<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF INCORPORATION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OR ORGANIZATION)
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)
----------------
MARK S. BERG, ESQ.
SENIOR VICE PRESIDENT 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:
MORRIS J. KRAMER, ESQ. PAUL S. BIRD, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP DEBEVOISE & PLIMPTON
919 THIRD AVENUE 875 THIRD AVENUE
NEW YORK, NY 10022 NEW YORK, NY 10022
(212) 735-3000 (212) 909-6000
----------------
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 Joint 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
<TABLE>
<CAPTION>
PROPOSED
TITLE OF EACH PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT PRICE FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.50 per share....... 47,000,000 shares (1) Not Applicable $1,675,882,745 $169,647.10(2)
</TABLE>
(1) Also includes associated Series A Junior Participating Preferred Stock
Purchase Rights, which Rights (a) are not currently separable from the
shares of Common Stock and (b) are not currently exercisable.
(2) Pursuant to Rule 457(f), the registration fee was computed on the basis of
the market value of 34,509,812 shares of USLIFE Common Stock to be
received by the Registrant pursuant to the acquisition of USLIFE
Corporation by the Registrant computed in accordance with Rule 457(c) on
the basis of the average of the high and low prices on May 14, 1997 as
reported for the American General Common Stock in The Wall Street Journal
on May 15, 1997. Pursuant to Rule 457(b), the fee has been reduced by
$338,196.16 paid on March 21, 1997 upon the filing under the Securities
Exchange Act of 1934, as amended, of preliminary copies of USLIFE's and
the Registrant's proxy materials included herein.
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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET PURSUANT TO
RULE 404(a) OF THE SECURITIES ACT, SHOWING THE LOCATION IN THE JOINT 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
--------------------------- --------------------------------------
<C> <S>
A. INFORMATION ABOUT THE TRANSACTION.
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus......................... Facing Page of Registration
Statement; Outside Front Cover Page
2. Inside Front and Outside Back Cover of Joint Proxy Statement/Prospectus
Pages of Prospectus................ Available Information; Incorporation
3. Risk Factors, Ratio of Earnings to of Certain Documents by Reference;
Fixed Charges and Other Table of Contents
Information........................ Summary of Joint Proxy
Statement/Prospectus; Summary
Historical Financial Data of American
General; Summary Historical Financial
Data of USLIFE; Selected Historical
Financial Data of American General;
Selected Historical Financial Data of
USLIFE; Selected Pro Forma Financial
Data; Risk Factors
4. Terms of the Transaction........... Summary of Joint Proxy
Statement/Prospectus; The Proposed
Merger; Comparison of Shareholder
Rights
5. Pro Forma Financial Information.... Summary Pro Forma Per Share and Other
Data; Selected Pro Forma Financial
Data; Pro Forma Combined Financial
Statements; Pro Forma Combined Balance
Sheet; Pro Forma Combined Statements
of Income; Notes to Pro Forma Combined
6. Material Contracts with the Company Financial Statements
Being Acquired .................... Summary of Joint Proxy
7. Additional Information Required for Statement/Prospectus; The Proposed
Reoffering by Persons and Parties Merger
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
Registrants....................... Incorporation of Certain Documents by
Reference; Certain Information
Concerning American General; Selected
Historical Financial Data of American
General
11. Incorporation of Certain
Information by Reference.......... Incorporation of Certain Documents by
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> <S>
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED.
15. Information With Respect to S-3
Companies......................... Incorporation of Certain Documents by
Reference; Certain Information
Concerning USLIFE; Selected Historical
Financial Data of USLIFE
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
or Authorizations Are to be
Solicited......................... Cover Page of Joint Proxy
Statement/Prospectus; Incorporation of
Certain Documents by Reference;
Summary of Joint Proxy
Statement/Prospectus; Special Meeting
of American General Shareholders;
19. Information if Proxies, Consents Special Meeting of USLIFE
or Authorizations Are Not to be Shareholders; The Proposed Merger
Solicited, or in an Exchange
Offer............................. *
</TABLE>
- --------
*Omitted because not required, inapplicable or answer is negative.
<PAGE>
[LOGO OF AMERICAN GENERAL]
AMERICAN GENERAL CORPORATION
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
May , 1997
Dear Shareholders:
You are cordially invited to attend a Special Meeting of the Shareholders of
American General Corporation ("American General") at the principal executive
offices of American General, 2929 Allen Parkway, Houston, Texas on Tuesday,
June 17, 1997 at 10:00 a.m.
