<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1996
REGISTRATION NO. 33-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
AMERICAN GENERAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 6719 74-0483432
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
(713) 522-1111
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JON P. NEWTON, ESQ.
VICE CHAIRMAN AND GENERAL COUNSEL
AMERICAN GENERAL CORPORATION
2929 ALLEN PARKWAY
HOUSTON, TX 77019
(713) 522-1111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES OF ALL COMMUNICATIONS TO:
SCOTT N. WULFE, ESQ. THEODORE J. KOZLOFF, ESQ.
VINSON & ELKINS L.L.P. SKADDEN, ARPS, SLATE, MEAGHER & FLOM
2300 FIRST CITY TOWER 919 THIRD AVENUE
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10022
(713) 758-2222 (212) 735-3500
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger described in the enclosed Proxy Statement/Prospectus
have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED(1) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE(3)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $0.50 par
value (including the
attached Preferred
Share Purchase Rights) $353,898,973 $53,599
- ------------------------
7% Convertible Preferred
Stock, $1.50 par value
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) This Registration Statement relates to (i) the shares of common stock, par
value $0.50 per share ("American General Common Stock"), and 7%
Convertible Preferred Stock, par value $1.50 per share ("American General
7% Convertible Preferred Stock"), of the Registrant issuable to holders of
voting common stock, par value $1.00 per share ("Independent Voting Common
Stock"), and non-voting common stock, par value $1.00 per share
("Independent Non-Voting Common Stock" and, together with the Independent
Voting Common Stock, the "Independent Common Stock"), of Independent
Insurance Group, Inc. ("Independent") pursuant to the merger described in
the enclosed Proxy Statement/Prospectus (the "Merger"); (ii) the shares of
American General Common Stock issuable upon conversion of the American
General 7% Convertible Preferred Stock (for which the Registrant will
receive no additional consideration); and (iii) the American General
Preferred Share Purchase Rights that will be attached to and represented
by the certificates for the American General Common Stock referred to in
clauses (i) and (ii) above (which Preferred Share Purchase Rights have no
market value independent of the American General Common Stock to which
they are attached). The number of securities of each class to be issued in
connection with the Merger is not determinable at this time.
In accordance with the elections to be made by Independent shareholders in
connection with the Merger, each share of Independent Common Stock
outstanding prior to the effective time of the Merger (other than dissenting
shares) will be converted into, exchanged for and represent the right to
receive any of the following: (i) $27.50 in cash, (ii) a fraction of a share
of American General Common Stock equal to $27.50 divided by the Average
Closing Price, or (iii) a fraction of a share of American General 7%
Convertible Preferred Stock equal to $27.50 divided by the Average Closing
Price, or a combination thereof. The "Average Closing Price" is equal to the
ten-day average closing sales prices of the American General Common Stock on
the New York Stock Exchange (the "NYSE") Composite Tape ending on (and
including) the fifth NYSE trading day prior to the effective time of the
Merger.
(2) Calculated pursuant to Rule 457(f) based on the number of shares of
Independent Voting Common Stock and Independent Non-Voting Common Stock
outstanding as of January 26, 1996, using a value of $27.06 per share for
the Independent Non-Voting Common Stock (the average of the high and low
sales prices reported on the Nasdaq National Market on January 26, 1996)
and using a value of $26.65 per share for the Independent Voting Common
Stock (the book value of such shares as of December 31, 1995).
(3) Pursuant to Rule 457(b), the registration fee has been reduced by the
$68,436 paid on November 15, 1995 upon the filing under the Securities
Exchange Act of 1934, as amended, of Independent's preliminary proxy
materials with respect to the proposed Merger.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET PURSUANT TO
ITEM 501(B) OF REGULATION S-K, SHOWING THE LOCATION IN THE PROXY
STATEMENT/PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-4.
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
--------------------------- --------------------------------------
A.INFORMATION ABOUT THE TRANSACTION.
<S> <C>
1.Forepart of Registration
Statement and Outside Front Outside Front Cover Page of Proxy
Cover Page of Prospectus....... Statement/Prospectus
2.Inside Front and Outside Back
Cover Pages of Prospectus...... Available Information; Incorporation of
Certain Documents by Reference; Table of
Contents
3.Risk Factors, Ratio of Earnings
to Fixed Charges and Other Summary; Summary Historical Financial Data
Information.................... of American General; Summary Historical
Financial Data of Independent; Summary Pro
Forma Per Share and Other Data; Risk
Factors
4.Terms of the Transaction......... Summary; The Proposed Merger; Description
of American General Capital Stock;
Comparison of Shareholder Rights
5.Pro Forma Financial Information.. *
6.Material Contacts with the
Company Being Acquired......... Summary; The Proposed Merger
7.Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters................... *
8.Interests of Named Experts and
Counsel........................ Legal Matters; Experts
9.Disclosure of Commission Position
on Indemnification for
Securities Act Liabilities..... *
B.INFORMATION ABOUT THE REGISTRANT.
10.Information With Respect to S-3 Incorporation of Certain Documents by
Registrants.................... Reference; Certain Information Regarding
American General; Selected Historical
Financial Data of American General
11.Incorporation of Certain Incorporation of Certain Documents by
Information by Reference....... Reference
12.Information With Respect to S-2
or S-3 Registrants............. *
13.Incorporation of Certain
Information by Reference....... *
14.Information With Respect to
Registrants Other Than S-3 or
S-2 Registrants................ *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
--------------------------- --------------------------------------
C.INFORMATION ABOUT THE COMPANY BEING ACQUIRED.
<S> <C>
15.Information With Respect to S-3 Incorporation of Certain Documents by
Companies...................... Reference; Certain Information Regarding
Independent; Selected Historical Financial
Data of Independent
16.Information With Respect to S-2
or S-3 Companies............... *
17.Information With Respect to
Companies Other Than S-2 or S-3
Companies...................... *
D.VOTING AND MANAGEMENT INFORMATION.
18.Information if Proxies, Consents Cover Page of Proxy Statement/Prospectus;
or Authorizations Are to be Incorporation of Certain Documents by
Solicited...................... Reference; Summary; The Special Meeting;
The Proposed Merger; Other Matters
19.Information if Proxies, Consents
or Authorizations Are Not to be
Solicited, or in an Exchange
Offer.......................... *
</TABLE>
- --------
* Omitted because not required, inapplicable or answer is negative.
<PAGE>
INDEPENDENT INSURANCE GROUP, INC.
ONE INDEPENDENT DRIVE
JACKSONVILLE, FLORIDA 32276
January 30, 1996
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Independent Insurance Group, Inc. ("Independent"), to be held at the principal
executive offices of Independent, One Independent Drive, Jacksonville, Florida
32276, at 10:00 a.m., local time, on February 29, 1996, and any adjournment or
postponement thereof (the "Special Meeting"). A Notice of the Special Meeting,
a proxy card, and a Proxy Statement/Prospectus containing information about
the matters to be acted upon are enclosed. All holders of outstanding shares
of Independent's voting common stock, par value $1.00 per share ("Independent
Voting Common Stock"), and Independent's non-voting common stock, par value
$1.00 per share ("Independent Non-Voting Common Stock") ("Independent Voting
Common Stock" and "Independent Non-Voting Common Stock" are collectively
referred to as the "Independent Common Stock"), as of the close of business on
January 8, 1996 (the "Record Date") are entitled to notice of and to vote at
the Special Meeting.
At the Special Meeting, Independent's shareholders will be asked to consider
and vote upon a proposal to approve and adopt an Agreement and Plan of Merger,
dated as of October 19, 1995 and as amended as of January 25, 1996 (the
"Merger Agreement"), by and among Independent, American General Corporation, a
Texas corporation ("American General"), and AGC Life Insurance Company, a
Missouri corporation and a wholly-owned subsidiary of American General ("AGC
Life"). Pursuant to the Merger Agreement, Independent would be merged (the
"Merger") with and into AGC Life, which would continue in existence as a
wholly-owned subsidiary of American General.
In the Merger, and as more fully described in the accompanying Proxy
Statement/Prospectus and in the Merger Agreement included as an annex thereto,
each share of Independent Common Stock outstanding prior to the effective time
of the Merger (other than dissenting shares) will be converted into, exchanged
for and represent the right to receive any of the following: (i) a fraction
(the "Exchange Ratio") of a share of common stock (together with the attached
American General Preferred Share Purchase Rights), par value $.50 per share
("American General Common Stock"), of American General (the "Common Stock
Consideration"), calculated by dividing (x) $27.50 by (y) the average of the
closing sales prices of American General Common Stock as reported on the New
York Stock Exchange (the "NYSE") Composite Tape during the ten consecutive
NYSE trading days ending on (and including) the fifth NYSE trading day prior
to the effective time of the Merger; (ii) a fraction of a share of 7%
convertible preferred stock, par value $1.50 per share ("American General 7%
Convertible Preferred Stock"), of American General (the "Convertible Preferred
Stock Consideration"), equal to the Exchange Ratio; or (iii) cash in the
amount of $27.50 (the "Cash Price"), without any interest thereon (the "Cash
Consideration"). (Common Stock Consideration and Convertible Preferred Stock
Consideration are collectively referred to as the "Stock Consideration.")
Independent shareholders will be entitled to elect to receive Common Stock
Consideration, Convertible Preferred Stock Consideration and/or Cash
Consideration with respect to shares held by them, but such elections will be
subject to certain allocation procedures described more fully in the
accompanying Proxy Statement/Prospectus and in the Merger Agreement included
as an annex thereto, which provide generally that (i) no more than 50% of the
Independent Common Stock may be converted into Cash Consideration and (ii) no
more than 50% of the Independent Common Stock may be converted into
Convertible Preferred Stock Consideration. The Merger is intended to qualify
as a tax-free transaction to American General, AGC Life, Independent and,
except to the extent they receive cash in the Merger, the Independent
shareholders.
The accompanying Proxy Statement/Prospectus provides a detailed description
of the proposed Merger. We urge you to read and consider it carefully. A Form
of Election/Letter of Transmittal with which you can elect to
<PAGE>
receive Common Stock Consideration, Convertible Preferred Stock Consideration
and/or Cash Consideration in exchange for your Independent Common Stock is
being mailed to holders of record of Independent Common Stock with the
accompanying Proxy Statement/Prospectus.
American General, with assets of $60 billion and shareholders' equity of
$5.5 billion as of September 30, 1995, is one of the nation's largest
diversified financial services organizations. Headquartered in Houston, it is
a leading provider of retirement annuities, consumer loans, and life
insurance.
INDEPENDENT'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND
RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. The Board
reached this decision after careful consideration of a number of factors,
including the opinion of Alex. Brown & Sons Incorporated, Independent's
financial advisor, to the effect that the consideration to be issued in the
Merger is fair to Independent shareholders from a financial point of view. The
full opinion of Alex. Brown, dated as of the date of the accompanying Proxy
Statement/Prospectus, is included as Annex B to the accompanying Proxy
Statement/Prospectus, and shareholders are urged to read the opinion in its
entirety.
The affirmative votes of (i) the holders of a majority of the shares of
Independent Non-Voting Common Stock entitled to vote and (ii) the holders of a
majority of the shares of Independent Voting Common Stock entitled to vote are
required to approve the Merger Agreement. Each share of Independent Non-Voting
Common Stock is entitled to one vote with respect to the approval and adoption
of the Merger Agreement at the Special Meeting. Each share of Independent
Voting Common Stock is entitled to one vote on all matters presented at the
Special Meeting.
In view of the importance of the action to be taken at the Special Meeting,
we urge you to read the enclosed material carefully and to complete, sign and
date the enclosed proxy card and return it promptly in the enclosed prepaid
envelope whether or not you plan to attend the Special Meeting. If you attend
the Special Meeting, you may vote your shares personally whether or not you
have previously submitted a proxy. Your prompt cooperation will be greatly
appreciated.
Sincerely yours,
/s/ Wilford C. Lyon, Jr.
Wilford C. Lyon, Jr.
Chairman of the Board and Chief
Executive Officer
If you have questions or need assistance in voting your shares, you should
contact Georgeson & Company Inc. at the phone numbers listed below.
LOGO
[Logo of Georgeson & Company Inc. appears here]
Wall Street Plaza
New York, New York 10005
Call Toll Free: (800) 223-2064
In New York State, Call Collect: (212) 509-6240
<PAGE>
INDEPENDENT INSURANCE GROUP, INC.
ONE INDEPENDENT DRIVE
JACKSONVILLE, FLORIDA 32276
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 29, 1996
----------------
To The Shareholders of
Independent Insurance Group, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Independent
Insurance Group, Inc., a Florida corporation ("Independent"), will be held on
February 29, 1996, at 10:00 a.m., local time, at the principal executive
offices of Independent, One Independent Drive, Jacksonville, Florida 32276,
and any adjournments or postponements thereof (the "Special Meeting"), for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger, dated as of October 19, 1995 and as amended as of
January 25, 1996 (the "Merger Agreement"), by and among Independent,
American General Corporation, a Texas corporation ("American General"), and
AGC Life Insurance Company, a Missouri corporation and a wholly-owned
subsidiary of American General ("AGC Life"). Pursuant to the Merger
Agreement, Independent would be merged (the "Merger") with and into AGC
Life, which would continue in existence as a wholly-owned subsidiary of
American General. In the Merger, and as more fully described in the
accompanying Proxy Statement/Prospectus and in the Merger Agreement
included as an annex thereto, each share of Independent voting common
stock, par value $1.00 per share ("Independent Voting Common Stock"), and
each share of Independent non-voting common stock, par value $1.00 per
share ("Independent Non-Voting Common Stock"), outstanding prior to the
effective time of the Merger (other than dissenting shares) will be
converted into, exchanged for and represent the right to receive any of the
following: (i) a fraction (the "Exchange Ratio") of a share of common stock
(together with the attached American General Preferred Share Purchase
Rights), par value $.50 per share ("American General Common Stock"), of
American General (the "Common Stock Consideration"), calculated by dividing
(x) $27.50 by (y) the average of the closing sales prices of American
General Common Stock as reported on the New York Stock Exchange (the
"NYSE") Composite Tape during the ten consecutive NYSE trading days ending
on (and including) the fifth NYSE trading day prior to the effective time
of the Merger; (ii) a fraction of a share of 7% convertible preferred
stock, par value $1.50 per share ("American General 7% Convertible
Preferred Stock") of American General (the "Convertible Preferred Stock
Consideration"), equal to the Exchange Ratio; or (iii) cash in the amount
of $27.50 (the "Cash Price"), without any interest thereon (the "Cash
Consideration"). (Common Stock Consideration and Convertible Preferred
Stock Consideration are collectively referred to as the "Stock
Consideration.") Independent shareholders will be entitled to elect to
receive Common Stock Consideration, Convertible Preferred Stock
Consideration and/or Cash Consideration with respect to shares held by
them, but such elections will be subject to certain allocation procedures
described more fully in the accompanying Proxy Statement/Prospectus and in
the Merger Agreement included as an annex thereto, which provide generally
that (i) no more than 50% of the Independent Common Stock may be converted
into Cash Consideration and (ii) no more than 50% of the Independent Common
Stock may be converted into Convertible Preferred Stock Consideration.
2. To transact such other business as may properly come before the
Special Meeting.
Only holders of record of shares of Independent Voting Common Stock and
Independent Non-Voting Common Stock as of the close of business on January 8,
1996 (the "Record Date") are entitled to notice of and to vote at the Special
Meeting. The list of Independent shareholders entitled to vote at the Special
Meeting will be available for examination for ten days prior to the Special
Meeting at the principal executive offices of Independent, One Independent
Drive, Jacksonville, Florida 32276.
<PAGE>
Holders of Independent Voting Common Stock who object to the Merger will be
entitled to dissenters' rights in accordance with the Florida Business
Corporation Act ("FBCA"). A copy of the relevant provisions of the FBCA is
included as Annex C to the enclosed Proxy Statement/Prospectus.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ADDRESSED ENVELOPE ENCLOSED.
By Order of the Board of Directors
/s/ Kendall G. Bryan
Kendall G. Bryan
Secretary
January 30, 1996
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY.
FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROXY STATEMENT/PROSPECTUS SHALL NOT CONSTITUTE AN +
+OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY +
+SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR +
+SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INDEPENDENT INSURANCE GROUP, INC.
PROXY STATEMENT
----------------
AMERICAN GENERAL CORPORATION
PROSPECTUS
----------------
This Proxy Statement and Prospectus ("Proxy Statement/Prospectus") relates
to the proposed merger (the "Merger") of Independent Insurance Group, Inc., a
Florida corporation ("Independent"), with and into AGC Life Insurance Company
("AGC Life"), a Missouri corporation and wholly-owned subsidiary of American
General Corporation, a Texas corporation ("American General"), pursuant to an
Agreement and Plan of Merger, dated as of October 19, 1995 and as amended as
of January 25, 1996 (the "Merger Agreement"), by and among Independent,
American General and AGC Life.
In the Merger, Independent would be merged with and into AGC Life, which
would continue in existence as a wholly-owned subsidiary of American General,
and each share of Independent's voting common stock, par value $1.00 per share
("Independent Voting Common Stock"), and each share of Independent's non-
voting common stock, par value $1.00 per share ("Independent Non-Voting Common
Stock" and, together with the "Independent Voting Common Stock," the
"Independent Common Stock"), outstanding prior to the Merger (other than
dissenting shares), will be converted into, exchanged for and represent the
right to receive any of the following: (i) a fraction (the "Exchange Ratio")
of a share of common stock (together with the attached American General
Preferred Share Purchase Rights), par value $.50 per share ("American General
Common Stock"), of American General (the "Common Stock Consideration"),
calculated by dividing (x) $27.50 by (y) the average of the closing sales
prices of American General Common Stock as reported on the New York Stock
Exchange (the "NYSE") Composite Tape during the ten consecutive NYSE trading
days (each, a "Trading Day") ending on (and including) the fifth Trading Day
prior to the effective time of the Merger (the "Average Closing Price"); (ii)
a fraction of a share of 7% convertible preferred stock, par value $1.50 per
share ("American General 7% Convertible Preferred Stock" and, together with
the American General Common Stock, the "American General Stock"), of American
General (the "Convertible Preferred Stock Consideration"), equal to the
Exchange Ratio; or (iii) cash in the amount of $27.50 (the "Cash Price"),
without any interest thereon (the "Cash Consideration"). (Common Stock
Consideration and Convertible Preferred Stock Consideration are collectively
referred to as "Stock Consideration" and Stock Consideration and Cash
Consideration are collectively referred to as "Merger Consideration.")
Independent shareholders will be entitled to elect to receive Common Stock
Consideration, Convertible Preferred Stock Consideration and/or Cash
Consideration with respect to shares held by them, but such elections will be
subject to certain allocation procedures described more fully in this Proxy
Statement/Prospectus and in the Merger Agreement included as an annex hereto,
which provide generally that (i) no more than 50% of the Independent Common
Stock may be converted into Cash Consideration, and (ii) no more than 50% of
the Independent Common Stock may be converted into Convertible Preferred Stock
Consideration.
On January 26, 1996, the most recent practicable date prior to the printing
of this Proxy Statement/Prospectus, the closing price of the American General
Common Stock as reported on the NYSE Composite Tape was $35.88 per share and
the closing price of the Independent Non-Voting Common Stock as reported by
the Nasdaq National Market was $27.06 per share. There is no established
trading market for the American General 7% Convertible Preferred Stock or the
Independent Voting Common Stock.
This Proxy Statement/Prospectus constitutes both the proxy statement of
Independent relating to the solicitation of proxies by its Board of Directors
for use at a special meeting of Independent shareholders to be held on
February 29, 1996 to approve the Merger (the "Special Meeting") and the
prospectus of American General included as part of a Registration Statement
filed with the Securities and Exchange Commission (the "Commission") with
respect to (i) the shares of American General Common Stock (including the
attached American General Preferred Share Purchase Rights) and American
General 7% Convertible Preferred Stock issuable in the Merger to holders of
Independent Common Stock; and (ii) the shares of American General Common Stock
(including the attached American General Preferred Share Purchase Rights)
issuable upon conversion of the American General 7% Convertible Preferred
Stock.
A Form of Election/Letter of Transmittal with which Independent shareholders
can elect to receive Common Stock Consideration, Convertible Preferred Stock
Consideration and/or Cash Consideration for their Independent shares is
enclosed with this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being sent to Independent shareholders on or about January 30, 1996.
IN REVIEWING THIS PROXY STATEMENT/PROSPECTUS, INDEPENDENT SHAREHOLDERS
SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE HEADING "RISK
FACTORS."
----------------
THE SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
ANY STATE SECURITIES COMMISSION OR ANY STATE INSURANCE DEPARTMENT, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY STATE INSURANCE DEPARTMENT PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS JANUARY 30, 1996.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROXY STATEMENT/PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
AMERICAN GENERAL OR INDEPENDENT. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF
A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF AMERICAN
GENERAL OR INDEPENDENT SINCE THE DATE OF THIS PROXY STATEMENT/PROSPECTUS.
HOWEVER, IF ANY MATERIAL CHANGE OCCURS DURING THE PERIOD THAT THIS PROXY
STATEMENT/PROSPECTUS IS REQUIRED TO BE DELIVERED, THIS PROXY
STATEMENT/PROSPECTUS WILL BE AMENDED AND SUPPLEMENTED ACCORDINGLY. ALL
INFORMATION REGARDING AMERICAN GENERAL AND ITS SUBSIDIARIES IN THIS PROXY
STATEMENT/PROSPECTUS HAS BEEN SUPPLIED BY AMERICAN GENERAL, AND ALL
INFORMATION REGARDING INDEPENDENT AND ITS SUBSIDIARIES IN THIS PROXY
STATEMENT/PROSPECTUS HAS BEEN SUPPLIED BY INDEPENDENT.
AVAILABLE INFORMATION
American General and Independent are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith each files reports, proxy statements and
other information with the Commission. Copies of such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
Regional Offices of the Commission: Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, materials filed by American General
may be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005 and The Pacific Stock Exchange, Incorporated, 301 Pine Street, San
Francisco, California 94104, and materials filed by Independent may be
inspected at the offices of the Nasdaq National Market, Reports Section, 1735
K Street N.W., Washington, D.C. 20006.
American General has filed with the Commission a Registration Statement on
Form S-4 (together with any amendments or supplements thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of American General Stock to be
issued pursuant to the Merger Agreement. This Proxy Statement/Prospectus does
not contain all the information set forth in the Registration Statement,
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. Such additional information may be obtained
from the Commission's principal office in Washington, D.C. Statements
contained in this Proxy Statement/Prospectus as to the contents of any
contract or other document referred to herein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
----------------
FOR NORTH CAROLINA RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH
CAROLINA, NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE
ACCURACY OR ADEQUACY OF THIS DOCUMENT.
----------------
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by American General (File
No. 1-7981) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement/Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
(2) Proxy Statement relating to American General's 1995 annual meeting of
shareholders.
(3) Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1995, June 30, 1995 and September 30, 1995.
(4) Current Reports on Form 8-K dated February 14, 1995, March 22, 1995,
April 14, 1995, May 9, 1995, June 21, 1995, July 14, 1995, August 23, 1995,
August 24, 1995, October 20, 1995, October 26, 1995 and November 13, 1995.
(5) The description of American General Common Stock contained in the
Registration Statement on Form 8-B dated June 25, 1980, as amended by
Amendment No. 1 on Form 8 dated December 22, 1983.
(6) The description of American General Preferred Share Purchase Rights
contained in the Registration Statement on Form 8-A dated July 31, 1989, as
amended by Amendment No. 1 on Form 8 dated August 7, 1989.
(7) All documents subsequently filed by American General pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the later of
the last possible date on which elections may be made as described herein
or the date of the final adjournment of the Special Meeting.
The following documents filed with the Commission by Independent (File No.
0-9649) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement/Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
(2) Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1995, June 30, 1995 and September 30, 1995.
(3) Current Report on Form 8-K dated November 2, 1995.
(4) All documents subsequently filed by Independent pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the later of the
last possible date on which elections may be made as described herein or
the date of the final adjournment of the Special Meeting.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document, which also is or
is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS RELATING
TO AMERICAN GENERAL AND INDEPENDENT WHICH ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH DOCUMENTS
OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST OF SUCH PERSON. REQUESTS FOR SUCH DOCUMENTS RELATING
TO AMERICAN GENERAL SHOULD BE DIRECTED TO AMERICAN GENERAL CORPORATION, 2929
ALLEN PARKWAY, HOUSTON, TEXAS 77019-2155, ATTENTION: INVESTOR RELATIONS,
TELEPHONE NUMBER (713) 831-1949; AND DOCUMENTS RELATING TO INDEPENDENT SHOULD
BE DIRECTED TO INDEPENDENT INSURANCE GROUP, INC., ONE INDEPENDENT DRIVE,
JACKSONVILLE, FLORIDA 32276-3902, ATTENTION: INVESTOR RELATIONS, TELEPHONE
NUMBER (904) 358-5470. TO ASSURE TIMELY DELIVERY OF SUCH DOCUMENTS, REQUESTS
FOR SUCH DOCUMENTS SHOULD BE MADE NO LATER THAN FEBRUARY 22, 1996.
3
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TABLE OF CONTENTS
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AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 3
SUMMARY OF PROXY STATEMENT/PROSPECTUS 6
The Companies............................................................. 6
The Special Meeting....................................................... 7
The Proposed Merger....................................................... 9
SUMMARY HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL...................... 20
SUMMARY HISTORICAL FINANCIAL DATA OF INDEPENDENT........................... 21
SUMMARY PRO FORMA PER SHARE AND OTHER DATA................................. 22
CERTAIN INFORMATION REGARDING AMERICAN GENERAL............................. 24
General................................................................... 24
Recent Developments....................................................... 24
Retirement Annuities...................................................... 25
Consumer Finance.......................................................... 26
Life Insurance............................................................ 26
SELECTED HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL..................... 28
CERTAIN INFORMATION REGARDING INDEPENDENT.................................. 30
General................................................................... 30
Recent Developments....................................................... 30
Subsidiaries.............................................................. 30
Products and Services..................................................... 30
SELECTED HISTORICAL FINANCIAL DATA OF INDEPENDENT.......................... 31
SELECTED PRO FORMA PER SHARE AND OTHER DATA................................ 33
MARKET PRICE DATA AND DIVIDENDS............................................ 35
RISK FACTORS............................................................... 37
Absence of Prior Public Trading Market for American General 7% Convertible
Preferred Stock.......................................................... 37
Uncertainty as to Trading Market and Liquidity for American General 7%
Convertible Preferred Stock after the Merger............................. 37
Less Equity Appreciation for American General 7% Convertible Preferred
Stock.................................................................... 37
Determination of Exchange Ratio........................................... 38
Tax Consequences Involved in Making Elections............................. 38
THE SPECIAL MEETING........................................................ 39
General................................................................... 39
Record Date............................................................... 39
Quorum.................................................................... 39
Votes Required; Voting Rights............................................. 39
Dissenters' Rights........................................................ 40
Solicitation of Proxies................................................... 40
THE PROPOSED MERGER........................................................ 42
General................................................................... 42
</TABLE>
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<S> <C>
Closing; Effective Time.................................................. 42
Conversion of Shares..................................................... 42
Fractional Shares........................................................ 42
Shareholder Elections.................................................... 42
Certain Election Considerations.......................................... 43
Procedures for Shareholder Elections..................................... 43
Allocation Rules......................................................... 44
Allocation of Cash Available for Election.............................. 44
Allocation of American General 7% Convertible Preferred Stock Available
for Election.......................................................... 45
Order of Allocation.................................................... 46
Illustration of Potential Unfavorable Effects of Allocation
Procedures............................................................ 46
Submission of Multiple Election Forms.................................. 46
Exchange of Certificates................................................. 47
Background of the Merger................................................. 47
Recommendation of the Independent Board and Independent's Reasons for
the Merger.............................................................. 50
Opinion of Independent's Financial Advisor............................... 51
Independent Non-Voting Common Stock Performance........................ 52
Analysis of Selected Mergers and Acquisitions.......................... 52
Analysis of Purchase Price Premiums to Market Price.................... 53
Analysis of Selected Publicly Traded Companies......................... 53
Analysis of American General 7% Convertible Preferred Stock............ 54
American General Common Stock Price Analysis........................... 54
Other.................................................................. 55
American General's Reasons for the Merger................................ 56
Interests of Certain Persons in the Merger............................... 56
General................................................................ 56
Indemnification of Independent's Directors and Officers................ 56
Severance Plan......................................................... 56
Transition Incentive Compensation Agreements........................... 56
Accelerated Vesting of Pensions........................................ 57
Plans for Independent after the Merger................................... 57
The Merger Agreement..................................................... 57
The Merger............................................................. 57
Directors and Officers................................................. 57
Charter and Bylaws..................................................... 57
Representations and Warranties......................................... 58
Conduct of Business Pending the Merger................................. 58
Filings and Other Actions.............................................. 60
Other Acquisition Proposals............................................ 60
Expenses............................................................... 61
Indemnification and Insurance.......................................... 61
Conditions to the Merger............................................... 61
Termination............................................................ 62
</TABLE>
4
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<S> <C>
Accounting Treatment..................................................... 64
Regulatory Filings and Approvals......................................... 64
Approval by Insurance Regulators....................................... 65
Antitrust.............................................................. 65
State Anti-Takeover Statutes............................................. 65
Operations After the Merger.............................................. 66
Certain Federal Income Tax Consequences of the Merger.................... 66
Receipt of Only American General Stock................................. 66
Receipt of Cash and American General Stock............................. 67
Receipt of Only Cash................................................... 67
Additional Considerations.............................................. 67
Restrictions on Sales of Shares by Affiliates............................ 69
Stock Exchange Listing................................................... 69
Dissenters' Rights....................................................... 69
DESCRIPTION OF AMERICAN GENERAL CAPITAL STOCK............................. 72
American General Common Stock............................................ 72
American General Preferred Stock......................................... 72
American General Preferred Share Purchase Rights......................... 73
American General 7% Convertible Preferred Stock.......................... 74
General................................................................ 74
Dividends.............................................................. 75
Mandatory Conversion................................................... 76
Redemption at the Option of American General........................... 76
Conversion at the Option of the Holder................................. 78
Conversion Adjustments................................................. 78
Adjustment for Certain Mergers and Other Transactions.................. 79
Fractional Shares...................................................... 80
Liquidation Rights..................................................... 80
Voting Rights.......................................................... 80
Miscellaneous.......................................................... 82
American General Series A Preferred Securities and Preferred Stock....... 82
Certain Federal Income Tax Aspects Relating to the Ownership and
Disposition of American General Common Stock and American General 7%
Convertible Preferred Stock............................................. 84
Dividends.............................................................. 84
Conversion............................................................. 85
Adjustment of Conversion Price......................................... 85
Back-Up Withholding.................................................... 85
DESCRIPTION OF INDEPENDENT CAPITAL STOCK.................................. 86
General.................................................................. 86
Independent Voting Common Stock and Independent Non-Voting Common
Stock.................................................................... 86
</TABLE>
<TABLE>
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Independent Preferred Stock............................................. 87
Shareholders' Agreement................................................. 87
Exchange Agreements..................................................... 88
Florida Anti-Takeover Law and Certain Charter Provisions................ 88
Dual Classes of Independent Common Stock.............................. 88
Restrictions on Transfers of Independent Voting Common Stock.......... 88
Independent Preferred Stock........................................... 88
Florida Affiliated Transactions Statute............................... 88
Florida Control-Share Acquisitions Statute............................ 89
Transfer Agent and Registrar............................................ 90
COMPARISON OF SHAREHOLDER RIGHTS......................................... 90
Authorized Capital Stock................................................ 90
Voting Rights........................................................... 91
American General Preferred Share Purchase Rights........................ 91
Amendments to Charter and Bylaws........................................ 91
Preemptive Rights; Cumulative Voting.................................... 91
Boards of Directors..................................................... 91
Removal of Directors.................................................... 92
Newly-Created Directorships and Vacancies............................... 92
Nomination of Directors................................................. 92
Shareholder Proposals................................................... 93
Special Meetings of the Shareholders.................................... 93
Shareholder Action by Written Consent................................... 93
Vote Required for Mergers............................................... 94
Vote Required for Sales of Assets....................................... 94
Anti-Takeover Statutes.................................................. 95
Dissenters' Rights...................................................... 95
Limitation on Director's Liability...................................... 95
Indemnification......................................................... 96
SECURITY OWNERSHIP....................................................... 97
Security Ownership of Certain Beneficial Owners of American General..... 97
Security Ownership of Certain Beneficial Owners, Directors and
Management of Independent.............................................. 98
LEGAL MATTERS............................................................ 99
EXPERTS.................................................................. 99
ANNEX A Agreement and Plan of Merger, dated as of October 19, 1995 and as
amended as of January 25, 1996, by and among Independent Insurance
Group, Inc., American General Corporation and AGC Life Insurance Company
ANNEX B Opinion of Alex. Brown & Sons Incorporated
ANNEX C Excerpts from the Florida Business Corporation Act Relating to
Dissenters' Rights
</TABLE>
5
<PAGE>
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The following is a summary of certain information contained elsewhere in this
Proxy Statement/Prospectus. It is not, and is not intended to be, complete in
itself. Reference is made to, and this summary is qualified in its entirety by,
the more detailed information contained elsewhere in this Proxy
Statement/Prospectus, including the Annexes hereto which are a part of this
Proxy Statement/Prospectus. Shareholders are encouraged to read carefully all
of the information contained in this Proxy Statement/Prospectus.
INDEPENDENT SHAREHOLDERS SHOULD CONSIDER CAREFULLY THE INFORMATION SET FORTH
HEREIN UNDER THE HEADING "RISK FACTORS" IN ADDITION TO THE OTHER INFORMATION
PRESENTED HEREIN.
THE COMPANIES
American General Corporation...... American General is one of the largest di-
versified financial services organizations
in the United States, with assets of $60
billion and shareholders' equity of $5.5
billion as of September 30, 1995. Head-
quartered in Houston, Texas, it is a lead-
ing provider of retirement annuities, con-
sumer loans and life insurance to over
eight million households. American General
was incorporated as a general business
corporation under the laws of the State of
Texas in 1980 and is the successor to
American General Insurance Company, an in-
surance company incorporated under the
laws of the State of Texas in 1926. The
principal executive offices of American
General are located at 2929 Allen Parkway,
Houston, Texas 77019-2155, and its tele-
phone number is (713) 522-1111. See "CER-
TAIN INFORMATION REGARDING AMERICAN GENER-
AL."
AGC Life Insurance Company........ AGC Life is a direct, wholly-owned subsidi-
ary of American General. AGC Life was or-
ganized under the laws of the State of
Missouri in 1982 by American General to
serve as an insurance holding company and
is engaged in owning insurance subsidiar-
ies and issuing and reinsuring insurance
policies. The statutory home office of AGC
Life is located at 222 Monroe Street, Jef-
ferson City, Missouri 65101, and the mail-
ing address of AGC Life is American Gen-
eral Center, Nashville, Tennessee 37250-
0001. Its telephone number is (615) 749-
1000. See "CERTAIN INFORMATION REGARDING
AMERICAN GENERAL."
Independent Insurance Group, Independent, with assets of $1.4 billion
Inc............................... and shareholders' equity of $336 million
as of September 30, 1995, is the parent
company for a group of operating subsidi-
aries engaged in the sale and servicing of
life, accident and health, and property
and casualty insurance products. Independ-
ent's operations are concentrated in the
southeastern United States. Independent's
operating subsidiaries are among the lead-
ing providers in the United States of in-
surance products utilizing the home serv-
ice distribution method. According to the
Life Insurers Conference,
6
<PAGE>
Independent ranks among the top ten compa-
nies using the home service distribution
method in terms of number of agencies,
premiums and total assets. Independent was
incorporated as a general business corpo-
ration under the laws of the State of
Florida in 1980 to serve as the parent of
The Independent Life and Accident Insur-
ance Company ("Independent Life"), an in-
surance company incorporated under the
laws of the State of Florida in 1920. The
principal executive offices of Independent
are located at One Independent Drive,
Jacksonville, Florida 32276, and its tele-
phone number is (904) 358-5151. See "CER-
TAIN INFORMATION REGARDING INDEPENDENT."
Trading Markets and Market Price Shares of Independent Non-Voting Common
Data.............................. Stock are listed and traded on the Nasdaq
National Market under the symbol "INDHK."
There is no established trading market for
the Independent Voting Common Stock.
Shares of American General Common Stock
are listed and traded on the NYSE, the Pa-
cific Stock Exchange, the London Stock Ex-
change, the Basel Stock Exchange, the Ge-
neva Stock Exchange and the Zurich Stock
Exchange under the symbol "AGC." There are
currently no issued or outstanding shares
of American General 7% Convertible Pre-
ferred Stock. The closing price of Inde-
pendent Non-Voting Common Stock on July
12, 1995, the last full trading day prior
to the announcement by Independent that it
was undertaking efforts to maximize share-
holder value, as reported by the Nasdaq
National Market, was $14 per share. The
closing price of Independent Non-Voting
Common Stock on October 18, 1995, the last
full trading day prior to the public an-
nouncement of the Merger, as reported by
the Nasdaq National Market, was $23 per
share. The closing price of American Gen-
eral Common Stock on October 18, 1995, the
last full trading day prior to the public
announcement of the Merger, as reported by
the NYSE Composite Tape, was $38.13 per
share. On January 26, 1996, the most re-
cent practicable date prior to the print-
ing of this Proxy Statement/Prospectus,
the closing price of Independent Non-Vot-
ing Common Stock, as reported by the
Nasdaq National Market, was $27.06 per
share, and the closing price of American
General Common Stock, as reported by the
NYSE Composite Tape, was $35.88 per share.
See "MARKET PRICE DATA AND DIVIDENDS."
THE SPECIAL MEETING
Time, Date and Place.............. The Special Meeting will be held on Febru-
ary 29, 1996 at 10:00 a.m., at the princi-
pal executive offices of Independent, One
Independent Drive, Jacksonville, Florida
32276.
7
<PAGE>
Purpose of the Special Meeting.... Holders of Independent Voting Common Stock
and holders of Independent Non-Voting Com-
mon Stock will consider and vote upon a
proposal to approve and adopt the Merger
Agreement among Independent, American Gen-
eral and AGC Life. Holders of Independent
Voting Common Stock will also consider and
vote upon all other matters as may prop-
erly be brought before the Special Meet-
ing. See "THE SPECIAL MEETING"; "THE PRO-
POSED MERGER."
Record Date....................... Only shareholders of record of Independent
Common Stock at the close of business on
January 8, 1996 (the "Record Date") are
entitled to notice of and to vote at the
Special Meeting. On such date, there were
outstanding 5,688,775 shares of Indepen-
dent Voting Common Stock and 7,475,725
shares of Independent Non-Voting Common
Stock, held by 138 and 994 holders of rec-
ord, respectively. See "THE SPECIAL MEET-
ING--Record Date."
Voting Rights..................... Each share of Independent Non-Voting Common
Stock is entitled to one vote with respect
to the approval and adoption of the Merger
Agreement at the Special Meeting. For a
discussion of to what extent holders of
Independent Non-Voting Common Stock may
vote on other matters at the Special Meet-
ing, see "DESCRIPTION OF INDEPENDENT CAPI-
TAL STOCK--Independent Voting Common Stock
and Independent Non-Voting Common Stock."
Each share of Independent Voting Common
Stock is entitled to one vote with respect
to all matters presented at the Special
Meeting. See "THE SPECIAL MEETING--Votes
Required; Voting Rights."
Quorum; Votes Required............ The presence, in person or by proxy, at the
Special Meeting of the holders of (i) a
majority of the shares of Independent Non-
Voting Common Stock outstanding and enti-
tled to vote at the Special Meeting and
(ii) a majority of the shares of Indepen-
dent Voting Common Stock outstanding and
entitled to vote at the Special Meeting
will be necessary to constitute a quorum.
The affirmative vote of (i) the holders of
a majority of the shares of Independent
Voting Common Stock entitled to vote and
voting as a separate class and (ii) the
holders of a majority of the shares of In-
dependent Non-Voting Common Stock entitled
to vote and voting as a separate class is
required to approve the Merger Agreement.
Security Ownership of
Independent's Management......... As of the Record Date, the directors and
executive officers of Independent (13 per-
sons) owned beneficially an aggregate of
3,673,579 shares of the Independent Voting
Common Stock (constituting approximately
64.6%
8
<PAGE>
of the outstanding shares) and 2,377,147
shares of Independent Non-Voting Stock
(constituting approximately 31.8% of the
outstanding shares). See "SECURITY OWNER-
SHIP--Security Ownership of Certain Bene-
ficial Owners, Directors and Management of
Independent." Other than 6,000 shares held
by an officer of American General, to the
knowledge of American General, no execu-
tive officer or director of American Gen-
eral owns any shares of Independent Common
Stock.
Revocability of Proxy............. Any Independent shareholder who executes
and returns a proxy may revoke such proxy
at any time before it is voted by (i) no-
tifying in writing the Corporate Secretary
of Independent at One Independent Drive,
Jacksonville, Florida 32276, (ii) granting
a subsequent proxy, or (iii) appearing in
person and voting at the Special Meeting.
Attendance at the Special Meeting will not
in and of itself constitute revocation of
a proxy.
THE PROPOSED MERGER
General........................... At the Effective Time (as defined below),
pursuant to the Merger Agreement, Indepen-
dent will be merged with and into AGC
Life, which would continue in existence as
a wholly-owned subsidiary of American Gen-
eral.
Closing; Effective Time........... The Merger will become effective upon the
execution and filing of Articles of Merger
with the Secretary of State of Florida in
accordance with the Florida Business Cor-
poration Act (the "FBCA") and with the
Secretary of State of Missouri in accor-
dance with The General and Business Corpo-
ration Law of Missouri, or at such later
time as may be designated in such filings
as the effective time of the Merger (the
"Effective Time"). Such filings will be
made as soon as practicable after the date
of the closing of the Merger (the "Clos-
ing" or the "Closing Date"). The Closing
will take place as soon as practicable
following the approval of the Merger
Agreement by Independent shareholders and
the satisfaction or waiver of the other
conditions to each party's obligation to
consummate the Merger. See "THE PROPOSED
MERGER--Closing; Effective Time."
Conversion of Shares.............. In the Merger, each share of Independent
Common Stock outstanding prior to the Ef-
fective Time (other than dissenting
shares) will be converted into, exchanged
for and represent the right to receive any
of the following: (i) a fraction of a
share of American General Common Stock
equal to the Exchange Ratio; (ii) a frac-
tion of a share of American General 7%
Convertible Preferred Stock equal to the
Exchange Ratio; or (iii) $27.50 in cash.
In the event that the Average Closing
Price of American General Common Stock
falls below $24.99 per share, which would
result in an Exchange Ratio greater than
1.10, the
9
<PAGE>
Independent Board will consider
resoliciting proxies. See "THE SPECIAL
MEETING--Solicitation of Proxies."
Election Procedures; Form of Subject to certain allocation procedures
Election.......................... described below, record holders of Inde-
pendent Common Stock as of the Record Date
will be entitled to elect to receive Com-
mon Stock Consideration, Convertible Pre-
ferred Stock Consideration and/or Cash
Consideration in exchange for their shares
of Independent Common Stock. All such
elections are to be made pursuant to a
Form of Election/Letter of Transmittal
("Election Form"), which is being mailed
to holders of Independent Common Stock as
of the Record Date along with this Proxy
Statement/Prospectus. Shareholders who ac-
quire shares of Independent Common Stock
after the Record Date may obtain copies of
the Election Form from Georgeson & Company
Inc., the Information Agent, by calling
(800) 223-2064, or in New York State,
(212) 509-6240 (call collect).
Allocation of Merger Shareholder elections as to the form of
Consideration..................... Merger Consideration to be received will
be subject to certain limitations de-
scribed below under "THE PROPOSED MERGER--
Procedures for Shareholder Elections" and
"--Allocation Rules." Generally, the allo-
cation provisions provide that (i) the to-
tal Cash Consideration to be paid (includ-
ing cash paid with respect to dissenting
shares or in lieu of fractional shares)
will not exceed the Cash Price multiplied
by 50% of the aggregate number of shares
of Independent Common Stock issued and
outstanding immediately prior to the Ef-
fective Time and (ii) no more than 50% of
the aggregate number of shares of Indepen-
dent Common Stock issued and outstanding
prior to the Merger will be converted into
Convertible Preferred Stock Consideration.
Election Deadline................. To be effective, a Form of Election must be
returned, properly completed and accompa-
nied by the stock certificates as to which
the election is being made (or a properly
completed and executed Notice of Guaran-
teed Delivery) in accordance with the in-
structions therein, to First Chicago Trust
Company of New York, as Exchange Agent, no
later than 5:00 p.m., New York City time,
on the business day that is two Trading
Days prior to the Closing Date of the
Merger (the "Election Deadline") (which
date will be publicly announced by Ameri-
can General as soon as practicable but in
no event less than five Trading Days prior
to the Closing Date). Elections will be
revocable at any time prior to the Elec-
tion Deadline. SHAREHOLDERS WHO DO NOT RE-
TURN A VALIDLY COMPLETED FORM OF
ELECTION/LETTER OF TRANSMITTAL PRIOR TO
THE ELECTION DEADLINE WILL BE DEEMED TO
HAVE ELECTED TO RECEIVE COMMON STOCK CON-
SIDERATION IN
10
<PAGE>
EXCHANGE FOR THEIR SHARES OF INDEPENDENT
COMMON STOCK.
Certain Election Considerations... In making an election for Common Stock Con-
sideration, Convertible Preferred Stock
Consideration and/or Cash Consideration,
Independent shareholders are urged to con-
sider the following factors: (i) because
the Exchange Ratio will be determined
based on an average market price of the
American General Common Stock during the
ten Trading Days ending on and including
the fifth Trading Day prior to the Effec-
tive Time, no assurance can be given that
the product of the Exchange Ratio and the
market value of a share of American Gen-
eral Common Stock will not be higher or
lower than $27.50 at the Effective Time of
the Merger; (ii) although American General
has agreed to use all reasonable efforts
to have the American General 7% Convert-
ible Preferred Stock listed on the NYSE or
the Nasdaq National Market, no assurance
can be given that such shares will in fact
be so listed, or, if listed, that an ac-
tive trading market with respect to such
shares will develop or be sustained (see
"RISK FACTORS--Uncertainty as to Trading
Market and Liquidity for American General
7% Convertible Preferred Stock after the
Merger"); (iii) the terms of the American
General 7% Convertible Preferred Stock
were determined in negotiations between
American General and Independent and be-
cause there will have been no public mar-
ket for the American General 7% Convert-
ible Preferred Stock prior to the Effec-
tive Time, no prediction or assurance is
given as to whether at the Effective Time
the market value of a share of American
General 7% Convertible Preferred Stock
will be higher, lower or the same as the
market value of a share of American Gen-
eral Common Stock; and (iv) there may be
materially different tax consequences in-
volved in electing to receive Common Stock
Consideration, Convertible Preferred Stock
Consideration and/or Cash Consideration,
as described below under "THE PROPOSED
MERGER--Certain Federal Income Tax Conse-
quences of the Merger." See "OPINION OF
INDEPENDENT FINANCIAL ADVISOR--Analysis of
American General 7% Convertible Preferred
Stock" for a discussion of the valuation
of the American General 7% Convertible
Preferred Stock.
NONE OF AMERICAN GENERAL, INDEPENDENT, THE
AMERICAN GENERAL BOARD OR THE INDEPENDENT
BOARD MAKES ANY RECOMMENDATION AS TO
WHETHER SHAREHOLDERS SHOULD ELECT TO RE-
CEIVE COMMON STOCK CONSIDERATION, CONVERT-
IBLE PREFERRED STOCK CONSIDERATION AND/OR
CASH CONSIDERATION IN THE MERGER. EACH
SHAREHOLDER MUST MAKE HIS OR HER OWN DECI-
SION WITH RESPECT TO ANY SUCH
11
<PAGE>
ELECTION. AS A RESULT OF THE ALLOCATION
PROCEDURES DESCRIBED HEREIN, A SHAREHOLDER
WHO ELECTS TO CONVERT (I) IN EXCESS OF AP-
PROXIMATELY 50% OF HIS OR HER INDE- PEN-
DENT COMMON STOCK INTO AMERICAN GENERAL 7%
CONVERTIBLE PREFERRED STOCK AND/OR (II) IN
EXCESS OF APPROXIMATELY 50% OF HIS OR HER
INDEPENDENT COMMON STOCK INTO CASH MAY NOT
RECEIVE THE CONSIDERATION HE OR SHE HAS
ELECTED WITH RESPECT TO SUCH EXCESS. IF A
SHAREHOLDER MAKES NO ELECTION, HE OR SHE
WILL RECEIVE COMMON STOCK CONSIDERATION IN
THE MERGER.
Fractional Shares................. Fractional shares of American General Stock
will not be issued in the Merger. Holders
of Independent Common Stock will be paid
cash in lieu of such fractional shares.
See "THE PROPOSED MERGER--Fractional
Shares."
American General 7% Convertible
Preferred Stock
Dividends........................ The American General 7% Convertible Pre-
ferred Stock will be entitled to receive
annual cumulative dividends at a rate per
annum of 7% of the stated liquidation
preference (which will be equal to the Av-
erage Closing Price) from the date of ini-
tial issuance, payable quarterly in ar-
rears on each March 1, June 1, September
1, and December 1, or if any such date is
not a business day, on the next succeeding
business day (each a "Preferred Dividend
Payment Date").
Mandatory Conversion............. On the Preferred Dividend Payment Date
closest to the fifth anniversary of the
Effective Time (the "Mandatory Conversion
Date"), unless previously redeemed or con-
verted, each share of American General 7%
Convertible Preferred Stock will
mandatorily convert into (i) one share of
American General Common Stock, subject to
adjustment in certain events and (ii) the
right to receive cash in an amount equal
to all accrued and unpaid dividends
thereon (other than previously declared
dividends payable to a holder of record as
of a prior date).
Redemption at the Option of
American General............... Shares of American General 7% Convertible
Preferred Stock are not redeemable prior
to the date that is one year prior to the
Mandatory Conversion Date (the "Initial
Redemption Date"). At any time and from
time to time on and after the Initial Re-
demption Date, American General may redeem
any or all of the outstanding shares of
American General 7% Convertible Preferred
Stock. Upon any such redemption, each
holder will receive, in exchange for each
share of American General 7% Convertible
Preferred Stock, the number of shares of
American General Common Stock equal to the
quotient obtained by dividing (i) 101.75%
of the Average Closing Price, declining as
set forth herein to 100% of the Aver-
12
<PAGE>
age Closing Price until the Mandatory Con-
version Date, plus all accrued and unpaid
dividends thereon (the "Call Price") by
(ii) the Current Market Price (as herein-
after defined) of American General Common
Stock on the applicable date of determina-
tion, but in no event less than .8264 of a
share of American General Common Stock.
Conversion at the Option of the At any time prior to the Mandatory Conver-
Holder............................ sion Date, unless previously redeemed,
each share of American General 7% Convert-
ible Preferred Stock is convertible at the
option of the holder into .8264 of a share
of American General Common Stock (the "Op-
tional Conversion Rate"), which is equiva-
lent to a conversion price of 121% of the
Average Closing Price, subject to adjust-
ment as described herein.
Voting Rights.................... The holders of shares of American General
7% Convertible Preferred Stock will have
the right together with the holders of the
American General Common Stock to vote in
the election of Directors of American Gen-
eral and upon each other matter coming be-
fore any meeting of the holders of Ameri-
can General Common Stock on the basis of
4/5 of one vote for each share of American
General 7% Convertible Preferred Stock. On
such matters, the holders of shares of
American General 7% Convertible Preferred
Stock and the holders of American General
Common Stock will vote together as one
class except as otherwise provided by law
or the American General Restated Articles
of Incorporation (the "American General
Articles"). In addition, holders of shares
of American General 7% Convertible Pre-
ferred Stock will have additional voting
rights with respect to certain other mat-
ters.
Liquidation Preference and The shares of American General 7% Convert-
Ranking........................... ible Preferred Stock will rank prior to
the American General Common Stock as to
the payment of dividends and distribution
of assets upon liquidation. The liquida-
tion preference of each share of American
General 7% Convertible Preferred Stock is
an amount equal to the sum of (i) the
stated liquidation preference, which will
be equal to the Average Closing Price, and
(ii) all accrued and unpaid dividends
thereon.
Trading Market and Illiquidity... American General has agreed to use all rea-
sonable efforts to have the American Gen-
eral 7% Convertible Preferred Stock listed
on the NYSE or the Nasdaq National Market.
However, no assurance can be given that
such shares will in fact be so listed, or,
if listed, that an active trading market
with respect to such shares will develop
or be sustained. The market for the Ameri-
can General 7% Convertible Preferred Stock
may be relatively illiquid, especially if
relatively few holders of Independent Com-
mon Stock elect to receive shares of Amer-
ican General 7% Convertible Preferred
Stock, which may adversely
13
<PAGE>
affect the market price of such shares
prevailing from time to time and subject
the market price of such shares to signif-
icant fluctuations based on relatively
small trading volume.
Enhanced Dividend Yield; Less
Equity Appreciation than
American General Common Stock
...............................
Dividends will accrue on the shares of
American General 7% Convertible Preferred
Stock at a higher rate than the rate at
which dividends are currently paid on
American General Common Stock. However,
the opportunity for equity appreciation
afforded by shares of American General 7%
Convertible Preferred Stock will be less
than that afforded by American General
Common Stock because the Optional Conver-
sion Rate will be equivalent to 121% of
the Average Closing Price and American
General may, at its option, redeem shares
of American General 7% Convertible Pre-
ferred Stock at any time on or after the
Initial Redemption Date and may be ex-
pected to do so if, among other circum-
stances, the then Current Market Price of
American General Common Stock exceeds the
Call Price. In such event, a holder of a
share of American General 7% Convertible
Preferred Stock will receive less than one
share of American General Common Stock,
but no less than .8264 of a share of Amer-
ican General Common Stock per share of
American General 7% Convertible Preferred
Stock. A holder who surrenders for conver-
sion any shares of American General 7%
Convertible Preferred Stock prior to their
redemption will receive .8264 of a share
of American General Common Stock per share
of American General 7% Convertible Pre-
ferred Stock. See "DESCRIPTION OF AMERICAN
GENERAL CAPITAL STOCK--American General 7%
Convertible Preferred Stock."
Recommendation of the Independent
Board of Directors and
Independent's Reasons for the
Merger............................ THE BOARD OF DIRECTORS OF INDEPENDENT (THE
"INDEPENDENT BOARD") BELIEVES THAT THE
MERGER IS FAIR TO AND IN THE BEST INTER-
ESTS OF INDEPENDENT AND ITS SHAREHOLDERS
AND RECOMMENDS THAT INDEPENDENT SHAREHOLD-
ERS VOTE FOR THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT. At a meeting held on
October 19, 1995, the Independent Board
unanimously approved the Merger and re-
solved to recommend that Independent
shareholders vote for approval and adop-
tion of the Merger Agreement. The Indepen-
dent Board considered many factors in
reaching its conclusion to approve the
Merger Agreement and to recommend that In-
dependent shareholders vote for approval
and adoption of the Merger Agreement. See
"THE PROPOSED MERGER--Recommen-
14
<PAGE>
dation of the Independent Board and In-
dependent's Reasons for the Merger."
Approval by the American General
Board and American General's The Board of Directors of American General
Reasons for the Merger............ (the "American General Board") has unani-
mously approved the Merger Agreement and
the issuance of the Stock Consideration in
connection with the Merger. The Merger
does not require the approval of the Amer-
ican General shareholders. See "THE PRO-
POSED MERGER--American General's Reasons
for the Merger."
Opinion of Independent's Alex. Brown & Sons Incorporated ("Alex.
Financial Advisor................. Brown") has delivered a written opinion to
the Independent Board, dated as of October
19, 1995 and the date of this Proxy
Statement/Prospectus, to the effect that
the consideration to be received by the
holders of Independent Common Stock pursu-
ant to the Merger Agreement is fair, from
a financial point of view, to such hold-
ers. In rendering its opinion, Alex. Brown
considered all the consideration options
and determined that, as of the date of its
fairness opinion, any mixture of the three
consideration election options (subject to
the potential liquidity issues concerning
the American General 7% Convertible Pre-
ferred Stock as discussed hereinafter--see
"Opinion of Independent's Financial Advi-
sor--Analysis of American General 7% Con-
vertible Preferred Stock"), was fair from
a financial point of view, although the
three consideration election options were
not necessarily equal. In selecting a con-
sideration option, a shareholder should
consider, among other factors, his or her
(i) tax position, (ii) desire for cash,
(iii) view as to the illiquidity of the
American General 7% Convertible Preferred
Stock, (iv) view as to the attractiveness
of the American General Common Stock, (v)
view as to general market conditions and
(vi) specific circumstances. Alex. Brown's
opinion is based on market, economic and
other considerations as they existed and
could be evaluated as of the date the
opinion was delivered. The full opinion of
Alex. Brown, dated as of the date of this
Proxy Statement/Prospectus, is included as
Annex B to this Proxy Statement/Prospec-
tus, and shareholders are urged to read
the opinion in its entirety. See "THE PRO-
POSED MERGER--Opinion of Independent's Fi-
nancial Advisor."
Interests of Certain Persons in In considering the recommendation of the
the Merger........................ Independent Board with respect to the
Merger Agreement, shareholders should be
aware that certain members of Independ-
ent's management and the Independent Board
have certain interests in the Merger that
are in addition to the interests of share-
holders of Independent generally. See "SE-
CURITY OWNERSHIP--Security Ownership of
15
<PAGE>
Certain Beneficial Owners, Directors and
Management of Independent." The Indepen-
dent Board was aware of these interests
and considered them, among other matters,
in approving the Merger Agreement. See
"THE PROPOSED MERGER--Interests of Certain
Persons in the Merger."
Conditions to the Merger.......... The respective obligations of Independent,
AGC Life and American General to consum-
mate the Merger are subject to a number of
conditions, including, among others
(i) the approval of the Merger by Indepen-
dent shareholders; (ii) the filing or ob-
taining of all authorizations, consents,
approvals or declarations required by any
governmental entity, including as required
by the insurance laws and regulations of
the States of Florida and Missouri; (iii)
the absence of any preliminary or perma-
nent injunction prohibiting the consumma-
tion of the Merger; (iv) the Registration
Statement having become effective and not
being the subject of any stop order pro-
ceedings; (v) the expiration or early ter-
mination of the waiting period (and any
extension thereof) under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and no action
having been instituted by the Department
of Justice (the "DOJ") or the Federal
Trade Commission (the "FTC"); (vi) the ap-
proval for listing on the NYSE of the
American General Common Stock issuable in
the Merger; (vii) the use of all reason-
able efforts by American General to have
the American General 7% Convertible Pre-
ferred Stock issuable in the Merger ap-
proved for listing on the NYSE or the
Nasdaq National Market; (viii) the receipt
by each of Independent and American Gen-
eral of opinions from their respective
counsel to the effect that the Merger will
be treated for federal income tax purposes
as a reorganization within the meaning of
Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"); and
(ix) the receipt by Independent of an
opinion from Alex. Brown, dated as of the
closing date of the Merger, to the effect
that the consideration to be received by
Independent shareholders in the Merger is
fair to such shareholders from a financial
point of view. None of the foregoing con-
ditions are irrevocable. Independent and
American General may determine to modify
or waive any condition to the consummation
of the Merger, provided that no modifica-
tion or waiver by Independent which re-
quires shareholder approval under applica-
ble law, the Independent Articles or the
Independent Bylaws will occur unless such
approval is obtained. In the event a modi-
fication or waiver by Independent is con-
templated which requires shareholder ap-
proval under applicable law, a
16
<PAGE>
supplement to this Proxy
Statement/Prospectus will be distributed
to shareholders and proxies will be resol-
icited. See "THE SPECIAL MEETING--Solici-
tation of Proxies." Neither American Gen-
eral nor Independent presently contem-
plates waiving or modifying any of the
foregoing conditions. See "THE PROPOSED
MERGER--The Merger Agreement--Conditions
to the Merger."
Other Acquisition Proposals....... The Merger Agreement provides that, subject
to certain exceptions, prior to the con-
summation or termination of the Merger
Agreement, Independent and its subsidiar-
ies and representatives and agents will
not initiate, solicit or encourage (in-
cluding by way of furnishing information
or assistance), or take certain other ac-
tions to facilitate, any inquiries or the
making of any proposals to purchase or ac-
quire any equity securities or (except in
the ordinary course of business) assets
of, or merge or combine with, Independent
or any of its subsidiaries (an "Acquisi-
tion Proposal"), or to enter into discus-
sions or negotiate with any person or en-
tity with respect to an Acquisition Pro-
posal or to endorse or obtain an Acquisi-
tion Proposal, in each case subject to
certain exceptions necessary to comply
with the Independent Board's fiduciary ob-
ligations to the Independent shareholders.
See "THE PROPOSED MERGER--The Merger
Agreement--Other Acquisition Proposals."
Termination....................... The Merger Agreement may be terminated and
the Merger abandoned at any time prior to
the Effective Time, (i) by mutual consent
of Independent and American General; (ii)
by the Board of Directors of either Ameri-
can General or Independent, if the Merger
shall not have been consummated on or be-
fore March 30, 1996, provided that under
certain circumstances such date may be ex-
tended to June 30, 1996; (iii) by Indepen-
dent or American General if there has been
a breach by the other of any repre-
sentation or warranty that has a material
adverse effect or there has been a mate-
rial breach of a covenant by the other
that is not curable or, if curable, is not
cured within thirty days after written no-
tice of such breach; (iv) by the Board of
Directors of either American General or
Independent if a court of competent juris-
diction or agency or commission shall have
issued an order, decree or ruling or taken
any other action permanently restraining,
enjoining or otherwise prohibiting the
transactions contemplated by the Merger
Agreement and such order, decree, ruling
or other action shall have become final
and non-appealable, provided that certain
conditions are satisfied; (v) by the Inde-
pendent Board if, (a) prior to the Special
Meeting, there is a third-party Acquisi-
tion Proposal and to act otherwise would,
based upon the written advice of
17
<PAGE>
Independent's counsel, cause the Indepen-
dent Board to breach its fiduciary duties,
(b) if the Average Closing Price of Ameri-
can General Common Stock falls below
$24.99 or (c) if American General issues
stock in a transaction for which approval
by its shareholders is required; and (vi)
by the American General Board if the Inde-
pendent Board takes action in relation to
a third-party Acquisition Proposal, or if
the Average Closing Price of American Gen-
eral Common Stock falls below $26.71. See
"THE PROPOSED MERGER--The Merger Agree-
ment--Termination."
Termination Fees.................. If the Merger Agreement is terminated by
either American General or Independent for
certain reasons and a competing Acquisi-
tion Proposal under which the Independent
shareholders would receive in excess of
$27.50 per share is outstanding, then un-
der certain circumstances Independent has
agreed to pay to American General a termi-
nation fee of up to $14 million.
Regulatory Filings and The consummation of the Merger is subject
Approvals......................... to certain regulatory approvals, including
approval by the Florida Department of In-
surance and the Missouri Department of In-
surance (for which notification of ap-
proval was received on November 29, 1995
for Missouri and January 26, 1996 for
Florida) and the expiration or early ter-
mination of the relevant waiting period
under the HSR Act (for which notice of
early termination was received on November
15, 1995). See "THE PROPOSED MERGER--Regu-
latory Filings and Approvals."
Accounting Treatment.............. The Merger will be treated as a purchase by
American General for accounting and finan-
cial reporting purposes. See "THE PROPOSED
MERGER--Accounting Treatment."
Certain Federal Income Tax
Consequences of the Merger........ The Merger is intended to qualify as a re-
organization within the meaning of Section
368(a) of the Code such that, for federal
income tax purposes, the Merger will not
result in the recognition of gain or loss
by American General, AGC Life, Independent
or, except to the extent they receive any
cash in the Merger, the shareholders of
Independent. Each party's obligation to
effect the Merger is conditioned on the
delivery of an opinion, in the case of In-
dependent, from Skadden, Arps, Slate, Mea-
gher & Flom, special counsel to Indepen-
dent, and in the case of American General,
from Vinson & Elkins L.L.P., special coun-
sel to American General, substantially to
the effect that, on the basis of facts,
representations and assumptions set forth
in such opinions, for federal income tax
18
<PAGE>
purposes the Merger constitutes a reorga-
nization within the meaning of Section
368(a) of the Internal Revenue Code of
1986, as amended (the "Code"). Independent
will not waive the condition requiring the
receipt of such an opinion from its coun-
sel. Shareholders are urged to consult
their tax advisors as to the tax conse-
quences of the Merger to them under feder-
al, state, local or any other applicable
law. See "THE PROPOSED MERGER--Certain
Federal Income Tax Consequences of the
Merger."
Dissenters' Rights................ Holders of Independent Non-Voting Common
Stock do not have dissenters' rights in
connection with the Merger because Inde-
pendent Non-Voting Common Stock was traded
on the Nasdaq National Market as of the
Record Date. However, holders of Indepen-
dent Voting Common Stock who comply with
the requirements of Section 607.1320 of
the FBCA may dissent from the Merger and
obtain payment for the fair value of their
Independent Voting Common Stock. Excerpts
from the FBCA relating to dissenters'
rights are attached to this Proxy
Statement/Prospectus as Annex C. See "THE
PROPOSED MERGER--Dissenters' Rights."
Comparison of Shareholder The rights of Independent shareholders are
Rights............................ currently governed by the FBCA, the Inde-
pendent Amended and Restated Articles of
Incorporation (the "Independent Articles")
and Independent's bylaws (the "Independent
Bylaws"). Upon consummation of the Merger,
Independent shareholders who receive Amer-
ican General Stock in the Merger will be-
come shareholders of American General, and
their rights will be governed by the Texas
Business Corporation Act ("TBCA"), the
American General Articles and American
General's bylaws (the "American General
Bylaws"). For a summary of the material
differences between the rights of Indepen-
dent shareholders and the rights of Ameri-
can General shareholders, see "COMPARISON
OF SHAREHOLDER RIGHTS."
19
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL
The following table presents summary historical financial data of American
General Corporation and its consolidated subsidiaries for the periods
indicated. The historical financial data as of and for the five years ended
December 31, 1994 was derived from American General's audited consolidated
financial statements. The financial data as of and for the nine months ended
September 30, 1995 and September 30, 1994 was derived from American General's
unaudited quarterly financial statements, which, in the opinion of American
General's management, reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of such data. The data for the nine
months ended September 30, 1995 and September 30, 1994 are not necessarily
indicative of results of operations for the entire year. The data should be
read in conjunction with the consolidated financial statements, related notes
and other financial information of American General included or incorporated by
reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA AND RATIO DATA)
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ---------------------------------------------
1995(a) 1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Total revenues.......... $ 4,818 $ 3,711 $ 4,841 $ 4,829 $ 4,602 $ 4,395 $ 4,434
Income before income tax
expense................ 823 745 802(b) 602(c) 775 678 836(d)
Net income.............. 536 478 513 204(e) 533 480 562
Per Share Data
Net income.............. $ 2.59 $ 2.27 $ 2.45 $ .94(e) $ 2.45 $ 2.13 $ 2.35
Dividends............... .93 .87 1.16 1.10 1.04 1.00 .79(f)
Book value.............. 26.94(g) 19.32(g) 17.05(g) 23.96(g) 21.33 19.86 18.57
High market price....... 38.88 30.50 30.50 36.50 29.38 22.50 25.32
Low market price........ 27.50 24.88 24.88 26.25 20.13 14.00 11.75
Closing market price.... 37.38 27.13 28.25 28.63 28.50 22.25 15.38
Average shares
outstanding............ 208.2 210.7 209.4 216.6 217.7 225.4 238.6
Coverage Ratios
Earnings to fixed
charges................ 2.52 2.80 2.40 2.13 2.37 2.06 2.20
Earnings to combined
fixed charges and
preferred stock
dividends.............. 2.45 2.80 2.40 2.13 2.37 2.06 2.20
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------------ ---------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial Position
Assets.................. $59,897(g) $45,384(g) $46,295(g) $43,982(g) $39,742 $36,105 $33,808
Corporate debt.......... 1,914 1,660 1,836 1,686 1,987 1,981 2,053
Redeemable equity....... 743 44 47 - - - 296
Shareholders' equity.... 5,512(g) 3,954(g) 3,457(g) 5,137(g) 4,616 4,329 4,138
</TABLE>
- --------
(a) Includes eight months of operations for American Franklin Company, which
was acquired January 31, 1995.
(b) Includes $172 million of realized investment losses primarily from the
capital gains offset program.
(c) Includes $300 million write-down of goodwill.
(d) Includes $216 million of realized investment gains from sale of
substantially all of the common stock portfolio.
(e) Includes effect of $300 million write-down of goodwill and $46 million
charge for cumulative effect of accounting changes.
(f) Excludes special dividends of $.61 per share.
(g) Includes the effect of SFAS 115. To facilitate analysis of period-to-period
balances, the effect of SFAS 115, which was adopted at December 31, 1993,
on reported balances is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- --------------
1995 1994 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Increase (decrease) in assets................. $1,018 $ (621) $ (986) $1,040
Increase (decrease) in shareholders' equity... 697 (531) (950) 676
Increase (decrease) in book value per share... 3.36 (2.58) (4.65) 3.14
</TABLE>
20
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA OF INDEPENDENT
The following table presents summary historical financial data of Independent
Insurance Group, Inc. and its consolidated subsidiaries for the periods
indicated. The historical financial data as of and for the five years ended
December 31, 1994 was derived from Independent's audited consolidated financial
statements. The financial data as of and for the nine months ended September
30, 1995 and September 30, 1994 was derived from Independent's unaudited
quarterly financial statements, which, in the opinion of Independent's
management, reflect all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of such data. The data for the nine months
ended September 30, 1995 and September 30, 1994 are not necessarily indicative
of results of operations for the entire year. The data should be read in
conjunction with the consolidated financial statements, related notes and other
financial information of Independent included or incorporated by reference in
this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- -------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Total revenues.......... $ 251.9 $ 268.8 $ 354.7 $ 471.6 $ 533.5 $548.7 $ 540.2
Income (loss) from
continuing operations
before income tax
expense................ 17.6 9.1 15.7 (3.4)(a)(b) (29.7)(b) 37.9 42.0
Net income (loss)....... 12.0 7.0 11.1 (36.3)(a)(b) (15.1)(b) 28.6 31.0
Per Share Data
Net income (loss)....... $ .92 $ .53 $ .84 $ (2.75)(a)(b) $ (1.15)(b) $ 2.18 $ 2.34
Dividends............... .18 .18 .24 .24 .88 .87 .83
Book value.............. 25.49 21.17 20.30 24.00 25.96 27.95 25.95
High market price....... 27.00 16.75 16.75 18.25 22.75 21.25 22.63
Low market price........ 11.00 13.50 9.75 13.75 13.50 16.25 13.25
Closing market price.... 25.00 13.50 11.75 15.75 15.75 20.25 15.50
Average shares
outstanding............ 13.2 13.2 13.2 13.2 13.2 13.2 13.3
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
----------------- -------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial Position
Assets.................. $1,417.8 $1,388.6 $1,363.8 $1,478.0 $1,517.9 $1,450.5 $1,399.4
Notes payable........... 5.4 6.2 7.5 6.8 8.0 2.3 10.2
Shareholders' equity.... 335.5 278.7 267.3 315.9 341.7 368.0 341.6
</TABLE>
- --------
(a) Includes restructuring charge of $23.0 million (pretax), increasing net
loss by $14.9 million or $1.14 per share.
(b) Includes catastrophe losses from Hurricane Andrew of $9.7 million and $59.7
million (pretax) in 1993 and 1992, respectively, increasing net loss by
$6.3 million or $.48 per share in 1993 and $38.8 million or $2.95 per share
in 1992.
21
<PAGE>
SUMMARY PRO FORMA PER SHARE AND OTHER DATA
The following table presents the consolidated net income and book value per
share of American General and Independent, on a pro forma basis for American
General and an equivalent pro forma basis for Independent. The table also
presents American General's ratios of earnings to fixed charges and earnings to
combined fixed charges and preferred stock dividends on a pro forma basis. The
American General Pro Forma A data was derived by combining American General's
historical financial statements with those of American Franklin Company,
acquired by American General on January 31, 1995, and a 40% interest in Western
National Corporation, acquired on December 23, 1994, giving effect to these
acquisitions under the purchase method of accounting for business combinations.
The American General Pro Forma B data was derived by combining the American
General Pro Forma A data with Independent's historical financial information,
giving effect to the Merger under the purchase method of accounting. Equivalent
pro forma information for Independent, with respect to holders of Independent
Common Stock who receive American General Common Stock, is presented on an
equivalent share basis, which reflects American General's Pro Forma B amounts
multiplied by an assumed exchange ratio of .7692 per share which is based on an
assumed Average Closing Price of $35.75, the closing price of American General
Common Stock on January 25, 1996.
The information set forth below should be read in conjunction with the
Selected Pro Forma Per Share and Other Data, the respective audited and
unaudited consolidated financial statements and related notes of American
General and Independent incorporated herein by reference, and the unaudited pro
forma financial information and notes thereto included in American General's
Current Report on Form 8-K dated November 13, 1995, incorporated herein by
reference.
<TABLE>
<CAPTION>
AMERICAN GENERAL INDEPENDENT
---------------------------------- ---------------------
PRO FORMA A PRO FORMA B EQUIVALENT
HISTORICAL (a), (c) (b), (c) HISTORICAL PRO FORMA
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1994:
Per Share Data
Net income............ $ 2.45 $ 2.77 $ 2.73 $ .84 $ 2.10
Book value (at end of
period).............. 17.05 17.05 17.48 20.30 13.45
Dividends............. 1.16 1.16 1.16 .24 .89
Coverage Ratios
Earnings to fixed
charges.............. 2.40 2.55 2.54
Earnings to combined
fixed charges and
preferred stock
dividends............ 2.40 2.39 2.36
Nine Months Ended
September 30, 1995:
Per Share Data
Net income............ $ 2.59 $ 2.58 $ 2.57 $ .92 $ 1.98
Book value (at end of
period).............. 26.94 26.94 27.12 25.49 20.86
Dividends............. .93 .93 .93 .18 .72
Coverage Ratios
Earnings to fixed
charges.............. 2.52 2.57 2.58
Earnings to combined
fixed charges and
preferred stock
dividends............ 2.45 2.41 2.40
</TABLE>
- --------
(a) The unaudited consolidated pro forma results for the year ended December
31, 1994, and for the nine months ended September 30, 1995, are based on
American General's historical results, adjusted to reflect the impact of
the acquisitions of American Franklin Company on January 31, 1995, and a
40% interest in Western National Corporation on December 23, 1994, as if
both had occurred on January 1, 1994. See American General's Current Report
on Form 8-K dated November 13, 1995, incorporated herein by reference. Pro
forma book value per share is calculated as if both acquisitions had
occurred on the respective balance sheet dates.
22
<PAGE>
SUMMARY PRO FORMA PER SHARE AND OTHER DATA--(CONTINUED)
(b) The unaudited consolidated pro forma results for the year ended December
31, 1994, and for the nine months ended September 30, 1995, are based on
American General's Pro Forma A results (see Note (a) above), adjusted to
reflect the impact of the Merger of Independent as if it had occurred on
January 1, 1994. See American General's Current Report on Form 8-K dated
November 13, 1995, incorporated herein by reference. Pro forma book value
per share is calculated as if the Merger had occurred on the respective
balance sheet dates.
For purposes of calculating American General's Pro Forma B data, the
acquisition price for Independent of $362 million is assumed to be financed
by issuances of American General's common stock (25%), American General's
7% convertible preferred stock (25%), and cash (50%).
American General plans to consolidate Independent's operations into those
of its life insurance subsidiary, American General Life and Accident
Insurance Company (AGLA). The consolidation is expected to take 18 to 24
months and, when completed, should result in a reduction in annual
operating expenses of approximately $75 million. These operating expense
savings are expected to result from the consolidation of Independent's home
office into AGLA's Nashville home office, the consolidation of a
substantial number of district offices, and the sale of the Independent
home office building. The American General Pro Forma B data has not been
adjusted to reflect the expected expense reductions, since the extent and
timing of such expense reductions may vary from management's current
expectations.
(c) The unaudited pro forma information is not necessarily indicative of
American General's consolidated financial data had the acquisitions been
consummated at the assumed dates (see Notes (a) and (b) above), nor is it
necessarily indicative of American General's consolidated financial data
for any future period.
23
<PAGE>
CERTAIN INFORMATION REGARDING AMERICAN GENERAL
GENERAL
American General, with assets of $60 billion and shareholders' equity of
$5.5 billion as of September 30, 1995, is the parent company of one of the
nation's largest diversified 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. 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.
RECENT DEVELOPMENTS
On January 29, 1996, American General reported preliminary unaudited 1995
net income of $545 million, or $2.64 per share of American General Common
Stock. Net income for 1994 was $513 million, or $2.45 per share. Net income
for fourth quarter 1995 was $9 million, or $.05 per share, compared to $35
million, or $.18 per share for fourth quarter 1994. Results for 1995 were
reduced by the following special fourth quarter aftertax charges: (1) $140
million, or $.67 per share, for an increase in the allowance for losses on
consumer finance receivables; (2) $16 million, $.08 per share, for estimated
liabilities to state life and health insurance guaranty funds resulting from
past industry insolvencies; and (3) $6 million, or $.03 per share, for adverse
policy lapse experience in a Canadian life insurance subsidiary. Fourth
quarter 1994 net income was reduced by aftertax net realized investment losses
and an increase in real estate reserves totaling $115 million, or $.56 per
share.
The following unaudited performance measures, adjusted to exclude the effect
of SFAS 115 to facilitate analysis of period-to-period balances, compare
American General's 1995 results with the comparable 1994 period: (1) revenues
and deposits increased $2.3 billion to $10.5 billion, up 28%; (2) assets
increased $12.2 billion to $59 billion, up 26%; (3) shareholders' equity
increased $325 million to $4.7 billion, up 7%; and (4) book value per share
increased 7% to $23.24 per share. Unaudited year-to-date and fourth quarter
results for each segment (which are discussed in more detail in the segment
sections below) are as follows:
Retirement Annuities segment earnings for 1995 were $204 million, compared
to $187 million for 1994. Retirement Annuities represented 32% of American
General's segment earnings for the year ended December 31, 1995. Segment
earnings for fourth quarter 1995 were $42 million, compared to $37 million for
fourth quarter 1994. The 1995 earnings reflect strong sales, asset growth, and
stable investment spreads during the year. Results for 1995 were adversely
affected by a fourth quarter aftertax charge of $12 million for estimated
state guaranty fund assessments.
Consumer Finance segment earnings for 1995 were $85 million, compared to
$245 million for 1994. Consumer Finance represented 13% of American General's
segment earnings for the year ended December 31, 1995. This segment reported a
loss of $92 million in fourth quarter 1995, compared to earnings of $67
million in fourth quarter 1994. American General conducts its consumer finance
operations through American General Finance, Inc. and its subsidiaries
("AGF"). On January 10, 1996, American General announced that AGF would report
an increase in the allowance for losses on finance receivables of $216 million
in the fourth quarter of 1995. This action resulted in an aftertax charge of
$140 million to American General's earnings in fourth quarter 1995, or $.67
per share.
As a result of an unexpected rise in consumer finance receivable
delinquencies beginning in third quarter 1995, American General commenced a
comprehensive analysis of its consumer finance operations in the fourth
quarter. Sixty-day delinquencies as a percentage of outstanding finance
receivables as of December 31, 1994, March 31, 1995, June 30, 1995, September
30, 1995, and December 31, 1995 were 2.9%, 2.9%, 3.0%, 3.8%,
24
<PAGE>
and 4.1%, respectively. Charge offs for fourth quarter 1995 were approximately
6.0% of finance receivables compared to 3.2% in third quarter 1995 and 2.9% in
fourth quarter 1994.
American General's recently completed analysis indicated a need for an
increase in the allowance for loan losses. The amount of the increase was
determined by extensive internal analysis, together with credit loss
development projections supplied by a nationally recognized credit consulting
firm, and with the concurrence of American General's independent auditors. At
December 31, 1995, the allowance for loan losses was approximately $492
million or 5.9% of finance receivables, compared to 2.9%, 3.0%, 3.1%, and 3.6%
at December 31, 1994, March 31, 1995, June 30, 1995, and September 30, 1995,
respectively. The increased allowance represents American General's current
estimate of the consumer finance segment's net credit losses on outstanding
receivables.
During the last few years, AGF has pursued a number of non-branch
initiatives to expand beyond AGF's traditional branch office network. These
initiatives generated high finance receivables growth but were followed by an
unacceptable rise in delinquencies. Each of these initiatives has been
analyzed recently, and underperforming programs have been restructured or
discontinued. In addition, certain other actions have been taken, all with the
objective of addressing AGF's overall credit quality issue.
Life Insurance segment earnings for 1995 were $348 million, compared to $257
million for 1994. Life Insurance represented 55% of American General's segment
earnings for the year ended December 31, 1995. Segment earnings for fourth
quarter 1995 were $83 million, compared to $63 million for fourth quarter
1994. Segment results for 1995 were increased $98 million by the acquisition
of The Franklin Life Insurance Company ("Franklin Life") on January 31, 1995.
Earnings for 1995 were affected by aftertax charges in the fourth quarter of
$3 million for estimated state guaranty fund assessments and $6 million for
adverse policy lapse experience in a Canadian life insurance subsidiary.
During 1995, the effect of declining investment yields and certain non-
recurring consolidation and reserve charges were partially offset by reduced
operating expenses.
During fourth quarter 1995, American General reactivated its share buyback
program and purchased 1.2 million shares of American General Common Stock at a
cost of $40 million. Purchases under the program since 1987 total 98 million
shares, or 33% of the shares then outstanding, for an aggregate cost of over
$1.9 billion.
RETIREMENT ANNUITIES
Retirement Annuities represented 27% of American General's segment earnings
for the year ended December 31, 1994 and for the nine months ended September
30, 1995. The Variable Annuity Life Insurance Company ("VALIC"), American
General's retirement annuity subsidiary with assets of $26 billion as of
September 30, 1995, is a leading provider of tax-deferred retirement plans and
annuities to employees of educational, health care and governmental
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 all 50 states and the District of Columbia to over
one million customer accounts through a national network of approximately 850
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 Director SM, which
offers customers an array of 18 different investment
25
<PAGE>
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 Optimizer SM, 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 American General's segment earnings for
the year ended December 31, 1994 and 29% for the nine months ended September
30, 1995. AGF, with finance receivables of $8.4 billion as of September 30,
1995, is a leading provider of consumer and home equity loans, credit cards and
credit-related insurance to individuals. With approximately 3.8 million
customers and 1,400 branch offices, AGF ranks among the nation's largest
consumer finance organizations. AGF 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 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 branch office
network, improved technology and strong credit ratings. AGF's branch office
network gives it a local presence in approximately 900 communities, and AGF
provides retail financing programs through approximately 20,000 merchants
nationwide.
AGF's strategy for future growth is centered on growing the branch office
customer base and strengthening the retail dealer network, while providing a
wider array of financial products and services to its customers.
LIFE INSURANCE
Life Insurance represented 37% of American General's segment earnings for the
year ended December 31, 1994 and 44% for the nine months ended September 30,
1995. American General's life insurance companies, with assets of $23 billion
as of September 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, Franklin Life. Franklin Life was acquired to
complement American General's existing life insurance distribution systems and
further strengthen American General's positions in middle-income households,
particularly in the Midwest. The $1.17 billion acquisition of Franklin Life
increased segment assets and life insurance in force by approximately 45% and
35%, respectively. American General's life insurance companies meet the
financial security needs of individual consumers, business owners and customers
of financial institutions, and offer personalized service through a
distribution system of 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. 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. AGLA concentrates on meeting the basic life insurance
needs of families with incomes of less than $50,000.
26
<PAGE>
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 distribution systems and externally by pursuing selective
acquisitions.
27
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL
The following table presents selected historical financial data of American
General Corporation and its consolidated subsidiaries for the periods
indicated. The historical financial data as of and for the five years ended
December 31, 1994 was derived from American General's audited consolidated
financial statements. The financial data as of and for the nine months ended
September 30, 1995 and September 30, 1994 was derived from American General's
unaudited quarterly financial statements, which, in the opinion of American
General's management, reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of such data. The data for the
nine months ended September 30, 1995 and September 30, 1994 are not
necessarily indicative of results of operations for the entire year. The data
should be read in conjunction with the consolidated financial statements,
related notes and other financial information of American General included or
incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA AND RATIO DATA)
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ---------------------------------------------
1995(a) 1994 1994 1993 1992 1991 1990
--------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Premiums and other
considerations......... $ 1,297 $ 891 $ 1,210 $ 1,252 $ 1,213 $ 1,168 $ 1,154
Net investment income... 2,291 1,860 2,493 2,437 2,327 2,178 2,064
Finance charges......... 1,113 907 1,248 1,083 994 977 946
Realized investment
gains (losses)......... 8 5 (172)(b) 8 18 8 216(c)
Equity in earnings of
investee............... 31 - - - - - -
Other................... 78 48 62 49 50 64 54
------- ------ ------- ------- ------- ------- -------
Total revenues...... 4,818 3,711 4,841 4,829 4,602 4,395 4,434
------- ------ ------- ------- ------- ------- -------
Insurance and annuity
benefits............... 2,239 1,647 2,224 2,311 2,198 2,065 1,868
Operating costs and
expenses............... 986 790 1,075 970 986 950 1,005
Provision for finance
receivable losses...... 261 147 214 163 135 137 118
Write-down of goodwill.. - - - 300(d) - - -
Interest expense
Corporate............. 123 82 110 108 116 132 175
Consumer Finance...... 386 300 416 375 392 433 432
------- ------ ------- ------- ------- ------- -------
Total benefits and
expenses........... 3,995 2,966 4,039 4,227 3,827 3,717 3,598
------- ------ ------- ------- ------- ------- -------
Income before income tax
expense................ 823 745 802 602 775 678 836
Income tax expense...... 277 267 289 352 242 198 274
------- ------ ------- ------- ------- ------- -------
Income before net
dividends on preferred
securities of
subsidiaries........... 546 478 513 250 533 480 562
Net dividends on
preferred securities of
subsidiaries........... 10 - - - - - -
------- ------ ------- ------- ------- ------- -------
Income before cumulative
effect................. 536 478 513 250 533 480 562
Cumulative effect of
accounting changes..... - - - (46) - - -
------- ------ ------- ------- ------- ------- -------
Net income.......... $ 536 $ 478 $ 513 $ 204(e) $ 533 $ 480 $ 562
======= ====== ======= ======= ======= ======= =======
Per Share Data
Net income.............. $ 2.59 $ 2.27 $ 2.45 $ .94(e) $ 2.45 $ 2.13 $ 2.35
Dividends............... .93 .87 1.16 1.10 1.04 1.00 .79(f)
Book value.............. 26.94(g) 19.32(g) 17.05(g) 23.96(g) 21.33 19.86 18.57
Average shares
outstanding............ 208.2 210.7 209.4 216.6 217.7 225.4 238.6
Coverage Ratios
Earnings to fixed
charges................ 2.52 2.80 2.40 2.13 2.37 2.06 2.20
Earnings to combined
fixed charges and
preferred stock
dividends.............. 2.45 2.80 2.40 2.13 2.37 2.06 2.20
</TABLE>
28
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL--(CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------------ ---------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial Position
Assets.................. $59,897(g) $45,384(g) $46,295(g) $43,982(g) $39,742 $36,105 $33,808
Invested assets......... 41,747(g) 30,925(g) 30,697(g) 31,876(g) 27,814 25,025 23,057
Finance receivables..... 8,139 7,219 7,694 6,390 6,038 5,794 5,667
Debt (including short-
term)
Corporate............. 1,914 1,660 1,836 1,686 1,987 1,981 2,053
Consumer Finance...... 7,568 6,632 7,090 5,843 5,484 5,243 5,096
Redeemable equity....... 743 44 47 - - - 296
Shareholders' equity.... 5,512(g) 3,954(g) 3,457(g) 5,137(g) 4,616 4,329 4,138
</TABLE>
- --------
(a) Includes eight months of operations for American Franklin Company, which
was acquired January 31, 1995.
(b) Results primarily from the capital gains offset program. See "Management's
Discussion and Analysis" within American General's Annual Report on Form
10-K for the year ended December 31, 1994, incorporated herein by
reference.
(c) Results primarily from the sale of substantially all of the common stock
portfolio.
(d) See "Management's Discussion and Analysis" and Note 1.7 of Item 8, both
within American General's Annual Report on Form 10-K for the year ended
December 31, 1994, incorporated herein by reference.
(e) Includes effect of $300 million write-down of goodwill (see Note (d) above)
and $46 million charge for cumulative effect of accounting changes.
(f) Excludes special dividends of $.61 per share.
(g) Includes the effect of SFAS 115. To facilitate analysis of period-to-period
balances, the effect of SFAS 115, which was adopted at December 31, 1993,
on reported balances is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ---------------
1995 1994 1994 1993
------ ------ ------- ------
<S> <C> <C> <C> <C>
Increase (decrease) in assets............... $1,018 $ (621) $ (986) $1,040
Increase (decrease) in invested assets...... 1,627 (964) (1,387) 1,594
Increase (decrease) in shareholders'
equity..................................... 697 (531) (950) 676
Increase (decrease) in book value per
share...................................... 3.36 (2.58) (4.65) 3.14
</TABLE>
See "Management's Discussion and Analysis" and Note 1.2 of Item 8, both
within American General's Annual Report on Form 10-K for the year ended
December 31, 1994, incorporated herein by reference.
29
<PAGE>
CERTAIN INFORMATION REGARDING INDEPENDENT
GENERAL
Independent, with assets of $1.4 billion and shareholders' equity of $336
million as of September 30, 1995, is the parent company for a group of
operating subsidiaries engaged in the sale and servicing of life,
accident/health and property/casualty insurance products. Independent's
operations are concentrated in the southeastern United States. Independent's
operating subsidiaries are among the leading providers in the United States of
insurance products utilizing the home service distribution method. According
to the Life Insurers Conference, Independent ranks among the top ten of all
companies using the home service distribution method, in terms of number of
agencies, premiums and total assets. Independent was incorporated as a general
business corporation under the laws of the State of Florida in 1980 to serve
as the parent of Independent Life, an insurance company incorporated under the
laws of the State of Florida in 1920. The principal executive offices of
Independent are located at One Independent Drive, Jacksonville, Florida 32276,
and its telephone number is (904) 358-5151.
RECENT DEVELOPMENTS
Revenue for the fourth quarter ended December 31, 1995 totaled $116.1
million, and grew $30.2 million over the comparable quarter in 1994. The
growth includes an increase in realized investment gains of $31.4 million,
primarily related to the liquidation of shares of common stock held in
Independent's securities portfolio, and a decrease in life insurance premiums
of $1.0 million.
Net income for the fourth quarter ended December 31, 1995 totaled $20.9
million, or $1.59 per share, and was aided by realized investment gains as
mentioned above. Excluding realized investment gains, Independent reported a
net loss for the fourth quarter ended December 31, 1995 of $273 thousand, or
$.02 per share compared with net income of $3.5 million, or $.26 per share in
the comparable quarter in the prior year. Results for the fourth quarter ended
December 31, 1995 were lowered an aggregate of approximately $3.7 million, or
$.28 per share from an increase in estimated legal exposures, and as
previously reported, from the impact of Hurricane Opal and costs for
professional services related to the Merger.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
QUARTER ENDED
DECEMBER 31, YEAR ENDED
(UNAUDITED) DECEMBER 31,
---------------- ---------------------
1995
1995 1994 (UNAUDITED) 1994
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Total revenue............................ $116.1 $ 85.9 $368.0 $ 354.7
Net income............................... $ 20.9 $ 4.1 $ 32.9 $ 11.1
Net income per share..................... $ 1.59 $ .31 $ 2.50 $ .84
</TABLE>
SUBSIDIARIES
Independent has two principal insurance subsidiaries, Independent Life and
Independent Property and Casualty Insurance Company ("Independent Casualty").
Representing approximately 91% of Independent's total assets, Independent Life
offers life, accident and health insurance products to individuals.
Independent Casualty offers property and casualty insurance including fire
insurance coverage for buildings and contents and limited homeowners and
automobile insurance products. Independent's principal non-insurance
subsidiaries are Independent Investment Advisory Services, Inc., which
provides investment advisory services to its affiliates, and Independent Real
Estate Management Corporation, which provides real estate management services
to its affiliates.
PRODUCTS AND SERVICES
The insurance coverages offered by Independent and its subsidiaries are
generally typical of those offered by others in the industry. Life, accident
and health, and property and casualty insurance products are marketed by
Independent through its career agents. For the nine months ended September 30,
1995, life insurance premiums comprised 63% of total premiums while accident
and health premiums and property and casualty premiums contributed 21% and 16%
of total premiums. The primary marketing area for Independent's insurance
operations is in the southeastern United States, with approximately 70% of
premium income being derived from the states of Florida, Georgia, South
Carolina and Alabama.
30
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF INDEPENDENT
The following table presents selected historical financial data of
Independent Insurance Group, Inc. and its consolidated subsidiaries for the
periods indicated. The financial data for the five fiscal years ended
December 31, 1994 have been derived from the audited consolidated financial
statements of Independent for such periods. The financial data for the nine
months ended September 30, 1995 and September 30, 1994 are unaudited, but in
the opinion of Independent reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of such data. The data
for the nine months ended September 30, 1995 and September 30, 1994 are not
necessarily indicative of results of operations for the entire fiscal year.
The data should be read in conjunction with the consolidated financial
statements, related notes and other financial information of Independent
incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Revenue and Earnings
Life premiums.......... $ 123.5 $ 125.6 $ 167.4 $ 177.1 $ 174.1 $ 175.8 $ 171.8
Property and casualty
premiums.............. 30.8 35.8 45.7 100.1 151.5 164.1 159.6
Accident and health
premiums.............. 41.8 44.9 58.5 94.5 101.4 103.9 107.6
-------- -------- -------- -------- -------- -------- --------
Premium income......... 196.1 206.3 271.6 371.7 427.0 443.8 439.0
Realized investment
gains (losses)........ (2.2) 3.3 4.4 14.8 14.4 5.4 .5
Net investment income.. 51.0 51.3 68.5 73.7 82.1 88.9 87.3
Other income........... 7.0 7.9 10.2 11.4 10.0 10.6 13.4
-------- -------- -------- -------- -------- -------- --------
Total revenues......... 251.9 268.8 354.7 471.6 533.5 548.7 540.2
Costs and expenses..... 234.3 259.7 339.0 475.0(a)(b) 563.2(b) 510.8 498.2
-------- -------- -------- -------- -------- -------- --------
Income (loss) from con-
tinuing operations be-
fore income tax ex-
pense................. 17.6 9.1 15.7 (3.4) (29.7) 37.9 42.0
Income tax expense..... 5.6 2.1 4.6 (2.5) (12.7) 10.9 12.3
-------- -------- -------- -------- -------- -------- --------
Income (loss) from con-
tinuing operations.... 12.0 7.0 11.1 (.9) (17.0) 27.0 29.7
Income from
discontinued
operations............ - - - .5 1.9 1.6 1.3
Gain on disposition of
discontinued
operations............ - - - 6.9 - - -
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
cumulative effect of
change in accounting
principles............ 12.0 7.0 11.1 6.5 (15.1) 28.6 31.0
Cumulative effect of
change in accounting
principles............ - - - (42.8) - - -
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $ 12.0 $ 7.0 $ 11.1 $ (36.3)(a)(b) $ (15.1)(b) $ 28.6 $ 31.0
======== ======== ======== ======== ======== ======== ========
Per Share Data
Income (loss) from con-
tinuing operations.... $ .92 $ .53 $ .84 $ (.07) $ (1.29) $ 2.05 $ 2.24
Income from discontin-
ued operations........ - - - .56 .14 .13 .10
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
cumulative effect of
change in accounting
principles............ .92 .53 .84 .49 (1.15) 2.18 2.34
Cumulative effect of
change in accounting
principles............ - - - (3.24) - - -
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $ .92 $ .53 $ .84 $ (2.75)(a)(b) $ (1.15)(b) $ 2.18 $ 2.34
======== ======== ======== ======== ======== ======== ========
Book value............. $ 25.49 $ 21.17 $ 20.30 $ 24.00 $ 25.96 $ 27.95 $ 25.95
Dividends.............. .18 .18 .24 .24 .88 .87 .83
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------------ --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial Position
Assets................. $1,417.8 $1,388.6 $1,363.8 $1,478.0 $1,517.9 $1,450.5 $1,399.4
Investments............ 1,116.8 1,026.5 1,019.5 1,091.8 1,118.4 1,096.1 1,050.3
Notes payable.......... 5.4 6.2 7.5 6.8 8.0 2.4 10.2
Shareholders' equity... 335.5 278.7 267.3 315.9 341.7 368.0 341.6
Unrealized gains (loss-
es) on debt securi-
ties--gross........... 18.9 (33.8) (46.7) 38.9 11.2 28.1 9.9
Unrealized gains on
equity securities--
gross................. 32.7 13.8 11.7 12.2 17.6 17.2 3.4
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------------ ------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Other Data
Life insurance in
force................. $7,109.3 $7,507.7 $7,320.6 $7,735.5 $7,723.3 $7,397.4 $7,256.9
Average shares out-
standing.............. 13.2 13.2 13.2 13.2 13.2 13.2 13.3
Property and casualty
combined ratio........ 102.3% 108.6% 119.6% 168.6% 147.5% 105.9% 102.9%
</TABLE>
- --------
(a) Includes restructuring charge of $23.0 million (pretax), increasing net
loss by $14.9 million or $1.14 per share.
(b) Includes catastrophe losses from Hurricane Andrew of $9.7 million and
$59.7 million (pretax) in 1993 and 1992, respectively, increasing net loss
by $6.3 million or $.48 per share in 1993 and $38.8 million or $2.95 per
share in 1992.
The effect on fourth quarter pretax income of Independent due to Hurricane
Opal, as calculated through December 31, 1995, is $1.58 million. This result
includes the expense of reinstatement premiums for catastrophe reinsurance
coverage of $700,000. It also includes $400,000 of income generated from
administering flood claims due to Opal that are related to the National Flood
Insurance Program.
Recently issued accounting standards not yet adopted by Independent include
Statement of Position (SOP) 94-6, Statement of Financial Accounting Standards
(SFAS) No. 121 and SFAS No. 123. SOP 94-6, Disclosure of Certain Significant
Risks and Uncertainties, requires additional disclosures but does not have an
impact on financial position or results of operations. SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of, is effective for 1996 and will require Independent to
examine the undiscounted cash flow and carrying value of any real estate
acquired through foreclosure. Such real estate represents less than 1% of
Independent's assets, the majority of which has been acquired during the last
three years. At acquisition, such property is recorded in accordance with
accounting standards, which has typically been at current market value. The
effect of SFAS No. 121 on Independent has not been quantified. SFAS No. 123,
Accounting for Stock-Based Compensation, is effective for 1996 and will not
impact Independent.
32
<PAGE>
SELECTED PRO FORMA PER SHARE AND OTHER DATA
The following table presents the consolidated net income, book value, and
dividends per share of American General and Independent on a historical basis,
a pro forma basis for American General, and an equivalent pro forma basis for
Independent. The table also presents American General's ratios of earnings to
fixed charges and earnings to combined fixed charges and preferred stock
dividends of American General on both a historical and pro forma basis. The
historical data for American General and Independent was derived from their
respective audited and unaudited consolidated financial statements. The
American General Pro Forma A data was derived by combining American General's
historical financial statements with those of American Franklin Company,
acquired by American General on January 31, 1995, and a 40% interest in
Western National Corporation, acquired on December 23, 1994, giving effect to
these acquisitions under the purchase method of accounting for business
combinations. The American General Pro Forma B data was derived by combining
the American General Pro Forma A data with Independent's historical financial
information, giving effect to the Merger under the purchase method of
accounting. Equivalent pro forma information for Independent, with respect to
holders of Independent Common Stock who receive American General Common Stock,
is presented on an equivalent share basis, which reflects American General's
Pro Forma B amounts multiplied by an assumed exchange ratio of .7692 per share
which is based on an assumed Average Closing Price of $35.75, the closing
price of American General Common Stock on January 25, 1996.
The information set forth below should be read in conjunction with the
respective audited and unaudited consolidated financial statements and related
notes of American General and Independent incorporated herein by reference,
and the unaudited pro forma financial information and notes thereto included
in American General's Current Report on Form 8-K dated November 13, 1995,
incorporated herein by reference. Additional pro forma financial information,
including a balance sheet and income statement, are not presented herein since
Independent does not fall within the definition of a "significant subsidiary"
as defined in Rule 1-02 of Regulation S-X.
<TABLE>
<CAPTION>
AMERICAN GENERAL INDEPENDENT
---------------------------------- ---------------------
PRO FORMA A PRO FORMA B EQUIVALENT
HISTORICAL (a), (c) (b), (c) HISTORICAL PRO FORMA
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1994:
Per Share Data
Net income............ $ 2.45 $ 2.77 $ 2.73 $ .84 $ 2.10
Book value (at end of
period).............. 17.05 17.05 17.48 20.30 13.45
Dividends............. 1.16 1.16 1.16 .24 .89
Coverage Ratios
Earnings to fixed
charges.............. 2.40 2.55 2.54
Earnings to combined
fixed charges and
preferred stock
dividends............ 2.40 2.39 2.36
Nine Months Ended Sep-
tember 30, 1995:
Per Share Data
Net income............ $ 2.59 $ 2.58 $ 2.57 $ .92 $ 1.98
Book value (at end of
period).............. 26.94 26.94 27.12 25.49 20.86
Dividends............. .93 .93 .93 .18 .72
Coverage Ratios
Earnings to fixed
charges.............. 2.52 2.57 2.58
Earnings to combined
fixed charges and
preferred stock
dividends............ 2.45 2.41 2.40
</TABLE>
- --------
(a) The unaudited consolidated pro forma results for the year ended December
31, 1994, and for the nine months ended September 30, 1995, are based on
American General's historical results, adjusted to reflect the impact of
the acquisitions of American Franklin Company on January 31, 1995, and a
40% interest in Western National Corporation on December 23, 1994, as if
both had occurred on January 1, 1994. See American General's Current
Report on Form 8-K dated November 13, 1995, incorporated herein by
reference. Pro forma book value per share is calculated as if both
acquisitions had occurred on the respective balance sheet dates. Pro forma
dividends per share assume dividends are consistent with American
General's historical dividend level.
33
<PAGE>
SELECTED PRO FORMA PER SHARE AND OTHER DATA--(CONTINUED)
(b) The unaudited consolidated pro forma results for the year ended December
31, 1994, and for the nine months ended September 30, 1995, are based on
American General's Pro Forma A results (see Note (a) above), adjusted to
reflect the impact of the Merger of Independent as if it had occurred on
January 1, 1994. See American General's Current Report on Form 8-K dated
November 13, 1995, incorporated herein by reference. Pro forma book value
per share is calculated as if the Merger had occurred on the respective
balance sheet dates. Pro forma dividends per share assume dividends are
consistent with American General's historical dividend level.
For purposes of calculating American General's Pro Forma B data, the
acquisition price for Independent of $362 million is assumed to be financed
by issuances of American General's common stock (25%), American General's
7% convertible preferred stock (25%), and cash (50%).
American General plans to consolidate Independent's operations into those
of its life insurance subsidiary, American General Life and Accident
Insurance Company (AGLA). The consolidation is expected to take 18 to 24
months and, when completed, should result in a reduction in annual
operating expenses of approximately $75 million. These operating expense
savings are expected to result from the consolidation of Independent's home
office into AGLA's Nashville home office, the consolidation of a
substantial number of district offices, and the sale of the Independent
home office building. The American General Pro Forma B data has not been
adjusted to reflect the expected expense reductions, since the extent and
timing of such expense reductions may vary from management's current
expectations.
(c) The unaudited pro forma information is not necessarily indicative of
American General's consolidated financial data had the acquisitions been
consummated at the assumed dates (see Notes (a) and (b) above), nor is it
necessarily indicative of American General's consolidated financial data
for any future period.
34
<PAGE>
MARKET PRICE DATA AND DIVIDENDS
American General Common Stock is listed and traded on the NYSE, the Pacific
Stock Exchange, the London Stock Exchange, the Basel Stock Exchange, the
Geneva Stock Exchange and the Zurich Stock Exchange under the symbol "AGC."
Currently, no shares of American General 7% Convertible Preferred Stock are
issued or outstanding. Independent Non-Voting Common Stock is listed and
traded on the Nasdaq National Market under the symbol "INDHK." Independent
Voting Common Stock is closely-held and there is no public market in which
such shares are traded. The table below sets forth, for the quarters
indicated, (i) the quarterly per share cash dividends paid (a) to holders of
American General Common Stock and (b) to holders of Independent Common Stock,
(ii) the high and low sales prices of American General Common Stock as
reported by the NYSE Composite Tape and (iii) the high and low sales prices of
Independent Non-Voting Common Stock, as reported by the Nasdaq National
Market.
<TABLE>
<CAPTION>
DIVIDENDS
DECLARED PRICE OF
PRICE OF PER INDEPENDENT DIVIDENDS
AMERICAN GENERAL AMERICAN NON-VOTING DECLARED PER
COMMON STOCK GENERAL COMMON STOCK INDEPENDENT
----------------- COMMON ------------- COMMON
HIGH LOW SHARE HIGH LOW SHARE
-------- -------- --------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31,
1990:
First Quarter......... $ 20.13 $ 14.07 $.1975 $22.00 $20.75 $.20
Second Quarter........ 25.32 17.69 .1975 22.63 20.75 .21
Third Quarter......... 24.13 14.25 .1975 21.75 16.25 .21
Fourth Quarter........ 16.75 11.75 .1975 17.00 13.25 .21
Year ended December 31,
1991:
First Quarter......... $ 19.56 $ 14.00 $ .25 $20.75 $16.25 $.21
Second Quarter........ 20.56 18.19 .25 21.25 19.50 .22
Third Quarter......... 20.25 18.88 .25 21.00 16.75 .22
Fourth Quarter........ 22.81 19.50 .25 20.50 17.25 .22
Year ended December 31,
1992:
First Quarter......... $ 22.38 $ 20.13 $ .26 $22.75 $18.25 $.22
Second Quarter........ 24.63 20.50 .26 22.25 18.00 .22
Third Quarter......... 25.19 23.69 .26 20.75 14.50 .22
Fourth Quarter........ 29.38 23.63 .26 16.00 13.50 .22
Year ended December 31,
1993:
First Quarter......... $ 32.88 $ 27.31 $ .275 $18.00 $15.25 $.06
Second Quarter........ 33.25 27.75 .275 18.25 13.75 .06
Third Quarter......... 36.50 30.13 .275 17.50 13.75 .06
Fourth Quarter........ 34.75 26.25 .275 17.00 14.00 .06
Year ended December 31,
1994:
First Quarter......... $ 29.63 $ 25.50 $ .29 $16.75 $15.00 $.06
Second Quarter........ 29.38 24.88 .29 16.25 14.00 .06
Third Quarter......... 30.50 26.88 .29 14.75 13.50 .06
Fourth Quarter........ 28.88 25.63 .29 13.75 9.75 .06
Year ending December 31,
1995:
First Quarter......... $ 33.25 $ 27.50 $ .31 $16.00 $11.00 $.06
Second Quarter........ 35.50 31.13 .31 15.00 11.50 .06
Third Quarter......... 38.88 33.63 .31 27.00 13.81 .06
Fourth Quarter........ 39.13 31.00 .31 27.50 22.00 .06
Year ending December 31,
1996:
First Quarter (through
January 26, 1996).... $36.00 $33.25 $ -- $27.50 $27.00 $.06
</TABLE>
The closing price of Independent Non-Voting Common Stock on July 12, 1995,
the last full trading day prior to the announcement by Independent that it was
undertaking efforts to maximize shareholder value, as
35
<PAGE>
reported by the Nasdaq National Market, was $14 per share. The closing prices
of Independent Non-Voting Common Stock and American General Common Stock on
October 18, 1995, the last full trading day prior to the public announcement
of the Merger were $23 per share, as reported by the Nasdaq National Market,
and $38.125 per share, as reported by the NYSE Composite Tape, respectively.
The closing prices of Independent Non-Voting Common Stock and American General
Common Stock on January 26, 1996, the most recent practicable date prior to
the printing of this Proxy Statement/Prospectus, were $27.06 per share, as
reported by the Nasdaq National Market, and $35.88 per share, as reported by
the NYSE Composite Tape, respectively. SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS.
American General has paid cash dividends on American General Common Stock in
each year since 1929. The regular dividend has been increased in each of the
last 20 years. As of the date of this Proxy Statement/Prospectus, American
General has not declared its dividend for the first quarter of 1996 but
expects that when declared it will be payable to holders of record as of
February 16, 1996. Future payment of dividends on the American General Common
Stock will depend on earnings, financial condition, capital requirements and
other relevant factors. Because American General is a holding company, its
capacity to pay dividends is limited by the ability of its subsidiaries to pay
dividends. 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. Furthermore, 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 restrictions was $1.1 billion.
Independent has paid cash dividends on Independent Common Stock in each year
since 1937. Independent currently pays cash dividends quarterly at an annual
rate of $.24 per share. Future payment of dividends on the Independent Common
Stock, in the event that the Merger is not consummated, will depend on
earnings, financial condition, capital requirements and other relevant
factors. Because Independent is a holding company, its capacity to pay
dividends is limited by the ability of its subsidiaries to pay dividends.
Since many of Independent's subsidiaries are insurance companies subject to
regulatory control by various state insurance departments, the ability of such
subsidiaries to pay dividends to Independent without prior regulatory approval
is limited by applicable laws and regulations. In addition, The Independent
Life and Accident Insurance Company, Independent's principal life insurance
subsidiary ("Independent Life") has agreed with the Florida Insurance
Department not to pay dividends to Independent in excess of $6,000,000 in each
of 1995 and 1996 without the prior approval of the Florida Insurance
Department. At December 31, 1994, the amount available to Independent for
dividends from subsidiaries not limited by restrictions was $9.9 million. As
of that date, Independent held liquid assets having a book value of $1.6
million, which were available to pay dividends.
On January 26, 1996, there were approximately 28,300 holders of record of
American General Common Stock. On January 26, 1996, there were approximately
988 and 137 holders of record of Independent Non-Voting Common Stock and
Independent Voting Common Stock, respectively.
36
<PAGE>
RISK FACTORS
In addition to the other information contained in this Proxy
Statement/Prospectus, the shareholders of Independent should consider the
following factors in deciding whether to approve the Merger and in making
their election as to which form of Merger Consideration they elect to receive
in the Merger.
ABSENCE OF PRIOR PUBLIC TRADING MARKET FOR AMERICAN GENERAL 7% CONVERTIBLE
PREFERRED STOCK
The terms of the American General 7% Convertible Preferred Stock were
determined in negotiations between American General and Independent. Because
there will have been no issued or outstanding shares of American General 7%
Convertible Preferred Stock prior to the Merger, and thus no public trading
market for the American General 7% Convertible Preferred Stock, no prediction
or assurance can be made as to whether the market value of a share of American
General 7% Convertible Preferred Stock will be higher, lower, or equal to the
market value of the American General Common Stock at the Effective Time.
UNCERTAINTY AS TO TRADING MARKET AND LIQUIDITY FOR AMERICAN GENERAL 7%
CONVERTIBLE PREFERRED STOCK AFTER THE MERGER
Application has been made to list the American General 7% Convertible
Preferred Stock on the NYSE following the Merger. The NYSE has not yet
approved the listing application, although it has indicated that it would
likely approve the application if, following the Merger, there is a sufficient
public float and number of beneficial holders of such stock to warrant trading
on the NYSE. Although the NYSE retains discretion with respect to listing
applications, it has indicated that, to qualify for listing on the NYSE, at
minimum it will require that the American General 7% Convertible Preferred
Stock be held by at least 100 beneficial owners and that there be at least
100,000 shares outstanding with an aggregate market value of at least $2
million (excluding, in each case, shares held by holders of more than 10% of
the American General 7% Convertible Preferred Stock). Because the number of
shares of American General 7% Convertible Preferred Stock that Independent
shareholders elect to receive in the Merger will not be known until after the
Election Deadline, the NYSE's final determination as to whether the American
General 7% Convertible Preferred Stock will in fact be approved for listing on
the NYSE will not be made until after the Merger. In addition, American
General and Independent believe that if the American General 7% Convertible
Preferred Stock is not approved for listing on the NYSE, it is highly unlikely
that such shares could be approved for inclusion in the Nasdaq National
Market. ACCORDINGLY, INDEPENDENT SHAREHOLDERS SHOULD BE AWARE THAT THE
AMERICAN GENERAL 7% CONVERTIBLE PREFERRED STOCK MAY NOT BE APPROVED FOR
LISTING ON THE NYSE OR THE NASDAQ NATIONAL MARKET FOLLOWING THE MERGER. The
failure to be listed on either the NYSE or the Nasdaq National Market
following the Merger would likely have an adverse effect on the liquidity of
the American General 7% Convertible Preferred Stock. Furthermore, the market
for the American General 7% Convertible Preferred Stock may be relatively
illiquid even if it is listed on the NYSE or Nasdaq National Market,
especially if relatively few holders of Independent Common Stock elect to
receive shares of American General 7% Convertible Preferred Stock in the
Merger. This illiquidity may adversely affect the market price of such shares
prevailing from time to time and subject the market price of such shares to
significant fluctuations based on relatively small trading volume.
LESS EQUITY APPRECIATION FOR AMERICAN GENERAL 7% CONVERTIBLE PREFERRED STOCK
The opportunity for equity appreciation afforded by shares of American
General 7% Convertible Preferred Stock will be less than that afforded by
American General Common Stock because the Optional Conversion Rate will be
equivalent to 121% of the Average Closing Price and American General may, at
its option, redeem shares of American General 7% Convertible Preferred Stock
at any time on or after the Initial Redemption Date and may be expected to do
so if, among other circumstances, the then Current Market Price of American
General Common Stock exceeds the Call Price. See "DESCRIPTION OF AMERICAN
GENERAL CAPITAL STOCK--American General 7% Convertible Preferred Stock."
37
<PAGE>
DETERMINATION OF EXCHANGE RATIO
The Exchange Ratio will be determined based on an average market price of
the American General Common Stock during the ten Trading Days ending on and
including the fifth Trading Day prior to the Effective Time. Therefore, no
assurance can be given that at the Effective Time the product of the Exchange
Ratio and the market value of a share of American General Common Stock will
not be higher or lower than $27.50.
TAX CONSEQUENCES INVOLVED IN MAKING ELECTIONS
There may be materially different tax consequences involved in electing to
receive Common Stock Consideration, Convertible Preferred Stock Consideration
and/or Cash Consideration. See "THE PROPOSED MERGER--Certain Federal Income
Tax Consequences of the Merger."
38
<PAGE>
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of Independent
Common Stock in connection with the solicitation of proxies by the Independent
Board for use at the Special Meeting to be held at the principal executive
offices of Independent, One Independent Drive, Jacksonville, Florida 32276, at
10:00 a.m. on February 29, 1996, and any adjournment or postponement thereof .
At the Special Meeting, the holders of Independent Voting Common Stock and
the holders of Independent Non-Voting Common Stock eligible to vote will be
asked to consider and vote upon a proposal to approve and adopt the Merger
Agreement. Holders of Independent Voting Common Stock will also be asked to
consider and vote upon such other business as may properly come before the
Special Meeting.
RECORD DATE
The Independent Board has fixed the close of business on January 8, 1996 as
the record date (the "Record Date") for the determination of holders of
Independent Common Stock entitled to notice of the Special Meeting. Under
Florida law, all shareholders are entitled to notice of the Special Meeting.
Only holders of Independent Common Stock as of the Record Date will be
entitled to vote at the Special Meeting. On the Record Date, there were
5,688,775 shares outstanding of Independent Voting Common Stock and 7,475,725
shares outstanding of Independent Non-Voting Common Stock.
QUORUM
The presence, in person or by proxy, at the Special Meeting of the holders
of (i) a majority of the shares of Independent Non-Voting Common Stock
outstanding and entitled to vote at the Special Meeting, and (ii) a majority
of the shares of Independent Voting Common Stock outstanding and entitled to
vote at the Special Meeting, will be necessary to constitute a quorum.
VOTES REQUIRED; VOTING RIGHTS
The affirmative votes of (i) the holders of a majority of the shares of
Independent Voting Common Stock entitled to vote and voting as a separate
class and (ii) the holders of a majority of the shares of Independent Non-
Voting Common Stock entitled to vote and voting as a separate class are
required to approve the Merger Agreement. Each share of Independent Non-Voting
Common Stock is entitled to one vote with respect to the approval and adoption
of the Merger Agreement at the Special Meeting. For a discussion of to what
extent holders of Independent Non-Voting Common Stock may vote on other
matters presented at the Special Meeting, see "DESCRIPTION OF INDEPENDENT
CAPITAL STOCK--Independent Voting Common Stock and Independent Non-Voting
Common Stock." Each share of Independent Voting Common Stock is entitled to
one vote with respect to all matters presented at the Special Meeting.
If fewer shares of Independent Common Stock are voted in favor of the Merger
than the number required for approval, it is expected that the Special Meeting
will be postponed or adjourned for the purpose of allowing additional time for
soliciting and obtaining additional proxies or votes. If a motion to adjourn
the meeting is presented for the purpose of allowing additional time to
solicit proxies, shareholders providing proxies that are not voted against the
Merger will be deemed to have conferred discretionary authority to vote for
such adjournment, and shares voted against the Merger shall be voted against a
motion to adjourn such meeting. See "--Solicitation of Proxies."
Under the rules of the National Association of Securities Dealers, brokers
who hold shares in "street name" have the authority to vote on certain matters
when they do not receive instructions from beneficial owners. However, this
authority does not extend to voting on the Merger Agreement. Accordingly,
brokers who do not receive instructions will not be entitled to vote on the
Merger Agreement. In tabulating the vote on the Merger, abstentions and broker
non-votes will have the same effect as votes against the Merger.
As of the Record Date, the directors and executive officers of Independent
(13 persons) owned beneficially an aggregate of 3,673,579 shares of the
Independent Voting Common Stock (constituting approximately 64.6% of the
outstanding shares) and 2,377,147 shares of Independent Non-Voting Stock
(constituting approximately
39
<PAGE>
31.8% of the outstanding shares). See "SECURITY OWNERSHIP--Security Ownership
of Certain Beneficial Owners, Directors and Management of Independent." Other
than 6,000 shares held by an officer of American General, to the knowledge of
American General, no executive officer or director of American General owns
any shares of Independent Common Stock.
Based on a Schedule 13D dated December 5, 1995, Tweedy, Browne Company L.P.,
a Delaware limited partnership ("TBC"), holds 637,055 shares of Independent
Non-Voting Common Stock (approximately 8.56% of Independent Non-Voting Common
Stock outstanding as of December 31, 1995). See "SECURITY OWNERSHIP--Security
Ownership of Certain Beneficial Owners, Directors and Management of
Independent.
DISSENTERS' RIGHTS
Holders of Independent Non-Voting Common Stock do not have dissenters'
rights in connection with the Merger because Independent Non-Voting Common
Stock was traded on the Nasdaq National Market as of the Record Date. However,
holders of Independent Voting Common Stock who comply with the applicable
requirements of the FBCA may dissent from the Merger and obtain payment for
the fair value of their Independent Common Stock. See "THE PROPOSED MERGER--
Dissenters' Rights" and the excerpted sections of the FBCA attached hereto as
Annex C.
SOLICITATION OF PROXIES
If a shareholder attends the Special Meeting, he or she may vote by ballot.
However, many of Independent's shareholders may be unable to attend the
Special Meeting. Therefore, the Independent Board is soliciting proxies so
that each holder of Independent Voting Common Stock and Independent Non-Voting
Common Stock on the Record Date has the opportunity to vote on the proposals
to be considered at the Special Meeting on which each is entitled to vote.
When a proxy is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions on the proxy. If a
shareholder does not return a signed proxy or vote in person at the Special
Meeting, his or her shares will not be voted. Shareholders are urged to mark
the boxes on the proxy to indicate how their shares are to be voted. If a
holder of Independent Voting Common Stock or Independent Non-Voting Common
Stock returns a signed proxy, but does not indicate how his or her shares are
to be voted, the shares represented by the proxy will be voted FOR approval
and adoption of the Merger Agreement.
The Independent Board does not know of any matters other than those
described in the notice of the Special Meeting that are to come before the
Special Meeting. If any other matters are properly brought before the Special
Meeting, including, among other things, a motion to adjourn or postpone the
Special Meeting to another time and/or place for the purpose of, among other
things, permitting dissemination of information regarding material
developments relating to the Merger or soliciting additional proxies in favor
of the proposal to adopt and approve the Merger Agreement, one or more of the
persons named on the proxy card will vote the shares represented by such proxy
upon such matters as determined in their best judgment and consistent with the
voting rights of such shares as provided by the Independent Bylaws and the
FBCA; provided, however, that no proxy that is voted against the proposal to
approve and adopt the Merger Agreement will be voted in favor of any
adjournment or postponement for the purpose of soliciting additional proxies.
At any subsequent reconvening of the Special Meeting, all proxies will be
voted in the same manner as such proxies would have been voted at the original
convening of the Special Meeting, except for proxies that have been
effectively revoked or withdrawn prior to such reconvened meeting. See "--
Votes Required; Voting Rights."
Any Independent shareholder who executes and returns a proxy may revoke such
proxy at any time before it is voted by (i) notifying in writing the Corporate
Secretary of Independent at One Independent Drive, Jacksonville, Florida
32276, (ii) granting a subsequent proxy, or (iii) appearing in person and
voting at the Special Meeting. Additional proxy cards are available from the
Information Agent. Attendance at the Special Meeting will not in and of itself
constitute revocation of a proxy.
In addition to solicitation by use of the mails, proxies may be solicited by
directors, officers and employees of Independent in person or by telephone,
telegram or other means of communications. Such directors, officers
40
<PAGE>
and employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation.
Independent has retained Georgeson & Company Inc., a proxy solicitation firm,
to act as Information Agent in connection with the election by Independent
shareholders of the type of consideration to be received in the Merger and to
assist with soliciting and tabulating proxies for the Special Meeting at an
estimated expense of approximately $9,000, plus reasonable out-of-pocket
expenses. Arrangements will be made with custodians, nominees and fiduciaries
for the forwarding of proxy solicitation materials to beneficial owners of
shares held of record by such custodians, nominees and fiduciaries, and
Independent will reimburse such custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith. Independent will bear
all costs and expenses of this solicitation other than expenses incurred in
connection with printing and mailing of this Proxy Statement/Prospectus, which
will be shared equally by Independent and American General.
SHAREHOLDERS SHOULD NOT SEND IN ANY SHARE CERTIFICATES WITH THEIR PROXY
CARDS. PROXY CARDS SHOULD BE SENT TO GEORGESON & COMPANY INC. SHARE
CERTIFICATES SHOULD BE SENT WITH THE ENCLOSED FORM OF ELECTION/LETTER OF
TRANSMITTAL TO FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS EXCHANGE AGENT.
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THE PROPOSED MERGER
GENERAL
The following is a brief summary of certain aspects of the Merger. This
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is included in this Proxy
Statement/Prospectus as Annex A and is incorporated herein by reference. A
description of the relative rights, privileges and preferences of Independent
Common Stock on the one hand, and American General Stock, on the other,
including certain material differences between the rights of holders of such
stock, is set forth under "DESCRIPTION OF AMERICAN GENERAL CAPITAL STOCK";
"DESCRIPTION OF INDEPENDENT CAPITAL STOCK" and "COMPARISON OF SHAREHOLDER
RIGHTS."
CLOSING; EFFECTIVE TIME
The closing of the transactions contemplated by the Merger Agreement (the
"Closing") will take place as promptly as practicable following the Special
Meeting and after the last of the regulatory approvals and other conditions
set forth in the Merger Agreement are satisfied or waived. The Merger will
become effective upon the filing of Articles of Merger with the Secretary of
State of Florida in accordance with the FBCA and Articles of Merger with the
Secretary of State of Missouri in accordance with The General and Business
Corporation Law of Missouri, or at such later time as may be designated in
such filings as the effective time of the Merger (the "Effective Time"). Such
filings will be made as soon as practicable after the Closing. The Closing
will take place as soon as practicable following the approval of the Merger
Agreement by Independent shareholders and the satisfaction or waiver of the
other conditions to each party's obligation to consummate the Merger.
CONVERSION OF SHARES
Each share of Independent Common Stock outstanding prior to the Effective
Time (other than dissenting shares) will be converted into, exchanged for and
represent the right to receive any of the following: (i) a fraction of a share
of American General Common Stock equal to the Exchange Ratio; (ii) a fraction
of a share of American General 7% Convertible Preferred Stock equal to the
Exchange Ratio; or (iii) $27.50 in cash. Independent shareholders will be
entitled to elect to receive any proportion of Common Stock Consideration,
Convertible Preferred Stock Consideration or Cash Consideration in exchange
for their shares, provided that all elections will be subject to the
procedures described below with respect to the allocation of available Cash
Consideration and Convertible Preferred Stock Consideration. For a description
of the terms of the American General 7% Convertible Preferred Stock, see
"DESCRIPTION OF AMERICAN GENERAL CAPITAL STOCK--American General 7%
Convertible Preferred Stock." In the event that the Average Closing Price of
American General Common Stock falls below $24.99 per share, which would result
in an Exchange Ratio greater than 1.10, the Independent Board will consider
resoliciting proxies. See "THE SPECIAL MEETING--Solicitation of Proxies."
FRACTIONAL SHARES
No fractional shares of American General Stock will be issued in the Merger,
and such fractional shares will not entitle the owners thereof to any rights
of a holder of American General Stock. Instead, each record holder of
Independent Common Stock who would otherwise have been entitled to receive a
fraction of a share of American General Stock upon surrender of certificates
representing Independent Common Stock for exchange will, upon surrender of
Independent Common Stock certificates, be entitled to receive a cash payment
(without interest) equal to the product of such fraction multiplied by the
Average Closing Price. Beneficial holders of Independent Common Stock who do
not own their shares of record should consult with the record holder of such
shares with regard to the receipt of the consideration to be received upon the
exchange of their Independent Common Stock certificates in the Merger.
SHAREHOLDER ELECTIONS
Each record holder of shares of Independent Common Stock issued and
outstanding immediately prior to the Election Deadline (as hereinafter
defined) will be entitled to submit a request specifying the percentage of
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his or her shares of Independent Common Stock which such record holder desires
to have converted into (i) Common Stock Consideration (a "Common Stock
Election"), (ii) Convertible Preferred Stock Consideration (a "Convertible
Preferred Stock Election") and/or (iii) Cash Consideration (a "Cash
Election"), or to indicate that such record holder has no preference as to the
receipt of Common Stock Consideration, Convertible Preferred Stock
Consideration and/or Cash Consideration for such shares (a "Non-Election"). A
Common Stock Election and a Convertible Preferred Stock Election are
collectively referred to as a "Stock Election."
Each record holder making a Cash Election will be entitled to submit a
request specifying the percentage of such holder's shares, if any, with
respect to which a Cash Election was made ("Cash Election Shares") but which
are not converted into Cash Consideration, he or she desires to have converted
into Common Stock Consideration and/or Convertible Preferred Stock
Consideration. Each record holder making a Convertible Preferred Stock
Election will be entitled to submit a request specifying the percentage of
such holder's shares, if any, with respect to which a Convertible Preferred
Stock Election was made, but which are not converted into Convertible
Preferred Stock Consideration, he or she desires to have converted into Common
Stock Consideration and/or Cash Consideration. Shares of Independent Common
Stock in respect of which a Non-Election is made ("Non-Election Shares") shall
be deemed to be shares in respect of which a Common Stock Election has been
made.
CERTAIN ELECTION CONSIDERATIONS
In making an election for Common Stock Consideration, Convertible Preferred
Stock Consideration and/or Cash Consideration, Independent shareholders are
urged to consider the following factors: (i) because the Exchange Ratio will
be determined based on an average market price of the American General Common
Stock during the ten Trading Days ending on and including the fifth Trading
Day prior to the Effective Time, no assurance can be given that the product of
the Exchange Ratio and the market value of a share of American General Common
Stock will not be higher or lower than $27.50 at the Effective Time of the
Merger; (ii) although American General has agreed to use all reasonable
efforts to have the American General 7% Convertible Preferred Stock listed on
the NYSE or the Nasdaq National Market, no assurance can be given that such
shares will in fact be so listed, or, if listed, that an active trading market
with respect to such shares will develop or be sustained (See "RISK FACTORS--
Uncertainty as to Trading Market and Liquidity for American General 7%
Convertible Preferred Stock after the Merger"); (iii) the terms of the
American General 7% Convertible Preferred Stock were determined in
negotiations between American General and Independent and because there will
have been no public market for the American General 7% Convertible Preferred
Stock prior to the Effective Time, no prediction or assurance is given as to
whether at the Effective Time the market value of a share of American General
7% Convertible Preferred Stock will be higher, lower or the same as the market
value of a share of American General Common Stock; and (iv) there may be
materially different tax consequences involved in electing to receive Common
Stock Consideration, Convertible Preferred Stock Consideration and/or Cash
Consideration, as described below under "THE PROPOSED MERGER--Certain Federal
Income Tax Consequences of the Merger." See "Opinion of Independent Financial
Advisor--Analysis of American General 7% Convertible Preferred Stock" for a
discussion of the valuation of the American General 7% Convertible Preferred
Stock.
NONE OF AMERICAN GENERAL, INDEPENDENT, THE AMERICAN GENERAL BOARD OR THE
INDEPENDENT BOARD MAKES ANY RECOMMENDATION AS TO WHETHER SHAREHOLDERS SHOULD
ELECT TO RECEIVE COMMON STOCK CONSIDERATION, CONVERTIBLE PREFERRED STOCK
CONSIDERATION AND/OR CASH CONSIDERATION IN THE MERGER. EACH SHAREHOLDER MUST
MAKE HIS OR HER OWN DECISION WITH RESPECT TO ANY SUCH ELECTION. AS A RESULT OF
THE ALLOCATION PROCEDURES DESCRIBED HEREIN, A SHAREHOLDER WHO ELECTS TO
CONVERT (I) IN EXCESS OF APPROXIMATELY 50% OF HIS OR HER INDEPENDENT COMMON
STOCK INTO AMERICAN GENERAL 7% CONVERTIBLE PREFERRED STOCK AND/OR (II) IN
EXCESS OF APPROXIMATELY 50% OF HIS OR HER INDEPENDENT COMMON STOCK INTO CASH
MAY NOT RECEIVE THE CONSIDERATION HE OR SHE HAS ELECTED WITH RESPECT TO SUCH
EXCESS. IF A SHAREHOLDER MAKES NO ELECTION, HE OR SHE WILL RECEIVE COMMON
STOCK CONSIDERATION IN THE MERGER.
PROCEDURES FOR SHAREHOLDER ELECTIONS
Independent shareholders will be required to make their elections by
completing and mailing the Form of Election/Letter of Transmittal enclosed
with this Proxy Statement/Prospectus ("Election Form") to the Exchange Agent.
To be effective, an Election Form must be (i) properly completed, signed and
submitted to the
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Exchange Agent at its designated office, by 5:00 p.m., on the business day
that is two Trading Days prior to the closing date of the Merger, which date
shall be publicly announced by American General as soon as practicable but in
no event less than five Trading Days prior to the Closing Date, (the "Election
Deadline") and (ii) accompanied by the certificates representing the shares of
Independent Common Stock as to which the election is being made (or by an
appropriate guarantee of delivery of such certificates by a commercial bank or
trust company in the United States or a member of a registered national
security exchange or of the National Association of Securities Dealers, Inc.,
provided such certificates are in fact delivered to the Exchange Agent within
eight Trading Days after the date of execution of such guarantee of delivery).
Independent will use all reasonable efforts to make an Election Form available
to all persons who become holders of record of Independent Common Stock
between the date of mailing of this Proxy Statement/Prospectus and the
Election Deadline. Additional Election Forms may be obtained from the
Information Agent.
Independent shall determine, in its sole and absolute discretion, which
authority it may delegate in whole or in part to the Exchange Agent, whether
Election Forms have been properly completed, signed and submitted or revoked.
The decision of Independent (or the Exchange Agent, as the case may be) in
such matters will be conclusive and binding. Neither Independent nor the
Exchange Agent will be under any obligation to notify any person of any defect
in an Election Form submitted to the Exchange Agent.
A holder of shares of Independent Common Stock who does not submit an
effective Election Form prior to the Election Deadline will be deemed to have
made a Non-Election. Shares of Independent Common Stock with respect to which
a Non-Election has been made will be converted into the right to receive
Common Stock Consideration without regard to the preference of the holder of
such shares. If Independent or the Exchange Agent determines that any
purported Stock Election or Cash Election was not effectively made, such
purported Stock Election or Cash Election will be deemed to be of no force and
effect and the shareholder making such purported Stock Election or Cash
Election will, for purposes hereof, be deemed to have made a Non-Election and
will be converted into Common Stock Consideration.
An election may be revoked but only by written notice received by the
Exchange Agent prior to the Election Deadline. Any certificate(s) representing
shares of Independent Common Stock which have been submitted to the Exchange
Agent in connection with an election will be returned without charge to the
holder thereof in the event such election is so revoked and such holder
requests in writing the return of such certificate(s). Upon any such
revocation, unless a duly completed Election Form is thereafter submitted in
accordance with the above, such shares will be deemed to be Non-Election
Shares.
In the event that the Merger Agreement is terminated pursuant to the
provisions thereof and any shares of Independent Common Stock have been
transmitted to the Exchange Agent pursuant to the provisions thereof, such
shares shall be returned as promptly as practicable without charge to the
person submitting the same. See "--The Merger Agreement--Termination."
ALLOCATION RULES
The following is a summary of the allocation rules with respect to the cash
and American General 7% Convertible Preferred Stock available for election as
Merger Consideration, as set forth in the Merger Agreement. The following
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached as Annex A to
this Proxy Statement/Prospectus and is incorporated herein by reference.
ALLOCATION OF CASH AVAILABLE FOR ELECTION
The Merger Agreement provides that the maximum cash consideration that can
be paid in the Merger is the Cash Price multiplied by 50% of the aggregate
number of shares of Independent Common Stock issued and outstanding
immediately prior to the Effective Time, less the amount of cash needed to be
paid in lieu of fractional shares and with respect to dissenting shares (the
"Cash Available for Election"). Assuming an insignificant number of dissenting
shares and the maximum payment with respect to shareholders in lieu of
fractional shares, the Cash Available for Election is presently estimated to
be approximately $181 million.
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However, if certain representations are not obtained from each person deemed
to own, immediately prior to the Closing, 5% or more of the Independent Common
Stock, then the Cash Available for Election may be reduced by up to the value
of the Independent Common Stock owned by such persons who do not provide such
representations. Such representations have been obtained from all persons
deemed to own, as of the date of this Proxy Statement/Prospectus, 5% or more
of the Independent Common Stock. In the event that the product of the
aggregate number of Cash Election Shares and the Cash Price exceeds the Cash
Available for Election, the Cash Election Shares will be converted into the
right to receive Cash Consideration or Stock Consideration in the following
manner:
(i) the Exchange Agent will determine the quotient obtained by
dividing the Cash Available for Election by the product of (A) the Cash
Price and (B) the aggregate number of shares of Independent Common
Stock issued and outstanding immediately prior to the Effective Time of
the Merger (the "Guaranteed Cash Percentage");
(ii) the Exchange Agent will distribute to each shareholder who has
elected to have such number of his or her shares converted into Cash
Consideration which as a percentage of the total number of shares of
Independent Common Stock held by such holder (the "Elected Cash
Percentage") is equal to or less than the Guaranteed Cash Percentage,
Cash Consideration for each of the Cash Election Shares of such
shareholder;
(iii) the Exchange Agent will distribute to each shareholder whose
Elected Cash Percentage is greater than the Guaranteed Cash Percentage,
Cash Consideration (A) for that number of Cash Election Shares equal to
the product of the number of shares of Independent Common Stock owned
by such record holder and the Guaranteed Cash Percentage, and (B) for
that number of Cash Election Shares equal to the product of the number
of Cash Election Shares which were not converted into Cash
Consideration pursuant to clause (A) above and the quotient determined
by dividing (x) the Cash Available for Election less the aggregate
amount of Cash Consideration paid to all shareholders pursuant to
clauses (ii) and (iii)(A) above by (y) the product of the Cash Price
and the aggregate number of Cash Election Shares which were not
entitled to be converted into Cash Consideration pursuant to clause
(iii)(A) above; and
(iv) all other Cash Election Shares which were not able to be
converted into Cash Consideration pursuant to the above will be
converted into such Stock Consideration as each record holder of such
shares directs, and in the absence of such direction, such shares shall
be treated as Non-Election Shares.
ALLOCATION OF AMERICAN GENERAL 7% CONVERTIBLE PREFERRED STOCK AVAILABLE FOR
ELECTION
The Merger Agreement provides that no more than 50% of the aggregate number
of shares of Independent Common Stock issued and outstanding immediately prior
to the Merger may be converted into Convertible Preferred Stock Consideration.
In the event that the aggregate number of shares of Independent Common Stock
in respect of which Convertible Preferred Stock Elections are made (the
"Convertible Preferred Stock Election Amount") exceeds 50% of the aggregate
number of shares of Independent Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger, the Convertible
Preferred Stock Election Shares shall be converted into the right to receive
Convertible Preferred Stock Consideration and/or other Merger Consideration in
the following manner:
(i) the Exchange Agent will distribute to each Independent
Shareholder who elects to convert 50% or less of his Independent Common
Stock into Convertible Preferred Stock Consideration, the full
Convertible Preferred Stock Consideration elected by such party;
(ii) the Exchange Agent will distribute to each Independent
Shareholder who elects to convert more than 50% of his Independent
Common Stock into Convertible Preferred Stock Consideration,
Convertible Preferred Stock Consideration
(A) for that number of Convertible Preferred Stock Election Shares
equal to 50% of the number of shares of Independent Common Stock
owned by such record holder, and
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(B) for that number of Convertible Preferred Stock Election Shares
equal to the product of (1) the number of Convertible Preferred
Stock Election Shares owned by such shareholder which were not
converted into Convertible Preferred Stock Consideration pursuant to
the above and (2) the quotient obtained by dividing (x) 50% of the
aggregate number of shares of Independent Common Stock issued and
outstanding immediately prior to the Merger less the aggregate
amount of Convertible Preferred Stock Election Shares converted to
Convertible Preferred Stock Consideration pursuant to clauses (i)
and (ii)(A) above by (y) the aggregate number of Convertible
Preferred Stock Election Shares which were not entitled to be so
converted pursuant to clause (ii)(A) above; and
(iii) all other Convertible Preferred Stock Election Shares will be
converted into such other Merger Consideration as each record holder of
such shares directs, subject to the above, and in the absence of such
direction, such shares will be treated as Non-Election Shares.
ORDER OF ALLOCATION
In the event that it is necessary to allocate both the Cash Election Shares
and the Convertible Preferred Stock Election Shares, the Convertible Preferred
Stock Election Shares will be allocated first. Such order of allocation was
selected to facilitate the process of computing the Cash Available for
Election.
ILLUSTRATION OF POTENTIAL UNFAVORABLE EFFECTS OF ALLOCATION PROCEDURES
The table below illustrates the most unfavorable allocation that a holder of
100 shares of Independent Common Stock might experience, assuming the
elections specified in the table and assuming that (i) the shareholder
requests that shares that cannot be converted into American General 7%
Convertible Preferred Stock or cash because of the application of the
allocation procedures described above be converted into cash or American
General 7% Convertible Preferred Stock, respectively, (ii) no cash is paid to
dissenters and (iii) payments on account of fractional shares are negligible.
<TABLE>
<CAPTION>
NUMBER OF SHARES ELECTED TO BE NUMBER OF SHARES ACTUALLY CONVERTED
CONVERTED INTO INTO
-------------------------------------- --------------------------------------
AMERICAN GENERAL AMERICAN GENERAL
7% CONVERTIBLE AMERICAN GENERAL 7% CONVERTIBLE AMERICAN GENERAL
PREFERRED STOCK CASH COMMON STOCK PREFERRED STOCK CASH COMMON STOCK
---------------- ---- ---------------- ---------------- ---- ----------------
<S> <C> <C> <C> <C> <C> <C>
70 30 0 50 50 0
30 70 0 50 50 0
70 20 10 50 40 10
20 70 10 40 50 10
40 40 20 40 40 20
</TABLE>
The table above is not representative of the results applicable to a
shareholder who requests that his or her shares of Independent Common Stock
that are subject to application of the allocation procedures described above
be converted into shares of American General Common Stock.
SUBMISSION OF MULTIPLE ELECTION FORMS
For the purpose of applying the allocation provisions described above, the
Exchange Agent will be entitled to assume that the shares of Independent
Common Stock submitted by an Independent shareholder pursuant to a given
Election Form represent all the shares of Independent Common Stock owned of
record by such shareholder, and the Exchange Agent will not aggregate such
shares with other shares of Independent Common Stock owned by such record
holder that are transmitted pursuant to another Election Form. Accordingly,
Independent shareholders should be aware that transmitting shares pursuant to
different Election Forms could, under some circumstances, result in some of
the shares of Independent Common Stock owned by such shareholder being subject
to allocation treatment that is less favorable than the allocation treatment
that would have been applied had such shares been submitted with a single
Election Form.
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EXCHANGE OF CERTIFICATES
Upon surrender of each certificate representing shares of Independent Common
Stock, the Exchange Agent will pay to the holder of such certificate, as soon
as practicable after the Effective Time, the applicable Merger Consideration
(and cash in lieu of fractional shares) and such certificate will thereafter
be cancelled. Until so surrendered and exchanged, each such certificate that
prior to the Effective Time represented shares of Independent Common Stock
(other than certificates representing dissenting shares) will represent solely
the right to receive the Merger Consideration (and cash in lieu of fractional
shares). No interest will be paid or accrue on the Merger Consideration.
After the Effective Time, there will be no transfers on the stock transfer
books of AGC Life of any shares of Independent Common Stock. If, after the
Effective Time, certificates formerly representing shares of Independent
Common Stock are presented to AGC Life or the Exchange Agent, they will be
cancelled and (subject to applicable abandoned property, escheat and similar
laws and, in the case of dissenting shares, subject to applicable law)
exchanged for Merger Consideration (and cash in lieu of fractional shares), as
provided above.
No dividends or other distributions declared or made after the Effective
Time with respect to shares of American General Stock will be paid to the
holder of any unsurrendered certificate with respect to the shares of American
General Stock such holder is entitled to receive, and no cash payment in lieu
of fractional shares will be paid, until the holder of such certificate
surrenders such certificate in accordance with the provisions of the Merger
Agreement.
At the Effective Time, all shares of Independent Common Stock that are owned
by Independent as treasury stock and any shares of Independent Common Stock
owned by American General, AGC Life or any other direct or indirect subsidiary
of American General (other than 3,000 shares of Independent Common Stock held
in a separate account of a subsidiary of American General) will be cancelled
and retired and will cease to exist, and no payment or other consideration
will be made in respect thereof.
BACKGROUND OF THE MERGER
During the early 1990's, sellers of life insurance through the home service
distribution system were confronted with demographic and economic changes
which resulted in virtually stagnant growth in revenues. In addition, in 1992,
claims arising out of Hurricane Andrew resulted in a substantial decrease in
the statutory capital and surplus of Independent, which substantially
inhibited the pursuit of a strategy of growth of Independent through
acquisition. Moreover, in the aftermath of Hurricane Andrew, Independent also
was forced to decrease its regular quarterly dividend from $.22 per share to
$.06 per share. In these circumstances, Independent's management began to
question the feasibility of enhancing shareholder value over the long term
through internal processes. As a result, in early 1995, management of
Independent asked Alex. Brown to consider the prospects for combining with
another company. After considering such prospects, in March 1995, Alex. Brown
reported that, based on Independent's low stock price relative to its book
value, the general level of merger and acquisition activity in the life
insurance industry and the potential synergies of a business combination, the
prospects were good for producing a significant enhancement in shareholder
value through a combinatory transaction. In the course of these discussions,
Alex. Brown and management concluded that the potential cost savings inherent
in combinations with other insurance companies were likely to produce values
in excess of those which might be achieved through combinations with acquirors
whose interests were primarily financial. In reaching this conclusion,
Independent's management and Alex. Brown considered the potential for
elimination of redundant functions, potential for consolidation of operations
with companies offering similar products and the potential to realize cost
efficiencies in its agency force through consolidation.
Shortly thereafter, Alex. Brown and the management of Independent identified
six companies in the insurance industry, including American General, for whom
they believed Independent would represent an attractive acquisition candidate
based on the potential synergies of a strategic combination. Each of the
companies sells life insurance through the home service distribution system.
As a result, Alex. Brown and Independent's management believe that these
companies might be able to realize synergies and cost efficiencies
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through the elimination of redundant back-office functions and the
consolidation of insurance operations. Alex. Brown, at the direction and with
the cooperation of management, contacted each of the six parties to assess its
interest in a potential transaction involving Independent. Prospective
acquirors were advised that the Independent Board had made no determination as
to whether to proceed with such a transaction. Each of the six parties
expressed an interest in a possible transaction involving Independent. In
connection with Independent's agreement to provide confidential information
concerning Independent, each of the six companies executed a confidentiality
agreement pursuant to which each agreed to (a) keep confidential information
concerning Independent and (b) customary "standstill" provisions limiting, for
a period of at least two years following the execution of the confidentiality
agreement, the freedom of action of each of the parties with respect to
proposals to acquire Independent and certain other actions that would affect
control of Independent. Following execution of the confidentiality agreements
in April and May 1995, each of the six parties conducted a preliminary due
diligence investigation of Independent, including a review of an actuarial
appraisal (the "Actuarial Report") of Independent Life, Independent's major
operating subsidiary. At the invitation of Alex. Brown on behalf of
Independent, each of the six parties, including American General, submitted
written, non-binding indications of interest to acquire Independent. The
indications of interest from the parties that went on to the next stage of the
process to submit binding bids indicated price levels ranging from a low of
approximately $17.09 per share of Independent Common Stock to a high of
approximately $26.63 per share of Independent Common Stock. One other party
provided an indicated price range of $300 million ($22.79 per share) to $400
million ($30.38 per share) for Independent; however, that party declined to
participate in the next stage of the bidding process, stating that, after
further consideration of its strategic plans, it did not believe that
Independent would be a good fit.
After reviewing the preliminary indications of interest, on July 12, 1995,
the Independent Board authorized Alex. Brown and management to conduct
additional investigation into alternatives for maximizing shareholder value,
including investigating the terms on which Independent might be combined with
another company. The Independent Board placed no restrictions on Alex. Brown
or management concerning prospective acquirors or types of transactions that
might be reviewed. In light of Alex. Brown's and management's determination
that the best price would be achieved by a combination with another company in
the insurance industry, Alex. Brown continued to focus on acquirors within the
insurance industry and did not seek out or respond positively to other
potential acquirors. After the close of trading on July 12, 1995, Independent
issued a press release (the "Press Release") stating that the Independent
Board had authorized management to look into various methods for maximizing
shareholder value, including investigating the terms on which Independent
might be combined with another company, and that Independent had retained
Alex. Brown as its financial advisor. The Press Release emphasized that the
process was in a preliminary stage and that there could be no assurance that
any transaction involving Independent would take place. The closing price of
Independent Non-Voting Common Stock on July 12, 1995 was $14.00 per share, as
reported by the Nasdaq National Market.
Subsequent to the issuance of the press release, a number of additional
parties, including one non-insurance company, expressed interest in acquiring
Independent. One additional party (an insurance company) entered into a
confidentiality agreement, reviewed information regarding Independent and
submitted a written, non-binding indication of interest to acquire Independent
within the range of the indications previously received by Independent. All
seven entities that submitted written, non-binding indications of interest
were offered the opportunity to complete further, on-site due diligence with
Independent and to hold meetings with management of Independent. Five parties
completed on-site due diligence and held meetings with Independent's
management. Two parties declined the opportunity to continue in the process,
complete on-site due diligence or negotiate with Independent's management.
On September 8, 1995, with the approval of the Independent Board and on its
behalf, Alex. Brown sent a letter (the "Procedures Letter") to each of the
five parties that had expressed an interest in pursuing an acquisition
transaction involving Independent and that had completed on-site due
diligence, inviting each of the parties to submit a firm offer to acquire all
of the outstanding Independent Common Stock. The Procedures Letter set forth
certain procedures and guidelines to be followed in connection with the
submission of offers. Among other things, the Procedures Letter stated that
while Independent would consider and evaluate all forms of consideration, it
was Independent's strong preference for its shareholders to be able to elect
to receive at least
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50% of the consideration for their Independent Common Stock in the form of
voting equity securities that would be accorded tax-free treatment, with the
remaining consideration to be in the form of cash or additional equity
securities, at the election of the Independent shareholder. The Procedures
Letter set a deadline of September 28, 1995 for the submission of firm offers.
During the week of September 25, 1995, Alex. Brown received bids from four
of the five parties that had been invited to make a firm offer, including
American General. The bids ranged from a low of approximately $21.58 per share
of Independent Common Stock to a high of approximately $26.97 per share of
Independent Common Stock and included a bid by American General of $26.50 per
share of Independent Common Stock. Two parties offered all cash bids and two
parties offered a combination of cash and common stock. Each bid differed as
to the form of consideration offered, proposed purchase price adjustments,
structure, conditions and other material terms so that the bids could not be
comparable analyzed based on price alone. No non-insurance companies submitted
binding bids. Following the receipt of bids by Independent, one bidder began
to articulate increasing concern with the exposure of Independent to lawsuits
and proceedings in Alabama that permit punitive damages disproportionate to
the actual damages alleged and ultimately advised Independent that it was
withdrawing its bid. After submission of bids, Alex. Brown undertook
discussions with each of the remaining bidders to clarify their bids and to
seek improvements in their terms, including the form of consideration,
structure and closing contingencies. These discussions resulted in certain
parties, including American General, making improvements in their proposals.
In addition to increasing its cash offer price and the equivalent amount of
American General Common Stock, in response to a request from Independent,
American General offered to make available for election by Independent
shareholders a new series of convertible preferred stock of American General
which had not been offered in its original bid. Alex. Brown and Independent's
management analyzed the various offers based on a variety of factors,
including the proposed purchase price, form of consideration, structure,
closing contingencies and other factors.
On October 11, 1995, the Independent Board met with representatives of Alex.
Brown and Independent's legal advisors. During the course of this meeting,
Alex. Brown representatives reviewed developments since the Independent Board
had authorized the investigation, including the bidding history, the identity
and financial attributes of each of the bidders and responded to questions
from various members of the Independent Board. The Independent Board then
authorized management of Independent and Alex. Brown to undertake further
negotiations with the three remaining bidders. These negotiations, conducted
by Alex. Brown, ultimately resulted in American General further increasing its
proposed offer price to $27.50 per share of Independent Common Stock and
increasing the dividend yield on the convertible preferred stock from 6.75% to
7%. Following a review of the final proposals with Independent's financial and
legal advisors, on October 12, 1995, the management of Independent determined
that the bid of $27.50 per share of Independent Common Stock offered by
American General, which was the highest bid received in dollar terms,
represented the most attractive offer.
Shortly after management's determination that the bid from American General
was the most attractive offer, Alex. Brown and a senior management team from
Independent, led by the Chairman of the Board of Independent and including the
President, Chief Financial Officer, General Counsel and others, met with
senior executives of American General and conducted an on-site due diligence
review of the business and financial affairs of American General.
From October 12 through October 19, 1995, representatives of American
General and Independent had numerous meetings by telephone and in person in
which various terms of the Merger Agreement were negotiated, including the
terms of the American General 7% Convertible Preferred Stock, the rights of
each party to terminate the Merger Agreement in certain circumstances, the
termination fees and various other provisions.
On the morning of October 19, 1995 representatives of Alex. Brown met with
the Independent Board and its legal advisors and reviewed the proposed
transaction with American General, including the terms of the Merger Agreement
which management had negotiated with American General. During this meeting,
Alex. Brown representatives once again reviewed the bidding history and
current status of the bids and responded to questions from members of the
Independent Board. Alex. Brown delivered a written opinion to the effect that,
in its opinion, the Merger Consideration to be received by the Independent
shareholders in the Merger was fair to the shareholders of Independent, from a
financial point of view.
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Following this discussion, the Independent Board approved the Merger
Agreement providing for a transaction on the terms previously negotiated with
American General, and the Merger Agreement was executed by each of American
General and Independent on October 19, 1995. Immediately following the
execution of the Merger Agreement, Independent and American General issued
press releases announcing execution of the Merger Agreement.
RECOMMENDATION OF THE INDEPENDENT BOARD AND INDEPENDENT'S REASONS FOR THE
MERGER
The Independent Board has determined that the Merger is fair to and in the
best interests of Independent and its shareholders. At a meeting held on
October 19, 1995, the Independent Board unanimously approved the Merger
Agreement and resolved to recommend that the shareholders of Independent vote
for approval and adoption of the Merger Agreement.
In reaching its conclusion to approve the Merger Agreement and to recommend
that shareholders vote for approval and adoption of the Merger Agreement, the
Independent Board considered many factors including, but not limited to the
following:
(i) the substantial decrease in the statutory capital and surplus of
Independent resulting from claims arising out of Hurricane Andrew, which
decrease substantially inhibited the pursuit of a strategy of growth
through acquisition;
(ii) the recognition by Independent's management of the difficulties and
risks inherent in attempting to enhance shareholder value over the long-
term through internal processes due to a reduction in capital and surplus
as a result of Hurricane Andrew, a shift in premium mix to products with
lower profit margins, a lack of overall premium growth, and high costs
relative to other companies using the home service distribution method;
(iii) American General's business, assets, management, competitive
position and prospects, which the Independent Board believes, on a combined
basis with those of Independent, would represent a good strategic fit
between the two companies as both companies offer similar product lines in
overlapping markets;
(iv) the financial condition, results of operations and cash flows of
each of Independent and American General, on an historical basis, before
giving effect to the Merger;
(v) historical market prices and trading information with respect to each
of Independent Non-Voting Common Stock and American General Common Stock;
(vi) the treatment of the Merger as a "tax-free reorganization" for
federal income tax purposes (see "--Certain Federal Income Tax Consequences
of the Merger");
(vii) the potential efficiencies and synergies to be realized by the
combined operations of Independent and American General, which are expected
to result from the consolidation of district offices, the consolidation of
Independent's home office into AGLA's Nashville office, the consolidation
of field sales forces, elimination of manager, clerical and agent positions
and other economies that are expected to produce a favorable impact on the
long-term value of American General as well as enhance the competitive
position of the combined entity;
(viii) the regulatory approvals required to consummate the Merger (see
"--Regulatory Filings and Approvals") and the prospects for receiving all
such approvals;
(ix) the opinion and analysis of Alex. Brown described under "--Opinion
of Independent's Financial Advisor"; and
(x) the compatibility of the business and operating strategies of both
companies.
These factors were considered collectively by the Independent Board, without
giving specific weight to any particular factor, in connection with its
assessment of the strategic and operational benefits and risks of the Merger
as well as the range of value of each of Independent and American General on a
stand-alone basis and the value of the combined entity on a pro forma basis.
Based on this analysis, the Independent Board concluded
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that (i) the Merger Consideration was within the range of fair value to
Independent and holders of Independent Common Stock and (ii) the Merger would
result in an increase in long-term value for Independent's shareholders due to
the strategic and operational benefits and synergies described above.
THE INDEPENDENT BOARD RECOMMENDS THAT INDEPENDENT SHAREHOLDERS VOTE "FOR"
THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF INDEPENDENT'S FINANCIAL ADVISOR
Independent retained Alex. Brown to provide certain investment banking
advice and services in connection with the Merger, including rendering its
opinion as to whether the consideration to be received by the holders of the
Independent Common Stock is fair, from a financial point of view, to such
holders. Independent retained Alex. Brown to act as Independent's financial
advisor in connection with the Merger and related matters based upon Alex.
Brown's expertise in mergers and acquisitions, knowledge of the life insurance
industry and familiarity with Independent.
At the October 19, 1995 meeting of the Independent Board, representatives of
Alex. Brown reviewed the proposed transaction with American General and
rendered its written opinion to the Independent Board that, as of such date,
based upon the facts and circumstances as they existed at the time, and
subject to certain assumptions, factors and limitations set forth in such
opinion, the consideration to be received by the holders of the Independent
Common Stock pursuant to the Merger Agreement was fair, from a financial point
of view, to such holders. Alex. Brown also delivered a written opinion that,
as of the date of this Proxy Statement/Prospectus, based upon the facts and
circumstances as they existed at the time, and subject to assumptions, factors
and limitations set forth in such opinion, the consideration to be received by
the holders of the Independent Common Stock pursuant to the Merger Agreement
was fair, from a financial point of view, to such holders. No limitations were
imposed by the Independent Board upon Alex. Brown with respect to the
investigations made or procedures followed by it in rendering its opinions.
The procedures followed and the analyses performed by Alex. Brown in
connection with its opinion dated as of the date of this Proxy
Statement/Prospectus were substantially similar to those procedures followed
and analyses performed by Alex. Brown in connection with its opinion dated
October 19, 1995, which are summarized below.
The full text of Alex. Brown's written opinion, dated as of the date of this
Proxy Statement/Prospectus (the "Alex. Brown Opinion"), which sets forth,
among other things, assumptions made, matters considered and limitations on
the review undertaken, is attached as Annex B to this Proxy
Statement/Prospectus and is incorporated herein by reference. Independent
shareholders are urged to read the Alex. Brown Opinion in its entirety. In
rendering its opinion, Alex. Brown considered all the consideration options
and determined that, as of the date of its fairness opinion, any mixture of
the three consideration election options (subject to the potential liquidity
issues concerning the American General 7% Convertible Preferred Stock as
discussed hereinafter--see "Opinion of Independent's Financial Advisor--
Analysis of American General 7% Convertible Preferred Stock"), was fair from a
financial point of view, although the three consideration election options
were not necessarily equal. In selecting a consideration option, a shareholder
should consider, among other factors, his or her (i) tax position, (ii) desire
for cash, (iii) view as to the illiquidity of the American General 7%
Convertible Preferred Stock, (iv) view as to the attractiveness of the
American General Common Stock, (v) view as to general market conditions and
(vi) specific circumstances. Alex. Brown's opinion is based on market,
economic and other considerations as they existed and could be evaluated as of
the date the opinion was delivered. The Alex. Brown Opinion addresses only the
fairness, from a financial point of view, of the consideration to be received
by Independent shareholders pursuant to the Merger Agreement and does not
constitute a recommendation to any Independent shareholder as to how such
shareholder should vote at the Special Meeting or which form of consideration
such shareholder should elect to receive in the Merger. The Alex. Brown
Opinion was rendered to the Independent Board for its consideration in
determining whether to approve the Merger Agreement. The discussion of the
Alex. Brown Opinion in this Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of the Alex. Brown Opinion. A condition
to Independent's obligation to close the Merger is that the opinion of Alex.
Brown will be updated as of the date of closing of the Merger.
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In its consideration of the Merger, Alex. Brown: (i) reviewed certain
publicly available financial information concerning Independent and American
General, (ii) held discussions with members of the senior management of
Independent and American General regarding the business and prospects of
Independent and American General, respectively, (iii) reviewed the reported
price and trading activity for the Independent Non-Voting Common Stock and the
American General Common Stock, (iv) compared certain financial and stock
market information for Independent and for American General with similar
information for certain other life insurance and consumer finance companies
whose securities are publicly traded, (v) reviewed the financial terms of
certain recent business combinations which Alex. Brown deemed comparable in
whole or in part, (vi) reviewed the Actuarial Report and (vii) performed such
other studies and analyses and considered such other factors, including the
terms of the Merger Agreement and the process by which Independent reviewed
its strategic alternatives, as it deemed appropriate.
As described in its opinion, Alex. Brown did not independently verify the
information described above and assumed the accuracy and completeness thereof.
Alex. Brown assumed that such information reflected the best currently
available estimates and judgments of management of Independent and of American
General as to the likely future financial performance of Independent and of
American General, respectively. In addition, Alex. Brown neither made an
independent evaluation or appraisal of the assets of Independent or American
General, nor was it furnished with any evaluation or appraisal, other than the
Actuarial Report described above. Alex. Brown's opinion was based on market,
economic and other conditions as they existed and could be evaluated as of the
date of the opinion and as updated as of the date of this Proxy
Statement/Prospectus.
The following is a brief summary of the analyses performed by Alex. Brown in
connection with its written opinion to the Independent Board, with respect to
the fairness of the Merger Consideration, from a financial point of view.
INDEPENDENT NON-VOTING COMMON STOCK PERFORMANCE
Alex. Brown's analysis of the price performance of Independent Non-Voting
Common Stock consisted of an historical analysis of closing prices and trading
volumes from January 1, 1992 to October 17, 1995 and Independent's indexed
price performance relative to the Standard & Poor's Composite Index of 500
stocks (the "S&P 500") and relative to selected insurers, which included
American General Corporation, American National Insurance Company, Home
Beneficial Corporation, Jefferson-Pilot Corporation, The Liberty Corporation,
Providian Corporation, Torchmark Corporation and Unitrin, Inc. (the "Selected
Insurers"). For the period January 1, 1992 through July 12, 1995, this
analysis indicated an average closing price per share of the Independent Non-
Voting Common Stock of $15.63, a high closing price per share of $22.25, a low
closing price per share of $9.75, and average daily trading volume of 11,376
shares. This analysis reflects the period prior to the issuance, following the
close of the market on July 12, 1995, of a press release by Independent
stating that the Independent Board had authorized Independent's management to
look into methods of maximizing shareholder value, including investigating the
terms on which Independent might be combined with another company (the "Press
Release"). For the period subsequent to the Press Release (July 13, 1995 to
October 17, 1995), this analysis indicated an average closing price per share
of the Independent Non-Voting Common Stock of $23.39 a high closing price per
share of $26.25, a low closing price per share of $19.25, and average daily
trading volume of 37,422 shares. Additionally, this analysis indicated that
for the period January 1, 1992 to July 12, 1995, prior to the issuance of the
Press Release, the closing value of the S&P 500 increased 34.5% and the
closing index value of the Selected Insurers increased 28.8% compared to a
decrease in the closing price of the Independent Non-Voting Common Stock of
Independent of 30.9%. Alex. Brown noted that the Independent Voting Common
Stock is not traded.
ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS
Alex. Brown performed an analysis of selected recent merger and acquisition
transactions involving companies in the life insurance industry that, in Alex.
Brown's judgment, were generally comparable, in whole or in part, to the
Merger. Alex. Brown reviewed a total of 10 mergers and acquisitions which were
consummated between April 1991 and August 1995. The transactions included
(acquiree/acquiror): Alexander Hamilton Life
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Insurance Company of America/Jefferson-Pilot Corporation, Laurentian Capital
Corporation/American Annuity Group, Inc., Victory Life Insurance
Company/Americo Life, Inc., Lamar Financial Group, Inc./Life Partners Group,
Inc., The Franklin Life Insurance Company/American General Corporation,
American Income Holding, Inc./Torchmark Corporation, USLICO Corporation/NWNL
Companies, Inc., Academy Insurance Group, Inc./Capital Holding Corporation,
Old American Insurance Company/Kansas City Life Insurance Company, and Durham
Corporation/Capital Holding Corporation. Alex. Brown noted that the range of
purchase price to latest available operating earnings multiples (i) when
operating earnings are measured in accordance with generally accepted
accounting principles ("GAAP") ranged from 6.9x to 22.1x with a median of
14.7x, versus a transaction multiple in the Merger of 28.9x and (ii) when
operating earnings are measured in accordance with statutory accounting
principles ranged from 8.6x to 23.5x with a median of 15.2x, versus a
transaction multiple in the Merger of 39.3x. Alex. Brown also noted the range
of purchase price to book value multiples (i) when book value is measured in
accordance with GAAP ranged from 0.6x to 2.8x with a median of 1.1x, versus a
transaction multiple in the Merger of 1.1x and (ii) when book value is
measured in accordance with statutory accounting principles ranged from 1.5x
to 3.2x with a median of 2.1x, versus a transaction multiple in the Merger of
2.8x. Alex. Brown noted that the median multiples for the transactions
reviewed are in a broad range and are therefore subject to different
interpretations.
ANALYSIS OF PURCHASE PRICE PREMIUMS TO MARKET PRICE
Alex. Brown noted that the per share value of the consideration to be
received in the Merger represents a premium of 96.4% over the closing market
price of the Independent Non-Voting Common Stock on the date of issuance of
the Press Release and a premium of 124.5% over the closing market price of the
Independent Non-Voting Common Stock thirty days prior to the date of the Press
Release. Alex. Brown also reviewed the purchase price premiums over closing
market price in selected recent merger and acquisition transactions involving
other companies in the life insurance industry. Alex. Brown reviewed a total
of nine mergers and acquisitions which were consummated between April 1991 and
September 1995. The transactions included (acquiree/acquiror): Financial
Benefit Group, Inc./AmVestors Financial Corporation, Laurentian Capital
Corporation/American Annuity Group, Inc., Kemper Corporation/Zurich Insurance
Group, American Income Holding, Inc./Torchmark Corporation, USLICO
Corporation/NWNL Companies, Inc., The Statesman Group, Inc./Conseco Capital
Partners II L.P., United Investors Management Company/Torchmark Corporation,
Colonial Companies, Inc./UNUM Corporation, and Durham Corporation/Capital
Holding Corporation.
Alex. Brown noted that the purchase price per share in each of the other
transactions represented a premium over the closing per share market price of
the acquired securities one day prior to the first public announcement of the
transaction, or announcement of the possibility of a transaction, which ranged
from 1.3% to 31.9% with a median of 19.7%. Alex. Brown also noted that the
purchase price per share in each of the other transactions represented a
premium over the closing market price of the acquired securities thirty days
prior to the first public announcement of the transaction, or announcement of
the possibility of a transaction, which ranged from 10.3% to 44.0% with a
median of 27.0%.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
Alex. Brown compared certain trading and financial statement data for
Independent with certain corresponding information for the Selected Insurers.
Alex. Brown noted that the Selected Insurers traded at price to trailing
twelve month operating earnings (defined as income from continuing operations
minus realized investment gains, tax-effected at 35%) multiples ranging from
9.9x to 18.8x with a median 11.8x, versus a transaction multiple in the Merger
of 28.9x. In addition, Alex. Brown noted that the Selected Insurers trade at
prices to estimated calendar 1995 earnings (based upon the compilation of
publicly available research estimates through the Institutional Brokerage
Estimates System ("I/B/E/S")) multiples ranging 9.9x to 15.5x with a median of
11.2x, versus a transaction multiple in the Merger of 27.5x. Alex. Brown also
noted that the Selected Insurers trade at prices to estimated calendar 1996
earnings (based on I/B/E/S) multiples ranging from 9.1x to 13.3x with a median
of 10.2x, versus a transaction multiple in the Merger of 22.9x. In addition,
Alex. Brown noted that the Selected Insurers traded at a price to GAAP book
value multiple ranging from 0.70x to 2.04x, with a median of 1.37x, versus a
transaction multiple in the Merger of 1.12x. Finally, Alex. Brown noted that
the median multiples for the Selected Insurers are based on a broad range of
multiples and, therefore, are subject to different interpretations.
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Alex. Brown further observed that historical five year earnings per share
growth for the Selected Insurers ranged from (3.1%) to 13.1% with a median of
10.8% compared to (22.7%) for Independent. The latest twelve months operating
return on equity (defined as operating income/average equity) for the Selected
Insurers ranged from 7.4% to 19.5% with a median of 9.4% compared to 4.2% for
Independent. Alex. Brown noted that the latest twelve months operating margin
(defined as operating income/(revenue-pretax realized gains)) for the Selected
Insurers ranged from 6.4% to 18.1% with a median of 11.6% compared to 3.7% for
Independent. Finally, Alex. Brown observed that the dividend yield for
Independent, based on the $14.00 per share closing stock price for the
Independent Non-Voting Common Stock on July 12, 1995, the date of the Press
Release, was 1.7% compared to a range of 2.1% to 4.3% and a median of 3.0% for
the Selected Insurers.
ANALYSIS OF AMERICAN GENERAL 7% CONVERTIBLE PREFERRED STOCK
Alex. Brown reviewed the terms of the American General 7% Convertible
Preferred Stock offered as an optional portion of consideration in the Merger.
Additionally, Alex. Brown reviewed the terms of currently outstanding
convertible preferred securities issued by American General and considered the
credit quality of American General in regards to its issuance of preferred
stock. Additionally, Alex. Brown reviewed the terms, yields and trading values
for selected preferred stocks that were similar to the American General 7%
Convertible Preferred Stock. The selected preferred stocks included Advanta
Corp.'s 6 3/4% Convertible Class B Preferred Stock (Series 1995); Alco
Standard Corporation's Convertible Preferred Stock, Series BB; Browning-Ferris
Industries, Inc.'s 7 1/4% Automatic Common Exchange Securities; and United
Companies Financial Corporation's 6 3/4% Preferred Redeemable Increased
Dividend Equity Securities. Alex. Brown noted that while these selected
preferred stocks were similar in certain respects to the American General 7%
Convertible Preferred Stock, none of these selected preferred stocks were
comparable in all respects. Alex. Brown was of the view that the terms of the
American General 7% Convertible Preferred Stock were similar to, or better
than, the terms offered on similar securities issued by other corporations.
Alex. Brown indicated that, subject to the liquidity issues discussed below,
the $27.50 liquidation preference of the fraction of a share of American
General 7% Convertible Preferred Stock exchangeable for each share of
Independent Common Stock approximated market value. Alex. Brown also noted
that, although the American General 7% Convertible Preferred Stock to be
issued in the merger will be registered and American General has agreed to use
reasonable efforts to list the American General 7% Convertible Preferred Stock
on the NYSE or the Nasdaq National Market, there is a possibility that the
market for the American General 7% Convertible Preferred Stock will be less
liquid than the market for many other similar preferred stocks and that the
value of a share of the American General 7% Convertible Preferred Stock may be
less, on a relative basis, than that of shares of similar convertible
preferred securities with more liquid markets.
AMERICAN GENERAL COMMON STOCK PRICE ANALYSIS
Alex. Brown reviewed certain financial and non-financial information, and
performed certain analyses relating to American General. These analyses
included (i) a review of American General's stock price and trading volume
activity from January 1, 1992 through October 17, 1995, (ii) a review of
American General's stock price performance from January 1, 1992 through
October 17, 1995 relative to the S&P 500 and an index of selected companies
(Transamerica Corporation, American National Insurance Company, Lincoln
National Corporation, Jefferson-Pilot Corporation, Providian Corporation,
Torchmark Corporation, and Unitrin, Inc., (collectively the "Selected
Companies")), (iii) a review of price to operating earnings multiples, price
to book value multiples and dividend yields of American General and the
Selected Companies. In its review of American General's stock trading from
January 1, 1992 through October 17, 1995, Alex. Brown observed a closing price
on October 17, 1995 of $38.125 per share, a high closing price per share of
$38.375, a low closing price per share of $20.25 and an average closing price
per share of $28.61. Alex. Brown observed that American General's stock
outperformed the S&P 500 and the index of Selected Companies over this time
period. In its review of price to earnings and price to book value multiples,
Alex. Brown observed that the price to latest twelve months operating income
for the Selected Companies ranged from 9.9x to 16.6x with a median of 11.7x
compared to 11.9x for American General. Alex. Brown also noted that the price
to 1996 estimated earnings (based on I/B/E/S estimates) for the Selected
Companies ranged from 9.1x to 13.3x with a median of 10.2x compared to 10.2x
for American General. Alex. Brown noted that the price to GAAP book value
multiples for the Selected Companies ranged from 0.70x to 2.04x with a median
of 1.22x compared to 1.44x for American General. Alex. Brown further noted
that American General had a dividend yield of 3.3% compared to a range of 2.1%
to 4.3% and a median of 2.9% for the Selected Companies.
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OTHER
In the course of its review of the Actuarial Report, Alex. Brown analyzed
such report and made certain adjustments to the actuarial valuation contained
therein, which it believed were necessary and beyond its scope, to reflect as
of December 31, 1994 the value of Independent and its insurance and non-
insurance subsidiaries (including those not included in the Actuarial Report)
on a consolidated basis. Such adjustments included reductions to include a
range of discounts not reflected in the Actuarial Report but often applied by
buyers of insurance companies to reflect their reluctance to pay for
anticipated new business, less aggressive assumptions than those utilized in
the Actuarial Report as to the minimum amount of capital required to be held
in the form of surplus, and possible less profitable loss ratios for accident
and health business. Upward adjustments were made for the net assets of
subsidiaries not reflected in the Actuarial Report. Valuation reference ranges
were computed using discount rates ranging from 10% to 14%. This analysis by
Alex. Brown resulted in a reference range per share of $15.75 to $22.39 in a
scenario not taking into effect any possible cost savings. This analysis
resulted in a reference range per share of $22.61 to $32.30 in a revised
overhead expense scenario, in which $27.3 million in annual overhead expenses
(referenced in the Actuarial Report) would be eliminated over a five-year
period. Alex. Brown noted that its reference ranges do not reflect any
potential value of Independent's home office building in excess of its
carrying value and certain other potential liabilities of Independent,
including potential exposure to litigation in Alabama and potential exposure
to catastrophes.
The summary set forth above does not purport to be a complete description of
the analyses performed and factors considered by Alex. Brown in arriving at
its opinion. Alex. Brown believes that its analyses and the summary set forth
above must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, or selecting portions of the above
summary, without considering all factors and analyses, could create an
incomplete view of the process underlying the analyses performed, and factors
considered, by Alex. Brown in delivering its opinion. In performing its
analyses, Alex. Brown made numerous assumptions with respect to the
performance of the industries, general business, economic, market and
financial conditions and other matters, many of which are beyond the control
of Independent and American General. The analyses performed by Alex. Brown are
not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than those suggested by such analyses.
Accordingly, such analyses and estimates are inherently subject to
substantial uncertainty. Additionally, analyses relating to the values of
businesses do not purport to be appraisals or to reflect the prices at which
businesses may actually be sold or combined. Furthermore, no opinion is being
expressed as to the prices at which the American General securities to be
delivered in the Merger may trade at any time.
Alex. Brown is a nationally recognized investment banking firm, engaged in
the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, private placements and valuations
for corporate and other purposes. Alex. Brown has provided various financing
and financial advisory services to Independent and received customary fees for
rendering such services. Alex. Brown has, in the past, acted as placement
agent in a private placement of debt securities for a subsidiary of
Independent. In addition, Alex. Brown acts as a market-maker for the
Independent Non-Voting Common Stock. Alex. Brown regularly publishes research
reports regarding the insurance and consumer finance industries and the
businesses and securities of publicly traded companies in those industries,
including Independent and American General. In the ordinary course of its
business, Alex. Brown may actively trade the equity securities of Independent
and American General for its own account or for the account of its customers
and, accordingly, may at any time hold a long or short position in such
securities. Alex. Brown has served as a co-manager on two recent public
offerings of securities for American General.
Pursuant to the terms of the engagement letter, dated February 21, 1989, as
amended February 2, 1995, between Independent and Alex. Brown, Alex. Brown
received an annual retainer fee of $50,000. Independent also agreed to pay
Alex. Brown a fee of $750,000 upon delivery of its initial opinion, which fee
is payable without regard to the conclusions set forth in such opinion. In
addition, Independent agreed to pay Alex. Brown an additional fee of
$2,283,673 upon consummation of the Merger as compensation for financial
advisory services. Alex. Brown will be paid $150,000 for the delivery of each
additional opinion related to the Merger. Fees for such additional opinions
will be credited against the additional fee referenced above and are payable
without regard to the conclusions set forth in such opinions. In addition,
Independent has also agreed to
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reimburse Alex. Brown for its reasonable out-of-pocket expenses incurred in
connection with rendering financial and advisory services, including fees and
disbursements of its legal counsel. Independent has agreed to indemnify Alex.
Brown and certain related persons against certain liabilities, including
certain liabilities under the federal securities laws, relating to, or arising
out of, its engagement.
AMERICAN GENERAL'S REASONS FOR THE MERGER
The American General Board unanimously approved the Merger Agreement and the
issuance of the Stock Consideration in connection with the Merger. The Merger
does not require the approval of the American General shareholders. In
reaching its conclusion to approve the Merger Agreement, the American General
Board determined that the Merger is consistent with and in furtherance of the
long-term business strategy of American General. The American General Board
believes that the acquisition of Independent will be an excellent geographic
and strategic fit with American General's existing life insurance business.
When the plan to consolidate Independent's operations into those of American
General's life insurance subsidiary, American General Life and Accident
Insurance Company ("AGLA"), is completed, American General expects a reduction
in annual operating expenses of $75 million. See "--Plans for Independent
After the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL
Certain directors and executive officers of Independent have interests in
the Merger that are in addition to the interests of Independent and its
shareholders generally. See "SECURITY OWNERSHIP--Security Ownership of Certain
Beneficial Owners, Directors and Management of Independent." The Independent
Board was aware of these interests and considered them, among other matters,
in approving the Merger Agreement.
INDEMNIFICATION OF INDEPENDENT'S DIRECTORS AND OFFICERS
The Merger Agreement provides that AGC Life will indemnify the directors and
officers of Independent, to the extent such indemnification was available
prior to the Merger pursuant to (i) the FBCA; (ii) the Independent Articles;
(iii) the Independent Bylaws; (iv) similar organizational documents of any of
Independent's subsidiaries; or (v) pursuant to the terms of any
indemnification agreements entered into between Independent and any of
Independent's directors and/or officers with respect to matters occurring
prior to the Effective Time, and to continue for not less than six years from
the Effective Time the current directors' and officers' liability insurance
maintained by Independent, or the equivalent thereof, with respect to matters
occurring prior to the Effective Time, provided that in no event shall
American General or AGC Life be required to pay for such coverage any amount
per annum in excess of 200% of the aggregate premiums paid for such coverage
on an annualized basis in 1995.
SEVERANCE PLAN
Independent has a management severance plan. The management plan provides
that (i) the top tier (Wilford C. Lyon, Jacob F. Bryan IV, Boyd E. Lyon, Sr.,
and Kendall G. Bryan) will receive 2.5 times their annual base salary not to
exceed 290% of the Base Amount as defined in Section 2806(b)(3) of the Code in
order to avoid the excise tax imposed by Section 4999 of the Code; (ii) the
second tier (ten participants, including Michael C. Lyon, William G. Howard
and David A. Skup) will receive their annual base salary; and (iii) the third
tier (47 participants, including Guy Marvin III) will receive one-half their
annual base salary or one week's salary for every full year of service plus
one week's salary, whichever is greater, provided, however, that if a
participant is offered a position which is accepted by the participant, only
one-half of the severance will be paid. If no position is offered by American
General or if one is offered by American General and rejected by the
participant, the full amount of the severance becomes due. Payment of
severance to a participant is conditioned upon such participant remaining with
Independent until a date to be set by Independent and can be taken as a lump-
sum or salary continuation, which includes the continuation of certain
benefits.
TRANSITION INCENTIVE COMPENSATION AGREEMENTS
In connection with the announcement by Independent that the Independent
Board had authorized Independent's management to look into various methods of
maximizing shareholder value, the Independent Board determined that it was in
the best interest of Independent to provide an incentive to several members of
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Independent's senior management to contribute to the continued success of
Independent during the period beginning on July 12, 1995 and ending on a date
to be set by Independent which is not more than six months after the date on
which the Effective Time occurs (the "Transition Period"). Accordingly,
Independent has entered into Transition Incentive Compensation Agreements (the
"Incentive Agreements") with nine members of its senior management, including
Guy Marvin, III, (the "Covered Managers"). Pursuant to the Incentive
Agreements, if a Covered Manager is terminated during the Transition Period
for any reason other than for cause, death or disability, such Covered Manager
will receive a severance benefit equal to one and one-half times the Covered
Manager's annual base compensation as of July 1, 1995. If a Covered Manager
(i) remains in the continuous service of Independent during the Transition
Period and, if offered, accepts a permanent position with American General or
one of its subsidiaries or (ii) dies or becomes disabled during the Transition
Period, he will receive a severance payment equal to three-fourths such
Covered Manager's annual base compensation as of July 1, 1995. If a Covered
Manager remains in the continuous service of Independent during the Transition
Period such Covered Manager will receive a severance payment equal to one and
one-half times such Covered Manager's annual base compensation as of July 1,
1995. Such Covered Managers are also eligible as third tier participants under
the Severance Plan described above.
ACCELERATED VESTING OF PENSIONS
Pursuant to Independent's Senior Executive ERISA Excess Plan, upon the
approval of the Merger Agreement by Independent shareholders, certain members
of Independent's senior management will receive 100% vesting of benefits.
PLANS FOR INDEPENDENT AFTER THE MERGER
American General plans to consolidate Independent's operations into those of
AGLA which is expected to continue to be based in Nashville, Tennessee. AGLA
is an indirect wholly-owned subsidiary of American General that utilizes
employee agents to sell and service life and health insurance. The
consolidation is expected to take 18 to 24 months and, when completed, should
result in a substantial reduction in annual operating expenses. American
General will maintain a presence in Jacksonville, Florida subsequent to the
Merger through district sales offices.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement not summarized elsewhere in this Proxy Statement/Prospectus. A copy
of the Merger Agreement is attached as Annex A to this Proxy
Statement/Prospectus and is incorporated herein by reference. The following
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement.
THE MERGER
The Merger Agreement provides that, as soon as practicable following the
approval of the Merger Agreement by Independent's shareholders, and the
satisfaction or waiver of the other conditions to each party's obligation to
consummate the Merger, Independent will be merged with and into AGC Life in
accordance with the FBCA and The General and Business Corporation Law of
Missouri, the separate corporate existence of Independent will cease, and AGC
Life will continue as the surviving corporation ("Surviving Corporation") in
the Merger.
DIRECTORS AND OFFICERS
Pursuant to the Merger Agreement, the directors and officers of AGC Life
immediately prior to the Effective Time, will be the directors and officers,
respectively, of the Surviving Corporation following the Merger.
CHARTER AND BYLAWS
Pursuant to the Merger Agreement, the Articles of Incorporation and Bylaws
of AGC Life as in effect immediately prior to the Effective Time will be the
Articles of Incorporation and Bylaws, respectively, of the Surviving
Corporation following the Merger until thereafter amended as provided by law,
the Articles of Incorporation and Bylaws of the Surviving Corporation.
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REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties of each of Independent and American General as to (i) due
organization, (ii) capitalization, (iii) ownership of subsidiaries, (iv)
authority relative to the Merger Agreement, (v) consents and approvals, (vi)
compliance with applicable laws, (vii) the accuracy of documents and reports
filed with the Commission, (viii) statutory financial statements, (ix) the
absence of certain changes, (x) the absence of undisclosed liabilities, (xi)
the absence of undisclosed litigation, (xii) the absence of defaults,
violations, breaches or conflicts with any agreements, governmental
authorizations or charter documents, (xiii) taxes, (xiv) title to property,
(xv) the accuracy of the information contained in reports filed with the
departments of insurance for all applicable domiciliary states, and the
conduct of insurance business by each of American General and Independent and
their respective insurance subsidiaries in compliance with applicable law,
(xvi) regulatory filings, (xvii) investments, (xviii) reserves , (xix) the
accuracy of the information provided for inclusion in this Proxy
Statement/Prospectus and the Registration Statement, (xx) no brokers being
entitled to fees in connection with the Merger other than as disclosed, (xxi)
environmental matters, and (xxii) full disclosure.
American General has also made representations and warranties as to (i) the
ownership by American General and its subsidiaries of Independent Common Stock
and (ii) its reliance upon its independent investigation of Independent and
the warranties contained in the Merger Agreement and the absence of liability
on the part of the directors, officers and other representatives of
Independent and its subsidiaries for statements made to American General prior
to the execution of the Merger Agreement.
Independent has also made representations and warranties as to (i) the
absence of redemptions of Independent Common Stock since January 1, 1995,
except for exchanges of Independent Voting Stock for Independent Non-Voting
Stock on a share for share basis, (ii) retirement and other employee plans and
matters relating to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (iii) labor relations and other employee matters, (iv)
related party transactions, (v) the identification of affiliates and the
delivery of a letter agreement from affiliates in connection with Rule 145
under the Securities Act, (vi) the receipt of an opinion of Alex. Brown to the
effect that the consideration to be received by the Independent shareholders
in the Merger is fair from a financial point of view, (vii) obligations of
Independent and its subsidiaries under futures, option contracts, swaps, or
similar instruments ("Derivatives"), and (viii) material contracts to which
Independent or its subsidiaries is a party or by which any of them is bound.
The respective representations and warranties of each of Independent and
American General will terminate at the Effective Time, other than the
representation and warranty of American General that it has conducted its own
independent review of Independent, has relied solely upon its own
investigation and analysis and the warranties contained in the Merger
Agreement and agrees, to the fullest extent permitted by law, that none of
Independent, its subsidiaries or any of their respective directors, officers,
employees, affiliates, agents or representatives shall have any liability or
responsibility whatsoever to American General based upon any information
provided or made available, or statements made, to American General prior to
the execution of the Merger Agreement.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Independent and American General have
agreed that, during the period from the date of the Merger Agreement until the
Effective Time, except as contemplated by the Merger Agreement or the
Independent disclosure letter or as mutually consented to, each of
Independent, AGC Life and American General and each of their respective
subsidiaries will conduct its business in the ordinary course consistent with
past practice and shall use all reasonable efforts to preserve intact their
respective business organizations and relationships with third parties. In
addition, each of Independent and American General have agreed not to, and not
to permit any subsidiary to: (i) amend its articles of incorporation or bylaws
(unless, in case of American General, it would not have any adverse impact on
the transactions contemplated by the Merger Agreement or would not amend or
modify the terms of the capital stock of American General), (ii) split,
combine or reclassify any shares of its capital stock (unless, in the case of
American General, it agrees to appropriate
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adjustment to the Exchange Ratio), (iii) pay or declare any dividends or other
distributions (except for regular quarterly dividends), (iv) repurchase,
redeem or otherwise acquire any shares of capital stock of Independent or
permit their respective subsidiaries to do so, (v) take any action that could,
directly or indirectly, cause the Merger to fail to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Code, or permit
their respective subsidiaries to do so, (vi) allow any of their respective
insurance subsidiaries to conduct transactions in specified investments except
in compliance with relevant investment policies and all applicable insurance
laws and regulations, or (vii) except to the extent necessary to comply with
the requirements of applicable laws and regulations, take, or agree to take,
any action that would make any of its representations and warranties
inaccurate in any material respect at any time prior to the Effective Time or
omit, or agree or commit to omit, to take any action necessary to prevent any
such representation or warranty from being inaccurate in any material respect
(provided that each of Independent and American General is permitted to take
or omit to take such action which (without any uncertainty) can be cured, and
in fact is cured, at or prior to the Effective Time) or take, or agree or
commit to take, any action that would result in, or is reasonably likely to
result in, any conditions to the Merger not being satisfied.
Pursuant to the Merger Agreement, Independent has also agreed that, during
the period from the date of the Merger Agreement until the Effective Time,
Independent will not, and will not permit any subsidiary to: (i) merge or
consolidate with any other person or, except in the ordinary course of
business, acquire a material amount of assets of any other person, (ii) sell,
lease, license or otherwise surrender, relinquish or dispose of any material
facility owned or leased by it or any of its subsidiaries or any assets or
property which are material to it and its subsidiaries, taken as a whole,
except pursuant to existing disclosed contracts or commitments or in the
ordinary course of business consistent with past practice, (iii) issue any
capital stock or other securities or enter into any amendment of any material
term of any outstanding security, or incur any material indebtedness except in
the ordinary course of business pursuant to existing credit facilities or
arrangements, or amend or otherwise increase, accelerate the payment of
vesting of amounts payable or to become payable under or fail to make any
required contribution to, any Independent employee benefit plan, except in the
ordinary course of business consistent with past practice or as otherwise
permitted by the Merger Agreement, (iv) make any change in any accounting
method or accounting practice followed by it or any of its subsidiaries,
except in specified circumstances, or (v) settle any material audit, make or
change any material tax election or file amended tax returns.
In addition, Independent has agreed not to, and to not permit any subsidiary
to (i) grant any increase in the compensation or benefits of directors,
officers, employees, consultants or agents (except in the ordinary course of
business consistent with past practice for any increase in the compensation of
employees who are not directors, officers or agents), (ii) enter into or amend
any employment agreement or other employment arrangement, except in the
ordinary course of business consistent with past practice, (iii) enter into
any agreement to purchase, or to lease for a term exceeding one year, any real
property, provided that Independent, or any of its subsidiaries, may as a
tenant, or a landlord, renew any existing lease for a term not exceeding
eighteen months, or (iv) release any third party from its obligations or grant
any consent under any existing standstill provision relating to any
Acquisition Proposal or otherwise under any confidentiality agreement or other
agreement, or fail to enforce fully any such agreement.
Pursuant to the Merger Agreement, American General has agreed that, from the
date of the Merger Agreement until the Effective Time, it will not and will
not permit any subsidiary to: (i) issue any shares of capital stock or other
securities (except for issuances of shares in the ordinary course pursuant to
any American General stock options) in connection with any transaction
requiring shareholder approval unless American General first notifies
Independent in writing of such transaction and provides Independent with
information with respect thereto, (ii) merge or consolidate with any other
person or, except in the ordinary course of business, acquire a material
amount of assets of any other person, if such merger, consolidation or
acquisition could reasonably be expected to have a material impact on the
ability of American General to consummate the transactions contemplated by the
Merger Agreement, (iii) issue shares of any class or series of stock, or any
security convertible at the option of the holder thereof into shares of any
class or series of stock ranking senior to the American General 7% Convertible
Preferred Stock as to dividends or as to the distribution of assets upon
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the liquidation of American General, and (iv) amend, alter or repeal, whether
by merger, consolidation or otherwise, any of the provisions of the American
General Articles or any of the resolutions contained therein which would
materially and adversely affect any right, preference, privilege or voting
power of the American General 7% Convertible Preferred Stock or of the holder
thereof.
In addition, from the date of the Merger Agreement until the Effective Time,
Independent has agreed that each of Independent and each Independent
subsidiary will (i) invest available cash only in corporate bonds (other than
bonds issued by public utilities) rated no higher than A1 nor lower than Baa3
by Moody's Investor Services, Inc. or no higher than A+ nor lower than BBB- by
Standard & Poors Corporation, with maturities of not fewer than five nor more
than ten years, (ii) maintain amounts in short-term investments equal to the
dividend amounts specified in the Merger Agreement, (iii) cease making
mortgage loans or purchasing mortgage-backed securities, and (iv) neither
purchase nor issue any Derivatives and use all reasonable efforts to sell,
closeout or otherwise liquidate, in an orderly fashion, any such Derivatives
which Independent owns.
FILINGS AND OTHER ACTIONS
Pursuant to the Merger Agreement, the parties have agreed that each of
Independent, American General and AGC Life will (i) promptly prepare and file
all requisite applications and notifications with the Florida Department of
Insurance, the Missouri Department of Insurance, and the insurance departments
of any other applicable states and make all filings and submissions under the
HSR Act, (ii) use all reasonable efforts to timely make all necessary filings
and timely seek all necessary consents, approvals, permits or authorizations
from the date of the Merger Agreement until the Effective Time, and (iii) use
all reasonable efforts to take all other actions, make all filings,
registrations and submissions, and do all things necessary or appropriate to
consummate the transactions contemplated by the Merger Agreement as soon as
practicable.
OTHER ACQUISITION PROPOSALS
The Merger Agreement provides that, from the date of the Merger Agreement
until the termination thereof, neither Independent nor any of its subsidiaries
will initiate, solicit or encourage (including by way of furnishing
information or assistance), any proposal to purchase or acquire any equity
securities or (except in the ordinary course of business) assets of, or merge
or combine with Independent or any of its subsidiaries (each such proposal, an
"Acquisition Proposal"). Independent has also agreed not to take any other
action to facilitate any inquiries or the making of any proposal relating to,
or that may reasonably be expected to lead to, any Acquisition Proposal, or
enter into discussions or negotiate with any person or entity in furtherance
of such inquiries or to obtain an Acquisition Proposal, or agree to or endorse
any Acquisition Proposal, or authorize or permit any of the officers,
directors or employees of Independent or any of Independent's subsidiaries or
any investment banker, financial advisor, attorney, accountant or other
representative retained by Independent or any of Independent's subsidiaries to
take any such action.
Independent has agreed to provide American General with prompt notice of its
receipt of an Acquisition Proposal from any third party. Notwithstanding the
foregoing, however, the Independent Board is not prohibited from (i)
furnishing information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide proposal in
writing by such person or entity to acquire Independent pursuant to a merger,
consolidation, share exchange, business combination or other similar
transaction, or to acquire a substantial portion of the assets of Independent
or any of Independent's subsidiaries, if, and only to the extent that (A) the
Independent Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Independent Board to comply with its fiduciary duties to
Independent's shareholders under applicable law and (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person or entity, Independent (x) provides written notice to American General
to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity and (y) enters into
with such person or entity a confidentiality agreement in reasonably customary
form on terms not more favorable to such person or entity than the terms
contained in the Confidentiality Agreement dated April 26, 1995 by and between
Independent and American General, or (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal. In
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addition, Independent has agreed to cease and terminate any existing
activities, discussions or negotiations with any parties with respect to any
possible Acquisition Proposal, and to send a written notice to each party with
which it has had discussions during the 30 days prior to the date of Merger
Agreement to the effect that the Independent Board no longer seeks the making
of any Acquisition Proposal.
EXPENSES
The Merger Agreement provides that, except in the event of the termination
payments described below, whether or not the Merger is consummated, all costs
and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby will be paid by the party incurring such
expenses except that those expenses incurred in connection with printing and
mailing of this Proxy Statement/Prospectus, as well as the filing fees
relating to the Registration Statement and the HSR Act, will be shared equally
by Independent and American General.
INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that all rights to indemnification existing in
favor of the present or former directors, officers, employees, fiduciaries and
agents of Independent or its subsidiaries (the "Indemnified Parties") as
provided in the Independent Articles or the Independent Bylaws or similar
organizational documents of any of its subsidiaries as in effect as of the
date of the Merger Agreement or pursuant to any indemnification agreements
between any of the Indemnified Parties and Independent with respect to matters
occurring prior to the Effective Time will survive the Merger and will
continue in full force and effect for the maximum term permitted by law, and
shall be enforceable by the Indemnified Parties against the Surviving
Corporation. In addition, AGC Life has agreed to maintain in effect for not
less than six years from the Effective Time the current policies of directors'
and officers' liability insurance maintained by Independent (provided that
American General may substitute therefor policies of equivalent coverage) with
respect to matters occurring prior to the Effective Time, provided that in no
event shall American General or AGC Life be required to pay for such coverage
any amount per annum in excess of 200% of the aggregate premiums paid for such
coverage on an annualized basis in 1995. These obligations survive the
consummation of the Merger and are intended to benefit each of the Indemnified
Parties.
CONDITIONS TO THE MERGER
The Merger Agreement provides that the respective obligations of
Independent, AGC Life and American General to effect the Merger are subject to
the satisfaction or waiver on or prior to the Effective Time of each of the
following conditions: (i) the Merger Agreement and the Merger shall have been
approved and adopted by the requisite vote of Independent shareholders, (ii)
the waiting period (and any extension thereof) applicable to the Merger under
the HSR Act shall have expired or been terminated and no action shall have
been instituted by the DOJ or the FTC challenging or seeking to enjoin the
Merger, which action shall not have been withdrawn or terminated, (iii) no
statute, rule, regulation, executive order, decree, ruling or preliminary or
permanent injunction shall have been enacted, entered, promulgated or enforced
by any federal or state court or governmental authority having jurisdiction
which prohibits, restrains, enjoins or restricts the consummation of the
Merger, (iv) all filings, permits, authorizations, consents, and approvals or
declarations or filings with, or expiration of waiting periods imposed by, any
governmental entity shall have been filed or obtained, and the appropriate
forms shall have been executed, filed and approved as required by the
corporate and insurance laws and regulations of the states of Florida and
Missouri, (v) the Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, (vi) the shares of American General Common Stock
issuable in the Merger shall have been approved for listing on the NYSE, and
(vii) American General shall have used all reasonable efforts to have the
shares of American General 7% Convertible Preferred Stock issuable to
Independent's shareholders pursuant to the Merger Agreement authorized for
listing on either the NYSE or the Nasdaq National Market.
The obligation of Independent to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
additional conditions: (i) each of American General and AGC Life shall have
performed in all material respects its obligations contained in the Merger
Agreement required to be performed
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by it at or prior to the Effective Time, (ii) all representations and
warranties of American General and AGC Life contained in the Merger Agreement
which are qualified with respect to materiality shall be true and correct in
all respects, and such representations and warranties that are not so
qualified shall be true and correct in all material respects in each case at
and as of the Effective Time as if made at and as of such time (except to the
extent such representations and warranties specifically relate to an earlier
date, in which case as of such earlier date) except as otherwise permitted,
(iii) Independent shall have received a certificate of the Chairman of the
Board, the President, an Executive Vice President, a Senior Vice President or
the Chief Financial Officer of American General to the effect that the
conditions in clauses (i) and (ii) have been satisfied, (iv) Independent shall
have received an opinion from Skadden, Arps, Slate, Meagher & Flom, special
counsel to Independent, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, and (v) Independent shall have received an opinion from
Alex. Brown to the effect that the consideration to be received by Independent
shareholders in the Merger is fair to such shareholders from a financial point
of view.
The obligations of American General and AGC Life to effect the Merger are
subject to the satisfaction or waiver on or prior to the Effective Time of the
following additional conditions: (i) Independent shall have performed in all
material respects its obligations contained in the Merger Agreement required
to be performed by it at or prior to the Effective Time, (ii) all
representations and warranties of Independent contained in the Merger
Agreement which are qualified with respect to materiality shall be true and
correct in all respects, and such representations and warranties that are not
so qualified shall be true and correct in all material respects in each case
at and as of the Effective Time as if made at and as of such time (except to
the extent such representations and warranties specifically relate to an
earlier date, in which case as of such earlier date), except as otherwise
permitted, (iii) American General and AGC Life shall have received a
certificate of the Chairman of the Board, the President, an Executive Vice
President, a Senior Vice President or the Chief Financial Officer of
Independent to the effect that the conditions in clauses (i) and (ii) of this
paragraph have been satisfied, and (iv) American General shall have received
an opinion from Vinson & Elkins L.L.P., special counsel to American General,
to the effect that the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code.
TERMINATION
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the Effective Time, (i) by mutual consent of
Independent and American General, (ii) by the Board of Directors of either
American General or Independent, if the Merger Agreement and the Merger shall
fail to receive the requisite vote for approval and adoption by the
shareholders of Independent at the Special Meeting, or if the Merger shall not
have been consummated by March 30, 1996, which date may be extended by written
notice of either American General or Independent to a date no later than June
30, 1996, if the Merger shall not have been consummated as a direct result of
the failure to obtain certain regulatory approvals, provided that the
terminating party is not in material breach of its representations, warranties
or covenants, (iii) by the Board of either American General or Independent if
a court of competent jurisdiction or agency or commission shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by the Merger
Agreement and such order, decree, ruling or other action shall have become
final and non-appealable provided certain conditions are satisfied, (iv) by
the Independent Board if (a) there has been a breach by American General or
AGC Life of any representation or warranty which would have or would be likely
to have a material adverse effect on American General, (b) there has been a
material breach of any covenants or agreements by American General, which
breach is not curable or, if curable, is not cured within thirty days notice,
or (c) prior to the Special Meeting, if the Independent Board has withdrawn,
modified or changed in a manner adverse to American General or AGC Life its
approval or recommendation of the Merger Agreement or the Merger in order to
approve and permit Independent to execute an agreement relating to an
Acquisition Proposal in circumstances where, based on a written opinion of
Independent's outside counsel, the failure to do so would result in a breach
of the fiduciary duties of the Independent Board (subject to Independent's
negotiation with American General to attempt to adjust the Merger Agreement to
permit Independent to proceed with the Merger); and (v) by the Board of
American General if (a) there has been a
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breach by Independent of any representation or warranty which would have or
would be reasonably likely to have a material adverse effect on Independent,
(b) there has been a material breach of any covenants or agreements by
Independent, which breach is not curable or, if curable, is not cured within
thirty days notice or (c) the Independent Board shall have withdrawn, modified
or changed in a manner adverse to American General or AGC Life its approval or
recommendation of the Merger Agreement or the Merger or taken action in
relation to an Acquisition Proposal.
The Merger Agreement further provides that, pending the Closing, American
General will not issue any capital stock in connection with any transaction
requiring shareholder approval unless American General first notifies
Independent and provides it with certain information. Thereafter, Independent
shall have the right, by giving notice to American General prior to 5:30 p.m.,
New York time, on the tenth Trading Day following receipt of such notice, to
terminate the Merger Agreement.
In addition, the Merger Agreement may be terminated at any time prior to the
Effective Time (i) by Independent if the Average Closing Price is less than
$24.99 and (ii) by American General if the Average Closing Price is less than
$26.71.
In the event of termination of the Merger Agreement by either Independent or
American General as described above, the Merger will be abandoned and there
will generally be no liability or obligation on the part of Independent,
American General or their respective subsidiaries, officers or directors
except for (i) certain specified obligations including without limitation
those relating to financial advisory and brokerage fees and expenses of the
Merger, (ii) damages occasioned by a party which is in material breach of its
representations, warranties, covenants or agreements, and (iii) under the
circumstances set forth in the paragraph below.
Pursuant to the Merger Agreement, under the circumstances set forth below,
Independent agrees to make certain termination payments to American General as
follows:
(i) if an Acquisition Proposal which provides that Independent's
shareholders will receive in excess of $27.50 per share is then outstanding
and
(A) the Board of Directors of Independent withdraws or modifies or
changes in a manner adverse to American General or AGC Life its
approval or recommendation of the Merger Agreement or the Merger in
order to permit Independent to execute a definitive agreement relating
to such Acquisition Proposal and Independent is unable to sustain the
burden of proving that at least one condition to the consummation of
the Merger (other than the conditions with respect to shareholder
approval, receipt of a fairness opinion from Alex. Brown, the accuracy
as of the Effective Time of Independent's representations and
warranties and the performance by Independent of its obligations under
the Merger Agreement) has not been satisfied and is unlikely to be
satisfied by the Closing Date, or
(B) the Merger Agreement and the Merger shall fail to receive the
requisite vote for approval and adoption by the shareholders of
Independent at the Special Meeting and Independent is unable to sustain
the burden of proving that at least one condition to the consummation
of the Merger (other than the conditions with respect to shareholder
approval, receipt of a fairness opinion from Alex. Brown, the accuracy
as of the Effective Time of Independent's representations and
warranties and the performance by Independent of its obligations under
the Merger Agreement) has not been satisfied and is unlikely to be
satisfied by the Closing Date, or
(C) the Merger Agreement and the Merger receives the requisite vote
for approval and adoption by the shareholders of Independent at the
Independent Special Meeting, but Alex. Brown refuses or states that it
will refuse to deliver the fairness opinion, and Independent is unable
to sustain the burden of proving that at least one condition to the
consummation of the Merger (other than the conditions with respect to
shareholder approval, receipt of a fairness opinion from Alex. Brown,
the accuracy as of the Effective Time of Independent's representations
and warranties and the performance by Independent of its obligations
under Merger Agreement) has not been satisfied and is unlikely to be
satisfied by the Closing Date,
then Independent shall pay American General the sum of $14,000,000 in cash
(the "Termination Payment").
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(ii) if an Acquisition Proposal which provides that Independent's
shareholders will receive in excess of $27.50 per share is then outstanding
and
(A) the Board of Directors of Independent withdraws or modifies or
changes in a manner adverse to American General or AGC Life its
approval or recommendation of the Merger Agreement or the Merger in
order to permit Independent to execute a definitive agreement relating
to such Acquisition Proposal and Independent is able to sustain the
burden of proving that at least one condition to the consummation of
the Merger (other than the conditions with respect to shareholder
approval, receipt of a fairness opinion from Alex. Brown, the accuracy
as of the Effective Time of Independent's representations and
warranties and the performance by Independent of its obligations under
the Merger Agreement) has not been satisfied and is unlikely to be
satisfied as of the Closing Date, or
(B) the Merger Agreement and the Merger shall fail to receive the
requisite vote for approval and adoption by the shareholders of
Independent at the Special Meeting and Independent is able to sustain
the burden of proving that at least one condition to the consummation
of the Merger (other than the conditions with respect to shareholder
approval, receipt of a fairness opinion from Alex. Brown, the accuracy
as of the Effective Time of Independent's representations and
warranties and the performance by Independent of its obligations under
the Merger Agreement) has not been satisfied and is unlikely to be
satisfied by the Closing Date, or
(C) the Merger Agreement and the Merger receives the requisite vote
for approval and adoption by the shareholders of Independent at the
Special Meeting, but Alex. Brown refuses or states that it will refuse
to deliver the fairness opinion, and Independent is able to sustain the
burden of proving that at least one condition to the consummation of
the Merger (other than the conditions with respect to shareholder
approval, receipt of a fairness opinion from Alex. Brown, the accuracy
as of the Effective Time of Independent's representations and
warranties and the performance by Independent of its obligations under
the Merger Agreement) has not been satisfied and is unlikely to be
satisfied by the Closing Date,
then Independent shall pay American General one-half the Termination Payment.
(iii) if an Acquisition Proposal which provides that Independent's
shareholders will receive in excess of $27.50 per share is not then
outstanding and the Merger Agreement and the Merger shall fail to receive
the requisite vote for approval and adoption by the shareholders of
Independent at the Special Meeting and all other conditions to the
consummation of the Merger have been satisfied or are likely to be
satisfied (other than the conditions with respect to shareholder approval,
receipt of a fairness opinion from Alex. Brown, the accuracy as of the
Effective Time of Independent's representations and warranties and the
performance by Independent of its obligations under the Merger Agreement),
then Independent shall reimburse American General for its out-of-pocket
expenses reasonably incurred in connection with the Merger, such
reimbursement not to exceed one-third of the Termination Payment.
All such termination payments shall be made as promptly as practicable but
not later than three business days after such termination, and such payments
shall be made by wire transfer of immediately available funds to an account
designated by American General.
ACCOUNTING TREATMENT
The Merger will be treated as a purchase by American General for accounting
and financial reporting purposes. Under the purchase method of accounting, the
assets and liabilities of Independent will be recorded on the consolidated
books of American General at their fair values at the Effective Time.
REGULATORY FILINGS AND APPROVALS
The regulatory filings and approvals described below must be made before the
Merger can be effected and may take a significant period of time to obtain.
Although Independent and American General believe that such approvals will be
obtained, there can be no assurance that this will be the case or that such
approvals will be obtained in a timely manner or that such approvals will not
be conditioned temporarily or otherwise encumbered.
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APPROVAL BY INSURANCE REGULATORS
Before the Merger can be effected, Independent and American General will be
required to obtain the prior approvals of the Florida Department of Insurance
and the Missouri Department of Insurance, respectively, pursuant to applicable
laws and regulations. Independent and American General have made the necessary
filings with the Florida Department of Insurance and the Missouri Department
of Insurance to obtain these approvals and are prepared to make any additional
filings where necessary. Notification of approval was received from the
Missouri Department of Insurance on November 29, 1995 and from the Florida
Department of Insurance on January 26, 1996.
ANTITRUST
The Merger is subject to the expiration or termination of the 30-day waiting
period under the HSR Act and no action having been instituted by the DOJ or
the FTC which is not withdrawn or terminated prior to the Effective Time. The
HSR Act, and the rules and regulations thereunder, provide that certain merger
transactions (including the Merger) may not be consummated until required
information and materials have been furnished to the DOJ and the FTC and
certain waiting periods have expired or been terminated. Independent and
American General made their respective filings with the DOJ and the FTC on
November 2, 1995, and received notice of early termination of the waiting
period on November 15, 1995.
The DOJ and the FTC frequently scrutinize the legality under the antitrust
laws of transactions such as the Merger. Notwithstanding the expiration of the
HSR waiting period, any time before or after the Effective Time, the FTC, the
DOJ or others can take action under the antitrust laws, including seeking to
enjoin the consummation of the Merger, or seeking the divestiture by American
General of all or any part of the stock or assets of Independent. There can be
no assurances that a challenge to the Merger on antitrust grounds will not be
made, or if such a challenge is made, that it would not be successful.
Any pre-acquisition notices regarding the competitive impact of the Merger
will be timely filed with various insurance departments in non-domiciliary
states where both Independent and American General insurance subsidiaries
transact business. Otherwise, after the Merger, any of these insurance
subsidiaries would be subject to a possible order (i) requiring the insurer to
cease transacting a line or lines of business or (ii) denying the license
application of the insurer.
STATE ANTI-TAKEOVER STATUTES
Section 607.0901 of the FBCA prohibits business combination transactions
involving a Florida corporation (such as Independent) and an "Interested
Shareholder" (defined generally as any person that directly or indirectly
beneficially owns 10% or more of the outstanding voting stock of the subject
corporation), unless special requirements are met or certain exceptions apply,
including that the majority of the disinterested members of the board of
directors of the subject corporation approved the acquisition of shares by
such Interested Shareholder. Because the Independent Board has approved the
Merger Agreement and the transactions contemplated thereby, the provisions of
Section 607.0901 are not applicable to the Merger. See "DESCRIPTION OF
INDEPENDENT CAPITAL STOCK--Florida Anti-Takeover Law and Certain Charter
Provisions--Florida Affiliated Transactions Statute."
Section 607.0902 of the FBCA generally denies voting rights to shares
purchased by an acquiring person who has obtained or anticipates obtaining a
specified level of voting control in shares of an issuing public corporation
as part of a control-share acquisition, except to the extent that such voting
rights are conferred by resolution of the shareholders of the issuing public
corporation. A vote of the shareholders to confer voting power under the
statute must meet the criteria set forth in the statute, including the
requirement for approval by a majority of all votes entitled to be cast by
each voting group entitled to vote separately, excluding all interested
shares. Because the statute specifically exempts both a merger effected in
compliance with the FBCA and a transaction approved by the board of directors
of the issuing public corporation, the provisions of Section 607.0902 are not
applicable to the Merger. See "DESCRIPTION OF INDEPENDENT CAPITAL STOCK--
Florida Anti-Takeover Law and Certain Charter Provisions--Florida Control-
Share Acquisitions Statute."
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Independent, directly or through subsidiaries, conducts business in a number
of other states throughout the United States, some of which have also enacted
anti-takeover laws. Independent and American General do not know whether any
of these laws, by their terms, apply to the Merger and have not attempted to
comply with any such laws. Should any person seek to apply any such state
anti-takeover laws, Independent and American General will take such action as
then appears appropriate, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the
event it is asserted that one or more state anti-takeover statutes is
applicable to the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Merger, Independent and American
General might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Independent and American General might be delayed in, or prevented from,
consummating the Merger.
OPERATIONS AFTER THE MERGER
As a result of the Merger, the separate existence of Independent and the
Independent Board will terminate, but the directors of American General and
AGC Life will continue in office. The Merger Agreement does not contain any
provisions either (i) obligating American General to employ any officer or
employee of Independent following the Merger or (ii) requiring the election or
nomination of any specified individuals or any specified number of persons to
the board of directors of either AGC Life or American General.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material federal income tax
consequences of the Merger under existing federal income tax law, which is
subject to change, possibly retroactively. Insofar as such discussion relates
to matters of law and legal conclusions, such discussion is the opinion of
Skadden, Arps, Slate, Meagher & Flom, counsel to Independent, and Vinson &
Elkins L.L.P., counsel to American General. This discussion assumes that
shareholders hold Independent Common Stock as capital assets as of the
effective date of the Merger. This discussion does not discuss all aspects of
federal income taxation which may be relevant to particular shareholders in
light of their personal circumstances, such as holders whose stock or options
were acquired pursuant to the exercise of an employee stock option or
otherwise as compensation, nor to shareholders who are subject to special
treatment under the federal income tax laws (for example, financial
institutions, insurance companies, tax-exempt organizations, broker-dealers
and foreign persons), nor does it discuss any aspects of state, local or
foreign tax law. Each shareholder is advised to consult his own tax advisor as
to the federal, state, local and foreign income and other tax consequences of
the Merger.
The obligation of Independent to consummate the Merger is conditioned upon
the receipt by Independent of an opinion from Skadden, Arps, Slate, Meagher &
Flom, and the obligation of American General to consummate the Merger is
conditioned upon the receipt by American General of an opinion from Vinson &
Elkins L.L.P., in each case substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinions, the Merger
will be treated for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). In accordance with such opinions, for federal income tax
purposes, Independent, American General and AGC Life will each be a "party to
a reorganization" within the meaning of Section 368(b) of the Code and no gain
or loss will be recognized by Independent, American General or AGC Life by
reason of the Merger. Independent will not waive the condition requiring the
receipt of such an opinion from its counsel.
The federal income tax consequences to a shareholder will depend on whether
the shareholder receives only American General Stock, a combination of
American General Stock and cash, or any cash in exchange for the shareholder's
Independent Common Stock pursuant to the Merger.
RECEIPT OF ONLY AMERICAN GENERAL STOCK
A shareholder who receives solely American General Stock in exchange for
Independent Common Stock will not recognize gain or loss upon such exchange
(except to the extent cash is received in lieu of fractional shares).
Accordingly, (i) the aggregate tax basis of the American General Stock
received by the shareholder
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(allocated in the case of a shareholder who receives shares of both American
General Common Stock and American General 7% Convertible Preferred Stock in
proportion to their respective fair market values) will be the same as the
aggregate tax basis of the Independent Common Stock surrendered in exchange
therefor pursuant to the Merger (adjusted with respect to fractional shares)
and (ii) the holding period of the American General Stock will include the
holding period of the Independent Common Stock surrendered in exchange
therefor pursuant to the Merger.
A shareholder who receives cash in lieu of fractional shares will be treated
as having received such fractional shares pursuant to the Merger and then as
having exchanged such fractional shares for cash in a redemption by American
General. The amount of any capital gain or loss attributable to such deemed
redemption of fractional shares will be equal to the difference between the
cash received in lieu of fractional shares and the ratable portion of the tax
basis of the Independent Common Stock surrendered that is allocated to such
fractional shares.
RECEIPT OF CASH AND AMERICAN GENERAL STOCK
Subject to the exception described below in "--Additional Considerations," a
shareholder who receives a combination of American General Stock and cash in
exchange for Independent Common Stock will recognize capital gain, but not
loss, with respect to each block of Independent Common Stock surrendered
(shares of Independent Common Stock acquired at the same time in a single
transaction) in an amount equal to the lesser of (i) the amount of gain
realized (i.e., the excess of the amount of cash and the fair market value of
American General Stock received that is allocable to such block of Independent
Common Stock over the tax basis of such block) and (ii) the amount of cash
received allocable to such block of Independent Common Stock. For purposes of
such calculation, the aggregate amount of cash and American General Stock
received by a shareholder will be allocated proportionally among the shares of
Independent Common Stock surrendered. The aggregate tax basis of the American
General Stock received by a shareholder (allocated in the case of a
shareholder who receives shares of both American General Common Stock and
American General 7% Convertible Preferred Stock in proportion to their
respective fair market values) will be the same as the aggregate tax basis of
the Independent Common Stock surrendered in exchange therefor pursuant to the
Merger, decreased by the total amount of cash received and increased by the
amount of gain recognized. The holding period of the American General Stock
will include the holding period of the Independent Common Stock surrendered.
Shareholders who have different blocks of Independent Common Stock may wish
to investigate submitting separate Transmittal Letters for each block in order
to claim the receipt of different mixes of consideration with respect to each
block. This may result in a more favorable calculation of recognized gain
under the foregoing rules, but may also reduce the aggregate amount of cash
consideration received by a shareholder because of the rules governing the
allocation of cash available for election.
RECEIPT OF ONLY CASH
Subject to the exception described below in "--Additional Considerations," a
shareholder who receives solely cash in exchange for Independent Common Stock
will recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the aggregate tax basis of the
Independent Common Stock surrendered. Gain or loss must be calculated
separately for each block of Independent Common Stock held by a shareholder.
ADDITIONAL CONSIDERATIONS
With respect to shareholders who receive cash in the Merger, it is possible
that, under certain circumstances, the gain recognized could be treated as
dividend income rather than capital gain unless the requirements of Section
302 of the Code are satisfied. In order to determine whether those
requirements are satisfied, a shareholder is treated as receiving American
General Stock in the Merger (instead of the cash actually received) and then
receiving cash from American General in a hypothetical redemption of those
shares. The hypothetical redemption will satisfy the requirements under
Section 302 if it either (i) is "not essentially equivalent to a
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dividend" or (ii) has the effect of a "substantially disproportionate"
redemption of American General Stock. Whether such cash received by a
shareholder in such hypothetical redemption of American General Stock is "not
essentially equivalent to a dividend" depends on the individual facts and
circumstances of each shareholder but in any event must result in a meaningful
reduction of a shareholder's proportionate interest in the American General
Stock. Alternatively, the hypothetical redemption of the American General
Stock will be "substantially disproportionate" if the ratio of the
shareholder's ownership of American General Stock after the hypothetical
redemption is less than 80% of the ratio of American General Stock
hypothetically owned by the shareholder after the Merger but before the
redemption. If the receipt of cash is treated as having the effect of a
dividend, only the portion of the recognized gain that is not in excess of the
shareholder's ratable share of the accumulated earnings and profits of
American General will be taxable as a dividend.
In applying the foregoing tests, there must be taken into account not only
actual ownership of stock but also stock constructively owned by a shareholder
by reason of certain attribution rules under Section 318 of the Code. Under
these rules, a shareholder is treated as owning the stock owned by certain
family members, stock subject to an option to acquire such stock, stock owned
by certain estates and trusts of which the shareholder is a beneficiary, and
stock owned by certain affiliated entities. Under certain circumstances, an
individual who actually owns no American General Stock but pursuant to Section
318 of the Code constructively owns American General Stock by reason of
attribution from family members may avoid such attribution by filing a timely
agreement with the Internal Revenue Service under Section 302(c)(2) of the
Code and the regulations thereunder. Because of the complexity of these rules,
each holder of Independent Common Stock who believes these rules might apply
to him is urged to contact his own tax advisor.
In addition, shareholders who receive American General 7% Convertible
Preferred Stock could be subject to special rules under Section 306 of the
Code on the sale, exchange, redemption or other disposition thereof if the
receipt of cash in lieu of such stock would have been treated as a dividend
under the Section 302 rules described above. Each shareholder is encouraged to
consult his or her own tax advisors on the potential application of Section
306 to the receipt of American General 7% Convertible Preferred Stock.
Under recent statutory proposals released by President Clinton on January
22, 1996, certain types of preferred stock, which could be interpreted to
include American General 7% Convertible Preferred Stock that is received by
stockholders in exchange for their Independent Common Stock in the Merger,
will be treated as taxable "other property" rather than as tax-free stock
consideration. The transitional rule contained in the proposed legislation
states that the legislation would not apply to any stock issued pursuant to a
written agreement that was (subject to customary conditions) binding on
December 7, 1995, and at all times thereafter before the stock was issued. On
January 25, 1996, certain terms of the American General 7% Convertible
Preferred Stock relating to voting rights were amended in order to meet
certain requirements for listing on the NYSE, although neither American
General nor Independent views these amendments as material for purposes of the
transitional rule. Accordingly, although it is uncertain whether the proposed
legislation will be enacted and, if enacted, whether it will contain
transitional relief that will apply to American General 7% Convertible
Preferred Stock, it presently appears that the proposed legislation is not
intended to apply to the Merger because the Merger Agreement, having supplied
all material terms, was executed and, therefore, binding on October 19, 1995.
EACH SHAREHOLDER IS ENCOURAGED TO CONSULT HIS OR HER OWN TAX ADVISORS AS TO
PARTICULAR FACTS AND CIRCUMSTANCES WHICH MAY BE UNIQUE TO SUCH SHAREHOLDER AND
ALSO AS TO ANY ESTATE, GIFT, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES ARISING
OUT OF THE MERGER.
For a description of certain tax consequences relating to the ownership and
disposition of American General Stock issuable in the Merger, see "DESCRIPTION
OF AMERICAN GENERAL CAPITAL STOCK--Certain Federal Income Tax Aspects Relating
to the Ownership and Disposition of American General Common Stock and American
General 7% Convertible Preferred Stock."
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RESTRICTIONS ON SALES OF SHARES BY AFFILIATES
The shares of American General Stock issuable in connection with the Merger
have been registered under the Securities Act. Such shares will be freely
transferable under the Securities Act, except for shares issued to any person
who may be deemed to be an affiliate, as such term is defined under the
Securities Act for purposes of Rule 145 (an "Affiliate"), of Independent or
American General at the time of the Special Meeting. Affiliates may not sell
their shares of American General Stock acquired in connection with the Merger
except pursuant to (i) an effective Registration Statement under the
Securities Act covering such shares, (ii) the conditions contemplated by
paragraph (d) of Rule 145, or (iii) any other applicable exemption from the
registration requirements of the Securities Act. Persons who may be deemed to
be Affiliates of Independent or American General generally include individuals
or entities that may be deemed to control, be controlled by or be under common
control with Independent or American General, and may include officers,
directors and principal shareholders of Independent or American General.
STOCK EXCHANGE LISTING
The obligations of the parties to the Merger Agreement to consummate the
Merger are subject to the shares of American General Common Stock to be issued
in connection with the Merger being authorized for listing on the NYSE and the
use of all reasonable efforts by American General to have the American General
7% Convertible Preferred Stock to be issued in connection with the Merger
authorized for listing on either the NYSE or the Nasdaq National Market. No
assurance can be given that such shares will in fact be so listed, or, if
listed, that an active trading market with respect to such shares will develop
or be sustained. See "RISK FACTORS--Uncertainty as to Trading Market and
Liquidity for American General 7% Convertible Preferred Stock After the
Merger" and "--The Merger Agreement--Conditions to the Merger."
DISSENTERS' RIGHTS
Holders of Independent Non-Voting Common Stock do not have dissenters'
rights in connection with the Merger because Independent Non-Voting Common
Stock is traded on the Nasdaq National Market as of the Record Date. However,
holders of Independent Voting Common Stock who comply with the requirements of
Sections 607.1320 of the FBCA may dissent from the Merger and obtain payment
for the fair value of their Independent Common Stock. Such fair value is
exclusive of any appreciation or depreciation in anticipation of the Merger,
unless such exclusion would be inequitable. The appraised value of shares of
Independent Common Stock of a dissenting shareholder may be either greater or
less than the consideration that a shareholder of Independent is entitled to
receive in the Merger.
The following is a summary of the statutory procedure to be followed by a
holder of Independent Voting Common Stock in order to dissent from the Merger
and enforce his right to receive fair value for his shares of Independent
Voting Common Stock if the Merger is approved and consummated. This summary
does not purport to be complete and is qualified in its entirety by reference
to the full text of such provisions, which is set forth as Annex C to this
Proxy Statement/Prospectus.
Any holder of Independent Voting Common Stock electing to exercise
dissenters' rights with respect to the Merger must deliver to Independent
before the Special Meeting, or at such Special Meeting but before the vote on
the Merger is taken, a written notice of such shareholder's intent to demand
payment of the fair value of such shareholder's Independent Voting Common
Stock if the Merger is consummated. This written objection must be in addition
to and separate from any proxy or vote against the Merger. A VOTE BY A
SHAREHOLDER IN FAVOR OF THE MERGER WITH RESPECT TO ANY SHARES OF INDEPENDENT
VOTING COMMON STOCK WILL CAUSE SUCH SHAREHOLDER'S DISSENTERS' RIGHTS WITH
RESPECT TO SUCH SHARES TO BE LOST. Because a signed proxy card left blank
will, unless revoked, be voted FOR the Merger, in order to be assured that
such shareholder's Independent Voting Common Stock is not voted in favor of
the Merger, a shareholder electing to exercise dissenter rights who votes by
proxy must not leave the proxy card blank but must (i) vote AGAINST the Merger
or (ii) ABSTAIN from voting for or against the Merger. Neither a vote against
the Merger nor a proxy card directing such vote nor an abstention will satisfy
the requirement that a written objection to the transaction be delivered to
Independent before the vote upon the Merger.