On February 12, 1997, American General entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Texas Stars Corporation, a New York
corporation and wholly owned subsidiary of American General ("Merger Sub"),
and USLIFE Corporation, a New York corporation ("USLIFE"), pursuant to which,
among other things, Merger Sub will be merged with and into USLIFE (the
"Merger"), with USLIFE remaining as the surviving corporation and a wholly
owned subsidiary of American General. In the Merger, as more fully described
in the accompanying Joint Proxy Statement/Prospectus and in the Merger
Agreement included as Annex A thereto, each share of the USLIFE's common
stock, par value $1.00 per share (the "USLIFE Common Stock") outstanding prior
to the effective time of the Merger (other than shares as to which dissenters'
rights have been properly exercised under New York law), will be exchanged for
and represent the right to receive a fraction (the "Exchange Ratio") of a
share of common stock of American General (together with the attached American
General Preferred Share Purchase Rights), par value $.50 per share ("American
General Common Stock"), calculated by dividing (x) $49.00 by (y) the average
of the high and low sales prices of American General Common Stock as reported
in The Wall Street Journal during the ten consecutive New York Stock Exchange
("NYSE") trading days (each, a "Trading Day") ending on (and including) the
fifth NYSE Trading Day prior to the effective time of the Merger, subject to a
minimum of 1.0919 shares and a maximum of 1.2937 shares of American General
Common Stock for each share of USLIFE Common Stock, without interest.
At the Special Meeting, you will be asked to approve the issuance, pursuant
to the Merger Agreement, of shares of American General Common Stock (estimated
to be a minimum of approximately 39 million and a maximum of approximately 47
million shares) (the "Share Issuance").
For the reasons set forth in the accompanying Joint Proxy
Statement/Prospectus, your Board of Directors believes that the Merger and the
Share Issuance are in the best interests of the shareholders of American
General and, accordingly, RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
SHARE ISSUANCE. In making its determination as to the fairness of the Merger,
the Board of Directors received and considered the opinion, dated February 12,
1997, of Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Merrill
Lynch Opinion") to the effect that, as of such date, the Exchange Ratio is
fair to American General from a financial point of view. A copy of the
complete Merrill Lynch Opinion, including the assumptions, qualifications and
other matters contained therein, is included in the accompanying Joint Proxy
Statement/Prospectus as Annex B thereto.
Consummation of the Merger is subject to certain conditions, including the
approval of the Share Issuance by American General's shareholders, the
approval and adoption of the Merger and the Merger Agreement and the
transactions contemplated thereby by USLIFE's stockholders, and the review by,
or receipt of certain approvals from, regulatory authorities.
<PAGE>
If you have any questions prior to the Special Meeting or need further
assistance, please call our proxy solicitor, Morrow & Co., Inc., at (800) 566-
9061.
The enclosed Notice and Joint Proxy Statement/Prospectus contain details
concerning the Merger and the Share Issuance. We urge you to read and consider
these documents carefully. Whether or not you plan to attend the Special
Meeting, please be sure to sign, date and return the enclosed proxy card in
the enclosed, postage-paid envelope as promptly as possible so that your
shares may be represented at the Special Meeting and voted in accordance with
your wishes. It is important that your shares be represented at the Special
Meeting. Your vote is important regardless of the number of shares you own.
Very truly yours,
/s/ Robert M. Devlin
Robert M. Devlin
Chairman and Chief Executive Officer
<PAGE>
AMERICAN GENERAL CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 17, 1997
To the Holders of Common Stock and 7% Convertible Preferred Stock of American
General Corporation:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of American
General Corporation ("American General") will be held at the principal
executive offices of American General, 2929 Allen Parkway, Houston, Texas
77019 on Tuesday, June 17, 1997, commencing at 10:00 a.m. (and thereafter as
it may be adjourned from time to time), for the following purposes:
1. To consider and vote on a proposal to issue shares (the "Share Issuance")
of American General common stock (estimated to be a minimum of approximately
39 million and a maximum of approximately 47 million shares) as consideration
pursuant to an Agreement and Plan of Merger, dated as of February 12, 1997
(the "Merger Agreement"), by and among American General, Texas Stars
Corporation, a New York corporation and wholly owned subsidiary of American
General ("Merger Sub") and USLIFE Corporation, a New York corporation
("USLIFE"), providing for the merger (the "Merger") of Merger Sub with and
into USLIFE, with USLIFE remaining as the surviving corporation and a wholly
owned subsidiary of American General. In the Merger, as more fully described
in the accompanying Joint Proxy Statement/Prospectus and in the Merger
Agreement included as Annex A thereto, each share of USLIFE's common stock,
par value $1.00 per share ("USLIFE Common Stock"), outstanding prior to the
effective time of the Merger (other than shares as to which dissenters' rights
have been properly exercised under New York law), will be exchanged for and
represent the right to receive a fraction of a share of common stock of
American General (together with the attached American General Preferred Share
Purchase Rights), par value $.50 per share ("American General Common Stock"),
calculated by dividing (x) $49.00 by (y) the average of the high and low sales
prices of American General Common Stock as reported in The Wall Street Journal
during the ten consecutive New York Stock Exchange ("NYSE") trading days
(each, a "Trading Day") ending on (and including) the fifth NYSE Trading Day
prior to the effective time of the Merger, subject to a minimum of 1.0919
shares and a maximum of 1.2937 shares of American General Common Stock for
each share of USLIFE Common Stock, without interest.