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Within ten days after the date on which the shareholders' vote authorizing
such action is taken, Independent (or AGC Life, if the time period referred to
is after the Effective Time) will give written notice of such authorization to
each shareholder who filed a written notice of intent to demand payment for
his shares, excepting any shareholder who voted for or consented in writing to
the proposed action and who thereby is deemed to have elected not to enforce
his right to receive payment for his shares.
Within twenty days after the giving of notice to him, any shareholder who
elects to dissent must file with Independent (or AGC Life, if the time period
referred to is after the Effective Time) a written notice of such election,
stating his name and address, the number and classes of shares as to which he
dissents and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the twenty day
period will be bound by the terms of the Merger. Each shareholder demanding
payment shall submit the certificate or certificates representing his or her
shares of Independent Voting Common Stock to Independent (or AGC Life, if the
time period referred to is after the Effective Time) simultaneously with the
filing of such election to dissent. A shareholder may dissent as to less than
all of the shares as to which he has a right to dissent, held by him of record
or that he owns beneficially.
Upon filing an election to dissent, each dissenting shareholder will cease
to have any of the rights of a shareholder. Such shareholder will have only
the right to be paid the fair value of his shares and any other rights
provided by Section 607.1320. A notice of election to dissent may be withdrawn
by the shareholder at any time before an offer is made by Independent (or AGC
Life, if the time period referred to is after the Effective Time) to pay an
amount which Independent (or AGC Life, if the time period referred to is after
the Effective Time) considers to be the fair value of Independent Voting
Common Stock owned by such shareholder. After such offer is made, a notice of
election may be withdrawn only if Independent (or AGC Life, if the time period
referred to is after the Effective Time) consents thereto. If a notice of
election to dissent is withdrawn, or the Merger is abandoned or rescinded or
the shareholders revoke the authority to effect the Merger, or no demand or
petition for the determination of fair value by a court has been made or filed
within the required time period, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, he shall not
have the right to receive payment for his shares and he shall be reinstated to
all his rights as a shareholder as of the filing of his notice of election,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of Independent (or AGC Life, if the time period
referred to is after the Effective Time), the fair value thereof in cash as
determined by the board of directors of Independent (or AGC Life, if the time
period referred to is after the Effective Time) as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
Within ten days after the expiration of the period within which shareholders
may file their notices of election to dissent, or within ten days after the
Merger is consummated, whichever is later (but in no case later than ninety
days from the shareholders' authorization date), Independent (or AGC Life, if
the time period referred to is after the Effective Time) will make a written
offer to each shareholder who has filed such notice of election to pay for his
shares at a specified price which Independent (or AGC Life, if the time period
referred to is after the Effective Time) considers to be their fair value.
Such offer shall be accompanied by (i) the balance sheet of Independent (or
AGC Life, if the time period referred to is after the Effective Time) as of
the latest available date but not more than twelve months prior to the making
of such offer; and (ii) the profit and loss statement of Independent (or AGC
Life, if the time period referred to is after the Effective Time) for the
twelve-month period ended on the date of such balance sheet. If within thirty
days after the making of such offer, any shareholder accepts the offer by
Independent (or AGC Life, if the time period referred to is after the
Effective Time), payment therefor shall be made within ninety days after the
making of such offer or the consummation of the Merger, whichever is later.
Upon payment of the agreed value, the dissenting shareholder will cease to
have any interest in such shares.
If Independent (or AGC Life, if the time period referred to is after the
Effective Time) fails to make such offer within such period of ten days, or if
it makes the offer and any dissenting shareholder or shareholders fail to
agree with it within the period of thirty days thereafter upon the price to be
paid for such shares, Independent
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(or AGC Life, if the time period referred to is after the Effective Time)
will, within thirty days after receipt of a written demand from any dissenting
shareholder, given within 60 days after the Merger was effected (or at its
election at any time within such period of 60 days), file an action in any
court of competent jurisdiction in Duval County, Florida requesting that the
fair value of such shares be determined. If Independent (or AGC Life, if the
time period referred to is after the Effective Time) fails to institute the
proceeding, any dissenting shareholder may do so in the name of Independent
(or AGC Life, if the time period referred to is after the Effective Time). All
dissenting shareholders whose demands remain unsettled are required to be made
parties to such proceeding. The jurisdiction of the court in the appraisal
proceeding is plenary and exclusive, and all shareholders who are proper
parties to the proceeding will be entitled to judgment against Independent (or
AGC Life, if the time period referred to is after the Effective Time) for the
amount of the fair value of their shares. The court may, if it so elects,
appoint one or more person(s) as appraisers to receive evidence and recommend
a decision on the question of fair value. Independent (or AGC Life, if the
time period referred to is after the Effective Time) will pay each dissenting
shareholder the amount found to be due within ten days after the final
determination of the proceedings. Upon payment, the dissenting shareholder
will cease to have any interest in such shares. The court has the discretion
to include a fair rate of interest.
The costs and expenses of any such dissent proceeding will be determined by
the court and will be assessed against Independent (or AGC Life, if the time
period referred to is after the Effective Time), but costs and expenses may be
apportioned and assessed against all or some of the dissenting shareholders to
whom Independent made an offer to pay for the shares, in such amounts as the
court deems equitable, to the extent that the court finds such dissenting
shareholders acted arbitrarily, vexatiously, or not in good faith in demanding
payment after receiving an offer of payment from Independent. The court may
also assess Independent (or AGC Life, if the time period referred to is after
the Effective Time) the reasonable compensation and expenses of the
appraisers. If the fair value of the shares, as determined by the court,
materially exceeds the amount offered by Independent (or AGC Life, if the time
period referred to is after the Effective Time) or if no offer was made, the
court may award to any dissenting shareholder that is a party such sum as it
determines to be reasonable compensation to any attorney or expert employed by
such shareholder.
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DESCRIPTION OF AMERICAN GENERAL CAPITAL STOCK
AMERICAN GENERAL COMMON STOCK
American General is authorized to issue 300,000,000 shares of American
General Common Stock, par value $.50 per share. As of December 31, 1995, there
were outstanding 203,948,246 shares of American General Common Stock.
Holders of American General Common Stock are entitled to receive dividends
when, as and if declared by the American General Board out of any funds
legally available therefore, 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 shareholders 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 shareholder.
The American General Common Stock is listed and traded on the NYSE, Pacific
Stock Exchange, London Stock Exchange, Basel Stock Exchange, Geneva Stock
Exchange and Zurich Stock Exchange under the symbol "AGC." First Chicago Trust
Company of New York is the transfer agent, registrar and dividend disbursing
agent for the American General Common Stock. Its address is P.O.Box 2500,
Jersey City, New Jersey 07303-2500, and its telephone number is (800) 519-
3111.
AMERICAN GENERAL PREFERRED STOCK
Pursuant to the American General Articles, the American General Bylaws and
the TBCA, the American General Board, 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
("American General Preferred Stock"), 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 American General Board, 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 American General 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 upon 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 the date hereof, American General has no American General Preferred
Stock outstanding; however, American General does have Rights (as defined
below) outstanding and has designated 5,000,000 shares of American General
Series A Preferred Stock (as defined below) for issuance upon exchange of the
American General Series A Preferred Securities (as defined below). A
description of the Rights and the American General
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Series A Preferred Stock is provided below. See "--American General Preferred
Share Purchase Rights" and "--American General Series A Preferred Securities."
AMERICAN GENERAL PREFERRED SHARE PURCHASE RIGHTS
On July 27, 1989, the American General Board 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
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
American General Board 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 American General Board 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 American General Board 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.
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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 American General Board 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 American General Board. The Rights should
not interfere with any merger or other business combination approved by the
American General Board 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 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 Proxy Statement/Prospectus forms a
part, and the Statement of Resolution Establishing Series of Shares of
American General Junior Preferred Shares.
AMERICAN GENERAL 7% CONVERTIBLE PREFERRED STOCK
GENERAL
In connection with the Merger Agreement, the American General Board has
adopted a Statement of Resolution Establishing 7% Convertible Preferred Stock
(the "7% Designation"), authorizing the issuance of the maximum number of
shares of the American General 7% Convertible Preferred Stock issuable
pursuant to the Merger. The summary of certain terms and provisions of the
American General 7% Convertible Preferred Stock set forth below does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the American General Articles and the 7% Designation. The form
of 7% Designation is attached as an exhibit to the Merger Agreement which is
included in Annex A hereto. In addition, the American General Articles are
filed as an exhibit to the Registration Statement of which this Proxy
Statement/Prospectus forms a part.
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DIVIDENDS
Holders of shares of American General 7% Convertible Preferred Stock will be
entitled to receive, when and as declared by the American General Board of
Directors out of funds legally available therefor, cash dividends from the
date of initial issuance of the shares of American General 7% Convertible
Preferred Stock at the rate per annum of 7% of the Average Closing Price,
payable quarterly in arrears on each March 1, June 1, September 1 and December
1 (each, a "Dividend Payment Date"), or, if any such date is not a business
day, on the next succeeding business day; provided, however, that with respect
to any dividend period during which a redemption occurs, American General may,
at its option, declare accrued dividends to, and pay such dividends on, the
date fixed for redemption, in which case such dividends will be payable in
cash to the holders of shares of American General 7% Convertible Preferred
Stock as of the record date for such dividend payment and would not be
included in the calculation of the related Call Price as set forth below. The
first dividend period will be from the date of initial issuance of the shares
of American General 7% Convertible Preferred Stock to but excluding the first
Dividend Payment Date thereafter that is at least eleven days after the
Effective Time, and the first dividend will be payable on such Dividend
Payment Date. Dividends will cease to accrue on shares of American General 7%
Convertible Preferred Stock on the Mandatory Conversion Date or on the date of
their earlier conversion or redemption.
Dividends will be payable to holders of record as they appear on the stock
register of American General. The record date for each such payment shall be
not less than 10 nor more than 50 days preceding the corresponding Dividend
Payment Date, as shall be fixed by the American General Board of Directors.
Dividends payable on shares of American General 7% Convertible Preferred Stock
for any period less than or more than a full quarterly dividend period will be
computed on the basis of a 360-day year of twelve 30-day months. Dividends
will accrue whether or not there are funds legally available for the payment
thereof and whether or not such dividends are declared. Accrued but unpaid
dividends on shares of American General 7% Convertible Preferred Stock will
accumulate as of the Dividend Payment Date on which they first become payable,
but no interest will accrue on accumulated but unpaid dividends.
The shares of American General 7% Convertible Preferred Stock will rank on a
parity as to payment of dividends and distribution of assets upon liquidation,
with the Series A Preferred Stock (as hereinafter defined) and any other
preferred stock of American General that by its terms ranks on such parity
with the American General 7% Convertible Preferred Stock.
If accumulated dividends have not been paid in full on the American General
7% Convertible Preferred Stock, then, subject to the next sentence, American
General shall not (a) declare or pay any dividend on any Dividend Pari Passu
Security or Dividend Junior Security (each as defined below) or (b) redeem,
purchase, retire or otherwise acquire for consideration shares of any Dividend
Junior Security (or rights to purchase such Dividend Junior Security), other
than (i) purchases or acquisitions of shares of any Dividend Junior Security
in connection with the satisfaction by American General or any of its
majority-owned subsidiaries of its obligations under any employee benefit plan
or the satisfaction by American General of its obligations pursuant to any
contract requiring American General to purchase any Dividend Junior Security,
(ii) as a result of a reclassification of any Dividend Junior Security or the
exchange or conversion of one class or series of any Dividend Junior Security
for another class or series of any Dividend Junior Security, (iii) redemptions
or purchases of any Rights or the declaration and payment of a dividend or
distribution of similar share purchase rights in the future or (iv) the
purchase of fractional shares of any Dividend Junior Security pursuant to the
conversion or exchange provisions of such Dividend Junior Security or the
security being converted or exchanged, (c) redeem, purchase, retire or
otherwise acquire for consideration any Dividend Pari Passu Security (or
rights, options or warrants to purchase such Dividend Pari Passu Security), or
(d) permit any subsidiary of American General to purchase or otherwise acquire
for consideration any shares of stock of American General unless American
General could, pursuant to the foregoing, purchase or otherwise acquire such
shares at such time and in such manner. The preceding sentence, however, shall
not apply to, or prohibit (a) dividends as a result of a reclassification of
Dividend Pari Passu Securities or Dividend Junior Securities, (b) dividends of
any Rights, (c) dividends or distributions of similar share purchase rights in
the future, (d) dividends or distributions in shares of American
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General Common Stock or another class or series of capital stock of American
General that is junior to the American General 7% Convertible Preferred Stock
as to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding-up of American General, or (e) dividends
with respect to Dividend Pari Passu Securities in accordance with the
following sentence. If full accumulated dividends have not been paid upon the
shares of American General 7% Convertible Preferred Stock and any other class
or series of Dividend Pari Passu Securities, all dividends declared upon
shares of American General 7% Convertible Preferred Stock and any other such
class or series of Dividend Pari Passu Securities shall, if declared, be
declared pro rata so that the amount of cash dividends declared per share on
the American General 7% Convertible Preferred Stock and such other class or
series of Dividend Pari Passu Securities shall in all cases bear to each other
the same ratio that accumulated and unpaid dividends per share on the shares
of American General 7% Convertible Preferred Stock and such other class or
series of Dividend Pari Passu Securities bear to each other.
The term "Dividend Pari Passu Security" means any preference stock or
preferred stock or other capital stock of American General and any guarantee
entered into by American General in respect of any preference stock or
preferred stock of any affiliate of American General ranking pari passu with
the American General 7% Convertible Preferred Stock as to the payment of
dividends. "Dividend Junior Security" means American General Common Stock,
Series A Junior Participating Preferred Stock of American General and any
other class or series of capital stock of American General and any guarantee
entered into by American General in respect of any preference stock or
preferred stock of any affiliate of American General ranking junior to the
American General 7% Convertible Preferred Stock as to the payment of
dividends.
MANDATORY CONVERSION
On the Mandatory Conversion Date, each outstanding share of American General
7% Convertible Preferred Stock will, unless previously either redeemed or
converted at the option of the holder into American General Common Stock, as
described below, mandatorily convert into (a) shares of American General
Common Stock at the Common Equivalent Rate (as defined below) in effect on
such date and (b) the right to receive cash in an amount equal to all accrued
and unpaid dividends on such shares of American General 7% Convertible
Preferred Stock (other than previously declared dividends payable to a holder
of record as of a prior date) to the Mandatory Conversion Date, whether or not
declared, out of funds legally available for the payments of dividends,
subject to the right of American General to redeem the shares of American
General 7% Convertible Preferred Stock on or after the Initial Redemption
Date, and before the Mandatory Conversion Date, as described below, and
subject to the conversion of the shares of American General 7% Convertible
Preferred Stock at the option of the holder at any time before the Mandatory
Conversion Date, as described below. The "Common Equivalent Rate" is initially
one share of American General Common Stock for each share of American General
7% Convertible Preferred Stock and is subject to adjustment as described
below. Dividends will cease to accrue on the Mandatory Conversion Date with
respect to the shares of American General 7% Convertible Preferred Stock then
outstanding.
Because the price of the American General Common Stock is subject to market
fluctuations, the value of the American General Common Stock that may be
received by holders of shares of American General 7% Convertible Preferred
Stock upon their mandatory conversion may be more or less than the Average
Closing Price.
REDEMPTION AT THE OPTION OF AMERICAN GENERAL
Shares of American General 7% Convertible Preferred Stock are not redeemable
by American General before the Initial Redemption Date. At any time and from
time to time on or after that date until immediately before the Mandatory
Conversion Date, American General will have the right to redeem, in whole or
in part, the outstanding shares of American General 7% Convertible Preferred
Stock. Upon any such redemption, American General will deliver to the holder
thereof in exchange for each share of American General 7% Convertible
Preferred Stock subject to redemption the greater of (a) the number of shares
of American General Common Stock determined by dividing the Call Price (as
defined below) in effect on the redemption date by the Current Market Price
(as defined below) of the American General Common Stock, determined as of the
second trading
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day immediately preceding the Notice Date (as defined below), or (b) 0.8264 of
a share of American General Common Stock (the "Minimum Redemption Rate"),
which is subject to adjustment in the manner described below. Dividends will
cease to accrue on the shares of American General 7% Convertible Preferred
Stock on the date fixed for their redemption.
The Call Price of each share of American General 7% Convertible Preferred
Stock is the sum of (a) 101.75% of the Average Closing Price on and after the
Initial Redemption Date, to and including the date immediately preceding the
first Preferred Dividend Payment Date after the Initial Redemption Date;
101.17% of the Average Closing Price on and after such first Preferred
Dividend Payment Date, to and including the date immediately preceding the
second Preferred Dividend Payment Date after the Initial Redemption Date;
100.58% of the Average Closing Price on and after such second Preferred
Dividend Payment Date, to and including the date immediately preceding the
third Preferred Dividend Payment Date after the Initial Redemption Date; and
the Average Closing Price on and after such third Preferred Dividend Payment
Date, to and including the date immediately preceding the Mandatory Conversion
Date; and (b) all accrued and unpaid dividends thereon to but not including
the date fixed for redemption (other than previously declared dividends
payable to a holder of record as of a prior date).
The "Current Market Price" per share of the American General Common Stock on
any date of determination means the lesser of (a) the average of the daily
closing sales prices of the American General Common Stock as reported on the
NYSE for the 15 consecutive trading days ending on and including such date of
determination and (b) the closing sale price of the American General Common
Stock as reported on the NYSE for such date of determination; provided,
however, that, with respect to any redemption of shares of American General 7%
Convertible Preferred Stock, if any event resulting in an adjustment of the
Common Equivalent Rate occurs during the period beginning on the first day of
such 15-day period and ending on the applicable redemption date, the Current
Market Price as determined pursuant to the foregoing will be appropriately
adjusted to reflect the occurrence of such event. The "Notice Date" with
respect to any notice given by the Company in connection with a redemption of
the shares of American General 7% Convertible Preferred Stock means the
earlier of the date of the public announcement of such redemption or the date
of commencement of mailing of such notice to the holders of shares of American
General 7% Convertible Preferred Stock.
If fewer than all the outstanding shares of American General 7% Convertible
Preferred Stock are to be called for redemption, the shares to be redeemed
shall be selected by American General from outstanding shares of American
General 7% Convertible Preferred Stock by lot or pro rata (as nearly as may be
practicable without creating fractional shares) or by any other method
determined by the American General Board of Directors in its sole discretion
to be equitable.
American General will provide notice of any redemption of shares of American
General 7% Convertible Preferred Stock to holders of record thereof to be
redeemed not less than 20 nor more than 60 days before the date fixed for
redemption. Any such notice will be provided by mail, sent to the holders of
record of the shares of American General 7% Convertible Preferred Stock to be
called for redemption at each such holder's address as it appears on the stock
register of American General, first class postage prepaid; provided, however,
that failure to give such notice or any defect therein will not affect the
validity of the proceeding for redemption of any shares of American General 7%
Convertible Preferred Stock to be redeemed except as to the holder to whom
American General has failed to give such notice or whose notice was defective.
On and after the redemption date, all rights of the holders of the shares of
American General 7% Convertible Preferred Stock called for redemption will
terminate except the right to receive the redemption price and to receive
dividends on such shares previously declared and payable to the holders of
record of such shares as of a prior date. A public announcement of any call
for redemption will be made by American General before, or at the time of, the
mailing of such notice of redemption.
Each holder of shares of American General 7% Convertible Preferred Stock
called for redemption must surrender the certificates evidencing such shares
to American General at the place designated in the notice of
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redemption and will thereupon be entitled to receive certificates for shares
of American General Common Stock and cash for any fractional share amount.
CONVERSION AT THE OPTION OF THE HOLDER
The shares of American General 7% Convertible Preferred Stock are
convertible, in whole or in part, at the option of the holders thereof, at any
time before the Mandatory Conversion Date, unless previously redeemed, into
shares of American General Common Stock at a rate of 0.8264 of a share of
American General Common Stock for each share of American General 7%
Convertible Preferred Stock (the "Optional Conversion Rate"), subject to
adjustment as described below. The right to convert shares of American General
7% Convertible Preferred Stock called for redemption will terminate
immediately before the close of business on the redemption date for such
shares.
Conversion of shares of American General 7% Convertible Preferred Stock at
the option of the holder may be effected by the delivery of certificates
evidencing such shares of American General 7% Convertible Preferred Stock,
together with written notice of conversion and a proper assignment of such
certificates to American General or in blank (and, if applicable, the cash
payment described in the following paragraph), to the office of the transfer
agent for the American General 7% Convertible Preferred Stock or to any other
office or agency maintained by American General for that purpose and otherwise
in accordance with conversion procedures established by American General. Each
optional conversion will be deemed to have been effective immediately before
the close of business on the date on which the foregoing requirements have
been satisfied. The conversion will be at the Optional Conversion Rate in
effect at such time and on such date.
Holders of shares of American General 7% Convertible Preferred Stock at the
close of business on a record date for any payment of declared dividends will
be entitled to receive the dividend payable on such shares of American General
7% Convertible Preferred Stock on the corresponding Dividend Payment Date
notwithstanding the optional conversion of such shares following such record
date and before such Dividend Payment Date. However, shares of American
General 7% Convertible Preferred Stock surrendered for conversion after the
close of business on a record date for any payment of declared dividends and
before the opening of business on the next succeeding Dividend Payment Date
must be accompanied by payment in cash of an amount equal to the dividend
attributable to the current quarterly dividend period payable on such date
minus the amount of the dividends, if any, payable on such date on the number
of shares of American General Common Stock issuable in connection with such
conversion (unless such shares of American General 7% Convertible Preferred
Stock are subject to redemption on a redemption date on or after such record
date and on or prior to such Dividend Payment Date). A holder of shares of
American General 7% Convertible Preferred Stock called for redemption on or
after the record date for any dividend payment and on or prior to the Dividend
Payment Date for such dividend will receive the dividend on such shares of
American General 7% Convertible Preferred Stock payable on that Dividend
Payment Date and will be able to convert such shares after the record date for
such dividend without paying the above cash amount to American General upon
conversion. Except as provided above, upon any optional conversion of shares
of American General 7% Convertible Preferred Stock, American General will make
no payment or allowance for unpaid dividends, whether or not in arrears, on
such shares, or for previously declared dividends or distributions on the
shares of American General Common Stock issued upon such conversion.
CONVERSION ADJUSTMENTS
The Common Equivalent Rate, the Minimum Redemption Rate and the Optional
Conversion Rate are each subject to adjustment as appropriate in certain
circumstances, including if American General (a) pays a stock dividend or
makes a distribution with respect to its American General Common Stock in
shares of American General Common Stock; (b) subdivides or splits its
outstanding American General Common Stock; (c) combines its outstanding
American General Common Stock into a smaller number of shares; (d) issues by
reclassification of its shares of American General Common Stock any shares of
American General Common Stock; (e) issues certain rights or warrants to all
holders of its American General Common Stock; or (f) pays a dividend or
distributes to all holders of its American General Common Stock evidences of
its indebtedness, cash or other
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assets (including capital stock of American General but excluding any Excluded
Dividends (as defined below), and dividends and distributions referred to in
clause (a) above). "Excluded Dividends" means (a) any dividend, distribution
or issuance of rights or warrants referred to in clauses (a) or (c) of the
preceding sentence, (b) any regular cash dividend on the American General
Common Stock that does not exceed the per share amount of the immediately
preceding regular cash dividend on the American General Common Stock (after
accounting for any appropriate anti-dilution adjustments), and (c) in the case
of any other dividend or distribution (cash or otherwise), that portion
thereof which, when combined with the per share fair market value of all other
dividends and distributions paid by American General on American General
Common Stock during the 365-day period ending on the date of declaration of
such dividend or distribution (after accounting for any appropriate anti-
dilution adjustments and excluding cash dividends and distributions for which
a prior adjustment to the Common Equivalent Rate, the Minimum Redemption Rate
and Optional Conversion Rate was previously made), does not exceed 15% of the
Current Market Price per share of the American General Common Stock on the
trading date immediately preceding the date of declaration of such dividend or
distribution. In addition, American General will be entitled (but will not be
required) to make upward adjustments in the Common Equivalent Rate, the
Minimum Redemption Rate, the Optional Conversion Rate and the Call Price as
American General, in its discretion, determines to be advisable, in order that
any stock dividend, subdivision of shares, distribution of rights to purchase
stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction which could be treated as any of
the foregoing transactions pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended) hereafter made by the Company to its shareholders
will not be taxable. All adjustments to the Common Equivalent Rate, the
Minimum Redemption Rate and the Optional Conversion Rate will be calculated to
the nearest .01 of a share of American General Common Stock. No such
adjustment will be required unless such adjustment will require an increase or
decrease of at least 1% therein; provided, however, that any adjustments
which, by reason of the foregoing, are not required to be made will be carried
forward and taken into account and any subsequent adjustment.
Whenever the Common Equivalent Rate, the Minimum Redemption Rate and the
Optional Conversion Rate are adjusted as provided in the preceding paragraph,
American General will file with the transfer agent for the shares of American
General 7% Convertible Preferred Stock a certificate with respect to such
adjustment, make a prompt public announcement thereof and mail a notice to
holders of the shares of American General 7% Convertible Preferred Stock
providing specified information with respect to such adjustment. At least ten
business days before taking any action that could result in certain
adjustments in the Common Equivalent Rate, the Minimum Redemption Rate and the
Optional Conversion Rate, American General will notify each holder of shares
of American General 7% Convertible Preferred Stock concerning such proposed
action.
ADJUSTMENT FOR CERTAIN MERGERS AND OTHER TRANSACTIONS
In case of any consolidation or merger to which American General is a party
(other than a consolidation or merger in which American General is the
surviving or continuing corporation and in which the shares of American
General Common Stock outstanding immediately before the consolidation or
merger remain unchanged), or in the case of any sale or transfer to another
corporation of all or substantially all of the assets of American General, or
in the case of a statutory exchange of securities with another corporation
(other than in connection with a merger or acquisition), each share of
American General 7% Convertible Preferred Stock shall, after consummation of
such transaction, be subject to (a) conversion at the option of the holder
into the kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of
American General Common Stock into which such share of American General 7%
Convertible Preferred Stock might have been converted immediately before
consummation of such transaction, (b) conversion on the Mandatory Conversion
Date into the kind and amount of securities, cash or other property receivable
upon consummation of such transaction by a holder of the number of shares of
American General Common Stock into which such share of American General 7%
Convertible Preferred Stock would have been converted if the conversion on the
Mandatory Conversion Date had occurred immediately before the date of
consummation of such transaction, plus the right to receive cash in an amount
equal to all accrued and unpaid dividends on such share of American General 7%
Convertible Preferred Stock other than previously declared dividends payable
to a holder of record as of a prior date, and (c) redemption on any redemption
date on or after
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the Initial Redemption Date in exchange for the kind and amount of securities,
cash or other property receivable upon consummation of such transaction by a
holder of the number of shares of American General Common Stock that would
have been issuable at the Call Price in effect on such redemption date upon a
redemption of such share of American General 7% Convertible Preferred Stock
immediately before consummation of such transaction, assuming that, if the
Notice Date for such redemption is not before such transaction, the Notice
Date had been the date of such transaction; and assuming in each case that
such holder of shares of American General Common Stock failed to exercise
rights of election, if any, as to the kind or amount of securities, cash or
other property receivable upon consummation of such transaction (provided
that, if the kind or amount of securities, cash or other property receivable
upon consummation of such transaction is not the same for each non-electing
share, then the kind and amount of securities, cash or other property
receivable upon consummation of such transaction for each non-electing share
will be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into
or for which the shares of American General 7% Convertible Preferred Stock
will be convertible or redeemable after consummation of such transaction will
be subject to adjustment as described above under "Conversion Adjustments"
following the date of consummation of such transaction. American General may
not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
FRACTIONAL SHARES
No fractional shares of American General Common Stock will be issued upon
redemption or conversion of shares of American General 7% Convertible
Preferred Stock. In lieu of any fractional share otherwise issuable with
respect to the aggregate number of shares of American General 7% Convertible
Preferred Stock of any holder that are redeemed or converted on any redemption
date or upon mandatory conversion or any optional conversion, such holder will
be entitled to receive an amount in cash equal to the same fraction of the (a)
Current Market Price of the American General Common Stock, determined as of
the second trading day immediately preceding the Notice Date, in the case of
redemption, or (b) Closing Price (as defined in the 7% Designation) of the
American General Common Stock determined (i) as of the fifth trading day
immediately preceding the Mandatory Conversion Date, in the case of mandatory
conversion, or (ii) as of the second trading day immediately preceding the
effective date of conversion, in the case of an optional conversion by a
holder.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of American General, and subject to the rights of holders of any
other series of Preferred Stock, the holders of outstanding shares of American
General 7% Convertible Preferred Stock are entitled to receive for each share
of American General 7% Convertible Preferred Stock an amount equal to the
Average Closing Price, plus accrued and unpaid dividends thereon, out of the
assets of American General available for distribution to shareholders, before
any distribution of assets is made to holders of American General Common Stock
or any other capital stock ranking junior to the American General 7%
Convertible Preferred Stock upon liquidation, dissolution or winding-up.
If, upon any voluntary or involuntary liquidation, dissolution or winding-up
of American General, the assets of American General are insufficient to permit
the payment of the full preferential amounts payable with respect to the
shares of American General 7% Convertible Preferred Stock and all other series
of preferred stock ranking on a parity as to distribution of assets upon
liquidation, the holders of shares of American General 7% Convertible
Preferred Stock and of all other such series of Preferred Stock will share
ratably in any distribution of assets of American General in proportion to the
full respective preferential amounts to which they are entitled. After payment
of the full amount of the liquidating distribution to which they are entitled,
the holders of shares of American General 7% Convertible Preferred Stock will
not be entitled to any further participation in any distribution of assets by
American General. A consolidation or merger of American General with or into
one or more other corporations, or a sale, lease or exchange of all or
substantially all of the assets of American General, will not be deemed to be
a voluntary or involuntary liquidation, dissolution or winding-up of American
General.
VOTING RIGHTS
The holders of shares of American General 7% Convertible Preferred Stock
will have the right with the holders of American General Common Stock to vote
in the election of Directors and upon each other matter
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coming before any meeting of the holders of American General Common Stock on
the basis of 4/5th of a vote for each share of American General 7% Convertible
Preferred Stock held. In addition, American General will be entitled (but will
not be required) to make upward adjustments in the Common Equivalent Rate, the
Minimum Redemption Rate, the Optional Conversion Rate and the Call Price as
American General, in its discretion, determines to be advisable, in order that
any stock dividend, subdivision of shares, distribution of rights to purchase
stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction which could be treated as any of
the foregoing transactions pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended) hereafter made by the Company to its shareholders
will not be taxable. The holders of shares of American General 7% Convertible
Preferred Stock and the holders of shares of American General Common Stock
will vote together as one class on such matters, except as otherwise provided
by law or by the American General Articles.
If full cumulative dividends on the American General 7% Convertible
Preferred Stock are not paid for six quarterly dividend periods, the number of
directors of American General constituting the entire Board of Directors shall
be increased by two persons and the holders of shares of American General 7%
Convertible Preferred Stock, voting separately as a class together with the
holders of shares of all other series of capital stock of American General
ranking on a parity with the American General 7% Convertible Preferred Stock
as to the payment of dividends and having the then present right to elect one
or more directors as a result of a dividend arrearage but not then entitled to
other separate voting rights to elect one or more directors in the event of
such an arrearage ("Class Voting Stock"), shall have the right to elect such
directors to fill such positions. Such right, when vested, will continue until
all dividends in arrears and payable on the shares of American General 7%
Convertible Preferred Stock have been paid in full, whereupon the terms of
office of all persons previously elected as directors by the holders of shares
of American General 7% Convertible Preferred Stock and such other Class Voting
Stock shall forthwith terminate and the number of the American General Board
of Directors shall be reduced accordingly.
The American General 7% Convertible Preferred Stock provides that:
(i) so long as any shares of American General 7% Convertible Preferred
Stock remain outstanding, the consent of the holders of at least two-thirds
of the outstanding shares of American General 7% Convertible Preferred
Stock and all other shares of preferred stock of American General ranking
on a parity with the American General 7% Convertible Preferred Stock as to
the payment of dividends and the distribution of assets upon Liquidation
that would be affected equally by the action described in clause (A) or (B)
below and that are entitled to vote on such matter (voting together as a
class, with each such share of preferred stock being entitled to a
proportional share of the votes that may be cast with respect to such
matter based on the proportion that the liquidation preference of such
share bears to the aggregate liquidation preference of all shares entitled
to vote thereon), given in person or by proxy, at any special or annual
meeting, or by written consent as permitted by law and the American General
Articles and Bylaws, shall be necessary to permit, effect or validate any
of the following: (A) the amendment, alteration or repeal of any of the
provisions of the American General Articles (or of the resolutions
establishing the American General 7% Convertible Preferred Stock), which
would materially and adversely affect any right, preference, privilege or
voting power of the American General 7% Convertible Preferred Stock,
provided, however, that any such amendment, alteration or repeal that would
authorize, create or issue any additional shares of stock (whether or not
already authorized) ranking on a parity with or junior to the American
General 7% Convertible Preferred Stock as to dividends or as to the
distribution of assets upon Liquidation, shall be deemed not to materially
and adversely affect such rights, preferences, privileges or voting power,
and provided further, however, that any such amendment, alteration or
repeal may authorize, create or issue additional shares of stock ranking
senior to the American General 7% Convertible Preferred Stock as to
dividends or as to the distribution of assets upon Liquidation, if such
action is approved in the manner set forth in subparagraph (ii) below; or
(B) the consummation of a merger or consolidation of American General with
any other corporation, unless each holder of shares of American General 7%
Convertible Preferred Stock immediately preceding such merger or
consolidation shall receive or continue to hold in the surviving
corporation the same number of shares, with substantially the same rights
and preferences (except as set forth above under
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"--Adjustments for Certain Mergers and Other Transactions"), as correspond
to the shares of American General 7% Convertible Preferred Stock so held;
(ii) so long as any shares of American General 7% Convertible Preferred
Stock remain outstanding, no class or series of stock ranking senior to the
American General 7% Convertible Preferred Stock as to dividends or as to
the distribution of assets upon Liquidation, may be authorized, created or
issued unless American General shall have obtained the consent of either
(A) the holders of at least two-thirds of the outstanding shares of
American General 7% Convertible Preferred Stock and all other shares of
preferred stock of American General ranking on parity with the American
General 7% Convertible Preferred Stock as to the payment of dividends and
the distribution of assets upon Liquidation that are entitled to vote on
such matter (voting together as a class, with each such share of preferred
stock being entitled to a proportional share of the votes that may be cast
with respect to such matter based on the proportion that the liquidation
preference of such share bears to the aggregate liquidation preference of
all shares entitled to vote thereon), or (B) the holders of a majority of
the outstanding shares of American General 7% Convertible Preferred Stock,
voting separately as a class, in each case given in person or by proxy, at
any special or annual meeting, or by written consent as permitted by law
and the American General Articles and Bylaws; and
(iii) if the holders of the American General 7% Convertible Preferred
Stock are entitled by law to vote on any matter other than as set forth
above in subparagraphs (i) or (ii) above, then (A) if such holders are
entitled to vote on such matter together with another series of preferred
stock of American General, the vote required with respect to such matter
shall be the vote of a majority of the outstanding shares of American
General 7% Convertible Preferred Stock and all such other series of
preferred stock entitled to vote thereon (voting together as a class, with
each such share of preferred stock being entitled to a proportional share
of the votes that may be cast with respect to such matter based on the
proportion that the liquidation preference of such share bears to the
aggregate liquidation preference of all shares entitled to vote thereon),
and (B) if such holders are entitled to vote as a separate class with
respect to such matter, the vote required with respect to such matter shall
be a majority of the outstanding American General 7% Convertible Preferred
Stock.
The provisions set forth in paragraphs (i) and (ii) above shall not apply
if, at or prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, (A) all outstanding shares of
American General 7% Convertible Preferred Stock shall have been redeemed or
converted pursuant to the terms of the American General 7% Convertible
Preferred Stock, or (B) all outstanding shares of American General 7%
Convertible Preferred Stock are scheduled to be redeemed or converted within
two months and sufficient shares of American General Common Stock and cash, if
any, necessary for such redemption or conversion shall have been deposited
with a bank or trust company in accordance with the terms of the American
General 7% Convertible Preferred Stock.
MISCELLANEOUS
Upon issuance, the shares of American General 7% Convertible Preferred Stock
will be fully paid and non-assessable. Holders of shares of American General
7% Convertible Preferred Stock have no preemptive rights. American General
will at all times reserve and keep available out of its authorized and
unissued American General Common Stock, solely for issuance upon the
conversion or redemption of shares of American General 7% Convertible
Preferred Stock, such number of shares of American General Common Stock as
will from time to time be issuable upon the conversion or redemption of all
the shares of American General 7% Convertible Preferred Stock then
outstanding. Shares of American General 7% Convertible Preferred Stock
redeemed for, or converted into, American General Common Stock or otherwise
reacquired by American General will resume the status of authorized and
unissued shares of Preferred Stock, undesignated as to series, and will be
available for subsequent issuance.
AMERICAN GENERAL SERIES A PREFERRED SECURITIES AND PREFERRED STOCK
American General Delaware, L.L.C., a Delaware limited liability company and
an affiliate of American General ("American General Delaware"), has issued
5,000,000 shares of 6% Convertible Monthly Income
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Preferred Securities, Series A (the"American General Series A Preferred
Securities"), representing preferred limited liability company interests in
American General Delaware. All of the common limited liability company
interests in American General Delaware are owned directly or indirectly by
American General. The proceeds from the offering of the American General
Series A Preferred Securities were used by American General Delaware to
purchase from American General its 6% Series A Convertible Junior Subordinated
Debentures due 2025 (the "Series A Junior Subordinated Debentures").
Holders of the American General Series A Preferred Securities are entitled
to receive cumulative cash distributions from American General Delaware at the
annual rate of 6% of the liquidation preference of $50 per Series A 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.
In the event of the liquidation, dissolution or winding-up of American
General Delaware, holders of American General Series A Preferred Securities
are entitled to receive for each Series A Preferred Security a liquidation
preference of $50 plus an amount equal to any accumulated and unpaid dividends
(whether or not earned or declared), including any Additional Dividends (as
hereinafter defined), to the date of payment, subject to certain limitations.
Each Series A Preferred Security is convertible at the option of the holder,
at any time prior to the expiration of such conversion rights as discussed
below (the "Conversion Expiration Date"), into shares of American General
Common Stock, at the rate of 1.2288 shares of American General Common Stock
for each Series A Preferred Security (equivalent to a conversion price of
$40.69 per share of American General Common Stock), subject to adjustment in
certain circumstances. On and after May 31, 2000, American General Delaware
may, at its option, cause the conversion rights of holders of the American
General Series A Preferred Securities to expire if certain conditions are then
satisfied.
The American General Series A Preferred Securities are redeemable at the
option of American General Delaware, in whole or in part, from time to time,
on or after May 31, 2003, at a cash redemption price equal to the liquidation
preference for such American General Series A Preferred Securities plus
accumulated and unpaid dividends (whether or not earned or declared),
including any Additional Dividends, to the date fixed for redemption. The
American General Series A Preferred Securities do not have a stated maturity
date, although they are subject to mandatory redemption upon repayment of the
principal of the Series A Junior Subordinated Debentures at stated maturity
(May 31, 2025), earlier redemption or otherwise, including as a result of
acceleration thereof.
In addition, the American General Series A Preferred Securities are subject
to exchange, in whole but not in part, for shares of Series A Cumulative
Convertible Preferred Stock, par value $1.50 per share, of American General
("American General Series A Preferred Stock"), at the rate of one share of
American General Series A Preferred Stock for each Series A Preferred
Security, upon a vote of the holders of a majority of the aggregate
liquidation preference of all outstanding American General Series A Preferred
Securities following the failure of holders of American General Series A
Preferred Securities to receive dividends in full (including arrearages) for
15 consecutive months. The American General Series A Preferred Stock will have
dividend, liquidation, optional redemption and conversion provisions and
certain other terms substantially similar to those of the American General
Series A Preferred Securities, except that, among other things, the holders of
American General Series A Preferred Stock will have the right (voting together
with holders of certain other series of capital stock of American General
including, under certain circumstances, with the holders of American General
7% Convertible Preferred Stock) to elect two additional directors of American
General whenever dividends on the American General Series A Preferred Stock
are in arrears for 18 or more consecutive months, no interest will accumulate
or be payable on any dividend arrearages on the American General Series A
Preferred Stock and the American General Series A Preferred Stock will not be
subject to mandatory redemption. The American General Series A Preferred
Stock, if issued, would be pari passu with the American General 7% Convertible
Preferred Stock as to the payment of dividends and distribution of assets upon
liquidation of American General.
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American General has irrevocably and unconditionally guaranteed, on a
subordinated basis and to the extent provided in the applicable guarantee, the
payment of dividends by American General Delaware on the American General
Series A Preferred Securities (but only if and to the extent declared from
funds of American General Delaware legally available therefor), the redemption
price payable with respect to American General Series A Preferred Securities
(but only to the extent payable out of funds of American General Delaware
legally available therefor) and payments on liquidation, dissolution or
winding-up with respect to the American General Series A Preferred Securities
(but only to the extent that assets of American General Delaware are available
for distribution to holders of the American General Series A Preferred
Securities) (the "Guarantee"). The Guarantee is unsecured and is subordinate
to all other liabilities of American General (other than certain other
guarantees) and ranks pari passu with the most senior preferred stock issued
by American General, including the American General 7% Convertible Preferred
Stock.
Interest on the Series A Junior Subordinated Debentures is payable monthly
in arrears but such interest payment period may be extended from time to time
by American General to a period not exceeding 60 consecutive months (an
"Extension Period"), in which event monthly dividend payments on the American
General Series A Preferred Securities by American General Delaware would be
deferred but would continue to accumulate monthly and certain additional
dividends ("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 A 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. At the end of any such Extension Period,
American General will be required to pay all accrued and unpaid interest
(including compounded interest) and upon such payment American General
Delaware should be able to pay all accumulated and unpaid dividends on the
American General Series A Preferred Securities (including Additional
Dividends). If American General were to exercise its rights to extend an
interest payment period on the Series A Junior Subordinated Debentures, it has
agreed, subject to certain exceptions, to not pay any dividends on any of its
capital stock, which would include the American General 7% Convertible
Preferred Stock.
CERTAIN FEDERAL INCOME TAX ASPECTS RELATING TO THE OWNERSHIP AND DISPOSITION
OF AMERICAN GENERAL COMMON STOCK AND AMERICAN GENERAL 7% CONVERTIBLE PREFERRED
STOCK
The following is a summary of the material federal income tax consequences
of the ownership and disposition of American General Common Stock and American
General 7% Convertible Preferred Stock under existing federal income tax law,
which is subject to change, possibly retroactively. Insofar as such summary
relates to matters of law and legal conclusions, such summary represents the
opinion of Vinson & Elkins L.L.P., counsel to American General. This summary
assumes that shareholders will hold American General Common Stock and American
General 7% Convertible Preferred Stock as capital assets. This summary does
not discuss all aspects of federal income taxation which may be relevant to
particular shareholders who are subject to special treatment under the federal
income tax laws (for example, financial institutions, insurance companies,
tax-exempt organizations, broker-dealers and foreign persons), nor does it
discuss any aspects of state, local or foreign tax law. Each shareholder is
advised to consult his own tax advisor as to the federal, state, local and
foreign income and other tax consequences of the ownership and disposition of
American General Common Stock and American General 7% Convertible Preferred
Stock.
DIVIDENDS
Dividends paid on the American General 7% Convertible Preferred Stock or
American General Common Stock will be taxable as ordinary income to the extent
of American General's current and accumulated "earnings and profits" (as
defined for federal income tax purposes). To the extent that a distribution on
American General 7% Convertible Preferred Stock or American General Common
Stock exceeds the current and accumulated
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earnings and profits of American General, such distribution will be treated as
a nontaxable return of capital which reduces the holder's basis in its
American General 7% Convertible Preferred Stock or American General Common
Stock; any such distribution in excess of a holder's basis will be treated as
gain from the sale or exchange of a capital asset. American General does not
expect, however, that dividends paid on the American General 7% Convertible
Preferred Stock or American General Common Stock will exceed its current and
accumulated earnings and profits. Subject to certain limitations, dividends
received by corporate holders of the American General 7% Convertible Preferred
Stock or American General Common Stock out of such earnings and profits
generally will qualify for the dividends received deduction allowable to
corporations under Section 243 of the Code.
CONVERSION
In general, no gain or loss will be recognized for federal income tax
purposes on conversion of American General 7% Convertible Preferred Stock
solely into shares of American General Common Stock, except with respect to
any cash received in lieu of fractional shares of American General Common
Stock (pursuant to either mandatory conversion or optional redemption). If
dividends on the American General 7% Convertible Preferred Stock were in
arrears at the time of conversion, however, a portion of the American General
Common Stock received in exchange for American General 7% Convertible
Preferred Stock could be viewed under Section 305(c) of the Code as a
distribution with respect to the American General 7% Convertible Preferred
Stock, taxable as a dividend. The tax basis for American General Common Stock
received on conversion will be equal to the tax basis of the American General
7% Convertible Preferred Stock converted, reduced by the portion of basis
allocable to any fractional share exchanged for cash. The holding period of
the shares of American General Common Stock will include the holding period of
such American General 7% Convertible Preferred Stock.
ADJUSTMENT OF CONVERSION PRICE
An adjustment in the conversion rates of the American General 7% Convertible
Preferred Stock pursuant to certain anti-dilution provisions contained in the
terms of the American General 7% Convertible Preferred Stock, or the failure
to make such an adjustment, may, in certain circumstances, be treated as a
constructive distribution to holders of American General 7% Convertible
Preferred Stock or to holders of American General Common Stock under Section
305 of the Code.
BACK-UP WITHHOLDING
Under Section 3406 of the Code and applicable Treasury regulations, a
noncorporate holder of American General 7% Convertible Preferred Stock or
American General Common Stock may be subject to back-up withholding at the
rate of 31 percent with respect to dividends paid or proceeds received from a
sale or exchange of American General 7% Convertible Preferred Stock or
American General Common Stock, as the case may be. The payor will be required
to withhold the tax if (a) the payee fails to furnish a taxpayer
identification number ("TIN") to the payor or establish an exemption from
backup withholding, (b) the IRS notifies the payor that the TIN furnished by
the payee is incorrect, (c) there has been a notified payee under reporting
with respect to interest, dividends or original issue discount described in
Section 3406(c) of the Code or (d) there has been a failure of the payee to
certify under the penalty of perjury that the payee is not subject to backup
withholding under the Code.
EACH SHAREHOLDER IS ENCOURAGED TO CONSULT HIS OR HER OWN TAX ADVISORS AS TO
PARTICULAR FACTS AND CIRCUMSTANCES WHICH MAY BE UNIQUE TO SUCH SHAREHOLDER AND
ALSO AS TO ANY ESTATE, GIFT, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE
OWNERSHIP OR DISPOSITION OF AMERICAN GENERAL COMMON STOCK OR AMERICAN GENERAL
7% CONVERTIBLE PREFERRED STOCK.
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DESCRIPTION OF INDEPENDENT CAPITAL STOCK
GENERAL
The authorized capital stock of Independent presently consists of 7,500,000
shares of Independent Voting Common Stock; 15,000,000 shares of Independent
Non-Voting Common Stock and 20,000,000 shares of preferred stock, par value
$0.10 per share (the "Independent Preferred Stock"). There were 5,688,775
shares of Independent Voting Common Stock and 7,475,725 shares of Independent
Non-Voting Common Stock outstanding as of the Record Date. No shares of
Independent Preferred Stock were outstanding as of the Record Date.
The following summaries of the terms of Independent Voting Common Stock,
Independent Non-Voting Common Stock, and Independent Preferred Stock do not
purport to be complete and are qualified in their entirety by reference to the
Independent Articles, the Independent Bylaws and the FBCA. For information as
to how to obtain the Independent Articles and the Independent Bylaws, see
"AVAILABLE INFORMATION." Shares of Independent Voting Common Stock and
Independent Non-Voting Common Stock are fully-paid and nonassessable. Neither
the holders of Independent Voting Common Stock nor the holders of Independent
Non-Voting Common Stock have any cumulative voting, pre-emptive, subscription,
redemption or sinking fund rights. Independent Non-Voting Common Stock is
listed and traded on the Nasdaq National Market under the symbol "INDHK."
There is no established trading market for Independent Voting Common Stock.
For a discussion of the material differences between the rights of holders of
Independent Common Stock and the rights of holders of American General Stock,
see "COMPARISON OF SHAREHOLDER RIGHTS."
INDEPENDENT VOTING COMMON STOCK AND INDEPENDENT NON-VOTING COMMON STOCK
Except for voting rights, Independent Voting Common Stock and Independent
Non-Voting Common Stock are identical in all respects. The holders of
Independent Voting Common Stock are entitled to one vote per share. The
holders of Independent Non-Voting Common Stock have no voting rights except in
certain limited circumstances specified in the Independent Articles or the
FBCA including, but not limited to, the following: (i) the right to vote
separately as a class with respect to any proposed amendment to the
Independent Articles that adversely affects the rights of holders of
Independent Non-Voting Common Stock including, but not limited to, any
amendment otherwise requiring shareholder approval that would (a) increase or
decrease the aggregate number of authorized shares of Independent Non-Voting
Common Stock; (b) effect an exchange, reclassification or cancellation of all
or part of the shares of Independent Non-Voting Common Stock; (c) effect an
exchange, or create a right of exchange, of all or any part of the shares of
another class into the shares of Independent Non-Voting Common Stock; (d)
change the designations, preferences, limitations or relative rights of the
shares of Independent Non-Voting Common Stock; (e) change the shares of
Independent Non-Voting Common Stock into the same or a different number of
shares of another class; (f) create a new class of shares having rights and
preferences prior and superior to the shares of Independent Non-Voting Common
Stock or increase the rights and preferences of any class having rights and
preferences prior to or superior to the shares of Independent Non-Voting
Common Stock; (g) increase the rights, preferences or number of authorized
shares of any class that, after giving effect to the amendment, have rights or
preferences with respect to distributions or to dissolution that are prior,
superior or substantially equal to shares of Independent Non-Voting Common
Stock and (h) cancel or otherwise affect dividends on the shares of
Independent Non-Voting Common Stock which have accrued but have not been
declared; (ii) the right to vote together with the holders of Independent
Voting Common Stock with respect to any merger or consolidation the terms of
which are more favorable (other than as to voting rights) to the holders of
Independent Voting Common Stock than to the holders of Independent Non-Voting
Common Stock;(iii) the right to vote separately as a class on a plan of merger
if the plan contains a provision which, if contained in a proposed amendment
to the Independent Articles, would entitle the class or series to vote as a
separate voting group on the amendment pursuant to the provisions set forth in
clause (i) above; and (iv) in certain other circumstances specified by the
FBCA.
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Subject to preferences that may be applicable to any then outstanding
Independent Preferred Stock, holders of Independent Voting Common Stock are
entitled to receive ratably such cash dividends when, if, and as may be
declared by the Independent Board out of funds legally available therefor and
only if at such time an equal per share dividend shall be declared and paid to
the holders of Independent Non-Voting Common Stock, and vice versa. No stock
dividend, split-up or other similar distribution of shares of authorized but
unissued Independent Common Stock can be made unless it is payable to holders
of Independent Voting Common Stock in Independent Voting Common Stock and to
holders of Independent Non-Voting Common Stock in Independent Non-Voting
Common Stock, and no distribution can be made to the holders of one of such
classes unless a distribution is made to the holders of the other class in the
same proportion and at the same time.
In the event of any liquidation, dissolution or winding-up of Independent,
the holders of Independent Voting Common Stock and the holders of Independent
Non-Voting Common Stock will be entitled to share pro rata in the net assets
of Independent remaining, if any, after payment or provision for payment in
respect of the debts and other liabilities of Independent and subject to
liquidation preferences that may be applicable to any then outstanding
Independent Preferred Stock.
INDEPENDENT PREFERRED STOCK
The Independent Articles authorize the Independent Board to issue, from time
to time and without further shareholder action, one or more series of
Independent Preferred Stock, and to fix the relative rights and preferences of
the shares, including voting powers, dividend rights, liquidation preferences,
redemption rights and conversion privileges. Because of its broad discretion
with respect to the creation and issuance of new series of Independent
Preferred Stock without shareholder approval, the Independent Board could
adversely affect the voting power of the holders of Independent Voting Common
Stock. Except with respect to the relative rights, preferences and limitations
that may be fixed by the Independent Board, pursuant to the Independent
Articles, all shares of Independent Preferred Stock are to be identical.
Dividends on Independent Preferred Stock are to be declared and paid or set
apart for payment before any dividends can be declared and paid or set apart
for payment on Independent Voting Common Stock and Independent Non-Voting
Common Stock with respect to the same period. Dividends on Independent
Preferred Stock are cumulative only if and to the extent determined by
resolution of the Independent Board.
In the event of any liquidation, dissolution or winding-up of the affairs of
Independent, the holders of Independent Preferred Stock shall have preference
and priority over the holders of Independent Voting Common Stock and the
holders of Independent Non-Voting Common Stock for the payment of the amount
to which each outstanding series of Independent Preferred Stock may be
entitled in accordance with the terms and rights thereof and each holder of
Independent Preferred Stock would be entitled to be paid in full such amount,
or have a sum sufficient for the payment in full set aside before any payments
can be made to the holders of Independent Voting Common Stock or to the
holders of Independent Non-Voting Common Stock.
SHAREHOLDERS' AGREEMENT
Holders of more than 90% of the issued and outstanding shares of Independent
Voting Common Stock have entered into a shareholders' agreement (the
"Shareholders' Agreement") prohibiting the parties thereto from transferring
shares of Independent Voting Common Stock held by them except under certain
circumstances. The excepted transfers include: (i) transfers pursuant to an
offer which has been approved by the Independent Board, (ii) transfers
pursuant to the written consent of holders of a majority of the shares of
Independent Voting Common Stock subject to the Shareholders' Agreement and
(iii) transfers to Independent in connection with the exchange of such shares
for an equal number of shares of Independent Non-Voting Common Stock. For
purposes of the Shareholders' Agreement, the Independent Board has approved
transfers of Independent Common Stock pursuant to the Merger Agreement. The
Shareholders' Agreement has an initial term ending on November 10, 1996 and is
renewable for two additional five-year terms by the approval of the holders of
a majority of the Independent Voting Common Stock subject thereto, prior to
the expiration of each successive term.
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EXCHANGE AGREEMENTS
Independent has entered into Exchange Agreements with holders of more than
90% of the outstanding shares of Independent Voting Common Stock pursuant to
which holders may, at any time on or prior to December 31, 2006, exchange
shares of Independent Voting Common Stock for an equal number of shares of
Independent Non-Voting Common Stock without payment of any additional
consideration. All of the principal shareholders, officers and directors of
Independent are parties to these Agreements. See "SECURITY OWNERSHIP--Security
Ownership of Certain Beneficial Owners, Directors and Management of
Independent."
FLORIDA ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
Certain provisions of the FBCA, the Independent Articles and the Independent
Bylaws may have the effect of delaying, making more difficult or preventing a
change in control or acquisition of Independent by means of a tender offer, a
proxy contest or otherwise. These provisions as summarized below, are expected
to discourage certain types of coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of
Independent first to negotiate with Independent. Independent believes that the
benefits derived from requiring the proponent of an unfriendly or unsolicited
proposal to negotiate with Independent outweigh the disadvantages of
discouraging such proposals because, among other things, negotiations with
respect to such proposals could result in an improvement of their terms.
DUAL CLASSES OF INDEPENDENT COMMON STOCK
Independent Common Stock is divided into Independent Voting Common Stock and
Independent Non-Voting Common Stock. Except for certain limited circumstances
discussed above, the holders of Independent Non-Voting Common Stock have no
voting rights.
RESTRICTIONS ON TRANSFERS OF INDEPENDENT VOTING COMMON STOCK
The Independent Articles give Independent the option to purchase shares of
Independent Voting Common Stock that are offered for sale. If any holder of
Independent Voting Common Stock desires to transfer his shares, he must first
obtain a bona fide written offer to purchase from the prospective purchaser
and then present it to Independent, which has thirty days to accept the offer
upon the same terms, conditions and price or to assign its right to do so to
anyone Independent designates. This restriction does not apply to a gift, sale
or devise of shares of Independent Voting Common Stock by a shareholder to any
member of such shareholder's family. This provision applies to all transferees
of Independent Voting Common Stock. The Independent Board has waived
Independent's right to purchase shares of Independent Voting Common Stock to
the extent such shares are sold pursuant to the Merger Agreement.
INDEPENDENT PREFERRED STOCK
As described above, the Independent Board is authorized to provide for the
issuance of shares of Independent Preferred Stock in one or more series and to
fix the relative rights and preferences of the shares, including voting
powers, dividend rights, liquidation preferences, redemption rights and
conversion privileges. Although the Independent Board has no present intention
of doing so, it could issue a series of Independent Preferred Stock that
could, depending on its terms, either impede or facilitate the consummation of
a merger, tender offer or other takeover attempt.
FLORIDA AFFILIATED TRANSACTIONS STATUTE
Independent is also subject to the provisions of Section 607.0901 of the
FBCA. In general, the statute requires that certain affiliated transactions
("Affiliated Transactions") between the corporation and any person who is the
beneficial owner of more than 10% of the outstanding voting shares of the
corporation (an "Interested Shareholder") be approved by the affirmative vote
of the holders of two-thirds of the corporation's voting shares (other than
the shares beneficially owned by the Interested Shareholder), in addition to
any affirmative vote required by any other section of the FBCA or by the
corporation's articles of incorporation.
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For purposes of this statute, Affiliated Transactions include: (i) any
merger or consolidation of the corporation or any subsidiary of the
corporation with the Interested Shareholder or an affiliate thereof; (ii) any
sale, lease, exchange, transfer or other disposition to or with the Interested
Shareholder or any affiliate thereof of assets of the corporation having an
aggregate fair market value equal to 5% or more of the aggregate fair market
value of all the corporation's assets, outstanding shares, earning power or
net income; (iii) the issuance or transfer by the corporation or any
subsidiary of the corporation (in one transaction or a series of transactions)
of any shares of the corporation or any subsidiary of the corporation which
have an aggregate fair market value equal to 5% or more of the aggregate fair
market value of all the outstanding shares of the corporation to the
Interested Shareholder or any affiliate thereof except pursuant to the
exercise of warrants or rights to purchase stock offered, or a dividend or
distribution paid or made, pro rata to all shareholders of the corporation;
(iv) the adoption of any plan or proposal for the liquidation or dissolution
of the corporation proposed by, or pursuant to any agreement, arrangement, or
understanding (whether or not in writing) with, the Interested Shareholder or
any affiliate thereof; (v) any reclassification of securities (including,
without limitation, any stock split, stock dividend, or other distribution of
shares in respect of shares, or any reverse stock split) or recapitalization
of the corporation, or any merger or consolidation of the corporation with any
subsidiary of the corporation, or any other transaction, with the Interested
Shareholder or any affiliate thereof, which has the effect, directly or
indirectly (in one transaction or a series of transactions during any 12-month
period), of increasing by more than 5% the percentage of the outstanding
voting shares of the corporation or any subsidiary of the corporation
beneficially owned by the Interested Shareholder; or (vi) any receipt by the
Interested Shareholder or any affiliate thereof of the benefit, directly or
indirectly (except proportionately as a shareholder of the corporation), of
any loans, advances, guaranties, pledges, or other financial assistance or any
tax credits or other tax advantages provided by or through the corporation.
The two-thirds voting requirement does not apply to Affiliated Transactions
when any one of the following seven requirements are met: (i) the Affiliated
Transaction has been approved by a majority of the disinterested directors;
(ii) the corporation has not had more than 300 shareholders of record at any
time during the three years preceding the announcement date; (iii) the
Interested Shareholder has been the beneficial owner of at least 80% of the
corporation's outstanding voting shares for at least five years preceding the
announcement date of the Affiliated Transaction; (iv) the Interested
Shareholder is the beneficial owner of at least 90% of the outstanding voting
shares of the corporation, exclusive of shares acquired directly from the
corporation in a transaction not approved by a majority of the disinterested
directors; (v) the corporation is an investment company registered under the
Investment Company Act of 1940; (vi) in the Affiliated Transaction,
consideration shall be paid to the holders of each class or series of voting
shares and certain conditions shall have been met including, without
limitation, (a) compliance with restrictions on the amount of the
consideration paid; (b) compliance with restrictions on the type of
consideration paid; (c) compliance with restrictions on the reduction of
dividends by the corporation during the previous three years; (d) compliance
with restrictions on transactions between the corporation and the Interested
Shareholder pursuant to which the Interested Shareholder receives any benefit
(except proportionately as a shareholder of the corporation) of loans,
advances, guaranties or other financial assistance from or through the
corporation; and (e) the mailing of a proxy statement describing the
Affiliated Transaction to holders of voting shares of the corporation at least
twenty-five days before the consummation of such Affiliated Transaction; or
(vii) the corporation has elected, in compliance with the FBCA, not to be
governed by this statute.
Because the Independent Board has approved the Merger Agreement and the
transactions contemplated thereby, the provisions of Section 607.0901 are not
applicable to the Merger.
FLORIDA CONTROL-SHARE ACQUISITIONS STATUTE
Independent is also subject to the provisions of Section 607.0902 of the
FBCA. In general, the statute denies voting rights to shares purchased by an
acquiring person who has obtained or anticipates obtaining a specified level
of voting control in shares of an issuing public corporation as part of a
control-share acquisition, except to the extent that such voting rights are
conferred by resolution by the shareholders of the issuing public corporation.
A vote of the shareholders to confer voting power under the statute must meet
the criteria set forth
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in the statute, including the requirement for approval by a majority of all
votes entitled to be cast in each voting group entitled to vote separately,
excluding all interested shares. For purposes of the statute, an "issuing
public corporation" is a corporation which has more than 100 shareholders, has
its principal offices and place of business or substantial assets in the State
of Florida, and either has (i) more than 10% of its shareholders resident in
Florida; or (ii) more than 10% of its shares owned by residents of Florida; or
(iii) 1000 shareholders resident in Florida. Provisions of this statute become
effective when a person acquires or intends to acquire stock which, when added
to all other shares owned by such person or in respect of which such person
may exercise or direct voting power, either alone or as part of a group, would
entitle such person to exercise at least 20% of the voting power of the
issuing public corporation. The statute does not apply to acquisitions of any
shares of an issuing public corporation (i) pursuant to a merger or share
exchange effected in compliance with the FBCA or (ii) which have been approved
by the board of directors of such issuing public corporation.
Because the statute specifically exempts both a merger effected in
compliance with the FBCA and a transaction approved by the board of directors
of the issuing public corporation, the provisions of Section 607.0902 are not
applicable to the Merger.
TRANSFER AGENT AND REGISTRAR
Chemical Mellon Securities Trust Company is the transfer agent and registrar
for Independent Common Stock. Its address is Four Station Square, Pittsburgh,
Pennsylvania 15219-1173, and its telephone number is (800) 756-3353.
COMPARISON OF SHAREHOLDER RIGHTS
The rights of shareholders of Independent are currently governed by the
FBCA, the Independent Articles and the Independent Bylaws. Upon consummation
of the Merger, Independent shareholders who receive Stock Consideration will
become shareholders of American General and their rights will be governed by
the TBCA, the American General Articles and the American General Bylaws, which
differ in certain material respects from the FBCA, the Independent Articles
and the Independent Bylaws. The following is a summary of certain differences
between the rights of Independent shareholders and those of American General
shareholders. See "DESCRIPTION OF INDEPENDENT CAPITAL STOCK" and "DESCRIPTION
OF AMERICAN GENERAL CAPITAL STOCK."
The following summary does not purport to be a complete description of the
rights of shareholders of Independent or the rights of shareholders of
American General or a comprehensive comparison of such rights, and is
qualified in its entirety by reference to the FBCA and the TBCA, to the
Independent Articles and the Independent Bylaws, and to the American General
Articles and the American General Bylaws. The American General Articles and
Bylaws are filed as exhibits to the Registration Statement of which this Proxy
Statement/Prospectus forms a part. For more information regarding reviewing or
obtaining a copy of the charter documents or bylaws of either company, see
"AVAILABLE INFORMATION."
AUTHORIZED CAPITAL STOCK
The authorized capital stock of Independent consists of 7,500,000 shares of
Independent Voting Common Stock, 15,000,000 shares of Independent Non-Voting
Common Stock and 20,000,000 shares of Independent Preferred Stock. As of
December 31, 1995, there were outstanding 5,688,775 shares of Independent
Voting Common Stock and 7,475,725 shares of Independent Non-Voting Common
Stock and no shares of Independent Preferred Stock. The authorized capital
stock of American General consists of 300,000,000 shares of American General
Common Stock and 60,000,000 shares of American General Preferred Stock. As of
December 31, 1995, there were outstanding 203,948,246 shares of American
General Common Stock and no shares of American General Preferred Stock.
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VOTING RIGHTS
As described more fully above under "DESCRIPTION OF INDEPENDENT CAPITAL
STOCK," the holders of Independent Non-Voting Common Stock have no voting
rights except in certain limited circumstances. All holders of American
General Common Stock have the right to one vote per share with respect to all
matters submitted to a vote of American General shareholders.
As described more fully above under "DESCRIPTION OF AMERICAN GENERAL CAPITAL
STOCK--American General 7% Convertible Preferred Stock," holders of American
General 7% Convertible Preferred Stock will generally be entitled to vote
together as a single class with holders of American General Common Stock on
all matters requiring a shareholder vote, on the basis of 4/5 of a vote per
share of American General 7% Convertible Preferred Stock. In addition, holders
of American General 7% Convertible Preferred Stock will be entitled to vote
separately as a class with respect to certain matters, including rights to
elect additional directors to the American General Board in the event of
specified dividend arrearages.
AMERICAN GENERAL PREFERRED SHARE PURCHASE RIGHTS
As described more fully above under "DESCRIPTION OF AMERICAN GENERAL CAPITAL
STOCK--American General Preferred Share Purchase Rights," American General has
adopted a shareholder rights plan under which it has granted to all holders of
American General Common Stock certain rights to acquire shares of American
General Junior Preferred Shares which may have certain anti-takeover effects.
AMENDMENTS TO CHARTER AND BYLAWS
Under the FBCA, the Independent Articles and the Independent Bylaws, an
amendment to the Independent Articles generally would require the approval of
the holders of a majority of the shares of each class entitled to vote thereon
and a majority of the total shares entitled to vote thereon. Under the FBCA,
the holders of a class of securities have the right to vote separately as a
class with respect to any charter amendments that would alter certain terms of
such class specified in the FBCA. Under the TBCA and the American General
Articles, an amendment to the American General Articles generally would
require the approval of the holders of two-thirds of the shares entitled to
vote thereon, or, if any class is entitled to vote separately thereon, the
approval of the holders of two-thirds of the shares of such class entitled to
vote thereon and two-thirds of the total shares entitled to vote thereon.
Under the FBCA and the Independent Articles, the Independent Board and the
Independent shareholders are each empowered to adopt, alter, amend or repeal
the Independent Bylaws, except that the Independent Board is prohibited from
taking such action in relation to any bylaw with respect to which the
shareholders have specifically provided that such bylaw is not subject to
amendment or repeal by the Independent Board. Under the American General
Articles, except as expressly provided in the American General Bylaws, the
American General Board may alter, amend or repeal the American General Bylaws
without shareholder approval, although bylaws made by the American General
Board, and the power conferred upon the American General Board to amend such
bylaws, may be altered or repealed by the shareholders. The American General
Bylaws provide that, unless otherwise provided in the American General
Articles, the power to alter, amend, or repeal the Bylaws or adopt new bylaws
is vested in the American General Board, subject to repeal or change by action
of the affirmative vote of the holders of at least 75% of the then outstanding
shares of all classes entitled to vote generally in the election of directors,
voting together as a single class.
PREEMPTIVE RIGHTS; CUMULATIVE VOTING
Neither the shareholders of Independent nor the shareholders of American
General have any preemptive rights to acquire unissued shares of the
corporation's capital stock, or any rights to cumulate votes with respect to
the election of directors.
BOARDS OF DIRECTORS
The Independent Board currently consists of eleven members, which is subject
to change by action of the Independent Board provided that, pursuant to the
Independent Articles, the Independent Board shall consist of at
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least five members. The American General Board consists of ten directors,
which is subject to change by action of the American General Board provided
that, pursuant to the American General Bylaws, the American General Board
shall consist of at least three members but no more than 25 members. Members
of the Board of Directors of each of Independent and American General are
elected at each annual meeting of shareholders for terms expiring at the
succeeding annual meeting. Neither Independent nor American General has a
classified board of directors.
REMOVAL OF DIRECTORS
Under the FBCA, the shareholders of a corporation may remove one or more
directors with or without cause unless the articles of incorporation provide
otherwise. However, if a director is elected by a voting group of
shareholders, only the shareholders of that voting group may participate in
the vote to remove him or her. The Independent Bylaws provide that any
director may be removed from office, with or without cause, by the affirmative
vote of the holders of at least a majority of the shares of Independent Voting
Common Stock represented in person or by proxy at a meeting of shareholders
called for that purpose.
Under the TBCA, a corporation's bylaws or articles of incorporation may
provide that at any meeting of shareholders called expressly for that purpose,
one or more directors may be removed, with or without cause, by a vote of the
holders of a specified portion, but not less than a majority, of the shares
then entitled to vote in an election of directors. Subject to the rights of
any class or series of stock having a preference over the American General
Common Stock as to dividends or upon liquidation to elect directors under
specified circumstances, the American General Bylaws provide that any director
may be removed, with or without cause, by the affirmative vote of the holders
of at least 75% of the combined voting power of the outstanding shares of all
classes of stock entitled to vote generally in an election of directors,
voting together as a single class.
NEWLY-CREATED DIRECTORSHIPS AND VACANCIES
Under the FBCA, except as noted below, whenever a vacancy occurs on a board
of directors, including a vacancy resulting from an increase in the number of
directors, it may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum, unless the articles of
incorporation provide otherwise. The Independent Bylaws provide that if any
vacancy shall occur in the Independent Board by reason of death, resignation,
removal or otherwise, the remaining directors shall continue to act and such
vacancy may be filled by a majority of the remaining directors, though less
than a quorum, subject to the right of the shareholders to replace a removed
director at the meeting of shareholders during which such removal occurred.
Under the TBCA and the American General Bylaws, subject to the rights of any
holders of a class or series of stock having a preference over the American
General Common Stock as to dividends or upon liquidation to elect directors
under specified circumstances, any vacancy on the American General Board
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall be filled by the affirmative vote of a majority of
the American General Board then in office, even though less than a quorum,
provided that any director so elected shall hold office only for the remainder
of the term of the director whose departure caused the vacancy. A directorship
created by reason of an increase in the number of directors by action of the
American General Board may be filled by the American General Board for a term
of office continuing only until the next election of directors (whether at an
annual or special shareholders meeting), provided that the American General
Board shall not fill more than two such directorships during the period
between two successive annual meetings of shareholders.
NOMINATION OF DIRECTORS
Pursuant to the Independent Bylaws, nominations of persons for election as
directors of the corporation may be made at a shareholders' meeting only (i)
by or at the direction of the Independent Board, (ii) by any nominating
committee or person appointed by the Independent Board or (iii) by any
Independent shareholder entitled to vote for the election of directors at the
meeting who delivers to the Corporate Secretary of Independent notice of such
nomination not less than fifty days nor more than seventy-five days prior to
the meeting, provided, however, that in the event that less than sixty-five
days' notice of the date of the meeting is given, notice by the
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shareholder to be timely must be received not later than the close of business
on the fifteenth day following the day on which such notice of the date of the
meeting was made. Such notice of nomination must contain certain specified
information with respect to the shareholder making the proposal, and the
nominee or nominees.
Subject to the rights of any class or series of stock having a preference
over the American General Common Stock as to dividends or upon liquidation to
elect directors under specified circumstances, pursuant to the American
General Bylaws, nominations of persons for election as directors of the
corporation may be made by the board of directors or a committee appointed by
the board of directors or by any shareholder entitled to vote for the election
of directors generally. However, any shareholder entitled to vote in the
election of directors generally may nominate one or more persons for election
as directors only if written notice of such shareholder's intent to make such
nomination or nominations has been given to the Secretary of American General
not later than sixty days nor more than ninety days prior to any meeting of
shareholders called for the election of directors, except that in the event
that less than seventy days notice of the date of the meeting is given to
shareholders, such written notice shall be delivered not later than the close
of business on the tenth day following the day on which notice of the meeting
was mailed to shareholders. Each such notice must contain certain specified
information with respect to the shareholder making the proposal, and the
nominee or nominees.
SHAREHOLDER PROPOSALS
Pursuant to the Independent Bylaws, in order for an Independent shareholder
to have a proposal considered at an annual meeting of shareholders, the
shareholder must deliver notice of such proposal to the Corporate Secretary of
Independent not less than fifty days nor more than seventy-five days prior to
the meeting, provided, however, that in the event that less than sixty-five
days' notice of the date of the annual meeting is given to shareholders,
notice by the shareholder to be timely must be received not later than the
close of business on the fifteenth day following the day on which such notice
of the date of the annual meeting was mailed to Independent shareholders. The
proposing shareholder's notice shall set forth with respect to each matter the
shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (ii) the
name and record address of the shareholder proposing such business, (iii) the
class and number of shares of Independent that are beneficially owned by the
shareholder and (iv) any material interest of the shareholder in such
business. The American General Bylaws do not address the issue of shareholder
proposals other than with respect to director nominations, as described above.
SPECIAL MEETINGS OF THE SHAREHOLDERS
Under the FBCA and the Independent Bylaws, special meetings of the
shareholders may be called by the Chairman of the Board, the Independent Board
or the President, and shall be called by the President or Vice President or
the Corporate Secretary upon the written request of the holders of not less
than 10% of the shares entitled to vote at the meeting.
Under the TBCA and the American General Bylaws, special meetings of the
shareholders shall be called by the Chairman of the Board, the President, or
the Secretary upon the written request of the holders of at least 10% of the
shares entitled to vote at the meeting.
SHAREHOLDER ACTION BY WRITTEN CONSENT
Unless a corporation's charter or bylaws provide otherwise, the FBCA allows
any action required to be taken, or which may be taken, at an annual or
special meeting of shareholders to be taken without a meeting, without prior
notice and without a vote so long as the written consent of not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted is delivered to the corporation. Neither the Independent Articles
nor the Independent Bylaws address the issue relating to the action by
shareholders without a meeting. However, the rules of the Nasdaq National
Market, on which Independent Non-Voting Common Stock is listed for trading,
generally prohibit listed corporations from taking action by written consent.
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The TBCA provides that any action required to be taken at an annual or
special meeting of shareholders may be taken without a meeting if all
shareholders entitled to vote with respect to the action consent in writing to
such action or, if the corporation's articles of incorporation so provide, if
a consent in writing shall be signed by the holders of shares having not less
than the minimum number of votes necessary to take such action at a meeting of
shareholders. The American General Articles do not contain such a provision.
VOTE REQUIRED FOR MERGERS
Unless the articles of incorporation or the board of directors requires a
greater vote, the FBCA generally requires the affirmative vote of the holders
a majority of the shares in each class entitled to vote to approve a merger.
The FBCA does not require shareholders of the surviving corporation to vote in
a merger if after the merger (i) the articles of incorporation of the
surviving corporation will not differ from its articles of incorporation
before the merger and (ii) each shareholder of the surviving corporation whose
shares were outstanding immediately prior to the effective date of the merger
will hold the same number of shares, with identical designations, preferences,
limitations, and relative rights, immediately after the merger. Other than
provisions which specify when the holders of Independent Non-Voting Common
Stock have the right to vote together with the Independent Voting Common
Stock, the Independent Articles do not contain any provisions relating to
shareholder approval of mergers.
Unless the board of directors requires a greater vote, the TBCA generally
requires the affirmative vote of the holders of at least two-thirds of the
shares entitled to vote to approve a merger, or if any class of shares is
entitled to vote as a class on the approval of a merger, the affirmative vote
of the holders of at least two-thirds of the shares in each such class and the
affirmative vote of the holders of at least two-thirds of the shares otherwise
entitled to vote. The TBCA does not require a vote by the shareholders of the
surviving corporation if after the merger (i) the articles of incorporation of
the surviving corporation will not differ from its articles of incorporation
before the merger; (ii) each shareholder of the surviving corporation whose
shares were outstanding immediately prior to the effective date of the merger
will hold the same number of shares, with identical designations, preferences,
limitations and relative rights immediately after the merger; (iii) the voting
power of the number of voting shares outstanding immediately after the merger,
plus the voting power of the number of voting shares issuable as a result of
the merger, will not exceed by more than 20% the voting power of the total
number of voting shares of the surviving corporation before the merger; (iv)
the number of participating shares outstanding immediately after the merger,
plus the number of participating shares issuable as a result of the merger,
will not exceed by more than 20% the total number of participating shares of
the surviving corporation outstanding immediately before the merger; and (v)
the board of directors of the surviving corporation adopts a resolution
approving the plan of merger. The American General Articles do not contain any
provisions relating to shareholder approval of mergers.
VOTE REQUIRED FOR SALES OF ASSETS
Unless the articles of incorporation or the board of directors, requires a
greater vote, the FBCA generally requires the affirmative vote of the holders
of a majority of the shares entitled to vote to approve the sale, lease,
exchange or other disposition of all or substantially all the corporation's
assets if other than in the usual and regular course of business. The FCBA
does not require shareholder approval for a sale of assets in the usual and
regular course of business, unless the articles of incorporation provide
otherwise. The Independent Articles do not contain any provisions relating to
shareholder approval of such dispositions.
The TBCA generally requires the affirmative vote of the holders of at least
two-thirds of the shares entitled to vote to approve the sale, lease, exchange
or other disposition of all or substantially all the corporation's assets if
other than in the usual and regular course of business, or if any class of
shares is entitled to vote as a class on the approval of a sale, lease,
exchange or other disposition of all or substantially all the corporation's
assets, the vote required for approval of such transaction is the affirmative
vote of the holders of at least two-thirds of the shares in each such class
and the affirmative vote of the holders of at least two-thirds of the shares
otherwise entitled to vote. The TBCA does not require shareholder approval of
a sale of assets in the usual and regular
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course of business unless otherwise specified in the articles of
incorporation. Under the TBCA, a sale of assets shall be deemed to be in the
usual and regular course of business if the corporation shall, directly or
indirectly, either continue to engage in one or more businesses or apply a
portion of the consideration received in connection with the transaction to
the conduct of a business in which it engages following the transactions. The
American General Articles do not contain any provisions relating to
shareholder approval of such dispositions.
ANTI-TAKEOVER STATUTES
For a description of the FBCA's anti-takeover provisions, see "DESCRIPTION
OF INDEPENDENT CAPITAL STOCK--Florida Anti-Takeover Law and Certain Charter
Provisions." The TBCA has no similar anti-takeover provisions.
DISSENTERS' RIGHTS
Under the FBCA, a dissenting shareholder of a corporation participating in
certain transactions, under varying circumstances, may receive cash in the
amount of the fair value of his or her shares (as determined by agreement or
by a court) in lieu of the consideration otherwise receivable in any such
transaction. Unless the articles of incorporation provide otherwise,
dissenters' rights are not available with respect to a plan of merger or share
exchange or a proposed sale or exchange of property to holders of shares of
any class or series which, on the record date fixed to determine the
shareholders entitled to vote at the meeting of shareholders at which such
action is to be acted upon or to consent to any such action without a meeting,
were (i) registered on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or (ii) held of record by
not fewer than 2,000 shareholders. The FBCA also provides dissenters' rights
in connection with (i) sales of substantially all of a corporation's assets,
(ii) amendments to the articles of incorporation that may adversely affect
certain rights of preferences of shareholders and (iii) control-share
acquisitions. See "THE PROPOSED MERGER--Dissenters' Rights."
Under the TBCA, a shareholder generally has the right to dissent from any
merger to which the corporation is a party, from any sale of all or
substantially all assets of the corporation, or from any plan of exchange and
to receive fair value for his or her shares. However, dissenters' rights are
not available with respect to a plan of merger in which there is a single
surviving corporation or with respect to any plan of exchange if (1) the
shares held by the shareholder are part of a class, shares of which are listed
on a national securities exchange or held of record by not less than 2,000
holders on the record date fixed to determine the shareholders entitled to
vote on the plan of merger or the plan of exchange and (2) the shareholder is
not required by the terms of the plan of merger or plan of exchange to accept
for his or her shares any consideration other than (a) shares of a corporation
that, immediately after the effective time of the merger or exchange, will be
part of a class of shares that are(i) listed, or authorized for listing upon
official notice of issuance, on a national securities exchange or (ii) held of
record by not less than 2,000 holders and (b) cash in lieu of fractional
shares otherwise entitled to be received.
LIMITATION ON DIRECTOR'S LIABILITY
The FBCA provides that directors are not personally liable for monetary
damages to the corporation or any other person, unless: (i) the director
breached or failed to perform his duties as a director; and (ii) the
director's breach of or failure to perform those duties constitutes: (a) a
violation of the criminal law (unless the director had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his
conduct was unlawful); (b) a transaction from which the director derived an
improper personal benefit; (c) a circumstance under which the director would
be liable for authorizing an unlawful distribution; (d) in a proceeding by or
in the right of the corporation to procure a judgment in its favor or by or in
the right of a shareholder, conscious disregard for the best interests of the
corporation, or willful misconduct; or (e) in a proceeding by or in the right
of someone other than the corporation or a shareholder, recklessness or an act
or omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety or
property.
95
<PAGE>
The American General Articles, in accordance with Texas law, provide that a
director of the corporation shall not be liable to the corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director, except to the extent the director is found liable for
(i) a breach of the director's duty or loyalty to the corporation or its
shareholders; (ii) an act or omission not in good faith or that involves
intentional misconduct or a knowing violation of the law; (iii) a transaction
from which the director received an improper benefit, whether or not the
benefit resulted from an action taken within the scope of the director's
office; (iv) an act or omission for which the liability of a director is
expressly provided by statute; or (v) an act related to an unlawful stock
repurchase or payment of a dividend. In addition, the American General
Articles provide that any repeal or amendment of the foregoing provisions by
the shareholders of the corporation shall be prospective only and shall not
adversely affect any limitation on the liability of a director of the
corporation existing at the time of such repeal or amendment, and that, in
addition to the circumstances in which the director of the corporation is not
liable as set forth in the preceding sentences, the director shall not be
liable to the fullest extent permitted by any provisions of the statutes of
Texas later enacted that further limits the liability of a director.
INDEMNIFICATION
The Independent Bylaws provide that Independent will indemnify any person
who (i) is party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he or she is or
was a director or officer of Independent or is or was serving at the request
of Independent as a director or officer of another corporation against certain
costs if he or she acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interests of Independent, and with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful; or (ii) was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of
Independent to procure a judgment in its favor by reason of the fact that he
or she is or was a director or officer of Independent or is or was serving at
the request of Independent as a director or officer of another corporation
against certain costs actually and reasonably incurred, if he or she acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of Independent, except that no indemnification shall be made
available where such person is adjudged to be liable for negligence or
misconduct in the performance of his or her duty unless the court determines
such person is fairly and reasonably entitled to indemnification for such
expenses the court deems proper.
Under the TBCA, a corporation has the power to indemnify directors,
officers, employees and agents of the corporations against certain liabilities
and to purchase and maintain liability insurance for those persons. The
American General Bylaws provide that American General will indemnify any
person who was or is a named defendant or respondent or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, or any appeal of such action, suit or proceeding and any
inquiry or investigation that could lead to such an action, suit or
proceeding, by reason of the fact that he is or was a director, officer or
employee of American General, or is or was serving at the request of American
General as a director, officer or employee of another foreign or domestic
corporation, against judgments, penalties, fines, amounts paid in settlement
and reasonable expenses actually incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed, (i) in the case of conduct in his or her official
capacity as a director of American General, to be in the best interests of
American General, and (ii) in all other cases, to be not opposed to the best
interests of American General, except that no indemnification shall be made
available where such person is found liable for willful or intentional
misconduct in the performance of his or her duty to American General.
96
<PAGE>
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF AMERICAN GENERAL
American General does not know of any person that owns more than five
percent of the American General Common Stock, except for those listed below.
The percentage ownership has been calculated based on the number of issued and
outstanding shares of American General Common Stock as of December 31, 1995.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED CLASS
------------------- ------------ ----------
<S> <C> <C>
INVESCO PLC
11 Devonshire Square
London EC2M 4YR
England............................................ 14,661,175(1) 7.2%
Fayez Sarofim & Co.
("Sarofim Co.") and
Fayez S. Sarofim
Two Houston Center
Suite 2907
Houston, Texas..................................... 12,079,430(2) 5.9%
</TABLE>
- --------
(1) Based on a Schedule 13G dated February 10, 1995. INVESCO PLC and certain
of its subsidiaries report shared voting and investment power with respect
to all of the shares reported in the table.
(2) Based on a Schedule 13G dated February 14, 1995. Mr. Sarofim is chairman,
president and principal shareholder of Sarofim Co. He reports that through
Sarofim Co., Sarofim Trust Co. (each of which is a registered investment
adviser) and certain trusts of which Mr. Sarofim is trustee, he may be
deemed to share investment power with respect to all of the shares
reported in the table. He shares voting power with Sarofim Co. and Sarofim
Trust Co. with respect to not more than 10,241,347 of such shares. Such
investment power, voting power, or both, also may be deemed to be shared
with clients of Sarofim Co. or Sarofim Trust Co., or with trustees, other
fiduciaries, clients or others. The shares reported in the table exclude
5,800 shares owned by family members of Mr. Sarofim, but as to which Mr.
Sarofim and Sarofim Co. disclaim beneficial ownership.
97
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT OF
INDEPENDENT
The following table shows as to each class of equity securities of
Independent, the number of shares owned beneficially, directly or indirectly,
by each director and executive officer, and by all directors and executive
officers of Independent as a group (13 persons), as of December 31, 1995. In
some instances more than one beneficial owner is listed for the same
securities. To the extent that shares held beneficially by spouses or
relatives of such officers and directors are included, such officers and
directors disclaim beneficial ownership.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PERCENT OF CLASS
---------------------- -------------------
NAME OF NON- NON-
ENEFICIAL OWNERB VOTING VOTING VOTING VOTING
- ---------------- --------- --------- -------- --------
<S> <C> <C> <C> <C>
George M. Baldwin............... 1,033,288(1) -- 18.2% --
Lucy B. Gooding................. 981,612(5) 1,222,340(5) 17.3 16.4
Jacob F. Bryan IV............... 867,128(2) 1,077,334(3) 15.2 14.4
G. Howard Bryan................. 829,612(2) 1,032,396(3) 14.6 13.8
Boyd E. Lyon, Sr................ 290,702(4) -- 5.1 --
Wilford C. Lyon, Jr............. 213,072 -- 3.7 --
Patricia H. Doane............... 143,512 602 2.5 *
Michael C. Lyon................. 49,531 100 * *
Carter B. Bryan................. 37,130 36,152 * *
Kendall G. Bryan................ 37,930 13,877 * *
William G. Howard............... 2,474 -- * --
Guy Marvin, III................. -- 500 -- *
David A. Skup................... -- 462 -- *
All directors and executive of-
ficers as a group.............. 3,673,579 2,377,147 64.6 31.8
</TABLE>
- --------
* Less than 1 percent of the outstanding shares of such class.
(1) Includes 1,032,888 shares held of record by a trust under the will of
Grace D. Coburn (deceased). Frederick E. Williams and John G. Grimsley are
trustees. George M. Baldwin and James L. Baldwin are beneficiaries of the
trust.
(2) Includes all the shares of three trusts aggregating 812,412 shares of
Independent Voting Common Stock of which Jacob F. Bryan IV, G. Howard
Bryan and Julia Olive Craig Brooke are beneficiaries and/or trustees.
(3) Includes all the shares of three trusts aggregating 1,006,616 shares of
Independent Non-Voting Common Stock of which Jacob F. Bryan IV, G. Howard
Bryan and Julia Olive Craig Brooke are beneficiaries and/or trustees.
(4) Includes all the shares of two trusts aggregating 101,760 shares of
Independent Voting Common Stock held by the Registrant's retirement plans
of which Boyd E. Lyon, Sr. is a trustee.
(5) Includes 981,612 shares of Independent Voting Common Stock and 1,222,340
shares of Independent Non-Voting Common Stock held in a trust of which
Lucy B. Gooding, Bonnie H. Smith and Jack E. Brooks are trustees.
The following table sets forth, as of December 31, 1995, certain information
with respect to the only persons who, to the best knowledge of Independent,
were the beneficial owners of more than five percent of the outstanding shares
of Independent Non-Voting Common Stock, other than those referred to above.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY
BENEFICIAL OWNER OWNED PERCENT OF CLASS
------------------- ------------------- ----------------
<S> <C> <C>
Tweedy, Browne Company, L.P.
52 Vanderbilt Avenue
New York, NY............................ 637,055(1) 8.56%
</TABLE>
- --------
(1) Based on a Schedule 13D dated December 5, 1995.
Independent has entered into Exchange Agreements with holders of more than
90% of the outstanding shares of Independent Voting Common Stock pursuant to
which such holders may, at any time on or prior to
98
<PAGE>
December 31, 2006, exchange shares of Independent Voting Common Stock for an
equal number of shares of Independent Non-Voting Common Stock without payment
of any additional consideration. All of the principal shareholders, officers
and directors listed above are parties to these agreements. See "DESCRIPTION
OF INDEPENDENT CAPITAL STOCK--Exchange Agreements."
LEGAL MATTERS
The legality of the American General Common Stock and the American General
7% Convertible Preferred Stock to be issued in the Merger will be passed upon
for American General by Vinson & Elkins L.L.P., counsel to American General.
Skadden, Arps, Slate, Meagher & Flom, counsel to Independent, and Vinson &
Elkins L.L.P. will each render opinions with respect to certain federal income
tax consequences of the Merger. J. Evans Attwell, a director of American
General, is a partner in the law firm of Vinson & Elkins L.L.P. See "THE
PROPOSED MERGER--Certain Federal Income Tax Consequences of the Merger" and
"DESCRIPTION OF AMERICAN GENERAL CAPITAL STOCK--Certain Federal Income Tax
Aspects Relating to the Ownership and Disposition of American General Common
Stock and American General 7% Convertible Preferred Stock."
EXPERTS
The consolidated financial statements and schedules of Independent and its
subsidiaries appearing in or incorporated by reference in Independent'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. Such consolidated
financial statements and schedules are incorporated herein by reference in
reliance upon reports of Ernst & Young LLP pertaining to such financial
statements and schedules given upon the authority of such firm as experts in
accounting and auditing. Representatives of Ernst & Young LLP are expected to
be present at the Special Meeting, where they will have the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
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. Such
consolidated financial statements and schedules are incorporated herein by
reference in reliance upon reports of Ernst & Young LLP pertaining to such
financial statements and schedules 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. Such consolidated financial
statements are incorporated herein by reference in reliance upon reports of
Coopers & Lybrand L.L.P. pertaining to such financial statements given upon
the authority of such firm as experts in accounting and auditing.
99
<PAGE>
ANNEX A
[CONFORMED COPY]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN GENERAL CORPORATION,
AGC LIFE INSURANCE COMPANY
AND
INDEPENDENT INSURANCE GROUP, INC.
DATED AS OF OCTOBER 19, 1995
(AND AS AMENDED AS OF JANUARY 25, 1996 WITH RESPECT TO EXHIBIT A)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
The Merger
<C> <S> <C>
Section 1.1 The Merger................................................ 1
Section 1.2 Closing................................................... 1
Section 1.3 Effective Time of the Merger.............................. 1
Section 1.4 Directors and Officers of the Surviving Corporation....... 2
ARTICLE II
Shareholder Approval
Section 2.1 Shareholder Meeting....................................... 2
Section 2.2 Proxy Statement/Prospectus; Registration Statement........ 2
Section 2.3 No False or Misleading Statements......................... 2
ARTICLE III
Conversion and Exchange of Securities
Section 3.1 Conversion of Shares...................................... 3
Section 3.2 Allocation of Merger Consideration; Election Procedures... 4
Section 3.3 Fractional Interests...................................... 7
Section 3.4 Dissenting Shares......................................... 8
Section 3.5 Exchange of Certificates.................................. 8
Section 3.6 No Liability.............................................. 9
ARTICLE IV
Representations and Warranties of Purchaser and Sub
Section 4.1 Organization.............................................. 9
Section 4.2 Capitalization............................................ 10
Section 4.3 Sub and Purchaser Subsidiaries............................ 10
Section 4.4 Authority Relative to this Agreement...................... 11
Section 4.5 Consents and Approvals; No Violations..................... 11
Section 4.6 Purchaser SEC Reports..................................... 11
Section 4.7 Statutory Financial Statements............................ 12
Section 4.8 Absence of Certain Changes................................ 12
Section 4.9 Litigation................................................ 12
Section 4.10 Absence of Undisclosed Liabilities........................ 12
Section 4.11 No Default................................................ 13
Section 4.12 Taxes..................................................... 13
Section 4.13 Title to Property......................................... 13
Section 4.14 Insurance Practices; Permit and Insurance Licenses........ 14
Section 4.15 Regulatory Filings........................................ 14
Section 4.16 Investments............................................... 14
Section 4.17 Reserves.................................................. 14
Section 4.18 Ownership of Company Common Stock......................... 15
Information in Proxy Statement/Prospectus and Registration
Section 4.19 Statement................................................. 15
Section 4.20 Brokers................................................... 15
Section 4.21 Environmental Matters..................................... 15
Section 4.22 Disclosure................................................ 15
Section 4.23 Investigation by Purchaser................................ 16
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE V
Representations and Warranties of the Company
<C> <S> <C>
Section 5.1 Organization.............................................. 16
Section 5.2 Capitalization............................................ 16
Section 5.3 Company Subsidiaries...................................... 17
Section 5.4 Authority Relative to this Agreement...................... 17
Section 5.5 Consents and Approvals; No Violations..................... 18
Section 5.6 Company SEC Reports....................................... 18
Section 5.7 Statutory Financial Statements............................ 19
Section 5.8 Absence of Certain Changes................................ 19
Section 5.9 Litigation................................................ 19
Section 5.10 Absence of Undisclosed Liabilities........................ 19
Section 5.11 No Default................................................ 19
Section 5.12 Taxes..................................................... 20
Section 5.13 Title to Property......................................... 20
Section 5.14 Insurance Practices; Permits and Insurance Licenses....... 20
Section 5.15 Regulatory Filings........................................ 21
Section 5.16 Investments............................................... 21
Section 5.17 Reserves.................................................. 21
Section 5.18 Redemption of Company Common Stock........................ 22
Information in Proxy Statement/Prospectus and Registration
Section 5.19 Statement................................................. 22
Section 5.20 Brokers................................................... 22
Section 5.21 Employee Benefit Plans; ERISA............................. 22
Section 5.22 Labor Relations; Employees................................ 24
Section 5.23 Environmental Matters..................................... 24
Section 5.24 Related Party Transactions................................ 24
Section 5.25 Affiliates................................................ 25
Section 5.26 Opinion of Financial Advisor.............................. 25
Section 5.27 Derivatives............................................... 25
Section 5.28 Contracts................................................. 25
Section 5.29 Disclosure................................................ 26
ARTICLE VI
Conduct of Business Pending the Merger
Section 6.1 Conduct of Business by the Company Pending the Merger..... 26
Section 6.2 Conduct of Business by Purchaser Pending the Merger....... 28
Section 6.3 Investment Restrictions................................... 29
ARTICLE VII
Additional Agreements
Section 7.1 Access and Information.................................... 29
Section 7.2 Acquisition Proposals..................................... 29
Section 7.3 Filings; Other Action..................................... 30
Section 7.4 Public Announcements...................................... 31
Section 7.5 Employee Benefits......................................... 31
Section 7.6 Stock Exchange Listing.................................... 31
Section 7.7 Company Indemnification Provision......................... 31
Section 7.8 Comfort Letters........................................... 32
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 7.9 Tax Matters.............................................. 32
Section 7.10 Intercompany Dividends................................... 32
Certificate of Designation of Purchaser Convertible
Section 7.11 Preferred Stock.......................................... 32
Section 7.12 Additional Matters....................................... 33
ARTICLE VIII
Conditions to Consummation of the Merger
Conditions to Each Party's Obligation to Effect the
Section 8.1 Merger................................................... 33
Conditions to Obligation of the Company to Effect the
Section 8.2 Merger................................................... 33
Conditions to Obligations of Purchaser and Sub to Effect
Section 8.3 the Merger............................................... 34
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 Termination by Mutual Consent............................ 34
Section 9.2 Termination by Either Purchaser or the Company........... 34
Section 9.3 Termination by the Company............................... 35
Section 9.4 Termination by Purchaser................................. 36
Section 9.5 Effect of Termination and Abandonment.................... 36
ARTICLE X
General Provisions
Section 10.1 Survival of Representations, Warranties and Agreements... 38
Section 10.2 Notices.................................................. 38
Section 10.3 Descriptive Headings..................................... 38
Section 10.4 Entire Agreement; Assignment............................. 38
Section 10.5 Governing Law............................................ 39
Section 10.6 Expenses................................................. 39
Section 10.7 Amendment................................................ 39
Section 10.8 Waiver................................................... 39
Section 10.9 Counterparts; Effectiveness.............................. 39
Section 10.10 Severability; Validity; Parties in Interest.............. 39
Section 10.11 Enforcement of Agreement................................. 39
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 19, 1995, by and among
AMERICAN GENERAL CORPORATION, a Texas corporation ("Purchaser"), AGC LIFE
INSURANCE COMPANY, a Missouri corporation and a wholly-owned subsidiary of
Purchaser ("Sub"), and INDEPENDENT INSURANCE GROUP, INC., a Florida
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Purchaser, Sub and the
Company have approved the merger of the Company with and into Sub upon the
terms and subject to the conditions set forth herein (the "Merger"); and
WHEREAS, Purchaser, Sub and the Company intend that the Merger qualify as a
tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions hereof,
at the Effective Time (as defined in Section 1.2 hereof), the Company shall be
merged with and into Sub in accordance with the applicable provisions of the
Florida Business Corporation Act (the "FBCA") and The General and Business
Corporation Law of Missouri and the separate corporate existence of the
Company shall thereupon cease, and Sub shall be the surviving corporation in
the Merger (the "Surviving Corporation") and all of its rights, privileges,
powers, immunities, purposes and franchises shall continue unaffected by the
Merger. The Merger shall have the effects set forth in the FBCA and in The
General and Business Corporation Law of Missouri. Pursuant to the Merger, (a)
the Articles of Incorporation of Sub as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation, until thereafter amended as provided by law and such Articles of
Incorporation and (b) the By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter amended as provided by law, such By-laws and the Articles of
Incorporation of the Surviving Corporation.
Section 1.2 Closing. The Company shall as promptly as practicable notify
Purchaser, and Purchaser and Sub shall as promptly as practicable notify the
Company, when the conditions to such party's or parties' obligation to effect
the Merger contained in Article VIII have been satisfied. The closing of the
Merger (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York, at 10:00 a.m.,
New York City time, on the sixth business day after the later of these notices
has been given (the "Closing Date"), unless another date or place is agreed to
in writing by the parties hereto; provided, however, that the parties hereto
agree to use all reasonable efforts to consummate the Closing on January 2,
1996, or as soon as practicable thereafter.
Section 1.3 Effective Time of the Merger. The Merger shall become effective
when an appropriate Articles of Merger is executed and filed with the
Secretary of State of the State of Florida as provided by the FBCA and the
Secretary of State of the State of Missouri as provided in The General and
Business Corporation Law of Missouri, or at such later time as the parties
hereto shall have designated in such filings as the Effective Time of the
Merger (the "Effective Time"), which filings shall be made as soon as
practicable after the closing of the transactions contemplated by this
Agreement in accordance with Section 1.2 hereof.
A-1
<PAGE>
Section 1.4 Directors and Officers of the Surviving Corporation. The
directors and officers of Sub immediately prior to the Effective Time shall be
the directors and officers of the Surviving Corporation at the Effective Time.
The directors and officers of the Surviving Corporation shall hold office
until their respective successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and By-laws of the Surviving
Corporation.
ARTICLE II
SHAREHOLDER APPROVAL
Section 2.1 Shareholder Meeting. In order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law, duly call, give notice of, convene and hold a special meeting
of its shareholders (the "Company Special Meeting"), as soon as practicable
after the Registration Statement (as hereinafter defined) is declared
effective, for the purpose of voting upon the adoption of this Agreement. The
Company shall include in the Proxy Statement/Prospectus (as hereinafter
defined) the recommendation of the Board of Directors of the Company that
shareholders of the Company vote in favor of the approval of the Merger and
the adoption of this Agreement, unless the inclusion of such recommendation
would, in the written opinion of outside legal counsel to the Company, result
in a breach of the Board of Directors' fiduciary duties under applicable law.
Section 2.2 Proxy Statement/Prospectus; Registration Statement. In
connection with the solicitation of approval of the principal terms of this
Agreement and the Merger by the Company's shareholders, the Company and
Purchaser shall as promptly as practicable prepare and file with the
Securities and Exchange Commission ("SEC") a preliminary proxy statement
relating to the Merger and this Agreement and use all reasonable efforts to
obtain and furnish the information required to be included by the SEC in the
Proxy Statement/Prospectus (as hereinafter defined). The Company, after
consultation with Purchaser, shall respond as promptly as practicable to any
comments made by the SEC with respect to the preliminary proxy statement and
shall cause a definitive proxy statement to be mailed to its shareholders at
the earliest practicable date. Such definitive proxy statement shall also
constitute a prospectus of Purchaser with respect to the Purchaser Stock (as
hereinafter defined) to be issued in the Merger (such proxy statement and
prospectus are referred to herein as the "Proxy Statement/Prospectus"), which
prospectus is to be filed with the SEC as part of a registration statement on
Form S-4 (the "Registration Statement") for the purpose of registering such
shares of Purchaser Stock under the Securities Act of 1933, as amended (the
"Securities Act"). Purchaser shall prepare and as promptly as practicable file
with the SEC the Registration Statement. Purchaser, after consultation with
the Company, shall respond as promptly as practicable to any comments made by
the SEC with respect to the Registration Statement, and shall use all
reasonable efforts to have the Registration Statement declared effective by
the SEC. Purchaser shall also take any action required to be taken under
applicable state securities laws in connection with the issuance of Purchaser
Stock in the Merger, and the Company shall furnish all information concerning
the Company and the holders of Company Common Stock as may be reasonably
requested by Purchaser in connection with such action.
Section 2.3 No False or Misleading Statements. The information provided and
to be provided by each of Purchaser and the Company specifically for use in
the Registration Statement and the Proxy Statement/Prospectus shall not, with
respect to the information supplied by such party, in the case of the
Registration Statement, on the date the Registration Statement becomes
effective and, in the case of the Proxy Statement/Prospectus, on the date upon
which the Proxy Statement/Prospectus is mailed to the shareholders of the
Company or on the date upon which approval of the Merger by the shareholders
of the Company is obtained, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of Purchaser and the Company agrees
to correct as promptly as practicable any such information provided by it that
shall have become false or misleading in any material respect and to take all
steps necessary to file with the SEC and have declared effective or cleared by
the SEC any amendment or supplement to the Registration Statement or the Proxy
Statement/Prospectus so as to correct the same and to cause the Proxy
Statement/Prospectus as so corrected to be disseminated to the Company's
shareholders to the extent required by applicable law. The Registration
Statement and the Proxy Statement/Prospectus shall comply as to form in all
material respects with the provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and other applicable
law.
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ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 3.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any of the parties hereto or any
holder of any of the following securities:
(a) All shares of Voting Common Stock of the Company, par value One
Dollar per share (the "Company Voting Stock"), and all shares of Non-Voting
Common Stock of the Company, par value One Dollar per share (the "Company
Non-Voting Stock"; the Company Voting Stock and the Company Non-Voting
Stock, collectively, the "Company Common Stock"), that are owned by the
Company as treasury stock and any shares of Company Common Stock owned by
Purchaser, Sub or any other direct or indirect subsidiary of Purchaser
(other than 3,000 shares of Company Common Stock held in a separate account
of a subsidiary of Purchaser) shall be cancelled and retired and shall
cease to exist and no payment or other consideration shall be made in
respect thereof.
(b) Each share of Common Stock of Sub, par value $100.00 per share,
issued and outstanding immediately prior to the Effective Time, shall
remain outstanding and shall be unchanged after the Merger and shall
thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation.
(c) Except as otherwise provided herein and subject to the limitations
set forth in Section 3.2, each remaining share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as hereinafter defined)), shall be converted into,
exchanged for and represent the right to receive any of the following:
(i) a fraction of a duly authorized, validly issued, fully paid and
nonassessable share of common stock of Purchaser (together with the
attached Series A Junior Participating Preferred Stock Purchase Rights,
the "Purchaser Common Stock"), par value $0.50 per share (the "Common
Stock Consideration"), calculated by dividing (x) $27.50 by (y) the
Average Closing Price, rounded to four decimal places (such fraction
being referred to herein as the "Exchange Ratio"). As used herein, the
"Average Closing Price" shall mean the average of the closing prices
(or, if the Purchaser Common Stock should not trade on any Trading Day
(as hereinafter defined), the average of the high bid and low asked
prices therefor on such day), regular way, per share of Purchaser
Common Stock as reported on the New York Stock Exchange Composite Tape
during the ten consecutive Trading Days ending on (and including) the
fifth Trading Day prior to the Effective Time,
(ii) a fraction of a duly authorized, validly issued, fully paid and
nonassessable share of 7% Convertible Preferred Stock of Purchaser (the
"Purchaser Convertible Preferred Stock"; the Purchaser Common Stock and
the Purchaser Convertible Preferred Stock, collectively, "Purchaser
Stock"), par value $1.50 per share (the "Convertible Preferred Stock
Consideration"; the Common Stock Consideration and the Convertible
Preferred Stock Consideration, collectively, "Stock Consideration"),
equal to the Exchange Ratio as calculated in accordance with Section
3.1(c)(i) above, which Purchaser Convertible Preferred Stock shall have
such terms and provisions as set forth in the Statement of Resolution
Establishing a Series of Shares (the "Certificate of Designation")
attached hereto as Exhibit A, with such immaterial changes as the
parties hereto shall agree, or
(iii) $27.50 in cash (the "Cash Price"), without any interest thereon
(the "Cash Consideration"; the Common Stock Consideration, the
Convertible Preferred Stock Consideration and the Cash Consideration,
collectively, the "Merger Consideration"),
in each case as the holder thereof shall have elected or be deemed to have
elected, in accordance with and subject to the limitations set forth in
Section 3.2 hereof. All shares of Company Common Stock converted or exchanged
into Merger Consideration shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
certificate previously evidencing any such shares of Company Common Stock
shall thereafter represent the right to receive, upon the surrender of such
certificate in accordance with the provisions of Section 3.5, only the
applicable Merger Consideration. The holders of such certificates previously
evidencing such
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shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided herein or by law.
Section 3.2 Allocation of Merger Consideration; Election Procedures.
(a) Certain Definitions. As used in this Agreement:
(i) "Elected Convertible Preferred Stock Percentage" means the
percentage determined by dividing (A) the number of Convertible
Preferred Stock Election Shares of a record holder of Company Common
Stock by (B) the total number of shares of Company Common Stock owned
by such record holder;
(ii) "Full Distribution Shareholder" means a record holder of Company
Common Stock whose Elected Convertible Preferred Stock Percentage is
equal to or less than 50%;
(iii) "Unguaranteed Distribution Shareholder" means a record holder
of Company Common Stock whose Elected Convertible Preferred Stock
Percentage is greater than 50%;
(iv) "Convertible Preferred Stock Election Amount" means the
aggregate number of shares of Company Common Stock in respect of which
Convertible Preferred Stock Elections have been made;
(v) "Convertible Preferred Stock Overelection Shares" means the
number of Convertible Preferred Stock Election Shares of a record
holder of Company Common Stock which were not converted into
Convertible Preferred Stock Consideration pursuant to Section
3.2(f)(ii)(A);
(vi) "Convertible Preferred Stock Overelection Percentage" means the
quotient obtained by dividing (A) 50% of the aggregate number of shares
of Company Common Stock issued and outstanding immediately prior to the
Merger less the aggregate amount of Convertible Preferred Stock
Election Shares converted to Convertible Preferred Stock Consideration
for all Full Distribution Shareholders pursuant to Section 3.2(f)(i)
and for all Unguaranteed Distribution Shareholders pursuant to Section
3.2(f)(ii)(A) by (B) the aggregate number of Convertible Preferred
Stock Overelection Shares;
(vii) "Unconverted Convertible Preferred Stock Election Shares" means
the Convertible Preferred Stock Election Shares of a record holder of
Company Common Stock which were not converted into Convertible
Preferred Stock Consideration pursuant to Section 3.2(f)(i) or Section
3.2(f)(ii);
(viii) "Maximum Cash Consideration" means the Cash Price multiplied
by 50% of the aggregate number of shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger;
(ix) "Cash Available for Election" means the Maximum Cash
Consideration less the sum of (A) the aggregate amount of cash paid in
lieu of fractional interests in accordance with Section 3.3 and (B) the
product of (i) the number of Dissenting Shares which are not to be
treated as Non-Election Shares pursuant to Section 3.4, if any, and
(ii) the Cash Price; provided, however, that if the Company fails to
deliver prior to the Closing executed representation letters from one
or more persons owning 5% or more of the outstanding shares of Company
Stock as contemplated by Section 7.9 hereof, then the Cash Available
for Election shall be reduced by the sum of (i) the product of (A) 50%
of the aggregate number of shares of Company Stock owned by such holder
or holders multiplied by (B) $27.50 and (ii) such additional amount, if
any, as is necessary, so that the tax opinions referred to in Sections
8.2(b) and 8.3(b) may be rendered, but in no event shall such
additional amount exceed the amount specified in clause (i) of this
proviso;
(x) "Guaranteed Cash Percentage" means the quotient obtained by
dividing Cash Available for Election by the product of (A) the Cash
Price and (B) the aggregate number of shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time of the
Merger;
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(xi) "Elected Cash Percentage" means the percentage determined by
dividing (A) the number of Cash Election Shares (as hereinafter
defined) of a record holder of Company Common Stock by (B) the total
number of shares of Company Common Stock owned by such record holder;
(xii) "Full Pay Shareholder" means a record holder of Company Common
Stock whose Elected Cash Percentage is equal to or less than the
Guaranteed Cash Percentage;
(xiii) "Unguaranteed Pay Shareholder" means a record holder of
Company Common Stock whose Elected Cash Percentage is greater than the
Guaranteed Cash Percentage;
(xiv) "Cash Election Amount" means the product of the aggregate
number of Cash Election Shares and the Cash Price;
(xv) "Cash Overelection Shares" means the number of Cash Election
Shares of a record holder of Company Common Stock which were not
converted into Cash Consideration pursuant to Section 3.2(g)(ii)(A);
(xvi) "Cash Overelection Percentage" means the quotient obtained by
dividing (A) the Cash Available for Election less the aggregate amount
of Cash Consideration paid to all Full Pay Shareholders pursuant to
Section 3.2(g)(i) and to all Unguaranteed Pay Shareholders pursuant to
Section 3.2(g)(ii)(A) by (B) the product of the Cash Price and the
aggregate number of Cash Overelection Shares; and
(xvii) "Unconverted Cash Election Shares" means the Cash Election
Shares of a record holder of Company Common Stock which were not
converted into Cash Consideration pursuant to Section 3.2(g)(i) or
Section 3.2(g)(ii).
(b) Allocation. Notwithstanding anything in this Agreement to the
contrary, the aggregate amount of Cash Consideration to be provided to
holders of Company Common Stock shall not exceed the Cash Available for
Election and no more than 50% of the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the Merger shall
be converted into Purchaser Convertible Preferred Stock.
(c) Election. Subject to allocation and proration in accordance with the
provisions of this Section 3.2, each record holder of shares of Company
Common Stock (other than Dissenting Shares, if any, which are not to be
treated as Non-Election Shares pursuant to Section 3.4 and shares to be
cancelled in accordance with Section 3.1(a)) issued and outstanding
immediately prior to the Election Deadline (as hereinafter defined) shall
be entitled to submit a request specifying the portion of such record
holder's shares of Company Common Stock which such record holder desires to
have converted into (i) Common Stock Consideration (a "Common Stock
Election"), (ii) Convertible Preferred Stock Consideration (a "Convertible
Preferred Stock Election"; a Common Stock Election and a Convertible
Preferred Stock Election, collectively, a "Stock Election") and/or (iii)
Cash Consideration (a "Cash Election"), or to indicate that such record
holder has no preference as to the receipt of Common Stock Consideration,
Convertible Preferred Stock Consideration or Cash Consideration for such
shares (a "Non-Election"). Each record holder making a Convertible
Preferred Stock Election shall also be entitled to submit a request
specifying the portion of such holder's Unconverted Convertible Preferred
Stock Election Shares, if any, such record holder desires to have converted
into Cash Consideration and/or Common Stock Consideration and each record
holder making a Cash Election shall be entitled to submit a request
specifying the portion of such holder's Unconverted Cash Election Shares,
if any, such record holder desires to have converted into Common Stock
Consideration and/or Convertible Preferred Stock Consideration. Shares of
Company Common Stock as to which a Cash Election is made, including
Unconverted Convertible Preferred Stock Election Shares which a record
holder has requested be converted into Cash Consideration, are referred to
herein as "Cash Election Shares". Shares of Purchaser Convertible Preferred
Stock as to which a Convertible Preferred Stock Election is made, including
Unconverted Cash Election Shares which a record holder has requested be
converted into Convertible Preferred Stock Consideration, are referred to
herein as "Convertible Preferred Stock Election Shares". Shares of Company
Common Stock in respect of which a Non-Election is made (including shares
in respect of which such an election is deemed to have been made
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pursuant to this Section 3.2 and Section 3.4) (collectively, "Non-Election
Shares") shall be deemed to be shares in respect of which a Common Stock
Election has been made.
(d) Procedure for Elections. Elections pursuant to Section 3.2(c) shall
be made on a form to be mutually agreed upon by Purchaser and the Company
(a "Form of Election") and to be provided by the Exchange Agent (as defined
in Section 3.5) for that purpose to holders of record of Company Common
Stock, together with appropriate transmittal materials, at the time of
mailing to holders of record of Company Common Stock of the Proxy
Statement/Prospectus in connection with the Company Special Meeting
referred to in Section 2.1. Elections shall be made by mailing to the
Exchange Agent a duly completed Form of Election. To be effective, a Form
of Election must be (i) properly completed, signed and submitted to the
Exchange Agent at its designated office, by 5:00 p.m., on the business day
that is two Trading Days (as hereinafter defined) prior to the Closing Date
(which date shall be publicly announced by Purchaser as soon as practicable
but in no event less than five Trading Days prior to the Closing Date) (the
"Election Deadline") and (ii) accompanied by the certificates representing
the shares of Company Common Stock as to which the election is being made
(or by an appropriate guarantee of delivery of such certificates by a
commercial bank or trust company in the United States or a member of a
registered national security exchange or of the National Association of
Securities Dealers, Inc., provided such certificates are in fact delivered
to the Exchange Agent within eight Trading Days after the date of execution
of such guarantee of delivery). The Company shall make, or cause the
Exchange Agent to make, a Form of Election available to all persons who
become holders of record of Company Common Stock between the date of
mailing described in the first sentence of this Section 3.2(d) and the
Election Deadline. The Company shall determine, in its sole and absolute
discretion, which authority it may delegate in whole or in part to the
Exchange Agent, whether Forms of Election have been properly completed,
signed and submitted or revoked. The decision of the Company (or the
Exchange Agent, as the case may be) in such matters shall be conclusive and
binding. Neither the Company nor the Exchange Agent will be under any
obligation to notify any person of any defect in a Form of Election
submitted to the Exchange Agent. A holder of shares of Company Common Stock
that does not submit an effective Form of Election prior to the Election
Deadline shall be deemed to have made a Non-Election. As used in this
Agreement, "Trading Day" means a day on which the New York Stock Exchange
is open for trading.
(e) Revocation of Election; Return of Certificates. An election may be
revoked, but only by written notice received by the Exchange Agent prior to
the Election Deadline. Any certificate(s) representing shares of Company
Common Stock which have been submitted to the Exchange Agent in connection
with an election shall be returned without charge to the holder thereof in
the event such election is revoked as aforesaid and such holder requests in
writing the return of such certificate(s). Upon any such revocation, unless
a duly completed Election Form is thereafter submitted in accordance with
Section 3.2(d) with respect to such shares, such shares shall be deemed
Non-Election Shares. In the event that this Agreement is terminated
pursuant to the provisions hereof and any shares of Company Common Stock
have been transmitted to the Exchange Agent pursuant to the provisions
hereof, such shares shall be returned as promptly as practicable without
charge to the person submitting the same.
(f) Proration of Convertible Preferred Stock Election Shares. In the
event that the Convertible Preferred Stock Election Amount exceeds 50% of
the aggregate number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger, the
Convertible Preferred Stock Election Shares shall be converted into the
right to receive Convertible Preferred Stock Consideration and/or other
Merger Consideration in the following manner:
(i) the Exchange Agent shall distribute to each Full Distribution
Shareholder, Convertible Preferred Stock Consideration for each of the
Convertible Preferred Stock Election Shares of such party;
(ii) the Exchange Agent shall distribute to each Unguaranteed
Distribution Shareholder, Convertible Preferred Stock Consideration
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(A) for that number of Convertible Preferred Stock Election Shares
equal to 50% of the number of shares of Company Common Stock owned
by such record holder, and
(B) for that number of Convertible Preferred Stock Election Shares
equal to the product of the number of Convertible Preferred Stock
Election Shares owned by such shareholder which were not converted
into Convertible Preferred Stock Consideration pursuant to Section
3.2(f)(ii)(A) and the Convertible Preferred Stock Overelection
Percentage;
(iii) all Unconverted Convertible Preferred Stock Election Shares
will be converted into such other Merger Consideration as each record
holder of such shares directs, subject to the provisions of this
Section 3.2, and in the absence of such direction, such shares shall be
treated as Non-Election Shares.
(g) Proration of Cash Election Shares. In the event that the Cash
Election Amount exceeds the Cash Available for Election, the Cash Election
Shares shall be converted into the right to receive Cash Consideration
and/or other Merger Consideration in the following manner:
(i) the Exchange Agent shall distribute to each Full Pay Shareholder,
Cash Consideration for each of the Cash Election Shares of such party;
(ii) the Exchange Agent shall distribute to each Unguaranteed Pay
Shareholder, Cash Consideration
(A) for that number of Cash Election Shares equal to the product
of the number of shares of Company Common Stock owned by such record
holder and the Guaranteed Cash Percentage, and
(B) for that number of Cash Election Shares equal to the product
of the number of Cash Election Shares which were not converted into
Cash Consideration pursuant to Section 3.2(g)(ii)(A) and the Cash
Overelection Percentage; and
(iii) all Unconverted Cash Election Shares will be converted into
such other Merger Consideration as each record holder of such shares
directs, subject to the provisions of this Section 3.2, and in the
absence of such direction, such shares shall be treated as Non-Election
Shares.
(h) Computations. The Exchange Agent, in consultation with the Company
and Purchaser, shall make all computations to give effect to this Section
3.2, which computations, in the event of a dispute between the Company and
Purchaser, shall be conclusive and binding.
(i) Order of Proration; No Proration.
(i) In the event both proration of Convertible Preferred Stock
Election Shares and Cash Election Shares is necessary, the Convertible
Preferred Stock Election Shares shall be prorated first.
(ii) In the event that the Cash Available for Election exceeds the
Cash Election Amount, all Cash Election Shares shall be converted into
the right to receive Cash Consideration.
(iii) In the event that the Convertible Preferred Stock Election
Amount is less than 50% of the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the Effective
Time of the Merger, all Convertible Preferred Stock Election Shares
shall be converted into the right to receive Convertible Preferred
Stock Consideration (and cash in lieu of fractional interests in
accordance with Section 3.3).
(iv) All Common Stock Election Shares shall be converted into the
right to receive Common Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 3.3).
Section 3.3 Fractional Interests. No certificates or scrip representing
fractional shares of Purchaser Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to
any rights of a shareholder of Purchaser. In lieu of a fractional interest in
a share of Purchaser Stock, each holder of shares of Company Common Stock
exchanged pursuant to Section 3.1(c) who would otherwise have been entitled to
receive a fraction of a share of Purchaser Stock shall receive cash (without
interest) in an amount equal to the product of such fractional interest
multiplied by the Average Closing Price.
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Section 3.4 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, no share of Company Voting Stock, the holder of which shall have
complied with the provisions of Section 607.1320 of the FBCA as to dissenter's
rights (a "Dissenting Share"), shall be deemed converted into and to represent
the right to receive Merger Consideration hereunder, and the holders of
Dissenting Shares, if any, shall be entitled to payment, solely from the
Surviving Corporation, of the appraised value of such Dissenting Shares to the
extent permitted by and in accordance with the provisions of Section 607.1320
of the FBCA; provided, however, that (i) if any holder of Dissenting Shares
shall, under the circumstances permitted by the FBCA, subsequently deliver a
written withdrawal of his or her demand for appraisal of such Dissenting
Shares, or (ii) if any holder fails to establish his or her entitlement to
rights to payment as provided in such Section 607.1320, or (iii) if neither
any holder of Dissenting Shares nor the Surviving Corporation has filed a
petition demanding a determination of the value of all Dissenting Shares
within the time provided in such Section 607.1320, such holder or holders (as
the case may be) shall forfeit such right to payment for such Dissenting
Shares pursuant to such Section 607.1320 and each such share shall not be
considered a Dissenting Share but shall thereupon be treated as a Non-Election
Share for purposes of Section 3.2. The Company shall give Purchaser (i) prompt
notice of any written demands for appraisal of any Company Common Stock,
attempted withdrawals of such demands, and any other instruments received by
Company relating to shareholders' rights of appraisal and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for
appraisal under the FBCA. The Company shall not, except with the prior written
consent of Purchaser, voluntarily make any payment with respect to any demands
for appraisals of Company Common Stock, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
Section 3.5 Exchange of Certificates.
(a) As soon as practicable after the execution and delivery of this
Agreement and, in any event, not less than five Trading Days prior to the
mailing of the Proxy Statement/Prospectus to holders of Company Common
Stock, Purchaser shall designate a bank or trust company (or such other
person or persons as shall be reasonably acceptable to Purchaser and
Company) to act as exchange agent (the "Exchange Agent") in effecting the
exchange of certificates that, prior to the Effective Time, represented
shares of Company Common Stock (the "Certificates") for Merger
Consideration pursuant to Section 3.1(a) hereof (and cash in lieu of
fractional interests in accordance with Section 3.3). Upon the surrender of
each such Certificate representing shares of Company Common Stock, the
Exchange Agent shall pay the holder of such Certificate the applicable
Merger Consideration (and cash in lieu of fractional interests in
accordance with Section 3.3), and such Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate that
prior to the Effective Time represented shares of Company Common Stock
(other than Certificates representing Dissenting Shares which are not to be
treated as Non-Election Shares pursuant to Section 3.2 or shares of Company
Common Stock to be cancelled in accordance with Section 3.1(a)) shall
represent solely the right to receive Merger Consideration (and cash in
lieu of fractional interests in accordance with Section 3.3). No interest
shall be paid or accrue on Merger Consideration.
(b) As of or as promptly as practicable after the Effective Time,
Purchaser shall deposit or cause to be deposited in trust with the Exchange
Agent, for the benefit of the holders of shares of Company Common Stock,
for exchange in accordance with this Article III, the aggregate Merger
Consideration.
(c) The cash portion of the aggregate Merger Consideration shall be
invested by the Exchange Agent, as directed by and for the benefit of the
Surviving Corporation, provided that such investments shall be limited to
direct obligations of the United States of America, obligations for which
the full faith and credit of the United States of America is pledged to
provide for the payment of principal and interest, commercial paper rated
of the highest quality by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. ("S&P"),
and certificates of deposit issued by a commercial bank whose long-term
debt obligations are rated at least A2 by Moody's or at least A by S&P, in
each case having a maturity not in excess of one year.
(d) As promptly as practicable following the date which is six months
after the Effective Time, the Exchange Agent shall deliver to the Surviving
Corporation all cash, shares of Purchaser Stock, Certificates
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and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to applicable
abandoned property, escheat and similar laws and, in the case of Dissenting
Shares, subject to applicable law) receive in exchange therefor the
applicable Merger Consideration (and cash in lieu of fractional interest in
accordance with Section 3.3), without any interest thereon.
(e) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any shares of Company Common
Stock. If, after the Effective Time, Certificates formerly representing
shares of Company Common Stock are presented to the Surviving Corporation
or the Exchange Agent, they shall be cancelled and (subject to applicable
abandoned property, escheat and similar laws and, in the case of Dissenting
Shares, subject to applicable law) exchanged for Merger Consideration (and
cash in lieu of fractional interests in accordance with Section 3.3), as
provided in this Article III.
(f) No dividends or other distributions declared or made after the
Effective Time with respect to shares of Purchaser Stock shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of
Purchaser Stock such holder is entitled to receive, and no cash payment in
lieu of fractional interests shall be paid pursuant to Section 3.3, in each
case, until the holder of such Certificate shall surrender such
Certificate, in accordance with the provisions of this Agreement.
(g) The Exchange Agent or Purchaser shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock such amounts as the
Exchange Agent, Purchaser or the Surviving Corporation, as the case may be,
is required to deduct and withhold with respect to such payment under the
Code or any provision of state, local or foreign tax law. Any amounts so
withheld shall be treated for all purposes of this Agreement as having been
paid to the holder of the Company Common Stock in respect of which such
deduction and withholding was made.
Section 3.6 No Liability. Neither Purchaser, the Company nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock
for any Merger Consideration in respect of such shares (or dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Purchaser, the posting by such person
of a bond in customary form and amount as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration (and cash in lieu of fractional interests in accordance with
Section 3.3), without any interest or other payments thereon, upon due
surrender of and deliverable in respect of such Certificate pursuant to this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB
Purchaser represents and warrants to the Company as follows:
Section 4.1 Organization. Each of Purchaser and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the States
of Texas and Missouri, respectively, with the corporate power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted or
presently proposed to be conducted. Sub is duly licensed or authorized as an
insurance company in the State of Missouri and in each other jurisdiction
where it is required to be licensed or authorized. Each of Purchaser and Sub
is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities make such qualification
necessary, except where the failure to be so qualified would not individually
or in the aggregate have a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of Purchaser, Sub
and the Purchaser Subsidiaries (as hereinafter defined), taken as a whole (a
"Purchaser Material Adverse Effect").
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Section 4.2 Capitalization. As of August 31, 1995: (i) the authorized
capital stock of Purchaser consists of 300,000,000 shares of Purchaser Common
Stock and 60,000,000 shares of Preferred Stock, par value $1.50 per share of
Purchaser ("Purchaser Preferred Stock"), (ii) 204,894,131 shares of Purchaser
Common Stock, and no shares of Purchaser Preferred Stock, were issued and
outstanding and (iii) stock options to acquire 2,843,228 shares of Purchaser
Common Stock (the "Purchaser Stock Options") were outstanding under all stock
option plans of Purchaser. All of the issued and outstanding shares of capital
stock of Purchaser are validly issued, fully paid and nonassessable and free
of preemptive rights. All of the shares of Purchaser Stock reserved for
issuance in exchange for shares of Company Common Stock at the Effective Time
in accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights.
Since August 31, 1995 to the date hereof, no shares of Purchaser's capital
stock have been issued, except Purchaser Common Stock issued pursuant to stock
option or other employee benefit plans. Except for (i) outstanding stock
options, (ii) 4,500,000 shares of 6% Convertible Monthly Income Preferred
Securities, Series A, of American General Delaware, L.L.C., (iii) the Series A
Junior Participating Preferred Stock Purchase Rights attached to the Purchaser
Common Stock and (iv) other miscellaneous options relating to 100,000 shares
of Purchaser Common Stock, as of the date of this Agreement, there are no
options, warrants, subscriptions, calls, rights, convertible securities or
other agreements or commitments obligating Purchaser to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock.
Section 4.3 Sub and Purchaser Subsidiaries.
(a) The authorized capital stock of Sub consists of 250,000 shares of
Common Stock, par value $100.00 per share. As of the date hereof, 141,041
shares of Common Stock of Sub are issued and outstanding and are owned by
Purchaser.
(b) Each subsidiary of Purchaser, other than Sub (collectively, the
"Purchaser Subsidiaries"), is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and all necessary
government approvals to own, lease and operate its properties and to carry
on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority or necessary governmental approvals would not individually or in
the aggregate have a Purchaser Material Adverse Effect. Each Purchaser
Subsidiary is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would
not individually or in the aggregate have a Purchaser Material Adverse
Effect. Schedule 4.3(b) attached hereto sets forth the name of each of the
Purchaser Subsidiaries that is as of the date hereof a significant
subsidiary as such term is defined in Rule 1-02 of Regulation S-X under the
Exchange Act (collectively, the "Purchaser Significant Subsidiaries").
(c) Schedule 4.3(c) attached hereto sets forth the name of each of the
Purchaser Significant Subsidiaries that is as of the date hereof an
insurance company (collectively, the "Purchaser Insurance Subsidiaries").
Each of the Purchaser Insurance Subsidiaries is (i) duly licensed or
authorized as an insurance company in its jurisdiction of incorporation and
(ii) duly licensed or authorized as an insurance company in each other
jurisdiction where it is required to be so licensed or authorized.
(d) Purchaser is, directly or indirectly, the record and beneficial owner
of all of the outstanding shares of capital stock of Sub and of each of the
Purchaser Significant Subsidiaries, there are no proxies with respect to
any such shares, and no equity securities of Sub or of any Purchaser
Significant Subsidiary are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into
or exchangeable or exercisable for, shares of any capital stock of Sub or
of any Purchaser Significant Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which Purchaser or any
Purchaser Significant Subsidiary is or may be bound to issue, redeem,
purchase or sell additional shares of capital stock of Sub or of any
Purchaser Significant Subsidiary or securities convertible into or
exchangeable or
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exercisable for any such shares. All of such shares so owned by Purchaser
are validly issued, fully paid and nonassessable and are owned by it free
and clear of Encumbrances (as hereinafter defined) securing obligations not
reflected in the Purchaser SEC Reports.
Section 4.4 Authority Relative to this Agreement. Each of Purchaser and Sub
has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution, delivery and performance
of this Agreement by Purchaser and Sub and the consummation by Purchaser and
Sub of the transactions contemplated hereby have been duly authorized by the
Board of Directors of Purchaser and Sub and by Purchaser as the sole
shareholder of Sub by written consent, and no other corporate proceedings on
the part of Purchaser or Sub are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Purchaser and Sub and (assuming this
Agreement constitutes a valid and binding obligation of the Company)
constitutes a valid and binding agreement of each of Purchaser and Sub,
enforceable against Purchaser and Sub in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and to
general equitable principles.
Section 4.5 Consents and Approvals; No Violations. Except (a) for applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Securities Act, the Exchange Act, state or
foreign laws relating to takeovers, state securities or blue sky laws, state
insurance laws and the regulations promulgated thereunder, the filing of the
Articles of Merger as required by the FBCA and The General and Business
Corporation Law of Missouri and the filing of the Certificate of Designation
as required by Section 7.11 (collectively, the "Governmental Requirements"),
or (b) where the failure to make any filing with, or to obtain any permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency, commission, division,
department, public body or other authority (a "Government Entity") would not
prevent or delay the consummation of the Merger, or otherwise prevent
Purchaser or Sub from performing their respective obligations under this
Agreement, and would not individually or in the aggregate have a Purchaser
Material Adverse Effect, no filing with, and no permit, authorization, consent
or approval of, any Governmental Entity is necessary for the execution,
delivery and performance of this Agreement by Purchaser and Sub and the
consummation of the transactions contemplated by this Agreement. Neither the
execution, delivery or performance of this Agreement by Purchaser or Sub, nor
the consummation by Purchaser or Sub of the transactions contemplated hereby,
nor compliance by Purchaser or Sub with any of the provisions hereof, will (i)
conflict with or result in any breach of any provisions of the Articles of
Incorporation or By-Laws of Purchaser and Sub or the Articles or Certificate
of Incorporation, as the case may be, or By-Laws of any of the Purchaser
Subsidiaries, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, acceleration, vesting, payment, exercise,
suspension or revocation) under, any of the terms, conditions or provisions of
any note, bond, mortgage, deed of trust, security interest, indenture,
license, contract, agreement, plan or other instrument or obligation to which
Purchaser, Sub or any of the Purchaser Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or affected, (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser, Sub, any Purchaser Subsidiary or any of their
properties or assets, (iv) result in the creation or imposition of any
Encumbrance on any asset of Purchaser, Sub or any Purchaser Subsidiary, or (v)
cause the suspension or revocation of any permit, license, governmental
authorization, consent or approval necessary for Purchaser, Sub or any of the
Purchaser Subsidiaries to conduct its business as currently conducted, except
in the case of clauses (ii), (iii), (iv) and (v) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations which would not individually or in the aggregate
have a Purchaser Material Adverse Effect.
Section 4.6 Purchaser SEC Reports. Purchaser has delivered to the Company
true and complete copies of each Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, Current Report on Form 8-K, Proxy Statement, Schedule 13D filed
with respect to Purchaser, Form S-4, and the prospectus included in any other
registration statement as presently in effect and as last amended, pursuant to
which Purchaser has registered equity securities for sale in underwritten
offerings (including any amendments thereto), filed by Purchaser with
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the SEC since January 1, 1992 through the date hereof (collectively, the
"Purchaser SEC Reports"). As of the respective dates such Purchaser SEC
Reports were filed or, if any such Purchaser SEC Reports were amended, as of
the date such amendment was filed, each of the Purchaser SEC Reports (i)
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of (i) the audited consolidated
financial statements of Purchaser (including any related notes and schedules)
included (or incorporated by reference) in its Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 and (ii) the unaudited consolidated
interim financial statements of Purchaser (including any related notes and
schedules) included (or incorporated by reference) in its Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, fairly present, in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of Purchaser and the Purchaser Subsidiaries as of the dates
thereof and the consolidated results of their operations and changes in their
financial position for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
Section 4.7 Statutory Financial Statements. The Annual Statements and
Quarterly Statements of the Purchaser Insurance Subsidiaries, as filed with
the departments of insurance for all applicable domiciliary states for the
years ended December 31, 1993 and December 31, 1994 (the "Annual Statutory
Statements of Purchaser") and the quarters ended March 31, 1994, June 30,
1994, March 31, 1995 and June 30, 1995 (collectively, the "March 31 and June
30 Statutory Statements of Purchaser"), respectively, together with all
exhibits and schedules thereto (all Annual Statutory Statements of Purchaser
and all March 31 and June 30 Statutory Statements of Purchaser, together with
all exhibits and schedules thereto, referred to in this Section 4.7 are
hereinafter referred to as the "Statutory Financial Statements of Purchaser"),
have been prepared in accordance with the accounting practices prescribed or
permitted by the departments of insurance for all applicable domiciliary
states for purposes of financial reporting to the state's insurance regulators
("State Statutory Accounting Principles"), and such accounting practices have
been applied on a basis consistent with State Statutory Accounting Principles
throughout the periods involved, except as expressly set forth in the notes,
exhibits or schedules thereto, and the Statutory Financial Statements of
Purchaser present fairly in all material respects the financial position and
the results of operations for the Purchaser Insurance Subsidiaries as of the
dates and for the periods therein in accordance with State Statutory
Accounting Principles. Purchaser has delivered to the Company true and
complete copies of the Annual Statutory Statements of Purchaser and the March
31 and June 30 Statutory Statements of Purchaser.
Section 4.8 Absence of Certain Changes. Since June 30, 1995, there has been
no event or condition which has had (or is reasonably likely to result in) a
Purchaser Material Adverse Effect, and Purchaser and the Purchaser Significant
Subsidiaries have in all material respects conducted their businesses in the
ordinary course consistent with past practices and have not taken any action
which, if taken after the date hereof, would violate Section 6.2 hereof.
Section 4.9 Litigation. Except as disclosed in the Purchaser SEC Reports,
there is no suit, action, proceeding or investigation (whether at law or
equity, before or by any federal, state or foreign court, tribunal,
commission, board, agency or instrumentality, or before any arbitrator)
pending or, to the best knowledge of Purchaser, threatened against or
affecting Purchaser, Sub or any of the Purchaser Subsidiaries, the outcome of
which, in the reasonable judgment of Purchaser, is likely individually or in
the aggregate to have a Purchaser Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against Purchaser, Sub or any of the Purchaser Subsidiaries having, or which,
insofar as can reasonably be foreseen, in the future may have, a Purchaser
Material Adverse Effect.
Section 4.10 Absence of Undisclosed Liabilities. Except for liabilities or
obligations which are accrued or reserved against in Purchaser's financial
statements (or reflected in the notes thereto) included in the Purchaser
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SEC Reports or which were incurred after June 30, 1995 in the ordinary course
of business and consistent with past practices or in connection with the
transactions contemplated by this Agreement or liabilities incurred in
connection with acquisitions made after June 30, 1995, Purchaser and the
Purchaser Subsidiaries do not have any material liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature required by
GAAP to be reflected in a consolidated balance sheet (or reflected in the
notes thereto) of Purchaser.
Section 4.11 No Default. Neither Purchaser, Sub nor any of the Purchaser
Subsidiaries is in violation or breach of, or default under (and no event has
occurred which with notice or the lapse of time or both would constitute a
violation or breach of, or default under) any term, condition or provision of
(a) its Articles or Certificate of Incorporation, as the case may be, or By-
Laws, (b) any note, bond, mortgage, deed of trust, security interest,
indenture, license, agreement, plan, contract, lease, commitment or other
instrument or obligation to which Purchaser, Sub or any of the Purchaser
Subsidiaries is a party or by which they or any of their properties or assets
may be bound or affected, (c) any order, writ, injunction, decree, statute,
rule or regulation applicable to Purchaser, Sub or any of the Purchaser
Subsidiaries or any of their properties or assets, or (d) any permit, license,
governmental authorization, consent or approval necessary for Purchaser, Sub
or any of the Purchaser Subsidiaries to conduct their respective businesses as
currently conducted, except in the case of clauses (b), (c) and (d) above for
violations, breaches or defaults which would not individually or in the
aggregate have a Purchaser Material Adverse Effect.
Section 4.12 Taxes.
(a) Except as set forth in the Purchaser SEC Reports:
(i) Purchaser and the Purchaser Subsidiaries have (i) duly filed (or
there has been filed on their behalf) with the appropriate governmental
authorities all material Tax Returns (as hereinafter defined) required
to be filed by them on or prior to the date hereof, and (ii) duly paid
in full or made provision in accordance with GAAP (or there has been
paid or provision has been made on their behalf) for the payment of all
material Taxes (as hereinafter defined) for all periods ending through
the date hereof;
(ii) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of Purchaser or the Purchaser
Subsidiaries wherein an adverse determination or ruling in any one such
proceeding or in all such proceedings in the aggregate could have a
Purchaser Material Adverse Effect;
(iii) the Internal Revenue Service has completed examinations of the
consolidated federal income Tax Returns of Purchaser for all periods
through and including December 31, 1985. Except as set forth in the
Purchaser SEC Reports, all issues have been settled with respect to
such examinations. The Internal Revenue Service is examining as of the
date hereof the consolidated federal income Tax Returns of Purchaser
for the years 1986 through 1988; and
(iv) neither Purchaser nor the Purchaser Subsidiaries is a party to
any material tax sharing agreement or arrangement with any entity not
included in Purchaser's consolidated financial statements most recently
filed by Purchaser with the SEC.
(b) "Taxes" shall mean all federal, state, local and foreign taxes, and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto. "Tax Returns" shall mean all federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms
and information returns and any amended Tax Returns relating to Taxes.
Section 4.13 Title to Property. Except as set forth in the Purchaser SEC
Reports, each of Purchaser and the Purchaser Subsidiaries (i) has good and
valid title to all of its properties, assets and other rights that do not
constitute real property, free and clear of all Encumbrances, except for such
Encumbrances that do not, individually or in the aggregate, have a Purchaser
Material Adverse Effect, and (ii) owns, has valid leasehold interests in or
valid contractual rights to use, all of the assets, tangible and intangible,
used by, or necessary for the conduct of, its business except where the
failure to have such valid leasehold interests or such valid contractual
rights do not, individually or in the aggregate, have a Purchaser Material
Adverse Effect.
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Section 4.14 Insurance Practices; Permit and Insurance Licenses.
(a) The business of Purchaser and each of the Purchaser Subsidiaries is
being conducted in compliance, in all material respects, with all
applicable laws, including, without limitation, all insurance laws,
ordinances, rules, regulations, decrees and orders of any Governmental
Entity, and all material notices, reports, documents and other information
required to be filed thereunder within the last three years were properly
filed in all material respects and were in compliance in all material
respects with such laws.
(b) Purchaser, and each of the Purchaser Insurance Subsidiaries, has all
permits and insurance licenses the use and exercise of which are necessary
for the conduct of its business as now conducted, other than such permits
and insurance licenses the absence of which would not, individually or in
the aggregate, be reasonably expected to have a Purchaser Material Adverse
Effect. The business of Purchaser and each of the Purchaser Insurance
Subsidiaries has been and is being conducted in compliance, in all material
respects, with all such permits and insurance licenses. To the best
knowledge of Purchaser, all such permits and insurance licenses are in full
force and effect, and there is no proceeding or investigation pending or
threatened which would reasonably be expected to lead to the revocation,
amendment, failure to renew, limitation, suspension or restriction of any
such permit or insurance license.
Section 4.15 Regulatory Filings. Purchaser and the Purchaser Subsidiaries
have filed all reports, statements, documents, registrations, filings or
submissions required to be filed by any of them with any Governmental Entity,
except where the failure to file, in the aggregate, would not have a Purchaser
Material Adverse Effect; and, to the best knowledge of Purchaser, all such
reports, statements, documents, registrations, filings or submissions were in
all material respects true, complete and accurate when filed.
Section 4.16 Investments.
(a) The Statutory Financial Statements of Purchaser set forth a list,
which list is accurate and complete in all material respects, of all
securities, mortgages and other investments (collectively, the "Purchaser
Investments") owned by the Purchaser Insurance Subsidiaries as of December
31, 1994, together with the cost basis book or amortized value, as the case
may be, as of December 31, 1994. All transactions in Purchaser Investments
by each of the Purchaser Insurance Subsidiaries from January 1, 1995 to the
date hereof have complied in all material respects with the investment
policies of such Purchaser Insurance Subsidiary and all applicable
insurance laws and regulations.
(b) Except as set forth in the Statutory Financial Statements of
Purchaser, the Purchaser Insurance Subsidiaries have good and marketable
title to the Purchaser Investments listed in the Statutory Financial
Statements of Purchaser or acquired in the ordinary course of business
since June 30, 1995, other than with respect to those Purchaser Investments
which have been disposed of in the ordinary course of business or as
contemplated by this Agreement or redeemed in accordance with their terms
since such date and other than with respect to statutory deposits which are
subject to certain restrictions on transfer.
(c) The information provided by Purchaser to the Company indicating the
aggregate amount by which the Purchaser Investments have been written down
from January 1, 1995 through September 30, 1995 and the aggregate amount of
Purchaser Investments in default with respect to the payment of principal
or interest as of September 30, 1995, is true and correct in all material
respects.
Section 4.17 Reserves. The aggregate reserves of the Purchaser Insurance
Subsidiaries as recorded in the Statutory Accounting Statements of Purchaser
have been determined in accordance with generally accepted actuarial
principles consistently applied (except as set forth therein). The insurance
reserving practices and policies of the Purchaser Insurance Subsidiaries have
not changed, in any material respect, since December 31, 1994 and the results
of the application of such practices and policies are reflected in the
Statutory Accounting Statements of Purchaser. All reserves of the Purchaser
Insurance Subsidiaries set forth in the Statutory Accounting Statements of
Purchaser are, to the best knowledge of Purchaser, fairly stated in accordance
with sound actuarial principles and meet the requirements of the insurance
laws of the applicable insurance authority, except where the failure to so
state such reserves or meet such requirements would not have a Purchaser
Material Adverse Effect.
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Section 4.18 Ownership of Company Common Stock. As of the date hereof,
Purchaser and the Purchaser Subsidiaries (a) are not beneficial owners (as
defined in Rule 16d-1(a)(2) of the Exchange Act) of more than 3,000 shares of
Company Common Stock and (b) have not purchased or otherwise acquired since
January 1, 1994 more than 130,000 shares of Company Common Stock.
Section 4.19 Information in Proxy Statement/Prospectus and Registration
Statement. The Registration Statement (or any amendment thereof or supplement
thereto), at the date it becomes effective and at the time of the Company
Special Meeting, will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation is made by
Purchaser with respect to statements made therein based on information
supplied by the Company in writing for inclusion in the Registration
Statement. None of the information supplied by Purchaser for inclusion or
incorporation by reference in the Proxy Statement/Prospectus will, at the date
mailed to shareholders and at the time of the Company Special Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply in all material respects
with the provisions of the Securities Act and the rules and regulations
thereunder.
Section 4.20 Brokers. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by Purchaser in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Purchaser.
Section 4.21 Environmental Matters.
(a) Except as disclosed in the Purchaser SEC Reports, to the knowledge of
Purchaser, (i) each of Purchaser and the Purchaser Subsidiaries is and has
been in compliance in all respects with and, except for ongoing compliance
obligations, including current activities to remove asbestos and future
activities to remove asbestos, if applicable, has no existing liabilities
under, and (ii) there are no written claims or notices by any person
received by Purchaser or any of the Purchaser Subsidiaries that any of
Purchaser or the Purchaser Subsidiaries has not been in compliance in all
respects with or has any existing liabilities under, all applicable laws,
rules, regulations, common law, ordinances, decrees, orders and other
binding legal requirements relating to pollution, the preservation of the
environment, and the exposure to materials in the environment or the work
place ("Environmental Laws") with respect to property owned by Purchaser or
any of the Purchaser Subsidiaries, except for such non-compliance or
liabilities that would not be reasonably likely to have a Purchaser
Material Adverse Effect. Except as disclosed in the Purchaser SEC Reports,
neither Purchaser nor any of the Purchaser Subsidiaries is subject to any
decrees, orders, decisions of arbitrators or judgments that impose
requirements under Environmental Laws, restrictions under Environmental
Laws, liabilities under Environmental Laws, or penalties for violations of
Environmental Laws or the aforementioned requirements or restrictions,
except where such requirements, restrictions, liabilities, or penalties
would not be reasonably likely to have a Purchaser Material Adverse Effect.
(b) Except as disclosed in the Purchaser SEC Reports, with respect to
currently owned property and all property formerly owned, leased or
operated by Purchaser or any of the Purchaser Subsidiaries, including
foreclosure property, to the knowledge of Purchaser, there are no past or
present actions, conditions or occurrences that could form the basis of any
outstanding claim under Environmental Laws against, or liability under such
laws of, Purchaser or any of the Purchaser Subsidiaries, except for such
claims or liabilities which in the aggregate would not reasonably be
expected to result in a Purchaser Material Adverse Effect.
Section 4.22 Disclosure. No representation or warranty by Purchaser or the
Purchaser Subsidiaries in this Agreement, and no statement contained in the
Purchaser SEC Reports and the Statutory Financial Statements of Purchaser,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was made, to make the statements herein or
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therein not misleading. There is no fact known to Purchaser which could
reasonably be expected to have a Purchaser Material Adverse Effect which has
not been set forth in the Purchaser SEC Reports, the Statutory Financial
Statements of Purchaser or in this Agreement.
Section 4.23 Investigation by Purchaser. Purchaser has conducted its own
independent review and analysis of the businesses, assets, condition,
operations and prospects of the Company and the Company Subsidiaries (as
hereinafter defined) and acknowledges that Purchaser has been provided access
to the properties, premises and records of the Company and the Company
Subsidiaries for this purpose. In entering into this Agreement, Purchaser has
relied solely upon its own investigation and analysis and the warranties
contained herein, and Purchaser:
(a) acknowledges that none of the Company, the Company Subsidiaries or
any of their respective directors, officers, employees, affiliates, agents
or representatives makes any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information
provided or made available to Purchaser or their agents or representatives
prior to the execution of this Agreement, and
(b) agrees, to the fullest extent permitted by law, that none of the
Company, the Company Subsidiaries or any of their respective directors,
officers, employees, affiliates, agents or representatives shall have any
liability or responsibility whatsoever to Purchaser on any basis
(including, without limitation, in contract or tort, under federal or state
securities laws or otherwise) based upon any information provided or made
available, or statements made, to Purchaser prior to the execution of this
Agreement,
except that the foregoing limitations shall not apply to the Company to the
extent the Company makes the specific representations and warranties set forth
in Article V of this Agreement and in the Company Disclosure Letter, but
always subject to the limitations and restrictions contained herein and
therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Purchaser in a letter delivered to it prior
to the execution hereof (which letter contains appropriate references to
identify the representations and warranties herein to which the information in
such letter relates) (the "Company Disclosure Letter"), the Company represents
and warrants to Purchaser as follows:
Section 5.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida
and has the corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted or presently proposed to be conducted.
The Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
individually or in the aggregate have a material adverse effect on the
business, assets, liabilities, results of operations or financial condition of
the Company and the Company Subsidiaries, taken as a whole (a "Company
Material Adverse Effect").
Section 5.2 Capitalization. As of September 1, 1995: (i) the authorized
capital stock of the Company consisted of 7,500,000 shares of Company Voting
Stock, 15,000,000 shares of Company Non-Voting Stock and 20,000,000 shares of
Preferred Stock, par value $.10 per share (the "Company Preferred Stock") and
(ii) 5,692,083 shares of Company Voting Stock, 7,472,417 shares of Company
Non-Voting Stock and no shares of Company Preferred Stock were issued and
outstanding. All of the issued and outstanding shares of Company Voting Stock
and Company Non-Voting Stock are validly issued, fully paid and nonassessable
and free of preemptive rights. Except as set forth above or as specified in
Section 5.2 of the Company Disclosure Letter, as of the date of this Agreement
there are no shares of capital stock of the Company issued or outstanding or
any options, warrants, subscriptions, calls, rights, convertible securities or
other agreements or commitments obligating the Company to issue, transfer,
sell, redeem, repurchase or otherwise acquire any shares of its capital stock.
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Section 5.3 Company Subsidiaries.
(a) Section 5.3(a) of the Company Disclosure Letter sets forth the name
of each subsidiary of the Company (collectively, the "Company
Subsidiaries") and the state or jurisdiction of its incorporation. Each
Company Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority and all necessary government
approvals to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority or necessary governmental approvals would not individually or in
the aggregate have a Company Material Adverse Effect. Each Company
Subsidiary is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would
not individually or in the aggregate have a Company Material Adverse
Effect.
(b) Section 5.3(b) of the Company Disclosure Letter sets forth the name
of each of the Company Subsidiaries that is an insurance company
(collectively, the "Company Insurance Subsidiaries"). Except as disclosed
in Section 5.3(b) of the Company Disclosure Letter, each of the Company
Insurance Subsidiaries is (i) duly licensed or authorized as an insurance
company in its jurisdiction of incorporation and (ii) duly licensed or
authorized as an insurance company in each other jurisdiction where it is
required to be so licensed or authorized.
(c) Except as set forth in Section 5.3(c) of the Company Disclosure
Letter, the Company is, directly or indirectly, the record and beneficial
owner of all of the outstanding shares of capital stock of each of the
Company Subsidiaries, there are no proxies with respect to any such shares,
and no equity securities of any Company Subsidiary are or may become
required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable or exercisable
for, shares of any capital stock of any Company Subsidiary, and there are
no contracts, commitments, understandings or arrangements by which the
Company or any Company Subsidiary is or may be bound to issue, redeem,
purchase or sell additional shares of capital stock of any Company
Subsidiary or securities convertible into or exchangeable or exercisable
for any such shares. Except as set forth in Section 5.3(c) of the Company
Disclosure Letter, all of such shares so owned by the Company are validly
issued, fully paid and nonassessable and are owned by it free and clear of
any Encumbrances, restraints on alienation, or any other restrictions with
respect to the transferability or assignability thereof (other than
restrictions on transfer imposed by federal or state securities laws).
(d) Except for the Company Subsidiaries and as set forth in the Statutory
Financial Statements of the Company (as hereinafter defined) or in Section
5.3(d) of the Company Disclosure Letter, the Company does not directly or
indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity that directly or indirectly conducts any activity
which is material to the Company.
Section 5.4 Authority Relative to this Agreement.
(a) The Company has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have
been duly authorized by the Company's Board of Directors, and no other
corporate proceedings on the part of the Company, other than obtaining
shareholder approval pursuant to Section 2.1 hereto, are necessary to
authorize this Agreement or the transactions contemplated hereby. Subject
to the foregoing, this Agreement has been duly and validly executed and
delivered by the Company and (assuming this Agreement constitutes a valid
and binding obligation of Purchaser and Sub) constitutes a valid and
binding agreement of the Company,
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enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other
laws affecting creditors' rights generally from time to time in effect and
to general equitable principles.
(b) The Company's Board of Directors has (i) taken sufficient action,
pursuant to paragraph 2(i) of the Shareholder Agreement dated as of January
29, 1990, to approve the offer of Purchaser to enter into the transactions
contemplated by this Agreement with the Company and (ii) waived the
Company's right, pursuant to Section 7.2 of the Company's Articles of
Incorporation, to purchase, or assign the right to purchase, the shares of
Company Voting Stock to be sold, assigned, transferred or otherwise
disposed of by any holder thereof hereunder.
Section 5.5 Consents and Approvals; No Violations. Except (a) for the
Governmental Requirements, or (b) where the failure to make any filing with,
or to obtain any permit, authorization, consent or approval of, any
Governmental Entity would not prevent or delay the consummation of the Merger,
or otherwise prevent the Company from performing its obligations under this
Agreement, and would not individually or in the aggregate have a Company
Material Adverse Effect, no filing with, and no permit, authorization, consent
or approval of, any Governmental Entity is necessary for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated by this Agreement. Except as set forth in
Section 5.5 of the Company Disclosure Letter, neither the execution, delivery
or performance of this Agreement by the Company, nor the consummation by the
Company of the transactions contemplated hereby, nor compliance by the Company
with any of the provisions hereof, will (i) conflict with or result in any
breach of any provisions of the Articles of Incorporation or By-Laws of the
Company or the Certificate or Articles of Incorporation, as the case may be,
or By-Laws of any of the Company Subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under, any of the
terms, conditions or provisions of any note, bond, mortgage, deed of trust,
security interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which the Company or any of the Company
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or affected, (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of the
Company Subsidiaries or any of their properties or assets, (iv) result in the
creation or imposition of any Encumbrance on any asset of the Company or any
Company Subsidiary or (v) cause the suspension or revocation of any permit,
license, governmental authorization, consent or approval necessary for the
Company or any of the Company Subsidiaries to conduct its business as
currently conducted, except in the case of clauses (ii), (iii), (iv) and (v)
for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations which would
not individually or in the aggregate have a Company Material Adverse Effect.
Section 5.6 Company SEC Reports. The Company has delivered to Purchaser true
and complete copies of each registration statement, report and proxy or
information statement (including exhibits and any amendments thereto) filed by
the Company with the SEC since January 1, 1992 through the date hereof
(collectively, the "Company SEC Reports"). As of the respective dates the
Company SEC Reports were filed or, if any such Company SEC Reports were
amended, as of the date such amendment was filed, each of the Company SEC
Reports (i) complied in all material respects with all applicable requirements
of the Securities Act and Exchange Act, and the rules and regulations
promulgated thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of (i) the
audited consolidated financial statements of the Company (including any
related notes and schedules) included (or incorporated by reference) in its
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and
(ii) the unaudited consolidated interim financial statements for the Company
(including any related notes and schedules) included (or incorporated by
reference) in its Quarterly Report on Form 10-Q for the quarter ended June 30,
1995, fairly present, in conformity with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and the Company Subsidiaries as of the dates thereof
and the consolidated results of their operations and changes in their
financial position for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
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Section 5.7 Statutory Financial Statements. The Annual Statements and
Quarterly Statements of the Company Insurance Subsidiaries, as filed with the
Florida Department of Insurance for the years ended December 31, 1993 and
December 31, 1994 (the "Annual Statutory Statements of the Company") and the
quarters ended March 31, 1994, June 30, 1994, March 31, 1995 and June 30, 1995
(collectively, the "March 31 and June 30 Statutory Statements of the
Company"), respectively, together with all exhibits and schedules thereto (all
Annual Statutory Statements of the Company and all March 31 and June 30
Statutory Statements of the Company, together with all exhibits and schedules
thereto, referred to in this Section 5.7 are hereinafter referred to as the
"Statutory Financial Statements of the Company"), have been prepared in
accordance with the accounting practices prescribed or permitted by the
Florida Department of Insurance for purposes of financial reporting to the
state's insurance regulators ("Florida Statutory Accounting Principles"), and
such accounting practices have been applied on a basis consistent with Florida
Statutory Accounting Principles throughout the periods involved, except as
expressly set forth in the notes, exhibits or schedules thereto, and the
Statutory Financial Statements of the Company present fairly in all material
respects the financial position and the results of operations for the Company
Insurance Subsidiaries as of the dates and for the periods therein in
accordance with Florida Statutory Accounting Principles. The Company has
delivered to Purchaser true and complete copies of the Annual Statutory
Statements of the Company and the March 31 and June 30 Statutory Statements of
the Company.
Section 5.8 Absence of Certain Changes. Since June 30, 1995, there has been
no event or condition which has had (or is reasonably likely to result in) a
Company Material Adverse Effect, and except as set forth in Section 5.8 of the
Company Disclosure Letter, the Company and the Company Subsidiaries have in
all material respects conducted their businesses in the ordinary course
consistent with past practices and have not taken any action which, if taken
after the date hereof, would violate Section 6.1 hereof.
Section 5.9 Litigation. Except as disclosed in the Company SEC Reports or as
set forth in Section 5.9 of the Company Disclosure Letter, there is no suit,
action, proceeding or investigation (whether at law or equity, before or by
any federal, state or foreign court, tribunal, commission, board, agency or
instrumentality, or before any arbitrator) pending or, to the best knowledge
of the Company, threatened against or affecting the Company or any of the
Company Subsidiaries, the outcome of which, in the reasonable judgment of the
Company, is likely individually or in the aggregate to have a Company Material
Adverse Effect, nor is there any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company or any of the Company Subsidiaries
having, or which, insofar as can reasonably be foreseen, in the future may
have, a Company Material Adverse Effect.
Section 5.10 Absence of Undisclosed Liabilities. Except for liabilities or
obligations which are accrued or reserved against in the Company's financial
statements (or reflected in the notes thereto) included in the Company SEC
Reports or disclosed in Section 5.10 of the Company Disclosure Letter or which
were incurred after June 30, 1995 in the ordinary course of business and
consistent with past practices or in connection with the transactions
contemplated by this Agreement, the Company and the Company Subsidiaries do
not have any material liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of a nature required by GAAP to be reflected in a
consolidated balance sheet (or reflected in the notes thereto) of the Company.
Section 5.11 No Default. Except as set forth in Section 5.11 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is
in violation or breach of, or default under (and no event has occurred which
with notice or the lapse of time or both would constitute a violation or
breach of, or a default under) any term, condition or provision of (a) its
Articles or Certificate of Incorporation, as the case may be, or By-Laws, (b)
any note, bond, mortgage, deed of trust, security interest, indenture,
license, agreement, plan, contract, lease, commitment or other instrument or
obligation to which the Company or any of the Company Subsidiaries is a party
or by which they or any of their properties or assets may be bound or
affected, (c) any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of the Company Subsidiaries or any of their
properties or assets, or (d) any permit, license, governmental authorization,
consent or approval necessary for the Company or any of the Company
Subsidiaries to conduct their respective
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businesses as currently conducted, except in the case of clauses (b), (c) and
(d) above for breaches, defaults or violations which would not individually or
in the aggregate have a Company Material Adverse Effect.
Section 5.12 Taxes. Except as set forth in Section 5.12 of the Company
Disclosure Letter:
(a) the Company and the Company Subsidiaries have (i) duly filed (or
there has been filed on their behalf) with the appropriate governmental
authorities all material Tax Returns required to be filed by them on or
prior to the date hereof, and (ii) duly paid in full or made provision in
accordance with GAAP (or there has been paid or provision has been made on
their behalf) for the payment of all material Taxes for all periods ending
through the date hereof;
(b) no federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with regard to any
Taxes or Tax Returns of the Company or the Company Subsidiaries wherein an
adverse determination or ruling in any one such proceeding or in all such
proceedings in the aggregate could have a Company Material Adverse Effect;
(c) The federal income Tax Returns of the Company and the Company
Subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal income
Taxes for such periods have expired) for all periods through and including
December 31, 1990, and no material deficiencies were asserted as a result
of such examinations that have not been resolved and fully paid. Neither
the Company nor any of the Company Subsidiaries has granted any requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes with respect to any
Tax Returns of the Company or any of the Company Subsidiaries; and
(d) neither the Company nor the Company Subsidiaries is a party to any
material tax sharing, tax indemnity or other agreement or arrangement.
Section 5.13 Title to Property.
(a) Except as set forth in Section 5.13(a) of the Company Disclosure
Letter, each of the Company and the Company Subsidiaries (i) has good and
valid title to all of its properties, assets and other rights that do not
constitute real property, free and clear of all Encumbrances, except for
such Encumbrances that do not, individually or in the aggregate, have a
Company Material Adverse Effect, and (ii) owns, has valid leasehold
interests in or valid contractual rights to use, all of the assets,
tangible and intangible, used by, or necessary for the conduct of, its
business, except where the failure to have such valid leasehold interests
or such valid contractual rights do not, individually or in the aggregate,
have a Company Material Adverse Effect.
(b) Except as set forth in Section 5.13(b) of the Company Disclosure
Letter, each of the Company and the Company Subsidiaries:
(i) owns and has good and marketable title in fee simple to the real
property owned by such party, free and clear of all mortgages, pledges,
liens, charges, encumbrances, defects, security interests, claims,
options and restrictions of all kind ("Encumbrances"), except for (A)
minor imperfections of title, easements and rights of way, none of
which, individually or in the aggregate, materially detracts from the
value of or impairs the use of the affected property or impairs the
operations of the Company or any of the Company Subsidiaries and (B)
liens for current taxes not yet due and payable ("Permitted Company
Liens");
(ii) is in peaceful and undisturbed possession of the space and/or
estate under each lease under which it is a tenant, and there are no
material defaults by it as tenant thereunder; and
(iii) has good and valid rights of ingress and egress to and from all
the real property owned or leased by such party from and to the public
street systems for all usual street, road and utility purposes.
Section 5.14 Insurance Practices; Permits and Insurance Licenses.
(a) The business of the Company and each of the Company Subsidiaries is
being conducted in compliance in all material respects with all applicable
laws, including, without limitation, all insurance laws, ordinances, rules,
regulations, decrees and orders of any Governmental Entity, and all
material notices,
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reports, documents and other information required to be filed thereunder
within the last three years were properly filed in all material respects
and were in compliance in all material respects with such laws.
(b) The Company, and each of the Company Insurance Subsidiaries, has all
permits and insurance licenses the use and exercise of which are necessary
for the conduct of its business as now conducted, other than such permits
and insurance licenses the absence of which would not, individually or in
the aggregate, be reasonably expected to have a Company Material Adverse
Effect. The business of the Company and each of the Company Insurance
Subsidiaries has been and is being conducted in compliance, in all material
respects, with all such permits and insurance licenses. To the best
knowledge of the Company, all such permits and insurance licenses are in
full force and effect, and there is no proceeding or investigation pending
or threatened which would reasonably be expected to lead to the revocation,
amendment, failure to renew, limitation, suspension or restriction of any
such permit or insurance license.
Section 5.15 Regulatory Filings. The Company has made available for
inspection by Purchaser complete copies of all material registrations, filings
and submissions made since January 1, 1992 by the Company or any of the
Company Subsidiaries with any Governmental Entity and any reports of
examinations issued since January 1, 1992 by any such Governmental Entity that
relate to the Company or any of the Company Subsidiaries. The Company and the
Company Subsidiaries have filed all reports, statements, documents,
registrations, filings or submissions required to be filed by any of them with
any Governmental Entity, except where the failure to file, in the aggregate,
would not have a Company Material Adverse Effect; and, to the best knowledge
of the Company, all such reports, statements, documents, registrations,
filings or submissions were in all material respects true, complete and
accurate when filed.
Section 5.16 Investments.
(a) The Statutory Financial Statements of the Company set forth a list,
which list is accurate and complete in all material respects, of all
securities, mortgages and other investments (collectively, the "Company
Investments") owned by the Company Insurance Subsidiaries as of December
31, 1994, together with the cost basis book or amortized value, as the case
may be, as of December 31, 1994. Section 5.16(a) of the Company Disclosure
Letter sets forth a list, which list is accurate and complete in all
material respects, of all transactions in the Company Investments by each
Company Insurance Subsidiary from January 1, 1995 to September 30, 1995.
All transactions in Company Investments by each of the Company Insurance
Subsidiaries from September 30, 1995 to the date hereof have complied in
all material respects with the investment policies of such Company
Insurance Subsidiary and all applicable insurance laws and regulations.
(b) Except as set forth in the Statutory Financial Statements of the
Company, the Company Insurance Subsidiaries have good and marketable title
to the Company Investments listed in the Statutory Financial Statements of
the Company or acquired in the ordinary course of business since June 30,
1995, other than with respect to those Company Investments which have been
disposed of in the ordinary course of business or as contemplated by this
Agreement or redeemed in accordance with their terms since such date and
other than Permitted Company Liens or with respect to statutory deposits
which are subject to certain restrictions on transfer.
(c) Section 5.16(c) of the Company Disclosure Letter identifies the
Company Investments listed thereon which have been written down on the June
30, 1995 Statutory Statement of the Company, or to the best knowledge of
the Company, are as of September 30, 1995 in default in the payment of
principal or interest.
(d) Except as set forth in the Statutory Financial Statements of the
Company, there are no Encumbrances on any of the Company Investments, other
than Permitted Company Liens and special deposits reflected in the
Statutory Financial Statements of the Company, and none of the Company
Investments consist of securities loaned to third parties.
Section 5.17 Reserves. The aggregate reserves of the Company Insurance
Subsidiaries as recorded in the Statutory Accounting Statements of the Company
have been determined in accordance with generally accepted
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actuarial principles consistently applied (except as set forth therein).
Except as disclosed in Section 5.17 of the Company Disclosure Letter, the
insurance reserving practices and policies of the Company Insurance
Subsidiaries have not changed, in any material respect, since December 31,
1994 and the results of the application of such practices and policies are
reflected in the Statutory Accounting Statements of the Company. All reserves
of the Company Insurance Subsidiaries set forth in the Statutory Accounting
Statements of the Company are, to the best knowledge of the Company, fairly
stated in accordance with sound actuarial principles and meet the requirements
of the insurance laws of the applicable insurance authority, except where the
failure to so state such reserves or meet such requirements would not have a
Company Material Adverse Effect.
Section 5.18 Redemption of Company Common Stock. Since January 1, 1995 the
Company has not redeemed any shares of Company Common Stock, except for
exchanges of Company Voting Stock for Company Non-Voting Stock on a share for
share basis.
Section 5.19 Information in Proxy Statement/Prospectus and Registration
Statement. The Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto), at the date mailed to Company shareholders and at the
time of the Company Special Meeting, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Purchaser in writing for inclusion in the
Proxy Statement/Prospectus. None of the information supplied by the Company
for inclusion or incorporation by reference in the Registration Statement
will, at the date it becomes effective and at the time of the Company Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement/Prospectus will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 5.20 Brokers. Except as set forth in Section 5.20 of the Company
Disclosure Letter, no person is entitled to any brokerage, financial advisory,
finder's or similar fee or commission payable by the Company in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of the Company.
Section 5.21 Employee Benefit Plans; ERISA.
(a) Section 5.21(a) of the Company Disclosure Letter sets forth a list,
which is complete and accurate in all material respects, of each bonus,
deferred compensation, incentive compensation, stock purchase, stock
option, equity-based award, severance or termination pay, hospitalization
or other medical, accident, disability, life or other insurance,
supplemental unemployment benefits, fringe and other welfare benefit,
profit-sharing, pension, or retirement plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, that is sponsored, maintained or contributed to or required to
be contributed to by the Company or the Company Subsidiaries or by any
trade or business, whether or not incorporated, that together with the
Company would be deemed a "single employer" within the meaning of Section
4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or considered as being members of a controlled group of
corporations, under common control, or members of an affiliated service
group within the meaning of Subsections 414(b), (c), (m) or (o) of the Code
or Section 4001(a)(14) of ERISA (each such Subsidiary, trade, business or
member an "ERISA Affiliate"), in each case for the benefit of any employee
or terminated employee of the Company or any of the Company Subsidiaries
(the "Plans"). No ERISA Plan is a "multiemployer pension plan," as defined
in Section 3(37) of ERISA, nor is any ERISA Plan a plan described in
Section 4063(a) of ERISA.
(b) With respect to each Plan listed in Section 5.21(a) of the Company
Disclosure Letter, to the extent applicable, the Company has heretofore
made available or has caused to be made available to Purchaser true and
complete copies of each of the following documents:
(i) a copy of each written Plan;
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(ii) a copy of the most recent annual report on Form 5500 and
actuarial report, if required under ERISA, and to the extent they have
been prepared by the Company or its ERISA Affiliates, the most recent
report prepared with respect thereto in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 87, Employer's Accounting
for Pensions, SFAS No. 106, Employer's Accounting for Post-Retirement
Benefits other than Pensions, or SFAS No. 112, Employer's Accounting
for Post-Employment Benefits, as the case may be;
(iii) a copy of the most recent Summary Plan Description required
unde ERISA with respect thereto;
(iv) if the Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement and the latest
financial statements thereof; and
(v) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan intended to qualify under
Section 401 of the Code.
(c) No material liability under Title IV of ERISA has been incurred by
the Company or any ERISA Affiliate that has not been satisfied in full, and
to the knowledge of the Company, no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring a material
liability under such Title, other than liability for premiums due the
Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been
paid when due).
(d) With respect to each ERISA Plan which is subject to Title IV of
ERISA, the present value of accrued benefits under such plan, based upon
the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such plan's actuary with respect to such plan,
did not exceed, as of its latest valuation date, the then current value of
the assets of such plan allocable to such accrued benefits. No ERISA Plan
or any trust established thereunder that is subject to Section 302 of ERISA
and Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent fiscal
year of each ERISA Plan ended prior to the Effective Time; and all
contributions required to be made with respect thereto (whether pursuant to
the terms of any ERISA Plan or otherwise) on or prior to the Effective Time
have been timely made.
(e) Except as set forth in Section 5.21(e) of the Company Disclosure
Letter, none of the Company, any ERISA Affiliate, any ERISA Plan, and, to
knowledge of the Company, any trust created thereunder and any trustee or
administrator thereof has engaged in a transaction in connection with which
the Company or any ERISA Affiliate, any ERISA Plan, any such trust, or any
trustee or administrator thereof, or any party dealing with any ERISA Plan
or any such trust could be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material tax
imposed pursuant to sections 4971, 4972, 4975, 4976, 4977, 4979 or 4980 of
the Code.
(f) Except as set forth in Section 5.21(f) of the Company Disclosure
Letter, there is no matter pending (other than routine qualification
determination filings, copies of which have been furnished to Purchaser, or
will be promptly furnished to Purchaser when made) with respect to any of
the Plans before the Internal Revenue Service, Department of Labor or PBGC.
(g) Each of the Company and its ERISA Affiliates has complied in all
material respects with the notice and continuation requirements of Section
4980B of the Code and Part 6 of Subtitle B of Title I of ERISA.
(h) Except as set forth in Section 5.21(h) of the Company Disclosure
Letter, to the knowledge of the Company, each Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code.
(i) Except as set forth in Section 5.21(i) of the Company Disclosure
Letter, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee, director or officer of
the Company or any of the Company Subsidiaries to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee,
director or officer.
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(j) Except as set forth in Section 5.21(j) of the Company Disclosure
Letter, there are no pending or, to the knowledge of the Company,
threatened or anticipated actions, suits or claims by or on behalf of any
Plan, by any employee or beneficiary covered under any Plan, or otherwise
involving any such Plan (other than routine claims for benefits).
Section 5.22 Labor Relations; Employees.
(a) Since January 1, 1991, none of the employees of the Company or the
Company Subsidiaries are represented by any labor organization and, to the
knowledge of the Company, no union claims to represent these employees have
been made. To the knowledge of the Company, there have been no union
organizing activities with respect to employees of the Company or the
Company Subsidiaries within the past five years. To the knowledge of the
Company, the Company and the Company Subsidiaries are not, and have not
been, engaged in any unfair labor practices as defined in the National
Labor Relations Act or similar applicable law, ordinance or regulation, nor
is there pending any unfair labor practice charge.
(b) The Company and the Company Subsidiaries have not during the past two
years effectuated a "plant closing" or "mass layoff" (as defined in the
Worker Adjustment and Retraining Notification Act) affecting any of their
sites of employment or one or more facilities or operating units within any
site of employment or facility, nor is any such action scheduled within the
90-day period prior to the Effective Time.
(c) The Company and the Company Subsidiaries have at all times during the
preceding three (3) years, treated their home service agents as employees
for purposes of filings required under applicable tax laws.
Section 5.23 Environmental Matters.
(a) Except as disclosed in Section 5.23 of the Company Disclosure Letter
and in any environmental report obtained by Purchaser in connection with
its due diligence review of the Company, to the knowledge of the Company,
(i) each of the Company and the Company Subsidiaries is and has been in
compliance in all respects with and, except for ongoing compliance
obligations, including current activities to remove asbestos and future
activities to remove asbestos, if applicable, has no existing liabilities
under, and (ii) there are no written claims or notices by any person
received by the Company or any of the Company Subsidiaries that any of the
Company or the Company Subsidiaries has not been in compliance in all
respects with or has any existing liabilities under, all applicable
Environmental Laws with respect to property owned by the Company or any of
the Company Subsidiaries, except for such non-compliance or liabilities
that would not be reasonably likely to have a Company Material Adverse
Effect. Except as disclosed in Section 5.23 of the Company Disclosure
Letter, neither the Company nor any of the Company Subsidiaries is subject
to any decrees, orders, decisions of arbitrators or judgments that impose
requirements under Environmental Laws, restrictions under Environmental
Laws, liabilities under Environmental Laws, or penalties for violations of
Environmental Laws or the aforementioned requirements or restrictions,
except where such requirements, restrictions, liabilities, or penalties
would not be reasonably likely to have a Company Material Adverse Effect.
(b) Except as disclosed in Section 5.23 of the Company Disclosure Letter
and in any environmental report obtained by Purchaser in connection with
its due diligence review of the Company, with respect to currently owned
property and all property formerly owned, leased or operated by the Company
or any of the Company Subsidiaries, including foreclosure property, to the
knowledge of the Company, there are no past or present actions, conditions
or occurrences that could form the basis of any outstanding claim under
Environmental Laws against, or liability under such laws of, the Company or
any of the Company Subsidiaries, except for such claims or liabilities
which in the aggregate would not reasonably be expected to result in a
Company Material Adverse Effect.
Section 5.24 Related Party Transactions. Except for the transactions
described in Section 5.24 of the Company Disclosure Letter, all transactions
involving the Company or any of the Company Subsidiaries that are required to
be disclosed in the Company SEC Reports in accordance with Item 404 of
Regulation S-K have been so disclosed, and to the knowledge of the Company,
since December 31, 1994, neither the Company nor any of the Company
Subsidiaries has entered into any transactions that would be required to be
disclosed in future
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public filings under the Exchange Act pursuant to such Item which have not
already been disclosed in the Company SEC Reports filed prior to the date
hereof.
Section 5.25 Affiliates. Section 5.25 of the Company Disclosure Letter
identifies all persons who, to the knowledge of the Company, may be deemed to
be affiliates of the Company under Rule 145 of the Securities Act, including,
without limitation, all directors and executive officers of the Company. The
Company shall use all reasonable efforts to obtain and deliver to Purchaser
prior to the Closing an executed letter agreement, in such form as may be
mutually agreed to by the parties, from each of the persons identified on
Section 5.25 of the Company Disclosure Letter, acknowledging that such person
is subject to the provisions of Rule 145(d) promulgated under the Securities
Act.
Section 5.26 Opinion of Financial Advisor. The Company has received a
written opinion from Alex. Brown & Sons Incorporated ("Alex. Brown"), dated as
of the date hereof, to the effect that the consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to such
shareholders from a financial point of view.
Section 5.27 Derivatives. Section 5.27 of the Company Disclosure Letter sets
forth the statement of position, as of September 30, 1995, of the Company and
the Company Subsidiaries with respect to obligations under any futures or
option contracts, swaps, hedges or similar instruments ("Derivatives") to
which the Company or any of the Company Subsidiaries is a party. Except as
disclosed in Section 5.27 of the Company Disclosure Letter, since September
30, 1995, neither the Company nor any of the Company Subsidiaries has entered
into agreements relating to Derivatives.
Section 5.28 Contracts.
(a) Section 5.28 of the Company Disclosure Letter sets forth a list of
contracts to which the Company or any of the Company Subsidiaries is a
party or by which it is bound which:
(i) require the payment by or to the Company or the Company
Subsidiaries of amounts in excess of $500,000 per annum, other than (X)
reinsurance and retrocession contracts, (Y) insurance contracts and (Z)
contracts with insurance agents ("Agent Contracts"), all of which
contracts referred to in clauses (X), (Y) and (Z) have been entered
into in the ordinary course of business;
(ii) are Agent Contracts for the top 50 insurance agents of the
Company or any of the Company Subsidiaries in terms of commission
income earned during calendar year 1995 through September 30, 1995
(setting forth the names of such insurance agents);
(iii) are reinsurance or retrocession contracts which require the
payment of premiums by the Company or the Company Subsidiaries of
amounts in excess of $500,000 per year;
(iv) contain covenants limiting the freedom of the Company or any of
the Company Subsidiaries to engage in any line of business in any
geographic area or to compete with any person or entity or restricting
the ability of the Company Subsidiaries to acquire equity securities of
any person or entity;
(v) are employment or severance contracts applicable to any employee
of the Company or the Company Subsidiaries, including without
limitation contracts to employ executive officers and other contracts
with officers or directors of the Company or any of the Company
Subsidiaries, other than Agent Contracts and any such contract which by
its terms is terminable by the Company or any of the Company
Subsidiaries on not more than 60 days' notice without material
liability; or
(vi) are other contracts (except those referred to in clauses (X),
(Y) and (Z) of subsection 5.28(a)(i) above) which were made in the
ordinary course of business and either involve an obligation on the
part of the Company or a Company Subsidiary of more than $500,000 per
annum or could result, upon the breach thereof, in damages or losses of
more than $500,000, other than consequential damages or damages
resulting from liabilities sounding in tort (collectively, the "Company
Contracts").
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(b) With respect to each of the Company Contracts, to the knowledge of
the Company, except as disclosed in Section 5.28 of the Company Disclosure
Letter:
(i) such contract is (assuming due power and authority of, and due
execution and delivery by, the other party or parties thereto) valid
and binding upon each party thereto and is in full force and effect;
(ii) there is no material default or claim of material default
thereunder and no event has occurred which, with the passage of time or
the giving of notice (or both), would constitute a material default
thereunder, or would permit material modification, acceleration or
termination thereof; and
(iii) the consummation of the transactions contemplated by this
Agreement will not give rise to a right of the other party or parties
thereto to terminate such contract or impose liability under the terms
thereof on the Company or any of the Company Subsidiaries; provided,
that this representation shall not be deemed to give assurances
regarding rights of termination based on any decrease in insurance
industry ratings of the Company or the Company Subsidiaries resulting
from the declaration and/or payment of the extraordinary dividend.
Section 5.29 Disclosure. No representation or warranty by the Company or the
Company Subsidiaries in this Agreement, including the Company Disclosure
Letter, and no statement contained in the Company SEC Reports and the
Statutory Financial Statements of the Company, contains or will contain any
untrue statement of a material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was
made, to make the statements herein or therein not misleading. There is no
fact known to Company which could reasonably be expected to have a Company
Material Adverse Effect which has not been set forth in the Company SEC
Reports, the Statutory Financial Statements of the Company or in this
Agreement, including the Company Disclosure Letter.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger. From the
date hereof until the Effective Time, unless Purchaser shall otherwise agree
in writing, or except as set forth in the Company Disclosure Letter or as
otherwise contemplated by this Agreement, the Company and the Company
Subsidiaries shall conduct their respective businesses in the ordinary course
consistent with past practice and shall use all reasonable efforts to preserve
intact their business organizations and relationships with third parties
(including but not limited to their respective relationships with
policyholders, insureds, agents, underwriters, brokers and investment
customers) and to keep available the services of their present officers and
key employees, subject to the terms of this Agreement. Except as set forth in
the Company Disclosure Letter or as otherwise provided in this Agreement, from
the date hereof until the Effective Time, without the prior written consent of
Purchaser:
(a) the Company shall not adopt or propose any change in its Articles of
Incorporation or By-Laws;
(b) the Company shall not declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of the Company
(except for regular quarterly dividends in an amount no greater than $.06
per share), or split, combine or reclassify any of the Company's capital
stock, and the Company and the Company Subsidiaries shall not repurchase,
redeem or otherwise acquire any shares of capital stock or other securities
of, or other ownership interests in, the Company;
(c) the Company shall not, and shall not permit any Company Subsidiary
to, merge or consolidate with any other person or (except in the ordinary
course of business) acquire a material amount of assets of any other
person;
(d) the Company shall not, and shall not permit any Company Subsidiary
to, sell, lease, license or otherwise surrender, relinquish or dispose of
(i) any material facility owned or leased by the Company or any Company
Subsidiary or (ii) any assets or property which are material to the Company
and the Company Subsidiaries, taken as a whole, except pursuant to existing
contracts or commitments (the terms of which
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have been disclosed to Purchaser prior to the date hereof), or in the
ordinary course of business consistent with past practice;
(e) the Company shall not, and shall not permit any Company Subsidiary
to, settle any material Audit, make or change any material Tax election or
file amended Tax Returns;
(f) the Company and the Company Subsidiaries shall not issue any capital
stock or other securities or enter into any amendment of any material term
of any outstanding security of the Company, and the Company and the Company
Subsidiaries shall not incur any material indebtedness except in the
ordinary course of business pursuant to existing credit facilities or
arrangements, amend or otherwise increase, accelerate the payment or
vesting of the amounts payable or to become payable under or fail to make
any required contribution to, any Company Plan (as hereinafter defined) or
materially increase any non-salary benefits payable to any employee or
former employee, except in the ordinary course of business consistent with
past practice or as otherwise permitted by this Agreement;
(g) the Company shall not, and shall not permit any Company Subsidiary
to, grant any increase in the compensation or benefits of directors,
officers, employees, consultants or agents of the Company or any Company
Subsidiary; provided, however, that increases in the ordinary course of
business consistent with past practice in the compensation of employees,
who are not directors, officers or agents, shall be permitted;
(h) the Company shall not, and shall not permit any Company Subsidiary
to, enter into or amend any employment agreement or other employment
arrangement with any employee of the Company or any Company Subsidiary,
except in the ordinary course of business consistent with past practice;
(i) the Company shall not change any method of accounting or accounting
practice by the Company or any Company Subsidiary, except for any such
required change in GAAP or the Florida Statutory Accounting Principles;
(j) The Company shall not, and shall not permit any Company Subsidiary
to, take any action that could, directly or indirectly, cause the Merger to
fail to qualify as a tax-free reorganization within the meaning of Section
368(a) of the Code;
(k) the Company shall not permit any Company Insurance Subsidiary to
conduct transactions in Company Investments except in compliance with the
investment policies of such Company Insurance Subsidiary and all applicable
insurance laws and regulations;
(l) The Company shall not, and shall not permit any Company Subsidiary
to, enter into any agreement to purchase, or to lease, for a term in excess
of one year, any real property, provided that the Company, or any Company
Subsidiary, (i) may as a tenant, or a landlord, renew any existing lease
for a term not to exceed eighteen months and (ii) nothing herein shall
prevent the Company, in its capacity as a landlord, from renewing any lease
pursuant to an option granted prior to the date hereof;
(m) the Company shall not, and shall not permit any Company Subsidiary
to, agree or commit to do any of the foregoing;
(n) except to the extent necessary to comply with the requirements of
applicable laws and regulations, the Company shall not, and shall not
permit any Company Subsidiary to, (i) take, or agree or commit to take, any
action that would make any representation and warranty of the Company
hereunder inaccurate in any material respect at, or as of any time prior
to, the Effective Time, (ii) omit, or agree or commit to omit, to take any
action necessary to prevent any such representation or warranty from being
inaccurate in any material respect at any such time, provided however that
the Company shall be permitted to take or omit to take such action which
(without any uncertainty) can be cured, and in fact is cured, at or prior
to the Effective Time or (iii) take, or agree or commit to take, any action
that would result in, or is reasonably likely to result in, any of the
conditions of the Merger set forth in Article 8 not being satisfied; and
(o) release any third party from its obligations, or grant any consent,
under any existing standstill provision relating to any Acquisition
Proposal (as hereinafter defined) or otherwise under any confidentiality or
other agreement, or fail to fully enforce any such agreement.
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Section 6.2 Conduct of Business by Purchaser Pending the Merger. From the
date hereof until the Effective Time, unless the Company shall otherwise agree
in writing, or as otherwise contemplated by this Agreement, Purchaser, Sub and
the Purchaser Subsidiaries shall conduct their respective businesses in all
material respects in the ordinary course consistent with past practice and
shall use all reasonable efforts to substantially preserve intact their
business organizations and relationships with third parties (including but not
limited to their respective relationships with policyholders, insureds,
agents, underwriters, brokers and investment customers) and to keep available
the services of their present officers and key employees, subject to the terms
of this Agreement. Except as otherwise provided in this Agreement, from the
date hereof until the Effective Time, without the prior written consent of the
Company:
(a) Purchaser shall not adopt or propose any change in its Articles of
Incorporation or By-Laws that would have any adverse impact on the
transactions contemplated by this Agreement or which would amend or modify
the terms or provisions of the capital stock of Purchaser;
(b) Purchaser shall not declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of Purchaser
(except for regular quarterly dividends), or split, combine or reclassify
the Purchaser Stock without agreeing to an appropriate adjustment to the
Exchange Ratio;
(c) Purchaser shall not merge or consolidate with any other person or
(except in the ordinary course of business) acquire a material amount of
assets of any other person, if such merger, consolidation or acquisition
could reasonably be expected to have a material impact on the ability of
Purchaser to consummate the transactions contemplated by this Agreement;
(d) Purchaser shall not issue any shares of capital stock or other
securities (except for issuances of shares in the ordinary course pursuant
to Purchaser Stock Options) in connection with any transaction requiring
shareholder approval unless Purchaser first notifies the Company in writing
(an "Issuance Notice") of such transaction and provides the Company with
information to the reasonable satisfaction of the Company with respect
thereto. Thereafter, the Company shall have the right, by giving written
notice to Purchaser at any time prior to 5:30 p.m., New York City time, on
the tenth Trading Day following receipt of the Issuance Notice, to abandon
the Merger and terminate this Agreement;
(e) Purchaser and the Purchaser Subsidiaries shall not (i) issue shares
of any class or series of stock, or any security convertible at the option
of the holder thereof into shares of any class or series of stock ranking
senior to the Purchaser Convertible Preferred Stock as to dividends or as
to the distribution of assets upon the liquidation of Purchaser or (ii)
amend, alter or repeal, whether by merger, consolidation or otherwise, any
of the provisions of Purchaser's Restated Articles of Incorporation or any
of the resolutions contained therein which would materially and adversely
affect any right, preference, privilege or voting power of the Purchaser
Convertible Preferred Stock or of the holder thereof; provided, however,
that any such amendment, alteration or repeal that would authorize, create
or issue any additional shares of stock (whether or not authorized as of
the date hereof) ranking on a parity with or junior to the Purchaser
Convertible Preferred Stock as to dividends or as to the distribution of
assets upon the liquidation of Purchaser, shall be deemed not to materially
and adversely affect the rights, preferences, privileges or voting power of
the Purchaser Convertible Preferred Stock;
(f) Purchaser shall not, and shall not permit any Purchaser Subsidiary
to, take any action that could, directly or indirectly, cause the Merger to
fail to qualify as a tax-free reorganization within the meaning of Section
368(a) of the Code;
(g) Purchaser shall not permit any Purchaser Insurance Subsidiary to
conduct transactions in Purchaser Investments except in compliance with the
investment policies of such Purchaser Insurance Subsidiary and all
applicable insurance laws and regulations;
(h) Purchaser shall not, and shall not permit any Purchaser Subsidiary
to, purchase or otherwise acquire any shares of Company Common Stock;
(i) Purchaser shall not, and shall not permit Sub or any Purchaser
Subsidiary to, agree or commit to do any of the foregoing; and
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(j) except to the extent necessary to comply with the requirements of
applicable laws and regulations, Purchaser shall not, and shall not permit
Sub or any Purchaser Subsidiary to, (i) take, or agree or commit to take,
any action that would make any representation and warranty of Purchaser
hereunder inaccurate, in any material respect, at, or as of any time prior
to, the Effective Time, (ii) omit, or agree or commit to omit, to take any
action necessary to prevent any such representation or warranty from being
inaccurate, in any material respect, at any such time, provided however
that Purchaser shall be permitted to take or omit to take such action which
(without any uncertainty) can be cured, and in fact is cured, at or prior
to the Effective Time or (iii) take, or agree or commit to take, any action
that would result in, or is reasonably likely to result in, any of the
conditions of the Merger set forth in Article 8 not being satisfied.
Section 6.3 Investment Restrictions.
(a) From the date hereof until the Effective Time, each of the Company
and each Company Subsidiary shall:
(i) invest available cash only in corporate bonds (other than bonds
issued by public utilities) rated no higher than A1 nor lower than Baa3
by Moody's or no higher than A+ nor lower than BBB--by S&P, with
maturities of not fewer than five nor more than ten years ("Permitted
Investments");
(ii) maintain amounts in short-term investments equal to the dividend
amounts specified in Section 7.10; and
(iii) cease making mortgage loans or purchasing mortgage backed
securities;
provided, however, that nothing in this Section 6.3(a) shall require any
Company Subsidiary to make any investment other than in compliance with the
investment policies of such Company Subsidiary and all insurance laws and
regulations applicable thereto, or prohibit the Company from making
investments, mortgage loans or purchasing mortgage backed securities
pursuant to existing contracts or commitments (the terms of which have been
disclosed to Purchaser prior to the date hereof).
(b) The Company and each Company Subsidiary shall neither purchase nor
issue any put, call, straddle, hedge, interest-rate swap or other similar
option or derivative contract, and the Company shall use all reasonable
efforts to sell, close-out or otherwise liquidate, in an orderly fashion,
any such options or derivatives which it owns.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The Company and Purchaser shall each
afford to the other and to the other's financial advisors, legal counsel,
accountants, consultants, financing sources, and other authorized
representatives access during normal business hours throughout the period
prior to the Effective Time to all of its books, records, properties, plants
and personnel and, during such period, each shall furnish as promptly as
practicable to the other (a) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal
securities laws, and (b) all other information as such other party reasonably
may request, provided that neither party shall disclose to the other any
competitively sensitive information and no investigation pursuant to this
Section 7.1 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. Each party shall continue to abide by the terms of the confidentiality
agreements between Purchaser and the Company, dated April 26, 1995 and October
16, 1995 (collectively, the "Confidentiality Agreements").
Section 7.2 Acquisition Proposals. From the date hereof until the
termination hereof, the Company and the Company Subsidiaries will not
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal relating to, or that may reasonably be expected to lead
to, any Acquisition Proposal, or enter into discussions or negotiate with any
person or entity in furtherance of such inquiries or to obtain an Acquisition
Proposal, or agree to or endorse any Acquisition Proposal, or authorize or
permit any of the officers, directors or employees of the Company or any
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of the Company Subsidiaries or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any of
the Company Subsidiaries to take any such action, and the Company shall
promptly notify Purchaser of all relevant terms of any such inquiries and
proposals received by the Company or any of the Company Subsidiaries, or by
any such officer, director, investment banker, financial advisor, attorney,
accountant or other representative relating to any such matters, and if such
inquiry or proposal is in writing, the Company shall promptly deliver or cause
to be delivered to Purchaser a copy of such inquiry or proposal; provided,
however, that nothing contained in this Section 7.2 shall prohibit the Board
of Directors of the Company from (i) furnishing information to, or entering
into discussions or negotiations with, any person or entity in connection with
an unsolicited bona fide proposal in writing by such person or entity to
acquire the Company pursuant to a merger, consolidation, share exchange,
business combination or other similar transaction or to acquire a substantial
portion of the assets of the Company or any of the Company Subsidiaries, if,
and only to the extent that (A) the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is necessary for such Board of
Directors to comply with its fiduciary duties to the Company's shareholders
under applicable law and (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or entity, the
Company (x) provides written notice to Purchaser to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity and (y) enters into with such person or entity a
confidentiality agreement in reasonably customary form on terms not more
favorable to such person or entity than the terms contained in the
Confidentiality Agreement dated April 26, 1995, or (ii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal. The term "Acquisition Proposal" as used herein means any proposal to
purchase or acquire any equity securities or (except in the ordinary course of
business) assets of, or merge or combine with, the Company or any of its
subsidiaries. Immediately after the execution and delivery of this Agreement,
the Company will cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
possible Acquisition Proposal and shall send a written notice to each party
that it has had discussions with during the 30 days prior to the date of this
Agreement that the Board of Directors of the Company no longer seeks the
making of any Acquisition Proposal.
Section 7.3 Filings; Other Action. Subject to the terms and conditions
herein provided, as promptly as practicable, the Company, Purchaser and Sub
shall: (i) promptly make all filings and submissions under the HSR Act and all
filings required by the insurance regulatory authorities in Florida and in
Missouri, and deliver notices and consents to jurisdiction to state insurance
departments, each as reasonably may be required to be made in connection with
this Agreement and the transactions contemplated hereby, (ii) use all
reasonable efforts to cooperate with each other in (A) determining which
filings are required to be made prior to the Effective Time with, and which
material consents, approvals, permits, notices or authorizations are required
to be obtained prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states or the District of
Columbia, the Commonwealth of Puerto Rico and foreign jurisdictions in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (B) timely making all
such filings and timely seeking all such consents, approvals, permits, notices
or authorizations, and (iii) use all reasonable efforts to take, or cause to
be taken, all other action and do, or cause to be done, all other things
necessary or appropriate to consummate the transactions contemplated by this
Agreement as soon as practicable. In connection with the foregoing, the
Company will provide Purchaser, and Purchaser will provide the Company, with
copies of correspondence, filings or communications (or memoranda setting
forth the substance thereof) between such party or any of its representatives,
on the one hand, and any governmental agency or authority or members of their
respective staffs, on the other hand, with respect to this Agreement and the
transactions contemplated hereby. Each of Purchaser and the Company
acknowledge that certain actions may be necessary with respect to the
foregoing in making notifications and obtaining clearances, consents,
approvals, waivers or similar third party actions which are material to the
consummation of the transactions contemplated hereby, and each of Purchaser
and the Company agree to take such action as is necessary to complete such
notifications and obtain such clearances, approvals, waivers or third party
actions, provided, however, that nothing in this Section 7.3 or elsewhere in
this Agreement shall require any party hereto to incur expenses in connection
with the transactions contemplated hereby which are not reasonable under the
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circumstances in relation to the size of the transaction contemplated hereby
or to require Purchaser, any Purchaser Subsidiary, the Surviving Corporation,
the Company or any Company Subsidiary to hold separate or make any divestiture
of a significant asset or otherwise agree to any material restriction on their
operations (including restrictions on the ability of Purchaser or any
Purchaser Subsidiary to consolidate operations of the Company and the Company
Subsidiaries in Nashville, Tennessee or to otherwise realize the expected
benefits and cost savings to be obtained from the Merger) in order to obtain
any waiver, consent or approval required by this Agreement.
Section 7.4 Public Announcements. Purchaser, on the one hand, and the
Company, on the other hand, agree that they will not issue any press release
or otherwise make any public statement or respond to any press inquiry with
respect to this Agreement or the transactions contemplated hereby without the
prior approval of the other party (which approval will not be unreasonably
withheld), except as may be required by applicable law.
Section 7.5 Employee Benefits.
(a) From and after the Effective Time, subject to applicable law and
except as contemplated hereby, Purchaser and the Purchaser Subsidiaries
will honor, in accordance with their terms, all employee benefit plans,
programs, agreements or arrangements of the Company and the Company
Subsidiaries in effect as of the date hereof (or as modified in accordance
with Section 6.1 hereof) (the "Company Plans"); provided, however, that
nothing herein shall preclude any change effected on a prospective basis in
any Company Plan from and after the Effective Time. Purchaser and the
Purchaser Subsidiaries will provide benefits to employees of the Company
and the Company Subsidiaries who become employees of Purchaser and the
Purchaser Subsidiaries or continue after the Effective Time as employees of
the Company or the Company Subsidiaries which will not, in the aggregate,
be materially less favorable than those provided to other similarly
situated employees of Purchaser, Sub and the Purchaser Subsidiaries from
time to time; provided, however, that Purchaser and the Purchaser
Subsidiaries shall be deemed to have satisfied the foregoing requirement if
benefits are provided to such employees that are no less favorable than
those provided to such employees by the Company immediately prior to the
Effective Time. With respect to the employee benefit plans, programs,
agreements or arrangements of Purchaser and the Purchaser Subsidiaries in
effect as of the date hereof (or as modified in accordance with Section 6.2
hereof) (the "Purchaser Plans"), Purchaser and the Surviving Corporation
shall grant all employees of the Company and the Company Subsidiaries from
and after the Effective Time credit for service with the Company and the
Company Subsidiaries, their affiliates and predecessors prior to the
Effective Time for all purposes, other than the accrual of benefits, for
which such service was recognized by the Company and the Company
Subsidiaries. To the extent the Purchaser Plans provide medical or dental
welfare benefits after the Effective Time, such plans shall waive pre-
existing conditions and actively-at-work exclusions to the extent such
exclusions have been satisfied in similar Company Plans and shall provide
that any expenses incurred on or before the Effective Time shall be taken
into account under deductible, coinsurance and maximum out-of-pocket
provisions under such Purchaser Plans.
(b) Purchaser agrees that it will cause the Company to comply with the
Workers Adjustment and Retraining Notification Act, to the extent
applicable to the Company and its subsidiaries, in connection with actions
taken after the Effective Time.
Section 7.6 Stock Exchange Listing. Purchaser shall as promptly as
practicable prepare and submit to the New York Stock Exchange a listing
application covering the shares of Purchaser Common Stock and Purchaser
Convertible Preferred Stock to be issued in connection with the Merger and
this Agreement, and shall use all reasonable efforts to obtain, prior to the
Effective Time, approval for the listing of such shares, subject to official
notice of issuance.
Section 7.7 Company Indemnification Provision. Purchaser agrees that all
rights to indemnification existing in favor of the present or former
directors, officers, employees, fiduciaries and agents of the Company or any
of the Company Subsidiaries (collectively, the "Indemnified Parties") as
provided in the Company's Articles of Incorporation or By-Laws or the
certificate or articles of incorporation, by-laws or similar
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organizational documents of any of the Company Subsidiaries as in effect as of
the date hereof or pursuant to the terms of any indemnification agreements
entered into between the Company and any of the Indemnified Parties with
respect to matters occurring prior to the Effective Time shall survive the
Merger and shall continue in full force and effect (without modification or
amendment, except as required by applicable law or except to make changes
permitted by law that would enlarge the Indemnified Parties' right of
indemnification), to the fullest extent and for the maximum term permitted by
law, and shall be enforceable by the Indemnified Parties against the Surviving
Corporation. At the Closing the Surviving Corporation shall expressly and
directly assume by written instrument all such obligations. Purchaser shall
cause to be maintained in effect for not less than six years from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company (provided that Purchaser may substitute
therefor policies of at least equivalent coverage containing terms and
conditions which are no less advantageous) with respect to matters occurring
prior to the Effective Time, provided that in no event shall Purchaser or the
Surviving Corporation be required to expend to maintain or procure insurance
coverage pursuant to this Section 7.7 any amount per annum in excess of 200%
of the aggregate premiums paid in 1995 on an annualized basis for such
purpose. In the event the payment of such amount for any year is insufficient
to maintain such insurance or equivalent coverage cannot otherwise be
obtained, the Surviving Corporation shall purchase as much insurance as may be
purchased for the amount indicated. The provisions of this Section 7.7 shall
survive the consummation of the Merger and expressly are intended to benefit
each of the Indemnified Parties.
Section 7.8 Comfort Letters.
(a) Purchaser shall use all reasonable efforts to cause Ernst & Young
LLP, Purchaser's independent accountants, to deliver to the Company a
letter dated as of the date of the Proxy Statement/Prospectus and addressed
to the Company, in form and substance reasonably satisfactory to the
Company, in connection with the procedures undertaken by them with respect
to the financial statements and other financial information of Purchaser
contained in the Registration Statement and the other matters contemplated
by AICPA Statement No. 72 and customarily included in comfort letters
relating to transactions similar to the Merger.
(b) The Company shall use all reasonable efforts to cause Ernst & Young
LLP, the Company's independent accountants, to deliver to Purchaser a
letter dated as of the date of the Proxy Statement/Prospectus and addressed
to Purchaser, in form and substance reasonably satisfactory to Purchaser,
in connection with the procedures undertaken by them with respect to the
financial statements and other financial information of the Company and the
Company Subsidiaries contained in the Registration Statement and the other
matters contemplated by AICPA Statement No. 72 and customarily included in
comfort letters relating to transactions similar to the Merger.
Section 7.9 Tax Matters. The Company shall use all reasonable efforts to
deliver to Purchaser as soon as practicable following the execution and
delivery of this Agreement an executed representation letter, substantially in
the form of Exhibit B attached hereto, from each person owning 5% or more of
the outstanding shares of Voting Common Stock or Non-Voting Common Stock of
the Company.
Section 7.10 Intercompany Dividends. On the date immediately prior to the
Closing Date, subject to compliance with applicable law and the receipt of all
necessary approvals, the Company shall use all reasonable efforts to cause (i)
Thomas Jefferson Insurance Company to pay a $1.0 million dividend to The
Independent Life and Accident Insurance Company; (ii) Independent Fire
Insurance Company to pay a $4 million dividend to The Independent Life and
Accident Insurance Company and (iii) The Independent Life and Accident
Insurance Company to pay a $35 million dividend to the Company, each such
dividend to be paid in the form of a demand promissory note, or such other
form as the parties may mutually agree.
Section 7.11 Certificate of Designation of Purchaser Convertible Preferred
Stock. Prior to Closing, Purchaser (i) shall cause to be filed with the
Secretary of State of the State of Texas, in accordance with Article 2.13 of
the Texas Business Corporation Act, the Certificate of Designation in the form
of Exhibit A attached hereto with such immaterial changes as the parties may
mutually agree (the "Certificate"), establishing and
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designating the Purchaser Convertible Preferred Stock and fixing and
determining the designations, preferences, limitations and relative rights
thereof; (ii) shall insert in Section 2(a) of the Certificate the Average
Closing Price as the liquidation preference; and (iii) shall insert in Section
1(a) of the Certificate a number no less than the maximum number of shares of
Purchaser Convertible Preferred Stock issuable in the Merger as the number of
shares constituting the Purchaser Convertible Preferred Stock Series.
Section 7.12 Additional Matters. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers,
consents and approvals in connection with the Governmental Requirements and to
effect all necessary registrations and filings. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors of Purchaser,
Sub and the Company shall take all such necessary action.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) any waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated, and no action shall have
been instituted by the Department of Justice or Federal Trade Commission
challenging or seeking to enjoin the consummation of this transaction,
which action shall have not been withdrawn or terminated;
(b) no statute, rule, regulation, executive order, decree, ruling or
preliminary or permanent injunction shall have been enacted, entered,
promulgated or enforced by any federal or state court or governmental
authority having jurisdiction which prohibits, restrains, enjoins or
restricts the consummation of the Merger;
(c) each of the Company and Purchaser shall have made such filings, and
obtained such permits, authorizations, consents, or approvals, required by
the Governmental Requirements to consummate the transactions contemplated
hereby, and the appropriate forms shall have been executed, filed and
approved as required by the corporate and insurance laws and regulations of
the states of Florida and Missouri;
(d) this Agreement and the Merger shall have been adopted and approved by
the requisite vote of the shareholders of the Company in accordance with
the applicable provisions of the FBCA;
(e) the Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order;
(f) the shares of Purchaser Common Stock issuable to the Company's
shareholders pursuant to this Agreement shall have been authorized for
listing on the New York Stock Exchange upon official notice thereof; and
(g) Purchaser shall have used all reasonable efforts to have the shares
of Purchaser Convertible Preferred Stock issuable to the Company's
shareholders pursuant to this Agreement authorized for listing on either
the New York Stock Exchange or the Nasdaq National Market.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) each of Purchaser and Sub shall have performed in all material
respects its obligations under this Agreement required to be performed by
it at or prior to the Effective Time; the representations and warranties of
Purchaser and Sub contained in this Agreement which are qualified with
respect to materiality
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shall be true and correct in all respects, and such representations and
warranties that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and at and
as of the Effective Time as if made at and as of such time (except to the
extent such representations and warranties specifically relate to an
earlier date, in which case as of such earlier date) except as contemplated
by this Agreement; and the Company shall have received a certificate of the
Chairman of the Board, the President, an Executive Vice President, a Senior
Vice President or the Chief Financial Officer of Purchaser as to the
satisfaction of this condition;
(b) the Company shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom, special counsel to the Company, dated the Effective Time,
to the effect that, on the basis of certain facts, representations and
assumptions set forth in such opinion which are consistent with the stated
facts existing at the Effective Time, the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that Purchaser, Sub and the Company will
each be a party to that reorganization within the meaning of Section 368(b)
of the Code. In rendering the opinion described in the preceding sentence,
such counsel may require and rely upon representations contained in
certificates of officers of Purchaser, Sub and the Company and their
respective subsidiaries; and
(c) the Company shall have received a written opinion from Alex. Brown,
dated as of the date of the Closing, to the effect that the consideration
to be received by the shareholders of the Company pursuant to the Merger is
fair to such shareholders from a financial point of view.
Section 8.3 Conditions to Obligations of Purchaser and Sub to Effect the
Merger. The obligations of Purchaser and Sub to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) the Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior
to the Effective Time; and the representations and warranties of the
Company contained in this Agreement which are qualified with respect to
materiality shall be true and correct in all respects, and such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such
time (except to the extent such representations and warranties specifically
relate to an earlier date, in which case as of such earlier date), except
as contemplated by the Company Disclosure Letter or this Agreement; and
Purchaser and Sub shall have received a Certificate of the Chairman of the
Board, the President, an Executive Vice President, Senior Vice President or
the Chief Financial Officer of the Company as to the satisfaction of this
condition; and
(b) Purchaser shall have received an opinion from Vinson & Elkins L.L.P.,
special counsel to Purchaser, dated the Effective Time, to the effect that,
on the basis of certain facts, representations and assumptions set forth in
such opinion which are consistent with the stated facts existing at the
Effective Time, the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code, and
that Purchaser, Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code. In
rendering the opinion described in the preceding sentence, such counsel may
require and rely upon representations contained in certificates of officers
of Purchaser, Sub and the Company and their respective subsidiaries.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Effective Time by mutual written agreement of
Purchaser and the Company.
Section 9.2 Termination by Either Purchaser or the Company. This Agreement
may be terminated and the Merger may be abandoned by action of the Board of
Directors of either Purchaser or the Company if (a) this Agreement and the
Merger shall fail to receive the requisite vote for approval and adoption by
the shareholders
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of the Company at the Company Special Meeting, (b) the Merger shall not have
been consummated before March 30, 1996; provided, however, that this Agreement
may be extended by written notice of either Purchaser or the Company to a date
not later than June 30, 1996, if the Merger shall not have been consummated as
a direct result of the conditions in Section 8.1(a) or 8.1(c) not having been
satisfied by such date, or (c) a United States federal or state court of
competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and non-
appealable; provided, that the party seeking to terminate this Agreement
pursuant to clause (b) shall not be in material violation of any of its
representations, warranties or covenants set forth in this Agreement, and the
party seeking to terminate this Agreement pursuant to clause (c) shall have
used all reasonable efforts to remove such injunction, order or decree.
Section 9.3 Termination by the Company. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of the Merger and the adoption of this Agreement by the
shareholders of the Company referred to in Section 2.1, by action of the Board
of Directors of the Company, if (a) there has been a breach by Purchaser or
Sub of any representation or warranty contained in this Agreement which would
have or would be likely to have a Purchaser Material Adverse Effect; (b) there
has been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of Purchaser, which breach is not curable or, if
curable, is not cured within thirty (30) days after written notice of such
breach is given by the Company to Purchaser; (c) prior to the Company Special
Meeting, the Board of Directors of the Company has (i) withdrawn, or modified
or changed in a manner adverse to Purchaser or Sub its approval or
recommendation of this Agreement or the Merger in order to approve and permit
the Company to execute a definitive agreement relating to an Acquisition
Proposal, and (ii) determined, based on a written opinion of outside legal
counsel to the Company, that the failure to take such action as set forth in
the preceding clause (i) would result in a breach of the Board of Directors'
fiduciary duties under applicable law, provided, however, that (A) the Board
of Directors of the Company shall have been advised in such written opinion of
outside counsel that notwithstanding a binding commitment to consummate an
agreement of the nature of this Agreement entered into in the proper exercise
of their applicable fiduciary duties, and notwithstanding all concessions
which may be offered by Purchaser in negotiations entered into pursuant to
clause (B) below, such fiduciary duties would also require the directors to
terminate this Agreement as a result of such Acquisition Proposal, and (B)
prior to any such termination, the Company shall, and shall cause its
respective financial and legal advisors to, negotiate with Purchaser to make
such adjustments in the terms and conditions of this Agreement as would enable
the Company to proceed with the transactions contemplated herein on such
adjusted terms; (d) the Average Closing Price shall be less than the Company's
Walk Away Threshold (as hereinafter defined); or (e) the Company shall have
elected to terminate this Agreement in accordance with Section 6.2(d).
The Company's Walk Away Threshold shall be computed as follows:
(i) if the Average Reference Price (as hereinafter defined) is equal
to or more than $38.125, the Company's Walk Away Threshold shall be
$29;
(ii) if the Average Reference Price is less than $38.125, the
Company's Walk Away Threshold shall be the lesser of (a) $29 or (b) $29
multiplied by the Adjustment Factor;
(iii) if the S&P Factor (as hereinafter defined) is greater than 1,
the Adjustment Factor shall be a fraction, the numerator of which shall
be the Average Reference Price and the denominator of which shall be
$38.125; and
(iv) if the S&P Factor is less than 1, the Adjustment Factor shall be
the sum of (i) the amount by which 1 exceeds the S&P Factor and (ii) a
fraction, the numerator of which shall be the Average Reference Price
and the denominator of which shall be $38.125.
As used herein, the "Average Reference Price" shall mean the average of the
closing prices (or if Purchaser Common Stock is not traded on any of the five
calendar days next succeeding October 29, 1995, the arithmetic
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mean of the high bid and the low asked prices therefor on such day), regular
way, of Purchaser Common Stock as reported on the New York Stock Exchange
Composite Tape on each of the five calendar days next succeeding October 29,
1995. As used herein, the "S&P Factor" shall be a fraction, the numerator of
which shall be the arithmetic mean of the Standard & Poor's 500 Composite
Stock Price Index at the close of business on each of the five calendar days
next succeeding October 29, 1995 and the denominator of which shall be the
Standard & Poor's 500 Composite Stock Price Index at the close of business on
October 18, 1995.
Section 9.4 Termination by Purchaser. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by action
of the Board of Directors of Purchaser, if (a) there has been a breach by the
Company of any representation or warranty contained in this Agreement which
would have or would be likely to have a Company Material Adverse Effect; (b)
there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of the Company, which breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach given by Purchaser to the Company; (c) the Board of
Directors of the Company shall have withdrawn, or modified or changed in a
manner adverse to Purchaser or Sub its approval or recommendation of this
Agreement or the Merger or shall have recommended an Acquisition Proposal, or
shall have executed an agreement in principle (or similar agreement) or
definitive agreement providing for an Acquisition Proposal or other business
combination with a person or entity other than Purchaser or its affiliates (or
the Board of Directors of the Company resolves to do any of the foregoing); or
(d) the Average Closing Price shall be less than the Purchaser's Walk Away
Threshold. The Purchaser's Walk Away Threshold shall be computed as follows
(i) if the Average Reference Price is equal to or more than $38.125,
the Purchaser's Walk Away Threshold shall be $31;
(ii) if the Average Reference Price is less than $38.125, the
Purchaser's Walk Away Threshold shall be the lesser of (a) $31 or (b)
$31 multiplied by the Adjustment Factor.
Section 9.5 Effect of Termination and Abandonment.
(a) In the event of termination of the Agreement and the abandonment of
the Merger pursuant to this Article IX, written notice thereof shall as
promptly as practicable be given to the other parties to this Agreement and
this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by any of the parties hereto. If
this Agreement is terminated as provided herein: (i) except as provided in
Section 9.5(b), there shall be no liability or obligation on the part of
Purchaser, the Purchaser Subsidiaries, the Company or the Company
Subsidiaries or their respective officers and directors, and all
obligations of the parties shall terminate, except for the obligations of
the parties pursuant to this Section 9.5, except for the provisions of
Sections 4.20, 5.20, 7.4, 10.4, 10.5, 10.6 and 10.10, except for the
obligations of the parties set forth in the Confidentiality Agreements
referred to in Section 7.1 hereof (provided, however, that if this
Agreement is terminated pursuant to Section 9.3(c), Purchaser shall no
longer be bound by paragraph 9 of the Confidentiality Agreement dated April
26, 1995) and except that a party who is in material breach of its
representations, warranties, covenants or agreements set forth in this
Agreement shall be liable for damages occasioned by such breach, including
without limitation any expenses incurred by the other party in connection
with this Agreement and the transactions contemplated hereby, and (ii) all
filings, applications and other submissions made pursuant to the
transactions contemplated by this Agreement shall, to the extent
practicable, be withdrawn from the agency or person to which made.
(b) Under the circumstances set forth in this Section 9.5(b), and only
under these circumstances, the Company agrees to make certain termination
payments to Purchaser as follows:
(i) if an Acquisition Proposal which provides that the Company's
shareholders will receive in excess of $27.50 per share is then
outstanding and
(A) the Board of Directors of the Company withdraws or modifies or
changes in a manner adverse to Purchaser or Sub its approval or
recommendation of this Agreement or the Merger in order to permit
the Company to execute a definitive agreement relating to such
Acquisition
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Proposal and the Company is unable to sustain the burden of proving
that at least one condition to the consummation of the Merger (other
than the conditions referred to in Section 8.1(d), Section 8.2(c)
and Section 8.3(a)) has not been satisfied and is unlikely to be
satisfied by the Closing Date, or
(B) this Agreement and the Merger shall fail to receive the
requisite vote for approval and adoption by the shareholders of the
Company at the Company Special Meeting and the Company is unable to
sustain the burden of proving that at least one condition to the
consummation of the Merger (other than the conditions referred to in
Section 8.1(d), Section 8.2(c) and Section 8.3(a))has not been
satisfied and is unlikely to be satisfied by the Closing Date, or
(C) this Agreement and the Merger receives the requisite vote for
approval and adoption by the shareholders of the Company at the
Company Special Meeting, but Alex. Brown refuses or states that it
will refuse to deliver the fairness opinion, and the Company is
unable to sustain the burden of proving that at least one condition
to the consummation of the Merger (other than the conditions
referred to in Section 8.2(c) and Section 8.3(a)) has not been
satisfied and is unlikely to be satisfied by the Closing Date,
then the Company shall pay the Purchaser the sum of $14,000,000 in cash
(the "Termination Payment").
(ii) if an Acquisition Proposal which provides that the Company's
shareholders will receive in excess of $27.50 per share is then
outstanding and
(A) the Board of Directors of the Company withdraws or modifies or
changes in a manner adverse to Purchaser or Sub its approval or
recommendation of this Agreement or the Merger in order to permit
the Company to execute a definitive agreement relating to such
Acquisition Proposal and the Company is able to sustain the burden
of proving that at least one condition to the consummation of the
Merger (other than the conditions referred to in Section 8.1(d),
Section 8.2(c) and Section 8.3(a)) has not been satisfied and is
unlikely to be satisfied as of the Closing Date, or
(B) this Agreement and the Merger shall fail to receive the
requisite vote for approval and adoption by the shareholders of the
Company at the Company Special Meeting and the Company is able to
sustain the burden of proving that at least one condition to the
consummation of the Merger (other than the conditions referred to in
Section 8.1(d), Section 8.2(c) and Section 8.3(a)) has not been
satisfied and is unlikely to be satisfied by the Closing Date, or
(C) this Agreement and the Merger receives the requisite vote for
approval and adoption by the shareholders of the Company at the
Company Special Meeting, but Alex. Brown refuses or states that it
will refuse to deliver the fairness opinion, and the Company is able
to sustain the burden of proving that at least one condition to the
consummation of the Merger (other than the conditions referred to in
Section 8.2(c) and Section 8.3(a)) has not been satisfied and is
unlikely to be satisfied by the Closing Date,
then the Company shall pay the Purchaser one-half the Termination
Payment.
(iii) if an Acquisition Proposal which provides that the Company's
shareholders will receive in excess of $27.50 per share is not then
outstanding and this Agreement and the Merger shall fail to receive the
requisite vote for approval and adoption by the shareholders of the
Company at the Company Special Meeting and all other conditions to the
consummation of the Merger have been satisfied or are likely to be
satisfied (other than the conditions referred to in Section 8.1(d),
Section 8.2(c) and Section 8.3(a)), then the Company shall reimburse
Purchaser for its out-of-pocket expenses, reasonably incurred in
connection with the Merger, such reimbursement not to exceed one-third
of the Termination Payment.
All such termination payments shall be made as promptly as practicable but
not later than three business days after such termination, and such payments
shall be made by wire transfer of immediately available funds to an account
designated by Purchaser.
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ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and Agreements. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement, other than the representation and warranty
contained in Section 4.23, shall survive beyond the Effective Time. This
Section 10.1 shall not limit any covenant or agreement set forth in this
Agreement, which covenants and agreements shall survive the Effective Time.
Section 10.2 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given upon (a) confirmation
of receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as shall
be specified by like notice):
(a)If to Purchaser or Sub, to:
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Telecopy: (713) 831-1300
Attention: Jon P. Newton, Esq.
with a copy to:
Vinson & Elkins L.L.P.
3300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Telecopy: (713) 758-2346
Attention: Scott N. Wulfe, Esq.
(b)If to the Company, to:
Independent Insurance Group, Inc.
One Independent Drive
Jacksonville, Florida 32276
Telecopy: (904) 358-5889
Attention: Guy Marvin, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Attention: Theodore J. Kozloff, Esq.
Section 10.3 Descriptive Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.4 Entire Agreement; Assignment. This Agreement (including the
Exhibits, Company Disclosure Letter and other documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and understandings (other than those contained in the
Confidentiality
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Agreements, which are hereby incorporated by reference herein), both written
and oral, among the parties or any of them, with respect to the subject matter
hereof, including, without limitation, any transaction between or among the
parties hereto. This Agreement shall not be assigned by operation of law or
otherwise, except that Sub may assign all of its rights and obligations
hereunder to any direct wholly-owned subsidiary of Purchaser which shall then
be substituted for Sub for all purposes hereof; provided, however, that no
such assignment shall be made if such assignment would have a material adverse
effect on the Company, the Company's shareholders or the likelihood that the
transaction contemplated hereby would be consummated.
Section 10.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to the provisions thereof relating to conflicts of law.
Section 10.6 Expenses. Except as provided in Section 9.5, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid
by the party incurring such expenses, except that those expenses incurred in
connection with printing and mailing the Proxy Statement/Prospectus, as well
as the filing fees relating to the Registration Statement and the HSR Act,
will be shared equally by Purchaser and the Company.
Section 10.7 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 10.8 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
Section 10.9 Counterparts; Effectiveness. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement shall
become effective when each party hereto shall have received counterparts
thereof signed by all of the other parties hereto.
Section 10.10 Severability; Validity; Parties in Interest. If any provision
of this Agreement, or the application thereof to any person or circumstance is
held invalid or unenforceable, the remainder of this Agreement, and the
application of such provision to other persons or circumstances, shall not be
affected thereby, and to such end, the provisions of this Agreement are agreed
to be severable. Nothing in this Agreement, express or implied, is intended to
confer upon any person not a party to this Agreement any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 10.11 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of
competent jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
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IN WITNESS WHEREOF, each of Purchaser, Sub and the Company has caused this
Agreement to be executed as of the date first above written.
AMERICAN GENERAL CORPORATION
/s/ James R. Tuerff
By:
----------------------------------
JAMES R. TUERFF
PRESIDENT
AGC LIFE INSURANCE COMPANY
/s/ James R. Tuerff
By:
----------------------------------
JAMES R. TUERFF
SENIOR CHAIRMAN OF THE BOARD
INDEPENDENT INSURANCE GROUP, INC.
/s/ Wilford C. Lyon, Jr.
By:
----------------------------------
WILFORD C. LYON, JR.
CHAIRMAN OF THE BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
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EXHIBIT A
AMERICAN GENERAL CORPORATION
STATEMENT OF RESOLUTION ESTABLISHING A SERIES OF SHARES
Providing for the Issuance of
7% Convertible Preferred Stock Pursuant to
Article 2.13 of the Texas Business Corporation Act
Pursuant to the provisions of Article 2.13 of the Texas Business Corporation
Act, the undersigned corporation submits the following statement for the
purpose of establishing and designating a series of shares of its Preferred
Stock and fixing and determining the designations, preferences, limitations
and relative rights thereof:
1. The name of the corporation is American General Corporation (the
"Corporation").
2. The following resolutions, establishing and designating a series of
shares and fixing and determining the designations, preferences,
limitations and relative rights thereof, was duly adopted by the Board of
Directors of the Corporation on , 1995:
RESOLVED, that pursuant to Article Four of the Restated Articles of
Incorporation of the Corporation, as amended, which authorizes the
issuance of three hundred sixty million (360,000,000) shares,
consisting of sixty million (60,000,000) shares of Preferred Stock of
the par value of one dollar fifty cents ($1.50) per share (hereinafter
referred to as the "Preferred Stock"), and three hundred million
(300,000,000) shares of Common Stock of the par value of fifty cents
($.50) per share (hereinafter referred to as the "Common Stock"), the
Corporation hereby provides for the issuance of a series of Preferred
Stock, designated as 7% Convertible Preferred Stock, and hereby fixes
the designations, preferences, limitations and relative rights of the
shares of the 7% Convertible Preferred Stock, in addition to those set
forth in such Article Four, which shall be as follows:
Section 1. Designation And Amount.
(a) The shares of this series of Preferred Stock shall be designated as "7%
Convertible Preferred Stock" (the "7% Preferred Stock") and the number of
shares constituting such series shall be ,000,000, par value $1.50 per share.
The number of authorized shares of 7% Preferred Stock may be reduced to a
number not less than the number of shares then issued by further resolution
duly adopted by the Board of Directors of the Corporation or a duly authorized
committee thereof and by the filing of a certificate pursuant to the
provisions of the Texas Business Corporation Act stating that such reduction
has been so authorized. The shares of 7% Preferred Stock shall rank on a
parity with the Corporation's Series A Cumulative Convertible Preferred Stock
(the "Series A Stock") in respect of the payment of dividends and the
distribution of assets upon Liquidation (as defined in paragraph (a) of
Section 5).
Section 2. Dividends.