2. To transact such other business as may properly come before the meeting.
Approval of the Share Issuance requires the affirmative vote of a majority
of the votes cast with respect to such proposal, provided that the total
number of votes cast on such proposal represents more than 50% of the holders
of outstanding shares of American General Common Stock and 7% Convertible
Preferred Stock of American General ("American General 7% Preferred Stock")
entitled to vote thereon at the Special Meeting. Only shareholders of record
on the books of American General at the close of business on May 7, 1997 will
be entitled to receive notice of and to vote at the Special Meeting. A
complete list of such shareholders will be available for examination by any
American General shareholder, for any purpose related to the Special Meeting,
at the offices of American General in Houston, Texas during normal business
hours for a period of ten days prior to the Special Meeting. Each share of
American General Common Stock is entitled to one vote at the Special Meeting,
and each share of American General 7% Preferred Stock is entitled to four-
fifths of one vote at the Special Meeting. The holders of American General
Common Stock and the holders of American General 7% Preferred Stock will vote
together as a single class upon the matters to come before the Special
Meeting.
The Board of Directors of American General unanimously recommends that
shareholders vote FOR approval of the Share Issuance.
<PAGE>
Whether or not you plan to attend the Special Meeting, you are urged to mark,
date and sign the enclosed proxy and return it promptly so that your vote can
be recorded. If you are present at the meeting and desire to do so, you may
revoke your proxy and vote in person.
By Order of the Board of Directors,
/s/ John A. Adkins
John A. Adkins
Corporate Secretary
Dated: May , 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
IN PERSON.
<PAGE>
GORDON E. CROSBY, JR.
[LOGO OF USLIFE CORPORATION] CHAIRMAN OF THE BOARD
- -------------------------------------------------------------------------------
125 Maiden Lane New York NY 10038 4992 212 709 6000
May , 1997
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
USLIFE Corporation (the "Company"), to be held at 10:30 A.M. on June 17, 1997
at Pace University, Schimmel Center Auditorium, Spruce Street, New York, New
York.
At the Special Meeting, you will be asked to approve and adopt an Agreement
and Plan of Merger, dated as of February 12, 1997 (the "Merger Agreement"), by
and among the Company, American General Corporation ("American General") and
Texas Stars Corporation ("Merger Sub"), a wholly owned subsidiary of American
General, pursuant to which Merger Sub will be merged (the "Merger") with and
into the Company, and the Company will become a subsidiary of American General
and the transactions contemplated thereby.
In the Merger, as more fully described in the accompanying Proxy
Statement/Prospectus and in the Merger Agreement included as Annex A thereto,
each share of the Company's common stock, par value $1.00 per share (the
"USLIFE Common Stock") outstanding prior to the effective time of the Merger
(other than shares as to which dissenters' rights have been properly exercised
under New York law), will be exchanged for and represent the right to receive
a fraction of a share of common stock (together with the attached American
General Preferred Share Purchase Rights), par value $.50 per share, of
American General ("American General Common Stock"), calculated by dividing (x)
$49.00 by (y) the average of the high and low sales prices of American General
Common Stock as reported in The Wall Street Journal during the ten consecutive
New York Stock Exchange ("NYSE") trading days (each, a "Trading Day") ending
on (and including) the fifth NYSE Trading Day prior to the effective time of
the Merger, subject to a minimum of 1.0919 shares and a maximum of 1.2937
shares of American General Common Stock for each share of USLIFE Common Stock,
without interest.
American General, with assets of $67 billion and shareholders' equity of
$5.2 billion as of March 31, 1997, is one of the nation's largest diversified
financial services organizations. Headquartered in Houston, Texas, it is a
leading provider of retirement services, life insurance and consumer loans.
Enclosed with this letter is a Notice of Special Meeting, Joint Proxy
Statement/Prospectus, Proxy Card and return envelope. I urge you to read the
enclosed material carefully.
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AND RECOMMENDS THAT YOU VOTE
FOR APPROVAL AND ADOPTION OF THE MERGER AND THE MERGER AGREEMENT.