(a) The holders of outstanding shares of 7% Preferred Stock will be entitled
to receive, subject to the rights of holders of the Series A Stock and holders
of other classes or series of stock which may from time to time be issued by
the Corporation ranking on a parity with the 7% Preferred Stock in respect of
dividends, and when, as and if declared by the Board of Directors out of funds
legally available therefor, cumulative preferential cash dividends from the
date of initial issuance at a rate per annum of seven percent (7%) of the
liquidation preference of $ per share (equivalent to $ per annum or
$ per quarter for each share of 7% Preferred Stock), payable quarterly in
arrears on each March 1, June 1, September 1 and December 1, respectively
(each such date being hereinafter referred to as a "Preferred Dividend Payment
Date"); provided, however, that, with respect to any dividend period during
which a redemption occurs, the Corporation may, at its option, declare accrued
dividends on the shares of 7% Preferred Stock to (but not including), and pay
such accrued dividends on, the date fixed for redemption, in which case such
dividends shall be payable to the holders of shares of 7%
<PAGE>
Preferred Stock as of the record date for such dividend payment and shall not
be included in the calculation of the related Call Price (as defined in clause
(ii) of paragraph (i) of Section 3). The first dividend shall be for the
period from the date of initial issuance of 7% Preferred Stock to and
including [the date immediately preceding the first Preferred Dividend Payment
Date following the eleventh day after the Effective Time under the Agreement
and Plan of Merger], 1996 and will be paid on [such Preferred Dividend Payment
Date], 1996. If any Preferred Dividend Payment Date shall not be a business
day (as defined in clause (i) of paragraph (i) of Section 3), then the
Preferred Dividend Payment Date shall be on the next succeeding day that is a
business day. Each such dividend will be payable to holders of record as they
appear on the books of the Corporation or any transfer agent for the shares of
7% Preferred Stock on such record dates, not less than 10 nor more than 50
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Dividends on the shares of 7% Preferred Stock shall accrue on a
daily basis (except as otherwise provided in the last paragraph of Section
3(c) with respect to Optional Conversion) commencing on and including the date
of initial issuance of 7% Preferred Stock, and accrued dividends for each
quarterly dividend period or portion thereof shall accumulate, to the extent
not paid, on the Preferred Dividend Payment Date first following the quarterly
period or portion thereof for which they accrue. Except as otherwise provided
in Section 3(a) or 3(j)(2), accumulated unpaid dividends shall not bear
interest. Dividends on the shares of 7% Preferred Stock shall accrue whether
or not the Corporation has earnings, whether or not there are funds legally
available for the payment of such dividends and whether or not such dividends
are declared. Dividends in arrears for any past quarterly dividend periods may
be declared and paid at any time without reference to any regular Preferred
Dividend Payment Date to holders of record on such date, not exceeding 50 days
preceding the payment date thereof, as shall be fixed by the Board of
Directors. Dividends (or cash amounts equal to accrued and unpaid dividends)
payable on the shares of 7% Preferred Stock for any period shorter than a
quarterly dividend period shall be computed on the basis of a 360-day year of
twelve 30-day months. Dividends on the shares of 7% Preferred Stock shall
cease to accrue as of the close of business on the earlier of (i) the day
immediately prior to the Mandatory Conversion Date, as defined in paragraph
(a) of Section 3, or (ii) the day immediately prior to their earlier
conversion or redemption.
(b) If full cumulative dividends on the 7% Preferred Stock have not been
declared and paid or irrevocably set apart for payment when due, then, subject
to the next succeeding sentence, the Corporation shall not (i) declare or pay
any dividend on any Dividend Pari Passu Security or Dividend Junior Security
(each as defined below) or (ii) redeem, purchase, retire or otherwise acquire
for consideration shares of any Dividend Junior Security (or rights, options
or warrants to purchase such Dividend Junior Security), other than (w)
purchases or acquisitions of shares of any Dividend Junior Security in
connection with the satisfaction by the Corporation or any of its majority-
owned subsidiaries of its obligations under any employee benefit plan or the
satisfaction by the Corporation of its obligations pursuant to any put
contract requiring the Corporation to purchase any Dividend Junior Security,
(x) as a result of a reclassification of any Dividend Junior Security or the
exchange or conversion of one class or series of any Dividend Junior Security
for another class or series of any Dividend Junior Security, (y) redemptions
or purchases of any Rights (as defined in Section 3(k)) or the declaration and
payment of a dividend or distribution of similar share purchase rights in the
future or (z) the purchase of fractional interests in shares of any Dividend
Junior Security pursuant to the conversion or exchange provisions of such
Dividend Junior Security or the security being converted or exchanged, (iii)
redeem, purchase, retire or otherwise acquire for consideration any Dividend
Pari Passu Security (or rights, options or warrants to purchase such Dividend
Pari Passu Security), or (iv) permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, pursuant to the foregoing, purchase
or otherwise acquire such shares at such time and in such manner. The
preceding sentence, however, shall not apply to, or prohibit (i) dividends as
a result of a reclassification of Dividend Pari Passu Securities or Dividend
Junior Securities, (ii) dividends of any Rights, (iii) dividends or
distributions of similar share purchase rights in the future, (iv) dividends
or distributions in shares of Common Stock or another class or series of
capital stock of the Corporation that is junior to the 7% Preferred Stock as
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding-up of the Corporation, or (v) dividends with respect to
Dividend Pari Passu Securities in accordance with the following sentence. If
full cumulative dividends have not been paid upon the shares of 7% Preferred
Stock and any other class or series of Dividend Pari Passu Securities, all
dividends declared upon shares of 7% Preferred Stock and any other such class
or
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<PAGE>
series of Dividend Pari Passu Securities shall, if declared, be declared pro
rata so that the amount of cash dividends declared per share on the 7%
Preferred Stock and such other class or series of Dividend Pari Passu
Securities shall in all cases bear to each other the same ratio that
accumulated and unpaid dividends per share on the shares of 7% Preferred Stock
and such other class or series of Dividend Pari Passu Securities bear to each
other.
The term "Dividend Pari Passu Security" means any preference stock or
preferred stock or other capital stock of the Corporation and any guarantee
entered into by the Corporation in respect of any preference stock or
preferred stock of any affiliate of the Corporation ranking pari passu with
the 7% Preferred Stock as to the payment of dividends. "Dividend Junior
Security" means Common Stock, Series A Junior Participating Preferred Stock of
the Corporation and any other class or series of capital stock of the
Corporation and any guarantee entered into by the Corporation in respect of
any preference stock or preferred stock of any affiliate of the Corporation
ranking junior to the 7% Preferred Stock as to the payment of dividends.
(c) Accruals of dividends on the 7% Preferred Stock shall not bear interest,
regardless of whether funds shall be legally available for the declaration or
payment thereof.
Section 3. Redemptions or Conversions.
(a) Mandatory Conversion on Mandatory Conversion Date. Unless earlier called
for redemption or converted in accordance with the provisions hereof, on [the
Preferred Dividend Payment Date closest to the fifth anniversary of the
Effective Time of the Merger] or, if such date is not a business day, the next
succeeding day that is a business day (the "Mandatory Conversion Date"), each
outstanding share of 7% Preferred Stock shall, without additional notice to
holders thereof, convert automatically ("Mandatory Conversion") into:
(i) fully paid and non-assessable shares of Common Stock at the Common
Equivalent Rate (as defined herein) in effect on the Mandatory Conversion
Date; plus
(ii) the right to receive an amount in cash equal to all accrued and
unpaid dividends on such share of 7% Preferred Stock (other than previously
declared dividends payable to a holder of record as of a prior date) to and
including the day immediately prior to the Mandatory Conversion Date,
whether or not earned or declared, out of funds legally available therefor.
The "Common Equivalent Rate" shall initially be one share of Common Stock
for each share of 7% Preferred Stock and shall be subject to adjustment as set
forth in paragraphs (d) and (e) of this Section 3.
If an amount equal to all accrued and unpaid dividends on the shares of 7%
Preferred Stock described in clause (ii) above (the "Required Dividend
Amount") is not deposited with a bank or trust company in accordance with
Section 3(j)(2) on or prior to the Mandatory Conversion Date (the amount, if
any, by which the Required Dividend Amount exceeds the amount so deposited in
respect of the Required Dividend Amount being herein called the "Deposit
Deficit"), the Corporation shall, out of funds legally available therefor, as
promptly as practicable following the Mandatory Conversion Date, deposit cash
with a bank or trust company in accordance with Section 3(j)(2) in an amount
equal to the Deposit Deficit plus an amount equal to interest at the rate of
7% per annum, compounded quarterly, on the Deposit Deficit from time to time
outstanding from and including the Mandatory Conversion Date to but not
including the date the Deposit Deficit is reduced to zero; provided, that so
long as a Deposit Deficit is outstanding, no class or series of stock
thereafter issued by the Corporation shall rank senior to the claims of the
holders of the shares of 7% Preferred Stock on the Mandatory Conversion Date
with regard to the Required Dividend Amount and interest thereon as and to the
extent provided in the first proviso of the penultimate sentence of Section
3(j)(2).
(b) Right to Call for Redemption. Shares of 7% Preferred Stock are not
redeemable by the Corporation before [the date one year prior to the Mandatory
Conversion Date] (the "Initial Redemption Date"). At any time and from time to
time on or after that date until and including the day immediately prior to
the Mandatory Conversion Date, the Corporation shall have the right to call,
in whole or in part, the outstanding shares of 7% Preferred Stock for
redemption (subject to the notice provisions set forth in paragraph (j) of
this Section 3). On
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<PAGE>
the redemption date, the Corporation shall deliver to the holders thereof in
exchange for each such share called for redemption the greater of:
(i) a number of fully paid and non-assessable shares of Common Stock
determined by dividing the Call Price (as defined in clause (ii) of
paragraph (i) of this Section 3) in effect on the redemption date by the
Current Market Price (as defined in clause (v) of paragraph (d) of this
Section 3) per share of Common Stock determined as of the second Trading
Date (as defined in clause (v) of paragraph (i) of this Section 3)
immediately preceding the Notice Date (as defined in clause (iv) of
paragraph (i) of this Section 3); or
(ii) 0.8264 of a share of Common Stock (subject to adjustment in the same
manner as the Optional Conversion Rate (as defined in paragraph (c) of this
Section 3) is adjusted).
If fewer than all the outstanding shares of 7% Preferred Stock are to be
called for redemption, shares to be redeemed shall be selected by the
Corporation from outstanding shares of 7% Preferred Stock by lot or pro rata
(as nearly as may be practicable without creating fractional shares) or by any
other method determined by the Board of Directors of the Corporation in its
sole discretion to be equitable.
(c) Optional Conversion. Shares of 7% Preferred Stock are convertible, at
the option of the holders thereof ("Optional Conversion"), at any time or from
time to time, before the Mandatory Conversion Date, unless previously
redeemed, into shares of Common Stock at a rate of 0.8264 of a share of Common
Stock for each share of 7% Preferred Stock (the "Optional Conversion Rate"),
subject to adjustment as set forth in paragraphs (d) and (e) of this Section
3. The right of Optional Conversion of shares of 7% Preferred Stock called for
redemption shall terminate immediately before the close of business on the day
prior to any redemption date with respect to such shares.
Optional Conversion of shares of 7% Preferred Stock may be effected by
delivering certificates evidencing such shares of 7% Preferred Stock, together
with written notice of conversion and, if required by the Corporation, a
proper assignment of such certificates to the Corporation or in blank (and, if
applicable as provided in the following paragraph, cash payment of an amount
equal to the dividends attributable to the current quarterly dividend period
payable on such shares), to the office of the transfer agent for the shares of
7% Preferred Stock or to any other office or agency maintained by the
Corporation for that purpose and otherwise in accordance with Optional
Conversion procedures established by the Corporation. Each Optional Conversion
shall be deemed to have been effected immediately before the close of business
on the date on which the foregoing requirements shall have been satisfied. The
Optional Conversion shall be at the Optional Conversion Rate in effect at such
time and on such date.
Holders of shares of 7% Preferred Stock at the close of business on a record
date for any payment of declared dividends shall be entitled to receive the
dividend payable on such shares of 7% Preferred Stock on the corresponding
dividend payment date notwithstanding the Optional Conversion of such shares
of 7% Preferred Stock following such record date and on or prior to such
dividend payment date. However, shares of 7% Preferred Stock surrendered for
Optional Conversion after the close of business on a record date for any
payment of declared dividends and before the opening of business on the next
succeeding dividend payment date must be accompanied by payment in cash of an
amount equal to the dividends attributable to the current quarterly dividend
period payable on such shares on such next succeeding dividend payment date
minus the dividends, if any, payable on such date on the number of shares of
Common Stock issuable in connection with such Optional Conversion of such
shares (unless such shares of 7% Preferred Stock are subject to redemption on
a redemption date between such record date established for such dividend
payment date and such dividend payment date). Except as provided above, upon
any Optional Conversion of shares of 7% Preferred Stock, the Corporation shall
make no payment of or allowance for unpaid dividends, whether or not in
arrears, on such shares of 7% Preferred Stock as to which Optional Conversion
has been effected or for previously declared dividends or distributions on the
shares of Common Stock issued upon Optional Conversion.
(d) Common Equivalent Rate and Optional Conversion Rate Adjustments. The
Common Equivalent Rate and the Optional Conversion Rate are each subject to
adjustment from time to time as provided below in this
A-A4
<PAGE>
paragraph (d). All adjustments to the Common Equivalent Rate and the Optional
Conversion Rate shall be calculated to the nearest 1/100th of a share of
Common Stock (with 5/1000 of a share being rounded to the next lower 1/100 of
a share).
(i) If the Corporation shall either:
(1) pay a dividend or make a distribution with respect to Common
Stock in shares of Common Stock,
(2) subdivide or split its outstanding shares of Common Stock into a
greater number of shares,
(3) combine its outstanding shares of Common Stock into a smaller
number of shares, or
(4) issue by reclassification of its shares of Common Stock any
shares of common stock of the Corporation
then, in any such event, the Common Equivalent Rate and the Optional
Conversion Rate in effect immediately prior thereto shall each be adjusted so
that the holder of a share of 7% Preferred Stock shall be entitled to receive,
on the conversion of such share of 7% Preferred Stock, the number of shares of
Common Stock of the Corporation which such holder would have owned or been
entitled to receive after the happening of any of the events described above
had such share of 7% Preferred Stock been converted at the Common Equivalent
Rate (in the case of a Mandatory Conversion) or the Optional Conversion Rate
(in the case of an Optional Conversion), as applicable, in effect immediately
prior to the happening of such event or the record date therefor, whichever is
earlier. Such adjustment shall become effective immediately after the close of
business on the record date for determination of stockholders entitled to
receive such dividend or distribution in the case of a dividend or
distribution and shall become effective immediately after the effective time
in case of a subdivision, split, combination or reclassification. Any shares
of Common Stock issuable in payment of a dividend or distribution shall be
deemed to have been issued immediately prior to the close of business on the
record date for such dividend or distribution for purposes of calculating the
number of outstanding shares of Common Stock under clauses (ii) and (iii)
below.
(ii) Subject to Section 3(d)(xi), if the Corporation shall issue rights
(other than Rights) or warrants to all holders of its Common Stock
entitling them (for a period not exceeding 45 days from the date of such
issuance) to subscribe for or purchase shares of Common Stock at a price
per share (taking into account the consideration received for the issuance
of such right or warrant plus any consideration to be received upon the
exercise thereof) less than the Current Market Price per share of the
Common Stock on the record date for the determination of stockholders
entitled to receive such rights or warrants, then in each case the Common
Equivalent Rate and the Optional Conversion Rate shall each be adjusted by
multiplying (I) the Common Equivalent Rate or the Optional Conversion Rate,
as applicable, in effect immediately prior thereto by (II) a fraction, of
which the numerator shall be (A) the number of shares of Common Stock
outstanding on such record date, plus (B) the number of additional shares
of Common Stock offered for subscription or purchase, and of which the
denominator shall be (A) the number of shares of Common Stock outstanding
on such record date, plus (B) the number of additional shares of Common
Stock which the aggregate offering price of the total number of shares so
offered for subscription or purchase would purchase at the Current Market
Price per share of the Common Stock on such record date (determined by
multiplying such total number of shares by the exercise price of such
rights or warrants and dividing the product so obtained by such Current
Market Price). Shares of Common Stock owned by or held for the account of
the Corporation or another company of which a majority of the shares
entitled to vote in the election of directors are held, directly or
indirectly, by the Corporation shall not be deemed to be outstanding for
purposes of such computation. Such adjustment shall be made successively
whenever any such rights or warrants are issued and shall become effective
immediately after the close of business on the record date for the
determination of stockholders entitled to receive such rights or warrants.
To the extent that any rights or warrants referred to in this clause (ii)
expire unexercised, the Common Equivalent Rate and the Optional Conversion
Rate shall each be readjusted to the Common Equivalent Rate and the
Optional Conversion Rate, respectively, which would then be in effect had
the adjustment made upon the issuance of such rights
A-A5
<PAGE>
or warrants been made upon the basis of the issuance of only the number of
rights or warrants actually exercised.
(iii) If the Corporation shall pay a dividend or make a distribution to
all holders of its Common Stock of evidences of its indebtedness or other
assets (including shares of capital stock of the Corporation but excluding
any Excluded Dividends (as defined in this clause (iii)) and excluding any
distributions and dividends referred to in clause (i) above), or shall
distribute to all holders of its Common Stock rights or warrants to
subscribe for or purchase securities of the Corporation or any of its
subsidiaries (other than those referred to in clause (ii) above), the
Common Equivalent Rate and the Optional Conversion Rate shall each be
adjusted by multiplying (I) the Common Equivalent Rate or the Optional
Conversion Rate, as applicable, in effect immediately prior to the date of
such dividend or distribution by (II) a fraction, of which the numerator
shall be the Current Market Price per share of Common Stock on the date
fixed for the payment of such distribution (the "Reference Date"), and of
which the denominator shall be such Current Market Price per share of
Common Stock less the fair market value as of the Reference Date of the
portion of the assets or evidences of indebtedness so distributed, or of
such subscription rights or warrants, applicable to one share of Common
Stock. Such adjustment shall become effective immediately after the close
of business on the record date for the determination of stockholders
entitled to receive such dividend or distribution. "Excluded Dividends"
shall mean (1) any dividend or distribution referred to in paragraphs
(i)(1) or (i)(4) of this Section 3(d), (2) any dividend, distribution or
issuance of rights or warrants referred to in paragraph (ii) of this
Section 3(d) or of Rights, (3) any regular cash dividend on the Common
Stock that does not exceed the per share amount of the immediately
preceding regular cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in paragraph (i) of
this Section 3(d)), and (4) in the case of any other dividend or
distribution (cash or otherwise), that portion thereof which, when combined
with the per share fair market value of all other dividends and
distributions paid by the Corporation on Common Stock during the 365-day
period ending on the date of declaration of such dividend or distribution
(as adjusted to appropriately reflect any of the events referred to in
paragraph (i) of this Section 3(d) and excluding dividends and
distributions referred to in clauses (1) and (2) and dividends and
distributions, or portions thereof, that resulted in an adjustment to the
Common Equivalent Rate and the Optional Conversion Rate (or would have but
for the application of Section 3(d)(vii), 3(d)(x) or 3(d)(xi)), does not
exceed 15% of the Current Market Price per share of the Common Stock on the
Trading Date immediately preceding the date of declaration of such dividend
or distribution. The fair market value of any dividend or distribution not
paid in cash shall be determined in good faith by the Board of Directors of
the Corporation, whose determination shall be conclusive and described in a
resolution of the Board of Directors of the Corporation. For purposes of
this paragraph (iii), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution
of the evidences of indebtedness, shares of capital stock of the
Corporation, cash or assets other than such shares of Common Stock or such
rights or warrants (making any Common Equivalent Rate or Optional
Conversion Rate adjustment required by this paragraph (iii)) immediately
followed by (2) a dividend or distribution of such shares of Common Stock
or such rights or warrants (making any further Common Equivalent Rate or
Optional Conversion Rate adjustment required by paragraphs (i) or (ii) of
this Section 3(d) and, in the case of rights or warrants, subject to the
last sentence of such paragraph (ii)), except the Reference Date of such
dividend or distribution as defined in this paragraph (iii) shall be
substituted as "the record date for determination of stockholders entitled
to receive such dividend or distribution," "the record date for
determination of stockholders entitled to receive such rights or warrants",
"the record date for such dividend or distribution" and "such record date"
within the meaning of paragraphs (i) and (ii) of this Section 3(d).
(iv) Anything in this Section 3 to the contrary notwithstanding, the
Corporation shall be entitled to make such upward adjustments in the Common
Equivalent Rate, the Optional Conversion Rate or the Call Price, in
addition to those required by this Section 3, as the Corporation in its
sole discretion shall determine to be advisable, in order that any stock
dividends, subdivision or split of shares, distribution of rights to
purchase stock or securities, or a distribution of securities convertible
into or exchangeable for stock (or any transaction which could be treated
as any of the foregoing transactions pursuant to Section 305 of the
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<PAGE>
Internal Revenue Code of 1986, as amended) hereafter made by the
Corporation to its stockholders shall not be taxable. If the Corporation
determines that such an adjustment to the Common Equivalent Rate, the
Optional Conversion Rate or the Call Price should be made, an adjustment
shall be made effective as of such date as is determined by the Board of
Directors of the Corporation. The Corporation from time to time may make
such upward adjustments in the Common Equivalent Rate, the Optional
Conversion Rate or the Call Price, in addition to those required by this
Section 3, by any amount selected by the Corporation for any period of time
if the period is at least 20 days and the Board of Directors of the
Corporation shall have made a determination that such upward adjustment
would be in the best interest of the Corporation. The determination of the
Board of Directors of the Corporation as to whether an adjustment to the
Common Equivalent Rate, the Optional Conversion Rate or the Call Price
should be made pursuant to the foregoing provisions of this clause (iv),
and if so, as to what adjustment should be made and when, shall be
conclusive, final and binding on the Corporation and all stockholders of
the Corporation.
(v) As used in this Section 3, the Current Market Price per share of
Common Stock on any date of determination shall be the lesser of (A) the
average of the daily Closing Prices for the fifteen consecutive Trading
Dates ending on and including the date of determination of the Current
Market Price, or (B) the Closing Price for the date of determination of the
Current Market Price; provided, however, that, for the purposes of
calculating the Current Market Price in connection with any redemption of
the 7% Preferred Stock, if any adjustment of the Common Equivalent Rate
pursuant to paragraph (d) or paragraph (e) of this Section 3 is effective
as of any date during the period beginning on the first day of such
fifteen-day period and ending on the date on which shares of 7% Preferred
Stock are to be redeemed, then the Current Market Price as determined
pursuant to the foregoing will be adjusted to the extent appropriate to
reflect such adjustment. If the Current Market Price is adjusted pursuant
to the immediately preceding proviso as a result of the effectiveness of an
adjustment of the Common Equivalent Rate but the event requiring an
adjustment of the Common Equivalent Rate does not occur prior to the
redemption of the 7% Preferred Stock, then the Corporation may in its sole
discretion elect to defer the following until the occurrence of such event:
(1) issuing to the holder of any shares of 7% Preferred Stock
surrendered for redemption the additional shares of Common Stock
issuable upon such redemption over and above the shares of Common Stock
issuable upon such redemption on the basis of the Current Market Price
prior to adjustment; and
(2) paying to such holder any amount in cash in lieu of a fractional
share of Common Stock pursuant to paragraph (g) of this Section 3.
(vi) Before taking any action that would cause an adjustment to the
Common Equivalent Rate or the Optional Conversion Rate that would cause the
Corporation to issue shares of Common Stock for consideration below the
then par value (if any) of the Common Stock upon conversion or redemption
of the 7% Preferred Stock, the Corporation shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and non-assessable
shares of such Common Stock at such adjusted Common Equivalent Rate or
Optional Conversion Rate.
(vii) No adjustment in the Common Equivalent Rate or the Optional
Conversion Rate shall be required unless such adjustment would require an
increase or decrease of at least 1% in such rate; provided, however, that
any adjustments which by reason of this clause (vii) are not required to be
(and are not) made shall be carried forward and taken into account in any
subsequent adjustment.
(viii) In any case in which this Section 3(d) shall require that an
adjustment in the Common Equivalent Rate or the Optional Conversion Rate as
a result of any event become effective after the close of business on a
record date, and the date of a conversion pursuant to paragraph (a) or (c)
of this Section 3 occurs after such record date but before the occurrence
of such event, the Corporation may in its sole discretion elect to defer
the following until the occurrence of such event:
(1) issuing to the holder of any shares of 7% Preferred Stock
surrendered for conversion the additional shares of Common Stock
issuable upon such conversion over and above the shares of
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<PAGE>
Common Stock issuable upon such conversion on the basis of the Common
Equivalent Rate or the Optional Conversion Rate, as applicable, prior
to adjustment; and
(2) paying to such holder any amount in cash in lieu of a fractional
share of Common Stock pursuant to paragraph (g) of this Section 3.
(ix) Before redeeming any shares of 7% Preferred Stock, the Corporation
shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Common Stock upon such redemption.
(x) Notwithstanding the foregoing provisions of this Section 3(d), no
adjustment of the Common Equivalent Rate or Optional Conversion Rate shall
be required to be made upon the issuance of any shares of Common Stock
pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation and the
investment of additional optional amounts in shares of Common Stock under
any such plan, or the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any present or future employee,
officer, director, consultant or agent benefit plan or program or agreement
of the Corporation or a subsidiary of the Corporation or pursuant to any
option, warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date the 7% Preferred Stock was first designated
pursuant to this Statement of Resolution Establishing a Series of Shares.
(xi) Notwithstanding any other provision of this Section 3(d), the
issuance or distribution of Rights shall not be deemed to constitute an
issuance or a distribution or dividend of rights, warrants, or other
securities to which any of the adjustment provisions described above
applies.
(xii) In case the Corporation shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in Section 3(d)(iii)
(including, without limitation, dividends or distributions referred to in
the last sentence of Section 3(d)(iii) but excluding the Excluded
Dividends), the holder of each share of 7% Preferred Stock, upon the
conversion thereof subsequent to the close of business on the date fixed
for the determination of shareholders entitled to receive such distribution
and prior to the effectiveness of the Optional Conversion Rate adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which such share of 7% Preferred Stock is
converted, the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however,
that, at the election of the Corporation (whose election shall be evidenced
by a resolution of the Board of Directors of the Corporation or a committee
thereof) with respect to all holders so converting, the Corporation may, in
lieu of distributing to such holders any portion of such distribution not
consisting of cash or securities of the Corporation, pay such holders an
amount in cash equal to the fair market value thereof (as determined in
good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors of the
Corporation or a committee thereof). If any conversion of a share of 7%
Preferred Stock described in the immediately preceding sentence occurs
prior to the payment date for a distribution to holders of Common Stock
which the holder of the share of 7% Preferred Stock so converted is
entitled to receive in accordance with the immediately preceding sentence,
the Corporation may elect (such election to be evidenced by a resolution of
the Board of Directors of the Corporation or a committee thereof) to
distribute to such holder a due bill for the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash
or assets to which such holder is so entitled, provided that such due bill
(y) meets any applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then traded, and (z)
requires payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
(xiii) There shall be no adjustment of the Common Equivalent Rate or
Optional Conversion Rate in case of the issuance of any capital stock (or
securities convertible into or exchangeable for capital stock) of the
Corporation or any other distribution or event except as specifically
described in this Section 3. If any
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action would require adjustment of the Common Equivalent Rate and the
Conversion Rate pursuant to more than one of the provisions of this Section
3, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value to the holders of
the 7% Preferred Stock.
(e) Adjustment for Certain Mergers and Other Transactions. In case of any
consolidation or merger to which the Corporation is a party (other than a
consolidation or merger in which the Corporation is the surviving or
continuing corporation and in which the shares of Common Stock outstanding
immediately before the merger or consolidation remain unchanged), or in the
case of any sale or transfer to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, or in the case of
a statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition), each share of 7% Preferred Stock
shall, after consummation of such transaction, be subject to (i) conversion at
the option of the holder into the kind and amount of securities, cash, or
other property receivable upon consummation of such transaction by a holder of
the number of shares of Common Stock into which such share of 7% Preferred
Stock might have been converted immediately before consummation of such
transaction, (ii) conversion on the Mandatory Conversion Date into the kind
and amount of securities, cash, or other property receivable upon consummation
of such transaction by a holder of the number of shares of Common Stock into
which such share of 7% Preferred Stock would have been converted if the
conversion on the Mandatory Conversion Date had occurred immediately before
the date of consummation of such transaction, plus the right to receive cash
in an amount equal to all accrued and unpaid dividends on such share of 7%
Preferred Stock (other than previously declared dividends payable to a holder
of record as of a prior date), and (iii) redemption on any redemption date on
or after the Initial Redemption Date in exchange for the kind and amount of
securities, cash, or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock that would
have been issuable at the Call Price in effect on such redemption date upon a
redemption of such share of 7% Preferred Stock immediately before consummation
of such transaction, assuming that, if the Notice Date for such redemption is
not before such transaction, the Notice Date had been the date of such
transaction; and assuming in each case that such holder of shares of Common
Stock failed to exercise rights of election, if any, as to the kind or amount
of securities, cash, or other property receivable upon consummation of such
transaction (provided that, if the kind or amount of securities, cash, or
other property receivable upon consummation of such transaction is not the
same for each non-electing share, then the kind and amount of securities,
cash, or other property receivable upon consummation of such transaction for
each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). The kind and
amount of securities into or for which the shares of 7% Preferred Stock shall
be convertible or redeemable after consummation of such transaction shall be
subject to adjustment as described in Section 3(d) following the date of
consummation of such transaction. The Corporation may not become a party to
any such transaction unless the terms thereof are consistent with the
foregoing.
(f) Notice of Adjustments, Etc. Whenever the Common Equivalent Rate and the
Optional Conversion Rate are adjusted as herein provided, the Corporation
shall:
(i) forthwith compute the adjusted Common Equivalent Rate and the
adjusted Optional Conversion Rate in accordance with this Section 3 and
prepare a certificate signed by the Chief Executive Officer, the Chairman,
the President, any Vice President or the Treasurer of the Corporation
setting forth the adjusted Common Equivalent Rate and the adjusted Optional
Conversion Rate, the method of calculation thereof in reasonable detail and
the facts requiring such adjustment and upon which such adjustment is based
and file such certificate forthwith with the transfer agent or agents for
the 7% Preferred Stock and the Common Stock;
(ii) make a prompt public announcement stating that the Common Equivalent
Rate and the Optional Conversion Rate have been adjusted and setting forth
the adjusted Common Equivalent Rate and the adjusted Optional Conversion
Rate; and
(iii) mail a notice stating that the Common Equivalent Rate and the
Optional Conversion Rate have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting forth the
adjusted Common Equivalent Rate and the adjusted Optional Conversion Rate
to the holders of
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record of the outstanding shares of 7% Preferred Stock at or prior to the
time the Corporation mails an interim statement to its stockholders
covering the quarter-yearly period during which the facts requiring such
adjustment occurred, but in any event within 45 days of the end of such
quarter-yearly period.
In case, at any time while any of the shares of 7% Preferred Stock are
outstanding,
(i) the Corporation shall declare a dividend (or any other distribution)
on its Common Stock, other than Excluded Dividends; or
(ii) the Corporation shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase shares of
its Common Stock or of any other subscription rights or warrants; or
(iii) the Corporation shall authorize any reclassification of its Common
Stock (other than a subdivision or combination thereof) or any
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required (except for a
merger of the Corporation into one of its subsidiaries solely for the
purpose of changing the corporate domicile of the Corporation to another
state of the United States and in connection with which there is no
substantive change in the rights or privileges of any securities of the
Corporation other than changes resulting from differences in the corporate
statutes of the state the Corporation was then domiciled in and the new
state of domicile), or the sale or transfer of all or substantially all of
the assets of the Corporation;
then the Corporation shall cause to be filed at each office or agency
maintained for the purpose of conversion of the shares of 7% Preferred Stock,
and shall cause to be mailed to the holders of record of the outstanding
shares of 7% Preferred Stock, at least 10 days (or such shorter period, if
any, as may be practicable in the case of an action described in clause (iii))
before the date hereinafter specified in clause (A) or (B) below (or the
earlier of the dates hereinafter specified, in the event that more than one
date is specified), a notice stating (A) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale or transfer is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property (including cash), if any, deliverable upon such
reclassification, consolidation, merger, sale or transfer. The failure to give
or receive the notice required by the preceding sentence or any defect therein
shall not affect the legality or validity of any such dividend, distribution,
right or warrant or other action.
(g) No Fractional Shares. No fractional shares of Common Stock shall be
issued upon redemption or conversion of any shares of the 7% Preferred Stock.
In lieu of any fractional share otherwise issuable in respect of the aggregate
number of shares of the 7% Preferred Stock of any holder that are redeemed or
converted on any redemption date or upon Mandatory Conversion or Optional
Conversion, such holder shall be entitled to receive an amount in cash
(computed to the nearest cent) equal to the same fraction of the (i) Current
Market Price of the Common Stock (determined as of the second Trading Date
immediately preceding the Notice Date) in the case of redemption, or (ii)
Closing Price of the Common Stock determined (A) as of the fifth Trading Date
immediately preceding the Mandatory Conversion Date, in the case of Mandatory
Conversion, or (B) as of the second Trading Date immediately preceding the
effective date of conversion, in the case of an Optional Conversion by a
holder. If more than one share of 7% Preferred Stock shall be surrendered for
conversion or redemption at one time by or for the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of the 7% Preferred Stock so
surrendered or redeemed.
(h) Cancellation. All shares of 7% Preferred Stock which shall have been
issued and reacquired in any manner by the Corporation (including shares
redeemed, shares purchased and retired and shares converted into shares of
Common Stock or exchanged for shares of any other class of stock) shall be
retired and canceled and the Board of Directors shall cause to be taken all
action necessary to restore such shares to the status of
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authorized but unissued shares of Preferred Stock without designation as to
series or class, and such shares may thereafter be issued, but not as shares
of 7% Preferred Stock.
(i) Definitions. As used herein,
(i) the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close or a day which
is or is declared a national or New York holiday;
(ii) The "Call Price" of each share of 7% Preferred Stock shall be the
sum of (x) $[101.75% of the liquidation preference] on and after the
Initial Redemption Date, to and including [the date immediately preceding
the next Preferred Dividend Payment Date], 2000; $[101.17% of the
liquidation preference] on and after [the next Preferred Dividend Payment
Date], 2000, to and including [the date immediately preceding the next
Preferred Dividend Payment Date], 2000; $[100.58% of the liquidation
preference] on and after [the next Preferred Dividend Payment Date], 2000,
to and including [the date immediately preceding the next Preferred
Dividend Payment Date], 2000; and $[100% of the liquidation preference] on
and after [the next Preferred Dividend Payment Date], 2000, to and
including [the date immediately preceding the Mandatory Conversion Date];
and (y) all accrued and unpaid dividends thereon to but not including the
date fixed for redemption (other than previously declared dividends payable
to a holder of record as of a prior date);
(iii) the term "Closing Price" on any day shall mean the closing sales
price regular way on such day or, in case no such sale takes place on such
day, the average of the reported closing bid and asked quotations regular
way, in each case on the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading, or, if not listed or admitted to trading on any
national securities exchange, the average of the high bid and low asked
quotations of the Common Stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting service, or, if no such quotations
are available, the fair market value of the Common Stock as determined by
any New York Stock Exchange member firm selected from time to time by the
Board of Directors of the Corporation for that purpose;
(iv) the term "Notice Date" with respect to any notice given by the
Corporation in connection with a redemption of shares of 7% Preferred Stock
shall be the date on which first occurs either the public announcement of
such redemption or the commencement of the mailing of such notice to the
holders of the shares of 7% Preferred Stock in accordance with paragraph
(j) of this Section 3;
(v) the term "Trading Date" shall mean a date on which the New York Stock
Exchange (or any successor to such Exchange) is open for the transaction of
business.
(j) Procedures Regarding Redemption or Mandatory Conversion.
(1) The Corporation will provide notice of any redemption of shares of 7%
Preferred Stock to holders of record of the 7% Preferred Stock to be
redeemed not less than 20 nor more than 60 days prior to the date fixed for
such redemption. Such notice shall be provided by mailing notice of such
redemption first class postage prepaid, to each holder of record of the
shares of 7% Preferred Stock to be redeemed at such holder's address as it
appears on the stock register of the Corporation; provided, however, that
no failure to give such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any shares of 7% Preferred
Stock to be redeemed except as to the holder to which the Corporation has
failed to give said notice of redemption or except as to the holder whose
notice of redemption was defective. A public announcement of any call for
redemption shall be made by the Corporation before, or at the time of, the
mailing of such notice of redemption. Each such mailed notice shall state,
as appropriate, the following:
(i) the redemption date;
(ii) the number of shares of 7% Preferred Stock to be redeemed and,
if less than all the shares held by any holder are to be redeemed, the
number of such shares to be redeemed;
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(iii) the Call Price, the number of shares of Common Stock per share
of 7% Preferred Stock deliverable upon redemption and the Current
Market Price used to calculate such number of shares of Common Stock;
(iv) the place or places where certificates for such shares are to be
surrendered for redemption; and
(v) that dividends on shares of 7% Preferred Stock to be redeemed
will cease to accrue on the day immediately prior to the redemption
date (except as otherwise provided herein).
(2) The Corporation's obligation to deliver shares of Common Stock and
cash, if any, in accordance with paragraphs (a) and (b) of this Section 3
shall be deemed fulfilled if, on or before a redemption date or the
Mandatory Conversion Date, the Corporation shall deposit, with a bank or
trust company having an office or agency and doing business in the Borough
of Manhattan in New York City and having a capital and surplus of at least
$50,000,000, such shares of Common Stock and cash, if any, as are required
to be delivered by the Corporation pursuant to this Section 3 upon the
occurrence of the related redemption or Mandatory Conversion, in trust for
the account of the holders of the shares to be redeemed or converted (and
so as to be and continue to be available therefor), with irrevocable
instructions and authority to such bank or trust company that such shares
and funds be delivered upon redemption or conversion of the shares of 7%
Preferred Stock so called for redemption or subject to conversion. Any
shares of Common Stock and cash, if any, so deposited and unclaimed by the
holders of shares of 7% Preferred Stock at the end of two years after such
redemption or conversion date (together with any interest thereon not
theretofore paid to the Corporation which shall be allowed by the bank or
trust company with which such deposit was made) shall be paid by such bank
or trust company to the Corporation (or its successor), after which the
holder or holders of such shares of 7% Preferred Stock so redeemed or
converted shall look only to the Corporation (or its successor) for
delivery of such shares of Common Stock and cash, if any. Each holder of
shares of 7% Preferred Stock to be redeemed or converted shall surrender
the certificates evidencing such shares to the Corporation at the place
designated in the notice of such redemption (or, in the case of a
conversion pursuant to paragraph (a) of this Section 3, the principal
executive offices of the Corporation or at such other place as may be
designated by the Corporation (or its successor) in a written notice mailed
to the holders of record of the 7% Preferred Stock) and shall thereupon be
entitled to receive certificates evidencing shares of Common Stock and
cash, if any, payable pursuant to paragraph (a) or (b), as the case may be,
of this Section 3, following such surrender and following the date of such
redemption or conversion. In case fewer than all the shares represented by
any such surrendered certificates are called for redemption, a new
certificate shall be issued at the expense of the Corporation representing
the unredeemed shares. If (A) shares of 7% Preferred Stock are called for
redemption and, on the date fixed for redemption, shares of Common Stock
necessary for the redemption shall have been deposited with a bank or trust
company as provided above or (B) shares of 7% Preferred Stock have been
converted pursuant to paragraph (a) of this Section 3, then,
notwithstanding that the certificates evidencing any shares of 7% Preferred
Stock so called for redemption or converted shall not have been
surrendered, the shares represented thereby so called for redemption or
converted shall be deemed no longer outstanding and all rights with respect
to the shares so called for redemption or converted shall forthwith cease
and terminate, except for the right of the holders to receive the shares of
Common Stock and cash, if any, payable pursuant to this Section 3, without
interest upon surrender of their certificates therefor; provided, that if
any cash payable upon the surrender of certificates evidencing shares of 7%
Preferred Stock that have been converted pursuant to paragraph (a) of this
Section 3 is not paid when due, the obligation to pay such cash shall bear
interest at the rate of 7% per annum, compounded quarterly; and provided
further that holders of shares of 7% Preferred Stock at the close of
business on a record date for any payment of dividends on shares of 7%
Preferred Stock shall be entitled to receive the dividends payable on such
shares on the corresponding dividend payment date notwithstanding the
redemption or conversion of such shares following such record date and on
or before such corresponding dividend payment date. Holders of shares of 7%
Preferred Stock that are redeemed or converted in a Mandatory Conversion
shall not be entitled to receive dividends declared and paid on shares of
Common Stock issuable on such redemption or Mandatory Conversion, and such
shares of Common
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Stock shall not be entitled to vote, until such shares of Common Stock are
issued upon the surrender of the certificates representing such shares of
7% Preferred Stock and upon such surrender such holders shall be entitled
to receive such dividends declared and paid on such shares of Common Stock
subsequent to the redemption date or Mandatory Conversion Date, as
applicable.
(k) Reservation of Shares and Rights. The Corporation shall at all times
reserve and keep available, free from preemptive rights, out of authorized but
unissued shares of Common Stock, the maximum number of shares of Common Stock
into which all shares of 7% Preferred Stock from time to time outstanding are
convertible pursuant to paragraph (a) or (c) of this Section 3, but shares of
Common Stock held in treasury of the Corporation may, in its discretion, be
delivered upon any conversion of shares of 7% Preferred Stock. Whenever the
Corporation shall issue shares of Common Stock upon conversion of 7% Preferred
Stock, the Corporation shall issue, together with each such share of Common
Stock, one right to purchase Series A Junior Participating Preferred Stock of
the Corporation (or other securities in lieu thereof) pursuant to the Rights
Agreement, dated as of July 27, 1989, between the Corporation and First
Chicago Trust Company of New York, as amended, or any similar rights issued to
holders of Common Stock in addition thereto or in replacement therefor (such
rights, together with any additional or replacement rights, being collectively
referred to as the "Rights"), whether or not such Rights shall be exercisable
at such time, but only if such Rights are issued and outstanding and held by
other holders of Common Stock (or are evidenced by outstanding share
certificates representing Common Stock) at such time and have not expired or
been redeemed.
(l) Timing. The holders of shares of 7% Preferred Stock at the close of
business on a record date for the payment of dividends shall be entitled to
receive the dividend payable on such shares on the corresponding dividend
payment date notwithstanding the redemption or conversion thereof subsequent
to such record date and on or before such corresponding dividend payment date.
(m) Partial Redemption. In no event shall the Corporation redeem less than
all the outstanding shares of 7% Preferred Stock pursuant to paragraph (b) of
this Section 3 unless full cumulative dividends shall have been paid or
declared and set apart for payment upon all outstanding shares of 7% Preferred
Stock for all past dividend periods.
(n) Taxes. The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock on the redemption or conversion of shares of 7%
Preferred Stock pursuant to this Section 3; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any registration of transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the registered holder of
the shares of 7% Preferred Stock redeemed or converted or to be redeemed or
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid.
(o) Listing. The Corporation shall endeavor to list the shares of Common
Stock required to be delivered upon redemption or conversion of the shares of
7% Preferred Stock, prior to such delivery, upon each national securities
exchange, if any, upon which the outstanding Common Stock is listed at the
time of such delivery.
(p) Multiple Shares Surrendered. If more than one share shall be surrendered
for redemption or conversion at one time by the same holder, the number of
full shares of Common Stock issuable upon such redemption or conversion
thereof shall be computed on the basis of the aggregate number of shares of 7%
Preferred Stock so surrendered.
(q) Compliance with Laws. Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon redemption or conversion of the
7% Preferred Stock, the Corporation shall endeavor to comply with all federal
and state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to delivery thereof by, any
governmental authority.
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(r) Survival of Certain Provisions. So long as a Deposit Deficit is
outstanding, the provisions contained in Sections 3(a) and 3(j)(2) hereof
regarding a Deposit Deficit shall continue in full force and effect and shall
not thereafter be amended, notwithstanding that no shares of 7% Preferred
Stock remain outstanding.
Section 4. Voting Rights.
(a) Except as otherwise provided by paragraph (b) or (c) of this Section 4
or as required by law, the holders of shares of 7% Preferred Stock shall have
4/5 of a vote in respect of each share of 7% Preferred Stock held as to all
matters voted upon by the stockholders of the Corporation and shall vote
together with the holders of the Common Stock and together with the holders of
any other classes or series of stock who are entitled to vote in such manner
and not as a separate class.
(b) In the event that full cumulative dividends on the 7% Preferred Stock
are not paid for six quarterly dividend periods, the number of directors of
the Corporation constituting the entire Board of Directors shall be increased
by two persons and the holders of shares of the 7% Preferred Stock, voting
separately as a class together with the holders of shares of all other series
of capital stock of the Corporation ranking pari passu with the 7% Preferred
Stock as to the payment of dividends and having the then present right to
elect one or more directors as a result of a dividend arrearage but not then
entitled to other separate voting rights to elect one or more directors in the
event of such an arrearage (herein referred to as "Class Voting Stock"), shall
have the right to elect such directors to fill such positions at any regular
meeting of shareholders or special meeting held in place thereof, or at a
special meeting of the holders of the 7% Preferred Stock and such other Class
Voting Stock called as provided in paragraph (c) below. Whenever all
arrearages of dividends on the 7% Preferred Stock then outstanding shall have
been paid or declared and irrevocably set apart for payment, then the right of
the holders of shares of the 7% Preferred Stock (and, subject to the terms of
such other Class Voting Stock, such other Class Voting Stock) to elect such
additional two directors shall cease (but subject always to the same
provisions for the vesting of such voting rights in the case of any similar
future arrearages in dividends), and the terms of office of all persons
previously elected as directors by the holders of shares of the 7% Preferred
Stock and such other Class Voting Stock shall forthwith terminate and the
number of the Board of Directors shall be reduced accordingly.
(c) At any time after the voting power referred to in paragraph (b) above,
shall have been so vested in the holders of shares of the 7% Preferred Stock,
the Secretary of the Corporation may, and upon the written request of any
holder or the holders of at least 10% of the number of shares of 7% Preferred
Stock then outstanding (addressed to the Secretary at the principal executive
office of the Corporation) shall, call a special meeting of the holders of
shares of the 7% Preferred Stock and all other Class Voting Stock for the
election of the two directors to be elected by them; provided that the
Secretary shall not be required to call such special meeting if the request
for such meeting is received less than 45 calendar days before the date fixed
for the next ensuing annual meeting of shareholders. Such call shall be made
by notice similar to that provided in the by-laws of the Corporation for a
special meeting of the shareholders or as required by law. Subject to the
foregoing provisions, if any such special meeting required to be called as
above provided shall not be called by the Secretary within 20 calendar days
after receipt of an appropriate request, then any holder of shares of 7%
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books and records of the
Corporation. Except as otherwise provided by law, at any such meeting, the
holders of a majority of the number of shares of 7% Preferred Stock and such
other Class Voting Stock then outstanding shall constitute a quorum for the
purpose of electing directors as contemplated in paragraph (b) above. If at
any such meeting or adjournment thereof a quorum of such holders of 7%
Preferred Stock and such other Class Voting Stock shall not be present, no
election of directors by the 7% Preferred Stock and such other Class Voting
Stock shall take place, and any such meeting may be adjourned from time to
time for periods not exceeding 30 calendar days until a quorum of the 7%
Preferred Stock and the Class Voting Stock is present at such adjourned
meeting. Unless otherwise provided by law, directors to be elected by the
holders of shares of 7% Preferred Stock and such other Class Voting Stock
shall be elected by a plurality of the votes cast by such holders at a meeting
at which a quorum is present. Notwithstanding the foregoing, the absence of a
quorum of the 7% Preferred Stock
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and such other Class Voting Stock shall not prevent the voting of, including
the election of, directors by the holders of Common Stock and other classes of
capital stock at such meeting.
(d) Any director who shall have been elected by holders of shares of 7%
Preferred Stock (or by the holders of shares of 7% Preferred Stock, voting
separately as a class together with the holders of one or more other series of
Class Voting Stock), or any director so elected as provided below, may be
removed at any time during a class voting period, either for or without cause,
by, and only by, the affirmative vote of the holders of a majority of the
number of shares of 7% Preferred Stock then outstanding, voting separately as
a class together with the holders of all other series of Class Voting Stock
then outstanding, if any, given at a special meeting of such shareholders
called for the purpose, and any vacancy thereby created may be filled during
such class voting period only by the holders of shares of 7% Preferred Stock
and the other series, if any, of Class Voting Stock. In case any vacancy
(other than as provided in the preceding sentence) shall occur among the
directors elected by the holders of shares of the Series A Preferred Stock
(and such other Class Voting Stock), a successor shall be elected by the Board
of Directors to serve until the next annual meeting of the shareholders or
special meeting held in place thereof upon the nomination of the then
remaining director elected by the holders of the 7% Preferred Stock (and such
other Class Voting Stock) or the successor of such remaining director.
(e) (i) So long as any shares of 7% Preferred Stock remain outstanding, the
consent of the holders of at least two-thirds of the outstanding shares of 7%
Preferred Stock and all other shares of preferred stock of the Corporation
ranking on a parity with the 7% Preferred Stock as to the payment of dividends
and the distribution of assets upon Liquidation that would be affected equally
by the action described in clause (A) or (B) below and that are entitled to
vote on such matter (voting together as a class, with each such share of
preferred stock being entitled to a proportional share of the votes that may
be cast with respect to such matter based on the proportion that the
liquidation preference of such share bears to the aggregate liquidation
preference of all shares entitled to vote thereon), given in person or by
proxy, at any special or annual meeting called for such purpose, or by written
consent as permitted by law and the Restated Articles of Incorporation and
Bylaws, shall be necessary to permit, effect or validate any of the following:
(A) the amendment, alteration or repeal of any of the provisions of the
Restated Articles of Incorporation or of the resolutions contained herein
which would materially and adversely affect any right, preference,
privilege or voting power of the 7% Preferred Stock, provided, however,
that any such amendment, alteration or repeal that would authorize, create
or issue any additional shares of stock (whether or not already authorized)
ranking on a parity with or junior to the 7% Preferred Stock as to
dividends or as to the distribution of assets upon Liquidation, shall be
deemed not to materially and adversely affect such rights, preferences,
privileges or voting power, and provided further, however, that any such
amendment, alteration or repeal may authorize, create or issue additional
shares of stock ranking senior to the 7% Preferred Stock as to dividends or
as to the distribution of assets upon Liquidation, if such action is
approved in the manner set forth in subparagraph (ii) below; or
(B) the consummation of a merger or consolidation of the Corporation with
any other corporation, unless each holder of shares of 7% Preferred Stock
immediately preceding such merger or consolidation shall receive or
continue to hold in the surviving corporation the same number of shares,
with substantially the same rights and preferences (except as contemplated
by Section 3(e)), as correspond to the shares of 7% Preferred Stock so
held.
(ii) So long as any shares of 7% Preferred Stock remain outstanding, no
class or series of stock ranking senior to the 7% Preferred Stock as to
dividends or as to the distribution of assets upon Liquidation may be
authorized, created or issued unless the Corporation shall have obtained the
consent of either (A) the holders of at least two-thirds of the outstanding
shares of 7% Preferred Stock and all other shares of preferred stock of the
Corporation ranking on parity with the 7% Preferred Stock as to the payment of
dividends and the distribution of assets upon Liquidation that are entitled to
vote on such matter (voting together as a class, with each such share of
preferred stock being entitled to a proportional share of the votes that may
be cast with respect to such matter based on the proportion that the
liquidation preference of such share bears to the aggregate liquidation
A-A15
<PAGE>
preference of all shares entitled to vote thereon), or (B) the holders of a
majority of the outstanding shares of 7% Preferred Stock, voting separately as
a class, in each case given in person or by proxy, at any special or annual
meeting, or by written consent as permitted by law and the Restated Articles
of Incorporation and Bylaws.
(iii) The provisions set forth in subparagraphs (i) and (ii) above shall not
apply if, at or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, (A) all outstanding shares of
7% Preferred Stock shall have been redeemed or converted pursuant to paragraph
(a), (b) or (c) of Section 3 or (B) all outstanding shares of 7% Preferred
Stock are scheduled to be redeemed or converted pursuant to paragraph (a) or
(b) of Section 3 within two months and sufficient shares of the Common Stock
and cash, if any, necessary for such redemption or conversion shall have been
deposited with a bank or trust company in accordance with Section 3(j)(2).
(iv) If the holders of the 7% Preferred Stock are entitled by law to vote on
any matter other than as set forth in subparagraphs (i) or (ii) above, then
(A) if such holders are entitled to vote on such matter together with another
series of preferred stock of the Corporation, the vote required with respect
to such matter shall be the vote of a majority of the outstanding shares of 7%
Preferred Stock and all such other series of preferred stock entitled to vote
thereon (voting together as a class, with each such share of preferred stock
being entitled to a proportional share of the votes that may be cast with
respect to such matter based on the proportion that the liquidation preference
of such share bears to the aggregate liquidation preference of all shares
entitled to vote thereon), and (B) if such holders are entitled to vote as a
separate class with respect to such matter, the vote required with respect to
such matter shall be a majority of the outstanding 7% Preferred Stock.
Section 5. Liquidation Rights.
(a) Subject to the rights of holders of Series A Stock and holders of any
class or series of stock which the Corporation may in the future issue which
ranks senior to, or on a parity with, the 7% Preferred Stock in respect of a
distribution of assets upon the liquidation, dissolution or winding-up of the
affairs of the Corporation, whether voluntary or involuntary (such event, a
"Liquidation"), the holders of shares of 7% Preferred Stock shall be entitled
to receive out of the assets of the Corporation available for distribution to
stockholders, whether from capital, surplus or earnings, before any
distribution or payment is made to holders of Common Stock of the Corporation
or on any other class or series of stock of the Corporation ranking junior as
to assets distributable upon Liquidation to the shares of 7% Preferred Stock,
liquidating distributions in the amount of $ per share [the Average Closing
Price as defined in the Agreement and Plan of Merger], plus an amount equal to
all dividends accrued and unpaid thereon, whether or not earned or declared
(including dividends accumulated and unpaid), to the date of Liquidation; but
such holders shall not be entitled to any further payment. If, upon any
Liquidation, the assets of the Corporation or proceeds thereof distributable
among the holders of the shares of 7% Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid and liquidating payments on any
other class or series of stock ranking on a parity with the 7% Preferred Stock
in respect of a distribution of assets upon Liquidation, then such assets or
proceeds thereof shall be distributed among the holders of shares of 7%
Preferred Stock and any such other stock ratably in accordance with the
respective amounts which would be payable on such shares of 7% Preferred Stock
and any such other stock if all amounts payable thereon were paid in full. For
the purposes hereof, neither the consolidation or merger of the Corporation
with one or more corporations nor the sale, lease or transfer by the
Corporation of all or any part of its assets shall be deemed a Liquidation.
(b) Subject to the rights of holders of shares of any class or series of
stock ranking on a parity with or senior to the 7% Preferred Stock in respect
of the distribution of assets upon Liquidation, and after payment shall have
been made in full to the holders of 7% Preferred Stock, as provided in this
Section 5, but not prior thereto, any other class or series of stock ranking
junior to the 7% Preferred Stock in respect of the distribution of assets upon
Liquidation shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of the 7% Preferred Stock shall not be
entitled to share therein.
A-A16
<PAGE>
(c) Written notice of any Liquidation, stating the payment date or dates
when and the place or places where the amounts distributable in such
circumstances shall be payable, shall be given by first class mail, postage
prepaid, not less than 15 days (to the extent practicable) prior to any
payment date stated therein, to the holders of record of the 7% Preferred
Stock at their respective addresses as the same shall appear on the books of
the Corporation or any transfer agent for the 7% Preferred Stock.
Section 6. Record Holders.
The Corporation and the transfer agent for the 7% Preferred Stock may deem
and treat the record holder of any share of 7% Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the Corporation nor such
transfer agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, this Statement of Resolution Establishing a Series of
shares has been made under the hand of the undersigned, the of the
Corporation, this day of , 199 .
American General Corporation
By: _________________________________
Name:
Title:
A-A17
<PAGE>
EXHIBIT B
Independent Insurance Group, Inc.
One Independent Drive
Jacksonville, Florida 32276
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Dear Sirs:
Reference is made to that certain Agreement and Plan of Merger by and among
American General Corporation ("Purchaser"), AGC Life Insurance Company and
Independent Insurance Group, Inc. (the "Company") dated as of October 19, 1995
(the "Agreement"). Capitalized terms used herein and not otherwise defined
herein shall have the meaning ascribed to them in the Agreement.
The undersigned represents, warrants and agrees, as of the date hereof and
as of the Closing Date as follows:
A. I have no plan, intention, or arrangement to dispose of any of the
Purchaser Stock that I receive in the Merger.
B. I will not dispose of any of the Purchaser Stock that I receive in the
Merger within two years of the Effective Time unless, prior to such
disposition, I deliver to Purchaser an opinion of counsel reasonably
satisfactory to Purchaser that such disposition will not violate the
continuity of shareholder interest requirement set forth in Treasury
Regulation (S) 1.368-1 with respect to the Merger. For this purpose, a
disposition by gift, bequest, or similar means will not be treated as a
disposition.
C. I will provide written notice to Purchaser, not less than 30 days prior
to the intended date of disposition, specifying the number of shares of
Purchaser Stock that I propose to dispose.
The undersigned acknowledges that this letter will be relied upon by
Skadden, Arps, Slate, Meagher & Flom and Vinson & Elkins L.L.P. in rendering
their opinions as to certain federal income tax consequences of the Merger and
that the receipt of this letter by Purchaser has been a condition to Purchaser
executing and delivering the Agreement.
Very truly yours,
_____________________________________
<PAGE>
SCHEDULE 4.3(B)
PURCHASER SIGNIFICANT SUBSIDIARIES
The Variable Annuity Life Insurance Company
American General Finance, Inc.
American General Finance Corporation
American General Life and Accident Insurance Company
American General Life Insurance Company
AGC Life Insurance Company
The Franklin Life Insurance Company
American Franklin Company
<PAGE>
SCHEDULE 4.3(C)
PURCHASER INSURANCE SUBSIDIARIES
The Variable Annuity Life Insurance Company
American General Life and Accident Insurance Company
American General Life Insurance Company
AGC Life Insurance Company
The Franklin Life Insurance Company
<PAGE>
ALEX. BROWN & SONS
INCORPORATED
<TABLE>
<S> <C> <C>
LOGO ESTABLISHED 1800 . AMERICA'S OLDEST INVESTMENT BANKING FIRM REPLY TO: P.O. BOX 515
MEMBERS: NEW YORK STOCK EXCHANGE, INC. AND OTHER LEADING EXCHANGES BALTIMORE, MD 21203
</TABLE>
ANNEX B
January 30, 1996
Independent Insurance Group, Inc.
One Independent Drive
Jacksonville, FL 32276
Attention: Board of Directors
Dear Sirs:
Independent Insurance Group, Inc. (the "Company"), American General
Corporation ("AGC") and AGC Life Insurance Company ("AGC Life"), a Missouri
Corporation and a wholly owned subsidiary of AGC, have entered into an
Agreement and Plan of Merger dated as of October 19, 1995 and as amended as of
January 25, 1996 (the "Agreement"). Pursuant to the Agreement, the Company
will be merged into AGC Life (the "Merger") and each outstanding share of the
Company's Voting and Non-voting Common Stock, par value $1.00, (collectively,
the "Common Stock") will be converted into the right to receive, at the option
of the holder thereof: (i) $27.50 in cash, (ii) a fraction of a share of AGC
common stock, par value $.50 per share, representing $27.50, or (iii) a
fraction of a share of newly issued AGC 7% Convertible Preferred Stock, par
value $1.50 per share (the "Convertible Preferred Stock"), such fraction of a
Convertible Preferred share having a liquidation preference of $27.50. The
aggregate amount of cash and the total number of shares of Convertible
Preferred Stock issuable in the Merger are subject to limitation as described
in the Agreement. We have assumed, with your consent, that the Merger will
qualify as a tax-free reorganization. You have requested our opinion as to
whether the consideration to be received by the holders of the Common Stock
pursuant to the Agreement is fair, from a financial point of view, to such
holders.
Alex. Brown & Sons Incorporated, ("Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and
other purposes. We have acted as financial advisor to the Board of Directors
of the Company in connection with the Merger and will receive a fee for our
services, a portion of which is contingent upon the consummation of the
Merger. We have, in the past, also acted as a financial advisor to the Company
on other matters. Alex. Brown regularly publishes research reports regarding
the life insurance and consumer finance industries and the businesses and
securities of publicly owned companies in one and/or both of those industries,
including the Company and AGC. In the ordinary course of business, we may
actively trade the securities of both the Company and AGC for our own account
and the account of our customers and, accordingly, may at any time hold a long
or short position in securities of the Company and AGC. We also have served as
a co-manager on two recent public offerings of securities for AGC.
In connection with our opinion, we have reviewed certain publicly available
financial information concerning the Company and AGC. We have also held
discussions with members of the senior managements of the Company and AGC
regarding the business and prospects of
<PAGE>
of the Company and AGC, respectively. In addition, we have (i) reviewed the
reported price and trading activity for the non-voting common stock of the
Company and the common stock of AGC, (ii) compared certain financial and stock
market information for the Company and AGC with similar information for certain
other life insurance and consumer finance companies whose securities are
publicly traded, (iii) reviewed the financial terms of certain recent business
combinations which we deemed comparable in whole or in part, (iv) reviewed an
actuarial appraisal of The Independent Life and Accident Insurance Company
prepared by a nationally-recognized actuarial firm and (v) performed such other
studies and analyses and considered such other factors, including the terms of
the Agreement and the process by which the Company reviewed its strategic
alternatives, as we deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to information relating to the prospects of the Company
and AGC, we have assumed that such information reflects the best currently
available estimates and judgments of the respective managements of the Company
and AGC as to the likely future financial performance of the Company and AGC,
respectively. Although we have been provided with certain financial
projections prepared by the Company's management, the Company's management
advised us that we should not rely on these projections due to the fact that
they only represented management's initial attempt at preparing detailed
financial forecasts. In addition, we have not made an independent evaluation
or appraisal of the assets of the Company or AGC, nor have we been furnished
with any such evaluation or appraisal, other than the appraisal described in
clause (iv) of the preceding paragraph. Our opinion is based on market,
economic and other conditions as they exist and can be evaluated as of the
date of this letter.
Our opinion as expressed below does not imply any conclusion as to the
likely trading prices or trading range for either AGC's common stock or the
Convertible Preferred Stock following the consummation of the Merger. The
trading range for AGC's common stock and the Convertible Preferred Stock may
vary depending on, among other factors, changes in interest rates, dividend
rates, market conditions, general economic conditions and other factors that
generally influence the price of securities. Moreover, we believe there is a
possibility that the market for the Convertible Preferred Stock will be less
liquid than the market for many other similar convertible preferred securities
and that the value of a share of Convertible Preferred Stock may be less, on a
relative basis, than the value of a share of similar convertible preferred
securities with more liquid markets. This opinion does not constitute a
recommendation to the Company's shareholders as to how they should vote at the
shareholders' meeting in connection with the Merger or which form of
consideration to request.
The opinion expressed herein was prepared for the use of the Board of
Directors of the Company. We hereby consent to the inclusion of this opinion
as an exhibit to any proxy or Registration Statement distributed in connection
with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the consideration to be received by the holders of the
Common Stock pursuant to the Agreement is fair, from a financial point of
view, to such holders.
Very truly yours,
Alex. Brown & Sons Incorporated
/s/ Peter F. de Vos
By: _________________________________
Peter F. de Vos
B-2
<PAGE>
ANNEX C
FLORIDA BUSINESS CORPORATION ACT
607.1301 DISSENTER'S RIGHTS; DEFINITIONS.--The following definitions apply
to ss. 607.1302 and 607.132:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value
of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in
the case of a merger pursuant to s. 607.1104, the day prior to the date on
which a copy of the plan of merger was mailed to each shareholder of record
of the subsidiary corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.--(1) Any shareholder has the
right to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent
under s. 607.1104, and the shareholders would have been entitled to
vote on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including
a sale pursuant to court order or a sale for cash pursuant to a plan by
which all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is
a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his shares;
2. Altering or abolishing the voting rights pertaining to any of his
shares, except as such rights may be affected by the voting rights of
new shares then being authorized of any existing or new class or series
of shares;
3. Effecting an exchange, cancellation, or reclassification of any of
his shares, when such exchange, cancellation, or reclassification would
alter or abolish his voting rights or alter his percentage of equity in
the corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his redeemable
shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his shares, or making any
of his shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of any of his
preferred shares which had theretofore been cumulative;
<PAGE>
6. Reducing the stated dividend preference of any of his preferred
shares; or
7. Reducing any stated preferential amount payable on any of his
preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in
paragraph (1)(e) has the right to dissent only as to those of his
shares which are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares
registered in his name. In that event, his rights shall be determined
as if the shares as to which he has dissented and his other shares were
registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this
section does not apply with respect to a plan of merger or share
exchange or a proposed sale or exchange of property, to the holders of
shares of any class or series which, on the record date fixed to
determine the shareholders entitled to vote at the meeting of
shareholders at which such action is to be acted upon or to consent to
any such action without a meeting, were either registered on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc., or held of record by not fewer than 2,000
shareholders.
(5) A shareholder entitled to dissent and obtain payment for his
shares under this section may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent
with respect to the shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.--(1)(a) If a proposed
corporate action creating dissenters' rights under s. 607.1302 is submitted to
a vote at a shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to assert dissenters' rights and be
accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A shareholder
who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of
his intent to demand payment for his shares if the proposed action is
effectuated, and
2. Not vote his shares in favor of the proposed action. A proxy or vote
against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each
shareholder simultaneously with any request for his written consent or, if
such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent,
to each shareholder, excepting any who voted for, or consented in writing
to, the proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder who
elects to dissent shall file with the corporation a notice of such
election, stating his name and address, the number, classes, and series of
shares as to which he dissents, and a demand for payment of the fair value
of his shares. Any shareholder failing to file such election to dissent
within the period set forth shall be bound by the terms of the proposed
corporate action. Any shareholder filing an election to dissent shall
deposit his certificates for certificated shares with the corporation
simultaneously with the filing of the election to dissent. The corporation
may restrict the transfer of uncertificated shares from the date the
shareholder's election to dissent is filed with the corporation.
C-2
<PAGE>
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and
shall not be entitled to vote or to exercise any other rights of a
shareholder. A notice of election may be withdrawn in writing by the
shareholder at any time before an offer is made by the corporation, as
provided in subsection (5), to pay for his shares. After such offer, no
such notice of election may be withdrawn unless the corporation consents
thereto. However, the right of such shareholder to be paid the fair value
of his shares shall cease, and he shall be reinstated to have all his
rights as a shareholder as of the filing of his notice of election,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have
expired or any such dividend or distribution other than in cash has been
completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section;
or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10
days after such corporate action is effected, whichever is later (but in no
case later than 90 days from the shareholders' authorization date), the
corporation shall make a written offer to each dissenting shareholder who
has made demand as provided in this section to pay an amount the
corporation estimates to be the fair value for such shares. If the
corporate action has not been consummated before the expiration of the 90-
day period after the shareholders' authorization date, the offer may be
made conditional upon the consummation of such action. Such notice and
offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not
more than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation
was not in existence throughout such 12-month period, for the portion
thereof during which it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after
the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period
specified therefor in subsection (5) or if it makes the offer and any
dissenting shareholder or shareholders fail to accept the same within the
period of 30 days thereafter, then the corporation, within 30 days after
receipt of written demand from any dissenting shareholder given within 60
days after the date on which such corporate action was effected, shall, or
at its election at any time within such period of 60 days may, file an
action in any court of competent jurisdiction in the county in this state
where the registered office of the corporation is located requesting that
the fair value of such shares be determined. The court shall also determine
whether each dissenting shareholder, as to whom the corporation requests
the court to make such determination, is entitled to receive payment for
his shares. If the corporation fails to institute the proceeding as herein
provided, any dissenting shareholder may do so in the name of the
corporation. All dissenting shareholders (whether or not residents of this
state), other than shareholders who have agreed with the corporation as to
the value of their shares, shall be made parties to the proceeding as an
action against their shares. The corporation shall serve a copy of the
initial pleading in such proceeding upon each dissenting shareholder who is
a resident
C-3
<PAGE>
of this state in the manner provided by law for the service of a summons
and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive.
All shareholders who are proper parties to the proceeding are entitled to
judgment against the corporation for the amount of the fair value of their
shares. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers shall have such power and authority as is
specified in the order of their appointment or an amendment thereof. The
corporation shall pay each dissenting shareholder the amount found to be
due him within 10 days after final determination of the proceedings. Upon
payment of the judgment, the dissenting shareholder shall cease to have any
interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any
part of such costs and expenses may be apportioned and assessed as the
court deems equitable against any or all of the dissenting shareholders who
are parties to the proceeding, to whom the corporation has made an offer to
pay for the shares, if the court finds that the action of such shareholders
in failing to accept such offer was arbitrary, vexatious, or not in good
faith. Such expenses shall include reasonable compensation for, and
reasonable expenses of, the appraisers, but shall exclude the fees and
expenses of counsel for, and experts employed by, any party. If the fair
value of the shares, as determined, materially exceeds the amount which the
corporation offered to pay therefor or if no offer was made, the court in
its discretion may award to any shareholder who is a party to the
proceeding such sum as the court determines to be reasonable compensation
to any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation
as authorized but unissued shares of the corporation, except that, in the
case of a merger, they may be held and disposed of as the plan of merger
otherwise provides. The shares of the surviving corporation into which the
shares of such dissenting shareholders would have been converted had they
assented to the merger shall have the status of authorized but unissued
shares of the surviving corporation.
C-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act contains detailed
provisions with respect to indemnification of directors and officers of a Texas
corporation against reasonable expenses actually incurred in connection with
certain legal proceedings.
Article VI of the American General Bylaws sets forth certain rights of the
Registrant's officers and directors to indemnification. The American General
Bylaws, as in effect on the date hereof, are incorporated by reference herein
as Exhibit 4(c).
The American General Restated Articles of Incorporation provide that, with
certain specified exceptions, a director of the Registrant will not be liable
to the corporation for monetary damages for an act or omission in the
director's capacity as a director. Reference is made to the American General
Restated Articles of Incorporation filed as exhibit 4(a) hereto.
The Registrant has placed in effect insurance coverage which purports (a) to
insure it against certain costs of indemnification which may be incurred by it
pursuant to the aforementioned bylaw provisions or otherwise, and (b) to insure
the officers and directors of the Registrant and of its specified subsidiaries
against certain liabilities incurred by them in the discharge of their
functions as officers and directors except for liabilities arising from their
own malfeasance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*2 Agreement and Plan of Merger by and among the Registrant, AGC Life
Insurance Company and Independent Insurance Group, Inc., dated as of
October 19, 1995 and as amended as of January 25, 1996 (included as
Annex A to the Proxy Statement/Prospectus in Part I of this
Registration Statement).
4(a) Restated Articles of Incorporation of the Registrant (including
Statement of Resolution Establishing Series of Shares of Series A
Junior Participating Preferred Stock) (incorporated by reference to
Exhibit 4.1 to Registration Statement No. 33-33115 filed by the
Registrant).
*4(b) Statement of Resolution Establishing Series of Shares of Series A
Cumulative Convertible Preferred Stock of the Registrant.
4(c) Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993).
*4(d) Form of Statement of Resolutions Establishing Series of Shares of 7%
Convertible Preferred Stock of the Registrant (included as an exhibit
to Annex A to the Proxy Statement/Prospectus in Part I of this
Registration Statement).
*4(e) Specimen Stock Certificate for the 7% Convertible Preferred Stock of
the Registrant.
4(f) Specimen Stock Certificate for American General Common Stock
(incorporated by reference to Exhibit 4 to Form 8-B filed by the
Registrant on June 26, 1980).
*4(g) Junior Subordinated Indenture, dated as of May 15, 1995, between the
Registrant and Chemical Bank, as Trustee, relating to the
Registrant's 6% Series A Convertible Junior Subordinated Debentures.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4(h) Rights Agreement dated as of July 27, 1989, as amended by the First
Amendment thereto dated as of October 26, 1992, by and between the
Registrant and First Chicago Trust Company of New York, as Rights
Agent (incorporated by reference to Exhibit 4 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1989,
and to Exhibit 19 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1992, respectively).
*4(i) Terms of the 6% Convertible Monthly Income Preferred Securities,
Series A, of American General Delaware, L.L.C.
*4(j) Guarantee of the Registrant with respect to the 6% Convertible Monthly
Income Preferred Securities, Series A, of American General Delaware,
L.L.C.
*4(k) Resolutions Establishing the Registrant's 6% Series A Convertible
Junior Subordinated Debentures.
4(l) Form of Certificate evidencing 6% Convertible Monthly Income Preferred
Securities, Series A, of American General Delaware, L.L.C.
(incorporated by reference to Exhibit 4(u) to Registration Statement
No. 33-58317 filed by the Registrant).
*5 Opinion and Consent of Vinson & Elkins L.L.P. with respect to the
legality of securities to be issued in the Merger.
*8(a) Opinion and Consent of Vinson & Elkins L.L.P. with respect to certain
tax matters.
*8(b) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom with
respect to certain tax matters.
*8(c) Opinion and Consent of Vinson & Elkins L.L.P. with respect to certain
other tax matters.
*8(d) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom with
respect to certain other tax matters.
*12 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred Stock Dividends.
*23(a) Consents of Vinson & Elkins L.L.P. (contained in their opinions in
Exhibits 5, 8(a) and 8(c) above).
*23(b) Consents of Skadden, Arps, Slate, Meagher & Flom (contained in their
opinions in Exhibits 8(b) and 8(d) above).
*23(c) Consents of Ernst & Young LLP.
*23(d) Consent of Coopers & Lybrand L.L.P.
*23(e) Consent of Alex. Brown & Sons Incorporated (contained in their opinion
included as Annex B to the Proxy Statement/Prospectus in Part I of
this Registration Statement).
*24 Powers of Attorney (included on the signature page of this
Registration Statement).
*99(a) Form of Proxy of Independent Insurance Group, Inc. (relating to the
special meeting of shareholders of Independent Insurance Group, Inc.
described in the Proxy Statement/Prospectus in Part I of this
Registration Statement).
*99(b) Form of Election/Letter of Transmittal.
</TABLE>
- --------
Filed Herewith (*).
In accordance with paragraph (b)(4)(iii) of Item 601 of Regulation S-K, the
Registrant is not filing herewith certain instruments defining the rights of
holders of long-term debt of the Registrant because the total amount of
securities authorized thereunder does not exceed 10 percent of the total
assets of the Registrant and its subsidiaries on a consolidated basis. The
Registrant hereby agrees to furnish a copy of such instruments to the
Commission upon request.
(B) FINANCIAL STATEMENT SCHEDULES
Not Applicable.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(6) That every prospectus (i) that is filed pursuant to the immediately
preceding paragraph or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 20 above or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the
II-3
<PAGE>
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(8) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when it
became effective.
II-4
<PAGE>
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY APPOINTS JON P. NEWTON AND
AUSTIN P. YOUNG AND EACH OF THEM, ANY ONE OF WHOM MAY ACT WITHOUT THE JOINDER
OF THE OTHER, AS HIS/HER ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION AND
RESUBSTITUTION, TO SIGN ON HIS/HER BEHALF AND IN THE CAPACITY STATED BELOW AND
TO FILE ALL AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION
STATEMENT, WHICH AMENDMENT OR AMENDMENTS MAY MAKE SUCH CHANGES AND ADDITIONS
IN THIS REGISTRATION STATEMENT AS SUCH ATTORNEY-IN-FACT MAY DEEM NECESSARY OR
APPROPRIATE.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON,
STATE OF TEXAS, ON JANUARY 29, 1996.
American General Corporation
/s/ Robert M. Devlin
By: _________________________________
Robert M. Devlin
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Harold S. Hook Chairman of the Board, January 29,
- --------------------------------- Chief Executive Officer 1996
(HAROLD S. HOOK) and Director (principal
executive officer)
/s/ Austin P. Young Senior Vice President January 29,
- ------------------------------- and Chief Financial 1996
Officer (principal
(AUSTIN P. YOUNG) financial officer)
/s/ Pamela J. Penny Vice President and January 29,
- ------------------------------- Controller (principal 1996
accounting officer)
(PAMELA J. PENNY)
/s/ J. Evans Attwell Director January 29,
- ------------------------------- 1996
(J. EVANS ATTWELL)
/s/ Brady F. Carruth Director January 29,
- ------------------------------- 1996
(BRADY F. CARRUTH)
II-5
<PAGE>
SIGNATURE TITLE DATE
/s/ W. Lipscomb Davis, Jr. Director January 29,
- ------------------------------- 1996
(W. LIPSCOMB DAVIS, JR.)
/s/ Robert M. Devlin Director January 29,
- ------------------------------- 1996
(ROBERT M. DEVLIN)
/s/ Larry D. Horner Director January 29,
- ------------------------------- 1996
(LARRY D. HORNER)
/s/ Richard J. V. Johnson Director January 29,
- ------------------------------- 1996
(RICHARD J. V. JOHNSON)
/s/ Jon P. Newton Director January 29,
- ------------------------------- 1996
(JON P. NEWTON)
/s/ Robert E. Smittcamp Director January 29,
- ------------------------------- 1996
(ROBERT E. SMITTCAMP)
/s/ Anne W. Tatlock Director January 29,
- ------------------------------- 1996
(ANNE W. TATLOCK)
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
*2 Agreement and Plan of Merger by and among the Registrant, AGC
Life Insurance Company and Independent Insurance Group,
Inc., dated as of October 19, 1995 and as amended as of
January 25, 1996 (included as Annex A to the Proxy
Statement/Prospectus in Part I of this Registration
Statement)..................................................
4(a) Restated Articles of Incorporation of the Registrant
(including Statement of Resolution Establishing Series of
Shares of Series A Junior Participating Preferred Stock)
(incorporated by reference to Exhibit 4.1 to Registration
Statement No. 33-33115 filed by the Registrant).............
*4(b) Statement of Resolution Establishing Series of Shares of
Series A Cumulative Convertible Preferred Stock of the
Registrant..................................................
4(c) Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993).............
*4(d) Form of Statement of Resolutions Establishing Series of
Shares of 7% Convertible Preferred Stock of the Registrant
(included as an exhibit to Annex A to the Proxy
Statement/Prospectus in Part I of this Registration
Statement)..................................................
*4(e) Specimen Stock Certificate for the 7% Convertible Preferred
Stock of the Registrant.....................................
4(f) Specimen Stock Certificate for American General Common Stock
(incorporated by reference to Exhibit 4 to Form 8-B filed by
the Registrant on June 26, 1980)............................
*4(g) Junior Subordinated Indenture, dated as of May 15, 1995,
between the Registrant and Chemical Bank, as Trustee,
relating to the Registrant's 6% Series A Convertible Junior
Subordinated Debentures.....................................
4(h) Rights Agreement dated as of July 27, 1989, as amended by the
First Amendment thereto dated as of October 26, 1992, by and
between the Registrant and First Chicago Trust Company of
New York, as Rights Agent (incorporated by reference to
Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1989, and to Exhibit 19 to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992, respectively).............
*4(i) Terms of the 6% Convertible Monthly Income Preferred
Securities, Series A, of American General Delaware,
L.L.C. .....................................................
*4(j) Guarantee of the Registrant with respect to the 6%
Convertible Monthly Income Preferred Securities, Series A,
of American General Delaware, L.L.C. .......................
*4(k) Resolutions Establishing the Registrant's 6% Series A
Convertible Junior Subordinated Debentures..................
4(l) Form of Certificate evidencing 6% Convertible Monthly Income
Preferred Securities, Series A, of American General
Delaware, L.L.C. (incorporated by reference to Exhibit 4(u)
to Registration Statement No. 33-58317 filed by the
Registrant).................................................
*5 Opinion and Consent of Vinson & Elkins L.L.P. with respect to
the legality of securities to be issued in the Merger.......
*8(a) Opinion and Consent of Vinson & Elkins L.L.P. with respect to
certain tax matters.........................................
*8(b) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
with respect to certain tax matters.........................
*8(c) Opinion and Consent of Vinson & Elkins L.L.P., with respect
to certain other tax matters................................
*8(d) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
with respect to certain other tax matters...................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
*12 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends....................................................
*23(a) Consents of Vinson & Elkins L.L.P. (contained in their
opinions in Exhibits 5, 8(a) and 8(c) above).................
*23(b) Consents of Skadden, Arps, Slate, Meagher & Flom (contained in
their opinions in Exhibits 8(b) and 8(d) above)..............
*23(c) Consents of Ernst & Young LLP.................................
*23(d) Consent of Coopers & Lybrand L.L.P. ..........................
*23(e) Consent of Alex. Brown & Sons Incorporated (contained in their
opinion included as Annex B to the Proxy Statement/Prospectus
in Part I of this Registration Statement)....................
*24 Powers of Attorney (included on the signature page of this
Registration Statement)......................................
*99(a) Form of Proxy of Independent Insurance Group, Inc. (relating
to the special meeting of shareholders of Independent
Insurance Group, Inc. described in the Proxy
Statement/Prospectus in Part I of this Registration
Statement)...................................................
*99(b) Form of Election/Letter of Transmittal........................
</TABLE>
- --------
Filed herewith (*).
<PAGE>
EXHIBIT 4(b)
AMERICAN GENERAL CORPORATION
STATEMENT OF RESOLUTION ESTABLISHING A SERIES OF SHARES
PROVIDING FOR THE ISSUANCE OF SERIES A
CUMULATIVE CONVERTIBLE PREFERRED STOCK PURSUANT TO
ARTICLE 2.13 OF THE TEXAS BUSINESS CORPORATION ACT
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares of its Preferred
Stock and fixing and determining the designations, preferences, limitations and
relative rights thereof:
1. The name of the corporation is American General Corporation (the
"Corporation").
2. The following resolutions, establishing and designating a series
of shares and fixing and determining the designations, preferences, limitations
and relative rights thereof, was duly adopted by an authorized committee of the
Board of Directors of the Corporation on May 24, 1995:
RESOLVED, that pursuant to Article Four of the Restated Articles of
Incorporation of the Corporation, as amended, which authorizes the issuance
of three hundred sixty million (360,000,000) shares, consisting of sixty
million (60,000,000) shares of Preferred Stock of the par value of one
dollar fifty cents ($1.50) per share (hereinafter referred to as the
"Preferred Stock"), none of which is currently outstanding, and three
hundred million (300,000,000) shares of Common Stock of the par value of
fifty cents ($.50) per share (hereinafter referred to as the "Common
Stock"), the Corporation hereby provides for the issuance of a series of
Preferred Stock, designated as Series A Cumulative Convertible Preferred
Stock, and hereby fixes the designations, preferences, limitations and
relative rights of the shares of the Series A Cumulative Convertible
Preferred Stock, in addition to those set forth in such Article Four, which
shall be as follows:
SECTION 1. DESIGNATION AND AMOUNT; SPECIAL PURPOSE; RESTRICTION ON SENIOR
SERIES.
(a) The shares of this series of Preferred Stock shall be designated as
"Series A Cumulative Convertible Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting such series shall be 5,000,000,
par value $1.50 per share. The number of authorized shares of Series A
Preferred Stock may be reduced to a number not less than the number of shares
then issued plus the number of shares then issuable upon the conversion of the
then outstanding Subordinated Debentures (as defined in Section 1(b)) by further
resolution duly adopted by the Board of Directors of the Corporation or a duly
1
<PAGE>
authorized committee thereof and by the filing of a certificate pursuant to the
provisions of the Texas Business Corporation Act stating that such reduction has
been so authorized.
(b) Shares of Series A Preferred Stock shall be issued only upon conversion
of 6% Series A Convertible Junior Subordinated Debentures due 2025 of the
Corporation (the "Subordinated Debentures"). Such conversion may occur
immediately following the exchange of all outstanding 6% Convertible Monthly
Income Preferred Securities, Series A (the "American General Delaware Series A
Preferred Securities") of American General Delaware, L.L.C., a Delaware limited
liability company ("American General Delaware"), for Subordinated Debentures
pursuant to a valid exchange election (the "Exchange Election") by the holders
of a majority of the aggregate liquidation preference of the American General
Delaware Series A Preferred Securities then outstanding in accordance with the
provisions of Section 9 of the Written Action, dated as of May 24, 1995, of the
Managing Member of American General Delaware establishing the terms of the
American General Delaware Series A Preferred Securities.
(c) Prior to an Exchange Election and if any American General Delaware
Series A Preferred Securities are then outstanding, the Corporation shall not
authorize or issue any other class or series of capital stock ranking senior to
the Series A Preferred Stock as to the payment of dividends or distribution of
assets upon liquidation, dissolution or winding-up of the Corporation without
the approval of the holders of not less than 66-2/3% of the aggregate
liquidation preference of the American General Delaware Series A Preferred
Securities then outstanding.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(a)(1) The holders of shares of Series A Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
at a rate per annum of 6% of the liquidation preference of $50 per share of
Series A Preferred Stock. The amount of dividends payable for a full monthly
dividend period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period shorter than a full monthly dividend
period, shall be computed on the basis of the actual number of days elapsed in
such period. Dividends on the Series A Preferred Stock shall accrue from the
date of the Exchange Election and, subject to the declaration of such dividends,
shall be payable in United States dollars monthly in arrears on the last day of
each calendar month of each year.
(2) Dividends shall accrue and be cumulative whether or not they have
been earned or declared and whether or not there are funds of the Corporation
legally available for the payment of dividends. Accrued but unpaid interest
(including additional interest, if any, payable in accordance with the terms of
the Subordinated Debentures) on the Subordinated Debentures converted into
Series A Preferred Stock, if any, on the date of the Exchange Election shall
constitute, and be treated as, accumulated and unpaid dividends on the Series A
Preferred Stock.
2
<PAGE>
(b) Dividends will be payable to the holders of shares of Series A
Preferred Stock as of the relevant record dates, which, if and so long as the
Series A Preferred Stock is represented by one or more global certificates
through the book-entry system of a Clearing Agency (as defined below), will be
one Business Day (as defined below) prior to the related dividend payment dates.
In the event that the Series A Preferred Stock shall not continue to be so
represented, the Board of Directors shall have the right to select relevant
record dates that are more than one Business Day prior to the related dividend
payment dates. A "Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that is acting as depositary for the
Series A Preferred Stock and in whose name (or nominee's name) shall be
registered one or more global certificates representing Series A Preferred Stock
and which shall undertake to effect book-entry transfers and pledges of
interests in the Series A Preferred Stock. In the event that any date on which
dividends are payable on the Series A Preferred Stock 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 shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" 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.
(c) If full cumulative dividends on the Series A Preferred Stock have not
been declared and paid or irrevocably set apart for payment when due, then,
subject to the next succeeding sentence, the Corporation shall not declare or
pay any dividend on any Dividend Pari Passu Security or Dividend Junior Security
(each as defined below). The preceding sentence, however, shall not apply to,
or prohibit (i) dividends as a result of a reclassification of Dividend Pari
Passu Securities or Dividend Junior Securities, (ii) dividends of any share
purchase rights issued by the Corporation pursuant to the Rights Agreement,
dated as of July 27, 1989, between the Corporation and First Chicago Trust
Company of New York, as amended from time to time, (iii) dividends or
distributions of similar share purchase rights in the future, (iv) dividends or
distributions in shares of Common Stock or another class or series of capital
stock of the Corporation that is junior to the Series A Preferred Stock as to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding-up of the Corporation, or (v) dividends with respect to
Dividend Pari Passu Securities in accordance with the following sentence. If
full cumulative dividends have not been paid upon the shares of Series A
Preferred Stock and any other class or series of Dividend Pari Passu Securities,
all dividends declared upon shares of Series A Preferred Stock and any other
such class or series of Dividend Pari Passu Securities shall, if declared, be
declared pro rata so that the amount of cash dividends declared per share on the
Series A Preferred Stock and such other class or series of Dividend Pari Passu
Securities shall in all cases bear to each other the same ratio that accumulated
and unpaid dividends per share on the shares of Series A Preferred Stock and
such other class or series of Dividend Pari Passu Securities bear to each other.
3
<PAGE>
The term "Dividend Pari Passu Security" means any preference stock or
preferred stock or other capital stock of the Corporation and any guarantee
entered into by the Corporation in respect of any preference stock or preferred
stock of any affiliate of the Corporation ranking pari passu with the Series A
Preferred Stock as to the payment of dividends. "Dividend Junior Security"
means Common Stock, Series A Junior Participating Preferred Stock of the
Corporation and any other class or series of capital stock of the Corporation
and any guarantee entered into by the Corporation in respect of any preference
stock or preferred stock of any affiliate of the Corporation ranking junior to
the Series A Preferred Stock as to the payment of dividends.
(d) Accruals of dividends on the Series A Preferred Stock shall not bear
interest, regardless of whether funds shall be legally available for the
declaration or payment thereof.
SECTION 3. VOTING RIGHTS.
(a) The holders of the shares of Series A Preferred Stock shall have no
right or power to vote on any question or matter or in any proceeding or to be
represented at, or to receive notice of, any meeting of shareholders of the
Corporation, except as specifically required by the laws of the State of Texas
or by the provisions of the Restated Articles of Incorporation of the
Corporation, as amended, and except as provided in this Section 3.
(b) In the event that full cumulative dividends on the Series A Preferred
Stock are not paid for 18 consecutive monthly dividend periods (including for
this purpose any monthly periods in which full dividends were not paid on the
American General Delaware Series A Preferred Securities prior to the Exchange
Election), the number of directors of the Corporation constituting the entire
Board of Directors shall be increased by two persons and the holders of shares
of the Series A Preferred Stock, voting separately as a class together with the
holders of shares of all other series of capital stock of the Corporation
ranking pari passu with the Series A Preferred Stock as to the payment of
dividends and having the then present right to elect one or more directors as a
result of a dividend arrearage but not then entitled to other separate voting
rights to elect one or more directors in the event of such an arrearage (herein
referred to as "Class Voting Stock"), shall have the right to elect such
directors to fill such positions at any regular meeting of shareholders or
special meeting held in place thereof, or at a special meeting of the holders of
the Series A Preferred Stock and such other Class Voting Stock called as
provided in paragraph (c) below. Whenever all arrearages of dividends on the
Series A Preferred Stock then outstanding shall have been paid or declared and
irrevocably set apart for payment, then the right of the holders of shares of
the Series A Preferred Stock (and, subject to the terms of such other Class
Voting Stock, such other Class Voting Stock) to elect such additional two
directors shall cease (but subject always to the same provisions for the vesting
of such voting rights in the case of any similar future arrearages in
dividends), and the terms of office of all persons previously elected as
directors by the holders of shares of the Series A Preferred Stock and such
other Class Voting Stock shall forthwith terminate and the number of the Board
of Directors shall be reduced accordingly.
4
<PAGE>
(c) At any time after the voting power referred to in paragraph (b) above,
shall have been so vested in the holders of shares of the Series A Preferred
Stock, the Secretary of the Corporation may, and upon the written request of any
holder or the holders of at least 10% of the number of shares of Series A
Preferred Stock then outstanding (addressed to the Secretary at the principal
executive office of the Corporation) shall, call a special meeting of the
holders of shares of the Series A Preferred Stock and all other Class Voting
Stock for the election of the two directors to be elected by them; provided that
the Secretary shall not be required to call such special meeting if the request
for such meeting is received less than 45 calendar days before the date fixed
for the next ensuing annual meeting of shareholders. Such call shall be made by
notice similar to that provided in the by-laws of the Corporation for a special
meeting of the shareholders or as required by law. Subject to the foregoing
provisions, if any such special meeting required to be called as above provided
shall not be called by the Secretary within 20 calendar days after receipt of an
appropriate request, then any holder of shares of Series A Preferred Stock may
call such meeting, upon the notice above provided, and for that purpose shall
have access to the stock books and records of the Corporation. Except as
otherwise provided by law, at any such meeting, the holders of a majority of the
number of shares of Series A Preferred Stock and such other Class Voting Stock
then outstanding shall constitute a quorum for the purpose of electing directors
as contemplated in paragraph (b) above. If at any such meeting or adjournment
thereof a quorum of such holders of Series A Preferred Stock and such other
Class Voting Stock shall not be present, no election of directors by the Series
A Preferred Stock and such other Class Voting Stock shall take place, and any
such meeting may be adjourned from time to time for periods not exceeding 30
calendar days until a quorum of the Series A Preferred Stock and the Class
Voting Stock is present at such adjourned meeting. Unless otherwise provided by
law, directors to be elected by the holders of shares of Series A Preferred
Stock and such other Class Voting Stock shall be elected by a plurality of the
votes cast by such holders at a meeting at which a quorum is present.
Notwithstanding the foregoing, the absence of a quorum of the Series A Preferred
Stock and such other Class Voting Stock shall not prevent the voting of,
including the election of, directors by the holders of Common Stock and other
classes of capital stock at such meeting.
(d) Any director who shall have been elected by holders of shares of Series
A Preferred Stock (or by the holders of shares of Series A Preferred Stock,
voting separately as a class together with the holders of one or more other
series of Class Voting Stock), or any director so elected as provided below, may
be removed at any time during a class voting period, either for or without
cause, by, and only by, the affirmative vote of the holders of a majority of the
number of shares of Series A Preferred Stock then outstanding, voting separately
as a class together with the holders of all other series of Class Voting Stock
then outstanding, if any, given at a special meeting of such shareholders called
for the purpose, and any vacancy thereby created may be filled during such class
voting period only by the holders of shares of Series A Preferred Stock and the
other series, if any, of Class Voting Stock. In case any vacancy (other than as
provided in the preceding sentence) shall occur among the directors elected by
the holders of shares of the Series A Preferred Stock (and such other Class
Voting Stock), a successor shall be elected by the Board of Directors to serve
until the next annual meeting of the shareholders or special meeting held in
place thereof upon the nomination of the then remaining director elected by the
holders of the
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Series A Preferred Stock (and such other Class Voting Stock) or the successor of
such remaining director.
(e) So long as any shares of Series A Preferred Stock are outstanding, the
consent of the holders of not less than 66-2/3% of the number of shares of
Series A Preferred Stock then outstanding, given in person or by proxy either at
a regular meeting or at a special meeting called for that purpose or pursuant to
written consents, at which or pursuant to which, as the case may be, the holders
of Series A Preferred Stock shall vote separately as a series, shall be
necessary for effecting, validating or authorizing any one or more of the
following:
(1) The amendment, alteration or repeal of any of the provisions of
this Statement of Resolution Establishing a Series of Shares, the Restated
Articles of Incorporation, or any amendment thereto, or any other
certificate filed pursuant to law (including any such amendment, alteration
or repeal effected by any merger or consolidation to which the Corporation
is a party) that would adversely affect any of the designations,
preferences, limitations or relative rights of the shares of Series A
Preferred Stock then outstanding; provided, however, that any amendment or
amendments to the provisions of the Restated Articles of Incorporation, as
amended, so as to authorize or create, or to increase the authorized amount
of, any capital stock of the Corporation ranking pari passu with or junior
to the Series A Preferred Stock as to the payment of dividends and as to
the distribution of assets upon any liquidation, dissolution or winding-up
of the Corporation shall not be deemed to affect adversely the
designations, preferences, limitations, or relative rights of the Series A
Preferred Stock;
(2) The authorization or creation of any shares of any class or
series, or any security convertible into shares of any class or series, of
capital stock ranking senior to the Series A Preferred Stock as to the
payment of dividends or as to the distribution of assets upon any
liquidation, dissolution or winding-up of the Corporation; or
(3) Any merger or consolidation with or into, or any conveyance,
transfer, or lease of all or substantially all of the assets of the
Corporation to, any other corporation or other entity, in either case that
would adversely affect any of the designations, preferences, limitations or
relative rights of the shares of Series A Preferred Stock then outstanding.
(f) In connection with any matter on which holders of shares of Series A
Preferred Stock are entitled to vote (including, without limitation, (i) with
respect to the election of directors as set forth in the preceding paragraphs of
this Section 3 or (ii) any matter on which holders of shares of Series A
Preferred Stock are entitled to vote as a class or otherwise pursuant to the
laws of the State of Texas or the provisions of the Restated Articles of
Incorporation, as amended), each holder of a share of Series A Preferred Stock
shall be entitled to one vote for such share of Series A Preferred Stock held by
such holder.
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Notwithstanding anything to the contrary herein, if the Restated Articles of the
Corporation, as amended, provide that shares of any Class Voting Stock are
entitled to more or less than one vote per share when voting together with the
Series A Preferred Stock every reference in this Section 3 to a majority or
another specified portion of the number of shares of Series A Preferred Stock
and Class Voting Stock shall mean a majority or such other portion of the votes
entitled to be cast in respect of such shares.
SECTION 4. REDEMPTION.
(a) If at any time following the Conversion Expiration Date (as defined
below), less than ten percent (10%) of the number of shares of Series A
Preferred Stock issued upon the Exchange Election remains outstanding, such
shares of Series A Preferred Stock shall be redeemable, at the option of the
Corporation, in whole but not in part, at a cash redemption price of $50 per
share, plus accumulated and unpaid dividends (whether or not earned or
declared), to the date fixed for redemption thereof (the "Redemption Price").
(b) The Series A Preferred Stock shall be redeemable, at the option of the
Corporation, in whole or in part, from time to time, on or after May 31, 2003,
at the Redemption Price. The Corporation may not redeem the Series A Preferred
Stock in part unless all accumulated and unpaid dividends (whether or not earned
or declared) have been paid in full on all shares of Series A Preferred Stock
for all monthly dividend periods terminating on or prior to the date of
redemption.
(c) Unless otherwise required by law, notice of any redemption of the
Series A Preferred Stock (a "Notice of Redemption") shall be irrevocable and
shall be given by the Corporation or sent to the holders of Series A Preferred
Stock by first-class mail, postage prepaid, not fewer than 30 nor more than 60
calendar days prior to the date fixed for redemption. If all of the shares of
Series A Preferred Stock are held in the name of the Clearing Agency (or its
nominees), the Notice of Redemption shall be sent to such Clearing Agency. Each
Notice of Redemption shall state: (i) the fact that shares of Series A
Preferred Stock are being redeemed and the number of such shares; (ii) the date
fixed for redemption; (iii) the Redemption Price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the Redemption
Price; (v) that dividends on the shares to be redeemed will cease to accrue on
such redemption date; and (vi) that conversion rights with respect to the shares
to be redeemed will cease on the close of business on the third Business Day
preceding the date fixed for redemption. If less than all outstanding shares of
Series A Preferred Stock are to be redeemed, the shares to be redeemed will be
selected ratably or by lot or in such other manner as may be fair and equitable
and the Notice of Redemption shall also specify the number of shares of Series A
Preferred Stock to be redeemed from each applicable holder. Such notice shall
be deemed to be given on the day such notice is deposited in the United States
mail, postage prepaid, addressed to the shareholder at such shareholder's
address as it appears on the books of the Corporation or the stock transfer
agent for the Series A Preferred Stock. No defect in the Notice of Redemption
or in the mailing thereof with respect to any share of Series A Preferred Stock
shall affect the validity of the proceedings for such redemption with respect to
any other share of Series A Preferred Stock.
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(d) If the Corporation gives a Notice of Redemption, then, by 12:00 noon,
New York time, on the date fixed for redemption, if the Series A Preferred Stock
is represented by one or more global certificates through the book-entry system
of a Clearing Agency, the Corporation shall irrevocably deposit an amount
sufficient to pay the Redemption Price to the holders of the shares of Series A
Preferred Stock called for redemption with the Clearing Agency and give the
Clearing Agency irrevocable instructions and authority to pay, on and after the
date fixed for redemption, the Redemption Price to the holders of the Series A
Preferred Stock to be redeemed, and if the Series A Preferred Stock is not
represented by such global certificates through the book-entry system of a
Clearing Agency, the Corporation shall irrevocably deposit with any bank or
trust company in the State of Texas, or any bank or trust company in the United
States duly appointed and acting as transfer agent for the Corporation, as a
trust fund, an amount sufficient to pay the Redemption Price to the holders of
the shares of Series A Preferred Stock called for redemption, with irrevocable
instructions and authority to such bank or trust company to pay, on and after
the date fixed for such redemption, to the respective holders of shares of
Series A Preferred Stock, as evidenced by a list of holders of such shares
certified by the President, any Vice President, the Secretary or an Assistant
Secretary of the Corporation, the Redemption Price upon surrender of their
respective share certificates. If a Notice of Redemption shall have been given
and funds irrevocably deposited as required, then immediately prior to the close
of business on the date fixed for redemption, such shares of Series A Preferred
Stock called for redemption shall no longer be deemed to be outstanding, and the
holders thereof shall cease to be shareholders with respect to such shares and
all rights of such holders will cease, except the right of such holders to
receive the Redemption Price (subject, in the case of holders of certificated
shares, to the surrender of their respective certificates therefor), but without
additional interest from and after such redemption date. In case the holders of
such shares of Series A Preferred Stock 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 the Corporation 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 of Series A Preferred Stock.
In the event that any date fixed for redemption of Series A Preferred Stock is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the Redemption
Price is improperly withheld or refused and not paid by the Corporation,
dividends on the Series A Preferred Stock called for redemption 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 A
Preferred Stock may exercise all of their rights as holders thereof.
(e) Subject to the next succeeding sentence, the Corporation may not, and
shall not permit any of its majority-owned subsidiaries to, purchase any shares
of Series A Preferred Stock or redeem, purchase, acquire or make a liquidation
payment with respect to any capital stock of the Corporation or make any
guarantee payment with respect to the foregoing, unless all accumulated
dividends shall have been declared and paid or irrevocably
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set apart for payment upon all shares of Series A Preferred Stock then
outstanding for all monthly dividend periods terminating on or prior to the date
thereof. The preceding sentence, however, shall not apply to, or prohibit (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Corporation or any of its majority-owned subsidiaries of its
obligations under any employee benefit plans or the satisfaction by the
Corporation of its obligations pursuant to any put contract requiring the
Corporation to purchase Common Stock, (ii) any of the actions described in the
preceding sentence as a result of a reclassification of capital stock of the
Corporation or the exchange or conversion of one class or series of capital
stock of the Corporation for another class or series of capital stock of the
Corporation, (iii) redemptions or purchases of any share purchase rights issued
by the Corporation pursuant to the Rights Agreement, dated as of July 27, 1989,
between the Corporation and First Chicago Trust Company of New York, as amended
from time to time, (iv) the redemption or purchase of similar share purchase
rights in the future, or (v) the purchase of fractional interests in shares of
capital stock of the Corporation pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING-UP.
(a) Upon any voluntary or involuntary liquidation, dissolution, or winding-
up of the Corporation, the holders of Series A Preferred Stock at the time
outstanding will be entitled to receive out of the net assets of the Corporation
legally available for distribution to shareholders after satisfaction of
liabilities to creditors as required by the Texas Business Corporation Act,
subject to the rights of the holders of any stock of the Corporation ranking
senior to the Series A Preferred Stock in respect of distributions of assets
upon liquidation, dissolution, or winding-up of the Corporation and holders of
Liquidation Pari Passu Securities (as defined below), but before any
distribution of assets is made with respect to any Liquidation Junior Securities
(as defined below), an amount equal to the aggregate of the liquidation
preference of $50 per share plus an amount equal to all accumulated and unpaid
dividends thereon (whether or not earned or declared) to the date of payment.
If, upon any liquidation, dissolution or winding-up of the Corporation, the
assets available for distribution are insufficient to pay in full the
liquidation preference to the holders of the Series A Preferred Stock and any
Liquidation Pari Passu Securities, the holders of the Series A Preferred Stock
and such Liquidation Pari Passu Securities shall share ratably in any
distribution of assets based on the proportion of their full respective
liquidation preferences to the aggregate amount of the unpaid liquidation
preferences of the Series A Preferred Stock and such Liquidation Pari Passu
Securities. After payment of the full amount to which they are entitled as
provided by the foregoing provisions of this Section 5(a), the holders of shares
of Series A Preferred Stock shall not be entitled to any further right or claim
to any of the remaining assets of the Corporation.
The term "Liquidation Pari Passu Security" means any preference stock or
preferred stock or other capital stock of the Corporation and any guarantee
entered into by the Corporation in respect of any preference stock or preferred
stock of any affiliate of the Corporation ranking pari passu with the Series A
Preferred Stock as to the distribution of assets upon liquidation, dissolution
or winding-up of the Corporation. "Liquidation Junior
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Security" means Common Stock, Series A Junior Participating Preferred Stock of
the Corporation and any other class or series of capital stock of the
Corporation and any guarantee entered into by the Corporation in respect of any
preference stock or preferred stock of any affiliate of the Corporation ranking
junior to the Series A Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding-up of the Corporation.
(b) Neither the merger or consolidation of the Corporation with or into any
other corporation or other entity, nor the merger or consolidation of any other
corporation with or into the Corporation or other entity, nor the conveyance,
transfer or lease of all or substantially all of the assets of the Corporation,
shall be deemed to be a liquidation, dissolution or winding-up, voluntary or
involuntary, of the affairs of the Corporation for purposes of this Section 5.
(c) Written notice of any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, stating the payment date or dates when, and
the place or places where, the amounts distributable to holders of Series A
Preferred Stock in such circumstances shall be payable, shall be delivered
personally or given by first-class mail, postage prepaid, not fewer than 30
calendar days prior to any payment date stated therein, to the holders of Series
A Preferred Stock, at the addresses shown on the books of the Corporation or the
transfer agent for the Series A Preferred Stock. No defect in such notice or in
the mailing thereof shall affect the Corporation's ability to consummate a
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation.
SECTION 6. CONVERSION RIGHTS OF SERIES A PREFERRED STOCK.
(a) Each share of Series A Preferred Stock shall be convertible at any time
before the close of business on the Conversion Expiration Date, at the option of
the holder thereof, into such number of shares of Common Stock as is determined
by dividing $50.00 by the then applicable conversion price (the "Conversion
Price") determined as hereinafter provided. The Conversion Price shall
initially be $40.69 per share and shall be adjusted as provided in Section 7.
(b) Holders of record of Series A Preferred Stock at the close of business
on a dividend record date will be entitled to receive the dividend payable on
such shares of Series A Preferred Stock on the corresponding dividend payment
date notwithstanding the conversion thereof following such dividend payment
record date but on or prior to such dividend payment date. Except as provided
in the immediately preceding sentence, the Corporation will make no payment,
allowance or adjustment for accumulated and unpaid dividends, whether or not in
arrears, on converted shares of Series A Preferred Stock. American General will
make no payment or allowance for dividends on the shares of Common Stock issued
upon conversion, except to the extent that such shares of Common Stock are held
of record on the record date for such dividends.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Corporation based on the Current Market Price (as defined in Section
6(h)(4)) of the Common Stock on the date
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on which the certificate or certificates for such shares of Series A Preferred
Stock were duly surrendered for conversion, or, if such date is not a Trading
Day for the Common Stock (as defined in Section 7(e), on the next Trading Day.
(d) Shares of Series A Preferred Stock that have been called for redemption
will not be convertible after the close of business on the third Business Day
preceding the date fixed for redemption, unless the Corporation defaults in
making payment of the Redemption Price payable on redemption.
(e) Any holder of shares of Series A Preferred Stock desiring to convert
such shares into shares of Common Stock shall surrender the certificate or
certificates representing the shares of Series A Preferred Stock being
converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto), at the offices of
the transfer agent for the Series A Preferred Stock or such office or offices in
the continental United States of an agent for conversion as may from time to
time be designated by notice to the holders of the Series A Preferred Stock by
the Corporation or the transfer agent for the Series A Preferred Stock,
accompanied by irrevocable notice of conversion, on any day that is a Business
Day. Such notice of conversion (i) shall specify the number of shares of Series
A Preferred Stock to be converted and the name or names, if other than the
holder, in which the certificate or certificates for Common Stock, and for any
shares of Series A Preferred Stock not to be so converted, are to be issued
(subject to compliance with applicable legal requirements if any of such
certificates are to be issued in a name other than the name of the holder), (ii)
shall direct the Corporation or such transfer agent to convert such Series A
Preferred Stock into Common Stock, and (iii) shall specify the address to which
such holder wishes delivery to be made of such new certificates issued upon such
conversion (the "Notice of Conversion").
(f) Upon surrender of a certificate representing a share or shares of
Series A Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery or by first-class mail, postage prepaid, to the holder thereof, at
the address designated by such holder, a certificate or certificates
representing the number of full shares of Common Stock to which such holder
shall be entitled upon conversion, together with the cash payment, if any, in
lieu of any fractional share of Common Stock. If a certificate or certificates
representing shares of Series A Preferred Stock, only part of which are to be
converted, shall have been surrendered, then the Corporation shall also issue
and deliver to such holder or such holder's designee in the manner provided in
the immediately preceding sentence a new certificate or certificates
representing the number of shares of Series A Preferred Stock that shall not
have been converted.
(g) Shares of Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day on which the
certificate or certificates for the shares of Series A Preferred Stock to be
converted are surrendered to the Corporation, or at the offices of the transfer
agent or conversion agent (in accordance with the provisions of Section 6(e)),
accompanied by a Notice of Conversion (the "Conversion Date"). The person or
persons entitled to receive the Common Stock issuable upon such
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conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock at such time.
(h)(1) On and after May 31, 2000, the Corporation shall have the right, at
its option, to cause the conversion rights of holders of shares of Series A
Preferred Stock set forth in this Section 6 to expire if (A) the Corporation has
paid in full all accumulated and unpaid dividends on all shares of Series A
Preferred Stock for all monthly dividend periods terminating on or prior to such
date, and (B) for 20 Trading Days within any period of 30 consecutive Trading
Days, including the last Trading Day of such period, the Current Market Price of
the Common Stock of the Corporation on each of such 20 Trading Days shall have
exceeded 120% of the Conversion Price in effect on such Trading Day.
(2) In order to exercise its option to cause the conversion rights of
holders of shares of Series A Preferred Stock to expire, the Corporation must
issue a press release for publication on the Dow Jones News Service or on a
comparable news service (the "Press Release") prior to the opening of business
on the second Trading Day after any period in which the conditions in the
preceding paragraph have been met, which shall state that the Corporation has
elected to exercise its right to extinguish the conversion rights of holders of
shares of Series A Preferred Stock, specify the Conversion Expiration Date and
provide the Conversion Price of the Series A Preferred Stock and the Current
Market Price of the Common Stock, in each case as of the close of business on
the Trading Day next preceding the date of the Press Release. If the
Corporation exercises the option described in this Section 6(h), the "Conversion
Expiration Date" shall be the close of business on the Business Day selected by
the Corporation, which shall be not less than 30 or more than 60 calendar days
after the date on which the Corporation issues the Press Release; provided,
however, that if the Corporation does not exercise the option described in this
Section 6(h), the "Conversion Expiration Date" with respect to any shares of
Series A Preferred Stock called for redemption shall be the close of business on
the third Business Day prior to the date fixed for redemption pursuant to
Section 4, unless the Corporation defaults in making payment of the Redemption
Price payable on redemption.
(3) In addition to the Press Release, notice of the expiration of
conversion rights (a "Notice of Conversion Expiration") must be given by the
Corporation by first-class mail to each holder of shares of Series A Preferred
Stock not more than four Business Days after the Corporation issues the Press
Release. Each such mailed Notice of Conversion Expiration shall state: (A) the
Conversion Expiration Date; (B) the Conversion Price of the Series A Preferred
Stock and the Current Market Price of the Common Stock, in each case as of the
close of business on the Trading Day next preceding the date of the Press
Release; (C) the place or places at which a Notice of Conversion may be given
and shares of Series A Preferred Stock may be surrendered prior to the
Conversion Expiration Date for certificates representing shares of Common Stock
in accordance with Section 6(e); and (D) such other information or instructions
as the Corporation deems necessary or advisable to enable a holder of shares of
Series A Preferred Stock to exercise its conversion right hereunder. For
purposes of the calculation of the Conversion Expiration Date and the dates on
which notices are given pursuant to this Section 6(h), a Notice of Conversion
Expiration shall be deemed to have been given on the day such notice is first
mailed by first-class mail,
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postage prepaid, to each holder of shares of Series A Preferred Stock at the
address of the holder appearing in the books and records of the Corporation
(whether or not the holder receives the Notice of Conversion Expiration). No
defect in the Notice of Conversion Expiration or in the mailing thereof with
respect to any share of Series A Preferred Stock shall affect the validity of
such notice with respect to any other share of Series A Preferred Stock. As of
the close of business on the Conversion Expiration Date, the shares of Series A
Preferred Stock shall be deemed to be non-convertible securities.
(4) As used in this Section 6, "Current Market Price" of shares of
Common Stock for any day means the reported last sale price, regular way, on
such day, or, if no sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in either case as
reported on the New York Stock Exchange Composite Tape, or, if the Common Stock
is not listed or admitted to trading on the New York Stock Exchange (the
"NYSE"), on the principal national securities exchange on which the Common Stock
is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on a national securities exchange, on the National Market
System of the National Association of Securities Dealers, Inc., or, if the
Common Stock is not quoted or admitted to trading on such quotation system, on
the principal quotation system on which the Common Stock is listed or admitted
to trading or quoted, or, if not listed or admitted to trading or quoted on any
national securities exchange or quotation system, the average of the closing bid
and asked prices of the Common Stock in the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or, if not so available in such
manner, as furnished by any NYSE member firm selected from time to time by the
Board of Directors of the Corporation for that purpose or, if not so available
in such manner, as otherwise determined in good faith by the Board of Directors.
(i) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of Series A Preferred Stock as herein provided, free from
any preemptive or other similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Series A Preferred Stock then outstanding. Notwithstanding the foregoing, the
Corporation shall be entitled to deliver upon conversion of Series A Preferred
Stock, shares of Common Stock reacquired and held in the treasury of the
Corporation (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, claims, equities, security interests and encumbrances. Any shares of
Common Stock delivered upon conversion of the Series A Preferred Stock shall be
duly authorized, validly issued, fully paid and non-assessable, free and clear
of all liens, charges, claims, equities, security interests and other
encumbrances, except for United States withholding taxes. The Corporation shall
use its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of the Common
Stock (and all listing requirements of any stock exchange on which the Common
Stock is then listed that are at the time applicable), in order to enable the
Corporation lawfully to issue and deliver such number of shares of its Common
Stock as shall from time to time be sufficient to effect the conversion of all
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shares of Series A Preferred Stock then outstanding and convertible into shares
of Common Stock.
(j) Whenever the Corporation shall issue shares of Common Stock upon
conversion of Series A Preferred Stock, the Corporation shall issue, together
with each such share of Common Stock, one right to purchase Series A Junior
Participating Preferred Stock of the Corporation (or other securities in lieu
thereof) pursuant to the Rights Agreement, dated as of July 27, 1989, between
the Company and First Chicago Trust Company of New York, as amended, or any
similar rights issued to holders of Common Stock in addition thereto or in
replacement therefor (such rights, together with any additional or replacement
rights, being collectively referred to as the "Rights"), whether or not such
Rights shall be exercisable at such time, but only if such Rights are issued and
outstanding and held by other holders of Common Stock (or are evidenced by
outstanding share certificates representing Common Stock) at such time and have
not expired or been redeemed.
SECTION 7. ADJUSTMENT OF CONVERSION PRICE.
(a) Adjustment of Conversion Price. The Conversion Price shall be subject
to adjustment from time to time as follows:
(i) If the Corporation shall pay or make a dividend or other
distribution exclusively in Common Stock on any class or series of capital
stock of the Corporation, then the Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Corporation. The Corporation shall not pay any
dividend or make any distribution exclusively in Common Stock on shares of
any class or series of capital stock of the Corporation held in the
treasury of the Corporation.
(ii) Subject to Section 7(g), if the Corporation shall pay or make a
dividend or other distribution on the outstanding shares of Common Stock
consisting exclusively of, or shall otherwise issue to all holders of the
outstanding shares of Common Stock, rights (other than Rights) or warrants
entitling the holders thereof to subscribe for or purchase shares of Common
Stock at a price per share (taking into account the consideration received
for the issuance of such right or warrant plus any consideration to be
received upon the exercise thereof) less than the Current Price per share
(determined as provided in subparagraph (vi) of this Section 7(a)) of the
Common Stock on the date fixed for the determination of shareholders
14
<PAGE>
entitled to receive such rights or warrants, then the Conversion Price in
effect at the opening of business on the day following the date fixed for
such determination shall be reduced by multiplying such Conversion Price by
a fraction, of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Current Price
per share and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (ii), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Corporation. The Corporation shall not issue
any rights or warrants in respect of shares of Common Stock held in the
treasury of the Corporation. In case any rights or warrants referred to in
this subparagraph (ii) in respect of which an adjustment shall have been
made shall expire or terminate unexercised, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that
would have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(iii) If outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, then the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced and,
conversely, if outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, then the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subparagraph (iv), if the
Corporation shall, by dividend or otherwise, pay or otherwise distribute to
all holders of Common Stock evidences of its indebtedness, shares of any
class or series of capital stock of the Corporation, cash, securities or
other assets other than Excluded Dividends (as defined below), then the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying (A) the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction contemplated
by this subparagraph (iv) by (B) a fraction of which the numerator shall be
the Current Price per share (determined as provided in subparagraph (vi) of
this Section 7(a)) of the Common Stock on the date fixed for the payment of
such distribution (the "Reference Date") less the fair market value, on the
Reference Date, of the portion of the evidences of indebtedness, shares of
capital stock of the Corporation, cash, securities or other assets so
distributed (other than Excluded
15
<PAGE>
Dividends) applicable to one share of Common Stock and the denominator
shall be such Current Price per share of the Common Stock, such reduction
to become effective immediately prior to the opening of business on the day
following the Reference Date. "Excluded Dividends" shall mean (1) any
dividend or distribution referred to in subparagraph (i) of this Section
7(a), (2) any dividend, distribution or issuance of rights or warrants
referred to in subparagraph (ii) of this Section 7(a) or of Rights, (3) any
regular cash dividend on the Common Stock that does not exceed the per
share amount of the immediately preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events
referred to in subparagraphs (i) and (iii) of this Section 7(a)), and (4)
in the case of any other dividend or distribution (cash or otherwise), that
portion thereof which, when combined with the per share fair market value
of all other dividends and distributions paid by the Corporation on Common
Stock during the 365-day period ending on the date of declaration of such
dividend or distribution (as adjusted to appropriately reflect any of the
events referred to in subparagraphs (i) and (iii) of this Section 7(a) and
excluding dividends and distributions referred to in clauses (1) and (2)
and dividends and distributions, or portions thereof, that resulted in an
adjustment to the Conversion Price (or would have but for the application
of Section 7(a)(viii), 7(f) or 7(g)), does not exceed 15% of the Current
Price per share of the Common Stock on the Trading Day immediately
preceding the date of declaration of such dividend or distribution. The
fair market value of any dividend or distribution not paid in cash shall be
determined in good faith by the Board of Directors of the Corporation,
whose determination shall be conclusive and described in a resolution of
the Board of Directors of the Corporation. For purposes of this
subparagraph (iv), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution
of the evidences of indebtedness, shares of capital stock of the
Corporation, cash or assets other than such shares of Common Stock or such
rights or warrants (making any Conversion Price reduction required by this
subparagraph (iv)) immediately followed by (2) a dividend or distribution
of such shares of Common Stock or such rights or warrants (making any
further Conversion Price reduction required by subparagraphs (i) or (ii) of
this Section 7(a) and, in the case of rights or warrants, subject to the
last sentence of such subparagraph (ii)), except (A) the Reference Date of
such dividend or distribution as defined in this subparagraph (iv) shall be
substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution," "the date fixed
for the determination of shareholders entitled to receive such rights or
warrants" and "the date fixed for such determination" within the meaning of
subparagraphs (i) and (ii) of this Section 7(a) and (B) any shares of
Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination" within the meaning of subparagraph (i) of this Section 7(a).
(v) If a tender or exchange offer made by the Corporation or any
subsidiary of the Corporation for all or any portion of the Corporation's
Common Stock shall expire and such tender or exchange offer shall involve
the payment by the
16
<PAGE>
Corporation or such subsidiary of consideration per share of Common Stock
having a fair market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be conclusive and
described in a resolution of the Board of Directors) at the last time (the
"Tender Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may have been amended) that exceeds 110% of
the Current Price per share (determined as provided in subparagraph (vi) of
this Section 7(a)) of the Common Stock on the Trading Day next succeeding
the Tender Expiration Time, then the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (v) by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) at the
Tender Expiration Time multiplied by the Current Price per share
(determined as provided in subparagraph (vi) of this Section 7(a)) of the
Common Stock on the Trading Day next succeeding the Tender Expiration Time
and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Tender Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) at the Tender Expiration Time
and the Current Price per share (determined as provided in subparagraph
(vi) of this Section 7(a)) of the Common Stock on the Trading Day next
succeeding the Tender Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Tender Expiration Time. Notwithstanding anything contained in this Section
7(a)(v) to the contrary, no adjustment shall be made to the Conversion
Price in the case of a tender or exchange offer of the character described
in Rule 13e-4(h)(5) under the Exchange Act, or any successor rule thereto.
(vi) For the purpose of any computation under subparagraphs (ii), (iv)
and (v) of this Section 7(a), the "Current Price" per share of Common Stock
on any date in question shall be deemed to be the average of the daily
Closing Prices (as defined in Section 7(e)) for the five consecutive
Trading Days selected by the Corporation commencing not more than 20
Trading Days before, and ending not later than, the earlier of the day in
question and, if applicable, the day before the "ex" date with respect to
the issuance or distribution requiring such computation; provided, however,
that if another event occurs that would require an adjustment pursuant to
subparagraph (i) through (v), inclusive, the Board of Directors of the
Corporation may make such adjustments to the Closing Prices during such
five Trading Day period as it deems appropriate to effectuate the intent of
the adjustments in this Section 7(a), in which case any such determination
by the Board of Directors of the Corporation shall be set forth in a Board
Resolution and shall be conclusive. For purposes of this paragraph, the
term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades
17
<PAGE>
regular way on the relevant exchange or in the relevant market from which
the Closing Prices were obtained without the right to receive such issuance
or distribution, and (2) when used with respect to any tender or exchange
offer means the first date on which the Common Stock trades regular way on
such exchange or in such market after the Tender Expiration Time of such
offer.
(vii) The Corporation may make such reductions in the Conversion
Price, in addition to those required by subparagraphs (i), (ii), (iii),
(iv) and (v) of this Section 7(a), as it considers to be advisable to avoid
or diminish any income tax to holders of Common Stock or holders of rights
to acquire Common Stock or securities convertible into Common Stock,
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. The
Corporation from time to time may reduce the Conversion Price by any amount
selected by the Corporation for any period of time if the period is at
least twenty days, and the Board of Directors of the Corporation shall have
made a determination that such reduction would be in the best interest of
the Corporation, which determination shall be conclusive. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the
Corporation shall mail to holders of record of the Series A Preferred Stock
a notice of the reduction at least fifteen days prior to the date the
reduced Conversion Price takes effect, and such notice shall state the
reduced Conversion Price and the period it will be in effect.
(viii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments which by reason
of this subparagraph (viii) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 7 shall be made to the nearest cent or to
the nearest 1/100 of a share, as the case may be, with one-half cent and
5/1000th of a share, respectively, being rounded upward.
(ix) Whenever the Conversion Price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted Conversion Price
and shall prepare a certificate signed by the Chief Financial Officer,
the Treasurer or a Vice President of the Corporation setting forth the
adjusted Conversion Price and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate shall
forthwith be filed with the transfer agent for the Series A Preferred
Stock; and
(2) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall, as soon as
practicable, be mailed by the Corporation to all holders of shares of
Series A Preferred Stock at their last addresses as they shall appear
upon the stock transfer books of the Corporation.
18
<PAGE>
(b) Reclassification, Consolidation, Merger Or Sale Of Assets. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), any consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another person into the
Corporation (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock), any
sale or transfer of all or substantially all of the assets of the Corporation or
any compulsory share exchange, in each case pursuant to which the Common Stock
is converted into the right to receive other securities, cash or other
property), then lawful provision shall be made as part of the terms of such
transaction whereby each holder of shares of Series A Preferred Stock then
outstanding shall have the right thereafter to convert such shares only into (i)
in the case of any such transaction other than a Common Stock Fundamental Change
(as defined in Section 7(e)), the kind and amount of securities, cash and other
property receivable upon the consummation of such transaction by a holder of
that number of shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior to such transaction,
after giving effect, in the case of any Non-Stock Fundamental Change (as defined
in Section 7(e)), to any adjustment in the Conversion Price required by the
provisions of Section 7(d), and (ii) in the case of a Common Stock Fundamental
Change, common stock of the kind received by holders of Common Stock as a result
of such Common Stock Fundamental Change in an amount determined pursuant to the
provisions of Section 7(d). The Corporation or the person formed by such
consolidation or resulting from such merger or which acquired such assets or
which acquired the Corporation's shares, as the case may be, shall make
provision in its certificate or articles of incorporation or other constituent
document to establish such right. Such certificate or articles of incorporation
or other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such provisions in such certificate or
articles of incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
7. The above provisions shall similarly apply to successive transactions of the
foregoing type.
(c) Prior Notice Of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash that would not
require an adjustment pursuant to 7(a)(iv) or (2) authorize a tender or
exchange offer that would require an adjustment pursuant to 7(a)(v); or
(ii) the Corporation shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants (other
than Rights); or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in
par value, or from par
19
<PAGE>
value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation shall be required, or of
the sale or transfer of all or substantially all of the assets of the
Corporation or of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
(d) Adjustments In Case Of Fundamental Changes. Notwithstanding any other
provision in this Section 7 to the contrary, if any Fundamental Change (as
defined in Section 7(e)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, the Series A
Preferred Stock shall be convertible solely into common stock of the kind
received by holders of Common Stock as the result of such Common Stock
Fundamental Change as more specifically provided in the following clauses (d)(i)
and (d)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
7(d) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price shall thereupon become the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to this
Section 7, and (B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 7(e)) or the then applicable
Reference Market Price (as defined in Section 7(e)) by a fraction, of which
the numerator shall be $50 and the denominator shall be the amount set
forth below (based on the date such Non-Stock Fundamental Change occurs):
20
<PAGE>
<TABLE>
<CAPTION>
Twelve Months
Ending May 31, Denominator
- -------------- -------------
<S> <C>
1996................. $53.000
1997................. $52.625
1998................. $52.250
1999................. $51.875
2000................. $51.500
2001................. $51.125
2002................. $50.750
2003................. $50.375
2004 and thereafter.. $50.000
</TABLE>
; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price in effect immediately prior to such Common Stock Fundamental Change,
but after giving effect to any other prior adjustments effected pursuant to
this Section 7, shall thereupon be adjusted by multiplying such Conversion
Price by a fraction, of which the numerator shall be the Purchaser Stock
Price (as defined in Section 7(e)) and the denominator shall be the
Applicable Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of the consideration
received by a holder of Common Stock is common stock of the successor,
acquiror or other third party (and cash, if any, is paid only with respect
to any fractional interests in such common stock resulting from such Common
Stock Fundamental Change) and (B) all of the Common Stock shall have been
exchanged for, converted into or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquiror or other third
party, the Conversion Price in effect immediately prior to such Common
Stock Fundamental Change shall thereupon be adjusted by multiplying such
Conversion Price by a fraction, of which the numerator shall be one (1) and
the denominator shall be the number of shares of common stock of the
successor, acquiror, or other third party received by a holder of one share
of Common Stock as a result of such Common Stock Fundamental Change.
(e) Definitions. The following definitions shall apply to terms used in
this Section 7:
(i) "Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only
cash, the amount of cash received by a holder of one share of Common Stock
and (ii) in the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the Closing Prices of the
Common Stock for the ten consecutive Trading Days prior to and including
the record date for the determination of the holders of Common Stock
entitled to receive securities, cash or other property in connection with
such Non-Stock Fundamental Change or Common
21
<PAGE>
Stock Fundamental Change, or, if there is no such record date, the date
upon which the holders of the Common Stock shall have the right to receive
such securities, cash or other property (such record date or distribution
date being hereinafter referred to as the "Entitlement Date"), in each
case, as adjusted in good faith by the Board of Directors of the
Corporation to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv) and (v) of Section 7(a).
(ii) "Closing Price" of any common stock on any day shall mean the
reported last sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices
on such day, regular way, in either case as reported on the principal
national securities exchange on which such common stock is listed or
admitted to trading, or, if such common stock is not listed or admitted to
trading on a national securities exchange, on the National Market System of
the National Association of Securities Dealers, Inc., or, if such common
stock is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which such common stock is listed or admitted
to trading or quoted, or, if not listed or admitted to trading or quoted on
any national securities exchange or quotation system, the average of the
closing bid and asked prices of such common stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or, if not
so available in such manner, as furnished by any NYSE member firm selected
from time to time by the Board of Directors of the Corporation for that
purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors of the Corporation.
(iii) "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith by
the Board of Directors of the Corporation) of the consideration received by
holders of Common Stock consists of common stock that for each of the ten
consecutive Trading Days prior to the Entitlement Date has been admitted
for listing or admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the National Market System of the
National Association of Securities Dealers, Inc.; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental Change unless
either (i) the Corporation continues to exist after the occurrence of such
Fundamental Change and the outstanding shares of Series A Preferred Stock
continue to exist as outstanding shares of Series A Preferred Stock, or
(ii) not later than the occurrence of such Fundamental Change, the
outstanding shares of Series A Preferred Stock are converted into or
exchanged for shares of convertible preferred stock of the entity
succeeding to the business of the Corporation, which convertible preferred
stock has designations, preferences, limitations and relative rights
substantially similar to those of the Series A Preferred Stock.
(iv) "Conversion Price" shall have the meaning given that term in
Section 6(a).
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<PAGE>
(v) "Fundamental Change" shall mean the occurrence of any transaction
or event in connection with a plan pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into, acquired
for or constitute solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, that, in the case of a plan involving more
than one such transaction or event, for purposes of adjustment of the
Conversion Price, such Fundamental Change shall be deemed to have occurred
when substantially all of the Common Stock shall be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash or other property, but the adjustment shall be based upon
the highest weighted average per share consideration that a holder of
Common Stock could have received in such transactions or events as a result
of which more than 50% of the Common Stock shall have been exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash or other property.
(vi) "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
(vii) "Purchased Shares" shall have the meaning given that term in
Section 7(a)(v).
(viii) "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the ten
consecutive Trading Days prior to and including the Entitlement Date, as
adjusted in good faith by the Board of Directors of the Corporation to
appropriately reflect any of the events referred to in subparagraphs (i),
(ii), (iii), (iv), and (v) of Section 7(a);
(ix) "Reference Date" shall have the meaning given that term in
Section 13(a)(iv).
(x) "Reference Market Price" shall initially mean $22.42 and in the
event of any adjustment to the Conversion Price other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall also be
adjusted so that the ratio of the Reference Market Price to the Conversion
Price after giving effect to any such adjustment shall always be the same
as the ratio of $22.42 to the initial Conversion Price.
(xi) "Tender Expiration Time" shall have the meaning given that term
in Section 7(a)(v).
(xii) "Trading Day" shall mean, with respect to any security listed
or admitted to trading on the NYSE, any day on which such securities are
traded on the NYSE, or, if such security is not listed or admitted to
trading on the NYSE, on the principal national securities exchange on which
such security is listed or admitted to
23
<PAGE>
trading, or, if such security is not listed or admitted to trading on a
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc., or, if such security is not quoted
or admitted to trading on such quotation system, on the principal quotation
system on which such security is listed or admitted to trading or quoted,
or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, in the over-the-counter market.
(f) Dividend Or Interest Reinvestment Plans. Notwithstanding the foregoing
provisions of this Section 7, no adjustment of the Conversion Price shall be
required to be made upon the issuance of any shares of Common Stock pursuant to
any present or future plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under any such plan, or
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any present or future employee, officer, director or
consultant benefit plan or program or agreement of the Corporation or a
subsidiary of the Corporation or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date the
Series A Preferred Stock was first designated pursuant to this Statement of
Resolution Establishing a Series of Shares.
(g) Certain Rights. Notwithstanding any other provision of this Section 7,
the issuance or distribution of Rights shall not be deemed to constitute an
issuance or a distribution or dividend of rights, warrants, or other securities
to which any of the adjustment provisions described above applies.
(h) Certain Additional Rights. In case the Corporation shall, by dividend
or otherwise, declare or make a distribution on its Common Stock referred to in
Section 7(a)(iv) (including, without limitation, dividends or distributions
referred to in the last sentence of Section 7(a)(iv) but excluding the Excluded
Dividends), the holder of each share of Series A Preferred Stock, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution and prior to
the effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which such share of Series A Preferred Stock is converted, the portion of
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Corporation (whose
election shall be evidenced by a resolution of the Board of Directors of the
Corporation or a committee thereof) with respect to all holders so converting,
the Corporation may, in lieu of distributing to such holders any portion of such
distribution not consisting of cash or securities of the Corporation, pay such
holders an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors of the Corporation or a
committee thereof). If any conversion of a share of Series A Preferred Stock
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the holder of the share of
Series A Preferred Stock so converted is entitled to receive
24
<PAGE>
in accordance with the immediately preceding sentence, the Corporation may elect
(such election to be evidenced by a resolution of the Board of Directors of the
Corporation or a committee thereof) to distribute to such holder a due bill for
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash or assets to which such holder is so entitled, provided
that such due bill (i) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock is then
traded, and (ii) requires payment or delivery of such shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
(i) One Adjustment. There shall be no adjustment of the Conversion Price
in case of the issuance of any capital stock (or securities convertible into or
exchangeable for capital stock) of the Corporation or any other distribution or
event except as specifically described in this Section 7. If any action would
require adjustment of the Conversion Price pursuant to more than one of the
provisions of this Section 7, only one adjustment shall be made and such
adjustment shall be the amount of adjustment that has the highest absolute value
to the holders of the Series A Preferred Stock.
SECTION 8. RANKING; RETIREMENT OF SHARES.
(a) The Series A Preferred Stock shall rank senior to Common Stock and
Series A Junior Participating Preferred Stock of the Corporation to the payment
of dividends and distribution of assets upon the liquidation, dissolution or
winding-up of the Corporation. The ranking of any subsequent series of
Preferred Stock, par value $1.50 per share, issued by the Corporation, or other
class or series capital stock of the Corporation, as compared to the Series A
Preferred Stock as to the payment of dividends and distribution of assets upon
the liquidation, dissolution or winding-up of the Corporation shall be as
specified in the Restated Articles of Incorporation, as amended, of the
Corporation, or the Statement of Resolution Establishing a Series of Shares
pertaining to such series.
(b) Any shares of Series A Preferred Stock acquired by the Corporation by
reason of the conversion or redemption of such shares, or otherwise so acquired,
shall be retired as shares of Series A Preferred Stock and restored to the
status of authorized but unissued shares of Preferred Stock, par value $1.50 per
share, of the Corporation, without designation as to series, and may thereafter
be reissued.
SECTION 9. MISCELLANEOUS.
(a) All notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon the earlier of receipt thereof
or three Business Days after the mailing thereof if sent by registered or
certified mail (unless first-class mail shall be specifically permitted for such
notice under the terms of this Section 9(a) with postage prepaid addressed: (i)
if to the Corporation, to its principal executive offices (Attention:
Secretary) or to the transfer agent for the Series A Preferred Stock, or other
agent of the Corporation designated as permitted by this Section 9(a), or (ii)
if to any holder
25
<PAGE>
of the Series A Preferred Stock or Common Stock, as the case may be, to such
holder at the address of such holder as listed in the stock record books of the
Corporation (which may include the records of any transfer agent for the Series
A Preferred Stock or Common Stock, as the case may be), or (iii) to such other
address as the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(b) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of Series A Preferred Stock or shares of Common Stock or other securities issued
on account of Series A Preferred Stock pursuant hereto or certificates
representing such shares or securities. The Corporation shall not, however, be
required to pay any such tax that may be payable in respect of any transfer
involving the issuance or delivery of shares of Series A Preferred Stock or
Common Stock or other securities in a name other than that in which the shares
of Series A Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than a payment
to the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid or is not payable.
(c) In the event that a holder of shares of Series A Preferred Stock shall
not by written notice designate the name in which shares of Common Stock to be
issued upon conversion of such shares should be registered or to whom payment
upon redemption of shares of Series A Preferred Stock should be made or the
address to which the certificate or certificates representing such shares, or
such payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such Series A
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Corporation.
(d) Registrar and Transfer Agent. The Corporation may appoint, and from
time to time discharge and change, a transfer agent for the Series A Preferred
Stock.
(e) Whenever possible, each provision hereof shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
hereof is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of time were extended
or shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
3. Such resolution was duly adopted by all necessary action on the part
of the Corporation.
26
<PAGE>
IN WITNESS WHEREOF, this Statement of Resolution Establishing a Series of
Shares has been made under the hand of the undersigned, the Senior Vice
President & Chief Financial Officer of the Corporation, this 30th day of May,
1995.
AMERICAN GENERAL CORPORATION
By: /S/ AUSTIN P. YOUNG
Name: Austin P. Young
Title: Senior Vice President &
Chief Financial Officer
27
<PAGE>
EXHIBIT 4(e)
INCORPORATED UNDER THE
LAWS OF THE STATE OF TEXAS
NUMBER
7% CONVERTIBLE
PREFERRED STOCK
SHARES
CUSIP NUMBER
SEE REVERSE FOR CERTAIN DEFINITIONS
AMERICAN GENERAL CORPORATION
THIS CERTIFIES THAT
IS THE REGISTERED HOLDER OF
FULLY PAID AND NON-ASSESSABLE SHARES WITH THE PAR VALUE OF $1.50 OF 7%
CONVERTIBLE PREFERRED STOCK OF
American General Corporation the rights against the Corporation in which are
transferable on the books of the Corporation by the holder hereof in person
or by attorney upon surrender of this Certificate properly endorsed. The
designations, preferences and relative rights of each class of stock of the
Corporation, and the restrictions, limitations and qualifications thereof are
set forth in Article Four of the Articles of Incorporation. This Certificate is
not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness, the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
DATED
/s/ Harold S. Hook
HAROLD S. HOOK, Chairman and
Chief Executive Officer
/s/ John A. Adkins
JOHN A. ADKINS,
Corporate Secretary
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
TRANSFER AGENT
AND REGISTRAR,
BY
AUTHORIZED SIGNATURE
[SEAL OF AMERICAN GENERAL CORPORATION APPEARS HERE]
<PAGE>
AMERICAN GENERAL CORPORATION
A STATEMENT OF (1) THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE
RIGHTS OF THE SHARES OF EACH CLASS OF STOCK OF THE CORPORATION, AND (2) THE
VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES OF THE SHARES OF EACH SERIES
OF PREFERRED STOCK OF THE CORPORATION, TO THE EXTENT SUCH RIGHTS AND PREFERENCES
HAVE BEEN ESTABLISHED, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO FIX AND
DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES, IS SET FORTH
IN THE ARTICLES OF INCORPORATION OF THE CORPORATION, ON FILE IN THE OFFICE OF
THE SECRETARY OF STATE OF THE STATE OF TEXAS. THE CORPORATION WILL FURNISH A
COPY OF SUCH STATEMENT TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST
TO THE CORPORATION AT ITS HEADQUARTERS IN HOUSTON, TEXAS, OR TO THE TRANSFER
AGENT.
NO SHAREHOLDER SHALL HAVE A PREEMPTIVE RIGHT TO ACQUIRE ANY SHARES OR
SECURITIES OF ANY CLASS, WHETHER NOW OR HEREAFTER AUTHORIZED, WHICH MAY AT ANY
TIME BE ISSUED, SOLD OR OFFERED FOR SALE BY THE CORPORATION.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common
TEN ENT --as tenants by the entireties
JT TEN --as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT-- Custodian
---------- ----------
(Cust) (Minor)
under Uniform Gifts to Minors
Act
---------------------------
(State)
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
| |
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
---------------------------------------
- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
-------------------------
--------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
[BACK OF SEAL OF AMERICAN GENERAL CORPORATION APPEARS HERE]
<PAGE>
EXHIBIT 4(g)
================================================================================
AMERICAN GENERAL CORPORATION
TO
CHEMICAL BANK
TRUSTEE
____________________________________
Indenture
____________________________________
DATED AS OF MAY 15, 1995
(JUNIOR SUBORDINATED DEBT SECURITIES)
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
RECITALS OF THE COMPANY................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions................................. 2
Act...................................................... 2
Additional Amounts....................................... 2
Additional Interest...................................... 2
Affiliate................................................ 3
American General Capital................................. 3
American General Capital Stock........................... 3
American General Common Stock............................ 3
American General Delaware................................ 3
American General LLC..................................... 3
American General LLCs.................................... 3
American General Preferred Stock......................... 4
Authenticating Agent..................................... 4
Authorized Newspaper..................................... 4
Board of Directors....................................... 4
Board Resolution......................................... 4
Business Day............................................. 4
Capitalized Lease Obligation............................. 4
Certificate of a Firm of Independent Public Accountants.. 4
Commission............................................... 4
Company.................................................. 5
Company Request.......................................... 5
Company Order............................................ 5
Corporate Trust Office................................... 5
corporation.............................................. 5
Defaulted Interest....................................... 5
Depository............................................... 5
Designated Senior Holder................................. 5
Dollars.................................................. 5
Event of Default......................................... 6
Government Obligations................................... 6
Guarantee................................................ 6
Holder................................................... 6
Indenture................................................ 6
Interest Payment Date.................................... 6
LLC Agreement............................................ 6
LLC Common Securities.................................... 6
</TABLE>
i
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<TABLE>
<CAPTION>
<S> <C>
Managing Member.......................................... 7
mandatory sinking fund payment........................... 7
Maturity................................................. 7
Officers' Certificate.................................... 7
Opinion of Counsel....................................... 7
optional sinking fund payment............................ 7
Outstanding.............................................. 7
Paying Agent............................................. 8
Payment Blockage Period.................................. 8
Person................................................... 8
Place of Payment......................................... 8
Predecessor Security..................................... 9
Preferred Securities..................................... 9
Proceeding............................................... 9
Redemption Date.......................................... 9
Redemption Price......................................... 9
Regular Record Date...................................... 9
Responsible Officer...................................... 9
Security................................................. 9
Securities............................................... 9
Securities Payment....................................... 9
Security Register........................................ 9
Security Registrar....................................... 9
Senior Indebtedness...................................... 10
Senior Nonmonetary Default............................... 11
Senior Payment Default................................... 11
Special Event Exchange................................... 11
Special Record Date...................................... 11
Special Trustee.......................................... 11
Stated Maturity.......................................... 11
Subsidiary............................................... 11
Trust Indenture Act...................................... 11
Trustee.................................................. 11
United States............................................ 12
Written Action........................................... 12
SECTION 102. Compliance Certificates and Opinions........ 12
SECTION 103. Form of Documents Delivered to Trustee...... 13
SECTION 104. Acts of Holders............................. 13
SECTION 105. Notices, etc., to Trustee and Company....... 15
SECTION 106. Notice to Holders of Securities; Waiver..... 16
SECTION 107. Conflict with Trust Indenture Act........... 16
SECTION 108. Effect of Headings and Table of Contents.... 16
SECTION 109. Successors and Assigns...................... 16
SECTION 110. Separability and Saving Clause.............. 16
SECTION 111. Benefits of Indenture....................... 17
SECTION 112. Governing Law............................... 17
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 113. Legal Holidays....................................... 17
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms of Securities.................................. 17
SECTION 202. Form of Trustee's Certificate of Authentication...... 18
SECTION 203. Securities in Global Form............................ 18
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series................. 19
SECTION 302. Currency; Denominations.............................. 22
SECTION 303. Execution, Authentication, Delivery and Dating....... 22
SECTION 304. Temporary Securities................................. 24
SECTION 305. Registration, Registration of Transfer and Exchange.. 25
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities..... 27
SECTION 307. Payment of Interest; Rights Preserved................ 28
SECTION 308. Persons Deemed Owners................................ 29
SECTION 309. Cancellation......................................... 30
SECTION 310. Computation of Interest.............................. 30
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.............. 30
SECTION 402. Application of Trust Money........................... 32
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.................................... 33
SECTION 502. Acceleration of Maturity; Rescission and Annulment... 35
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.......................................... 36
SECTION 504. Trustee May File Proofs of Claim..................... 37
SECTION 505. Trustee May Enforce Claims without Possession of
Securities.......................................... 38
SECTION 506. Application of Money Collected....................... 38
SECTION 507. Limitation on Suits.................................. 38
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C>
SECTION 508. Unconditional Right of Holders to Receive Principal,
any Premium and Interest............................ 39
SECTION 509. Restoration of Rights and Remedies................... 39
SECTION 510. Rights and Remedies Cumulative....................... 40
SECTION 511. Delay or Omission Not Waiver......................... 40
SECTION 512. Control by Holders of Securities..................... 40
SECTION 513. Waiver of Past Defaults.............................. 40
SECTION 514. Undertaking for Costs................................ 41
SECTION 515. Waiver of Stay or Extension Laws..................... 41
SECTION 516. Special Trustee...................................... 42
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.................. 42
SECTION 602. Notice of Defaults................................... 44
SECTION 603. Certain Rights of Trustee............................ 44
SECTION 604. Not Responsible for Recitals, Issuance of Securities
or for Preferred Securities......................... 45
SECTION 605. May Hold Securities.................................. 46
SECTION 606. Money Held in Trust.................................. 46
SECTION 607. Compensation and Reimbursement....................... 46
SECTION 608. Disqualifications; Conflicting Interests............. 47
SECTION 609. Corporate Trustee Required; Eligibility.............. 47
SECTION 610. Resignation and Removal; Appointment of Successor.... 47
SECTION 611. Acceptance of Appointment by Successor............... 49
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business............................................ 50
SECTION 613. Appointment of Authenticating Agent.................. 50
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders of Securities............................... 52
SECTION 702. Preservation of Information; Communications to
Holders............................................. 53
SECTION 703. Reports by Trustee................................... 53
SECTION 704. Reports by Company................................... 53
</TABLE>
iv
<PAGE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, OR CONVEYANCE
<TABLE>
<CAPTION>
<S> <C>
SECTION 801. Consolidations and Mergers of Company and Conveyances
Permitted Subject to Certain Conditions.............. 54
SECTION 802. Rights and Duties of Successor Corporation............ 55
SECTION 803. Officers' Certificate and Opinion of Counsel.......... 55
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.... 55
SECTION 902. Supplemental Indentures with Consent of Holders....... 59
SECTION 903. General Provisions Regarding Supplemental Indentures.. 60
SECTION 904. Execution of Supplemental Indentures.................. 60
SECTION 905. Effect of Supplemental Indentures..................... 61
SECTION 906. Conformity with Trust Indenture Act................... 61
SECTION 907. Reference in Securities to Supplemental Indentures.... 61
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, any Premium and Interest....... 61
SECTION 1002. Maintenance of Office or Agency...................... 61
SECTION 1003. Money for Securities Payments to be Held in
Trust............................................... 62
SECTION 1004. Additional Amounts................................... 64
SECTION 1005. Corporate Existence.................................. 64
SECTION 1006. Limitations on Dividends and Certain Other
Payments............................................ 64
SECTION 1007. Certain Covenants Regarding the American General
LLCs................................................ 65
SECTION 1008. Statement as to Compliance; Certain Notices.......... 67
SECTION 1009. Waiver of Certain Covenants.......................... 67
SECTION 1010. Defeasance of Certain Obligations.................... 67
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article............................. 69
SECTION 1102. Election to Redeem; Notice to Trustee................ 69
SECTION 1103. Selection by Trustee of Securities to be Redeemed.... 70
SECTION 1104. Notice of Redemption................................. 70
SECTION 1105. Deposit of Redemption Price.......................... 71
</TABLE>
v
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<TABLE>
<CAPTION>
<S> <C>
SECTION 1106. Securities Payable on Redemption Date............... 72
SECTION 1107. Securities Redeemed in Part......................... 72
SECTION 1108. Permitted Variations................................ 72
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article............................ 73
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities......................................... 73
SECTION 1203. Redemption of Securities for Sinking Fund........... 73
ARTICLE THIRTEEN
SUBORDINATION
SECTION 1301. Securities Subordinate to Senior Indebtedness....... 74
SECTION 1302. Payment of Proceeds Upon Dissolution, Etc........... 74
SECTION 1303. No Payment When Senior Indebtedness in Default...... 75
SECTION 1304. Payment Permitted If No Default..................... 77
SECTION 1305. Subrogation To Rights of Holders of Senior
Indebtedness....................................... 77
SECTION 1306. Provisions Solely To Define Relative Rights......... 77
SECTION 1307. Trustee To Effectuate Subordination................. 78
SECTION 1308. No Waiver of Subordination Provisions............... 78
SECTION 1309. Trust Moneys Not Subordinated....................... 78
SECTION 1310. Notice To Trustee................................... 79
SECTION 1311. Reliance On Judicial Order or Certificate of
Liquidating Agent.................................. 80
SECTION 1312. Trustee Not Fiduciary For Holders of Senior
Indebtedness....................................... 80
SECTION 1313. Rights of Trustee As Holder of Senior Indebtedness;
Preservation Of Trustee's Rights................... 80
SECTION 1314. Article Applicable To Paying Agents................. 80
SECTION 1315. Reliance by Holders of Senior Indebtedness on
Subordination Provisions........................... 81
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1401. Applicability of Article............................ 81
SECTION 1402. Call, Notice and Place of Meetings.................. 81
SECTION 1403. Persons Entitled to Vote at Meetings................ 82
</TABLE>
vi
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<TABLE>
<CAPTION>
<S> <C>
SECTION 1404. Quorum; Action...................................... 82
SECTION 1405. Determination of Voting Rights; Conduct and
Adjournment of Meetings............................ 83
SECTION 1406. Counting Votes and Recording Action of Meetings..... 83
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 1501. No Recourse Against Others.......................... 84
SECTION 1502. Set-off............................................. 84
SECTION 1503. Assignment; Binding Effect.......................... 84
</TABLE>
vii
<PAGE>
INDENTURE, dated as of May 15, 1995, between AMERICAN GENERAL CORPORATION,
a Texas corporation (hereinafter called the "Company"), having its principal
office at 2929 Allen Parkway, Houston, Texas 77019, and CHEMICAL BANK, a New
York corporation having its principal corporate trust office at 450 West 33rd
St., New York, New York 10001, as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for its lawful
purposes debt securities (hereinafter called the "Securities") evidencing its
unsecured and subordinated indebtedness and has duly authorized the execution
and delivery of this Indenture to provide for the issuance of the Securities,
unlimited as to principal amount, to bear such rates of interest, if any, to
mature at such time or times, to be issued in one or more series and to have
such other provisions as shall be fixed as hereinafter provided.
It is contemplated that the Securities will be issued to evidence the
Company's indebtedness resulting from loans to be made to the Company from the
proceeds of the issuance by American General Capital, L.L.C., a Delaware limited
liability company, and American General Delaware, L.L.C., a Delaware limited
liability company, or either of them, of preferred limited liability company
interests, in one or more series, and from related capital contributions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act (as
hereinafter defined) and the rules and regulations of the Commission (as
hereinafter defined) promulgated thereunder that are required to be part of this
Indenture and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
For and in consideration of the premises and the purchase of the Securities
by the Holders (as hereinafter defined) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Securities
or of any series thereof, as follows:
1
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided in or pursuant to this Indenture or unless the context otherwise
requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States at the
date of such computation;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) a series of Preferred Securities related to a particular series of
Securities means the series of Preferred Securities the proceeds of the
sale of which were loaned to the Company in exchange for such series of
Securities, and the Guarantee related to such series of Preferred
Securities means the Guarantee pursuant to which the Company has
guaranteed, to the extent stated therein, the payment of dividends and
certain other amounts with respect to such series of Preferred Securities;
and
(f) the term "day," unless designated as a "Business Day," means a
calendar day.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Amounts" means any additional amounts payable by the
Company which are designated as an "Additional Amount" in the Securities of
a particular series or by or pursuant to a supplemental indenture, Board
Resolution or other instrument authorizing such series of Securities.
2
<PAGE>
"Additional Interest" means (i) interest that shall accrue on any
interest on the Securities of any particular series that is not paid when
due because of an extension of an interest payment period, which shall
accrue at the rate of interest specified in the Securities of such series,
the supplemental indenture, the Board Resolution or the other instrument
authorized by a Board Resolution authorizing such series of Securities and,
unless otherwise specified in such supplemental indenture, Board Resolution
or other instrument, shall compound monthly, and (ii) the Additional
Amounts, if any, payable with respect to the Securities of any particular
series.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"American General Capital" means American General Capital, L.L.C., a
Delaware limited liability company, and its successors.
"American General Capital Stock" means American General Common Stock,
American General Preferred Stock, any shares of capital stock resulting
from any reclassification or reclassifications of either of such classes,
and any other class of stock of the Company.
"American General Common Stock" means the Common Stock, par value $.50
per share, of the Company or any other class of stock resulting from
changes or reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no par
value to par value. Subject to the anti-dilution provisions of any
convertible Security, however, shares of American General Common Stock
issuable on conversion of a Security shall include only shares of the class
designated as Common Stock of the Company at the date of the supplemental
indenture, Board Resolution or other instrument authorizing such Security
or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of the
payment of dividends or the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which
are not subject to redemption by the Company, provided that if at any time
there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of such classes
resulting from all such reclassifications.
"American General Delaware" means American General Delaware, L.L.C., a
Delaware limited liability company, and its successors.
3
<PAGE>
"American General LLC" or "American General LLCs" means each of
American General Capital, American General Delaware, or, as appropriate,
American General Capital and American General Delaware, collectively.
"American General Preferred Stock" means the Preferred Stock, par
value $1.50 per share, of the Company.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 613 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official language of
the country of publication or in the English language, customarily
published on each Business Day, whether or not published on Saturdays,
Sundays or holidays, and of general circulation in the place in connection
with which the term is used or in the financial community of such place.
Where successive publications are required to be made in Authorized
Newspapers, the successive publications may be made in the same or in
different Authorized Newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of one or more resolutions certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, delivered to the Trustee.
"Business Day" means, except as may otherwise be provided in the
Securities of any particular series, 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.
"Capitalized Lease Obligation" of any Person means the obligation to
pay rent or other payment amounts under a lease of (or other indebtedness
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital
lease or a liability on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles.
"Certificate of a Firm of Independent Public Accountants" means a
certificate signed by an independent public accountant or a firm of
independent public accountants who may be the independent public
accountants regularly retained by the Company or who may be other
independent public accountants. Such accountant
4
<PAGE>
or firm shall be entitled to rely upon an Opinion of Counsel as to the
interpretation of any legal matters relating to such certificate.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this instrument
such Commission is not existing and performing the duties now assigned to
it under the Trust Indenture Act, then the body performing such duties at
such time.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman, Vice
Chairman, the President or a Vice President (any reference to a Vice
President of the Company herein shall be deemed to include any Vice
President of the Company whether or not designated by a number or a word or
words added before or after the title "Vice President"), and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in The City
of New York at which, at any particular time, its corporate trust business
shall be principally administered, which office on the date of execution of
this Indenture is located at 450 West 33rd Street, New York, New York
10001.
"corporation" includes corporations, associations, companies and
business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" means, with respect to any Security issuable or issued in
the form of one or more global Securities, the Person designated as
Depository by the Company in or pursuant to this Indenture, which Person
must be, to the extent required by applicable law or regulation, a clearing
agency registered under the Securities Exchange Act of 1934, as amended,
and, if so provided with respect to any Security, any successor to such
Person. If at any time there is more than one such Person, "Depository"
shall mean, with respect to any Securities, the qualifying entity which has
been appointed with respect to such Securities.
"Designated Senior Holder" means, with respect to any Senior
Indebtedness, the Person designated as such in accordance with the terms of
the instrument evidencing such Senior Indebtedness or, if no Person is so
designated, any trustee, agent, fiduciary, representative, group or Person
authorized to act on behalf of the holders of such Senior Indebtedness.
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"Dollars" or "$" or any similar reference shall mean the coin or currency
of the United States of America as at the time shall be legal tender for
the payment of public and private debts, except as may otherwise be
provided in the form of Securities of any particular series pursuant to the
provisions of this Indenture.
"Event of Default" has the meaning specified in Section 501.
"Government Obligations", means securities that are (i) direct
obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States of America, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such Government Obligation
or a specific payment of interest on or principal of or other amount with
respect to any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of such Government Obligation
or the specific payment of interest on or principal of or other amount with
respect to such Government Obligation evidenced by such depository receipt.
"Guarantee" means the Guarantee Agreement, to be dated as of May 24,
1995, executed and delivered by the Company for the benefit of the holders
from time to time of the Preferred Securities of American General Delaware,
or the Guarantee Agreement, to be dated as of May 24, 1995, executed and
delivered by the Company for the benefit of the holders from time to time
of the Preferred Securities of American General Capital, or, where
appropriate, each such Guarantee, in each case as the same may exist at the
time.
"Holder" means the Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof and shall include the terms of particular series of Securities
established as contemplated by Section 301.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"LLC Agreement" means either the Limited Liability Company Agreement,
to be dated as of May 24, 1995, of American General Capital, the Limited
Liability
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Company Agreement, dated the same date, of American General Delaware, or,
if the context so requires, each of such Limited Liability Company
Agreements, in each case as the same may exist at the time.
"LLC Common Securities" means common limited liability company
interests in either American General Capital or American General Delaware,
as the context requires.
"Managing Member" means American General Delaware Management
Corporation, a Delaware corporation, in its capacity as the manager of the
American General LLCs, or its successor or successors in such capacity.
"mandatory sinking fund payment" has the meaning specified in Section
1201.
"Maturity" when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
exercise by a Holder of an option to elect repayment or otherwise, and
includes the Redemption Date and the date for repayment at the option of
such Holder.
"Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, which
certificate complies with the requirements, if applicable, of Section
314(e) of the Trust Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel who is (except
as otherwise expressly provided in this Indenture) an employee of or
counsel for the Company, or other counsel acceptable to the Trustee, which
opinion complies with the requirements, if applicable, of Section 314(e) of
the Trust Indenture Act.
"optional sinking fund payment" has the meaning specified in Section
1201.
"Outstanding," when used with respect to any Securities, means, as of
the date of determination, all such Securities theretofore authenticated
and delivered under this Indenture, except:
(a) any such Security theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) any such Security, or portion thereof, for whose payment or
redemption money or Government Obligations in the necessary amount has
been theretofore deposited pursuant hereto with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the
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Holders of such Securities, provided that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made;
(c) any such Security that has been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Security in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Security is held by a
bona fide purchaser in whose hands such Security is a valid obligation
of the Company; and
(d) any such Security, or portion thereof, converted into or
exchanged for another security if the terms of such Security provide
for such conversion or exchange;
provided, however, that (i) in determining, during any period in which any
Securities of a series are owned by any Person other than the Company or
any other obligor upon the Securities of a series or any Affiliate of the
Company or such other obligor, whether the Holders of the requisite
principal amount of Outstanding Securities of such series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder or whether a quorum is present at a meeting of Holders of
Securities held for the purpose of voting on any such action, Securities of
such series owned by the Company or any other obligor upon the Securities
of such series or any Affiliate of the Company or such other obligor shall
be disregarded and deemed not to be Outstanding, and (ii) in making any
such determination under Section 512, 513, or 601(c)(3) hereof during any
period in which the Company or any such other obligor or any Affiliate of
the Company or such other obligor is the sole Holder of the Securities of
such series, the Securities of such series so owned by the Company, such
other obligor, or an Affiliate of the Company or such other obligor shall
be disregarded and deemed not to be Outstanding, except that if a Special
Trustee shall have been appointed pursuant to Section 516 during such
period, then, as provided in such Section 516, the Securities with regard
to which such Special Trustee shall have voting power shall, for purposes
of this definition, be deemed to be owned by such Special Trustee. In
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver or
upon any such determination as to the presence of a quorum, only Securities
which the Trustee knows to be so owned by the Company, such other obligor
or an Affiliate of the Company or such other obligor in the above
circumstances shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or
such other obligor.
"Paying Agent" means the Company or any Person authorized by the
Company to pay the principal of and any premium or interest on any
Security.
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"Payment Blockage Period" has the meaning specified in Section 1303.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of
Section 1002, the principal of, and any premium and interest on the
Securities of that series are payable as specified as contemplated by
Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Preferred Securities" means any series of Preferred Securities, as
that term is defined in the LLC Agreements, issued by American General
Delaware or American General Capital.
"Proceeding" has the meaning specified in Section 1302.
"Redemption Date," when used with respect to any Security or portion
thereof to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price," when used with respect to any Security or portion
thereof to be redeemed, means the price at which it is to be redeemed as
determined by or pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date, if any, specified for
that purpose as contemplated by Section 301, whether or not a Business Day.
"Responsible Officer," when used with respect to the Trustee, means
any officer of the Trustee assigned by it to administer corporate trust
matters.
"Security" or "Securities" means any Security or Securities, as the
case may be, authenticated and delivered under this Indenture; provided,
however, that, if at any time there is more than one Person acting as
Trustee under this Indenture, "Securities," with respect to any such
Person, shall mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
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"Securities Payment" has the meaning specified in Section 1302.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of and any premium and
interest on, and any other payment due pursuant to, any of the following,
whether outstanding on the date of execution of this Indenture or
thereafter incurred, created or assumed:
(i) all obligations of the Company for money borrowed;
(ii) all obligations of the Company evidenced by notes,
debentures, bonds or other securities, including, without limitation,
the 13 1/2% Restricted Subordinated Notes Due 2002 of the Company
issued pursuant to an Indenture, dated as of January 3, 1994, between
the Company and Texas Commerce Bank, National Association and any
obligations incurred, created or assumed in connection with the
acquisition of property, assets or businesses;
(iii) all Capitalized Lease Obligations of the Company;
(iv) all reimbursement obligations of the Company with respect to
letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company;
(v) all obligations of the Company 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);
(vi) all payment obligations of the Company under any interest
rate, currency or commodity swap agreement, option agreement, hedge
agreement, forward contract, or similar agreement designed to protect
the Company or another Person against fluctuations in interest rates,
exchange rates or commodity prices;
(vii) all obligations of the type referred to in clauses (i)
through (vi) above of another Person and all dividends of another
Person, the payment of which, in either case, the Company has assumed
or guaranteed, or for which the Company is responsible or liable,
directly or indirectly, jointly or severally, as obligor, guarantor or
otherwise; and
(viii) all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings by the Company of any such
indebtedness or obligations referred to in clauses (i) through (vii)
above (and of any such amended, modified, renewed, extended,
refinanced, replaced or refunded indebtedness or obligations);
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provided, however, that the following shall not constitute Senior
Indebtedness: (a) 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 Securities, and (b) each Guarantee. 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.
"Senior Nonmonetary Default" has the meaning specified in Section
1303.
"Senior Payment Default" has the meaning specified in Section 1303.
"Special Event Exchange," when used with respect to the Securities of
any series, means an exchange of such Securities by the American General
LLC that is the Holder thereof for all Preferred Securities of the related
series then outstanding in the circumstance or upon the occurrence of the
event or events specified in the terms of such Preferred Securities or the
Written Action authorizing such Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest on the
Securities of any series means a date fixed by the Trustee pursuant to
Section 307.
"Special Trustee" means a special trustee appointed by the holders of
a series of Preferred Securities authorized to enforce an American General
LLC's rights under the Securities of the related series held by such
American General LLC.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest (including Additional
Interest) thereon, means the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable,
determined as contemplated by Section 301.
"Subsidiary" means any corporation of which at the time of
determination the Company and/or one or more Subsidiaries owns or controls,
directly or indirectly, more than 50% of the total voting power of shares
of stock or other equity interests having general voting power under
ordinary circumstances (without regard to the occurrence of any
contingency) and entitled to vote in the election of directors, managers or
trustees of such corporation.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a
particular provision thereof shall mean such Trust Indenture Act or
provision, as the case may be, as amended or replaced from time to time or
as supplemented from time to time by rules or
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regulations adopted by the Commission under or in furtherance of the
purposes of such Trust Indenture Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such with respect to one or more series of Securities pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder, and if at any
time there is more than one such Person, "Trustee" as used with respect to
the Securities of any series shall mean the Trustee with respect to the
Securities of that series.
"United States," except as otherwise provided in or pursuant to this
Indenture, means The United States of America (including the States thereof
and the District of Columbia), its territories and possessions and other
areas subject to its jurisdiction.
"Written Action," when used with respect to the Preferred Securities
of any series, means a written action of the Managing Member of the
American General LLC issuing such Preferred Securities establishing the
terms of such series of Preferred Securities pursuant to the terms of the
applicable LLC Agreement.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent, if any, have been complied with, provided that in the case
of any such application or request as to which the furnishing of such documents
or either of them is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
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(d) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate of counsel or Opinion
of Counsel or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to matters upon which his certificate or opinion is
based are erroneous. Any such certificate of counsel or Opinion of Counsel or
representations by counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Security, they may, but need not, be
consolidated and form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by or pursuant to this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by an agent duly appointed in writing (including a Special Trustee).
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by or pursuant to this Indenture to be given or taken
by Holders of Securities of a particular series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities of such
series voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Securities of such
series duly called and held (which, if applicable, shall be in accordance
with the provisions of Article Fourteen), or a combination of such
instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
and any such record (and the action embodied therein and evidenced
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thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments or so voting at any such meeting.
Proof of execution of any such instrument or of a writing appointing any
such agent, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company and any agent of the
Trustee or the Company, if made in the manner provided in this Section.
The record of any meeting of Holders of Securities held pursuant to
Article Fourteen shall be proved in the manner provided in Section 1406.
Without limiting the generality of this Section 104, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a Depository
that is a Holder of a global Security, may make, give or take, by a proxy
or proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant
to this Indenture to be made, given or taken by Holders, and a Depository
that is a Holder of a global Security may provide its proxy or proxies to
the beneficial owners of interests in any such global Security through such
Depository's standing instructions and customary practices.
The Trustee may fix a record date for the purpose of determining the
Persons who are beneficial owners of interests in any global Security held
by a Depository entitled under the procedures of such Depository to make,
give or take, by a proxy or proxies duly appointed in writing, any request,
demand, authorization, direction, notice, consent, waiver or other action
provided in or pursuant to this Indenture to be made, given or taken by
Holders. If such a record date is fixed, the Holders on such record date
or their duly appointed proxy or proxies, and only such Persons, shall be
entitled to make, give or take such request, demand, authorization,
direction, notice, consent, waiver or other action, whether or not such
Holders remain Holders after such record date. No such request, demand,
authorization, direction, notice, consent, waiver or other action shall be
valid or effective if made, given or taken more than 90 days after such
record date.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership of Securities and the principal amount and serial
numbers of Securities held by any Person, and the date of holding the same,
shall be proved by the Security Register.
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(d) If the Company shall solicit from the Holders of any Securities
any request, demand, authorization, direction, notice, consent, waiver or
other action, the Company may, at its option, by Board Resolution, fix in
advance a record date for the determination of Holders of Securities
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other action, but the Company shall have no obligation
to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be
given before or after such record date, but only the Holders of Securities
of record at the close of business on such record date shall be deemed to
be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver
or other action, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization,
agreement or consent by the Holders of Securities on such record date shall
be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record
date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee, any Security Registrar, any Paying Agent, any Authenticating
Agent or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trustee Administration Department, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, by United States first-class mail, postage prepaid,
to the Company addressed to the attention of its Treasurer at the address
of its principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee by
the Company.
Additionally, any notice provided or permitted to be given or furnished to
the Trustee pursuant to Article Thirteen shall be sufficient if given or
furnished in the manner provided in Section 1310.
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SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided in or pursuant to the provisions of
this Indenture, where this Indenture provides for notice to Holders of
Securities of any event, such notice shall be sufficiently given to Holders of
Securities if in writing and mailed by United States first-class mail, postage
prepaid, to each Holder of a Security affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders of Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder of a Security shall affect the sufficiency of such notice with
respect to other Holders of Securities. Any notice that is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders of Securities by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required to be a part of and govern this
Indenture, such required provision shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not, and all rights of the
Company hereunder shall inure to the benefit of such successors and assigns.
SECTION 110. SEPARABILITY AND SAVING CLAUSE.
In case any provision in this Indenture or in any Security shall be
invalid, illegal or unenforceable, either wholly or partially, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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No provision of this Indenture or of any Security shall require the payment
or permit the collection of interest (including any Additional Interest) in
excess of the maximum which is not prohibited by law. If any such excess
interest is provided for herein or in any Security, which shall be adjudicated
to be so provided for, then the Company shall not be obligated to pay such
interest in excess of the maximum not prohibited by law.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in any Security, express or implied, shall
give to any Person, other than the parties hereto, any Security Registrar, any
Paying Agent, any Authenticating Agent and their respective successors and
assigns hereunder, the Holders of Securities, and, to the extent, but only to
the extent, provided in Section 1503, the holders of Senior Indebtedness or
Preferred Securities, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities, including the validity thereof, shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, date for
repayment at the option of a Holder, Maturity or Stated Maturity of any Security
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or the Securities other than a provision in the Securities of any
series which specifically states that such provision shall apply in lieu of this
Section) any such payment of principal, any premium or interest (including any
Additional Interest) need not be made on such date, but may be made on the next
succeeding Business Day, 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 the
Interest Payment Date, Redemption Date, date for repayment at the option of a
Holder, Maturity or Stated Maturity, and no interest shall accrue on any amount
so payable for the period from and after such Interest Payment Date, Redemption
Date, date for repayment at the option of a Holder, Maturity or Stated Maturity,
as the case may be, to such next succeeding Business Day.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS OF SECURITIES.
The Securities of each series shall be in such form or forms (including
global form) as shall be established in one or more indentures supplemental
hereto or by or pursuant to
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a Board Resolution in accordance with Section 301, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by or pursuant to this Indenture or any indenture
supplemental hereto and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements placed thereon as
may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or as may
consistently herewith be determined by the officers executing such Securities,
as evidenced by their execution of such Securities.
If the forms of Securities of any series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such
Securities.
The Securities of each series shall be issuable in registered form without
coupons.
The definitive Securities shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner, all as determined by the officers of the Company executing
such Securities, as evidenced by their execution of such Securities.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
__________________________________________________
, as Trustee
By ______________________________________________
Authorized Officer
SECTION 203. SECURITIES IN GLOBAL FORM.
Unless otherwise provided in or pursuant to this Indenture, the Securities
shall not be issuable in global form. If Securities of a series shall be
issuable in global form, any such Security may provide that it or any number of
such Securities shall represent the aggregate amount of all Outstanding
Securities of such series (or such lesser amount as is permitted by the terms
thereof) from time to time endorsed thereon and may also provide that the
aggregate amount of Outstanding Securities represented thereby may from time to
time be increased or reduced to reflect exchanges. Any endorsement of any
Security in global form
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to reflect the amount, or any increase or decrease in the amount, or changes in
the rights of Holders, of Outstanding Securities represented thereby shall be
made in such manner and by such Person or Persons as shall be specified therein
or in the Company Order to be delivered pursuant to Section 303 or 304 with
respect thereto. Subject to the provisions of Section 303, the Trustee shall
deliver and redeliver any Security in global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 has been,
or simultaneously is, delivered, any instructions by the Company with respect to
a Security in global form shall be in writing but need not be accompanied by or
contained in an Officers' Certificate and need not be accompanied by an Opinion
of Counsel.
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. The terms of the
Securities in addition to or in lieu of those set forth in this Indenture shall
be determined or established in any one or more of the following ways: (1) in
one or more indentures supplemental hereto; (2) in one or more Board
Resolutions; or (3) in a manner specified in or authorized by one or more Board
Resolutions (in which case such Board Resolutions shall be included in or
attached to an Officers' Certificate setting forth such terms or the manner in
which such terms are to be determined or established). The terms to be so
determined or established shall include:
(a) the title of the Securities and the series in which such
Securities shall be included;
(b) any limit upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of such series pursuant to Section 304, 305,
306, 907 or 1107);
(c) the date or dates on which the principal of such Securities
is payable, or the manner in which such date or dates is to be
determined, and the terms and conditions, if any, upon which the
Company may re-borrow the proceeds from such a payment or exchange
such Securities for new Securities or other securities on any such
payment date or dates;
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(d) the rate or rates at which such Securities shall bear
interest, if any, or the manner in which such rate or rates shall be
determined, the date or dates from which such interest shall accrue or
the manner in which such date or dates shall be determined, the
Interest Payment Dates on which any such interest shall be payable, or
the manner in which such Interest Payment Dates shall be determined,
the Regular Record Date for any interest payable on such Interest
Payment Dates, and the basis upon which interest shall be calculated
if other than that of a 360-day year consisting of twelve 30-day
months;
(e) the right, if any, of the Company to extend the interest
payment periods of such Securities, the maximum duration, if any, of
any such extension or extensions, the Additional Interest, if any,
payable on such Securities if any interest payment period is extended
and any notice (which shall include notice to the Trustee) which must
be given upon the exercise of such rights;
(f) each Place of Payment for such Securities, if any, other than
or in addition to The City of New York, and the place or places where
such Securities may be surrendered for registration of transfer or
exchange and where such Securities may be surrendered for conversion
or exchange and any notices and demands to or upon the Company in
respect of such Securities and this Indenture may be served;
(g) whether such Securities are to be redeemable at the option of
the Company and, if so, 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 such Securities may be redeemed, in whole or in
part, at the option of the Company;
(h) the obligation, if any, of the Company to redeem or repay
such Securities pursuant to any sinking fund or analogous provisions
or to repay such Securities at the option of a Holder thereof or upon
the occurrence of one or more specified events and, if so, 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 other terms
and conditions upon which such Securities shall be redeemed or repaid,
in whole or in part, pursuant to such obligation, and any provisions
for the remarketing of such Securities so redeemed or repaid;
(i) the terms and conditions, if any, upon which such Securities
may be convertible into or exchanged for American General Common
Stock, American General Preferred Stock or other securities of any
kind, including the initial conversion or exchange price or rate, the
conversion or exchange period, the circumstances under which any such
conversion or exchange right
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may expire, and any other provision in addition to or in lieu of those
set forth in this Indenture;
(j) the denominations in which any such Securities shall be
issuable if other than denominations of $25 and any integral multiple
thereof;
(k) whether the amount of payments of principal of and any
premium or interest (including Additional Interest) on such Securities
may be determined with reference to an index, formula or other method
or methods (which index, formula or method or methods may be based,
without limitation, on one or more currencies, commodities, equity
indices or other indices) and, if so, the terms and conditions upon
which and the manner in which such amounts shall be determined and
paid or payable;
(l) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to such
Securities, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein,
any change in the right of the Trustee or Holders to declare the
principal of, and any premium and interest on, such Securities due and
payable, and any additions to the definitions currently set forth in
this Indenture;
(m) the form or forms of such Securities;
(n) whether any such Securities are to be issuable in global
form, and, if so, (i) when any of such Securities are to be issued in
global form, (ii) whether beneficial owners of interests in any such
global Security may exchange such interests for certificated
Securities of such series and of like tenor of any authorized
denomination and the circumstances under which any such exchange may
occur, if other than in the manner provided in Section 305, (iii) the
name of the Depository with respect to any global Security, and (iv)
the form of any legend or legends to be borne by any such global
Security in addition to or in lieu of the legend referred to in
Section 303;
(o) if there is more than one Trustee, the identity of the
Trustee and, if not the Trustee, the identity of each Security
Registrar, Paying Agent and Authenticating Agent with respect to such
Securities;
(p) the applicability, if any, of Section 1010 to the Securities
of such series and any provisions in modification of, in addition to
or in lieu of any of the provisions of Section 1010;
(q) whether and under what circumstances Additional Amounts on
such Securities or any of them shall be payable and, if so, whether
the
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Company has the option to redeem such Securities rather than pay such
Additional Amounts;
(r) any restriction or condition on the transferability of such
Securities; and
(s) any other terms of such Securities (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to the date or dates from which interest, if any, shall accrue and denomination
and except as may otherwise be provided in the terms of such Securities
determined or established as provided above. All Securities of any one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened for issuances of additional Securities of such series.
If any of the terms of the Securities of any series are established by
action that is specified in or authorized by a Board Resolution and such action
is to be taken at or prior to the delivery of the Officers' Certificate setting
forth the terms of such series of Securities or the manner in which such terms
are to be determined or established, then a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series or the manner in
which such terms are to be determined or established.
SECTION 302. CURRENCY; DENOMINATIONS.
The principal of, premium, if any, and interest (including Additional
Interest) on the Securities shall be payable in Dollars. Unless otherwise
provided as contemplated by Section 301 with respect to any series of
Securities, any Securities of a series shall be issuable in denominations of $25
and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its Chairman,
its Vice Chairman, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Treasurer or Secretary or one
of its Assistant Treasurers or Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices on the date(s) such Securities were issued.
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At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with the Board Resolution
and Officers' Certificate or supplemental indenture or other instrument with
respect to such Securities referred to in Sections 201 and 301 and a Company
Order for the authentication and delivery of such Securities, and the Trustee,
in accordance with the Company Order and subject to the provisions hereof, shall
authenticate and deliver such Securities. If all the Securities of any series
are not to be issued at one time and if the Board Resolution or supplemental
indenture establishing such series shall so permit, such Company Order may set
forth procedures acceptable to the Trustee for the issuance of such Securities
and determining the terms of particular Securities of such series, such as
interest rate, maturity date, date of issuance and date from which interest
shall accrue. In authenticating Securities hereunder, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon,
(1) an Opinion of Counsel stating substantially to the effect that,
(a) the form and terms of such Securities, or the manner of
determining such terms, have been established in conformity with the
provisions of this Indenture; and
(b) such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance or other laws relating to or affecting the
enforcement of creditors' rights and by general equity principles;
(2) an Officers' Certificate stating, to the best knowledge of each
signer of such certificate, that no event which is, or after notice or
lapse of time would become, an Event of Default with respect to any of the
Securities shall have occurred and be continuing; and
(3) a copy of the LLC Agreement and Written Action of the American
General LLC issuing the series of Preferred Securities related to such
Securities, certified by the Secretary or Assistant Secretary of the
Company or by the Manager Member of such American General LLC to be a true
and correct copy thereof and in full force and effect.
The Trustee shall not be required to authenticate or to cause an Authenticating
Agent to authenticate such Securities if the issuance of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner that
is not reasonably acceptable to the Trustee.
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If all the Securities of any series are not to be issued at one time, it
shall not be necessary to deliver an Opinion of Counsel and Officers'
Certificate at the time of issuance of each such Security, but such opinion and
certificate shall be delivered at or before the time of issuance of the first
Security of such series to be issued.
If the Company shall establish pursuant to Section 301 that the Securities
of a series are to be issued in whole or in part in the form of one or more
global Securities, the Company shall execute and the Trustee shall, in
accordance with this Section and the Company Order with respect to such series,
authenticate and deliver one or more global Securities that (i) shall represent
and shall be denominated in an amount equal to the aggregate principal amount of
the Outstanding Securities of such series to be represented by such global
Security or Securities, (ii) shall be registered in the name of the Depository
for such global Security or Securities or the nominee of such Depository, (iii)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instruction and (iv) shall bear a legend substantially to the
following effect (or to such other effect as may be specified in the document
authorizing such a series of Securities or as the Depository, the Trustee and
the Company may agree):
"Unless this Security is presented by an authorized representative of
The Depository Trust Company (the "Depository") (55 Water Street, New York,
New York) to the issuer hereof or its agent for registration of transfer,
exchange or payment, and any security issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative
of the Depository and any payment is made to Cede & Co., any transfer,
pledge or other use hereof for value or otherwise by or to any person is
wrongful since the registered owner hereof, Cede & Co., has an interest
herein.
Unless and until it is exchanged in whole or in part for Securities in
certificated form, this Security may not be transferred except as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of
such successor Depository".
Unless otherwise provided in the form of Security, each Security shall be
dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for in Section
202 or 613 executed by or on behalf of the Trustee or an Authenticating Agent by
the manual signature of one of its authorized officers. Such an executed
certificate of authentication upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.
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SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the Company
may execute and deliver to the Trustee, and upon Company Order the Trustee shall
authenticate and deliver, in the manner provided in Section 303, temporary
Securities of such series which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form and with such appropriate insertions, omissions,
substitutions and other variations as the officers of the Company executing such
Securities may determine, as evidenced by their execution of such Securities.
Such temporary Securities may be in global form.
If temporary Securities of any series are issued, the Company shall cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of such definitive Securities, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series
containing identical terms and provisions upon surrender of the temporary
Securities of such series at the office or agency of the Company maintained for
such purpose pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like aggregate principal amount of definitive Securities
of authorized denominations of the same series containing identical terms and
provisions. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at an office or agency of the Company
maintained pursuant to Section 1002 a register (each such register being herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of the Securities of each series and of transfers of the Securities
of each series. Such office or agency shall be the "Security Registrar" for the
Securities, if any, of each series of Securities. In the event that the Trustee
shall not be the Security Registrar with respect to a particular series of
Securities, it shall have the right to examine the Security Register for such
series at all reasonable times. Unless otherwise provided with respect to a
series of Securities in a supplemental indenture, Board Resolution or other
instrument authorizing such series of Securities, Chemical Bank shall serve as
the Security Registrar for each series of Securities until a successor has been
appointed by a Board Resolution or an instrument executed on behalf of the
Company by its Chairman, Vice Chairman, President or one of its Vice Presidents
and delivered to the Trustee.
Upon surrender for registration of transfer of any Security of any series
at any office or agency of the Company maintained for that series pursuant to
Section 1002, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized
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denominations and of a like aggregate principal amount, bearing a number not
contemporaneously outstanding, and containing identical terms and provisions.
At the option of the Holder, Securities of any series (except a global
Security representing all or a portion of such series) may be exchanged for
other Securities of the same series, of any authorized denominations and of a
like aggregate principal amount, containing identical terms and provisions, upon
surrender of the Securities to be exchanged at any such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities that the
Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in or pursuant
to this Indenture, any global Security shall be exchangeable for certificated
Securities only if (i) the Depository is at any time unwilling, unable or
ineligible to continue as Depository and a successor depository is not appointed
by the Company within 90 days of the date the Company is so informed in writing,
(ii) the Company executes and delivers to the Trustee a Company Order to the
effect that such global Security shall be so exchangeable, or (iii) an Event of
Default has occurred and is continuing with respect to the Securities of the
same series. If the beneficial owners of interests in a global Security are
entitled to exchange such interests for certificated Securities of such series,
then without unnecessary delay but in any event not later than the earliest date
on which such interests may be so exchanged, the Company shall deliver to the
Trustee certificated Securities in such form and denominations as are required
by or pursuant to this Indenture, and of the same series as, containing
identical terms as and in aggregate principal amount equal to the principal
amount of, such global Security, executed by the Company. On or after the
earliest date on which such interests may be so exchanged, such global Security
shall be surrendered from time to time by the Depository to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or in part, for
certificated Securities as described above, without charge, in accordance with
instructions (which instructions shall be in writing but need not be contained
in or accompanied by an Officers' Certificate or be accompanied by an Opinion of
Counsel) given by the Company to the Trustee and such Depository. The Trustee
shall authenticate and make available for delivery, in exchange for each portion
of such surrendered global Security, a like aggregate principal amount of
certificated Securities of the same series of authorized denominations and of
like tenor as the portion of such global Security to be exchanged; provided,
however, that no such exchanges may occur during a period beginning at the
opening of business 15 days before any selection of Securities for redemption of
the same series and containing identical terms and ending on the relevant
Redemption Date. Promptly following any such exchange in part, such global
Security shall be returned by the Trustee to the Depository, in accordance with
the instructions of the Company referred to above, with an endorsement thereon
to reflect the decrease in the aggregate amount of Outstanding Securities
represented thereby. If a Security is issued in exchange for any portion of a
global Security after the close of business at the office or agency for such
Security where such exchange occurs on or after (i) any Regular Record Date for
such Security and before the opening of business at such office or agency on the
next Interest Payment Date, or (ii) any Special Record Date for such Security
and before the opening of business at such office or agency on the related
proposed date for payment
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of interest or Defaulted Interest, as the case may be, interest shall not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of such Security, but shall be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such global Security shall
be payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitling the Holders thereof to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of transfer or for
exchange or redemption shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar therefor
duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 907 or 1107 not involving any transfer.
Except as otherwise provided in or pursuant to this Indenture, the Company
shall not be required (i) to issue, register the transfer of or exchange
Securities of any series during a period beginning at the opening of business 15
days before the day of the selection for redemption of Securities of like tenor
and the same series under Section 1103 or Article Twelve and ending at the close
of business on the day of the mailing of the relevant notice of redemption, (ii)
to register the transfer of or exchange any Security so selected for redemption
in whole or in part, except, in the case of any Security to be redeemed in part,
the portion thereof not to be redeemed or (iii) to issue, register the transfer
of or exchange any Security which, in accordance with its terms, has been
surrendered for repayment at the option of the Holder, except the portion, if
any, of such Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and principal amount, containing identical terms
and provisions and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request
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the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost
or stolen Security, a new Security of the same series and principal amount,
containing identical terms and provisions and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; RIGHTS PRESERVED.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, interest (including Additional
Interest) on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest. If a series of
Securities is convertible into shares of American General Common Stock, then,
unless otherwise specified with respect to such Securities in accordance with
the provisions of Section 301, interest on such Interest Payment Date shall be
payable to each Holder on the related Regular Record Date notwithstanding the
conversion of any such Security between such Regular Record Date and such
Interest Payment Date.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, any interest (including any
Additional Interest) with respect to any Security of any series which is
payable, but is not punctually paid or duly provided for (other than by reason
of an extension of an interest payment period), on any Interest Payment Date for
such Security (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder thereof on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in subsection (a) or (b) below:
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(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities affected (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
such Security and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when so deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this subsection provided. Thereupon, the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date
of the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
United States first-class postage prepaid, to each Holder of such
Securities (or their respective Predecessor Securities) at the address of
such Holder as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. The Trustee may, in its discretion, in
the name and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper of general circulation
in The City of New York, but such publication shall not be a condition
precedent to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names such Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following subsection (b).
(b) The Company may make payment of any Defaulted Interest on such
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this subsection (b), such manner of payment shall be deemed practicable
by the Trustee.
At the option of the Company, interest on Securities of any series that
bear interest may be paid by mailing a check to the address of the Person
entitled thereto as such address shall appear in the Security Register or by
transfer to an account maintained by the payee with a bank located in the United
States or by any other means permitted in the form of Securities of any
particular series pursuant to the provisions of this Indenture.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu
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of any other Security shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered in the Security Register as the
owner and Holder of such Security for the purpose of receiving payment of the
principal of and any premium and (subject to Sections 305 and 307) interest
(including Additional Interest) on such Security and for all other purposes
whatsoever, whether or not any payment with respect to such Security shall be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
No owner of a beneficial interest in any global Security held on its behalf
by a Depository shall have any rights under this Indenture with respect to such
global Security, and such Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the owner and Holder of such
global Security for all purposes whatsoever. None of the Company, the Trustee,
any Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, conversion, exchange or
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities, as well as Securities surrendered
directly to the Trustee for any such purpose, shall be promptly canceled by the
Trustee. The Company may at any time deliver to the Trustee for cancellation
any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and may deliver to the
Trustee for cancellation any Securities previously authenticated hereunder which
the Company has not issued and sold, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by or pursuant to this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
customary practices, subject to applicable law.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year consisting of twelve 30-day months and, for any
period shorter than a full monthly interest payment period, shall be computed on
the basis of the actual number of days elapsed in such period.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
with respect to any series of Securities specified in such Company Request
(except as provided in the last paragraph of this Section 401), and the Trustee,
on demand of and at the expense of the Company, shall execute such instruments
as may be requested by the Company acknowledging satisfaction and discharge of
this Indenture with respect to such series, when
(a) either
(1) all Securities of such series theretofore authenticated and
delivered (other than Securities of such series that have been
destroyed, lost or stolen and that have been replaced or paid as
provided in Section 306, and Securities of such series for whose
payment money has theretofore been deposited in trust or segregated
and held in trust and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or
(2) all Securities of such series not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii)if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense,
of the Company,
and the Company has irrevocably deposited or caused to be irrevocably
deposited (except as provided in Section 402(c)) with the Trustee, as
trust funds and/or obligations in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Securities of such series, (A) money in an amount, or (B)
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms, without
consideration of any reinvestment thereof, will provide not later than
the opening of business on the due dates of any payment of the
principal, premium, if any, and interest (including any Additional
Interest) with respect thereto money in an amount or (C) a combination
thereof,
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sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation,
including the principal of, premium, if any, and interest (including
any Additional Interest) on, such Securities to the date of such
deposit (in the case of Securities of such series which have become
due and payable) or to the Stated Maturity or Maturity thereof, as the
case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee a Certificate of a Firm
of Independent Public Accountants certifying as to the sufficiency of the
amounts deposited pursuant to paragraph (2) of subsection (a) of this
Section for payment of the principal, premium, if any, and interest
(including any Additional Interest) with respect to the Securities of such
series on the dates such payments are due, and an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
as to such series of Securities have been complied with.
If there are Securities of two or more series hereunder and if a different
Trustee has been appointed with respect to one or more of such series, then each
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture if requested to do so only with respect to
Securities of the series as to which it is Trustee and if the other conditions
thereto are met.
If, subsequent to the date a discharge is effected pursuant to this Section
401, Additional Amounts in excess of those established as of the date such
discharge is effected become payable in respect of the series of Securities
discharged, in order to preserve the benefits of the discharge established
hereunder, the Company shall irrevocably deposit or cause to be irrevocably
deposited in accordance with the provisions of this Section 401, within ten
Business Days prior to the date the first payment in respect of any portion of
such excess Additional Amounts becomes due, such additional funds as are
necessary to satisfy the provisions of this Section 401 as if a discharge were
being effected as of the date of such subsequent deposit. Failure to comply
with the requirements of this paragraph shall result in the termination of the
benefits of the discharge established by this Section 401.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a series of Securities, the obligations with respect to the right of
registration of transfer or exchange of Securities of such series provided for
herein, the obligations of the Company under the preceding paragraph, the
obligations with respect to any conversion or exchange of Securities of such
series provided in the supplemental indenture, Board Resolution or other
instrument authorizing such series of Securities, the obligations of the Company
to the Trustee under Section 607 and, if money and/or Government Obligations
shall have been irrevocably deposited with the Trustee pursuant to paragraph (2)
of subsection (a) of this Section, the obligations of the Trustee under Section
402 and the last paragraph of Section 1003 shall survive.
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SECTION 402. APPLICATION OF TRUST MONEY.
(a) Subject to the provisions of the last paragraph of Section 1003,
all money and/or Government Obligations deposited with the Trustee pursuant
to Section 401 or Section 1010 or pursuant to a supplemental indenture
entered into pursuant to Section 901(i), and all money received by the
Trustee in respect of any such Government Obligations, shall be held in
trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the
principal, premium, if any, and interest (including any Additional
Interest) for whose payment such money has or Government Obligations have
been deposited with or received by the Trustee or to make mandatory sinking
fund payments or analogous payments as contemplated by Section 401, or
Section 1010 or any such supplemental indenture; but such money and
Government Obligations need not be segregated from other funds of the
Trustee except to the extent required by law.
(b) The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against Government
Obligations deposited pursuant to Section 401 or Section 1010 or pursuant
to a supplemental indenture entered into pursuant to Section 901(i) or the
interest and principal received in respect of such obligations other than
any payable by or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time to time
upon Company Request any Government Obligations or money held by it as
provided in Section 401 or Section 1010 or in any supplemental indenture
entered into pursuant to Section 901(i) which, as expressed in a
Certificate of a Firm of Independent Public Accountants delivered to the
Trustee, are then in excess of the amount thereof which then would have
been required to be deposited for the purpose for which such obligations or
money were deposited or received.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein with respect to Securities of any
series (unless otherwise specified with respect to such series of Securities in
the supplemental indenture, Board Resolution or other instrument authorizing
such series of Securities), means any one of the following events which has
occurred and is continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to the provisions of Article Thirteen or any
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judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any installment of interest (including
any Additional Interest) upon any of the Securities of that series, as and
when the same shall become due and payable, and continuance of such default
for a period of 10 days; provided that (i) a valid extension of an interest
payment period by the Company pursuant to the supplemental indenture, Board
Resolution or other instrument authorizing such series of Securities 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, the Company 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 Securities and
shall have delivered a notice to the Trustee to that effect;
(b) default in the payment of the principal of (or premium, if any,
on) any of the Securities of that series, as and when the same shall become
due and payable whether at maturity, upon redemption, by declaration of
acceleration or otherwise, or in any payment required by any sinking or
analogous fund established with respect to that series; provided that (i)
no such default in the payment of principal (or premium, if any) shall be
deemed to exist if, on or prior to the date such principal (and premium, if
any) became due (whether at maturity, upon redemption, by declaration of
acceleration or otherwise), the Company shall have made a payment,
sufficient to pay such principal (and premium, if any), pursuant to the
Guarantee with respect to the series of Preferred Securities related to
such series of Securities and shall have delivered a notice to the Trustee
to that effect and (ii) a valid exchange of a Security upon its Maturity
for another Security pursuant to this Indenture or the supplemental
indenture, Board Resolution or other instrument authorizing Securities of
that series shall not constitute a default in the payment of the principal
of the Security being exchanged for this purpose;
(c) if applicable to the Securities of that series, failure by the
Company to issue the American General Preferred Stock or American General
Common Stock upon an election by the Holder or Holders of such Securities
to convert such Securities into shares of American General Preferred Stock
or American General Common Stock, as the case may be, pursuant to the
supplemental indenture, Board Resolution or other instrument authorizing
such series of Securities;
(d) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Company with respect to that series contained in such Securities or
otherwise established with respect to that series of Securities pursuant to
Section 301 hereof or contained in this Indenture (other than a covenant or
agreement which has been expressly included in this Indenture solely for
the benefit of one or more series of Securities other than such series) and
continuance of such failure for a period of 90 days after the date on which
written notice of such failure, requiring the same to be
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remedied and stating that such notice is a "Notice of Default" hereunder,
shall have been given to the Company by the Trustee, by registered or
certified mail, or to the Company and the Trustee by a Holder or Holders of
at least 25% in aggregate principal amount of the Securities of that series
at the time Outstanding or the holder or holders of at least 25% in
aggregate liquidation preference of Preferred Securities of the series
related to such series of Securities;
(e) the liquidation, dissolution or winding-up of the American General
LLC that issued the Preferred Securities of the series related to such
series of Securities, except in connection with, or after, the exchange of
such Preferred Securities for such Securities or the related series of
American General Preferred Stock, as the case may be, or in connection with
any merger or consolidation permitted by the applicable LLC Agreement;
(f) a court having jurisdiction in the premises shall have entered a
decree or order for relief in respect of the Company in an involuntary
proceeding under any applicable United States bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Company or of all or any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days;
(g) the Company shall have commenced a voluntary proceeding under any
applicable United States bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or shall have consented to the
entry of an order for relief in an involuntary case under any such law, or
shall have consented to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of all or any substantial part of its
property, or shall have made an assignment for the benefit of creditors; or
(h) any other Event of Default provided with respect to Securities of
such series in the supplemental indenture, Board Resolution or other
instrument authorizing such series.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing (other than an Event of Default specified
in Section 501 (f) or (g)), then, and in every such case, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities of that series may declare the principal amount of all of the
Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal amount shall become immediately due and
payable. If an Event of Default specified in Section 501 (f) or (g) with
respect to Securities of any series at the
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time Outstanding occurs and is continuing, then, and in every such case, the
principal amount of all of the Securities of that series shall become and be
immediately due and payable without any declaration or other action on the part
of the Trustee or any Holder.
At any time after such acceleration with respect to Securities of any
series and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article, the Holders of
a majority in aggregate principal amount of the Outstanding Securities of that
series, by written notice to the Company and the Trustee, may, subject to the
provisions of Section 1007(b)(iii), rescind and annul such acceleration and its
consequences if:
(a) the Company has paid or deposited with the Trustee a sum of money
sufficient to pay
(1) all overdue installments of any interest (including any
Additional Interest) on all Securities of that series;
(2) the principal of and any premium on any Securities of that
series which have become due otherwise than by reason of such
acceleration and interest thereon at the rate or rates borne by or
provided for in such Securities;
(3) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest (including Additional
Interest) at the rate or rates borne by or provided for in such
Securities, and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which has become due solely by reason of such acceleration, have been cured
or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest
shall have become due and payable and such default continues for a period
of 10 days, or
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(b) default is made in the payment of the principal of or any premium
on any Security at its Maturity,
the Company shall, upon demand of the Trustee, pay to it, for the benefit of the
Holders of all Securities which are of the same series as such Security, the
whole amount of money then due and payable with respect to such Securities for
principal, premium, interest (including any Additional Interest) and, to the
extent that payment of such interest shall be legally enforceable, interest upon
any overdue principal (and premium, if any) and upon any overdue installments of
interest (including any Additional Interest), at the rate or rates borne by or
provided for in such series of Securities, and, in addition thereto, such
further amount of money as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or such Securities or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration of
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of any overdue principal,
premium, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of any series, of
principal, premium and interest (including any Additional Interest) owing
and unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the
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reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders of Securities allowed
in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or any of the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, shall,
subject to the provisions of Article Thirteen, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, any premium
or interest (including Additional Interest), upon presentation of the
Securities, and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: Subject to Article Thirteen, to the payment of the amounts
then due and unpaid upon the Securities for principal, any premium and
interest (including any Additional Interest) in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind,
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according to the aggregate amounts due and payable on such Securities for
principal, any premium and interest (including any Additional Interest),
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. LIMITATION ON SUITS.
Subject to Section 508, no Holder of any Security of any series shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, ANY
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture but subject to
Article Thirteen, the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal of (and premium,
if any) and (subject to Sections 305 and 307) any interest (including any
Additional Interest) on such Security, on the respective Stated Maturity or
Maturities thereof expressed in such Security (or, in the case of redemption, on
the Redemption Date or, in the case of repayment at the option of such
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Holder, on the date such repayment is due) and to institute suit for the
enforcement of any such payment and, in the case of Securities which are
convertible into or exchangeable for other securities or property, the right to
receive such securities or property when such Securities are converted or
exchanged in accordance with the terms of such Securities, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Security has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders of Securities shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee and
such Holders shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders of Securities is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders of Securities may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders of
Securities.
SECTION 512. CONTROL BY HOLDERS OF SECURITIES.
Subject to the provisions of Section 1007(b)(i), the Holders of a majority
in aggregate principal amount of the Outstanding Securities of any series shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Securities of such series, provided
that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or with the Securities of such series;
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(b) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction;
(c) such direction is not unduly prejudicial to the rights of other
Holders of Securities of such series not joining in such action; and
(d) subject to the provisions of Sections 601 and 603, the Trustee
shall have the right to decline to follow any such direction if the Trustee
in good faith shall, by a Responsible Officer or Officers of the Trustee,
determine that the proceeding so directed would involve the Trustee in
personal liability.
SECTION 513. WAIVER OF PAST DEFAULTS.
Subject to the provisions of Section 1007(b)(ii), the Holders of a majority
in aggregate principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to the Securities of such series and its
consequences, except a default
(a) in the payment of the principal of or any premium or interest
(including Additional Interest) on any Security of such series; or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant (other
than the Company and the Trustee) in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply
to any suit instituted by the Company, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of the Outstanding Securities of any
series, to any suit instituted by any Holder of a Security for the enforcement
of the payment of the principal of or any premium or interest (including
Additional Interest) on any Security, on or after the Stated Maturity or
Maturities expressed in such Security (or,
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in the case of redemption, on or after the Redemption Date or, in the case of
repayment at the option of a Holder, on or after the date such repayment is due)
or interest on any overdue principal of any Security, or to any suit instituted
by any Holder of a Security for the enforcement of any right to convert or
exchange such Security into or for another security.
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 516. SPECIAL TRUSTEE
(a) The Company expressly acknowledges that, under the circumstances
set forth in the applicable LLC Agreement or Written Action, the holders of
each series of Preferred Securities shall have the right, prior to a
Special Event Exchange of such series of Preferred Securities, to appoint a
Special Trustee if an Event of Default with respect to the series of
Securities related to such series of Preferred Securities or certain other
events specified in such LLC Agreement or Written Action shall have
occurred and be continuing. Such Special Trustee shall be authorized to
exercise the rights and remedies of the American General LLC that issued
the Preferred Securities of such series as Holder of the related series of
Securities under this Indenture, other than the right to receive any
payments on such Securities. Without limiting the foregoing, such Special
Trustee shall be entitled to give any request, demand, authorization,
direction, notice, consent or waiver hereunder as if it, rather than such
American General LLC, were the Holder of the Securities of such series and,
in determining whether the Holders of the requisite principal amount of
Outstanding Securities of such series have given any such request, demand,
authorization, direction, notice, consent or waiver, such Securities shall
be deemed to be owned by the Special Trustee rather than such American
General LLC. Any Special Trustee so appointed shall vacate office
immediately in accordance with the applicable LLC Agreement if all Events
of Default or other events specified in the applicable LLC Agreement or
Written Action giving rise to such right of appointment have been cured or
waived. The Company shall notify the Trustee when any such Special Trustee
shall have been appointed and the date on which the authority of the
Special Trustee shall have expired or terminated.
(b) Without limiting the generality of the foregoing, any Special
Trustee appointed with respect to a series of Preferred Securities, in its
own name and as trustee of an express trust, may, subject to Section 507,
institute a proceeding,
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including, without limitation, any suit in equity, an action at law or
other judicial or administrative proceeding, to enforce the creditor's
rights of the American General LLC that is the Holder of the related series
of Securities directly against the Company to the same extent and subject
to the same limitations as such American General LLC, as a Holder, could do
so and on behalf of such American General LLC, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the
Company and, subject to Article Thirteen, collect, out of the property,
wherever situated, of the Company the monies adjudged or decreed to be
payable in the manner and to the extent provided by law.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture, but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in aggregate principal
amount of the Outstanding Securities of any series or a Special
Trustee appointed with respect to the Securities of such series
relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture with respect to
the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act, notice of
such default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of or any premium or interest (including Additional
Interest) on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders of Securities of such series; and
provided, further, that in the case of any default of the character specified in
Section 501(d) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 601:
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(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security to the Trustee for authentication and delivery
pursuant to Section 303 which shall be sufficiently evidenced as provided
therein) and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by or pursuant to this Indenture at the
request or direction of any of the Holders of Securities of any series or a
Special Trustee pursuant to this Indenture, unless such Holders or Special
Trustee shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) the Trustee shall not be charged with knowledge of any Event of
Default (other than a default in any payment with respect to a Security due
on a
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fixed date and with respect to which the Trustee is a Paying Agent) unless
either (i) a Responsible Officer of the Trustee assigned to its corporate
trustee administration department shall have actual knowledge thereof or
(ii) the Trustee shall have received written notice thereof in accordance
with Section 105 from the Company, any Holder or a Special Trustee.
SECTION 604. NOT RESPONSIBLE FOR RECITALS, ISSUANCE OF SECURITIES OR FOR
PREFERRED SECURITIES.
The recitals contained herein and in the Securities (except the Trustee's
certificate of authentication) shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility on Form T-1 supplied to the
Company are true and accurate, subject to the qualifications set forth therein.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Company of Securities or the proceeds thereof.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
the Preferred Securities and the Trustee (as well as the Company and any
conversion agent) shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of a Preferred Security
to establish that such Person is such a holder. Prior to a Special Event
Exchange with respect to a series of Preferred Securities, the Trustee (and any
conversion agent) may conclusively rely on a certificate signed by an officer of
the Managing Member of the American General LLC that issued such Preferred
Securities or a certificate signed by an officer or representative of a Special
Trustee with respect to such series of Preferred Securities as evidence that the
holders of the necessary percentage of liquidation preference of Preferred
Securities of such series have taken any action contemplated hereunder and shall
have no duty to investigate the truth or accuracy of any statement contained
therein.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Paying Agent, Security Registrar, Authenticating Agent or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to the provisions of the
Trust Indenture Act, may otherwise deal with the Company with the same rights it
would have if it were not Trustee, Paying Agent, Security Registrar,
Authenticating Agent or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for
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interest on any money received by it hereunder except as otherwise agreed with
the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except to the extent any such
expense, disbursement or advance may be attributable to the Trustee's
negligence or willful misconduct; and
(c) to indemnify each of the Trustee and its agents for, and to hold
each of them harmless against, any loss, liability or expense arising out
of or in connection with the acceptance or administration of the trust or
trusts hereunder or the performance of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or willful misconduct.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of or any premium or interest (including
Additional Interest) on particular Securities. "Trustee" for purposes of this
Section 607 includes any predecessor Trustee, but negligence or bad faith of any
Trustee shall not be attributed to any other Trustee. The obligations of the
Company to the Trustee under this Section 607 are not subordinated to any Senior
Indebtedness.
SECTION 608. DISQUALIFICATIONS; CONFLICTING INTERESTS.
If the Trustee has or shall acquire any conflicting interest, within the
meaning of the Trust Indenture Act, it shall, within 90 days after ascertaining
that it has such conflicting interest, either eliminate such conflicting
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or other person permitted by the Trust Indenture Act to act as
Trustee under an indenture qualified
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under the Trust Indenture Act and that has a combined capital and surplus of at
least $50,000,000. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
the instrument of acceptance by a successor Trustee required by Section 611
shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of such series delivered to
the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder of a Security
who has been a bona fide Holder of a Security for at least six months,
or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or
by any such Holder of a Security, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove such Trustee with respect to all Securities as to
which it is Trustee or (ii) subject to Section 514, any Holder of a
Security who has been a bona fide Holder of a Security of any series for at
least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal
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of such Trustee with respect to all Securities of such series and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee
or Trustees with respect to the Securities of that or those series (it
being understood that any such successor Trustee may be appointed with
respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of
any particular series) and shall comply with the applicable requirements of
Section 611. If, within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to
the Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to
the Securities of any series shall have been so appointed by the Company or
the Holders of Securities and accepted appointment in the manner required
by Section 611, any Holder of a Security who has been a bona fide Holder of
a Security of such series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(f) The Company shall give notice to the Holders of Securities of a
particular series of each resignation and each removal of the Trustee with
respect to the Securities of such series and each appointment of a
successor Trustee with respect to the Securities of such series in the
manner provided in Section 106. Each such notice shall include the name of
the successor Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties hereunder of the retiring
Trustee; but, on request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts hereunder of the retiring Trustee, and shall duly assign,
transfer and deliver to such
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successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its lien, if any, provided for in
Section 607.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees as co-
trustees of the same trust, that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee and that no Trustee shall
be responsible for any notice given to, or received by, or any act or
failure to act on the part of any other Trustee hereunder; and upon the
execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent
provided therein, such retiring Trustee shall with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates have no further responsibility for the exercise
of rights and powers or for the performance of the duties and obligations
vested in the Trustee under this Indenture other than as hereinafter
expressly set forth, and each such successor Trustee without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee, to the extent contemplated by such supplemental indenture, the
property and money held by such retiring Trustee hereunder with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in subsection (a) or (b) of this Section, as the case may be.
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(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents acceptable to the
Company with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issue or exchange, registration of transfer or
partial redemption thereof or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, a copy of which instrument shall
be promptly furnished to the Company. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall at all
times be a bank or trust company or corporation organized and doing business and
in good standing under the laws of the United States, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $5,000,000 and subject to
supervision or examination by Federal or State authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
In case at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by United States first-class mail, postage prepaid, to all
Holders of Securities of the series with respect to which such Authenticating
Agent shall serve, as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent
herein. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation, including reimbursement of its reasonable expenses for
its services under this Section.
The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternative certificate of authentication substantially in the following form:
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This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
__________________________________________________
as Trustee
By ______________________________________________
as Authenticating Agent
By ______________________________________________
Authorized Officer
If all of the Securities of any series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested in writing (which writing need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel) by the
Company, shall appoint in accordance with this Section 613, and on terms
acceptable to the Trustee, an Authenticating Agent having an office in a Place
of Payment designated by the Company with respect to such series of Securities.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS OF
SECURITIES.
The Company shall furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than May 15 and November 15 in each year,
commencing November 15, 1995, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Securities
as of a date not more than 15 days prior to the date of delivery thereof,
and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished for Securities for which the Trustee
acts as Security Registrar.
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SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with Section 312(c) of
the Trust Indenture Act, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the first
May 15 after the first issuance of Securities pursuant to this Indenture,
if required by Section 313(a) of the Trust Indenture Act, the Trustee shall
transmit a brief report dated as of such May 15 with respect to any of the
events specified in said Section 313(a) which may have occurred since the
later of the immediately preceding May 15 and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section 313(b)
of the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and (d) of the Trust
Indenture Act.
SECTION 704. REPORTS BY COMPANY.
(a) The Company, pursuant to Section 314(a) of the Trust Indenture
Act, shall:
(i) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended; or, if the Company is not required to file information,
documents or reports pursuant to either of said Sections, then it
shall file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934, as
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amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(ii) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) transmit to the Holders of Securities within 30 days after
the filing thereof with the Trustee, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, such summaries
of any information, documents and reports required to be filed by the
Company pursuant to subsections (i) and (ii) of this Section 704(a) as
may be required by rules and regulations prescribed from time to time
by the Commission.
(b) The Company shall notify the Trustee when and as the Securities of
any series become admitted to trading on any national securities exchange.
ARTICLE EIGHT
CONSOLIDATION, MERGER, OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND CONVEYANCES
PERMITTED SUBJECT TO CERTAIN CONDITIONS.
The Company may consolidate with, merge with or into, or, if no Preferred
Securities are then outstanding, convey, transfer or lease all or substantially
all of its assets to any other Person, provided that (a) (i) in the case of a
merger, the Company is the surviving entity in such merger, or (ii) in the case
of a merger in which the Company is not the surviving entity or in the case of a
consolidation or a conveyance, transfer or lease of assets, the Person into
which the Company is merged or which is formed by such consolidation or the
Person which acquires by conveyance, transfer or lease all or substantially all
of the assets of the Company shall be a Person duly organized and validly
existing under the laws of the United States of America or a State thereof and
(x) such Person shall expressly assume by supplemental indenture, in form
satisfactory to the Trustee, executed and delivered to the Trustee by such
Person, the due and punctual payment of the principal of and any premium and
interest (including Additional Interest) on all the Securities, according to
their tenor, and the due and punctual performance and observance of all of the
other covenants of this Indenture and the Securities to be performed by the
Company, and, (y) if any Preferred Securities are then outstanding, such Person
shall expressly assume, in a written instrument delivered to the Managing Member
of the American General LLC which issued such Preferred Securities, all of the
obligations of the Company under the Guarantee related to such Preferred
Securities, and (b) in each case, after giving effect to such consolidation,
merger, conveyance, transfer or lease, no Event of
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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 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION.
In case of any such merger in which the Company is not the surviving entity
or any such consolidation, conveyance, transfer or lease and upon any such
assumption by the successor Person, such successor Person shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and the predecessor, except in the event
of a conveyance by way of lease, shall be relieved of any further obligation
under this Indenture and the Securities and, if applicable, the Guarantee
assumed by such successor Person. Such successor Person thereupon may cause to
be signed, and may issue either in its own name or in the name of the Company,
any or all of the Securities issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee, and, upon the order of
such successor, instead of the Company, and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication, and
any Securities which such successor thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such merger, consolidation, conveyance, transfer or lease,
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL.
The Trustee, subject to the provisions of Sections 601 and 603, may receive
an Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any such merger, consolidation, conveyance, transfer or lease, and any such
assumption by the successor Person, complies with the provisions of this
Article.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
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(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities contained; or
(b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default with respect to all or any
series of Securities; or
(d) to add to or change any of the provisions of this Indenture to
change or eliminate any restrictions on the payment of principal (or
premium, if any) or any interest (including Additional Interest) with
respect to Securities, to modify the provisions relating to global
Securities, or to permit the issuance of Securities in bearer or
uncertificated form, provided that any such action shall not adversely
affect the interests of the Holders of Securities of any series in any
material respect; or
(e) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination not otherwise permitted under this
Section 901 shall (i) become effective only when there is no Security
Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision
or (ii) not apply to any Security then Outstanding; or
(f) to secure the Securities; or
(g) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or to facilitate the administration of
the trusts hereunder by more than one Trustee pursuant to the requirements
of Section 611(b); or
(i) to provide that the Company shall be deemed to have paid and
discharged the entire indebtedness on all the Outstanding Securities of any
series on the 91st day after the date of the deposit referred to in
paragraph (5) hereof, and that the provisions of this Indenture, as it
relates to such Outstanding Securities shall no longer be in effect (and
the Trustee, at the expense of the Company, shall at Company Request,
execute proper instruments acknowledging the same), except as to:
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(1) the rights of Holders of Securities to receive, from the
trust funds described in paragraph (4) hereof, (i) payment of the
principal of (and premium, if any) and interest (including any
Additional Interest) on the Outstanding Securities of that series on
the Stated Maturity or Maturity of such principal, premium, if any,
and interest and (ii) any mandatory sinking fund payments or analogous
payments applicable to Securities of such series on the day on which
such payments are due and payable in accordance with the terms of this
Indenture and of such Securities;
(2) the Company's obligations with respect to such Securities
under Sections 305, 306, 402, 1002 and 1003,
(3) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, and
(4) such other rights, if any, that are specified in such
supplemental indenture as surviving such payment and discharge;
provided that the following conditions shall have been satisfied:
(5) with reference to such provision, the Company has irrevocably
deposited or caused to be irrevocably deposited (except as provided in
Section 402(c)) with the Trustee, as trust funds and/or obligations in
trust, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of the Securities of that series, (i) money
in an amount, or (ii) Government Obligations which through the payment
of interest and principal in respect thereof in accordance with their
terms, without consideration of any reinvestment thereof, will provide
not later than one day before the due date of any payment referred to
in clause (A) or (B) of this paragraph (4) money in an amount or (iii)
a combination thereof, sufficient, as expressed in a Certificate of a
Firm of Independent Public Accountants delivered to the Trustee, to
pay and discharge (A) the principal of (and premium, if any) and
interest (including any Additional Interest) on the Outstanding
Securities of that series due on the Stated Maturity or Maturity of
such principal, premium, if any, and/or interest and (B) any mandatory
sinking fund payments or analogous payments applicable to Securities
of such series on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such Securities;
(6) such deposit shall not cause the Trustee with respect to the
Securities of that series to have a conflicting interest for purposes
of the Trust Indenture Act with respect to the Securities of any
series;
(7) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument relating to borrowed money, pursuant to which in excess of
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$10,000,000 principal amount is then outstanding, to which the Company
is a party or by which it is bound;
(8) such provision would not cause the Outstanding Securities of
such series then listed on the New York Stock Exchange to be delisted
as a result thereof;
(9) no Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to
Securities of that series shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st day after
such date;
(10) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that (i) the
Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling, or (ii) since the date of
this Indenture there has been a change in the applicable Federal
income tax law, in either case, to the effect that Holders of the
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to Federal income tax on the same
amount and in the same manner and at the same times, as would have
been the case if such deposit, defeasance and discharge had not
occurred;
(11) if the Securities of such series are to be redeemed, either
notice of such redemption shall have been given or the Company shall
have given the Trustee irrevocable directions to give notice of such
redemption in the name, and at the expense of the Company, under
arrangements satisfactory to the Trustee;
(12) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent provided for relating to the defeasance contemplated by such
provision have been complied with; and
(13) such supplemental indenture shall contain a provision
substantially to the same effect as the last paragraph of Section 1010
but relating to the Securities to be discharged under the terms of
such supplemental indenture; or
(j) to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
(k) to make provision with respect to the conversion or exchange
rights of the Holders of any series of Securities pursuant to the
requirements of the
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supplemental indenture, Board Resolution, or other instrument establishing
the terms of such series of Securities; or
(l) subject to Section 903(a), to make any change in Article Thirteen
that would limit or terminate the benefits available to any holder of
Senior Indebtedness under such Article; or
(m) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders of Securities of any series
in any material respect.
No consent of the holders of any Preferred Securities shall be required in
connection with any supplemental indenture entered into pursuant to this Section
901.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of a majority in aggregate principal amount
of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of such Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby:
(i) change the Stated Maturity of the principal of, or any installment
of principal of or interest (including Additional Interest) on, any
Security, or change any obligation of the Company to pay Additional Amounts
pursuant to Section 1004 (except as contemplated by Section 801 and
permitted by Section 901(a) and (d)), or reduce the principal amount
thereof, any premium payable upon the redemption thereof or the rate or
amount of interest (including Additional Interest) payable thereon, or
adversely affect any right of repayment at the option of the Holder of any
Security, or, subject to the provisions of Section 1002, change any Place
of Payment where, or the coin or currency in which, the principal of any
Security or any premium or interest (including any Additional Interest) on
any Security is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date or, in the
case of repayment at the option of the Holder, on or after the date for
repayment); or
(ii) adversely affect any right to convert or exchange any Security or
modify the provisions of this Indenture with respect to the subordination
of the Securities in a manner adverse to such Holder; or
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(iii) reduce the percentage in aggregate principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture or reduce the requirements of Section 1404
for quorum or voting; or
(iv) modify any of the provisions of this Section, Section 513 or
Section 1009, except to increase the percentage in aggregate principal
amount of the Outstanding Securities of any series, the consent of whose
Holders is required for the actions specified herein or therein, or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security
affected thereby; provided, however, that this subsection shall not be
deemed to require the consent of any Holder of Securities with respect to
changes in the references to "the Trustee" and concomitant changes in this
Section and Section 1009, or the deletion of this proviso, in accordance
with the requirements of Section 901(h).
SECTION 903. GENERAL PROVISIONS REGARDING SUPPLEMENTAL INDENTURES.
(a) A supplemental indenture entered into pursuant to Section 901 or
Section 902 may not make any change that adversely affects the rights under
Article Thirteen of any holder of Senior Indebtedness then outstanding unless
the holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change. Moreover, prior to a
Special Event Exchange with respect to a series of Preferred Securities then
outstanding, no such supplemental indenture entered into pursuant to Section 902
shall amend the series of Securities related to such series of Preferred
Securities or the provisions of this Indenture benefiting such series of
Securities unless the prior approval of the holders of at least 66% of the
aggregate liquidation preference of the Preferred Securities of such series then
outstanding is obtained; provided, however, that where a consent of each Holder
of Securities of a particular series is required pursuant to Section 902, the
prior consent of each holder of the related series of Preferred Securities shall
be first obtained.
(b) A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series (or the holders of
Preferred Securities of any series not related to such particular series of
Securities).
(c) It shall not be necessary for any Act of Holders of Securities or
action of the holders of Preferred Securities under this Section to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act or action shall approve the substance thereof.
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SECTION 904. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 905. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 906. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 907. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, ANY PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of the Holders of
Securities of each series that it will duly and punctually pay the principal of
and any premium and interest, including any Additional Interest (subject to any
right of the Company to extend an interest payment period or, if so provided
pursuant to Section 301, to exchange a Security upon the Maturity of such
Security for another Security and subject to Section 1502) on the
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Securities of that series in accordance with the terms of such series of
Securities and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for conversion or exchange or for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served, and the Company hereby initially
appoints the Trustee at its Corporate Trust Office as its agent to receive all
such presentations, surrenders, notices and demands, other than the surrender of
Securities for conversion or exchange, which shall be made at the office of
Chemical Mellon Shareholder Services, LLC in New York City or at such other
office as may be specified in the supplemental indenture, Board Resolution or
other instrument authorizing such series of Securities. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of each such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all of such purposes, and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Securities of
any series for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. Unless otherwise set forth in, or
pursuant to, a Board Resolution or any indenture supplemental hereto with
respect to a series of Securities, the Company hereby designates as the Place of
Payment for each series of Securities the Borough of Manhattan, The City of New
York, and initially appoints the Trustee at its Corporate Trust Office as Paying
Agent and, except as provided in the first sentence of the preceding paragraph,
as its agent to receive all such presentations, surrenders, notices and demands.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it shall, on or before each due date of the
principal of and any premium or interest (including any Additional Interest) on
any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal,
any premium and interest (including any Additional Interest) so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided, and shall promptly notify the Trustee of its action or failure so to
act.
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Whenever the Company shall have one or more Paying Agents for any series of
Securities, it shall, on or prior to each due date of the principal of and any
premium or interest (including any Additional Interest) on any Securities of
that series, deposit with a Paying Agent a sum sufficient to pay the principal,
any premium and interest (including any Additional Interest) so becoming due,
such sum to be held in trust for the benefit of the Persons entitled to such
principal, premium and interest (including any Additional Interest), and (unless
such Paying Agent is the Trustee) the Company shall promptly notify the Trustee
of its action or failure so to act.
The Company shall cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of and
any premium or interest (including any Additional Interest) on Securities
of that series in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
provided in or pursuant to this Indenture;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of the principal of, or premium, if any, or interest (including any
Additional Interest) on Securities of that series; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge or defeasance of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Except as otherwise specified as contemplated by Section 301 for Securities
of any particular series, any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal of
and any premium or interest (including any Additional Interest) on any Security
of any series and remaining unclaimed for two years after such principal and any
premium or interest (including any Additional Interest) has become due and
payable shall be paid to the Company upon Company Request along with interest,
if any, that has been accumulated thereon or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment of such
principal, premium or interest (including any Additional Interest), without
interest thereon,
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and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment for such
series or to be mailed to Holders of Securities of such series, or both, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication or
mailing, any unclaimed balance of such money then remaining will be repaid to
the Company.
SECTION 1004. ADDITIONAL AMOUNTS.
If the Securities of a series provide for the payment of Additional Amounts
to the Holders of such Securities, then the Company shall pay to each Holder of
such Securities the Additional Amounts as provided therein.
Except as otherwise provided in or pursuant to this Indenture, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Securities upon which such Additional Amounts shall be payable (or, if the
Securities of that series shall not bear interest prior to Maturity, the first
day on which a payment of principal and any premium is made), and at least 10
days prior to each date of payment of principal and any premium or interest if
there has been any change with respect to the matters set forth in the below-
mentioned Officers' Certificate, the Company will furnish the Trustee and the
Company's Paying Agent or Paying Agents, if other than the Trustee or the
Company, with an Officers' Certificate stating the amount of the Additional
Amount payable per minimum authorized denomination of such Securities (and, if
such Additional Amounts are payable only with respect to particular Securities,
then the names of the Holders of such Securities).
SECTION 1005. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company,
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and that
the loss thereof is not disadvantageous in any material respect to the Holders
of Securities.
SECTION 1006. LIMITATIONS ON DIVIDENDS AND CERTAIN OTHER PAYMENTS.
The Company covenants, for the benefit of the Holders of each series of
Securities, that, subject to the next succeeding sentence, it shall not declare
or pay any dividend on, and it shall not, nor shall it permit any of its
Subsidiaries to, redeem, purchase, acquire or make a liquidation payment with
respect to, any shares of American General Capital Stock, or make any guarantee
payments with respect to the foregoing, if at such time (a) the Company shall
have given notice of its election to extend an interest payment period for such
series
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of Securities in accordance with the terms of such Securities and such extension
shall be continuing, (b) the Company shall be in default with respect to its
payment or other obligations under the Guarantee with respect to the series of
Preferred Securities related to such series of Securities, or (c) an Event of
Default hereunder with respect to such series of Securities shall have occurred
and be continuing. The preceding sentence, however, shall not restrict (i) the
purchase or acquisition of shares of American General Common Stock in connection
with the satisfaction by the Company or a Subsidiary of its obligations under
any employee benefit plan or the satisfaction by the Company of its obligations
pursuant to any put contract requiring the Company to purchase any American
General Common Stock, (ii) any of the actions described in the preceding
sentence resulting from any reclassification of American General Capital Stock
or the exchange or conversion of one class or series of American General Capital
Stock for another class or series of American General Capital Stock, (iii)
redemptions or purchases of any share purchase rights issued by the Company
pursuant to its Rights Agreement, dated as of July 27, 1989, between the Company
and First Chicago Trust Company of New York, as the same may exist at the time,
(iv) the declaration and payment of a dividend or distribution of similar share
purchase rights in the future, or (v) the purchase of fractional interests in
shares of American General Capital Stock pursuant to the conversion or exchange
provisions of such American General Capital Stock or the security being
converted or exchanged. The Company covenants that it shall take all actions
necessary to ensure the compliance of its Subsidiaries with this Section 1006.