In arriving at its recommendation, your Board of Directors gave careful
consideration to the factors described in the attached Joint Proxy
Statement/Prospectus, including the opinion dated February 12, 1997 of its
financial advisor, Goldman, Sachs & Co., that, as of the date of such opinion,
the consideration to be received by the holders of USLIFE Common Stock
pursuant to the Merger Agreement was fair to such holders. Goldman Sachs
subsequently delivered an updated written opinion to the USLIFE Board of
Directors to the effect that as of the date of the attached Joint Proxy
Statement/Prospectus, the Merger consideration was fair to the holders of
USLIFE Common Stock. The full text of such updated written opinion is attached
as Annex C to the Joint Proxy Statement/Prospectus and shareholders are urged
to read it in its entirety.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the accompanying Proxy Card and return
it in the enclosed prepaid envelope as soon as possible. If you attend the
Special Meeting, you may vote your shares in person, even if you have
previously submitted a Proxy
<PAGE>
Card. Pursuant to the New York Business Corporation Law, approval of the
Merger requires the affirmative vote of the holders of at least two-thirds of
all the shares of the Company's capital stock outstanding and entitled to vote
thereon and, as a result, a failure to vote will have the same effect as a
vote against the Merger.
If you have any questions prior to the Special Meeting or need further
assistance, please call Georgeson & Company, Inc., our proxy solicitor and
information agent, toll free at (800) 223-2064 or collect at (212) 440-9800.
Your continued support of and interest in USLIFE Corporation are greatly
appreciated.
Sincerely,
/s/ Gordon E. Crosby, Jr.
Gordon E. Crosby, Jr.
Chairman of the Board
<PAGE>
[LOGO OF USLIFE CORPORATION] 125 Maiden Lane New York New York 10038
- -------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS JUNE 17, 1997
- -------------------------------------------------------------------------------
Notice is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of USLIFE Corporation (the "Company") will be held on June 17, 1997
at 10:30 A.M., local time, at Pace University, Schimmel Center Auditorium,
Spruce Street, New York, New York, for the following purposes:
1. To consider and vote upon a proposal (the "Merger Proposal") to approve
and adopt the Agreement and Plan of Merger, dated as of February 12, 1997 (the
"Merger Agreement"), by and among the Company, American General Corporation
("American General") and Texas Stars Corporation, a wholly owned subsidiary of
American General ("Merger Sub"), providing for the merger (the "Merger") of
Merger Sub with and into the Company, pursuant to which the Company will
become a wholly owned subsidiary of American General and as a result of which
each outstanding share (other than shares owned by shareholders who properly
exercised their dissenters' rights under New York law) of common stock, par
value $1.00 per share, of the Company (the "USLIFE Common Stock"), will be
exchanged for and represent the right to receive a fraction of a share of
common stock, par value $.50 per share, (together with the attached American
General Preferred Share Purchase Rights), of American General ("American
General Common Stock"), calculated by dividing (x) $49.00 by (y) the average
of the high and low sales prices of American General Common Stock as reported
in The Wall Street Journal during the ten consecutive New York Stock Exchange
("NYSE") trading days (each, a "Trading Day") ending on (and including) the
fifth NYSE Trading Day prior to the effective time of the Merger, subject to a
minimum of 1.0919 shares and a maximum of 1.2937 shares of American General
Common Stock for each share of USLIFE Common Stock, without interest, and the
transactions contemplated thereby. Based on approximately 36.1 million shares
of USLIFE Common Stock outstanding on the date hereof (on a fully diluted
basis), the number of shares of American General Common Stock to be issued in
the Merger will range from approximately 39 million shares to approximately 47
million shares and represents between approximately 16.25% and 18.30% of the
outstanding shares of American General Common Stock following the Merger.
2. To transact such other business as may properly be brought before the
Special Meeting or at any adjournments thereof.
Approval of the Merger Proposal requires the affirmative vote of the holders
of two-thirds of the outstanding shares of USLIFE Common Stock entitled to be
voted with respect to such proposal. Only those shareholders of record of the
Company at the close of business on May 5, 1997, are entitled to notice of,
and to vote at, the Special Meeting and any adjournments thereof. A complete
list of such shareholders will be available for examination by any USLIFE
shareholder, for any purpose related to the Special Meeting at the offices of
the Company in New York, New York during normal business hours for a period of
ten days prior to the Special Meeting. Each share of USLIFE Common Stock
outstanding on such date is entitled to one vote at the Special Meeting.
If the Merger is consummated, holders of USLIFE Common Stock who dissent
from the proposed Merger and comply with the requirements of Section 623 of
the New York Business Corporation Law will have the right to receive payment
in cash of the fair value of their shares of USLIFE Common Stock. See "THE
MERGER--Dissenters' Rights" in the accompanying Joint Proxy
Statement/Prospectus.
The Board of Directors of the Company recommends that shareholders vote FOR
approval and adoption of the Merger Agreement.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE WITHOUT DELAY. ANY
SHAREHOLDER PRESENT AT THE SPECIAL MEETING MAY VOTE PERSONALLY ON EACH
<PAGE>
MATTER BROUGHT BEFORE THE SPECIAL MEETING AND ANY PROXY GIVEN BY A SHAREHOLDER
MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors,
/s/ Richard G. Hohn
Richard G. Hohn
Senior Vice President--Investor
Relations, Secretary--Counsel
New York, New York
May , 1997
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<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 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 STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 19, 1997
AMERICAN GENERAL CORPORATION
PROXY STATEMENT/PROSPECTUS
-----------
USLIFE CORPORATION
PROXY STATEMENT
-----------
JOINT PROXY STATEMENT / PROSPECTUS
This Joint Proxy Statement and Prospectus (the "Joint Proxy
Statement/Prospectus") relates to the proposed merger (the "Merger") of Texas
Stars Corporation ("Merger Sub"), a New York corporation and wholly owned
subsidiary of American General Corporation, a Texas corporation ("American
General"), with and into USLIFE Corporation, a New York corporation ("USLIFE"),
pursuant to an Agreement and Plan of Merger, dated as of February 12, 1997 (the
"Merger Agreement"), by and among USLIFE, American General and Merger Sub. In
the Merger, Merger Sub will be merged with and into USLIFE, which will continue
in existence as a wholly owned subsidiary of American General.
In the Merger, each share of USLIFE's Common Stock, par value $1.00 per share
("USLIFE 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 a fraction (the "Exchange Ratio") of a share of
common stock, par value $0.50 per share, (together with the attached American
General Preferred Share Purchase Rights, "American General Common Stock"), of
American General (the "Merger Consideration"), calculated by dividing (x)
$49.00 by (y) the average of the high and low sales prices (the "Average
American General Price"), of American General Common Stock as reported in The
Wall Street Journal during the ten consecutive New York Stock Exchange ("NYSE")
trading days (each, a "Trading Day") ending on (and including) the fifth
Trading Day prior to the effective time of the Merger (the "Trading Average"),
subject to (i) a maximum of 1.2937 shares of American General Common Stock per
share of USLIFE Common Stock and (ii) a minimum of 1.0919 shares of American
General Common Stock per share of USLIFE Common Stock.
On May 14, 1997, the most recent practicable date prior to the printing of
this Joint Proxy Statement/Prospectus, the closing price of American General
Common Stock as reported on the NYSE Composite Tape was $44.625 per share, and
the closing price of USLIFE Common Stock as reported on the NYSE Composite Tape
was $48.75 per share.
This Joint Proxy Statement/Prospectus constitutes (i) the proxy statement of
USLIFE relating to the solicitation of proxies by its Board of Directors for
use at a special meeting of USLIFE shareholders to be held on June 17, 1997 at
10:30 a.m., local time, at Pace University, Schimmel Center Auditorium, New
York, New York to approve and adopt the Merger Agreement (the "USLIFE Special
Meeting"), (ii) the proxy statement of American General relating to the
solicitation of proxies by its Board of Directors for use at a special meeting
of American General shareholders to be held on June 17, 1997 at 10:00 a.m. at
the principal executive offices of American General, 2929 Allen Parkway,
Houston, Texas 77019, to approve the issuance (the "Share Issuance") of a
minimum of approximately 39 million to a maximum of approximately 47 million
shares of American General Common Stock as consideration in the Merger, such
number of shares of American General Common Stock being referred to as the
"Merger Shares," to holders of USLIFE Common Stock (the "American General
Special Meeting," and, together with the USLIFE Special Meeting, the "Special
Meetings"), and (iii) the prospectus of American General included as part of a
Registration Statement filed with the Securities and Exchange Commission (the
"Commission") with respect to the Merger Shares.
This Joint Proxy Statement/Prospectus and the accompanying form of proxy are
first being sent to USLIFE shareholders and American General shareholders on or
about May , 1997.
IN REVIEWING THIS JOINT PROXY STATEMENT/PROSPECTUS, USLIFE SHAREHOLDERS AND
AMERICAN GENERAL SHAREHOLDERS SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED
UNDER THE HEADING "RISK FACTORS " ON PAGE 21.
-----------
THE SHARES OF AMERICAN GENERAL COMMON STOCK TO BE ISSUED IN CONNECTION WITH
THE MERGER 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 JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS MAY , 1997.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS JOINT 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 USLIFE. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS JOINT 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 JOINT PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS JOINT
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 USLIFE SINCE THE DATE OF THIS JOINT
PROXY STATEMENT/PROSPECTUS. HOWEVER, IF ANY MATERIAL CHANGE OCCURS DURING THE
PERIOD THAT THIS JOINT PROXY STATEMENT/PROSPECTUS IS REQUIRED TO BE DELIVERED,
THIS JOINT PROXY STATEMENT/PROSPECTUS WILL BE AMENDED AND SUPPLEMENTED
ACCORDINGLY. EXCEPT AS OTHERWISE DESCRIBED HEREIN, ALL INFORMATION REGARDING
AMERICAN GENERAL AND ITS SUBSIDIARIES IN THIS JOINT PROXY STATEMENT/PROSPECTUS
HAS BEEN SUPPLIED BY AMERICAN GENERAL, AND ALL INFORMATION REGARDING USLIFE
AND ITS SUBSIDIARIES IN THIS JOINT PROXY STATEMENT/PROSPECTUS HAS BEEN
SUPPLIED BY USLIFE.