SECTION 1007. CERTAIN COVENANTS REGARDING THE AMERICAN GENERAL LLCS.
(a) The Company covenants that, prior to a Special Event Exchange of a
series of Preferred Securities which is then outstanding, the Company shall:
(i) not cause or permit any LLC Common Securities of the American
General LLC that is the issuer of the Preferred Securities of such series
to be transferred (other than, in the case of the Company, in connection
with a merger or consolidation permitted by Article Eight or, in the case
of the Managing Member of such American General LLC, in connection with any
merger or consolidation involving such Managing Member);
(ii) maintain direct or indirect ownership of all outstanding LLC
Common Securities and other limited liability company interests (other than
Preferred Securities) of the American General LLC that is the issuer of the
Preferred Securities of such series, except as may be permitted by the
applicable LLC Agreement;
(iii) 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 the LLC Common Securities of such American General LLC;
(iv) not voluntarily liquidate, dissolve or wind-up (other than in
connection with a merger or consolidation permitted by Article Eight) or
permit the Managing Member of the American General LLC that is the issuer
of the Preferred
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Securities of such series, or such American General LLC, to voluntarily
liquidate, dissolve or wind-up (except, in the case of such Managing
Member, in connection with any merger or consolidation involving such
Managing Member and, in the case of such American General LLC, in
connection with or after an exchange of all outstanding series of Preferred
Securities of such American General LLC for the related series of
Securities, if so provided in the applicable Written Action);
(v) cause American General Delaware Management Corporation or any
successor thereto by merger or consolidation to remain the Managing Member
of such American General LLC and to perform timely all of its duties as
such Managing Member (including the duty to cause such American General LLC
to declare and pay dividends on such series of Preferred Securities to the
extent set forth in the applicable LLC Agreement and the Written Action
authorizing such series of Preferred Securities); and
(vi) if so provided in the applicable Written Action and in the
supplemental indenture, Board Resolution or other instrument authorizing
the related series of Securities pursuant to Section 301, issue and/or
deliver American General Preferred Stock or American General Common Stock,
as the case may be, upon an election by the holder or holders of the
Preferred Securities of the related series to exchange their Preferred
Securities of such series for Securities of the related series and
thereafter convert such Securities into shares of American General
Preferred Stock or American General Common Stock.
(b) The Company also covenants that, prior to a Special Event Exchange of a
series of Preferred Securities which is then outstanding, the Company shall not
permit the Managing Member of the American General LLC that is the issuer of
such series of Preferred Securities to do any of the following:
(i) at any time at which a Special Trustee has been appointed with
respect to such series of Preferred Securities, directing the time, method
and place of conducting any proceeding for any remedy available to the
Special Trustee or the Trustee, or the exercise of any trust or power
conferred on the Special Trustee or the Trustee, with respect to the
related series of Securities;
(ii) waiving compliance with, or any past default under, the related
series of Securities or this Indenture (to the extent that a Holder of
Securities of such series is entitled to the benefits of the covenant or
agreement waived or breached);
(iii) exercising any right to rescind or annul a declaration that
the principal of the Securities of such related series shall be due and
payable; or
(iv) consenting to any amendment, or modification of the Securities
of such related series or of this Indenture;
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without, in each case, obtaining the prior approval of the holders of at least
66-2/3% of the aggregate liquidation preference of the outstanding Preferred
Securities of such series; provided, however, that, where a waiver or consent to
an amendment or modification of a Security or this Indenture under the related
series of Securities would, under this Indenture, require the waiver or consent
of each Holder of such Securities affected thereby, the Company shall not permit
such Managing Member to grant such waiver or consent without the prior consent
of each holder of the Preferred Securities of such series. The Company shall
not permit such Managing Member to revoke any action previously authorized or
approved by a vote or the consent of the holders of Preferred Securities of such
series without the approval of the holders of at least 66-2/3% of the aggregate
liquidation preference of the Preferred Securities of such series then
outstanding (or, if such action required the approval of each holder of
Preferred Securities of such series, then only with the approval of each such
holder).
SECTION 1008. STATEMENT AS TO COMPLIANCE; CERTAIN NOTICES.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement, which need not comply
with Section 102, signed by the principal executive officer, the principal
financial officer or the principal accounting officer of the Company, as to
his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture. For purposes of this Section 1008, such
compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.
(b) The Company shall deliver to the Trustee, no later than the
Business Day on which the event occurs, written notice of the liquidation,
dissolution or winding-up of an American General LLC if such liquidation,
dissolution or winding-up would cause the principal of one or more series
of Securities related to the Preferred Securities issued by such American
General LLC to mature earlier than the Stated Maturity of any such series
of Securities.
(c) The Company shall deliver to the Trustee, within five days after
the occurrence thereof, written notice of any event which after notice or
lapse of time or both would become an Event of Default pursuant to Section
501.
SECTION 1009. WAIVER OF CERTAIN COVENANTS.
(a) The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 1005 or 1006 and any
covenant not currently included in this Indenture but specified as
applicable to a series of Securities as contemplated by Section 301, with
respect to the Securities of any series if, before or after the time for
such compliance, the Holders of a majority in principal amount of the
Outstanding Securities of such series (and, prior to a Special Event
Exchange with respect to the Securities of such series, the holders of at
least 66 2/3% of the aggregate liquidation preference of the Preferred
Securities of the related series then outstanding) shall, by Act of such
Holders, either waive such
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compliance in such instance or generally waive compliance with such
covenant or condition.
(b) No waiver granted pursuant to this Section 1009 shall extend to
or affect a covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
SECTION 1010. DEFEASANCE OF CERTAIN OBLIGATIONS.
If this Section 1010 is specified, as contemplated by Section 301, to be
applicable to Securities of any series, the Company may omit to comply with any
term, provision or condition set forth in Sections 1005 and 1006 and any
additional covenants not currently included in this Indenture specified as
applicable to the Securities of such series as contemplated by Section 301, if
(a) with reference to this Section 1010, the Company has irrevocably
deposited or caused to be irrevocably deposited (except as provided in
Section 402) with the Trustee, as trust funds and/or obligations in trust,
specifically pledged as security for, and dedicated solely to, the benefit
of the Holders of the Securities of that series, (i) money in an amount, or
(ii) Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms, without
consideration of any reinvestment thereof, will provide not later than one
day before the due date of any payment referred to in clause (A) or (B) of
this subsection (a) money in an amount, or (iii) a combination thereof,
sufficient, as expressed in a Certificate of a Firm of Independent Public
Accountants delivered to the Trustee, to pay and discharge (A) the
principal of (and premium, if any) and interest (including any Additional
Interest) on the Outstanding Securities of that series due on the Stated
Maturity or Maturity of such principal, premium, if any, and interest and
(B) any mandatory sinking fund payments or analogous payments applicable to
Securities of such series on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of such
Securities;
(b) such deposit shall not cause the Trustee with respect to the
Securities of that series to have a conflicting interest for purposes of
the Trust Indenture Act with respect to the Securities of any series;
(c) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument relating to the borrowing of money, pursuant to which in excess
of $10,000,000 principal amount is then outstanding, to which the Company
is a party or by which it is bound;
(d) such deposit would not cause the Outstanding Securities of such
series then listed on the New York Stock Exchange to be delisted as a
result thereof;
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(e) no Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to Securities of that
series shall have occurred and be continuing on the date of such deposit;
(f) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that Holders of the Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result
of such deposit and defeasance of certain obligations and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times, as would have been the case if such deposit and defeasance had
not occurred;
(g) if the Securities of such series are to be redeemed, either
notice of such redemption shall have been given or the Company shall have
given the Trustee irrevocable direction to give notice of such redemption
in the name and at the expense of the Company, under arrangements
satisfactory to the Trustee; and
(h) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the defeasance contemplated by
this Section have been complied with.
In the event that, subsequent to the date a defeasance is effected pursuant
to this Section 1010 with respect to Securities of any series, Additional
Amounts in excess of those established as of the date such defeasance is
effected become payable in respect of such Securities, in order to preserve the
benefits of the defeasance established hereunder with respect to such series,
the Company shall irrevocably deposit or cause to be irrevocably deposited in
accordance with the provisions of subsection (a) of this Section 1010, within
ten Business Days prior to the earlier to occur of (i) one year after the
existence of such excess Additional Amounts is established and (ii) the date the
first payment in respect of any portion of such excess Additional Amounts
becomes due, such additional funds as are necessary to satisfy the provisions of
such subsection (a) as if a defeasance were being effected as of the date of
such subsequent deposit. For purposes of this paragraph, the existence of
excess Additional Amounts shall be deemed to have been established as of the
date the governmental authority imposing the tax, duty, assessment or other
governmental charge resulting in the Additional Amounts first publishes the
legislation, regulation or other enactment adopting such tax, duty, assessment
or other governmental charge. Failure to comply with the requirements of this
paragraph shall result in the termination of the benefits of the defeasance
established by this Section 1010 with respect to the Securities of such series.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the option of
the Company of Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless all Securities of such
series then Outstanding are held by an American General LLC, in which event, at
least five Business Days prior to such Redemption Date and, in any case, unless
a shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of such series to
be redeemed. In the case of any redemption of Securities (i) prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, or (ii) pursuant to an election of
the Company which is subject to a condition specified in the terms of such
Securities, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction or condition.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series with the same terms are to be
redeemed, the particular Securities to be redeemed shall be selected by the
Trustee, not more than 60 days prior to the Redemption Date, from the
Outstanding Securities of such series having such terms not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Security redeemed or to be redeemed only in part, to the portion of
the principal amount of such Security which has been or is to be redeemed.
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SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section 106,
not less than 30 nor more than 60 days prior to the Redemption Date, unless a
shorter period is specified in Section 1108 or in the Securities to be redeemed
or unless all Securities to be redeemed are held by an American General LLC, in
which event such notice shall, except as provided in Section 1108, be given at
least one Business Day prior to such Redemption Date, to each Holder of
Securities to be redeemed. Failure to give such notice by mailing in the manner
therein provided to the Holder of any Security designated for redemption as a
whole or in part, or any defect in the notice to any such Holder, shall not
affect the validity of the proceedings for the redemption of any other such
Security or portion thereof.
Any notice that is given in the manner provided in Section 106 shall be
conclusively presumed to have been duly given, whether or not the Holder of
Securities receives the notice.
All notices of redemption shall state, to the extent applicable:
(a) the Redemption Date;
(b) the Redemption Price and accrued interest (including Additional
Interest), if any;
(c) if less than all Outstanding Securities of any series having the
same terms are to be redeemed, the identification (and, in the case of
partial redemption, the principal amount) of the particular Security or
Securities to be redeemed;
(d) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the Holder of such Security will
receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed;
(e) that on the Redemption Date the Redemption Price and any accrued
interest (including any Additional Interest) shall become due and payable
upon each such Security or portion thereof to be redeemed and, if
applicable, that interest thereon shall cease to accrue on and after said
date;
(f) that a Holder of Securities who desires to convert Securities
called for redemption must satisfy the requirements for conversion
contained in such Securities, the then existing conversion price or rate,
and the date and time when the option to convert shall expire;
(g) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and any accrued interest (including any
Additional Interest) pertaining thereto;
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(h) that the redemption is for a sinking fund, if such is the case;
and
(i) the CUSIP number (or any other numbers used by a Depository to
identify such Securities), if any, of the Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, except in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay on the Redemption Date the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) any accrued interest
(including any Additional Interest) on all the Securities or portions thereof
which are to be redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.
If notice of redemption has been given as provided in Section 1104 (unless
such notice is not required pursuant to such Section or Section 1108), the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, together with any accrued
interest (including any Additional Interest) thereon, and from and after such
date (unless the Company shall default in the payment of the Redemption Price or
any accrued interest (including any Additional Interest)) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price, together with any accrued interest (and any Additional
Interest) to the Redemption Date; provided, however, that, except as may be
otherwise provided with respect to Securities convertible into another security
in the supplemental indenture, Board Resolution or other instrument authorizing
such Securities, installments of interest on Securities whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Regular Record Dates or Special Record Dates,
as the case may be, according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal, any premium and, to the extent permitted
by applicable law, the interest required to be paid shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
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SECTION 1107. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered at
any office or agency of the Company maintained for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series containing identical terms and provisions, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. If a Security in global form is so surrendered,
the Company shall execute, and the Trustee shall authenticate and deliver to the
Depository for such Security, without service charge, a new Security in global
form in a denomination equal to and in exchange for the unredeemed portion of
the principal of the Security in global form so surrendered.
SECTION 1108. PERMITTED VARIATIONS.
If an American General LLC is the Holder of all the Securities of a
particular series, then, in lieu of the provisions set forth in Section 1102,
1103 and 1104, the Company and such Holder may establish such alternative
provisions with respect to such series of Securities as the Company and the
Holder may agree and the Trustee may determine to be acceptable. Additionally,
if a series of Securities is subject to mandatory redemption by reason of the
redemption or pre-payment of the series of Preferred Securities related to such
series of Securities, then no redemption notice need be mailed pursuant to this
Article to the Holder or Holders of such series of Securities.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of such series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
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SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of a series required to be made pursuant
to the terms of such Securities (i) deliver Outstanding Securities of such
series (other than any of such Securities previously called for redemption), and
(ii) apply as a credit Securities of such series which have been redeemed either
at the election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Securities, as provided for by the terms of such Securities;
provided that such Securities so delivered or applied as a credit have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities (or such shorter notice as the Trustee may approve), the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing mandatory sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering or crediting Securities of that series pursuant to
Section 1202, the basis for any such crediting, and the optional amount, if any,
to be added in cash to the next ensuing mandatory sinking fund payment, and will
also deliver to the Trustee any Securities to be so credited and not theretofore
delivered. If such Officers' Certificate shall specify an optional amount to be
added in cash to the next ensuing mandatory sinking fund payment, the Company
shall thereupon be obligated to pay the amount therein specified. Not less than
30 days before each such sinking fund payment date the Trustee shall, subject to
Section 1108, select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and, subject to Section
1108, cause notice of the redemption thereof to be given in the name of and at
the expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
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ARTICLE THIRTEEN
SUBORDINATION
SECTION 1301. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of, premium, if any, and interest (including all Additional Interest) on each
and all of the Securities are hereby expressly made subordinate and subject in
right of payment to the prior payment in full in cash of all Senior
Indebtedness.
SECTION 1302. PAYMENT OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any payment or distribution of assets of the Company 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 the Company (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(a) the holders of Senior Indebtedness shall 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 the commencement of any such Proceeding, whether or not allowed as a
claim against the Company in such Proceeding), before the Holders of the
Securities are entitled to receive any payment or distribution (excluding
any payment described in the last paragraph of this Section 1302 or any
payment described in Section 1309), on account of the principal of,
premium, if any, or interest (including any Additional Interest) on the
Securities or on account of any purchase, redemption or other acquisition
of Securities by the Company or any Subsidiary of the Company (all such
payments, distributions, purchases, redemptions and acquisitions, whether
or not in connection with a Proceeding, herein referred to, individually
and collectively, as a "Securities Payment"); and
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders of the Securities or the Trustee would be
entitled but for the provisions of this Article shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Indebtedness or the
Designated Senior Holders, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented
by each, to the extent necessary to make payment in full in cash of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
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In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received in
connection with any Proceeding any Securities Payment before all Senior
Indebtedness is paid in full or payment thereof is provided for in cash, then
and in such event such Securities Payment shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full
in cash after giving effect to any concurrent payment to or for the holders of
Senior Indebtedness.
For purposes of this Article only, the words "payment or distribution" or
"any payment or distribution of any kind or character, whether in cash, property
or securities" shall not be deemed to include a payment or distribution of
stock or securities of the Company provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law
or of any other corporation provided for by such plan of reorganization or
readjustment, which stock or securities are subordinated in right of payment to
all then outstanding Senior Indebtedness to substantially the same extent, or to
a greater extent than, the Securities are so subordinated as provided in this
Article. The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance, transfer or lease of all or substantially all of its properties
and assets to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a Proceeding for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance, transfer or lease such properties and
assets, as the case may be, shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions set forth in Article
Eight.
SECTION 1303. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
In the event that any Senior Payment Default (as defined below) shall have
occurred and be continuing, then no Securities Payment shall be made, unless and
until such Senior Payment Default shall have been cured or waived in writing or
shall have ceased to exist or all amounts then due and payable in respect of
such Senior Indebtedness (including, without limitation, amounts that have
become and remain due by acceleration) shall have been paid in full in cash.
"Senior Payment Default" means any default in the payment of the principal of,
premium, if any, or interest on any Senior Indebtedness when due, whether at the
stated maturity of any such payment or by declaration of acceleration, call for
redemption, notice of the exercise of an option to require such repayment,
mandatory payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below) shall
have occurred and be continuing, then, upon the receipt by the Company or the
Trustee of written notice of such Senior Nonmonetary Default from any holder or
the Designated Senior Holder of the Senior Indebtedness to which such Senior
Nonmonetary Default relates, no Securities Payment shall be made during the
period (the "Payment Blockage
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Period") commencing on the date of such receipt by the Company or the Trustee of
such written notice and ending on the earlier of (i) the date, if any, on which
the Senior Indebtedness to which such Senior Nonmonetary Default relates is
discharged or such Senior Nonmonetary Default shall have been cured or waived in
writing or shall have ceased to exist and any acceleration of Senior
Indebtedness to which such Senior Nonmonetary Default relates shall have been
rescinded or annulled and (ii) the 179th day after the date of such receipt of
such written notice. No more than one Payment Blockage Period may be commenced
with respect to the Securities during any period of 360 consecutive days and
there shall be a period of at least 181 consecutive days in each period of 360
consecutive days when no Payment Blockage Period is in effect. Following the
commencement of any Payment Blockage Period, the holders of Senior Indebtedness
shall be precluded from commencing a subsequent Payment Blockage Period until
the conditions set forth in the preceding sentence shall have been satisfied.
For all purposes of this paragraph, no Senior Nonmonetary Default that existed
or was continuing on the date of commencement of any Payment Blockage Period
with respect to the Senior Indebtedness initiating such Payment Blockage Period
shall be, or may be made, the basis for the commencement of a subsequent Payment
Blockage Period by any holder of Senior Indebtedness or a Designated Senior
Holder unless such Senior Nonmonetary Default shall have been cured for a period
of not less than 90 consecutive days. "Senior Nonmonetary Default" means any
default (other than a Senior Payment Default) or any event (other than a Senior
Payment Default) which, after notice or lapse of time (or both), would become an
event of default, under the terms of any instrument or agreement pursuant to
which any Senior Indebtedness is outstanding, permitting one or more holders of
such Senior Indebtedness or a Designated Senior Holder to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable.
In the event that, notwithstanding the foregoing, the Company shall make
any Securities Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section, then in such event such Securities Payment shall be
held in trust and paid over and delivered forthwith to the Designated Senior
Holders under the Senior Indebtedness or, if there is no Designated Senior
Holder with respect to such Senior Indebtedness, to the holders of such Senior
Indebtedness.
The provisions of this Section shall not apply to any Securities Payment
with respect to which Section 1302 hereof would be applicable.
SECTION 1304. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent the Company, at any time except during the
pendency of any Proceeding referred to in Section 1302 hereof or under the
conditions described in Section 1303 hereof, from making Securities Payments.
Nothing in this Article shall have any effect on the right of the Holders or the
Trustee to accelerate the maturity of the Securities upon the occurrence of an
Event of Default, but, in that event, no payment may be made in violation of the
provisions of this Article with respect to the Securities. If payment of the
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Securities is accelerated because of an Event of Default, the Company shall
promptly notify the holders of the Senior Indebtedness (or their
representatives) of such acceleration.
SECTION 1305. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full in cash of all Senior Indebtedness, the
Holders of the Securities shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness until the principal of,
premium, if any, and interest (including Additional Interest) on the Securities
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments pursuant to
the provisions of this Article to the holders of Senior Indebtedness by Holders
of the Securities or the Trustee, shall, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Securities, be
deemed to be a payment or distribution by the Company to or on account of the
Senior Indebtedness.
SECTION 1306. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders on the one hand and the holders
of Senior Indebtedness on the other hand. Nothing contained in this Article or
elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under this
Article of the holders of Senior Indebtedness, is intended to rank equally with
all other general obligations of the Company), to pay to the Holders of the
Securities the principal of, premium, if any, and interest (including Additional
Interest) on the Securities as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder or,
under the conditions specified in Section 1303, to prevent any payment
prohibited by such Section or enforce their rights pursuant to the penultimate
paragraph in Section 1303.
SECTION 1307. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company, whether in bankruptcy, insolvency, receivership
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proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file a proper claim at least 30 days before the expiration of the time
to file such claim, then the holders of the Senior Indebtedness and their
agents, trustees or other representatives are authorized to do so (but shall in
no event be liable for any failure to do so) for and on behalf of the Holders of
the Securities.
SECTION 1308. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness to
enforce the subordination provisions provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) permit the Company to borrow, repay and then
reborrow any or all of the Senior Indebtedness; (iii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iv) release any Person liable in any manner for the collection of
Senior Indebtedness; (v) exercise or refrain from exercising any rights against
the Company and any other Person; and (vi) apply any sums received by them to
Senior Indebtedness.
SECTION 1309. TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of Government Obligations held in trust by the Trustee
under Article Four, under Section 1010, or under a supplemental indenture
containing the provisions described in Section 901(i) for the payment of the
principal of, premium, if any, and interest (including Additional Interest) on
any series of Securities shall not be subordinated to the prior payment of any
Senior Indebtedness or subject to the restrictions set forth in this Article,
and no Holder of such Securities nor the Trustee shall be obligated to pay over
any such amount to the Company, any holder of Senior Indebtedness, any
Designated Senior Holder or any other creditor of the Company.
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SECTION 1310. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company that would prohibit the making of any payment to or by the
Trustee in respect of the Securities or that would end such prohibition.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that which would prohibit the making of any payment to or by the
Trustee in respect of the Securities or that would end such prohibition, unless
and until a Responsible Officer of the Trustee assigned to its Corporate Trustee
Administration Department (or in the absence of such a department, any
Responsible Officer of the Trustee) shall have received written notice thereof
from the Company, any holder of Senior Indebtedness or any Designated Senior
Holder; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601 hereof, shall be entitled in all
respects to assume that no such facts exist; provided, however, that, if prior
to the close of business on the Business Day immediately preceding the date upon
which by the terms hereof any monies become payable hereunder (including,
without limitation, the payment of either the principal of, premium, if any, or
interest on a Security), the Trustee or any Paying Agent shall not have received
with respect to such monies the notice provided for in this Section 1310, then,
anything herein contained to the contrary notwithstanding, the Trustee or such
Paying Agent shall have full power and authority to receive such monies and
apply the same to the purpose for which they were received on the date payment
is due and, unless such payment is not made on that date, shall not be affected
by any notice to the contrary which may be received by it on or after the date
upon which such monies become due and payable. Any notice required or permitted
to be given to the Trustee by the Company, a holder of Senior Indebtedness or
any Designated Senior Holder shall be in writing and shall be sufficient for
every purpose hereunder if in writing and either (i) sent via facsimile to the
Trustee to a facsimile number provided by the Trustee, the receipt of which
shall be confirmed via telephone, or (ii) mailed, first class postage prepaid,
or sent by overnight carrier, to the Trustee addressed to it, attention of its
Corporate Trustee Administration Department, at the address of its principal
corporate trust office specified in the first paragraph of this Indenture or at
any other address furnished in writing to the Company, such holder of Senior
Indebtedness or such Designated Senior Holder.
Subject to the provisions of Section 601 hereof, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness or Designated Senior
Holder to establish that such notice has been given by such holder of Senior
Indebtedness or Designated Senior Holder. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person representing himself to be a holder of Senior Indebtedness
or Designated Senior Holder to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, or if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
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SECTION 1311. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 601 hereof, and
the Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article,
provided that the foregoing shall apply only if such court has been apprised of
the provisions of this Article.
SECTION 1312. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the provisions of Section 601, the Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be
liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION 1313. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607 hereof.
SECTION 1314. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee (or the Company
or an Affiliate of the Company) shall have been appointed by the Company and be
then acting hereunder, the term "Trustee" as used in this Article shall in such
case (unless the context otherwise requires) be construed as extending to and
including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article in addition to or in
place of the Trustee.
SECTION 1315. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS.
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Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1401. APPLICABILITY OF ARTICLE.
If a supplemental indenture, Board Resolution or other instrument
authorizing a series of Securities pursuant to Section 301 provides that a
meeting of Holders of Securities of such series shall be called pursuant to this
Article to make, give or take any request, demand, authorization, direction,
notice, consent, approval, waiver or other action specified in such supplemental
indenture, Board Resolution or other instrument, then the provisions of this
Article shall be applicable except as otherwise specified in such supplemental
indenture, Board Resolution or other instrument.
SECTION 1402. CALL, NOTICE AND PLACE OF MEETINGS.
(a) If a supplemental indenture, Board Resolution or other instrument
authorizing a series of Securities provides that the Trustee shall call a
meeting of the Holders of such Securities, then, upon the satisfaction of any
notice requirements or other conditions specified in such supplemental
indenture, Board Resolution or other instrument, the Trustee shall call a
meeting of Holders of Securities of such series for the purpose specified in
such supplemental indenture, Board Resolution or other instrument, to be held at
such time and at such place in the Borough of Manhattan, The City of New York,
or in such other place within the United States as the Trustee shall determine.
Notice of every meeting of Holders of Securities of any series, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be given, in the manner provided in Section
106, not less than 10 nor more than 180 days prior to the date fixed for the
meeting.
(b) If the Trustee shall not have mailed the notice of such meeting within
14 days after the date specified in such supplemental indenture, Board
Resolution or other instrument or shall not thereafter proceed to cause the
meeting to be held, then the Company or the Holders of at least 10% in aggregate
principal amount of the Outstanding Securities of such series, as the case may
be, may determine the time and the place in the Borough of Manhattan, The City
of New York, for such meeting and may call such meeting for such purposes by
giving notice thereof as provided in subsection (a) of this Section.
SECTION 1403. PERSONS ENTITLED TO VOTE AT MEETINGS.
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To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (i) a Holder of one or more Outstanding Securities of
such series, or (ii) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1404. QUORUM; ACTION.
The Persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any action
is to be taken at such meeting which the supplemental indenture, Board
Resolution or other instrument authorizing such series of Securities expressly
provides may be given by the Holders of not less than 66 2/3%, or a greater
percentage, in aggregate principal amount of the Outstanding Securities of such
series, then with respect to such action (and only such action), the Persons
entitled to vote 66 2/3%, or such greater percentage, in aggregate principal
amount of the Outstanding Securities of such series shall constitute a quorum.
In the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1402(a), except that such notice shall be given not
less than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum with
respect to each action to be considered at such meeting.
Any resolution presented to a meeting duly convened or an adjourned meeting
duly reconvened at which a quorum is present may be adopted only by the
affirmative vote of the Holders of the percentage in aggregate principal amount
of the Outstanding Securities of the applicable series specified in the
supplemental indenture, Board Resolution or other instrument authorizing such
series or herein as being required to take such action.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series, whether or not present
or represented at the meeting.
SECTION 1405. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
MEETINGS.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of any series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of
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votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1402(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall
be entitled to one vote for each minimum authorized denomination of Securities
of such series held or represented by him; provided, however, that no vote shall
be cast or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called pursuant
to Section 1402 at which a quorum is present may be adjourned from time to time
by Persons entitled to vote a majority in aggregate principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 1406. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1402 and, if
applicable, Section 1404. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 1501. NO RECOURSE AGAINST OTHERS.
An incorporator or any past, present or future director, officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. Such waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 1502. SET-OFF.
Notwithstanding anything to the contrary in this Indenture or in any
Security of any series, prior to a Special Event Exchange with respect to a
series of Preferred Securities, the Company shall have the right to set-off and
apply against any payment it is otherwise required to make hereunder or
thereunder with respect to the principal of, premium, if any, or interest
(including any Additional Interest) on the Securities of such series with and to
the extent the Company has theretofore made, or is concurrently on the date of
such payment making, a payment with respect to the Preferred Securities of the
series related to such series of Securities under the applicable Guarantee to
provide funds to the applicable American General LLC to pay dividends on, or the
redemption price or liquidation preference of, such series of Preferred
Securities. Contemporaneously with, or as promptly as practicable after, any
such payment under such Guarantee to pay dividends on, or the redemption price
or the liquidation preference of, a series of Preferred Securities, the Company
shall deliver to the Trustee an Officers' Certificate (upon which the Trustee
shall be entitled to rely conclusively without any requirement to investigate
the facts contained therein) to the effect that such payment has been made and
that, as a result of such payment, the corresponding payment under the related
series of Securities has been set-off in accordance with this Section 1502.
SECTION 1503. ASSIGNMENT; BINDING EFFECT.
The Company shall have the right at all times to assign any of its rights
or obligations under this Indenture to a direct or indirect wholly-owned
Subsidiary of the Company, provided that, in the event of any such assignment,
the Company shall remain primarily liable for the performance of all such
obligations. This Indenture may also be assigned by the Company in connection
with a transaction described in Article Eight. This Indenture shall be binding
upon and inure to the benefit of the Company, the Trustee, the Holders, any
Security Registrar, Paying Agent, and Authenticating Agent and, to the extent
specifically set forth herein, the holders of Senior Indebtedness and their
respective successors and assigns. The provisions of Section 903(a) (to the
extent relating to Preferred Securities), Section 1006 and Section 1007 are for
the benefit of the holders of the series of Preferred Securities referred to
therein and, prior to a Special Event Exchange with respect to such series, may
be enforced by such holders. A holder of a Preferred Security shall not have
the right, as such a holder, to enforce any other provision of this Indenture.
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SECTION 1504. ADDITIONAL INTEREST.
Whenever there is mentioned in this Indenture, in any context, the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security of any series, such mention shall be deemed to include mention of the
payment of Additional Interest provided for by the terms of such series of
Securities to the extent that, in such context, Additional Interest is, were or
would be payable in respect thereof pursuant to such terms and express mention
of the payment of Additional Interest in any provisions hereof shall not be
construed as excluding Additional Interest in those provisions hereof where such
express mention is not made.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
AMERICAN GENERAL CORPORATION
[CORPORATE SEAL]
By: /S/ AUSTIN P. YOUNG
Austin P. Young
Senior Vice President &
Chief Financial Officer
Attest:
By: /S/ JAMES L. GLEAVES
James L. Gleaves
/S/ JOHN A. ADKINS Vice President & Treasurer
Corporate Secretary
CHEMICAL BANK
[CORPORATE SEAL]
By: /S/ F.J. GRIPPO
F.J. Grippo
Vice President
Attest:
/S/ ANDREW M. DECK
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STATE OF TEXAS: (S)
(S)
COUNTY OF HARRIS: (S)
On the 30th day of May, 1995, before me personally came Austin P.
Young, to me known, who, being by me duly sworn, did depose and say that he is
Senior Vice President & Chief Financial Officer of AMERICAN GENERAL CORPORATION,
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.
/S/ PAM TUDOR
Notary Public
STATE OF TEXAS: (S)
(S)
COUNTY OF HARRIS: (S)
On the 30th day of May, 1995, before me personally came James L.
Gleaves, to me known, who, being by me duly sworn, did depose and say that he is
Vice President & Treasurer of AMERICAN GENERAL CORPORATION, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/S/ PAM TUDOR
Notary Public
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STATE OF NEW YORK: (S)
(S)
COUNTY OF NEW YORK: (S)
On the 1st day of June, 1995, before me personally came F. J. Grippo,
to me known, who, being by me duly sworn, did depose and say that he resides at
Montgomery, New York; that he is a Vice President of Chemical Bank, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/S/ JAMES FOLEY
Notary Public
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EXHIBIT 4(i)
TERMS OF THE 6% CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES, SERIES A
DATED AS OF MAY 24, 1995
WRITTEN ACTION OF THE MANAGING MEMBER
PURSUANT TO SECTION 7.1(B) OF THE AMENDED
AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF AMERICAN GENERAL DELAWARE, L.L.C.
The undersigned Managing Member of American General Delaware, L.L.C.,
a Delaware limited liability company (the "Company"), pursuant to Section 7.1(b)
of the Amended and Restated Limited Liability Company Agreement of the Company
(the "Agreement") dated as of May 24, 1995 by and among American General
Corporation ("American General"), the Managing Member and the Persons who become
Members of the Company in accordance with the provisions thereof, does hereby
authorize the issue of, and establish the relative rights, powers, preferences,
limitations and restrictions of, a series of Preferred Securities as follows:
1. Definitions. All terms defined in the Agreement and not otherwise
defined herein shall have for purposes hereof the meanings provided for therein.
The following additional terms have the respective meanings specified below:
"Additional Dividends" means the amount of dividends that is payable
by the Company on any dividend arrearages in respect of the Series A Preferred
Securities at the rate of 6% per annum compounded monthly.
"American General Common Stock" means the Common Stock, par value $.50
per share, of American General. However, subject to the anti-dilution
provisions of the Series A Debentures, shares of American General Common Stock
issuable on conversion of Series A Debentures or upon exchange of the American
General Preferred Stock shall include only shares of the class designated as
Common Stock of American General on the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference as to the payment of dividends or the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding-up
of American General and which are not subject to redemption by American General;
provided, that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassification bears to the total number of shares of all such classes
resulting from all such reclassification.
"American General Preferred Stock" means the Series A Cumulative
Convertible Preferred Stock, par value $1.50 per share, of American General with
such terms and provisions as set forth in the Restated Articles of
Incorporation, as amended, and in the applicable Statement of Resolution
Establishing a Series of Shares.
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"Book-Entry Interest" means a beneficial interest in the global
certificates representing Series A Preferred Securities, ownership and transfers
of which shall be made through the book-entry system of a Clearing Agency as
described in Section 12.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, that is acting as depositary for the Series A Preferred Securities and
in whose name (or nominee's name) shall be registered one or more global
certificates representing Series A Preferred Securities and which shall
undertake to effect book-entry transfers and pledges of interests in the Series
A Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of interests in securities
deposited with the Clearing Agency.
"Conversion Agent" has the meaning set forth in Section 8(c) hereof.
"Conversion Date" has the meaning set forth in Section 8(b) hereof.
"Conversion Expiration Date" has the meaning set forth in Section
8(d)(ii) hereof.
"Conversion Price" has the meaning set forth in Section 8(a) hereof.
"Current Market Price" of shares of American General Common Stock for
any day means the reported last sale price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the NYSE
Composite Tape, or, if the American General Common Stock is not listed or
admitted to trading on the NYSE, on the principal national securities exchange
on which the American General Common Stock is listed or admitted to trading, or
if the American General Common Stock is not listed or admitted to trading on a
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc., or, if the American General Common
Stock is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which the American General Common Stock is listed
or admitted to trading or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the American General Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any NYSE member
firm selected from time to time by the Board of Directors of American General
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by such Board of Directors.
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"Dividend Payment Date" has the meaning set forth in Section 4(b)
hereof.
"Exchange Election" has the meaning set forth in Section 9(c) hereof.
"Exchange Event" has the meaning set forth in Section 9(b) hereof.
"Exchange Price" means one share of American General Preferred Stock
for each $50.00 principal amount of Series A Debentures.
"Guarantee" means the Guarantee Agreement dated as of May 24, 1995,
executed and delivered by American General for the benefit of the holders from
time to time of the Series A Preferred Securities and other Preferred Securities
of the Company, as amended from time to time.
"Holders" means the registered holders of the Series A Preferred
Securities as they appear on the books and records of the Company.
"Investment Company Event" means that a change in any applicable
United States law or regulation or in the interpretation thereof (including but
not limited to the enactment or imminent enactment of any legislation, the
publication of any judicial decisions, regulatory rulings, regulatory
procedures, or notices or announcements (including notices or announcements of
intent to adopt such procedures or regulations), or a change in the official
position or the interpretation of any law or regulation by any legislative body,
court, governmental authority or regulatory body, irrespective of the manner in
which such change is made known) shall have occurred after May 24, 1995, and
that the Company or American General shall have received an opinion of
nationally recognized independent legal counsel experienced in practice under
the Investment Company Act of 1940, as amended (the "1940 Act"), that, as a
result of such change, there exists more than an insubstantial risk that the
Company is or will be considered an "investment company" which is required to be
registered under the 1940 Act.
"Liquidation Distribution" has the meaning set forth in Section 7
hereof.
"Notice of Conversion" has the meaning set forth in Section 8(b)
hereof.
"Notice of Conversion Expiration" has the meaning set forth in Section
8(d)(iii) hereof.
"Notice of Exchange" has the meaning set forth in Section 6(a) hereof.
"Notice of Exchange Election" has the meaning set forth in Section
9(a) hereof.
"Notice of Redemption" has the meaning set forth in Section 6(a)
hereof.
"NYSE" means the New York Stock Exchange, Inc.
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"Press Release" has the meaning set forth in Section 8(d)(ii) hereof.
"Redemption Price" has the meaning set forth in Section 5(a) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Debentures" means the $281,962,050 aggregate principal
amount (or up to $313,291,100 aggregate principal amount if and to the extent
the over-allotment option granted by the Company to the underwriters of the
Series A Preferred Securities is exercised) of American General's 6% Series A
Convertible Junior Subordinated Debentures due 2025 issued pursuant to the
Indenture and sold by American General to the Company in connection with the
issuance and sale by the Company of the Series A Preferred Securities.
"Series A Preferred Securities" has the meaning set forth in Section 2
hereof.
"Tax Event" means that a change in any applicable United States law or
regulation or in the interpretation thereof (including but not limited to the
enactment or imminent enactment of any legislation, the publication of any
judicial decisions, regulatory rulings, regulatory procedures, or notices or
announcements (including notices or announcements of intent to adopt such
procedures or regulations), or a change in the official position or the
interpretation of any law or regulation by any legislative body, court,
governmental authority or regulatory body, irrespective of the manner in which
such change is made known) shall have occurred after May 24, 1995, and that the
Company or American General shall have received an opinion of nationally
recognized independent legal counsel experienced in such matters that, as a
result of such change, there exists more than an insubstantial risk that (i) the
Company will be subject to federal income tax with respect to the interest
received on the Series A Debentures, (ii) American General will be precluded
from deducting the interest paid on the Series A Debentures for federal income
tax purposes or (iii) the Company will be subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Trading Day" means, with respect to any security listed or admitted
to trading on the NYSE, any day on which such securities are traded on the NYSE,
or, if such security is not listed or admitted to trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted to trading, or, if such security is not listed or admitted to trading
on a national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc., or, if such security is not quoted or
admitted to trading on such quotation system, on the principal quotation system
on which such security is listed or admitted to trading or quoted, or, if not
listed or admitted to trading or quoted on any national securities exchange or
quotation system, in the over-the-counter market.
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2. Designation. A total of 4,500,000 6% Convertible Monthly Income
Preferred Securities, Series A (or up to 5,000,000 6% Convertible Monthly Income
Preferred Securities, Series A if and to the extent the over-allotment option
granted by the Company to the related underwriters is exercised) with a
liquidation preference of $50.00 per Preferred Security are hereby authorized
and designated as "6% Convertible Monthly Income Preferred Securities, Series A"
(collectively, the "Series A Preferred Securities").
3. Voting. Except as otherwise provided in the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended, the
Agreement (including, without limitation, Section 8.1 thereof) or this Written
Action, Preferred Members holding the Series A Preferred Securities shall have,
with respect to such Series A Preferred Securities, no right or power to vote on
any question or matter or in any proceeding or to be represented at, or to
receive notice of, any meeting of Members.
4. Dividends. (a) The Holders shall be entitled to receive, when, as
and if declared by the Company out of funds legally available therefor,
cumulative cash dividends at a rate per annum of 6% of the liquidation
preference of $50.00 per Series A Preferred Security. The amount of dividends
payable for a full monthly dividend period shall be computed on the basis of a
360-day year consisting of 12 months of 30 days each, and for any period shorter
than a full monthly dividend period, shall be computed on the basis of the
actual number of days elapsed in such period. Dividends shall accrue from June
1, 1995, and shall be payable in United States dollars monthly in arrears on the
last day of each calendar month of each year, commencing June 30, 1995.
Dividends shall accrue and be cumulative whether or not they have been earned or
declared and whether or not there are funds of the Company legally available for
the payment of dividends. Upon any dividend arrearages in respect of the Series
A Preferred Securities, the Company shall declare and pay Additional Dividends
in order to provide, in effect, monthly compounding on such dividend arrearages
at a rate of 6% per annum compounded monthly and such Additional Dividends shall
accumulate. In the event that any date on which dividends are payable on the
Series A Preferred Securities is not a Business Day, then payment of the
dividend payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(b) Dividends on the Series A Preferred Securities must be declared
monthly and be paid on the last day of each calendar month (each a "Dividend
Payment Date") to the extent that the Company has, on such date, (x) funds
legally available for the payment of such dividends and (y) cash on hand
sufficient to make such payments, it being understood that to the extent that
funds are not available to pay in full all accumulated and unpaid dividends, the
Company may pay partial dividends to the extent of funds legally available
therefor. For purposes of this Section 4(b), net interest and investment income
from Eligible Investments shall be considered funds available for the payment of
dividends; provided, however, that the principal amount of Eligible Investments
shall not be available as distributions, dividends or otherwise except in
connection with a Liquidation Distribution
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pursuant to Section 15.4 of the Agreement. Dividends will be payable to the
Holders as of the relevant record dates, which, if and so long as the Series A
Preferred Securities are represented by one or more global certificates through
the book-entry system of a Clearing Agency, will be one Business Day prior to
the related Dividend Payment Dates. In the event that the Series A Preferred
Securities shall not continue to be so represented, the Managing Member shall
have the right to select relevant record dates that are more than one Business
Day prior to the related Dividend Payment Dates. In addition, if American
General has extended an interest payment period with respect to the Series A
Debentures pursuant to the Indenture, thereby resulting in the deferral of the
payment of dividends on the Series A Preferred Securities, the Managing Member
shall notify the Holders in writing as to such extended interest payment period
no later than the last date on which notice would be required to be given to the
NYSE of the related record date or Dividend Payment Date.
(c) In the event of an election by a Holder to convert its Series A
Preferred Securities through the Conversion Agent into American General Common
Stock pursuant to Section 8 hereof, neither American General nor the Company
shall make, or be required to make, any payment, allowance or adjustment with
respect to accumulated and unpaid dividends, whether or not in arrears, on such
converted Series A Preferred Securities, except that Holders at the close of
business on a record date for the payment of dividends on the Series A Preferred
Securities will be entitled to receive the dividend payable on such Series A
Preferred Securities on the related Dividend Payment Date notwithstanding the
conversion of such Series A Preferred Securities into American General Common
Stock following such record date but prior to such Dividend Payment Date.
5. Redemption and Exchange. (a) If at any time following the Conversion
Expiration Date, less than ten percent (10%) of the aggregate number of Series A
Preferred Securities issued hereunder remains outstanding, such Series A
Preferred Securities shall be redeemable at the option of the Company (subject
to the prior consent of American General), in whole but not in part, at a cash
redemption price equal to the liquidation preference for such Series A Preferred
Securities plus accumulated and unpaid dividends (whether or not earned or
declared), including any Additional Dividends, to the date fixed for redemption
thereof (the "Redemption Price"). American General shall have the right to
cause the Company to exercise such redemption option.
(b) Upon repayment by American General of the principal of the Series
A Debentures at stated maturity, earlier redemption or otherwise, including as a
result of the acceleration of the Series A Debentures upon the occurrence of an
Event of Default under the Indenture with respect to the Series A Debentures,
the Series A Preferred Securities shall be subject to mandatory redemption, in
whole but not in part, by the Company, and the proceeds from such repayment
shall be applied to redeem the Series A Preferred Securities at the Redemption
Price (unless such proceeds are used to fund the aggregate Liquidation
Distributions on the Series A Preferred Securities in connection with the
liquidation, dissolution or winding-up of the Company). In case of such
repayment, the Series A Preferred Securities will only be redeemed when
repayment of the Series A Debentures has actually been received by the Company.
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(c) The Series A Preferred Securities shall be redeemable at the
option of the Company (subject to the prior consent of American General), in
whole or in part from time to time, on or after May 31, 2003 at the Redemption
Price. The Company may not redeem the Series A Preferred Securities in part
unless all accumulated and unpaid dividends (whether or not earned or declared),
including any Additional Dividends, have been paid in full on all Series A
Preferred Securities for all monthly dividend periods terminating on or prior to
the date of redemption. American General shall have the right to cause the
Company to exercise such redemption option.
(d) At any time after the occurrence of a Tax Event or an Investment
Company Event, the Company (subject to the prior consent of American General)
may exchange, in whole but not in part, the Series A Preferred Securities for
Series A Debentures having an aggregate principal amount and accrued and unpaid
interest equal to the Redemption Price. Upon any such exchange, American
General will use its best efforts to have the Series A Debentures listed on the
NYSE or, if the Series A Preferred Securities are not then listed on the NYSE,
such other exchange on which the Series A Preferred Securities may then be
listed. American General shall have the right to cause the Company to exercise
its right to effect any such exchange for Series A Debentures.
(e) Subject to applicable law, American General or its subsidiaries
may at any time and from time to time purchase outstanding Series A Preferred
Securities by tender, in the open market or otherwise.
6. Redemption and Exchange Procedures. (a) Notice of any redemption
(optional or mandatory) of the Series A Preferred Securities (a "Notice of
Redemption") and notice of any exchange of the Series A Preferred Securities for
Series A Debentures (a "Notice of Exchange") shall be irrevocable and shall be
given by the Company by mail not fewer than 30 nor more than 60 calendar days
prior to the date fixed for redemption or exchange thereof to American General
and (i) with respect to a Notice of Redemption, to each Holder of Series A
Preferred Securities that are being redeemed and (ii) with respect to a Notice
of Exchange, to each Holder of Series A Preferred Securities. For purposes of
the calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 6(a), a Notice of Redemption or
Notice of Exchange shall be deemed to be given on the day such notice is first
mailed by first-class mail, postage prepaid, to each appropriate Holder of
Series A Preferred Securities. A Notice of Redemption or Notice of Exchange
shall be addressed to each appropriate Holder of Series A Preferred Securities
at the address of such Holder appearing in the books and records of the Company.
If all of the Series A Preferred Securities are represented by Book-Entry
Interests, Notices of Redemption or Notices of Exchange shall be sent to the
Clearing Agency. No defect in the Notice of Redemption or Notice of Exchange or
in the mailing thereof with respect to any Series A Preferred Security shall
affect the validity of the redemption or exchange proceedings with respect to
any other Series A Preferred Security.
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(b) If the Company issues a Notice of Redemption, then, by 12:00 noon,
New York time, on the date fixed for redemption, American General will repay to
the Company an aggregate principal amount of the Series A Debentures, which,
together with accrued and unpaid interest thereon, will be an amount sufficient
to pay the Redemption Price for the Series A Preferred Securities to be
redeemed. If the Series A Preferred Securities are represented by Book-Entry
Interests, the Company shall irrevocably deposit such funds on the date fixed
for redemption with the Clearing Agency and give the Clearing Agency irrevocable
instructions and authority to pay the Redemption Price to the Holders of the
Series A Preferred Securities to be redeemed, and if the Series A Preferred
Securities are not represented by Book-Entry Interests, the Company shall
irrevocably deposit such funds with the paying agent for the Series A Preferred
Securities and give such paying agent such irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Series A Preferred
Securities to be redeemed. If a Notice of Redemption shall have been given and
funds irrevocably deposited as required, then immediately prior to the close of
business on the date of such deposit, all rights of the Holders of such Series A
Preferred Securities so called for redemption will cease, except the right of
such Holders to receive the Redemption Price, but without additional interest
from and after such redemption date. In the event that any date fixed for
redemption of Series A Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price is improperly withheld
or refused and not paid either by the Company or by American General (pursuant
to the Guarantee), dividends on the Series A Preferred Securities called for
redemption (including any Additional Dividends) will continue to accumulate at
the then applicable rate, from the original redemption date to the date that the
Redemption Price is actually paid and the Holders of such Series A Preferred
Securities may exercise all of their rights as Holders thereof.
(c) If the Company issues a Notice of Exchange, then following the
date fixed for the exchange of Series A Preferred Securities for Series A
Debentures (as set forth in the Notice of Exchange), (i) the Series A Preferred
Securities will no longer be deemed to be outstanding, (ii) certificates
representing Series A Debentures will be issued to holders of certificates
representing Series A Preferred Securities, upon surrender of such certificates
to the Company or its agent for exchange, (iii) any certificates representing
Series A Preferred Securities not so surrendered for exchange will be deemed to
represent Series A Debentures having a principal amount and accrued and unpaid
interest equal to the Redemption Price of such Series A Preferred Securities
until such certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made with respect to
such Series A Debentures) and (iv) all rights of Holders of Series A Preferred
Securities will cease, except the right of such Holders to receive Series A
Debentures upon surrender of certificates representing Series A Preferred
Securities.
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7. Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company (other than in connection
with or after the exchange of the Series A Preferred Securities for the Series A
Debentures as set forth in Section 5(d) or for American General Preferred Stock
as set forth in Section 9), the Holders of Series A Preferred Securities then
outstanding will be entitled to receive out of the assets of the Company
(including any Eligible Investments or amounts deposited in the Eligible
Investment Account) legally available for distribution to Members, after
satisfaction of liabilities of creditors as required by the Delaware Act but
before any distribution of assets is made with respect to any Interest in the
Company ranking junior to the Series A Preferred Securities as to the
distribution of assets upon such liquidation, dissolution or winding-up of the
Company, but together with Preferred Members holding Preferred Securities or any
other Interests in the Company then outstanding ranking pari passu with the
Series A Preferred Securities as to the distribution of assets upon such
liquidation, dissolution or winding-up of the Company, an amount equal to the
aggregate of the liquidation preference of $50.00 per Series A Preferred
Security plus all accumulated and unpaid Dividends (whether or not earned or
declared), including any Additional Dividends, to the date of payment (the
"Liquidation Distribution"). A merger, consolidation, replacement, conveyance,
transfer or lease in accordance with the provisions of Section 2.8 of the
Agreement shall not be deemed to be a liquidation, dissolution or winding-up of
the Company for purposes of this Section 7.
8. Conversion Rights. The Holders of Series A Preferred Securities shall
have the right, at their option, at any time before the close of business on the
Conversion Expiration Date, to cause the Conversion Agent to convert Series A
Preferred Securities, on behalf of the converting Holders, into shares of
American General Common Stock in the manner described herein and subject to the
following terms and conditions:
(a) The Series A Preferred Securities will be convertible at the
office of the Conversion Agent into validly issued, fully paid and nonassessable
shares of American General Common Stock pursuant to the Holder's direction to
the Conversion Agent (i) to exchange such Series A Preferred Securities for a
portion of the Series A Debentures theretofore held by the Company on the basis
of one Series A Preferred Security per $50.00 principal amount of the Series A
Debentures, and (ii) to immediately convert such amount of Series A Debentures
into validly issued, fully paid and nonassessable shares of American General
Common Stock at an initial conversion rate of 1.2288 shares of American General
Common Stock per $50.00 principal amount of Series A Debentures (equivalent to a
conversion price of $40.69 per share of American General Common Stock), subject
to those adjustments set forth in the terms of the Series A Debentures (as so
adjusted, "Conversion Price").
(b) In order to convert Series A Preferred Securities into American
General Common Stock as contemplated in Section 8(a) hereof, a Holder shall
surrender the Series A Preferred Securities to be converted to the Conversion
Agent, together with an irrevocable notice of conversion (i) setting forth the
number of Series A Preferred Securities to be converted and the name or names,
if other than the Holder, in which the shares of American General Common Stock
and of any Series A Preferred Securities not
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to be so converted are to be issued (subject to compliance with applicable legal
requirements if any of such certificates are to be issued in a name other than
the name of the Holder), (ii) directing the Conversion Agent (a) to exchange
such Series A Preferred Securities for a portion of the Series A Debentures held
by the Company (at the rate of exchange specified in Section 8(a) hereof) and
(b) to immediately convert such Series A Debentures, on behalf of such Holder,
into American General Common Stock (at the Conversion Price specified in Section
8(a) hereof) and (iii) setting forth the address or addresses to which such
Holder wishes delivery to be made of such certificate or certificates for
American General Common Stock to be issued upon such conversion (the "Notice of
Conversion"). Holders may obtain copies of the required form of the Notice of
Conversion from the Conversion Agent. If the Notice of Conversion is received
by the Conversion Agent before the close of business on the Conversion
Expiration Date, the Conversion Agent shall notify the Company of the Holder's
election to exchange Series A Preferred Securities for a portion of the Series A
Debentures held by the Company and the Company shall, upon receipt of such
notice, deliver to the Conversion Agent the specified principal amount of Series
A Debentures for conversion in accordance with this Section 8. The Conversion
Agent shall thereupon notify American General of the Holder's election to
convert such Series A Debentures into the specified number of shares of American
General Common Stock. Series A Preferred Securities shall be deemed to have
been converted immediately prior to the close of business on the day on which a
Notice of Conversion relating to such Series A Preferred Securities is received
by the Conversion Agent in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive the American
General Common Stock issuable upon conversion of the Series A Debentures shall
be treated for all purposes as the record holder or holders of such American
General Common Stock at such time. No fractional shares of American General
Common Stock will be issued as a result of conversion, but in lieu thereof such
fractional interest will be paid in cash by American General as contemplated in
Section 8(e). As promptly as practicable on or after the Conversion Date,
American General shall issue and deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares of American General
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fractional share of American General Common Stock, whereupon
the Conversion Agent shall distribute such certificate or certificates and cash
payment, if any, to the Person or Persons entitled to receive the same at the
address or addresses specified in the Notice of Conversion.
(c) Each Holder of a Series A Preferred Security by his acceptance
thereof appoints the transfer agent for the Series A Preferred Securities as
"Conversion Agent" for the purpose of effecting the conversion of Series A
Preferred Securities in accordance with this Section 8 and the exchange of
Series A Preferred Securities for American General Preferred Stock in accordance
with Section 9 hereof. In effecting the conversion and exchange transactions
described in this Section 8 and Section 9 hereof, the Conversion Agent shall be
acting as agent of the Holders of Series A Preferred Securities directing it to
effect such conversion or exchange transactions. The Conversion Agent is hereby
authorized (i) to exchange Series A Preferred Securities from time to time for
Series A Debentures held by the Company in connection with the conversion or
exchange of such Series A Preferred Securities in accordance with this Section 8
and Section 9 hereof, (ii) to
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convert all or a portion of the Series A Debentures into American General Common
Stock and thereupon to deliver such shares of American General Common Stock, all
in accordance with the provisions of this Section 8, and to deliver to the
Company a new Series A Debenture or Debentures for any resulting unconverted
principal amount and (iii) to exchange all or a portion of the Series A
Debentures for shares of American General Preferred Stock and thereupon to
deliver such shares of American General Preferred Stock, all in accordance with
the provisions of Section 9 hereof.
(d) (i) On and after May 31, 2000, the Company shall have the right,
at its option, to cause the conversion rights of Holders of the Series A
Preferred Securities set forth in this Section 8 to expire if (x) the
Company shall have paid in full all accumulated and unpaid dividends
(whether or not earned or declared), including any Additional Dividends, on
all of the Series A Preferred Securities for all dividend periods
terminating on or prior to such date and (y) for 20 Trading Days within any
period of 30 consecutive Trading Days, including the last Trading Day of
such period, the Current Market Price of the American General Common Stock
on each of such 20 Trading Days shall have exceeded 120% of the Conversion
Price in effect on such Trading Day. American General shall have the right
to cause the Company to exercise such conversion expiration option.
(ii) In order to exercise its option to cause the conversion rights of
Holders to expire, the Company must issue a press release for publication
on the Dow Jones News Service or on a comparable news service (the "Press
Release") prior to the opening of business on the second Trading Day after
any period in which the conditions in Section 8(d)(i) have been met, which
shall state that the Company has elected to exercise its right to
extinguish the conversion rights of Holders of Series A Preferred
Securities, specify the Conversion Expiration Date and provide the
Conversion Price of the Series A Preferred Securities and the Current
Market Price of the American General Common Stock, in each case as of the
close of business on the Trading Day next preceding the date of the Press
Release. If the Company exercises the option described in this Section
8(d), the "Conversion Expiration Date" shall be the close of business on
the Business Day selected by the Company which shall be not less than 30 or
more than 60 calendar days after the date on which the Company issues the
Press Release; provided, however, that if the Company does not exercise the
option described in this Section 8(d), the "Conversion Expiration Date"
with respect to any Series A Preferred Securities called for redemption
shall be the close of business on the third Business Day prior to the
scheduled date for redemption pursuant to Section 5 hereof, unless the
Company defaults in making payment of the Redemption Price payable on
redemption.
(iii) In addition to the Press Release, notice of the expiration of
conversion rights of Holders of the Series A Preferred Securities (a
"Notice of Conversion Expiration") must be given by the Company by first-
class mail to each Holder of Series A Preferred Securities not more than
four Business Days after the Company issues the Press Release. Each such
mailed Notice of Conversion Expiration shall state: (1) the Conversion
Expiration Date; (2) the Conversion Price of the Series A
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Preferred Securities and the Current Market Price of the American General
Common Stock, in each case as of the close of business on the Trading Day
next preceding the date of the Press Release; (3) the place or places at
which a Notice of Conversion may be given and Series A Preferred Securities
may be surrendered prior to the Conversion Expiration Date for certificates
representing shares of American General Common Stock; and (4) such other
information or instructions as the Company deems necessary or advisable to
enable a Holder to exercise its conversion right hereunder. For purposes
of the calculation of the Conversion Expiration Date and the dates on which
notices are given pursuant to this Section 8(d)(iii), a Notice of
Conversion Expiration shall be deemed to have been given on the day such
notice is first mailed by first-class mail, postage prepaid, to each Holder
of Series A Preferred Securities at the address of such Holder appearing in
the books and records of the Company (whether or not any such Holder
receives the Notice of Conversion Expiration). No defect in the Notice of
Conversion Expiration or in the mailing thereof with respect to any Series
A Preferred Security shall affect the validity of such notice with respect
to any other Series A Preferred Security. As of the close of business on
the Conversion Expiration Date, the Series A Preferred Securities shall be
deemed to be non-convertible securities.
(e) No fractional shares of American General Common Stock will be
issued as a result of conversion, but in lieu thereof such fractional interest
will be paid in cash (based on the Current Market Price of the American General
Common Stock on the date on which the certificate or certificates for such
shares of Series A Preferred Securities were duly surrendered for conversion,
or, if such date is not a Trading Day for the American General Common Stock, on
the next Trading Day) by American General to the Conversion Agent, which in turn
will make such payment to the Holder or Holders of Series A Preferred Securities
so converted.
(f) American General shall at all times reserve and keep available out
of its authorized and unissued American General Common Stock, solely for
issuance upon the conversion of the Series A Debentures, free from any
preemptive or other similar rights, such number of shares of American General
Common Stock as shall from time to time be issuable upon the conversion of all
the Series A Debentures then outstanding. Notwithstanding the foregoing,
American General shall be entitled to deliver upon conversion of Series A
Debentures, shares of American General Common Stock reacquired and held in the
treasury of American General (in lieu of the issuance of authorized and unissued
shares of American General Common Stock), so long as any such treasury shares
are free and clear of all liens, charges, claims, equities, security interests
or encumbrances. Any shares of American General Common Stock issued and
delivered upon conversion of the Series A Debentures and exchange of the Series
A Preferred Securities shall be duly authorized, validly issued, fully paid and
nonassessable. The Conversion Agent shall deliver the shares of American
General Common Stock received upon conversion of the Series A Debentures and
exchange of the Series A Preferred Securities to the converting Holder, free and
clear of all liens, charges, claims, equities, security interests and
encumbrances, except for United States withholding taxes. Each of American
General and the Company shall use its best efforts to obtain and keep in force
such governmental or regulatory permits or other
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authorizations as may be required by law, and shall comply with all applicable
requirements as to registration or qualification of the American General Common
Stock (and all listing requirements of any stock exchange on which the American
General Common Stock is then listed that are at the time applicable), in order
to enable American General to lawfully issue and deliver such number of shares
of American General Common Stock to the Conversion Agent as shall from time to
time be sufficient to effect the conversion of all of the Series A Debentures
and the Conversion Agent to lawfully deliver the American General Common Stock
upon conversion of the Series A Preferred Securities to the Person or Persons
entitled thereto.
(g) American General will pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of the issue or delivery
of shares of American General Common Stock upon conversion of Series A
Debentures and exchange of the Series A Preferred Securities. American General
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of American General
Common Stock in a name other than the name of any Holder of Series A Preferred
Securities so converted, and no such issue or delivery shall be made unless and
until the Holder requesting such conversion has paid to the Conversion Agent the
amount of any such tax or has established to the satisfaction of the Conversion
Agent that such tax has been paid or is not payable.
(h) Nothing in Section 8(g) shall limit the requirement of the Company
or the Conversion Agent to withhold taxes pursuant to applicable law or
otherwise require the Managing Member, the Company, American General or the
Conversion Agent to pay any amounts on account of such withholdings.
9. Optional Exchange For American General Preferred Stock. (a) Upon the
occurrence of an Exchange Event, the Holders of a Majority in Liquidation
Preference of the Series A Preferred Securities, voting at a meeting of Holders
called for such purpose or by written consents, may, at their option, direct the
Conversion Agent to (i) exchange all (but not less than all) of the Series A
Preferred Securities then outstanding for Series A Debentures held by the
Company at the rate of one Series A Preferred Security for each $50.00 principal
amount of Series A Debentures, (ii) immediately exchange such Series A
Debentures, on behalf of the Holders, for shares of American General Preferred
Stock, at the Exchange Price and (iii) distribute such shares of American
General Preferred Stock to the Holders. Upon receipt of such directions from
such Holders (the "Notice of Exchange Election"), the Conversion Agent shall
promptly notify the Company, American General and the trustee under the
Indenture of an Exchange Election by delivering copies of the Notice of Exchange
Election to such Persons. The Company, upon receipt of such Notice of Exchange
Election, shall deliver the requisite principal amount of Series A Debentures to
the Conversion Agent in exchange for the Series A Preferred Securities.
American General, upon receipt of such Notice of Exchange Election, shall, in
exchange for the corresponding principal amount of the Series A Debentures,
issue certificates for the number of shares of American General Preferred Stock
issuable at the Exchange Price in the names of the Holders of Series A Preferred
Securities designated in such Notice of Exchange Election.
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(b) The failure of the Holders of Series A Preferred Securities to
receive, for 15 consecutive months, the full amount of dividends, including
arrearages and any Additional Dividends, on the Series A Preferred Securities
(including any such failure caused by an extension of an interest payment period
on the Series A Debentures), shall constitute an "Exchange Event."
(c) As soon as practicable, but in no event later than 30 calendar
days after the occurrence of an Exchange Event, the Managing Member shall, upon
not less than 15 calendar days' written notice by first-class mail to the
Holders of Series A Preferred Securities, convene a meeting of the Holders of
the Series A Preferred Securities (an "Exchange Election Meeting") to determine
whether to cause the Conversion Agent to exchange all of the Series A Preferred
Securities then outstanding for the related portion of Series A Debentures held
by the Company and immediately exchange such Series A Debentures, on behalf of
the Holders, for shares of American General Preferred Stock in the manner set
forth in Section 9(a) hereof. If the Managing Member fails to convene such
Exchange Election Meeting within such 30-day period, the Holders of at least 10%
in Liquidation Preference of the Series A Preferred Securities will be entitled
to convene such Exchange Election Meeting. Upon the affirmative vote of the
Holders of a Majority in Liquidation Preference of the Series A Preferred
Securities at such Exchange Election Meeting or, in the absence of such meeting,
upon receipt by the Company of written consents signed by the Holders of a
Majority in Liquidation Preference of the Series A Preferred Securities, an
election to exchange all outstanding Series A Preferred Securities on the basis
set forth above (an "Exchange Election") will be deemed to have been made.
Holders, by becoming Members of the Company pursuant to Section 2.7 of
the Agreement, will be deemed to have agreed to be bound by these optional
exchange provisions in regard to the exchange of Series A Preferred Securities
for American General Preferred Stock pursuant to the terms set forth above.
(d) American General shall at all times reserve and keep available out
of its authorized and unissued American General Preferred Stock, solely for
issuance upon the exchange of Series A Debentures, free from any preemptive or
other similar rights, such number of shares of American General Preferred Stock
as shall from time to time be issuable upon the exchange of Series A Debentures
pursuant to Section 9(a) hereof. Each of American General and the Company shall
use its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of the American
General Preferred Stock in order to enable American General to lawfully issue
and deliver the American General Preferred Stock to the Conversion Agent upon
exchange of the Series A Debentures and the Conversion Agent to lawfully deliver
the American General Preferred Stock upon exchange of the Series A Preferred
Securities to the Person or Persons entitled thereto. All shares of American
General Preferred Stock issued upon exchange of Series A Debentures and the
Series A Preferred Securities shall be duly authorized, validly issued and fully
paid and non-assessable and the terms of the American General Preferred Stock
shall be valid and binding on American General. American General will use its
best efforts to have such shares of American General Preferred Stock
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listed on the NYSE or, if the Series A Preferred Securities are not then listed
on the NYSE, such other exchange on which the Series A Preferred Securities may
then be listed. The Conversion Agent shall deliver the certificates
representing shares of American General Preferred Stock received upon exchange
of the Series A Debentures and the Series A Preferred Securities to the
exchanging Holder, free and clear of all liens, charges, claims, equities,
security interests and encumbrances.
(e) American General will pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of the issue or delivery
of shares of American General Preferred Stock upon exchange of the Series A
Debentures and the Series A Preferred Securities. American General shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of American General
Preferred Stock in a name other than the name of any Holder of Series A
Preferred Securities so exchanged, and no such issue or delivery shall be made
unless and until the Holder requesting such exchange has paid to the Conversion
Agent the amount of any such tax or has established to the satisfaction of the
Conversion Agent that such tax has been paid or is not payable.
(f) Series A Preferred Securities shall be deemed to have been
exchanged immediately prior to the close of business on the day on which the
Exchange Election is made. The Person or Persons entitled to receive the
certificates representing shares of American General Preferred Stock issuable
upon exchange of the Series A Debentures and the Series A Preferred Securities
shall be treated for all purposes as the record holder or holders of such
American General Preferred Stock at such time. As promptly as practicable on or
after the date on which the Exchange Election is made, American General shall
issue and deliver at the office of the Conversion Agent a certificate or
certificates for the number of full shares of American General Preferred Stock
issuable upon such exchange, whereupon the Conversion Agent shall promptly
distribute such certificate or certificates to the Person or Persons entitled to
receive the same.
(g) Nothing in Section 9(e) shall limit the requirement of the Company
or the Conversion Agent to withhold any taxes as may be required by applicable
law or otherwise require the Managing Member, the Company, American General or
the Conversion Agent to pay any amounts on account of such withholdings.
10. Sinking Fund. The Series A Preferred Securities shall not be subject
to the operation of a retirement or sinking fund.
11. Guarantee of Liabilities. It shall be a condition precedent to the
issuance of the Series A Preferred Securities that American General execute and
deliver to the Company the Guarantee, the Indenture and the Series A Debentures.
12. Book-Entry-Only Issuance. (a) The Depository Trust Company, New
York, New York ("DTC"), will initially act as the Clearing Agency. The Series A
Preferred Securities will be issued only as fully-registered securities and will
be initially registered in the name of Cede & Co. (DTC's partnership nominee).
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(b) Redemption notices shall be sent to Cede & Co. or any successor
thereof. If less than all of the Series A Preferred Securities are being
redeemed, such securities shall be redeemed in accordance with DTC's then
current practice.
(c) DTC may discontinue providing its services as Clearing Agency with
respect to the Series A Preferred Securities by giving reasonable notice to the
Company as provided in the agreement between the Company and DTC. Under such
circumstances, if a successor Clearing Agency is not obtained, the Company at
its expense shall cause certificates for Series A Preferred Securities to be
printed and delivered as promptly as practicable. If an Event of Default occurs
under the Indenture with respect to the Series A Debentures or if the Company
(with the consent of American General) decides to discontinue use of the system
of book-entry transfers through DTC (or a successor Clearing Agency), the
Company at its expense shall cause certificates for Series A Preferred
Securities to be printed and delivered to the beneficial owners of the Series A
Preferred Securities as promptly as practicable.
(d) In the event that the Series A Preferred Securities do not remain
in book-entry-only form, the following provisions will apply:
(i) Registration of transfers of Series A Preferred Securities will be
effected without charge by or on behalf of the Company, but upon payment
(and/or the giving of such indemnity as the Company or the Managing Member
may require) in respect of any tax or other governmental charges which may
be imposed in connection therewith.
(ii) Exchanges of Series A Preferred Securities for Series A
Debentures will be effected without charge by or on behalf of the Company,
but upon payment (and/or the giving of such indemnity as the Company or the
Managing Member may require) in respect of any tax or other governmental
charges which may be imposed in connection with the issuance of any Series
A Debenture in the name of any person other than the Holder of the Series A
Preferred Security for which the Series A Debenture is being exchanged or
for any reason other than such exchange.
(iii) The Company will not be required to register or cause to be
registered the transfer of Series A Preferred Securities after such Series
A Preferred Securities have been called for redemption or exchange.
13. Registrar and Transfer Agent. The Company hereby appoints Chemical
Mellon Shareholder Services, LLC as its initial registrar, transfer agent,
paying agent and Conversion Agent for the Series A Preferred Securities. The
Company may at any time designate an additional or substitute registrar,
transfer agent, paying agent and Conversion Agent for the Series A Preferred
Securities and shall promptly notify the Holders of the Series A Preferred
Securities of any such designation.
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14. Governing Law. This Written Action shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the undersigned Managing Member of the Company has
hereto set its hand as of the day and year first above written.
AMERICAN GENERAL DELAWARE
MANAGEMENT CORPORATION
By: /S/ KENT E. BARRETT
Name: Kent E. Barrett
Title: Vice President and Treasurer
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EXHIBIT 4(j)
THIS GUARANTEE AGREEMENT (this "Guarantee"), dated as of May 24, 1995, is
executed and delivered by American General Corporation, a corporation organized
under the laws of the State of Texas ("American General"), for the benefit of
the Holders (as hereinafter defined) from time to time of the Preferred
Securities (as hereinafter defined) of American General Delaware, L.L.C., a
Delaware limited liability company ("American General Delaware").
WHEREAS, American General Delaware intends to issue and sell from time to
time, in one or more series, preferred limited liability company interests (the
"Preferred Securities"), and American General desires to issue this Guarantee
for the benefit of the Holders of the Preferred Securities, as provided herein;
WHEREAS, American General Delaware will purchase the Junior Subordinated
Debentures (as hereinafter defined) issued pursuant to the Junior Subordinated
Indenture (as hereinafter defined) with substantially all of the proceeds from
the issuance and sale of the Preferred Securities and its other common limited
liability company interests (the "Common Securities"); and
WHEREAS, American General desires hereby to unconditionally and irrevocably
guarantee, to the extent set forth herein, the payment in full to the Holders of
the Guarantee Payments (as hereinafter defined) and the performance of the other
obligations set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Preferred Securities, which purchase American General hereby agrees shall
benefit American General, American General executes and delivers this Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS
As used in this Guarantee, the terms set forth below shall, unless the
context otherwise requires, have the following meanings. Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to such
terms in the Amended and Restated Limited Liability Company Agreement of
American General Delaware, L.L.C., dated as of May 24, 1995 (the "LLC
Agreement").
1.1 "Additional Dividends" shall mean Dividends (as hereinafter defined)
that shall be declared and paid by American General Delaware on any Dividend
arrearages in respect of the Preferred Securities of any series at the rate set
forth in the Declaration (as hereinafter defined) with respect to such series of
Preferred Securities.
<PAGE>
1.2 "American General Common Stock" shall mean the Common Stock, par value
$.50 per share, of American General. However, subject to the anti-dilution
provisions of the applicable series of Junior Subordinated Debentures (as
hereinafter defined), shares of American General Common Stock issuable on
conversion of such Junior Subordinated Debentures or upon exchange of the
American General Preferred Stock (as hereinafter defined) shall include only
shares of the class designated as Common Stock of American General on the date
hereof or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference as to the payment of
dividends or the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding-up of American General and which are not
subject to redemption by American General; provided, that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassification bears to the total
number of shares of all such classes resulting from all such reclassification.
1.3 "American General Preferred Stock" shall mean the series, if any, of
Preferred Stock, par value $1.50 per share, of American General exchangeable for
the related series of Junior Subordinated Debentures.
1.4 "Conversion Agent" shall mean Chemical Mellon Shareholder Services,
LLC and its successors (or such substitute entity as may be designated from time
to time by the Manager (as hereinafter defined), acting as agent of the Holders
in effecting, as applicable, (a) the exchange of the Preferred Securities of any
series into the related series of Junior Subordinated Debentures and the
conversion of such Junior Subordinated Debentures into shares of American
General Common Stock or (b) the exchange of Preferred Securities of any series
for the related series of Junior Subordinated Debentures and the conversion of
such Junior Subordinated Debentures for the related series of American General
Preferred Stock, in each case as and in such manner as may be set forth in the
LLC Agreement and the Declaration with respect to such series of Preferred
Securities.
1.5 "Declaration" shall mean, with respect to any series of Preferred
Securities, the Written Action adopted by the Manager pursuant to Section 7.1(b)
of the LLC Agreement relating to such series of Preferred Securities.
1.6 "Dividends" shall mean, with respect to any series of Preferred
Securities, the cumulative cash distributions from American General Delaware
with respect to such series of Preferred Securities, accruing and payable in the
manner set forth in the Declaration with respect to such series of Preferred
Securities.
1.7 "Guarantee Payments" shall mean, with respect to any series of
Preferred Securities, the following payments, without duplication, to the extent
not paid by American General Delaware: (a) any accumulated and unpaid Dividends
(whether or not earned), including any Additional Dividends, which are required
to be paid on such Preferred Securities, but only if and to the extent that such
Dividends have been declared on such Preferred Securities from funds of American
General Delaware legally available therefor; (b) the Redemption Price (including
all accumulated and unpaid Dividends (whether or not
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earned or declared), including any Additional Dividends) payable with respect to
any such Preferred Securities called for redemption by American General
Delaware, but only to the extent payable out of funds of American General
Delaware legally available therefor; and (c) upon the voluntary or involuntary
liquidation, dissolution or winding-up of American General Delaware other than
in connection with or after the exchange, if applicable, of such Preferred
Securities for the related series of Junior Subordinated Debentures, the lesser
of (i) the Liquidation Distribution and (ii) the amount of assets of American
General Delaware available for distribution to Holders of such Preferred
Securities in liquidation, dissolution or winding-up of American General
Delaware.
1.8 "Holder" shall mean the registered holder from time to time of any
Preferred Securities of American General Delaware; provided, however, that in
determining whether the Holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include American General or any majority-owned entity thereof, either
directly or indirectly.
1.9 "Junior Subordinated Debentures" shall mean the series of Junior
Subordinated Debentures issued by American General pursuant to the Junior
Subordinated Indenture and delivered to American General Delaware in connection
with the issuance and sale by American General Delaware of the related series of
Preferred Securities. The Junior Subordinated Debentures will evidence the loan
made by American General Delaware to American General of substantially all of
the proceeds received by American General Delaware from the issuance and sale of
the related series of Preferred Securities and the Common Securities.
1.10 "Junior Subordinated Indenture" shall mean the Indenture, dated as of
May 15, 1995, between American General and Chemical Bank, as Trustee.
1.11 "Manager" means American General Delaware Management Corporation, in
its capacity as the manager of American General Delaware, or any permitted
successor manager of American General Delaware admitted as such pursuant to the
applicable provisions of the LLC Agreement.
1.12 "Redemption Price" shall mean, with respect to any series of
Preferred Securities subject to redemption by American General Delaware, the
liquidation preference of such Preferred Securities plus accumulated and unpaid
dividends (whether or not earned or declared), including any Additional
Dividends, to the date fixed for redemption thereof.
1.13 "Special Trustee" shall mean, with respect to any series of Preferred
Securities, a special trustee appointed by the Holders of the Preferred
Securities of such series pursuant to Section 8.1 of the LLC Agreement and
authorized, among other things, to enforce American General Delaware's rights
under the related series of Junior Subordinated Debentures against American
General and to enforce the obligations undertaken with respect to such series of
Preferred Securities by American General under this Guarantee.
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ARTICLE II
GUARANTEE
2.1 GENERAL. American General irrevocably and unconditionally agrees
to pay in full to the Holders of each series of Preferred Securities the
Guarantee Payments with respect to such series of Preferred Securities, as and
when due (except to the extent previously paid by American General Delaware),
regardless of any defense, right of set-off or counterclaim which American
General Delaware may have or assert. American General's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
American General to the Holders of such series of Preferred Securities or by
causing American General Delaware to pay such amounts to such Holders.
2.2 WAIVER OF CERTAIN RIGHTS. American General hereby waives, to the
fullest extent permitted by applicable law, notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
2.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements
and duties of American General under this Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by American General Delaware of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities of any series to be performed or observed by American General
Delaware;
(b) the extension of time for the payment by American General Delaware
of all or any portion of the Dividends, Additional Dividends, Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities of any series or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities of such series;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders of Preferred Securities of any series or the Special Trustee to
enforce, assert or exercise any right, privilege, power or remedy conferred
on such Holders or such Special Trustee pursuant to the terms of the
Preferred Securities of such series, or any action on the part of American
General Delaware granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, winding-up,
sale of any collateral, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, American
General Delaware or any of the assets of American General Delaware;
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(e) any invalidity of, or defect or deficiency in, any of the
Preferred Securities of any series;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) to the fullest extent permitted by applicable law, any other
circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 2.3 that the obligations of American General hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of any Holders of Preferred Securities to give
notice to, or obtain any consent of, American General with respect to the
happening of any of the foregoing.
2.4 PROCEEDING DIRECTLY AGAINST AMERICAN GENERAL. This Guarantee is a
guarantee of payment and not of collection. A Holder of Preferred Securities of
any series or the Special Trustee may enforce this Guarantee with respect to
such series of Preferred Securities directly against American General, and
American General waives any right or remedy to require that any action be
brought against American General Delaware or any other person or entity before
proceeding against American General. Subject to Section 2.5 hereof, all waivers
herein contained shall be without prejudice to the right of a Holder or the
Special Trustee, at its option, to proceed against American General Delaware,
whether by separate action or by joinder. American General agrees that this
Guarantee shall not be discharged except by payment of the Guarantee Payments in
full (to the extent not previously paid by American General Delaware) and by
complete performance of all obligations under this Guarantee.
2.5 SUBROGATION. American General shall be subrogated to all (if any)
rights of the Holders of Preferred Securities against American General Delaware
in respect of any amounts paid to such Holders by American General under this
Guarantee and shall have the right to waive payment by American General Delaware
of any amount of Dividends in respect of which payment has been made to the
Holders by it pursuant to Section 2.1 hereof; provided, however, that American
General shall not (except to the extent required by mandatory provisions of law)
exercise any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of a payment under
this Guarantee, if, at the time of any such payment, any amounts are due and
unpaid under this Guarantee. If any amount shall be paid to American General in
violation of the preceding sentence, American General agrees to hold such amount
in trust for the Holders and to pay over such amount promptly to the Holders.
2.6 INDEPENDENT OBLIGATIONS. American General acknowledges that its
obligations hereunder are independent of the obligations of American General
Delaware with respect to the Preferred Securities and that American General
shall be liable as principal and sole debtor under this Guarantee to make
Guarantee Payments in full pursuant to the terms of
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this Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
2.7 TERMINATION. This Guarantee shall terminate and be of no further
force and effect as to the Preferred Securities of any series upon (a) full
payment of the Redemption Price of all outstanding Preferred Securities of such
series, (b) if applicable, the exchange (in the manner provided in the LLC
Agreement and the applicable Declaration) of all of the Preferred Securities of
such series for the Junior Subordinated Debentures of the related series and the
conversion (in the manner provided in the Junior Subordinated Indenture) of such
Junior Subordinated Debentures for American General Common Stock or the series
of American General Preferred Stock related to such series of Preferred
Securities, as the case may be, or (c) if applicable, the exchange (in the
manner provided in the LLC Agreement or such Declaration) of all of the
Preferred Securities of such series for the Junior Subordinated Debentures of
the related series. In addition, this Guarantee will terminate completely upon
full payment of the aggregate Liquidation Distributions applicable to all
outstanding series of Preferred Securities. Notwithstanding the foregoing, this
Guarantee shall continue to be effective or, to the fullest extent permitted by
applicable law, shall be reinstated, as the case may be, with respect to the
Preferred Securities of any series if at any time any Holder of such Preferred
Securities must restore payment of any sums recovered on account of, or must
redeliver any securities received on account of, such Preferred Securities or
under this Guarantee for any reason whatsoever.
ARTICLE III
CERTAIN COVENANTS OF AMERICAN GENERAL
3.1 DIVIDENDS AND OTHER PAYMENTS. So long as the Preferred Securities of
any series 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 any 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 dated as of July 27, 1989, as amended
from time to time, or the declaration and payment of a dividend or distribution
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 series of Preferred
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Securities and such extension is continuing, American General is in default with
respect to its payment or other obligations hereunder or there has occurred and
is continuing any Event of Default (as defined in the Junior Subordinated
Indenture) with respect to the series of Junior Subordinated Debentures related
to such series of Preferred Securities. American General shall take all actions
necessary to ensure the compliance of its majority-owned subsidiaries with this
Section 3.1.
3.2 CERTAIN OTHER COVENANTS. So long as the Preferred Securities of any
series remain outstanding, American General shall: (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 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 any other limited liability
company interests in American General Delaware other than any series of
Preferred Securities (except as may be permitted in the LLC Agreement); (c)
cause at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of American General Delaware 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), or permit the Manager (other than in connection with
any merger or consolidation involving the Manager) or American General Delaware
(other than in connection with or after an exchange of all outstanding series of
Preferred Securities for the related series of Junior Subordinated Debentures,
if so provided in the Declaration relating to each such series of Preferred
Securities) 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 (including the duty to cause American General Delaware to declare and
pay dividends on all outstanding series of Preferred Securities to the extent
set forth in the LLC Agreement and the applicable Declaration); and (f) subject
to the terms of the Preferred Securities of any series, use reasonable efforts
to cause American General Delaware to remain a Delaware limited liability
company and otherwise continue to be treated as a partnership for United States
federal income tax purposes.
ARTICLE IV
STATUS
4.1 STATUS. American General covenants and agrees that this Guarantee
constitutes an unsecured obligation of American General ranking (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) of this Section
4.1, (ii) pari passu with the most senior preferred stock issued by American
General, with that Guarantee dated as of May 24, 1995 in respect of certain
securities issued by American General Capital, L.L.C. 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 this Guarantee and (iii) senior to
American General Common Stock, any
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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 this Guarantee.
ARTICLE V
CONVERSION AND EXCHANGE OF PREFERRED SECURITIES
5.1 ISSUANCE OF AMERICAN GENERAL COMMON STOCK. If the Preferred
Securities of any series are convertible into shares of American General Common
Stock pursuant to the applicable Declaration, American General hereby agrees
that, upon the request of the Conversion Agent (on behalf of one or more Holders
of such Preferred Securities), to convert Junior Subordinated Debentures of the
series related to such series of Preferred Securities into American General
Common Stock pursuant to the request of such Holders to effect such conversion
in accordance with the terms of the LLC Agreement and such Declaration, American
General shall deliver to the Conversion Agent certificates representing the
number of full shares of American General Common Stock issuable upon conversion
of such Junior Subordinated Debentures in accordance with the terms of the
Junior Subordinated Indenture and such Junior Subordinated Debentures. American
General shall reserve and keep available out of its authorized and unissued
American General Common Stock (solely for issuance upon the conversion of such
Junior Subordinated Debentures), free of any preemptive or other similar
rights, the number of full shares of American General Common Stock deliverable
by the Conversion Agent to the Holders upon the conversion of all outstanding
convertible Preferred Securities not theretofore converted by the Holders.
5.2 VALIDITY OF AMERICAN GENERAL COMMON STOCK. All shares of American
General Common Stock delivered by American General upon such conversion will be
duly authorized, validly issued and fully paid and nonassessable.
5.3 ISSUANCE OF AMERICAN GENERAL PREFERRED STOCK. American General hereby
agrees, upon the making of an Exchange Election (as such term may be defined in
the applicable Declaration) by the Holders of a majority of the aggregate
liquidation preference of the outstanding Preferred Securities of the related
series in accordance with the terms of the LLC Agreement and such Declaration,
to issue one share of American General Preferred Stock of the related series in
respect of the applicable principal amount (as set forth in such Declaration) of
Junior Subordinated Debentures of the related series. American General further
agrees, upon receipt of a Notice of Exchange Election (as defined in such
Declaration), to deliver to the Conversion Agent the number of shares of
American General Preferred Stock of the related series issuable upon conversion
of such Junior Subordinated Debentures. American General shall reserve and keep
available out of its authorized and unissued American General Preferred Stock
(solely for issuance upon conversion of such Junior Subordinated Debentures),
free of any preemptive or other similar rights, the number of shares of American
General Preferred Stock of the related
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series deliverable by the Conversion Agent to the Holders upon exchange of all
outstanding exchangeable Preferred Securities.
5.4 VALIDITY OF AMERICAN GENERAL PREFERRED STOCK. All such shares of
American General Preferred Stock issued by American General upon such conversion
will be duly authorized, validly issued and fully paid and nonassessable.
5.5 TERMINATION OF OBLIGATION TO ISSUE AMERICAN GENERAL COMMON STOCK.
American General's obligations under this Article V to issue American General
Common Stock shall terminate upon the termination of the right of Holders of
Preferred Securities to request the Conversion Agent to effect such conversion
as may be set forth in the LLC Agreement and any applicable Declaration.
ARTICLE VI
MISCELLANEOUS
6.1 THIRD PARTY BENEFICIARIES. All of American General's obligations
under this Guarantee shall be directly enforceable by the Holders from time to
time of the applicable series of Preferred Securities. Each Holder of Preferred
Securities of the applicable series is an intended third-party beneficiary of
this Guarantee.
6.2 SUCCESSORS AND ASSIGNS. All provisions contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
American General and shall inure to the benefit of the Holders. Except as
permitted by Section 6.4, American General shall not assign its rights or
delegate its obligations hereunder without the prior approval (obtained in the
manner set forth in the LLC Agreement) of the Holders of not less than 66-2/3%
of the aggregate liquidation preference of all Preferred Securities of all
series then outstanding voting as a single class.
6.3 AMENDMENTS. Except with respect to any changes which do not adversely
affect the rights of any Holders of Preferred Securities (in any of which cases
no vote will be required), this Guarantee may be amended with respect to the
Preferred Securities of any series affected by such amendment only with the
prior approval (obtained in the manner set forth in the LLC Agreement and the
applicable Declaration) of the Holders of not less than 66-2/3% of the aggregate
liquidation preference of the outstanding Preferred Securities of such series.
6.4 MERGER OR CONSOLIDATION. American General may consolidate with or
merge with or into any other person or entity, provided that such consolidation
or merger is permitted under Section 801 of the Junior Subordinated Indenture.
6.5 NOTICES. Any notice, request or other communication required or
permitted to be given hereunder to American General shall be given in writing by
delivering the same against receipt therefor by registered mail, hand delivery,
facsimile transmission (confirmed by registered mail) or telex, addressed to
American General, as follows (and if so given,
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shall be deemed given when mailed; upon receipt of facsimile confirmation, if
sent by facsimile transmission; or upon receipt of an answer-back, if sent by
telex):
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attention: Treasury
Telecopy: (713) 522-3487
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by American General in the same
manner as notices are sent by American General Delaware to the Holders.
6.6 GENDERS. The masculine and neuter genders used herein shall include
the masculine, feminine and neuter genders.
6.7 GUARANTEE NOT SEPARATELY TRANSFERABLE. This Guarantee is solely for
the benefit of the Holders and is not separately transferable from the Preferred
Securities.
6.8 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6.9 SEVERABILITY. In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.10 HEADINGS. The Article and section headings herein are for convenience
only and shall not affect the construction hereof.
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IN WITNESS WHEREOF, American General has caused this Guarantee to be duly
executed as of the day and year first above written.
AMERICAN GENERAL CORPORATION
By: /S/ AUSTIN P. YOUNG
Name: Austin P. Young
Title: Senior Vice President &
Chief Financial Officer
ATTEST:
/S/ JOHN A. ADKINS
Secretary
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EXHIBIT 4(k)
AMERICAN GENERAL CORPORATION
RESOLUTIONS RELATING TO 6% SERIES A CONVERTIBLE
JUNIOR SUBORDINATED DEBENTURES DUE 2025
ADOPTED BY THE TERMS COMMITTEE
WHEREAS, American General Delaware, L.L.C., a Delaware limited
liability company ("American General Delaware"), proposes to issue its 6%
Convertible Monthly Income Preferred Securities, Series A (collectively, the
"Series A Preferred Securities") and use the proceeds from the sale of such
Preferred Securities to purchase junior subordinated debentures of the Company;
and
WHEREAS, this Committee desires to establish the terms of such junior
subordinated debentures pursuant to Section 301 of the Indenture, dated as of
May 15, 1995 (the "Indenture"), between the Company and Chemical Bank, as
Trustee;
Now, therefore, be it:
RESOLVED, that, upon receipt of the purchase price therefor, the
Company shall issue, sell and deliver a series of its junior subordinated
debentures pursuant to the Indenture.
RESOLVED, that the title, principal amount, interest rate, redemption
provisions, conversion and exchange features, and other terms of such debentures
to be fixed pursuant to Section 301 of the Indenture shall be as follows
(capitalized terms appearing below that are defined in the Indenture, but not
defined herein, having the meanings ascribed to them in the Indenture):
1. TITLE. Each of such debentures shall be designated as "6% Series
A Convertible Junior Subordinated Debenture due 2025" (collectively, the "Series
A Junior Subordinated Debentures") and each such Series A Junior Subordinated
Debenture shall be included in the series of Securities so designated.
2. PRINCIPAL AMOUNT. The aggregate principal amount of the Series A
Junior Subordinated Debentures which may be authenticated and delivered pursuant
to these resolutions shall be limited to $281,962,050 or, if and to the extent
that the underwriters underwriting the sale of the Series A Preferred Securities
exercise their overallotment option with respect thereto, then such aggregate
principal amount of Series A Junior Subordinated Debentures shall be up to
$313,291,100 (except, in each case, for Series A Junior Subordinated Debentures
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Series A Junior Subordinated Debentures pursuant to
Section 304, 305, 306, 907 or 1107 of the Indenture).
3. MATURITY DATE. The principal of the Series A Junior Subordinated
Debentures shall be payable (together with any accrued and unpaid interest
thereon, including
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Additional Interest, as defined in Section 6, if any) on the earlier of (a) May
31, 2025, or (b) the date upon which American General Delaware is liquidated,
dissolved or wound-up; provided, however, that, if all the Series A Preferred
Securities are exchanged for Series A Junior Subordinated Debentures (a "Series
A Special Event Exchange") in the manner set forth in Section 5(d) of the
Written Action, dated as of May 24, 1995 (the "Written Action"), of the Managing
Member of American General Delaware establishing the Series A Preferred
Securities, the Series A Junior Subordinated Debentures will mature on the date
set forth in clause (a), notwithstanding that American General Delaware may have
liquidated, dissolved or wound-up in connection with or after such Series A
Special Event Exchange.
4. INTEREST RATE; INTEREST PAYMENT DATES. The Series A Junior
Subordinated Debentures shall bear interest at the rate of 6% per annum;
interest shall accrue from June 1, 1995 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for; the Interest Payment
Dates on which such interest shall be payable shall be the last day of each
calendar month of each year, commencing June 30, 1995, until the principal is
paid in full or such payment is duly provided for; and the Regular Record Date
for the interest payable upon any such Interest Payment Date shall be the
Business Day next preceding such Interest Payment Date; provided, however, that
if the Series A Junior Subordinated Debentures are not in book-entry-only form
during any period following a Series A Special Event Exchange, the Regular
Record Date for any Interest Payment Date within such period shall be the
fifteenth day of the month in which such Interest Payment Date occurs. If any
date on which interest is payable on the Series A Junior Subordinated Debentures
is not a Business Day, then the payment of the interest payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
5. EXTENSION OF AN INTEREST PAYMENT PERIOD. The Company shall have
the right, at any time and from time to time during the term of the Series A
Junior Subordinated Debentures, to extend the interest payment period to a
period ending on the last day of a calendar month (an "Extension Period") not
exceeding 60 consecutive months, but in no event beyond the date of Stated
Maturity or the Redemption Date of the Series A Junior Subordinated Debentures.
During an Extension Period, interest will continue to accrue and compound
monthly in the manner set forth in Section 6 below. Prior to the termination of
any Extension Period of less than 60 consecutive months, the Company may further
extend the interest payment period, provided that such Extension Period may not
exceed 60 consecutive months and may not extend beyond the date of Stated
Maturity or the Redemption Date of the Series A Junior Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all accrued and
unpaid interest (including Additional Interest) then due, the Company may select
a new Extension Period, subject to the above requirements. No interest shall be
due during an Extension Period until the end of such period. Such interest
shall be due and payable on the Interest Payment Date which is the last day of
the Extension Period. The Regular Record Date for the interest payable
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on such Interest Payment Date shall be the Business Day next preceding such
Interest Payment Date, provided that if the Series A Junior Subordinated
Debentures are not in book-entry-only form during any period following a Series
A Special Event Exchange, the Regular Record Date for such payment shall be the
15th day of the month in which such Interest Payment Date occurs.
At any time prior to a Series A Special Event Exchange and if any
Series A Preferred Securities are then outstanding, the Company shall give
American General Delaware notice of its selection of an Extension Period at
least one Business Day prior to the earlier of (i) the date that dividends on
the Series A Preferred Securities are payable or (ii) the date on which American
General Delaware is required to give notice of the record or payment date of any
dividend payable on the Series A Preferred Securities to the New York Stock
Exchange ("NYSE") or other applicable self-regulatory organization or to holders
of the Series A Preferred Securities, but in any event not less than one
Business Day prior to such record date. After any Series A Special Event
Exchange, the Company shall give the holders of the Series A Junior Subordinated
Debentures notice of its selection of an Extension Period not less than two
Business Days prior to the Regular Record Date for the first Interest Payment
Date for which such Extension Period will be effective. In each case, the
Company shall give the Trustee notice of its selection of an Extension Period
not later than the Business Day such notice is required to be given to American
General Delaware or the Holders of the Series A Junior Subordinated Debentures,
as the case may be, pursuant to the preceding provisions of this paragraph.
Notice of the Company's extension of an Extension Period shall be
given prior to the then scheduled end of the Extension Period in a manner
similar to the notice given in connection with the selection of an Extension
Period.
6. ADDITIONAL INTEREST. Interest shall accrue at the rate of 6% per
annum on any interest on the Series A Junior Subordinated Debentures that is not
paid during an Extension Period. Such interest shall compound monthly. The
Company shall pay such interest, to the fullest extent permitted by applicable
law, on the Interest Payment Date which is the last day of the Extension Period.
Additionally, if at any time prior to a Series A Special Event Exchange,
American General Delaware shall be required to pay, with respect to the income
it derives from the interest payments on the Series A 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, the
Company shall pay, to the fullest extent permitted by applicable law, as
additional interest such additional amounts (the "Additional Amounts") as may be
necessary in order that the net amounts received and retained by American
General Delaware with respect to interest payments on the Series A Junior
Subordinated Debentures, after the payment of such taxes, duties, assessments or
governmental charges (including such taxes, duties, assessments or governmental
charges payable with respect to Additional Amounts), shall result in American
General Delaware's having such funds as it would have had in the absence of the
payment of such taxes, duties, assessments or governmental charges. Such
Additional Amounts shall be payable when the related interest payment on the
Series A Junior Subordinated
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Debentures is due, except that, if the existence or applicability of such taxes,
duties, assessments or governmental charges is not known by the Company at the
time of such interest payment, then on the Interest Payment Date immediately
preceding the date on which American General Delaware proposes to pay such
taxes, duties, assessments or charges. The amounts of interest payable to
effect monthly compounding on the Series A Junior Subordinated Debentures
pursuant to the first three sentences of this Section 6, together with any such
Additional Amounts, are referred to herein as "Additional Interest."
In addition to the Additional Interest, the Company shall be required
to pay interest, at the rate borne by the Series A Junior Subordinated
Debentures, on any principal or premium that is not paid when due and, to the
extent that payment of such interest is lawful, interest on overdue installments
of interest (which shall not include interest not paid because of an extension
of an interest payment period).
7. PLACE OF PAYMENT. The Trustee is hereby appointed as the initial
sole Paying Agent for the Series A Junior Subordinated Debentures. The
principal of and interest (including any Additional Interest) on the Series A
Junior Subordinated Debentures shall be payable at the Corporate Trust Office of
the Trustee in the Borough of Manhattan, The City of New York, provided,
however, that, at the option of the Company, payment of interest may be made (a)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (b) subject to the procedures of the
Paying Agent, by wire transfer in immediately available funds at such place and
to such account maintained at a bank located in the United States as may be
designated by the Person entitled thereto as specified in the Security Register.
8. CONDITIONAL RIGHT OF REDEMPTION. If at any time following the
Conversion Expiration Date or the Conversion Expiration Date of the Series A
Junior Subordinated Debentures (as such terms are defined in Section 12(d)),
less than 10% of the aggregate principal amount of the Series A Junior
Subordinated Debentures originally purchased by American General Delaware with
the proceeds from the sale of the Series A Preferred Securities remains
Outstanding, then the Series A Junior Subordinated Debentures shall be subject
to redemption, in whole but not in part, at the option of the Company, at a
Redemption Price equal to the unpaid principal amount thereof, without premium
or penalty, plus any accrued and unpaid interest (including any Additional
Interest) thereon to the Redemption Date.
9. MANDATORY REDEMPTION.
(a) If, prior to a Series A Special Event Exchange, American General
Delaware redeems any Series A Preferred Securities in accordance with the terms
thereof, then the Series A Junior Subordinated Debentures shall be due and
payable and shall be redeemed by the Company in an aggregate principal amount
equal to the aggregate stated liquidation preference of the Series A Preferred
Securities so redeemed at a cash Redemption Price equal to the unpaid principal
amount of the Series A Junior Subordinated Debentures so redeemed, without
premium or penalty, plus any accrued and unpaid interest (including any
Additional Interest) thereon to the Redemption Date. Any redemption pursuant to
this
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Section shall be made prior to 12:00 noon, New York time, on the date of such
redemption of the Series A Preferred Securities (or at such other time on such
earlier date as the Company and American General Delaware shall agree).
(b) In the case of a redemption pursuant to this Section 9, the
Company shall, at least one Business Day prior to the Redemption Date, notify
the Trustee of such Redemption Date and of the principal amount of the Series A
Junior Subordinated Debentures to be redeemed. If the related redemption of
Series A Preferred Securities does not occur, then such redemption of the Series
A Junior Subordinated Debentures shall be of no force and effect,
notwithstanding the giving of such notice of redemption.
10. OPTIONAL REDEMPTION. The Series A Junior Subordinated Debentures
shall be subject to redemption, at the option of the Company, in whole or in
part, at any time or from time to time on or after May 31, 2003 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.
Additionally, if, prior to a Series A Special Event Exchange, the
Company or any of its Subsidiaries acquires any Series A Preferred Securities by
tender, in the open market, or otherwise, the Company shall have the right to
redeem the Series A Junior Subordinated Debentures in a principal amount not to
exceed the aggregate stated liquidation preference of the Series A 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.
11. CONVERSION INTO AMERICAN GENERAL COMMON STOCK.
(a) Conversion Price. The Series A Junior Subordinated Debentures
shall be convertible, at the option of the Holders, at any time on or before the
earlier of the Conversion Expiration Date or the Conversion Expiration Date of
the Series A Junior Subordinated Debentures, into fully paid and nonassessable
shares of American General Common Stock at an initial conversion price of $40.69
principal amount of Series A Junior Subordinated Debentures per share of
American General Common Stock, subject to adjustment as described in Section 13
(such conversion price, as so adjusted, being herein called the "Conversion
Price"). Subject to the provisions of this Section 11 and Section 12, a Holder
of Series A Junior Subordinated Debentures may convert any portion of the
principal amount of the Series A Junior Subordinated Debentures held by it into
that number of fully paid and nonassessable full shares of American General
Common Stock obtained by dividing the aggregate principal amount of the Series A
Junior Subordinated Debentures to be converted by such Holder by such Conversion
Price.
(b) Conversion Procedure Prior to Series A Special Event Exchange.
The Written Action provides that a holder of Series A Preferred Securities
wishing to exercise its right under such Written Action to convert Series A
Preferred Securities into American General Common Stock shall surrender to the
Conversion Agent, as defined in Section 16, such Series A Preferred Securities
(or, if such Series A Preferred Securities are in book-entry
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form, cause such Series A Preferred Securities to be transferred to the account
of the Conversion Agent on the records of the Depository), together with an
irrevocable notice of conversion setting forth the number of Series A Preferred
Securities to be converted, together with the name or names, if other than the
holder, in which the shares of American General Common Stock to be issued upon
conversion are to be registered and directing it (i) to exchange such Series A
Preferred Securities for the appropriate portion of the Series A Junior
Subordinated Debentures held by American General Delaware at the exchange rate
specified in the Written Action and (ii) to immediately convert such Series A
Junior Subordinated Debentures, on behalf of such holder, into shares of
American General Common Stock. The Written Action also provides that, if such
Series A Preferred Securities and notice of conversion are so delivered (or
transferred, in the case of book-entry Series A Preferred Securities) to the
Conversion Agent before the close of business on the Conversion Expiration Date,
American General Delaware shall deliver the appropriate portion of the Series A
Junior Subordinated Debentures held by it to the Conversion Agent for conversion
in accordance with this Section. As promptly as practicable after its receipt
of a copy of such notice of conversion and the certificates representing the
Series A Junior Subordinated Debentures surrendered for conversion (or, in the
case of book-entry Series A Junior Subordinated Debentures, the transfer of such
Series A Junior Subordinated Debentures to its account at the Depository), the
Company shall issue and deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares of American General
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of a share to the Person or Persons entitled to
receive the same and, if required pursuant to Section 11(e) below, the Series A
Junior Subordinated Debentures referenced in such section.
(c) Conversion Procedure After Series A Special Event Exchange. In
order to convert Series A Junior Subordinated Debentures into shares of American
General Common Stock after a Series A Special Event Exchange and prior to the
Conversion Expiration Date of the Series A Junior Subordinated Debentures, the
Holder of any Series A Junior Subordinated Debentures to be converted shall
surrender to the Conversion Agent such Series A Junior Subordinated Debentures,
duly endorsed or assigned to the Company or in blank (or, if such Series A
Junior Subordinated Debentures are in book-entry form, cause such Series A
Junior Subordinated Debentures to be transferred to the account of the
Conversion Agent on the records of the Depository), together with an irrevocable
notice of conversion (copies of which shall be available at the office of the
Conversion Agent) stating that the Holder elects to convert such Series A Junior
Subordinated Debentures or, if less than the entire principal amount thereof is
to be converted, the portion thereof to be converted. Such notice of conversion
shall list the name or names, if other than the Holder, in which the shares of
American General Common Stock to be issued upon conversion are to be registered
upon conversion (and in which the unconverted portion, if any, of the Series A
Junior Subordinated Debentures surrendered are to be registered). As promptly
as practicable after its receipt of a copy of such notice of conversion and the
certificates representing the Series A Junior Subordinated Debentures
surrendered for conversion (or, in the case of book-entry Series A Junior
Subordinated Debentures, the transfer of such Series A Junior Subordinated
Debentures to its account at the Depository), the Company shall issue and shall
deliver at the office of the
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Conversion Agent a certificate or certificates for the number of full shares of
American General Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of a share, and, if applicable, a
new Series A Junior Subordinated Debenture representing the unconverted portion
of the Series A Junior Subordinated Debentures surrendered for conversion.
(d) Fractional Shares. No fractional shares of American General
Common Stock will be issued as a result of conversion, but in lieu thereof, such
fractional interest will be paid in cash (computed to the nearest cent, with
one-half cent being rounded upward) by the Company based on the Current Market
Price (as defined in Section 12(d)) of American General Common Stock on the date
the notice of conversion was received by the Conversion Agent.
(e) Partial Conversions. If the conversion of any Series A Junior
Subordinated Debenture is in part only, then a new Series A Junior Subordinated
Debenture for the unconverted portion thereof will be issued in the name of the
Holder thereof (or, subject to compliance with applicable legal requirements,
the name specified by the Holder) upon the cancellation thereof in accordance
with Section 305 of the Indenture.
(f) No Payments. Subject to the next succeeding sentence, upon the
conversion of any Series A Junior Subordinated Debentures into American General
Common Stock, the Company will not make, or be required to make, any payment,
allowance or adjustment for accrued interest (including any Additional Interest)
thereon, whether or not in arrears. If, however, a notice of conversion is
received by the Conversion Agent with respect to Series A Junior Subordinated
Debentures on or after a Regular Record Date and prior to the next succeeding
Interest Payment Date, the Holder thereof will be entitled to receive the
interest payable on such Interest Payment Date on the portion of such Series A
Junior Subordinated Debentures to be converted, notwithstanding the conversion
thereof prior to such Interest Payment Date. No payment or adjustment shall be
made upon conversion of any Series A Junior Subordinated Debentures into
American General Common Stock with respect to dividends or other distributions
on such American General Common Stock having record dates prior to the date of
conversion.
(g) Effective Time of Conversion. Each conversion shall be deemed to
have been effected immediately prior to the close of business on the day on
which the related notice of conversion was received by the Conversion Agent and
the Conversion Price of Series A Subordinated Debentures surrendered for
conversion shall be the Conversion Price in effect at that time. The Person or
Persons entitled to receive the American General Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
the American General Common Stock issued upon such conversion as of such
effective time and, at such time, the rights of the Holders of the converted
Series A Junior Subordinated Debentures, as such Holders, but subject to the
second sentence of Section 11(f) and the last sentence of Section 11(h), shall
cease.
(h) Effect of Conversion. Subject to the second sentence of Section
11(f), the Company's delivery (through the Conversion Agent or otherwise) of the
number of full
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shares of American General Common Stock into which the Series A Junior
Subordinated Debentures surrendered for conversion are convertible (together
with the cash payment, if any, in lieu of fractional shares) to the Person or
Persons entitled to receive such shares shall be deemed to satisfy the Company's
obligation to pay the principal amount at Maturity of the portion of Series A
Junior Subordinated Debentures so converted and any unpaid interest, including
Additional Interest (but excluding Additional Amounts), accrued on, or payable
with respect to, such Series A Junior Subordinated Debentures at the time of
such conversion. A Holder's right to receive Additional Amounts accrued as of
the effective time of conversion shall continue until such Additional Amounts
are paid.
(i) Issuance of Rights. Whenever the Company shall issue shares of
American General Common Stock upon conversion of Series A Junior Subordinated
Debentures as contemplated by this Section 11, the Company shall issue, together
with each such share of American General Common Stock, one right to purchase
Series A Junior Participating Preferred Stock of the Company (or other
securities in lieu thereof) pursuant to the Rights Agreement, dated as of July
27, 1989, between the Company and First Chicago Trust Company of New York, as
amended, or any similar rights issued to holders of American General Common
Stock in addition thereto or in replacement therefor (such rights, together with
any additional or replacement rights, being collectively referred to as the
"Rights"), whether or not such Rights shall be exercisable at such time, but
only if such Rights are issued and outstanding and held by other holders of
American General Common Stock (or are evidenced by outstanding share
certificates representing American General Common Stock) at such time and have
not expired or been redeemed.
12. EXPIRATION OF CONVERSION RIGHTS.
(a) Right of Company to Terminate Conversion Privilege. On or after
May 31, 2000, the Company may, at its option, cause the conversion rights of
Holders of Series A Junior Subordinated Debentures to expire if (i) the Company
is then current in the payment of interest (without regard to any Extension
Period) on the Series A Junior Subordinated Debentures and (ii) for 20 Trading
Days (as defined in Section 13(e)) within any period of 30 consecutive Trading
Days, including the last Trading Day of such period, the Current Market Price of
American General Common Stock shall have exceeded 120% of the Conversion Price
then in effect.
(b) Exercise of Option Prior to a Series A Special Event Exchange. In
order to exercise its conversion expiration option prior to a Series A Special
Event Exchange, the Company shall give a written notice to American General
Delaware directing American General Delaware to exercise its right, pursuant to
Section 8(d) of the Written Action, to cause the conversion rights of the
holders of Series A Preferred Securities to expire and to issue the press
release referred to in Section 8(d)(ii) of the Written Action. The Company
shall also furnish a copy of such notice to the Trustee (and the Conversion
Agent if the Trustee is not then serving as the Conversion Agent). If American
General Delaware fails to issue such press release within two Business Days
after its receipt of such notice, the Company may, on behalf of American General
Delaware, issue such press release in accordance with the provisions of Section
8(d)(ii) of the Written Action.
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(c) Exercise of Option After a Series A Special Event Exchange. In
order to exercise its conversion expiration option after a Series A Special
Event Exchange, the Company shall issue a press release for publication on the
Dow Jones News Service or on a comparable news service announcing the Conversion
Expiration Date of the Series A Junior Subordinated Debentures. Such press
release must be issued prior to the opening of business on the second Trading
Day after a period in which the conditions in Section 12(a) have been met, but
in no event prior to May 31, 2000. Such press release shall state that the
Company has elected to exercise its right to terminate the conversion privilege,
specify the Conversion Expiration Date of the Series A Junior Subordinated
Debentures (as determined in the manner set forth below) and provide the
Conversion Price and the Current Market Price of American General Common Stock,
in each case as of the close of business on the Trading Day next preceding the
date of the press release. Additionally, the Company shall cause a notice of
the expiration of conversion rights (a "Notice of Conversion Expiration") to be
given by first-class mail to the Holders of Series A Junior Subordinated
Debentures, the Trustee (and the Conversion Agent if the Trustee is not then
serving as the Conversion Agent) not more than four Business Days after the
Company issues the press release. The Notice of Conversion Expiration shall
state, as appropriate: (i) the Conversion Expiration Date of the Series A
Junior Subordinated Debentures; (ii) the Conversion Price of the Series A Junior
Subordinated Debentures and the Current Market Price of the American General
Common Stock, in each case as of the close of business on the Trading Day next
preceding the date of the Notice of Conversion Expiration; (iii) the place or
places at which a conversion notice with respect to Series A Junior Subordinated
Debentures may be given to the Conversion Agent in accordance with Section 11(c)
prior to the Conversion Expiration Date of the Series A Junior Subordinated
Debentures; and (iv) such other information or instructions as the Company deems
necessary or advisable to enable a Holder to exercise its conversion right
hereunder. Notice of Conversion Expiration shall be deemed to have been given
on the day such notice is first mailed by first-class mail, postage prepaid, to
each Holder of Series A Junior Subordinated Debentures at the address of the
Holder appearing in the Security Register (whether or not the Holder receives
the Notice of Conversion Expiration). No defect in the Notice of Conversion
Expiration or in the mailing thereof with respect to any Series A Junior
Subordinated Debenture shall affect the validity of the Company's exercise of
its conversion expiration option if the press release referred to above shall
have been issued.
(d) Certain Definitions. The term "Conversion Expiration Date" has
the meaning assigned to such term in Section 8(d)(ii) of the Written Action.
The "Conversion Expiration Date of the Series A Junior Subordinated Debentures"
shall be the close of business on the Business Day selected by the Company which
is not less than 30 nor more than 60 calendar days after the date on which the
Company issues the press release required by Section 12(c) announcing its
intention to terminate the conversion rights of the holders of the Series A
Junior Subordinated Debentures. If the Company does not exercise its conversion
expiration option, the Conversion Expiration Date of the Series A Junior
Subordinated Debentures (i) with respect to any principal amount of Series A
Junior Subordinated Debentures which is called for redemption shall be the close
of business on the third Business Day prior to the scheduled Redemption Date for
such Series A Junior Subordinated Debentures and (ii) in any other case shall be
the close of business on the
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<PAGE>
third Business Day prior to the Stated Maturity of the principal of the Series A
Junior Subordinated Debentures. As of the close of business on the earlier of
the Conversion Expiration Date or the Conversion Expiration Date of the Series A
Junior Subordinated Debentures, the Series A Junior Subordinated Debentures
shall be deemed to be non-convertible securities.