AVAILABLE INFORMATION
Each of American General and USLIFE is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the 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. The Commission also maintains a Web Site at
http://www.sec.gov which contains reports and other information regarding
registrants that file electronically with the Commission. In addition,
materials filed by American General and USLIFE 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
618 South Spring Street, Los Angeles, California 90014.
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 Common Stock
to be issued pursuant to the Merger Agreement. This Joint 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 Joint 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.
2
<PAGE>
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
Joint Proxy Statement/Prospectus:
(1) Quarterly Report on Form 10-Q for the period ended March 31, 1997
(the "American General 10-Q").
(2) Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (the "American General 10-K"), filed on March 20, 1997.
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in the Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
(4) Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in the Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.
(5) Proxy Statement relating to American General's 1997 annual meeting of
shareholders.
(6) Current Reports on Form 8-K dated February 12, 1997 and February 21,
1997.
(7) 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.
(8) 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.
(9) 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 date of
the final adjournment of the American General Special Meeting.
The following documents filed with the Commission by USLIFE (File No. 1-
5683) pursuant to the Exchange Act are incorporated by reference in this Joint
Proxy Statement/Prospectus:
(1) Quarterly Report on Form 10-Q for the period ended March 31, 1997
(the "USLIFE 10-Q").
(2) Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (the "USLIFE 10-K"), filed on March 20, 1997.
(3) Current Report on Form 8-K dated February 21, 1997.
(4) Registration Statement on Form 8-A/A dated February 21, 1997.
(5) All documents subsequently filed by USLIFE pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the final adjournment of
the USLIFE 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 Joint 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
Joint Proxy Statement/Prospectus.
This Joint Proxy Statement/Prospectus incorporates by reference documents
relating to American General and USLIFE that 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 Joint 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 (800) 242-1111; and documents relating to
USLIFE should be directed to USLIFE Corporation, 125 Maiden Lane, New York,
New York 10038, Attention: Senior Vice President-Investor Relations, Secretary
and Counsel, telephone number (212) 709-6415. To assure timely delivery of
such documents, requests for such documents should be made no later than June
6, 1997.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 3
SUMMARY OF JOINT PROXY
STATEMENT/PROSPECTUS....................................................... 6
The Companies.............................................................. 6
The American General Special Meeting....................................... 7
The USLIFE Special Meeting................................................. 8
The Proposed Merger........................................................ 9
SUMMARY HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL....................... 18
SUMMARY HISTORICAL FINANCIAL DATA OF USLIFE................................. 19
SUMMARY PRO FORMA PER SHARE AND OTHER DATA.................................. 20
RISK FACTORS................................................................ 21
Determination of Exchange Ratio............................................ 21
Fluctuations in American General's Consumer Finance Segment Earnings....... 21
Uncertainties in Integrating Operations and Achieving Cost Savings......... 21
Information Concerning Forward-Looking Statements.......................... 22
CERTAIN INFORMATION CONCERNING AMERICAN GENERAL............................. 23
General.................................................................... 23
Recent Developments........................................................ 23
Rating Agencies............................................................ 23
CERTAIN INFORMATION CONCERNING USLIFE....................................... 24
General.................................................................... 24
Subsidiaries, Products and Services........................................ 24
Litigation................................................................. 24
Rating Agency.............................................................. 25
SELECTED HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL...................... 26
SELECTED HISTORICAL FINANCIAL DATA OF USLIFE................................ 28
SELECTED PRO FORMA FINANCIAL DATA........................................... 30
SPECIAL MEETING OF AMERICAN GENERAL SHAREHOLDERS............................ 32
General.................................................................... 32
Record Date................................................................ 32
Quorum..................................................................... 32
Votes Required; Voting Rights.............................................. 32
Solicitation of Proxies.................................................... 33
Availability of Principal Accountants...................................... 34
SPECIAL MEETING OF USLIFE SHARE- HOLDERS.................................... 35
</TABLE>
<TABLE>
<S> <C>
General................................................................... 35
Record Date............................................................... 35
Quorum.................................................................... 35
Votes Required; Voting Rights............................................. 35
Dissenters' Rights........................................................ 36
Solicitation of Proxies................................................... 36
Availability of Principal Accountants..................................... 37
THE PROPOSED MERGER........................................................ 38
General................................................................... 38
Closing; Effective Time................................................... 38
Conversion of Shares...................................................... 38
Fractional Shares......................................................... 39
Exchange of Certificates.................................................. 39
Background of the Merger.................................................. 40
American General's Reasons for the Merger; Recommendation of the American
General Board............................................................ 42
USLIFE's Reasons for the Merger; Recommendation of the USLIFE Board....... 44
Opinion of American General's Financial Advisor........................... 46
Opinion of USLIFE'S Financial Advisor..................................... 50
Interests of Certain Persons in the Merger................................ 55
Plans for USLIFE after the Merger......................................... 60
The Merger Agreement...................................................... 60
The Merger............................................................... 61
Directors and Officers................................................... 61
Charter and Bylaws....................................................... 61
Representations and Warranties........................................... 61
Conduct of Business Pending the Merger................................... 62
Filings and Other Actions................................................ 63
Other Acquisition Proposals; Certain Fees................................ 63
Expenses................................................................. 64
Indemnification and Insurance............................................ 64
Additional Agreements.................................................... 65
Conditions to the Merger................................................. 65
Termination.............................................................. 67
Accounting Treatment...................................................... 68
Regulatory Filings and Approvals.......................................... 68
Approval by Insurance Regulators......................................... 68
Antitrust................................................................ 69
State Anti-Takeover Statutes.............................................. 69
Certain Federal Income Tax Consequences of the Merger..................... 69
Restrictions on Sales of Shares by Affiliates............................. 70
Stock Exchange Listing.................................................... 71
Rights of Dissenting Shareholders......................................... 71
MARKET PRICE DATA AND DIVIDENDS............................................ 73
PRO FORMA COMBINED FINANCIAL STATEMENTS.................................... 75
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
PRO FORMA COMBINED BALANCE SHEET (March 31, 1997)........................... 76
PRO FORMA COMBINED STATEMENT OF INCOME (First Quarter 1997)................. 77
PRO FORMA COMBINED STATEMENT OF INCOME (First Quarter 1996)................. 78
PRO FORMA COMBINED STATEMENT OF INCOME (1996)............................... 79
PRO FORMA COMBINED STATEMENT OF INCOME (1995)............................... 80
PRO FORMA COMBINED STATEMENT OF INCOME (1994)............................... 81
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS............................ 82
COMPARISON OF SHAREHOLDER RIGHTS............................................ 83
Authorized Capital Stock................................................... 83
Voting Rights.............................................................. 83
USLIFE Common Share Purchase Rights........................................ 84
American General Preferred Share Purchase Rights........................... 85
Amendments to Charter and Bylaws........................................... 86
Preemptive Rights; Cumulative Voting....................................... 87
Boards of Directors........................................................ 87
Removal of Directors....................................................... 87
Newly-Created Directorships and Vacancies.................................. 88
Nomination of Directors.................................................... 88
</TABLE>
<TABLE>
<S> <C>
Special Meetings of the Shareholders....................................... 89
Shareholder Action by Written Consent...................................... 89
Vote Required for Mergers.................................................. 89
Vote Required for Sales of Assets.......................................... 90
Anti-Takeover Statutes..................................................... 90
Supermajority Voting Provision............................................. 91
Dissenters' Rights......................................................... 91
Limitation on Director's Liability......................................... 92
Indemnification............................................................ 92
Dividends.................................................................. 93
SECURITY OWNERSHIP.......................................................... 94
Security Ownership of Certain Beneficial Owners of American General........ 94
Security Ownership of Certain Beneficial Owners of USLIFE Common Stock..... 95
LEGAL MATTERS............................................................... 95
EXPERTS..................................................................... 95
FUTURE SHAREHOLDER PROPOSALS................................................ 96
MANAGEMENT AND ADDITIONAL INFORMATION....................................... 96
</TABLE>
ANNEX A--Agreement and Plan of Merger, dated as of February 12, 1997
ANNEX B--Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
ANNEX C--Opinion of Goldman, Sachs & Co.
ANNEX D--Sections 623 and 910 from the New York Business Corporation Law
Regarding Dissenters' Rights
5
<PAGE>
SUMMARY OF JOINT PROXY STATEMENT/PROSPECTUS
The following is a summary of certain information contained elsewhere in this
Joint 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 Joint
Proxy Statement/Prospectus, including the Annexes hereto which are a part of
this Joint Proxy Statement/Prospectus. Shareholders are encouraged to read
carefully all of the information contained in this Joint Proxy
Statement/Prospectus.
USLIFE AND AMERICAN GENERAL 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
diversified financial services organizations in
the United States, with assets of $67 billion and
shareholders' equity of $5.2 billion as of March
31, 1997. Headquartered in Houston, Texas, it is
a leading provider of retirement services, life
insurance and consumer loans to more than nine
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 insurance 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 telephone number is (713)
522-1111. See "CERTAIN INFORMATION CONCERNING
AMERICAN GENERAL."
USLIFE Corporation.......... USLIFE is a life insurance-based holding company
comprised of eleven wholly owned subsidiaries,
with assets of nearly $8 billion and
shareholders' equity of $1.2 billion as of March
31, 1997. USLIFE operates nationwide through
three ordinary life insurance companies, a credit
insurance group, and six other companies that
provide investment advisory, broker-dealer,
marketing, real estate, data processing and
administrative services. USLIFE was incorporated
under the laws of the State of New York in 1966.