The term "Current Market Price" of American General Common Stock for
any day means the reported last sale price, regular way, on such day, or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the NYSE
Composite Tape, or, if the American General Common Stock is not listed or
admitted to trading on the NYSE, on the principal national securities exchange
on which the American General Common Stock is listed or admitted to trading, or
if the American General Common Stock is not listed or admitted to trading on a
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc., or, if the American General Common
Stock is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which the American General Common Stock is listed
or admitted to trading or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the American General Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any NYSE member
firm selected from time to time by the Board of Directors of the Company for
that purpose or, if not so available in such manner, as otherwise determined in
good faith by the Company's Board of Directors.
13. CONVERSION PRICE ADJUSTMENTS.
(a) Stock Dividends, Subdivisions, Etc. The Conversion Price shall be
subject to adjustment from time to time as follows:
(i) If the Company shall pay or make a dividend or other distribution
exclusively in American General Common Stock on any class or series of
capital stock of the Company, then the Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction, of which the numerator shall be the number of shares of American
General Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number
of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i), the number of
shares of American General Common Stock at any time outstanding shall not
include shares held in the treasury of the Company. The Company shall not
pay any dividend or make any distribution exclusively in American General
Common Stock on shares of any class or series of capital stock of the
Company held in the treasury of the Company.
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(ii) Subject to Section 13(g), if the Company shall pay or make a
dividend or other distribution on the outstanding shares of American
General Common Stock consisting exclusively of, or shall otherwise issue to
all holders of the outstanding shares of American General Common Stock,
rights (other than Rights) or warrants entitling the holders thereof to
subscribe for or purchase shares of American General Common Stock at a
price per share (taking into account the consideration received for the
issuance of such right or warrant plus any consideration to be received
upon the exercise thereof) less than the Current Price per share
(determined as provided in subparagraph (vi) of this Section 13(a)) of the
American General Common Stock on the date fixed for the determination of
shareholders entitled to receive such rights or warrants, then the
Conversion Price in effect at the opening of business on the day following
the date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction, of which the numerator shall be the number
of shares of American General Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares
of American General Common Stock which the aggregate of the offering price
of the total number of shares of American General Common Stock so offered
for subscription or purchase would purchase at such Current Price per share
and the denominator shall be the number of shares of American General
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of American General Common
Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this
subparagraph (ii), the number of shares of American General Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company. The Company shall not issue any rights or warrants in respect of
shares of American General Common Stock held in the treasury of the
Company. In case any rights or warrants referred to in this subparagraph
(ii) in respect of which an adjustment shall have been made shall expire or
terminate unexercised, the Conversion Price shall be readjusted at the time
of such expiration to the Conversion Price that would have been in effect
if no adjustment had been made on account of the distribution or issuance
of such expired rights or warrants.
(iii) If outstanding shares of American General Common Stock shall be
subdivided into a greater number of shares of American General Common
Stock, then the Conversion Price in effect at the opening of business on
the day following the day upon which such subdivision becomes effective
shall be proportionately reduced and, conversely, if outstanding shares of
American General Common Stock shall be combined into a smaller number of
shares of American General Common Stock, then the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
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<PAGE>
(iv) Subject to the last sentence of this subparagraph (iv), if the
Company shall, by dividend or otherwise, pay or otherwise distribute to all
holders of American General Common Stock evidences of its indebtedness,
shares of any class or series of American General Capital Stock, cash,
securities or other assets other than Excluded Dividends (as defined
below), then the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying (A) the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph (iv) by (B) a fraction of which
the numerator shall be the Current Price per share (determined as provided
in subparagraph (vi) of this Section 13(a)) of the American General Common
Stock on the date fixed for the payment of such distribution (the
"Reference Date") less the fair market value, on the Reference Date, of the
portion of the evidences of indebtedness, shares of American General
Capital Stock, cash, securities or other assets so distributed (other than
Excluded Dividends) applicable to one share of American General Common
Stock and the denominator shall be such Current Price per share of the
American General Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the
Reference Date. "Excluded Dividends" shall mean (1) any dividend or
distribution referred to in subparagraph (i) of this Section 13(a), (2) any
dividend, distribution or issuance of rights or warrants referred to in
subparagraph (ii) of this Section 13(a) or of Rights, (3) any regular cash
dividend on the American General Common Stock that does not exceed the per
share amount of the immediately preceding regular cash dividend on the
American General Common Stock (as adjusted to appropriately reflect any of
the events referred to in subparagraphs (i) and (iii) of this Section
13(a)), and (4) in the case of any other dividend or distribution (cash or
otherwise), that portion thereof which, when combined with the per share
fair market value of all other dividends and distributions paid by the
Company on American General Common Stock during the 365-day period ending
on the date of declaration of such dividend or distribution (as adjusted to
appropriately reflect any of the events referred to in subparagraphs (i)
and (iii) of this Section 13(a) and excluding dividends and distributions
referred to in clauses (1) and (2) and dividends and distributions, or
portions thereof, that resulted in an adjustment to the Conversion Price
(or would have but for the application of Section 13(a)(viii), 13(f) or
13(g)), does not exceed 15% of the Current Price per share of the American
General Common Stock on the Trading Day immediately preceding the date of
declaration of such dividend or distribution. The fair market value of any
dividend or distribution not paid in cash shall be determined in good
faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors. For purposes of
this subparagraph (iv), any dividend or distribution that includes shares
of American General Common Stock or rights or warrants to subscribe for or
purchase shares of American General Common Stock shall be deemed instead to
be (1) a dividend or distribution of the evidences of indebtedness, shares
of American General Capital Stock, cash or assets other than such shares of
American General Common Stock or such rights or warrants (making any
Conversion Price reduction required by this subparagraph (iv)) immediately
followed by (2) a dividend or distribution of such shares of American
General
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<PAGE>
Common Stock or such rights or warrants (making any further Conversion
Price reduction required by subparagraphs (i) or (ii) of this Section 13(a)
and, in the case of rights or warrants, subject to the last sentence of
such subparagraph (ii)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted as
"the date fixed for the determination of shareholders entitled to receive
such dividend or other distribution," "the date fixed for the determination
of shareholders entitled to receive such rights or warrants" and "the date
fixed for such determination" within the meaning of subparagraphs (i) and
(ii) of this Section 13(a) and (B) any shares of American General Common
Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination" within the meaning of subparagraph (i) of this Section
13(a).
(v) If a tender or exchange offer made by the Company or any
Subsidiary of the Company for all or any portion of American General Common
Stock shall expire and such tender or exchange offer shall involve the
payment by the Company or such Subsidiary of consideration per share of
American General Common Stock having a fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) at the last time (the
"Tender Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may have been amended) that exceeds 110% of
the Current Price per share (determined as provided in subparagraph (vi) of
this Section 13(a)) of the American General Common Stock on the Trading Day
(as defined in Section 13(e)) next succeeding the Tender Expiration Time,
then the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction contemplated
by this subparagraph (v) by a fraction, of which the numerator shall be the
number of shares of American General Common Stock outstanding (including
any tendered or exchanged shares) at the Tender Expiration Time multiplied
by the Current Price per share (determined as provided in subparagraph (vi)
of this Section 13(a)) of the American General Common Stock on the Trading
Day next succeeding the Tender Expiration Time and the denominator shall be
the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the Tender
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of American General Common Stock outstanding (less any
Purchased Shares) at the Tender Expiration Time and the Current Price per
share (determined as provided in subparagraph (vi) of this Section 13(a))
of the American General Common Stock on the Trading Day next succeeding the
Tender Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Tender Expiration
Time. Notwithstanding anything contained in this Section 13(a)(v) to the
contrary, no adjustment shall be made to the Conversion Price in the case
of a tender or exchange offer of the character described in Rule 13e-
4(h)(5)
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<PAGE>
under the Securities Exchange Act of 1934, as amended, or any successor
rule thereto.
(vi) For the purpose of any computation under subparagraphs (ii), (iv)
and (v) of this Section 13(a), the "Current Price" per share of American
General Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices (as defined in Section 13(e)) for the
five consecutive Trading Days selected by the Company commencing not more
than 20 Trading Days before, and ending not later than, the earlier of the
day in question and, if applicable, the day before the "ex" date with
respect to the issuance or distribution requiring such computation;
provided, however, that if another event occurs that would require an
adjustment pursuant to subparagraph (i) through (v), inclusive, the Board
of Directors may make such adjustments to the Closing Prices during such
five Trading Day period as it deems appropriate to effectuate the intent of
the adjustments in this Section 13(a), in which case any such determination
by the Board of Directors shall be set forth in a Board Resolution and
shall be conclusive. For purposes of this paragraph, the term "ex" date,
(1) when used with respect to any issuance or distribution, means the first
date on which the American General Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing Prices
were obtained without the right to receive such issuance or distribution,
and (2) when used with respect to any tender or exchange offer means the
first date on which the American General Common Stock trades regular way on
such exchange or in such market after the Tender Expiration Time of such
offer.
(vii) The Company may make such reductions in the Conversion Price of
the Series A Junior Subordinated Debentures, in addition to those required
by subparagraphs (i), (ii), (iii), (iv) and (v) of this Section 13(a), as
it considers to be advisable to avoid or diminish any income tax to holders
of American General Common Stock or holders of rights to acquire American
General Common Stock or securities convertible into American General Common
Stock, resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes.
The Company from time to time may reduce the Conversion Price by any amount
selected by the Company for any period of time if the period is at least
twenty days, and the Board of Directors of the Company shall have made a
determination that such reduction would be in the best interest of the
Company, which determination shall be conclusive. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail
to holders of record of the Series A Junior Subordinated Debentures a
notice of the reduction at least fifteen days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(viii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments which by reason
of this subparagraph (viii) are not required to be made shall be carried
forward and taken into account
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<PAGE>
in any subsequent adjustment. All calculations under this Section 13 shall
be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be, with one-half cent and 5/1000th of a share, respectively,
being rounded upward.
(ix) Whenever the Conversion Price is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer, the
Treasurer or a Vice President of the Company setting forth the
adjusted Conversion Price and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate shall
forthwith be filed with the Conversion Agent and, if such adjustment
is made prior to a Series A Special Event Exchange, to American
General Delaware; and
(2) if such adjustment is made after a Series A Special Event
Exchange, the Company shall cause a notice stating that the Conversion
Price has been adjusted and setting forth the adjusted Conversion
Price to be mailed to all record holders of Series A Junior
Subordinated Debentures at their last addresses as they appear upon
the Security Register.
(b) Reclassification, Consolidation, Merger Or Sale of Assets. In the
event that the Company shall be a party to any transaction, including without
limitation any recapitalization or reclassification of the American General
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the American General Common Stock), any consolidation of the
Company with, or merger of the Company into, any other Person, any merger of
another Person into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
American General Common Stock), any sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange, in each case
pursuant to which the American General Common Stock is converted into the right
to receive other securities, cash or other property, then lawful provision shall
be made as part of the terms of such transaction whereby each holder of Series A
Junior Subordinated Debentures then outstanding shall have the right thereafter
to convert such Series A Junior Subordinated Debentures only into (i) in the
case of any such transaction other than a Common Stock Fundamental Change (as
defined in Section 13(e)), the kind and amount of securities, cash and other
property receivable upon the consummation of such transaction by a holder of
that number of shares of American General Common Stock into which such Series A
Junior Subordinated Debentures could have been converted immediately prior to
such transaction, after giving effect, in the case of any Non-Stock Fundamental
Change (as defined in Section 13(e)), to any adjustment in the Conversion Price
required by the provisions of Section 13(d), and (ii) in the case of a Common
Stock Fundamental Change, common stock of the kind received by holders of
American General Common Stock as a result of such Common Stock Fundamental
Change in an amount determined pursuant to the provisions of Section 13(d). The
Company or the Person formed by such consolidation or resulting from such merger
or which acquired such assets or which acquired the Company's shares, as the
case may be,
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<PAGE>
shall make provision in its certificate or articles of incorporation or other
constituent document to establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments which,
for events subsequent to the effective date of such provisions in such
certificate or articles of incorporation or other constituent document, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 13. The above provisions shall similarly apply to successive
transactions of the foregoing type.
(c) Prior Notice Of Certain Events. In case:
(i) the Company shall (1) declare any dividend (or any other
distribution) on the American General Common Stock, other than (A) a
dividend payable in shares of American General Common Stock or (B) a
dividend payable in cash that would not require an adjustment pursuant to
13(a)(iv) or (2) authorize a tender or exchange offer that would require an
adjustment pursuant to Section 13(a)(v);
(ii) the Company shall authorize the granting to all holders of
American General Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other rights
or warrants (other than Rights);
(iii) of any reclassification of American General Common Stock (other
than a subdivision or combination of the outstanding American General
Common Stock, or a change in par value, or from par value to no par value,
or from no par value to par value), or of any consolidation or merger to
which the Company is a party and for which approval of any shareholders of
the Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory share
exchange whereby the American General Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (1) if such event occurs prior to a Series A Special
Event Exchange, cause to be filed with American General Delaware or (2) if such
event occurs after a Series A Special Event Exchange, cause to be mailed to the
Holders at their last addresses as they appear in the Security Register, in each
case, at least fifteen calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record (if
any) is to be taken for the purpose of such dividend, distribution, rights or
warrants or, if a record is not to be taken, the date as of which the holders of
American General Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of American General Common Stock of
record shall be entitled to exchange their shares of American General Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale,transfer, share exchange,
dissolution, liquidation or winding up
16
<PAGE>
(but no failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action required to be
specified in such notice).
(d) Adjustments In Case of Fundamental Changes. Notwithstanding any other
provision in this Section 13 to the contrary, if any Fundamental Change (as
defined in Section 13(e)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, the Series A Junior
Subordinated Debentures shall be convertible solely into common stock of the
kind received by holders of American General Common Stock as the result of such
Common Stock Fundamental Change as more specifically provided in the following
clauses (d)(i) and (d)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
13(d) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price shall thereupon become the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to this
Section 13, and (B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 13(e)) or the then applicable
Reference Market Price (as defined in Section 13(e)) by a fraction, of
which the numerator shall be $50 and the denominator shall be the amount
set forth below (based on the date such Non-Stock Fundamental Change
occurs):
<TABLE>
<CAPTION>
Twelve Months
Ending May 31, Denominator
<S> <C>
1996................. $53.000
1997................. $52.625
1998................. $52.250
1999................. $51.875
2000................. $51.500
2001................. $51.125
2002................. $50.750
2003................. $50.375
2004 and thereafter.. $50.000
</TABLE>
; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price in effect immediately prior to such Common Stock Fundamental Change,
but after giving effect to any other prior adjustments effected pursuant to
this Section 13, shall thereupon be adjusted by multiplying such Conversion
Price by a fraction of which the numerator shall be the Purchaser Stock
Price (as defined in Section 13(e)) and the denominator shall be the
Applicable Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of
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<PAGE>
the consideration received by a holder of American General Common Stock is
common stock of the successor, acquiror or other third party (and cash, if
any, is paid only with respect to any fractional interests in such common
stock resulting from such Common Stock Fundamental Change) and (B) all of
the American General Common Stock shall have been exchanged for, converted
into or acquired for common stock (and cash with respect to fractional
interests) of the successor, acquiror or other third party, the Conversion
Price of the Series A Junior Subordinated Debentures in effect immediately
prior to such Common Stock Fundamental Change shall thereupon be adjusted
by multiplying such Conversion Price by a fraction of which the numerator
shall be one (1) and the denominator shall be the number of shares of
common stock of the successor, acquiror, or other third party received by a
holder of one share of American General Common Stock as a result of such
Common Stock Fundamental Change.
(e) Definitions. The following definitions shall apply to terms used in
this Section 13:
(i) "Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the American General Common
Stock receive only cash, the amount of cash received by a holder of one
share of American General Common Stock and (ii) in the event of any other
Non-Stock Fundamental Change or any Common Stock Fundamental Change, the
average of the Closing Prices of the American General Common Stock for the
ten consecutive Trading Days prior to and including the record date for the
determination of the holders of American General Common Stock entitled to
receive securities, cash or other property in connection with such Non-
Stock Fundamental Change or Common Stock Fundamental Change, or, if there
is no such record date, the date upon which the holders of the American
General Common Stock shall have the right to receive such securities, cash
or other property (such record date or distribution date being hereinafter
referred to as the "Entitlement Date"), in each case, as adjusted in good
faith by the Board of Directors to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv) and (v) of Section
13(a).
(ii) "Closing Price" of any common stock on any day shall mean the
reported last sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices
on such day, regular way, in either case as reported on the principal
national securities exchange on which such common stock is listed or
admitted to trading, or, if such common stock is not listed or admitted to
trading on a national securities exchange, on the National Market System of
the National Association of Securities Dealers, Inc., or, if such common
stock is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which such common stock is listed or admitted
to trading or quoted, or, if not listed or admitted to trading or quoted on
any national securities exchange or quotation system, the average of the
closing bid and asked prices of such common stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally
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<PAGE>
accepted reporting service, or, if not so available in such manner, as
furnished by any NYSE member firm selected from time to time by the Board
of Directors for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors.
(iii) "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith by
the Board of Directors) of the consideration received by holders of
American General Common Stock consists of common stock that for each of the
ten consecutive Trading Days prior to the Entitlement Date has been
admitted for listing or admitted for listing subject to notice of issuance
on a national securities exchange or quoted on the National Market System
of the National Association of Securities Dealers, Inc.; provided, however,
that a Fundamental Change shall not be a Common Stock Fundamental Change
unless either (i) the Company continues to exist after the occurrence of
such Fundamental Change and the outstanding Series A Junior Subordinated
Debentures continue to exist as outstanding Series A Junior Subordinated
Debentures, or (ii) not later than the occurrence of such Fundamental
Change, the outstanding Series A Junior Subordinated Debentures are
converted into or exchanged for convertible subordinated debentures of the
entity succeeding to the business of the Company, which convertible
subordinated debentures have terms substantially similar to those of the
Series A Junior Subordinated Debentures.
(iv) "Conversion Price" shall have the meaning given that term in
Section 11(a).
(v) "Fundamental Change" shall mean the occurrence of any transaction
or event in connection with a plan pursuant to which all or substantially
all of the American General Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive securities,
cash or other property (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, that, in the case of a
plan involving more than one such transaction or event, for purposes of
adjustment of the Conversion Price, such Fundamental Change shall be deemed
to have occurred when substantially all of the American General Common
Stock shall be exchanged for, converted into, or acquired for or constitute
solely the right to receive securities, cash or other property, but the
adjustment shall be based upon the highest weighted average per share
consideration that a holder of American General Common Stock could have
received in such transactions or events as a result of which more than 50%
of the American General Common Stock shall have been exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash or other property.
(vi) "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
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<PAGE>
(vii) "Purchased Shares" shall have the meaning given that term in
Section 13(a)(v).
(viii) "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the ten
consecutive Trading Days prior to and including the Entitlement Date, as
adjusted in good faith by the Board of Directors to appropriately reflect
any of the events referred to in subparagraphs (i), (ii), (iii), (iv) and
(v) of Section 13(a).
(ix) "Reference Date" shall have the meaning given that term in
Section 13(a)(iv).
(x) "Reference Market Price" shall initially mean $22.42 and in the
event of any adjustment to the Conversion Price other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall also be
adjusted so that the ratio of the Reference Market Price to the Conversion
Price after giving effect to any such adjustment shall always be the same
as the ratio of $22.42 to the initial Conversion Price.
(xi) "Tender Expiration Time" shall have the meaning given that term
in Section 13(a)(v).
(xii) "Trading Day" shall mean, with respect to any security listed
or admitted to trading on the NYSE, any day on which such security is
traded on the NYSE, or, if such security is not listed or admitted to
trading on the NYSE, on the principal national securities exchange on which
such security is listed or admitted to trading, or, if such security is not
listed or admitted to trading on a national securities exchange, on the
National Market System of the National Association of Securities Dealers,
Inc., or, if such security is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which such security
is listed or admitted to trading or quoted, of, if not listed or admitted
to trading or quoted on any national securities exchange or quotation
system, in the over-the-counter market.
(f) Dividend or Interest Reinvestment Plans. Notwithstanding the foregoing
provisions of this Section 13, no adjustment of the Conversion Price shall be
required to be made upon the issuance of any shares of American General Common
Stock pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment of
additional optional amounts in shares of American General Common Stock under any
such plan, or the issuance of any shares of American General Common Stock or
options or rights to purchase such shares pursuant to any present or future
employee, officer, director, or consultant benefit plan or program or agreement
of the Company or a Subsidiary or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date the
Series A Junior Subordinated Debentures were first established pursuant to this
instrument.
20
<PAGE>
(g) Certain Rights. Notwithstanding any other provision of this Section
13, the issuance or distribution of Rights shall not be deemed to constitute an
issuance or a distribution or dividend of rights, warrants, or other securities
to which any of the adjustment provisions described above applies.
(h) Certain Additional Rights. In case the Company shall, by dividend or
otherwise, declare or make a distribution on American General Common Stock
referred to in Section 13(a)(iv) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 13(a)(iv) but
excluding the Excluded Dividends), the Holders of the Series A Junior
Subordinated Debentures, upon the conversion thereof subsequent to the close of
business on the date fixed for the determination of shareholders entitled to
receive such distribution and prior to the effectiveness of the Conversion Price
adjustment in respect of such distribution, shall also be entitled to receive
for each share of American General Common Stock into which the Series A Junior
Subordinated Debentures are converted, the portion of the shares of American
General Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of
American General Common Stock; provided, however, that, at the election of the
Company (whose election shall be evidenced by a Board Resolution) with respect
to all Holders so converting, the Company may, in lieu of distributing to such
Holders any portion of such distribution not consisting of cash or securities of
the Company, pay such Holders an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution). If any
conversion of Series A Junior Subordinated Debentures described in the
immediately preceding sentence occurs prior to the payment date for a
distribution to holders of American General Common Stock which the Holder of the
Series A Junior Subordinated Debentures so converted is entitled to receive in
accordance with the immediately preceding sentence, the Company may elect (such
election to be evidenced by a Board Resolution) to distribute to such Holder a
due bill for the shares of American General Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets to which such
Holder is so entitled, provided that such due bill (i) meets any applicable
requirements of the principal national securities exchange or other market on
which the American General Common Stock is then traded, and (ii) requires
payment or delivery of such shares of American General Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets no
later than the date of payment or delivery thereof to holders of shares of
American General Common Stock receiving such distribution.
(i) One Adjustment. There shall be no adjustment of the Conversion Price
in case of the issuance of any American General Capital Stock (or securities
convertible into or exchangeable for American General Capital Stock) or any
other distribution or event except as specifically described in this Section 13.
If any action would require adjustment of the Conversion Price pursuant to more
than one of the provisions of this Section 13, only one adjustment shall be made
and such adjustment shall be the amount of adjustment that has the highest
absolute value to the Holders of the Series A Junior Subordinated Debentures.
21
<PAGE>
14. CONVERSION FOR AMERICAN GENERAL SERIES A PREFERRED STOCK PRIOR TO A
SERIES A SPECIAL EVENT EXCHANGE.
(a) Convertibility. Section 9 of the Written Action provides that, upon
the occurrence of an Exchange Event (as defined in Section 14(d)) prior to a
Series A Special Event Exchange, the holders of a majority of the aggregate
liquidation preference of the Series A Preferred Securities then outstanding,
voting at a meeting of the holders of the Series A Preferred Securities called
for such purpose or by written consent, may, at their option, direct the
Conversion Agent to exchange all (but not less than all) of the Series A
Preferred Securities for Series A Junior Subordinated Debentures and to
immediately convert such Series A Junior Subordinated Debentures, on behalf of
such holders, for shares of Series A Cumulative Convertible Preferred Stock, par
value $1.50 per share, of the Company ("American General Series A Preferred
Stock"), at the rate of one share of American General Series A Preferred Stock
for each $50 principal amount of Series A Junior Subordinated Debentures.
Accordingly, prior to a Series A Special Event Exchange and if any Series A
Preferred Securities are then outstanding, the Series A Junior Subordinated
Debentures shall be convertible at the request of Holders thereof, following an
Exchange Election (as defined in Section 9(c) of the Written Action) by a
majority in aggregate liquidation preference of the Series A Preferred
Securities, into fully paid and non-assessable shares of American General Series
A Preferred Stock in accordance with the terms and conditions of this Section
14.
(b) Conversion Procedure. The procedure for the conversion of all the
Series A Junior Subordinated Debentures into shares of American General Series A
Preferred Stock pursuant to this Section 14 shall be as follows:
(i) The Conversion Agent, upon receiving irrevocable notice from
American General Delaware (or such other Person as is entitled to give such
notice under the Written Action) of an Exchange Election by the holders of
a majority in aggregate liquidation preference of the Series A Preferred
Securities (a "Notice of Exchange"), shall (A) exchange all (but not less
than all) outstanding Series A Preferred Securities for Series A Junior
Subordinated Debentures held by American General Delaware in the manner
prescribed in Section 9(a) of the Written Action at the rate of $50
principal amount of Series A Junior Subordinated Debentures for each share
of Series A Preferred Securities and (B) deliver a copy of the Notice of
Exchange to the Company and, if the Trustee is not then serving as the
Conversion Agent, the Trustee. Upon receipt by it of the Notice of
Exchange, American General Delaware shall deliver the appropriate principal
amount of Series A Junior Subordinated Debentures held by it to the
Conversion Agent (or, if such Series A Junior Subordinated Debentures are
in book-entry form, cause such principal amount of Series A Junior
Subordinated Debentures to be transferred to the account of the Conversion
Agent on the records of the Depository) for conversion in accordance with
this Section 14.
(ii) Upon receipt of a copy of the Notice of Election from the
Conversion Agent and the certificates, if any, representing the appropriate
principal amount of
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<PAGE>
Series A Junior Subordinated Debentures held by American General Delaware
(or the transfer thereof to its account at the Depository, as the case may
be), the Company shall issue, and deliver to the Conversion Agent, shares
of American General Series A Preferred Stock for the principal amount of
Series A Junior Subordinated Debentures so to be converted, at the rate of
one share of American General Series A Preferred Stock for each $50
principal amount of Series A Junior Subordinated Debentures.
(iii) The Company shall cause the shares of American General Series A
Preferred Stock issuable upon conversion of the Series A Junior
Subordinated Debentures to be registered in the names of the holders of
Series A Preferred Securities designated in the Notice of Exchange and, as
promptly as practicable after receipt of certificates representing the
shares of American General Series A Preferred Stock so registered, the
Conversion Agent shall deliver such certificates, if any, representing the
American General Series A Preferred Stock issuable upon such conversion to
the Person or Persons entitled to receive the same.
(c) Accrued Interest; Effective Date of Exchange. Any accrued but unpaid
interest (including any Additional Interest) on the Series A Junior Subordinated
Debentures surrendered for conversion shall, from and after the time of such
conversion, be treated as accumulated and unpaid dividends on the American
General Series A Preferred Stock issued upon conversion of the Series A Junior
Subordinated Debentures. Series A Junior Subordinated Debentures shall be
deemed to have been converted immediately prior to the close of business on the
Exchange Election Date (as defined below). The Person or Persons entitled to
receive the American General Series A Preferred Stock issuable upon an exchange
of the Series A Preferred Securities shall be treated for all purposes as the
record holder or holders of such shares at such time and, at such time, all
interest on the Series A Junior Subordinated Debentures shall cease to accrue
and the rights of such Person or Persons as a Holder or Holders of Series A
Junior Subordinated Debentures shall cease. Any Series A Junior Subordinated
Debentures surrendered for conversion shall be cancelled by the Trustee.
(d) Definitions. For the purpose of this Section 14, the failure of
holders of Series A Preferred Securities to receive, for 15 consecutive months,
the full amount of dividend payments (including arrearages and any Additional
Dividends (as defined in Section 1 of the Written Action)) on the Series A
Preferred Securities will constitute an "Exchange Event." The term "Exchange
Election Date" shall mean the date of an Exchange Election Meeting (as defined
in Section 9(c) of the Written Action) at which the holders of a majority of the
aggregate liquidation preference of the Series A Preferred Securities authorize
the exchange of all the Series A Preferred Securities or, in the absence of such
meeting, the date of receipt by American General Delaware of a written consent
or consents signed by the holder or holders of a majority in aggregate
liquidation preference of the Series A Preferred Securities authorizing such
exchange.
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<PAGE>
15. CERTAIN PROVISIONS APPLICABLE TO CONVERSION INTO AMERICAN GENERAL
SERIES A PREFERRED STOCK.
(a) Redemptions and Conversion. Notwithstanding the provisions of Section
14, a Series A Junior Subordinated Debenture (or portion thereof) may not be
converted into American General Series A Preferred Stock if such Series A Junior
Subordinated Debenture (or applicable portion thereof) has been previously
surrendered for conversion into American General Common Stock or called for
redemption unless the applicable Redemption Price is not paid on the applicable
Redemption Date.
(b) Consolidation, Mergers and Sale of Assets. If the Company shall
consolidate with, or merge into, another Person or sell or transfer all or
substantially all of the property of the Company to another Person, in each case
prior to a conversion pursuant to Section 14, then, subject to the penultimate
sentence of this Section 15(b), lawful provision shall be made as part of the
terms of such transaction whereby each Holder of Series A Junior Subordinated
Debentures then Outstanding shall have the right thereafter to convert, at a
conversion rate as nearly equivalent as may be practicable to the rate specified
in Section 14, each such Series A Junior Subordinated Debenture upon the
occurrence of an Exchange Election only into shares of preferred stock of the
Person resulting from such consolidation, surviving such merger or to which such
property was transferred having substantially the same dividend and voting
rights, liquidation preference, and (subject to the provisions of Section 13)
other designations, preferences, limitations and relative rights as the American
General Series A Preferred Stock. The Person resulting from such consolidation
or surviving such merger or which acquired such property, as the case may be,
shall make provision in its certificate or articles of incorporation or other
constituent document to establish such right. The above provisions shall
similarly apply to successive transactions of the foregoing type.
16. CONVERSION AGENT. Chemical Mellon Shareholder Services, LLC shall be
the initial Conversion Agent for the Series A Junior Subordinated Debentures.
Without in any way limiting any authority granted to the Conversion Agent under
the Written Action, in effecting the conversion and exchange transactions
described in Sections 11 and 14, the Conversion Agent is acting (i) in the case
of Sections 11(b) and 14, as agent of the holders of Series A Preferred
Securities, and (ii) in the case of Section 11(c), as agent for the Holders of
the Series A Junior Subordinated Debentures, directing it to effect such
conversion or exchange transactions. Without in any way limiting any authority
granted to the Conversion Agent under the Written Action, the Conversion Agent
is authorized (i) to convert Series A Junior Subordinated Debentures into
American General Common Stock and thereupon to deliver such shares of American
General Common Stock, all in accordance with the provisions of Section 11, (ii)
to convert Series A Junior Subordinated Debentures following the occurrence of
an Exchange Event into American General Series A Preferred Stock and thereupon
to deliver such shares of American General Series A Preferred Stock, all in
accordance with the provisions of Section 14, and (iii) to conduct the other
activities specified herein to be performed by such Conversion Agent. Subject
to the provisions of 601 of the Indenture, neither the Trustee nor the
Conversion Agent shall at any time be under any duty or responsibility to any
Holder of a Series A Junior
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<PAGE>
Subordinated Debenture or any holder of a Series A Preferred Security to
determine whether any facts exist which may require any adjustment of the
Conversion Price or any exchange contemplated hereby, or with respect to the
nature or extent of any such adjustment when made, or with respect to the method
employed in making the same. Neither the Trustee nor the Conversion Agent shall
be accountable with respect to the validity or value (or the kind or amount) of
any shares of American General Common Stock, or of any securities or property or
cash, which may at any time be issued or delivered upon the conversion of any
Series A Junior Subordinated Debenture or upon any exchange contemplated hereby;
and neither the Trustee nor the Conversion Agent shall be deemed to make any
representation with respect thereto. Subject to the provisions of 601 of the
Indenture, neither the Trustee nor the Conversion Agent shall be responsible for
any failure of the Company to issue, transfer or deliver any shares of American
General Common Stock or American General Series A Preferred Stock or stock
certificates or other securities or property or cash upon the surrender of any
Series A Junior Subordinated Debenture or Series A Preferred Security for the
purpose of conversion or exchange or to comply with any of the covenants of the
Company in this resolution, provided that the foregoing shall not relieve the
Conversion Agent of any responsibility it may have under this resolution to
deliver to the Person entitled to receive the same the shares of American
General Common Stock or American General Series A Preferred Stock or other
securities or property or cash which has been made available to the Conversion
Agent by the Company for such purpose.
17. RESERVATION OF SHARES; REGULATORY REQUIREMENTS; TAXES; LISTING.
(a) Reservation of Shares. The Company shall at all times reserve and keep
available out of its authorized and unissued American General Common Stock and
American General Series A Preferred Stock, solely for issuance upon the
conversion of the Series A Junior Subordinated Debentures, free from any
preemptive or other similar rights, such number of shares of American General
Common Stock and American General Series A Preferred Stock as shall from time to
time be issuable upon the conversion of all the Series A Junior Subordinated
Debentures then Outstanding. Notwithstanding the foregoing, the Company shall
be entitled to deliver upon conversion of Series A Junior Subordinated
Debentures, shares of American General Common Stock or American General Series A
Preferred Stock, as appropriate, reacquired and held in the treasury of American
General (in lieu of the issuance of authorized and unissued shares), so long as
any such treasury shares are free and clear of all liens, charges, claims,
equities, security interests or encumbrances. Any shares of American General
Common Stock or American General Series A Preferred Stock, as appropriate,
issued upon conversion of the Series A Junior Subordinated Debentures shall be
duly authorized, validly issued and fully paid and nonassessable.
(b) Governmental Requirements. The Company shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all applicable
requirements as to registration or qualification of the American General Common
Stock and American General Series A Preferred Stock (and all requirements to
list on the applicable stock exchange, the American General Common Stock and
American General Series A Preferred Stock issuable upon
25
<PAGE>
conversion of Series A Junior Subordinated Debentures that are at the time
applicable), that are necessary to enable the Company to lawfully issue American
General Common Stock and American General Series A Preferred Stock upon the
conversion of the Series A Junior Subordinated Debentures.
(c) Taxes. The Company shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of the issuance or
delivery of shares of American General Common Stock or American General Series A
Preferred Stock, as the case may be, by the Company upon conversion of the
Series A Junior Subordinated Debentures. The Company shall not, however, be
required to pay any tax, fee or governmental charge which may be payable in
respect of any transfer involved in the issuance or delivery of shares of
American General Common Stock or American General Series A Preferred Stock in a
name other than that in which the security so converted was registered and no
such issuance or delivery shall be made unless and until the Person requesting
such issuance or delivery has paid to the Conversion Agent the amount of any
such tax, fee or governmental charge or has established to the satisfaction of
the Conversion Agent that such tax, fee or governmental charge has been paid.
The Company and the Conversion Agent may require that such Person furnish a
suitable indemnity with respect to any tax, fee or other governmental charge
required to be paid with respect to such a transfer. Nothing in this paragraph
(c) shall limit the requirement of the Company to withhold taxes pursuant to
applicable law or otherwise require the Company to pay any amounts on account of
such withholding.
(d) Listing. If the Series A Preferred Securities are listed on the NYSE
or another national securities exchange at the time of the distribution of the
Series A Junior Subordinated Debentures pursuant to a Series A Special Event
Exchange, then, prior to such distribution, the Company shall use its best
efforts to cause the Series A Junior Subordinated Debentures to be listed on the
NYSE or such other exchange on which the Series A Preferred Securities are then
listed.
18. CERTAIN PROVISIONS APPLICABLE AFTER A SERIES A SPECIAL EVENT EXCHANGE.
If, immediately prior to any Series A Special Event Exchange, the Series A
Preferred Securities are represented by one or more global securities held by
The Depository Trust Company ("DTC") or any successor securities depositary or
their respective nominees, then (a) DTC or such successor shall act as (and is
hereby appointed) the Depository for the Series A Junior Subordinated
Debentures, and (b) the Series A Junior Subordinated Debentures exchanged for
the Series A Preferred Securities upon such Series A Special Event Exchange
shall be represented by one or more global Series A Junior Subordinated
Debentures registered in the name of DTC or such successor securities depositary
or their respective nominees.
After the date fixed for a Series A Special Event Exchange, any
certificates representing Series A Preferred Securities not held by DTC or any
successor securities depositary or their respective nominees and not surrendered
for exchange shall be deemed to represent Series A Junior Subordinated
Debentures having a principal amount and accrued and unpaid interest equal to
the liquidation preference plus accrued and unpaid
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<PAGE>
dividends (including Additional Dividends (as defined in Section 1 of the
Written Action)) of such Series A Preferred Securities until such certificates
are surrendered to the Conversion Agent for exchange in accordance with the
terms of the Series A Special Event Exchange. Notwithstanding the foregoing,
until such certificates are so surrendered, no payments of interest or principal
will be made with respect to such Series A Junior Subordinated Debentures.
19. REGISTRAR. The Series A Junior Subordinated Debentures may be
surrendered for registration of transfer or exchange and for conversion or
exchange at the Corporate Trust Office of the Trustee and any notices or demands
to or upon the Company in respect of the Series A Junior Subordinated Debentures
and the Indenture may be presented at that office.
20. FORM. The certificates evidencing the Series A Junior Subordinated
Debentures shall be substantially in the form attached hereto as Annex A, with
such changes as the officer executing the same shall approve, such approval to
be evidenced by such officer's manual or facsimile signature.
21. TRANSFERABILITY. Prior to a Series A Special Event Exchange, the
Series A Junior Subordinated Debentures may not be transferred by American
General Delaware without the Company's prior consent. The Series A Junior
Subordinated Debentures may be distributed to the holders of the Series A
Preferred Securities upon the occurrence of a Tax Event or an Investment Company
Event (as such terms are defined in the Written Action) only upon the written
consent of the Company.
22. DENOMINATION. The Series A Junior Subordinated Debentures shall be
issuable in denominations of $50 and any integral multiple thereof.
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ANNEX A
FORM OF FACE OF SERIES A JUNIOR SUBORDINATED DEBENTURE
AMERICAN GENERAL CORPORATION
6% Series A Convertible Junior Subordinated Debenture
Due 2025
No. 1 $313,291,100
American General Corporation, a corporation duly organized and
existing under the laws of the State of Texas (herein called the "Company",
which term includes any successor under the Indenture referred to on the reverse
side), for value received, hereby promises to pay to American General Delaware,
L.L.C. or registered assigns, the principal sum of Three Hundred Thirteen
Million Two Hundred Ninety-One Thousand One Hundred ($313,291,100) Dollars on
the earlier of (i) May 31, 2025 or (ii) the date upon which American General
Delaware, L.L.C., a Delaware limited liability company (herein called "American
General Delaware"), is liquidated, dissolved or wound-up; provided, however,
that, if all the 6% Convertible Monthly Income Preferred Securities, Series A,
of American General Delaware (herein called the "Series A Preferred Securities")
are exchanged (herein called a "Series A Special Event Exchange") for Series A
Junior Subordinated Debentures (as defined on the reverse side) in accordance
with the terms of the Series A Preferred Securities, this Series A Junior
Subordinated Debenture will mature on May 31, 2025, notwithstanding that
American General Delaware may have liquidated, dissolved or wound-up in
connection with or after such Series A Special Event Exchange. The Company also
agrees to pay interest on the principal hereof at the rate of 6% per annum from
June 1, 1995 (or from the most recent Interest Payment Date, as hereinafter
defined, to which interest has been paid or duly provided for), payable monthly
in arrears on the last day of each calendar month of each year (each an
"Interest Payment Date"), commencing June 30, 1995, until the principal hereof
is paid or made available for payment. To the fullest extent permitted by
applicable law, interest will accrue at the rate of 6% per annum on any interest
installment that is not paid at the end of any monthly interest period
compounded monthly (herein, together with the Additional Amounts referred to in
the Indenture, called "Additional Interest"). The amount of interest payable
for any period shall be computed on the basis of a 360 day year consisting of
twelve 30-day months and, for any period shorter than a full monthly interest
payment period, will be computed on the basis of the actual number of days
elapsed in such period. If any date on which interest is payable on this Series
A Junior Subordinated Debenture is not a Business Day, then the payment of the
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall
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be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. A "Business Day" shall mean any day
other than a Saturday, Sunday or other day on which banking institutions in New
York City are authorized or obligated by law or executive order to close. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Series A Junior Subordinated Debenture (or one or more Predecessor
Securities, as defined in the Indenture) is registered at the close of business
on the Regular Record Date for such Interest Payment Date. The Regular Record
Date shall be the Business Day next preceding such Interest Payment Date,
provided that if the Series A Junior Subordinated Debentures are not in book-
entry-only form during any period following a Series A Special Event Exchange,
the Regular Record Date for any Interest Payment Date within such period shall
be the 15th day of the month in which such Interest Payment Date occurs. Any
such interest not so punctually paid or duly provided for (other than by reason
of the following paragraph) will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Series A Junior Subordinated Debenture (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in such Indenture.
The Company shall have the right, at any time and from time to time,
to extend the interest payment period hereof to a period ending on the last day
of a calendar month (herein called an "Extension Period") not exceeding 60
consecutive months, but in no event beyond the date of Stated Maturity or the
Redemption Date of this Series A Junior Subordinated Debenture. During an
Extension Period, interest will continue to accrue and compound monthly. Prior
to the termination of any Extension Period of less than 60 consecutive months,
the Company may further extend the interest payment period hereof, provided that
such Extension Period may not exceed 60 consecutive months and may not extend
beyond the date of Stated Maturity or the Redemption Date of this Series A
Junior Subordinated Debenture. Upon the termination of any Extension Period and
the payment of all accrued and unpaid interest (including any Additional
Interest) then due, the Company may select a new Extension Period, subject to
the above requirements. No interest shall be due during an Extension Period
until the end of such period. Such interest shall be due and payable on the
Interest Payment Date which is the last day of the Extension Period to the
Person in whose name this Series A Junior Subordinated Debenture is registered
on the Regular Record Date for such Interest Payment Date.
Payment of the principal of and interest on this Series A Junior
Subordinated Debenture will be made at the office or agency of the Company
maintained for that purpose in New York, New York, in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register or (ii) subject to the procedures of the Paying Agent, by wire transfer
in
29
<PAGE>
immediately available funds at such place and to such account at a bank located
in the United States as may be designated by the Person entitled thereto as
specified in the Security Register.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Series A
Junior Subordinated Debenture shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
AMERICAN GENERAL CORPORATION
By:__________________________
Name:
Title:
[SEAL]
Attest:_______________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
CHEMICAL BANK
As Trustee
By ________________________
Authorized Officer
30
<PAGE>
FORM OF REVERSE OF SERIES A JUNIOR SUBORDINATED DEBENTURE
This Series A Junior Subordinated Debenture is one of a duly authorized
issue of Securities of the Company, designated as its 6% Series A Convertible
Junior Subordinated Debentures due 2025 (herein called the "Series A Junior
Subordinated Debentures"), limited in aggregate principal amount to $281,962,050
(or up to 313,291,100 aggregate principal amount if and to the extent the over-
allotment option granted to the underwriters for the sale of the Series A
Preferred Securities is exercised), issued and to be issued under an Indenture,
dated as of May 15, 1995 (herein called the "Indenture"), between the Company
and Chemical Bank, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture). Reference is made to the Indenture
and all indentures supplemental thereto (including the Board Resolution setting
forth the terms of this series of Securities) for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the Series A
Junior Subordinated Debentures and other series of Securities which may be
issued pursuant to the Indenture and of the terms upon which the Securities are,
and are to be, authenticated and delivered. All terms used in this Series A
Junior Subordinated Debenture which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
The indebtedness evidenced by this Series A Junior Subordinated Debenture,
including all principal and interest (including Additional Interest), is, to the
extent provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this Series A Junior
Subordinated Debenture is issued subject to the provisions of the Indenture with
respect thereto. The Holder of this Series A Junior Subordinated Debenture, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default with respect to the Series A Junior Subordinated
Debentures shall occur and be continuing, the principal of the Series A Junior
Subordinated Debentures may be declared due and payable in the manner and with
the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Series A Junior Subordinated
Debentures under the Indenture at any time by the Company and the Trustee with,
in some cases, the consent of the Holders of a majority in aggregate principal
amount of the Series A Junior Subordinated Debentures at the time Outstanding
and, in other cases, without the consent of any Holders. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Series A Junior Subordinated Debentures, on behalf of the Holders
of all Series A Junior Subordinated Debentures, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver shall be
conclusive and binding upon the Holder
31
<PAGE>
of this Series A Junior Subordinated Debenture and upon all future Holders of
this Series A Junior Subordinated Debenture and of any Series A Junior
Subordinated Debenture issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent is
made upon this Series A Junior Subordinated Debenture or thereon.
Subject to and in compliance with the provisions of the Indenture, this
Series A Junior Subordinated Debenture is convertible at any time on or before
the earlier of close of business on the Conversion Expiration Date or Conversion
Expiration Date of the Series A Junior Subordinated Debentures at the option of
the Holder hereof into fully paid and nonassessable shares of American General
Common Stock at an initial conversion price of $40.69 principal amount hereof
per share of American General Common Stock, subject to adjustment as provided
for in the Indenture. Notwithstanding the conversion hereof after a Regular
Record Date but before the corresponding Interest Payment Date, the Holder
hereof will be entitled to receive the interest payable on this Series A Junior
Subordinated Debenture on such next succeeding Interest Payment Date. No other
adjustment, however, shall be made for accrued interest, including Additional
Interest, whether or not in arrears. No fractional shares of American General
Common Stock will be issued as a result of conversion, but in lieu thereof such
fractional interest will be paid in cash by the Company. On or after May 31,
2000, the Company may, at its option, cause the conversion rights of Holders of
Series A Junior Subordinated Debentures to expire if (i) the Company is then
current in the payment of interest (without regard to any Extension Period) on
the Series A Junior Subordinated Debentures and (ii) for 20 Trading Days within
any period of 30 consecutive Trading Days, including the last Trading Day of
such period, the Current Market Price of American General Common Stock shall
have exceeded 120% of the Conversion Price then in effect.
If at any time following the Conversion Expiration Date or Conversion
Expiration Date of the Series A Junior Subordinated Debentures, less than 10% of
the aggregate principal amount of the Series A Junior Subordinated Debentures
originally purchased by American General Delaware with the proceeds from the
sale of the Series A Preferred Securities remains Outstanding, then such Series
A Junior Subordinated Debentures shall be subject to redemption, in whole but
not in part, at the option of the Company upon not less than 30 days' nor more
than 60 days' notice, 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.
The Series A Junior Subordinated Debentures are also subject to redemption,
at the option of the Company, in whole or in part, at any time or from time to
time on or after May 31, 2003, 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 American General Delaware redeems the Series A Preferred Securities in
accordance with the terms thereof, the Series A Junior Subordinated Debentures
shall be due and payable and shall be redeemed by the Company in an aggregate
principal amount equal to the aggregate stated liquidation preference of the
Series A Preferred Securities so redeemed at a Redemption Price equal to the
unpaid
32
<PAGE>
principal amount of the Series A Junior Subordinated Debentures so redeemed,
without premium or penalty, plus any accrued and unpaid interest (including any
Additional Interest) thereon to the Redemption Date.
In addition, if the Company or any of its Subsidiaries acquires any Series
A Preferred Securities by tender, in the open market or otherwise, the Company
shall have the right to redeem the Series A Junior Subordinated Debentures, in
an aggregate principal amount not to exceed the aggregate stated liquidation
preference of the Series A Preferred Securities so purchased, at a cash
Redemption Price equal to the principal amount thereof, without premium or
penalty, plus any accrued and unpaid interest (including any Additional
Interest) thereon to the Redemption Date.
Upon the occurrence of an Exchange Event, the Series A Junior Subordinated
Debentures are convertible into Series A Cumulative Convertible Preferred Stock
of the Company as provided under the terms of the Indenture.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Series A Junior Subordinated Debenture is
registrable in the Security Register, upon surrender of this Series A Junior
Subordinated Debenture for registration of transfer at the office or agency of
the Trustee in New York City, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Series A Junior Subordinated Debentures,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees; provided, however, that,
prior to a Series A Special Event Exchange, this Series A Junior Subordinated
Debenture may not be transferred without the written consent of the Company.
The Series A Junior Subordinated Debentures are issuable only in registered
form without coupons in denominations of $50 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations set forth
therein, Series A Junior Subordinated Debentures are exchangeable for a like
aggregate principal amount of Series A Junior Subordinated Debentures of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Series A Junior Subordinated Debenture for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Series A Junior
Subordinated Debenture is registered as the owner hereof for all purposes,
whether or not this Series A Junior Subordinated Debenture be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.
33
<PAGE>
No recourse shall be had for the payment of the principal of or interest
(including Additional Interest, if any) on this Series A Junior Subordinated
Debenture, or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture supplemental thereto,
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
34
<PAGE>
Exhibit 5
VINSON & ELKINS
ATTORNEYS AT LAW
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
TELEPHONE (713) 758-2222
FAX (713) 758-2346
January 26, 1996
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Ladies and Gentlemen:
We have acted as counsel to American General Corporation, a Texas
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-4 (the "Registration Statement") to be filed by
the Company with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Act"), which Registration Statement
relates to the proposed issuance by the Company of certain shares of (i) the
Company's Common Stock, par value $.50 per share (together with the attached
Preferred Share Purchase Rights, "Common Stock"), and (ii) the Company's 7%
Convertible Preferred Stock, par value $1.50 per share (the "Preferred Stock"),
in each case pursuant to the Agreement and Plan of Merger (the "Merger
Agreement") dated as of October 19, 1995, as amended January 25, 1996, among
the Company, AGC Life Insurance Company and Independent Insurance Group, Inc.
("Independent"), which Merger Agreement provides for the acquisition by the
Company of Independent by means of the merger described therein (the "Merger").
In addition to the shares of Common Stock and Preferred Stock to be issued in
connection with the Merger, the Registration Statement also relates to the
shares of Common Stock that may be issued upon conversion of the Preferred Stock
in accordance with the terms thereof. In such connection, we are passing on
certain legal matters in connection with the foregoing issuances of the Common
Stock and the Preferred Stock. At your request, this opinion is being furnished
to you for filing as an exhibit to the Registration Statement.
In connection with rendering this opinion, we have examined such
certificates, instruments and documents and reviewed such questions of law as we
have considered necessary or appropriate for the purposes of this opinion. In
addition, we have relied as to factual matters on certificates of certain public
officials and officers of the Company.
Based upon the foregoing examination and review, we are of the opinion
that:
(i) when the conditions to the Merger set forth in the Merger
Agreement have been satisfied and the Merger has been effected in
accordance therewith, the shares of Common Stock issued in exchange for
shares of capital stock of Independent pursuant to the Merger will be
validly issued, fully paid and non-assessable;
(ii) when (a) the proposed Statement of Resolutions Establishing a
Series of Shares relating to the Preferred Stock (in substantially the form
attached as an exhibit to the Merger Agreement) has been duly filed with
the appropriate officials of the State of Texas in accordance with Article
2.13 of the Texas Business Corporation Act and (b) the conditions to the
Merger set forth in the Merger Agreement have been satisfied and the
<PAGE>
American General Corporation
Page 2
January 26, 1996
Merger has been effected in accordance therewith, the shares of Preferred
Stock issued in exchange for shares of capital stock of Independent
pursuant to the Merger will be validly issued, fully paid and non-
assessable; and
(iii) the shares of Common Stock initially issuable upon conversion of
the Preferred Stock in accordance with the terms thereof have been
authorized for issuance and, when such shares have been duly issued upon
conversion of the Preferred Stock in accordance with the terms thereof,
such shares will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the caption "Legal
Matters" in the Proxy Statement/Prospectus forming a part of the Registration
Statement. In giving this consent, however, we do not hereby admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 and the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
VINSON & ELKINS L.L.P.
<PAGE>
Exhibit 8(a)
VINSON & ELKINS
ATTORNEYS AT LAW
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
TELEPHONE (713) 758-2222
FAX (713) 758-2346
January 26, 1996
American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
Ladies and Gentlemen:
We participated in the preparation of American General Corporation's
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission with respect to the merger of Independent Insurance Group, Inc.
with and into AGC Life Insurance Company, a wholly-owned subsidiary of
American General Corporation (the "Registration Statement").
We hereby confirm to you our opinions with respect to federal income
tax matters set forth in the Registration Statement under the headings
"THE PROPOSED MERGER -- Certain Federal Income Tax Consequences of the
Merger" and "DESCRIPTION OF AMERICAN GENERAL CAPITAL STOCK -- Certain
Federal Income Tax Aspects Relating to the Ownership and Disposition of
American General Common Stock and American General 7% Convertible
Preferred Stock."
We hereby consent to the use of our name in the Registration
Statement and to the filing of this letter as an exhibit to the
Registration Statement. In giving this consent, however, we do not hereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 and the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
VINSON & ELKINS L.L.P.
<PAGE>
Exhibit 8(b)
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
January 30, 1996
Independent Insurance Group, Inc.
One Independent Drive
Jacksonville, Florida 32276
Ladies and Gentlemen:
You have requested our opinion regarding the discussions of the material
U.S. federal income tax consequences under the captions "SUMMARY OF PROXY
STATEMENT/PROSPECTUS--The Proposed Merger--Certain Federal Income Tax
Consequences of the Merger" and "THE PROPOSED MERGER--Certain Federal Income Tax
Consequences of the Merger" in the Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") which will be included in the Registration Statement on
Form S-4 (the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). The Proxy Statement/Prospectus relates to the proposed merger
of Independent Insurance Group, Inc. with and into AGC Life Insurance Company, a
wholly-owned subsidiary of American General Corporation. This opinion is
delivered in accordance with the requirements of Item 601(b)(8) of Regulation
S-K under the Securities Act.
In rendering our opinion, we have reviewed the Proxy Statement/Prospectus
and such other materials as we have deemed necessary or appropriate as a basis
for our opinion. In addition, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended, Treasury regulations, pertinent
judicial authorities, rulings of the Internal Revenue Service, and such other
authorities as we have considered relevant.
<PAGE>
Independent Insurance Group
January 30, 1996
Page 2
Based upon the foregoing, it is our opinion that the statements made under
the captions "SUMMARY OF PROXY STATEMENT/PROSPECTUS--The Proposed Merger--
Certain Federal Income Tax Consequences of the Merger" and "THE PROPOSED MERGER
- --Certain Federal Income Tax Consequences of the Merger" in the Proxy
Statement/Prospectus, to the extent that they constitute matters of law or legal
conclusions, are correct in all material respects. There can be no assurance
that contrary positions may not be asserted by the Internal Revenue Service.
This opinion is being furnished in connection with the Proxy
Statement/Prospectus. You may rely upon and refer to the foregoing opinion in
the Proxy Statement/Prospectus. Any variation or difference in the facts from
those set forth or assumed either herein or in the Proxy Statement/Prospectus
may affect the conclusions stated herein.
In accordance with the requirements of Item 601(b)(23) of Regulation S-K
under the Securities Act, we hereby consent to the use of our name under the
captions "SUMMARY OF PROXY STATEMENT/PROSPECTUS--The Proposed Merger--Certain
Federal Income Tax Consequences of the Merger" and "THE PROPOSED MERGER--Certain
Federal Income Tax Consequences of the Merger" in the Proxy Statement/Prospectus
and to the filing of this opinion as an Exhibit to the Registration Statement.
In giving this consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
<PAGE>
EXHIBIT 8(c)
VINSON & ELKINS
ATTORNEYS AT LAW
VINSON & ELKINS L.L.P
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
TELEPHONE (713) 758-2222
FAX (713) 758-2346
WRITER'S TELEPHONE WRITER'S FAX
(713) 758-2192 (713) 615-5210
January 30, 1996
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Ladies and Gentlemen:
We have been acting as counsel to American General Corporation
("Purchaser") and its wholly-owned subsidiary, AGC Life Insurance Company
("Sub") in connection with the transactions contemplated by the Agreement and
Plan of Merger, dated as of October 19, 1995 and amended as of January 25, 1996,
by and among Purchaser, Sub and Independent Insurance Group, Inc. (the
"Company") (the "Merger Agreement"). The delivery of an opinion at the Effective
Time,/1/ in substance to the effect hereinafter stated, is a condition to the
obligations of Purchaser and Sub to consummate the Merger pursuant to Section
8.3(b) of the Merger Agreement.
Our opinion is based upon (i) the Merger Agreement, (ii) the facts and
documents set forth or referenced in Schedule 14A, Information Required in Proxy
Statement, as filed with the Securities and Exchange Commission as part of the
Registration Statement with respect to the Merger (the "Registration
Statement"), and (iii) the representations referenced below as to the existence
of certain facts. Our opinion is expressly conditioned upon the initial and
continuing accuracy of all of such facts, documents and representations.
In rendering this opinion, we have assumed that the Merger will be
consummated at the Effective Time strictly in accordance with the terms of the
Merger Agreement and that there are no other agreements, arrangements, or
understandings among any of Purchaser, Sub, the Company or the stockholders of
the Company other than those described or referenced in the Merger Agreement or
the Registration Statement. In addition, our opinion is expressly conditioned
upon our receipt, at or prior to the Effective Time, of certificates executed by
officers of Purchaser, Sub and the Company, in form and substance satisfactory
to us and on which we may rely, as to certain facts relating to, and knowledge
and intentions of, Purchaser, Sub and the Company with respect to the Merger.
- ----------
/1/ Capitalized terms used but not defined herein have the meanings ascribed to
them in the Merger Agreement.
<PAGE>
American General Corporation
Page 2
January 30, 1996
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder, other relevant statutes, pertinent judicial authorities,
interpretive rulings of the Internal Revenue Service and such other authorities
as we have considered relevant. It should be noted that statutes, regulations,
judicial decisions and administrative interpretations are subject to change at
any time, in some circumstances with retroactive effect. A material change in
the authorities upon which our opinion is based could affect our conclusions.
Based solely upon the foregoing, it is our opinion that, under current law:
The Merger would be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
Purchaser, Sub and the Company would each be a party to that reorganization
within the meaning of Section 368(b) of the Code.
We express no opinion as to the tax treatment of the Merger under the
provisions of any other sections of the Code which also may be applicable
thereto or to the tax treatment of any conditions existing at the time of, or
effects resulting from, the transactions which are not specifically addressed in
the foregoing opinion.
This opinion is given to you by us solely for your use and is not to be
quoted or otherwise referred to or furnished to any governmental agency (other
than to the Securities and Exchange Commission as an exhibit to the Registration
Statement or to the Internal Revenue Service in connection with an examination
of the transactions contemplated by the Merger Agreement) or to other persons
without our prior written consent.
We hereby consent to the use of our name in the Registration Statement and
to the filing of this letter as an exhibit to the Registration Statement.
Very truly yours,
/s/VINSON & ELKINS L.L.P.
VINSON & ELKINS L.L.P.
<PAGE>
EXHIBIT 8(d)
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
January 30, 1996
Independent Insurance Group, Inc.
One Independent Drive
Jacksonville, Florida 32276
Ladies and Gentlemen:
We have been acting as counsel to Independent Insurance Group, Inc. (the
"Company") in connection with the transactions contemplated by the Agreement and
Plan of Merger, dated as of October 19, 1995 and as amended as of January 25,
1996, by and among the Company, American General Corporation, and AGC Life
Insurance Company, a wholly-owned subsidiary of American General Corporation
(the "Merger Agreement"). The delivery of an opinion at the Effective Time, in
substantially the form hereof, is a condition to the obligations of the Company
to consummate the Merger pursuant to Section 8.2(b) of the Merger Agreement. All
capitalized terms used herein, unless otherwise specified, shall have the
meanings ascribed to them in the Merger Agreement.
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, covenants, statements and
representations contained in originals or copies, certified or otherwise
identified to our satisfaction, of the Merger Agreement, representations
referred to in Section 7.9 of the Merger Agreement and such other documents as
we have deemed necessary or appropriate as a basis for the opinion set forth
below as well as other statements, representations and assumptions. Our opinion
is expressly conditioned on, among other things, the accuracy as of the date
hereof, and the continuing accuracy of all of such facts, information,
covenants, statements and representations up to and including the Effective
Time.
<PAGE>
Independent Insurance Group, Inc
January 30, 1996
Page 2
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such documents. We have also assumed that the contemplated
transactions will be consummated at the Effective Time in accordance with the
terms of the Merger Agreement. In addition, our opinion is expressly conditioned
on, among other things, the assumptions that at or prior to the Effective Time,
we will be provided with officers' certificates executed by executives of the
Company, American General Corporation, and AGC Life Insurance Company, in form
and substance satisfactory to us and on which we may rely, as to certain facts
relating to, and knowledge and intentions of, the Company, American General
Corporation, and AGC Life Insurance Company, and certain facts relating to the
Merger.
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder, pertinent judicial authorities, interpretive rulings of
the Internal Revenue Service and such other authorities as we have considered
relevant. It should be noted that statutes, regulations, judicial decisions and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change in the authorities or
the facts, information, covenants, statements, representations or assumptions
upon which our opinion is based could affect our conclusions.
Based solely upon the foregoing, we are of the opinion that, under current
law:
The Merger would qualify as a reorganization pursuant to Section 368(a) of
the Code, and that the Company, American General Corporation, and AGC Life
Insurance Company would each be a party to that reorganization within the
meaning of Section 368(b) of the Code.
Except as set forth above, we express no opinion to any party as to any
consequences of the Merger or any transactions related thereto. This opinion is
for your benefit and is not to be used, circulated, quoted or otherwise referred
to for any purpose, excluding the Proxy Statement-Prospectus which will be
included in
<PAGE>
Independent Insurance Group, Inc
January 30, 1996
Page 3
the Registration Statement on Form S-4 (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act").
In accordance with the requirements of Item 601(b)(23) of Regulation S-K
under the Securities Act, we hereby consent to the filing of this opinion as an
Exhibit to the Registration Statement. In giving this consent, we do not admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(Unaudited)
($ in millions)
<TABLE>
<CAPTION>
Year Ended
December 31, 1994
-------------------------------------------
Historical Pro Forma A(1) Pro Forma B(2)
---------- -------------- --------------
<S> <C> <C> <C>
Income before income tax expense
and dividends on preferred
securities........................ $ 802(3) $ 952 $ 961
Fixed charges deducted from income
Interest expense................. 526 569 579
Implicit interest in rents....... 16 16 16
------ ------ ------
Total fixed charges deducted
from income................... 542 585 595
------ ------ ------
Earnings available for fixed
charges....................... $1,344 $1,537 $1,556
====== ====== ======
Fixed charges per above............ $ 542 $ 585 $ 595
Capitalized interest relating to
real estate operations............ 18 18 18
------ ------ ------
Total fixed charges.............. 560 603 613
Dividends on preferred
securities...................... -- 41 47
------ ------ ------
Total fixed charges and
dividends on preferred
securities.................... $ 560 $ 644 $ 660
====== ====== ======
Ratio of earnings to fixed
charges....................... 2.40 2.55 2.54
====== ====== ======
Ratio of earnings to combined
fixed charges and preferred
stock dividends............... 2.40 2.39 2.36
====== ====== ======
Nine Months Ended
September 30, 1995
-------------------------------------------
Historical Pro Forma A(1) Pro Forma B(2)
---------- -------------- --------------
Income before income tax expense
and dividends on preferred
securities........................ $ 823(4) $ 841 $ 860
Fixed charges deducted from income
Interest expense................. 506 500 508
Implicit interest in rents....... 14 14 14
------ ------ ------
Total fixed charges deducted
from income................... 520 514 522
------ ------ ------
Earnings available for fixed
charges....................... $1,343 $1,355 $1,382
====== ====== ======
Fixed charges per above............ $ 520 $ 514 $ 522
Capitalized interest relating to
real estate operations............ 13 13 13
------ ------ ------
Total fixed charges.............. 533 527 535
Dividends on preferred
securities...................... 15 36 41
------ ------ ------
Total fixed charges and
dividends on preferred
securities.................... $ 548 $ 563 $ 576
====== ====== ======
Ratio of earnings to fixed
charges....................... 2.52 2.57 2.58
====== ====== ======
Ratio of earnings to combined
fixed charges and preferred
stock dividends............... 2.45 2.41 2.40
====== ====== ======
</TABLE>
- ------------------
(1) The unaudited consolidated pro forma results for the year ended December 31,
1994, and for the nine months ended September 30, 1995, are based on
American General's historical results, adjusted to reflect the impact of the
acquisitions of American Franklin Company (AFC) on January 31, 1995, and a
40% interest in Western National Corporation on December 23, 1994, as if
both had occurred on January 1, 1994. See American General's Current Report
on Form 8-K dated November 13, 1995, incorporated herein by reference.
(2) The unaudited consolidated pro forma results for the year ended December 31,
1994, and for the nine months ended September 30, 1995, are based on
American General's Pro Forma A results (see Note (1) above), adjusted to
reflect the impact of the merger of the Independent Insurance Group, Inc. as
if it had occurred on January 1, 1994. See American General's Current Report
on Form 8-K dated November 13, 1995, incorporated herein by reference.
(3) Includes $172 million of realized investment losses primarily from the
capital gains offset program. See "Management's Discussion and Analysis"
within American General's Annual Report on Form 10-K for the year ended
December 31, 1994, incorporated herein by reference.
(4) Includes eight months of operations for AFC, which was acquired
January 31, 1995.
<PAGE>
Exhibit 23(c)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Proxy Statement/Prospectus of
American General Corporation for the registration of shares of its common stock
and preferred stock to be issued pursuant to the Merger Agreement among
American General Corporation, AGC Life Insurance Company, and Independent
Insurance Group, Inc. and to the incorporation by reference therein of our
report dated March 1, 1995, with respect to the consolidated financial
statements of Independent Insurance Group, Inc. incorporated by reference in
Independent Insurance Group, Inc.'s Annual Report (Form 10-K) for the year ended
December 31, 1994, and our report dated March 29, 1995 with respect to the
related financial statement schedules included therein, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Jacksonville, Florida
January 26, 1996
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Proxy Statement/Prospectus of
American General Corporation for the registration of shares of its common stock
and preferred stock to be issued pursuant to the Merger Agreement among
American General Corporation, AGC Life Insurance Company, and Independent
Insurance Group, Inc. and to the incorporation by reference therein of our
report dated February 15, 1995, with respect to the consolidated financial
statements of American General Corporation incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1994, and our report
dated March 17, 1995 with respect to the related financial statement schedules
included therein, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Houston, Texas
January 26, 1996
<PAGE>
Exhibit 23(d)
[LOGO OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
American General Corporation ("American General") on Form S-4 to be filed with
the Securities and Exchange Commission on or about January 29, 1996, and in the
related Proxy Statement/Prospectus included therein, our report, which includes
an explanatory paragraph for certain changes in accounting principles, dated
February 1, 1994, except for Note 13 as to which the date is January 30, 1995,
on our audit of the consolidated financial statements of American Franklin
Company and Subsidiaries as of December 31, 1993, and for the year then ended,
which report is included in the Form 8-K of American General dated February 14,
1995, and of our report, which includes an explanatory paragraph for certain
changes in accounting principles, dated February 1, 1995, on our audits of the
consolidated financial statements of American Franklin Company and Subsidiaries
as of December 31, 1994, and 1993, and for the years ended, which report is
included in the Form 8-K of American General dated April 14, 1995. We also
consent to the references to our Firm under the caption "Experts" in the
Registration Statement.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
January 26, 1996
<PAGE>
EXHIBIT 99(a)
LOGO
INDEPENDENT INSURANCE GROUP, INC.
ONE INDEPENDENT DRIVE
JACKSONVILLE, FLORIDA 32276
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 29, 1996
The undersigned shareholder of Independent Insurance Group, Inc.
("Independent") hereby appoints Wilford C. Lyon, Jr., Jacob F. Bryan, IV, Boyd
E. Lyon, Sr., Kendall G. Bryan, Carter B. Bryan, Michael C. Lyon and William A.
Howard and each of them, the lawful attorneys and proxies of the undersigned,
each with several powers of substitution, to vote all the shares of common
stock of Independent held of record by the undersigned on January 8, 1996 at
the Special Meeting of Shareholders, and at any and all adjournments or
postponement thereof (the "Special Meeting"), to be held at the principal
executive offices of Independent, One Independent Drive, Jacksonville, Florida
32276 on February 29, 1996 at 10:00 AM, local time, with all the powers the
undersigned would possess if personally present, upon all matters set forth in
the Proxy Statement/Prospectus, dated January 30, 1996, and all supplements and
amendments thereto.
1. Approval and adoption of an Agreement and Plan of Merger, dated as of
October 19, 1995 and as amended as of January 25, 1996 ("Merger Agreement"), by
and among Independent, American General Corporation ("American General") and
AGC Life Insurance Company ("AGC Life") whereby Independent would be merged
with and into AGC Life Insurance Company (the "Merger"), which would continue
in existence as a wholly-owned subsidiary of American General and each share of
Independent voting and non-voting common stock outstanding prior to the
effective time of the Merger (other than dissenting shares and certain shares
of Independent Common Stock held in a separate account of a subsidiary of
American General) would, subject to certain allocation procedures described in
the Merger Agreement, be converted into, exchanged for and represent the right
to receive any of the following: (i) a fraction (the "Exchange Ratio") of a
share of American General's common stock (together with the attached American
General Series A Junior Participating Preferred Stock Purchase Rights), par
value $.50 per share, calculated by dividing (x) $27.50 by (y) the average of
the closing share prices of American General's common stock as reported on the
New York Stock Exchange (the "NYSE") Composite Tape during the ten consecutive
NYSE trading days ending on (and including) the fifth NYSE trading day prior to
the effective time of the Merger; (ii) a fraction of a share of 7% convertible
preferred stock, par value $1.50 per share ("American General Convertible
Preferred Stock"), of American General, equal to the Exchange Ratio; or (iii)
cash in the amount of $27.50, without any interest thereon.
[_] FOR [_] AGAINST [_] ABSTAIN
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE AND RETURNED PROMPTLY
IN THE ENCLOSED ENVELOPE)
<PAGE>
- -------------------------------------------------------------------------------
Shares represented by all properly executed proxies will be voted in
accordance with instructions appearing on the proxy and at the discretion of
the proxy holders as to any other matter that may properly come before the
Special Meeting of Shareholders. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS,
PROXIES WILL BE VOTED FOR ITEM 1 AND AT THE DISCRETION OF THE PROXY HOLDERS AS
TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING OF
SHAREHOLDERS.
Please mark, sign, date and return this proxy in the enclosed envelope as
soon as possible, even though you plan to attend the Special Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INDEPENDENT INSURANCE
GROUP, INC.
DATED:_________________________, 1996
-------------------------------------
-------------------------------------
Signature(s)
Please sign as name(s) appear on
this proxy, and date this proxy. If
a joint account, each joint owner
must sign. If signing for a
corporation or partnership or as
agent, attorney or fiduciary,
indicate the capacity in which you
are signing.
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99(b)
FORM OF ELECTION/LETTER OF TRANSMITTAL
TO ACCOMPANY CERTIFICATES REPRESENTING SHARES OF
VOTING COMMON STOCK
AND
NON-VOTING COMMON STOCK
OF
INDEPENDENT INSURANCE GROUP, INC.
SURRENDERED IN CONNECTION WITH THE PROPOSED
MERGER OF INDEPENDENT INSURANCE GROUP, INC. WITH AND INTO
AGC LIFE INSURANCE COMPANY
A WHOLLY-OWNED SUBSIDIARY OF
AMERICAN GENERAL CORPORATION
This Form of Election/Letter of Transmittal is to be completed by
shareholders of Independent Insurance Group, Inc. (the "Company") if stock
certificates ("Share Certificates") for shares of voting common stock, par
value $1.00 per share, of the Company ("Company Voting Common Stock"), or if
Share Certificates for shares of non-voting common stock, par value $1.00 per
share, of the Company ("Company Non-Voting Common Stock" and, together with
the Company Voting Common Stock, the "Shares") are to be forwarded herewith or
if delivery of Shares is to be made by book-entry transfer to the account of
First Chicago Trust Company of New York (the "Exchange Agent") at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and collectively, the "Book-Entry Transfer Facilities") pursuant to book-entry
transfer procedures, or if a guarantee of delivery of such Share Certificates,
and all other required documents, are to be delivered to the Exchange Agent by
5:00 p.m., New York City time, on the Election Deadline (as hereinafter
defined), in order to effect an Election (as hereinafter defined) in
connection with the proposed merger (the "Merger") of the Company with and
into AGC Life Insurance Company ("AGC Life"), a wholly-owned subsidiary of
American General Corporation ("American General").
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail:
By Hand or Courier:
First Chicago Trust Company First Chicago Trust Company
of New York of New York
Tenders and Exchanges Tenders and Exchanges
Suite 4660-IIG Suite 4680-IIG
P.O. Box 2559 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
DELIVERY OF THIS FORM OF ELECTION/LETTER OF TRANSMITTAL TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. YOU MUST SIGN THIS FORM OF ELECTION/LETTER OF TRANSMITTAL WHERE
INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW.
<PAGE>
The instructions accompanying this Form of Election/Letter of Transmittal
should be read carefully before this Form of Election/Letter of Transmittal is
completed.
THE DEADLINE FOR SUBMITTING THIS FORM OF ELECTION/LETTER OF TRANSMITTAL,
TOGETHER WITH YOUR SHARE CERTIFICATES, IS 5:00 P.M., NEW YORK CITY TIME, ON
THE ELECTION DEADLINE. IT IS CURRENTLY EXPECTED THAT THE ELECTION DEADLINE
WILL BE ON FEBRUARY 27, 1996, ALTHOUGH THE ACTUAL ELECTION DEADLINE WILL BE
PUBLICLY ANNOUNCED BY AMERICAN GENERAL AT LEAST FIVE TRADING DAYS PRIOR TO
THE CLOSING OF THE MERGER (BUT IN NO EVENT WILL THE ELECTION DEADLINE BE
EARLIER THAN FEBRUARY 27, 1996). SEE INSTRUCTION B5.
Shareholders of the Company whose Share Certificates are not immediately
available or who cannot deliver their Share Certificates and all other
documents required hereby to the Exchange Agent prior to the Election
Deadline, and who wish to make an Election must do so pursuant to the
guaranteed delivery procedure described below. See Instruction A2.
WITH RESPECT TO THE PROPOSED MERGER, SHAREHOLDERS OF THE COMPANY MAY CHOOSE
TO MAKE A COMMON STOCK ELECTION, A CONVERTIBLE PREFERRED STOCK ELECTION AND/OR
A CASH ELECTION (EACH AS HEREINAFTER DEFINED) WITH RESPECT TO ALL OR ANY
PORTION OF THE SHARES HELD BY SUCH HOLDER (AS HEREINAFTER DEFINED).
[_] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
EXCHANGE AGENT'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Check Box of Applicable Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
[_] Midwest Securities Trust Company
Account Number Transaction Code Number ___________________________________
2
<PAGE>
TYPE OF ELECTION (SEE INSTRUCTIONS B1 , B2 AND B3)
- --------------------------------------------------------------------------------
CERTIFICATES ENCLOSED (ATTACH SEPARATE SIGNED LIST IF NECESSARY)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONVERTIBLE
TOTAL COMMON PREFERRED
NUMBER CASH STOCK STOCK
OF SHARES ELECTION* ELECTION ELECTION**
REPRESENTED (NUMBER (NUMBER (NUMBER
NAME(S) AND ADDRESS(ES) OF CERTIFICATE BY OF OF OF
REGISTERED HOLDER(S) NUMBER CERTIFICATE SHARES) SHARES) SHARES)
- ------------------------------------------------------------------------------------------
(PLEASE FILL IN IF BLANK)
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Shares
- ------------------------------------------------------------------------------------------
</TABLE>
Information regarding the conversion of Shares is provided in the
accompanying Proxy Statement/Prospectus (as hereinafter defined) and in the
instructions hereto, both of which shareholders are urged to read carefully
in their entirety prior to making any Elections.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* TO BE COMPLETED BY HOLDERS MAKING A CASH ELECTION:
Shares for which a Cash Election are made will be subject to certain
allocation procedures if the aggregate number of Shares for which a Cash
Election is made exceeds certain limits as described in the Proxy
Statement/Prospectus and in Instruction B3 hereto. With respect to Shares
for which you have made a Cash Election, specify in the spaces below the
percentage of such Shares you would like converted into Convertible
Preferred Stock Consideration and the percentage of such Shares you would
like converted into Common Stock Consideration in the event that allocation
is required and such Shares are not converted into Cash Consideration. In
the absence of such a designation, such Shares will be converted into Common
Stock Consideration.
COMMON STOCK CONSIDERATION ______ PERCENT
CONVERTIBLE PREFERRED STOCK CONSIDERATION ______ PERCENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
** TO BE COMPLETED BY HOLDERS MAKING A CONVERTIBLE PREFERRED STOCK ELECTION:
Shares for which a Convertible Preferred Stock Election are made will be
subject to certain allocation procedures if the aggregate number of Shares
for which a Convertible Preferred Stock Election is made exceeds certain
limits as described in the Proxy Statement/Prospectus and in instruction B2
hereto. With respect to Shares for which you have made a Convertible
Preferred Stock Election, specify in the spaces below the percentage of such
Shares you would like converted into Cash Consideration and the percentage
of such Shares you would like converted into Common Stock Consideration in
the event that allocation is required and such Shares are not converted into
Convertible Preferred Stock Consideration. In the absence of such a
designation, such Shares will be converted into Common Stock Consideration.
COMMON STOCK CONSIDERATION ______ PERCENT
CASH CONSIDERATION ______ PERCENT
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
FORM OF ELECTION/LETTER OF TRANSMITTAL CAREFULLY.
3
<PAGE>
Ladies and Gentlemen:
In connection with the proposed Merger, the undersigned record holder (a
"Holder") of Shares hereby submits Share Certificates evidencing the Shares
listed above or hereby transfers ownership of such Shares on the account books
maintained by a Book-Entry Transfer Facility, and elects, subject to
consummation of the Merger and subject to the conditions set forth below, to
have such Shares converted into one or more of the following, as specified
above: (a) $27.50 in cash (the "Cash Price"), without interest thereon (the
"Cash Consideration"); (b) a fraction of a share of Common Stock (together
with the associated American General Preferred Share Purchase Rights), par
value $0.50 per share, of American General ("American General Common Stock"),
calculated by dividing (x) $27.50 by (y) the Average Closing Price (as defined
in the Merger Agreement) of the American General Common Stock, rounded to four
decimal places (such fraction being referred to herein as the "Exchange
Ratio") (the "Common Stock Consideration"); or (c) a fraction of a share of 7%
Convertible Preferred Stock, par value $1.50 per share, of American General
("American General 7% Convertible Preferred Stock"), equal to the Exchange
Ratio (the "Convertible Preferred Stock Consideration"). It is understood that
the following election is subject to (i) the terms, conditions and limitations
set forth in the Proxy Statement/Prospectus, dated as of January 30, 1996,
relating to the Merger (the "Proxy Statement/Prospectus"), receipt of which is
hereby acknowledged by the undersigned, (ii) the terms of the Agreement and
Plan of Merger, dated as of October 19, 1995 and as amended as of January 25,
1996, by and among American General, AGC Life and the Company (the "Merger
Agreement"), a copy of which is included as Annex A to the Proxy
Statement/Prospectus, and (iii) the accompanying instructions. American
General's acceptance of Shares delivered pursuant to this Form of
Election/Letter of Transmittal will constitute a binding agreement between the
undersigned and American General upon the terms and subject to the conditions
set forth in the documents referenced in (i), (ii) and (iii) listed above.
THERE ARE MATERIAL DIFFERENCES IN THE CONSEQUENCES OF ELECTING TO RECEIVE
CASH CONSIDERATION, COMMON STOCK CONSIDERATION OR CONVERTIBLE PREFERRED STOCK
CONSIDERATION. NONE OF AMERICAN GENERAL, THE COMPANY, THE BOARD OF DIRECTORS
OF AMERICAN GENERAL OR THE BOARD OF DIRECTORS OF THE COMPANY MAKES ANY
RECOMMENDATION AS TO WHETHER SHAREHOLDERS SHOULD ELECT TO RECEIVE CASH
CONSIDERATION, COMMON STOCK CONSIDERATION AND/OR CONVERTIBLE PREFERRED STOCK
CONSIDERATION IN THE MERGER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN
DECISION WITH RESPECT TO SUCH ELECTION. AS A RESULT OF THE ALLOCATION
PROCEDURES DESCRIBED HEREIN, AND IN THE PROXY STATEMENT/PROSPECTUS, A
SHAREHOLDER WHO ELECTS TO CONVERT IN EXCESS OF APPROXIMATELY 50% OF HIS OR HER
SHARES INTO CONVERTIBLE PREFERRED STOCK CONSIDERATION OR IN EXCESS OF
APPROXIMATELY 50% OF HIS OR HER SHARES INTO CASH CONSIDERATION MAY NOT RECEIVE
THE CONSIDERATION HE OR SHE HAS ELECTED WITH RESPECT TO SUCH EXCESS. IF A
HOLDER MAKES NO ELECTION, HE OR SHE WILL RECEIVE COMMON STOCK CONSIDERATION IN
THE MERGER AS DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS.
Failure of a Holder of Shares to complete properly and to return this Form
of Election/Letter of Transmittal together with his or her Share Certificates,
or with an appropriate guarantee of delivery of Share Certificates, to the
Exchange Agent by the Election Deadline, or failure of a Holder of Shares to
complete the procedure for delivery by book-entry transfer on a timely basis
and to comply with the election procedures described in the Proxy
Statement/Prospectus and in this Form of Election/Letter of Transmittal
(including the instructions hereto), will cause such Holder's Shares to be
converted into the right to receive Common Stock Consideration without regard
to the preference of such Holder of Shares.
The undersigned authorizes and instructs you, as Exchange Agent, to deliver
the Share Certificates listed above and to receive on behalf of the
undersigned, in exchange for the Shares represented thereby, any check for the
Cash Consideration or any certificate for the shares of American General
Common Stock and American General 7% Convertible Preferred Stock issuable in
the Merger. If certificates are not delivered herewith, there is furnished a
guarantee of delivery of such Share Certificates from an Eligible Institution
(as hereinafter defined).
4
<PAGE>
The undersigned represents and warrants that the undersigned has full power
and authority to execute and deliver this Form of Election/Letter of
Transmittal and to transfer ownership of the Shares listed above on the
account books maintained by a Book-Entry Transfer Facility, or to surrender
the Share Certificate(s) for such Shares surrendered herewith or covered by a
guarantee of delivery, free and clear of any liens, claims, charges or
encumbrances whatsoever. The undersigned understands and acknowledges that the
method of delivery of Share Certificate(s) and all other required documents is
at the option and risk of the undersigned and that the risk of loss of any
Share Certificate(s) surrendered herewith or covered by a guarantee of
delivery shall pass only after the Exchange Agent has actually received the
Share Certificate(s). All questions as to the validity, form and eligibility
of any Election and surrender of Share Certificates hereunder shall be
determined by the Company (which may delegate power in whole or in part to the
Exchange Agent), and such determination shall be final and binding. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the sale, assignment, transfer, cancellation and retirement of the
Shares delivered herewith. No authority herein conferred or agreed to be
conferred shall be affected by, and all such authority shall survive, the
death or incapacity of the undersigned. All obligations of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
The undersigned understands that the purpose of the election procedure is to
permit Holders of Shares to express their preferences for the type of
consideration they wish to receive in the Merger. The Merger Agreement
provides that (a) no more than 50% of the aggregate number of Shares issued
and outstanding immediately prior to the Effective Time (as defined in the
Merger Agreement) shall be converted into the right to receive Convertible
Preferred Stock Consideration and (b) no more than the Cash Available for
Election (as hereinafter defined) shall be distributed as Cash Consideration.
The undersigned further understands that each Holder making a Cash Election or
a Convertible Preferred Stock Election may specify in the election form above
the other forms of Merger Consideration (as defined in the Merger Agreement)
such Holder prefers to receive in the event that a portion of such Holder's
Shares with respect to which such Holder has made a Convertible Preferred
Stock Election or a Cash Election are subject to allocation as a result of the
restrictions specified in the previous sentence. In the event that a Holder of
Shares fails to specify the other forms of Merger Consideration such Holder
prefers to receive in the event that a portion of such Holder's Shares are
subject to allocation, such Holder shall receive Common Stock Consideration
without regard to the preference of such Holder with respect to any
Unconverted Cash Election Shares (as defined in the Merger Agreement) and any
Unconverted Convertible Preferred Stock Election Shares (as defined in the
Merger Agreement). Subject to the foregoing and the limitations described in
the Merger Agreement and in the Proxy Statement/Prospectus, the Exchange Agent
will honor the Common Stock Elections, Convertible Preferred Stock Elections
and Cash Elections (each as defined in the Merger Agreement) made by Holders
of Shares when it issues shares of American General Common Stock, shares of
American General 7% Convertible Preferred Stock and the Cash Consideration
after the Effective Time.
The undersigned acknowledges and agrees that, for the purposes of applying
the allocation provisions described herein, the Exchange Agent will assume
that all Shares owned of record by the undersigned Holder are submitted
herewith, and that Shares owned of record by the undersigned Holder that are
transmitted pursuant to another Form of Election/Letter of Transmittal will
not be aggregated with the Shares submitted herewith for the purposes of
applying the allocation procedures described herein. Accordingly, Holders
should be aware that transmitting Shares pursuant to different Forms of
Election/Letters of Transmittal could, under some circumstances, result in the
Shares owned by such Holder being subject to treatment that is less favorable
to such Holder than in accordance with the allocation procedures that would be
applied if such Shares had been submitted with a single Form of
Election/Letter of Transmittal.
The undersigned understands that in lieu of any fractional share of American
General Common Stock or American General 7% Convertible Preferred Stock, the
Exchange Agent will pay to each former shareholder of the Company who
otherwise would be entitled to receive a fractional share of American General
Common Stock or American General 7% Convertible Preferred Stock an amount in
cash determined by multiplying (i) the
5
<PAGE>
Average Closing Price by (ii) the fractional interest in a share of American
General Common Stock or American General 7% Convertible Preferred Stock to
which such Holder would otherwise be entitled.
Unless otherwise indicated in the box entitled "Special Payment
Instructions," please issue any check and register any certificate for shares
of American General Common Stock or American General 7% Convertible Preferred
Stock in the name of the registered Holder(s) of the Shares appearing above
under "Type of Election." Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any check and any
certificate for shares of American General Common Stock or American General 7%
Convertible Preferred Stock to the registered Holder(s) of the Shares at the
address(es) of the registered Holder(s) appearing above under "Type of
Election." In the event that the boxes entitled "Special Payment Instructions"
and "Special Delivery Instructions" are both completed, please issue any check
and any certificate for shares of American General Common Stock or American
General 7% Convertible Preferred Stock in the name(s) of, and mail such check
and such certificate to, the person(s) so indicated.
6
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS A1, C2 AND C3)
(SEE INSTRUCTIONS A1, C2 AND C3)
To be completed ONLY if the check To be completed ONLY if the check
is to be made payable to, or the or the certificates for shares of
certificates for shares of American American General Common Stock or
General Common Stock or shares of shares of American General 7%
American General 7% Convertible Convertible Preferred Stock are to
Preferred Stock are to be be mailed to someone other than the
registered in, the name of someone undersigned or to the undersigned
other than the undersigned. at an address other than that shown
Issue check or certificates to: under "Type of Election."
Name _______________________________
(Please Print)
Mail[_] check [_] certificates to:
Address ____________________________
------------------------------------ Name _______________________________
(Please Print)
Zip Code
------------------------------------ Address ____________________________
Taxpayer Identification or Social ------------------------------------
Security Number Zip Code
(See Substitute Form W-9 on reverse
side)
SIGNATURE
(SEE INSTRUCTIONS A1 AND C2)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
SIGN HERE:
-------------------------------------
------------------------------------- Name(s): ____________________________
Signature(s) of Owner(s)
Must be signed by registered Name(s): ____________________________
Holder(s) exactly as name(s) (Please Print)
appear(s) on Share Certificate(s) or
by person(s) authorized to become
registered Holder(s) by certificates
and documents transmitted herewith.
If signature is by attorney,
executor, administrator, trustee or
guardian or others acting in a
fiduciary capacity, set forth full
title and see Instruction C2.
-------------------------------------
(Area Code and Telephone Number)
-------------------------------------
(Payee Taxpayer Identification or
Social Security Number)
Dated: ______________________________
SIGNATURE GUARANTEE
If you have filled out either the Name of Guarantor: __________________
Special Payment Instructions or the
Special Delivery Instructions above,
you must have your signatures
guaranteed. (See Instructions A1, C2
and C3)
Signature(s) Guaranteed: ____________
(Authorized signature required)
Date: _______________________________
7
<PAGE>
IMPORTANT TAX INFORMATION
In order to ensure compliance with federal income tax requirements, each
Holder of Shares is requested to provide the Exchange Agent with his correct
Taxpayer Identification Number ("TIN") and to certify whether he or she is
subject to backup federal income tax withholding by completing and signing the
Substitute Form W-9 below. (See Instruction C6 and accompanying Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9.)
PART I--PLEASE
PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
---------------------
SUBSTITUTE Social Security
Number
FORM W-9 OR
DEPARTMENT OF THE TREASURY ---------------------
INTERNAL REVENUE SERVICE Employer
Identification
PAYER'S REQUEST FOR TAXPAYER Number
IDENTIFICATION NUMBER (TIN) (If awaiting TIN,
write
"Applied For")
- -------------------------------------------------------------------------------
PART II--For Payees Exempt From Backup
Withholding, see the enclosed Guidelines
for Certification of Taxpayer
Identification Number on Substitute Form W-
9 and complete as instructed therein.
----------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct TIN (or a TIN has not been
issued to me and either (a) I have mailed or delivered an application to
receive a TIN to the appropriate Internal Revenue Service ("IRS") or
Social Security Administration office or (b) I intend to mail or deliver
an application in the near future. I understand that if I do not provide
a TIN within sixty (60) days, 31% of all reportable payments made to me
thereafter will be withheld until I provide a number), and
(2) I am not subject to backup withholding either because I have not been
notified by the IRS that I am subject to backup withholding as a result
of failure to report all interest or dividends, or the IRS has notified
me that I am no longer subject to backup withholding.
- -------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting of interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.)
SIGNATURE ________________________________ DATE ___________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE MERGER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
8
<PAGE>
INSTRUCTIONS
A. FORM OF ELECTION/LETTER OF TRANSMITTAL
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Form of Election/Letter of Transmittal must be guaranteed
by a firm that is a bank, broker, dealer, credit union, savings association or
other entity that is a member in good standing of the Securities Transfer
Agent's Medallion Program (each, an "Eligible Institution"). No signature
guarantee is required on this Form of Election/Letter of Transmittal if (a)
this Form of Election/Letter of Transmittal is signed by the registered
Holder(s) (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of Shares delivered herewith, unless
such Holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions." If a Share
Certificate is registered in the name of a person other than the signer of
this Form of Election/Letter of Transmittal, or if checks or certificates are
to be payable to the order of or registered in the name of a person other than
the registered Holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered Holder(s) appear(s) on the Share Certificate, with
the signature(s) on such Share Certificate or stock powers guaranteed as
described above. See Instruction C2.
2. Delivery of Form of Election/Letter of Transmittal and Share
Certificates. This Form of Election/Letter of Transmittal is to be used either
if Share Certificates are to be forwarded herewith or if Shares are to be
delivered by book-entry transfer pursuant to book-entry transfer procedures.
Share Certificates evidencing all delivered Shares, or confirmation of a book-
entry transfer of such Shares, if such procedure is available, into the
Exchange Agent's account at one of the Book-Entry Transfer Facilities pursuant
to book-entry transfer procedures, together with a properly completed and duly
executed Form of Election/Letter of Transmittal (or facsimile thereof) with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message, as defined below) and any other documents required by this
Form of Election/Letter of Transmittal, must be received by the Exchange Agent
at its address set forth on the front page of this Form of Election/Letter of
Transmittal prior to the Election Deadline. If Share Certificates are
forwarded to the Exchange Agent in multiple deliveries, a properly completed
and duly executed Form of Election/Letter of Transmittal must accompany each
such delivery. Shareholders of the Company whose Share Certificates are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Exchange Agent prior to the Election Deadline
or who cannot complete the procedure for delivery by book-entry transfer on a
timely basis may deliver their Shares pursuant to the guaranteed delivery
procedure. Pursuant to such procedure: (a) such delivery must be made by or
through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided herewith,
must be received by the Exchange Agent prior to the Election Deadline; and (c)
in the case of a guarantee of Shares, the Share Certificates, in proper form
for transfer, or a confirmation of a book-entry transfer of such Shares, if
such procedure is available, into the Exchange Agent's account at one of the
Book-Entry Transfer Facilities, together with a properly completed and duly
executed Form of Election/Letter of Transmittal (or manually signed facsimile
thereof) with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message), and any other documents required by this
Form of Election/Letter of Transmittal, must be received by the Exchange Agent
within eight New York Stock Exchange trading days after the date of execution
of the Notice of Guaranteed Delivery. The term "Agent's Message" means a
message transmitted by a Book-Entry Transfer Facility to, and received by, the
Exchange Agent and forming a part of a book-entry confirmation, which states
that such Book-Entry Transfer Facility has received an express acknowledgment
from the participant in such Book-Entry Transfer Facility delivering the
Shares, that such participant has received and agrees to be bound by the terms
of this Form of Election/Letter of Transmittal and that American General and
the Company may enforce such agreement against the participant.
Record Holders of Shares who are nominees only may submit a separate Form of
Election/Letter of Transmittal for each beneficial owner for whom such record
Holder is a nominee; provided, however, that at the request of the Exchange
Agent, such record Holder shall certify to the satisfaction of the Exchange
Agent that
9
<PAGE>
such record Holder holds such Shares as nominee for the beneficial owner
thereof. Each beneficial owner for which a Form of Election/Letter of
Transmittal is submitted will be treated as a separate Holder of Shares.
Shareholders of the Company whose Forms of Election/Letters of Transmittal
and Share Certificates, or appropriate Notices of Guaranteed Delivery, are not
received prior to the Election Deadline, or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis, will not be entitled to
specify their preference(s) and will receive Common Stock Consideration in the
Merger.
THE METHOD OF DELIVERY OF THIS FORM OF ELECTION/LETTER OF TRANSMITTAL, SHARE
CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
3. Inadequate Space. If there is inadequate space for any information
required under "Type of Election," please include such information on a
separate signed sheet attached to this Form of Election/Letter of Transmittal.
4. Change or Revocation of Election. Any Holder of Share Certificates may,
at any time prior to the Election Deadline, change his or her Election by
submitting to the Exchange Agent a properly completed and signed revised Form
of Election/Letter of Transmittal and all required additional documents,
provided that the Exchange Agent receives such revised Form of Election/Letter
of Transmittal and other necessary documents prior to the Election Deadline.
Any Holder of Shares may, at any time prior to the Election Deadline, revoke
his or her prior valid Election by written notice received by the Exchange
Agent prior to the Election Deadline or by written withdrawal prior to the
Election Deadline of his or her Share Certificates (or of the Notice of
Guaranteed Delivery of such certificates) previously deposited with the
Exchange Agent.
5. Automatic Revocations of Elections. All Elections will be revoked
automatically if the Exchange Agent is notified in writing by the Company or
American General that the Merger Agreement has been terminated, and Share
Certificates will be promptly returned to the persons who have submitted them.
B. ELECTION AND ALLOCATION PROCEDURES
1. Elections. By completing this Form of Election/Letter of Transmittal in
accordance with the instructions hereto, each Holder will be permitted to make
a Stock Election, a Convertible Preferred Stock Election and/or a Cash
Election (each, an "Election") with respect to all or any portion of the
Shares held by such Holder. No alternative, conditional or contingent
Elections will be accepted.
Each Holder of Shares should consult his or her own financial advisor and
tax advisor as to the specific consequences of the Merger and Election to such
Holder.
2. Stock Elections and Allocations. The undersigned acknowledges and agrees
that, for the purposes of applying the allocation provisions set forth below,
the Exchange Agent will assume that all Shares owned of record by the
undersigned Holder are submitted herewith, and that Shares owned of record by
the undersigned Holder that are transmitted pursuant to another Form of
Election/Letter of Transmittal will not be aggregated with the Shares
submitted herewith for the purposes of applying the allocation procedures
described herein. Accordingly, Holders should be aware that transmitting
Shares pursuant to different Forms of Election/Letters of Transmittal could,
under some circumstances, result in the Shares owned by such Holder being
subject to treatment that is less favorable to such Holder than in accordance
with the allocation procedures that would be applied if such Shares had been
submitted with a single Form of Election/Letter of Transmittal.
If Convertible Preferred Stock Elections are received for a number of Shares
that is equal to or less than 50% of the aggregate number of Shares issued and
outstanding immediately prior to the Effective Time of the
10
<PAGE>
Merger, each Share with respect to which a Convertible Preferred Stock
Election has been made will be converted in the Merger into the Convertible
Preferred Stock Consideration.
Subject to the terms and conditions contained in the Merger Agreement, if
Convertible Preferred Stock Elections are received for a number of Shares that
is greater than 50% of the aggregate number of Shares issued and outstanding
immediately prior to the Effective Time of the Merger, the Exchange Agent will
allocate the Shares with respect to which Convertible Preferred Stock
Elections have been received so that such Shares will be converted into
American General 7% Convertible Preferred Stock and such other forms of Merger
Consideration in the following manner: (a) the Exchange Agent will distribute
to each Holder of Shares who has made a Convertible Preferred Stock Election
for an amount of Shares equal to or less than 50% of the number of Shares held
by such Holder, Convertible Preferred Stock Consideration for each Share with
respect to which a Convertible Preferred Stock Election has been made by such
Holder; (b) the Exchange Agent will distribute to each Holder of Shares who
has made a Convertible Preferred Stock Election for an amount of Shares
greater than 50% of the number of Shares held by such Holder, Convertible
Preferred Stock Consideration (i) for such number of Shares with respect to
which a Convertible Preferred Stock Election has been made equal to 50% of the
number of Shares owned by such Holder and (ii) for such number of Shares with
respect to which a Convertible Preferred Stock Election has been made equal to
the product of the number of Shares owned by such Holder that were not
converted into Convertible Preferred Stock Consideration pursuant to (b)(i)
and the quotient obtained by dividing (X) 50% of the aggregate number of
Shares issued and outstanding immediately prior to the Effective Time of the
Merger less the aggregate number of Shares with respect to which a Convertible
Preferred Stock Election has been made that were converted into Convertible
Preferred Stock Consideration pursuant to (a) and (b)(i) by (Y) the aggregate
number of Shares with respect to which a Convertible Preferred Stock Election
has been made that were not converted into Convertible Preferred Stock
Consideration pursuant to (b)(i); and (c) the Exchange Agent will distribute
to each Holder of Unconverted Convertible Preferred Stock Election Shares (as
defined in the Merger Agreement) such other forms of Merger Consideration as
such Holder prefers to receive as designated by such Holder in the appropriate
box provided herein under "Type of Election," subject to the restrictions
contained herein and in the Merger Agreement and provided that in the absence
of such designation, the Exchange Agent will distribute Common Stock
Consideration to such Holder with respect to such unconverted Shares.
There is no limitation on the amount of Common Stock Consideration that may
be issued in connection with the Merger, and each Share with respect to which
a Common Stock Election has been made will be converted in the Merger into the
right to receive a fraction of a share of American General Common Stock equal
to the Exchange Ratio.
No fractional shares of American General Common Stock or American General 7%
Convertible Preferred Stock will be distributed in connection with the Merger.
In lieu of any fractional share of American General Common Stock or American
General 7% Convertible Preferred Stock, the Exchange Agent will pay to each
former shareholder of the Company who otherwise would be entitled to receive a
fractional share of American General Common Stock or American General 7%
Convertible Preferred Stock an amount in cash determined by multiplying (i)
the Average Closing Price by (ii) the fractional interest in a share of
American General Common Stock or American General 7% Convertible Preferred
Stock to which such Holder would otherwise be entitled.
3. Cash Elections and Allocations. The Merger Agreement provides that the
maximum aggregate Cash Consideration that can be paid in the Merger is the
Cash Price multiplied by 50% of the aggregate number of Shares issued and
outstanding immediately prior to the Effective Time of the Merger, less the
amount of cash needed to be paid in lieu of fractional interests and with
respect to dissenting shares (the "Cash Available for Election"); provided,
that if certain representations are not obtained from each person owning,
immediately prior to the Closing (as defined in the Merger Agreement), 5% or
more of the Shares, then the Cash Available for Election may be reduced by up
to the value of the Shares owned by such persons who do not provide such
representations. Subject to the terms and conditions contained in the Merger
Agreement, in the event that the product of the aggregate number of Shares
with respect to which Cash Elections have been made and the Cash Price (the
"Cash Election Amount") exceeds the Cash Available for Election, the Exchange
Agent will allocate
11
<PAGE>
the Shares with respect to which Cash Elections have been received so that
such Shares will be converted into Cash Consideration and such other forms of
Merger Consideration in the following manner: (a) the Exchange Agent will
determine the quotient obtained by dividing the Cash Available for Election by
the product of (i) the Cash Price and (ii) the aggregate number of Shares
issued and outstanding immediately prior to the Effective Time of the Merger
(the "Guaranteed Cash Percentage"); (b) the Exchange Agent will distribute to
each Holder of Shares who has elected to have such number of his or her Shares
converted into Cash Consideration, which as a percentage of the total number
of Shares held by such Holder (the "Elected Cash Percentage") is equal to or
less than the Guaranteed Cash Percentage, Cash Consideration for each Share
with respect to which a Cash Election has been made by such Holder; (c) the
Exchange Agent will distribute to each Holder of Shares whose Elected Cash
Percentage is greater than the Guaranteed Cash Percentage, Cash Consideration
(i) for such number of Shares with respect to which a Cash Election has been
made equal to the product of the number of Shares owned by such Holder and the
Guaranteed Cash Percentage and (ii) for such number of Shares with respect to
which a Cash Election has been made equal to the product of the number of
Shares with respect to which a Cash Election has been made that were not
converted into Cash Consideration pursuant to (c)(i) and the quotient
determined by dividing (X) the Cash Available for Election less the aggregate
amount of Cash Consideration paid to all Holders of Shares pursuant to (b) and
(c)(i) by (Y) the product of the Cash Price and the aggregate number of Shares
with respect to which a Cash Election has been made which were not converted
into Cash Consideration pursuant to (c)(i); and (d) the Exchange Agent will
distribute to each Holder of Unconverted Cash Election Shares (as defined in
the Merger Agreement) such other forms of Merger Consideration as such Holder
prefers to receive as designated by such Holder in the appropriate box
provided herein under "Type of Election," subject to the restrictions
contained herein and in the Merger Agreement and provided that in the absence
of such designation, the Exchange Agent will distribute Common Stock
Consideration to such Holder with respect to such unconverted Shares.
In the event that the Cash Available for Election exceeds the Cash Election
Amount, all Shares with respect to which a Cash Election has been made will be
converted into the right to receive Cash Consideration.
In the event that it is necessary to allocate both the Shares with respect
to which Convertible Preferred Stock Elections have been made and the Shares
with respect to which Cash Elections have been made, the Shares with respect
to which Convertible Preferred Stock Elections have been made will be
allocated first.
4. Treatment of Non-Electing Shares. Non-Electing Shares will be converted
in the Merger into the right to receive Common Stock Consideration.
Failure of a Holder of Shares to complete properly and to return this Form
of Election/Letter of Transmittal together with his or her Share Certificates,
or with an appropriate guarantee of delivery of Share Certificates, to the
Exchange Agent by the Election Deadline, or a Holder of Shares who cannot
complete the procedure for delivery by book-entry transfer on a timely basis,
and who fails to comply with the election procedures described in the Proxy
Statement/Prospectus and in this Form of Election/Letter of Transmittal
(including the instructions hereto), will cause each of such Holder's Shares
to be treated as a "Non-Electing Share" in the Merger and converted into the
right to receive Common Stock Consideration without regard to the preference
of such Holder of Shares.
5. Election Deadline. The deadline for submitting this Form of
Election/Letter of Transmittal to the Exchange Agent is 5:00 p.m., New York
City time, on the business day that is two Trading Days (as hereinafter
defined) prior to the Closing Date (as defined in the Merger Agreement) (the
"Election Deadline"). "Trading Day" means a day on which the New York Stock
Exchange is open for trading.
IT IS CURRENTLY EXPECTED THAT THE ELECTION DEADLINE WILL BE FEBRUARY 27,
1996. THE EXACT ELECTION DEADLINE WILL BE PUBLICLY ANNOUNCED BY AMERICAN
GENERAL AT LEAST FIVE TRADING DAYS PRIOR TO THE CLOSING (BUT IN NO EVENT WILL
THE ELECTION DEADLINE BE EARLIER THAN FEBRUARY 27, 1996).
12
<PAGE>
A MORE COMPLETE DESCRIPTION OF THE ELECTION AND ALLOCATION PROCEDURES IS SET
FORTH IN THE PROXY STATEMENT/PROSPECTUS UNDER "THE PROPOSED MERGER--ALLOCATION
RULES." ALL ELECTIONS ARE SUBJECT TO COMPLIANCE WITH THE ELECTION PROCEDURES
PROVIDED FOR IN THE MERGER AGREEMENT. IN CONNECTION WITH MAKING ANY ELECTION,
A SHAREHOLDER OF THE COMPANY SHOULD READ CAREFULLY, AMONG OTHER MATTERS, THE
DESCRIPTION AND STATEMENT OF THE INFORMATION CONTAINED IN THE PROXY
STATEMENT/PROSPECTUS UNDER "THE PROPOSED MERGER--CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER."
C. RECEIPT OF MERGER CONSIDERATION, SIGNATURES, SPECIAL INSTRUCTIONS, TAXES
AND ADDITIONAL COPIES
1. Receipt of Merger Consideration. As soon as practicable after the
Effective Time, checks and certificates representing shares of American
General Common Stock and shares of American General 7% Convertible Preferred
Stock will be distributed to those Holders who are entitled thereto and who
have surrendered their Share Certificates to the Exchange Agent for
cancellation.
2. Signatures on Form of Election/Letter of Transmittal; Stock Powers and
Endorsements. If this Form of Election/Letter of Transmittal is signed by the
registered Holder(s) of the Shares delivered herewith, the signature(s) must
correspond with the name(s) as written on the face of the Share Certificates
evidencing such Shares without alteration or any other change whatsoever.
If any Share delivered herewith is owned of record by two or more persons,
all such persons must sign this Form of Election/Letter of Transmittal.
If any of the Shares delivered herewith are registered in the names of
different Holders, it will be necessary to complete, sign and submit as many
separate Forms of Election/Letters of Transmittal as there are different
registrations of such Shares.
If this Form of Election/Letter of Transmittal is signed by the registered
Holder(s) of the Shares delivered herewith, no endorsements of Share
Certificates or separate stock powers are required, unless checks or
certificates evidencing shares of American General Common Stock or American
General 7% Convertible Preferred Stock are to be payable to the order of, or
registered in, the name of a person other than the registered Holder(s), in
which case, the Share Certificate(s) evidencing the Shares delivered herewith
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered Holder(s) appear(s) on such
Share Certificate(s). Signatures on such Share Certificate(s) and stock powers
must be guaranteed by an Eligible Institution.
If this Form of Election/Letter of Transmittal is signed by a person other
than the registered Holder(s) of the Shares delivered herewith, the Share
Certificate(s) evidencing the Shares delivered herewith must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered Holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Form of Election/Letter of Transmittal or any Share Certificate or
stock power is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Company of such person's
authority so to act must be submitted.
3. Special Payment and Delivery Instructions. If any check or certificates
evidencing shares of American General Common Stock or American General 7%
Convertible Preferred Stock are to be payable to the order of, or registered
in the name of, a person other than the person(s) signing this Form of
Election/Letter of Transmittal, or if such checks or such certificates are to
be sent to someone other than the person(s) signing this Form of
Election/Letter of Transmittal or to the person(s) signing this Form of
Election/Letter of Transmittal but at an address other than that shown in the
box entitled "Type of Election," the appropriate boxes on this Form of
Election/Letter of Transmittal must be completed.
13
<PAGE>
4. Stock Transfer Taxes. American General will bear the liability for any
state stock transfer taxes applicable to the issuance and delivery of checks
and certificates in connection with the Merger; provided, however, that if any
such check or certificate is to be issued in a name other than that in which
the Share Certificates surrendered in exchange therefor are registered, it
shall be a condition of such exchange that the person requesting such exchange
shall pay the amount of any stock transfer taxes (whether imposed on the
registered Holder or such person), payable on account of the transfer to such
person, to the Exchange Agent or satisfactory evidence of the payment of such
taxes, or exemption therefrom, shall be submitted to the Exchange Agent before
any such check or certificate is issued.
EXCEPT AS PROVIDED IN THIS INSTRUCTION C4, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE
SHARES DELIVERED HEREWITH.
5. Requests for Assistance or Additional Copies. Requests for assistance may
be directed to, and additional copies of the Proxy Statement/Prospectus, this
Form of Election/Letter of Transmittal and the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 may be obtained from,
Georgeson & Company Inc., the information agent (the "Information Agent") at
the telephone number and address set forth below.
6. Substitute Form W-9. Under the federal income tax law, a shareholder who
delivers Shares is required to provide the Exchange Agent (as payer) with such
shareholder's correct TIN on Substitute Form W-9 above. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
Exchange Agent is not provided with the correct TIN, the shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
In addition, payments of Cash Consideration that are made to such shareholder
with respect to Shares purchased pursuant to the Merger may be subject to
backup withholding of 31%. Certain shareholders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, such individual must submit a statement,
signed under penalties of perjury, attesting to such individual's exempt
status. Forms of such statements can be obtained from the Information Agent.
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions. If backup
withholding applies with respect to a shareholder, the Exchange Agent is
required to withhold 31% of any payments made to such shareholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the IRS.
To prevent backup withholding on payments of Cash Consideration that are
made to a shareholder with respect to Shares delivered herewith, the
shareholder is required to notify the Exchange Agent of such shareholder's
correct TIN by completing the Substitute Form W-9 attached hereto certifying
(a) that the TIN provided on Substitute Form W-9 is correct (or that such
shareholder is awaiting a TIN) and (b) that (i) such shareholder has not been
notified by the IRS that such shareholder is subject to backup withholding as
a result of a failure to report all interest or dividends or (ii) the IRS has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
The shareholder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
the shareholder should write "Applied For" in the space provided for the TIN
in Part I and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Exchange Agent is not provided with a TIN within 60
days, the Exchange Agent will withhold 31% of all payments of Cash
Consideration to such shareholder until a TIN is provided to the Exchange
Agent.
7. Lost, Destroyed or Stolen Share Certificates. Prior to the Election
Deadline, if any Share Certificate(s) representing Shares have been lost,
destroyed or stolen, shareholders should promptly notify Chemical-Mellon
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Securities Trust Company, the transfer agent and registrar for the Shares (the
"Transfer Agent"). The Transfer Agent's address is Four Station Square,
Pittsburgh, Pennsylvania 15219-1173, and its telephone number is (800) 756-
3353. Shareholders will then be instructed as to the steps that must be taken
in order to replace the Share Certificate(s). This Form of Election/Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed Share Certificates have been followed. After the
Election Deadline, if any Share Certificate(s) representing Shares have been
lost, destroyed or stolen, shareholders should promptly notify the Exchange
Agent.
The Information Agent is:
LOGO
[Logo of Georgeson & Company Inc. appears here]
Wall Street Plaza
New York, New York 10005
Call Toll Free: (800) 223-2064
In New York State, Call Collect: (212) 509-6240
SHAREHOLDERS HAVING QUESTIONS CONCERNING THIS FORM OF ELECTION/LETTER OF
TRANSMITTAL OR THE PROCEDURES FOR THE EXCHANGE OF THEIR SHARES ARE ENCOURAGED
TO CONTACT THE INFORMATION AGENT AT THE ADDRESS AND TELEPHONE NUMBER SET FORTH
ABOVE. UNDER NO CIRCUMSTANCES SHOULD SHAREHOLDERS DELIVER THEIR STOCK
CERTIFICATES TO THE INFORMATION AGENT.
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