The principal executive offices of USLIFE are
located at 125 Maiden Lane, New York, New York
10038, and its telephone number is (212) 709-
6000. See "CERTAIN INFORMATION CONCERNING
USLIFE."
Texas Stars Corporation..... Texas Stars Corporation, a New York corporation
and a wholly owned subsidiary of American General
("Merger Sub") was incorporated in February 1997
for purposes of the transactions contemplated by
the Merger Agreement. Merger Sub engages in no
other business. The mailing address of Merger
Sub's principal executive offices is c/o American
General Corporation, 2929 Allen Parkway, Houston,
Texas 77019-2155, and its telephone number is
(713) 522-1111.
Trading Markets and Market
Price Data................. Shares of USLIFE Common Stock are listed and
traded on the NYSE, Chicago Stock Exchange, The
Pacific Stock Exchange and
6
<PAGE>
The London Stock Exchange under the symbol "USH."
Shares of American General Common Stock are
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." The
closing price of USLIFE Common Stock on February
12, 1997, the last full trading day prior to the
public announcement of the Merger, as reported by
the NYSE Composite Tape, was $41.75 per share.
The closing price of American General Common
Stock on February 12, 1997, the last full trading
day prior to the public announcement of the
Merger, as reported by the NYSE Composite Tape,
was $41.50 per share. On May 14, 1997, the most
recent practicable date prior to the printing of
this Joint Proxy Statement/Prospectus, the
closing price of USLIFE Common Stock, as reported
by the NYSE Composite Tape, was $48.75 per share,
and the closing price of American General Common
Stock, as reported by the NYSE Composite Tape,
was $44.625 per share. See "MARKET PRICE DATA AND
DIVIDENDS."
THE AMERICAN GENERAL
SPECIAL MEETING
Time, Date and Place........ The American General Special Meeting will be held
on June 17, 1997 at 10:00 a.m., at the principal
executive offices of American General, 2929 Allen
Parkway, Houston, Texas 77019.
Purpose of the American
General Special Meeting.... Holders of American General Common Stock and
American General 7% Preferred Stock will consider
and vote upon a proposal to approve the issuance
of the Merger Shares. Holders of American General
Common Stock and American General 7% Preferred
Stock will also consider and vote upon all other
matters as may properly be brought before the
American General Special Meeting. See "THE
AMERICAN GENERAL SPECIAL MEETING"; "THE PROPOSED
MERGER."
Record Date................. Only shareholders of record of American General
Common Stock and American General 7% Preferred
Stock at the close of business on May 7, 1997
(the "American General Record Date") are entitled
to notice of and to vote at the American General
Special Meeting. On such date, there were
outstanding 203,752,159 shares of American
General Common Stock, held by 27,521 holders of
record and 2,317,701 shares of American General
7% Preferred Stock, held by 86 holders of record.
See "THE AMERICAN GENERAL SPECIAL MEETING--Record
Date."
Voting Rights............... Each share of American General Common Stock is
entitled to one vote with respect to all matters
presented at the American General Special
Meeting. Each share of American General 7%
Preferred Stock is entitled to 4/5 of one vote
(voting together as a single class with the
holders of the American General Common Stock)
with respect to all matters presented at the
American General Special Meeting.
7
<PAGE>
Quorum; Votes Required...... The presence, in person or by proxy, at the
American General Special Meeting of the holders
of a majority of the aggregate number of shares
of American General Common Stock and American
General 7% Preferred Stock outstanding will be
necessary to constitute a quorum. The affirmative
vote of the holders of a majority of the
aggregate number of shares of American General
Common Stock and American General 7% Preferred
Stock voting at the American General Special
Meeting is required to approve the issuance of
the Merger Shares.
Security Ownership of
American General's
Management................. As of the American General Record Date, the
directors and executive officers of American
General (26 persons) owned beneficially an
aggregate of 807,554 shares of American General
Common Stock (constituting approximately 0.4% of
the outstanding shares of American General Common
Stock), and such persons do not own any shares of
the American General 7% Preferred Stock. See the
American General 10-K incorporated herein by
reference.
Revocability of Proxy....... Any American General shareholder who executes and
returns a proxy may revoke such proxy at any time
before it is voted by (i) executing a subsequent
proxy, or (ii) appearing in person and voting at
the American General Special Meeting. Attendance
at the American General Special Meeting will not
in and of itself constitute revocation of a
proxy.
THE USLIFE SPECIAL MEETING
Time, Date and Place........ The USLIFE Special Meeting will be held on June
17, 1997 at 10:30 a.m., local time, at Pace
University, Schimmel Center Auditorium, Spruce
Street, New York, New York.
Purpose of the USLIFE
Special Meeting............ Holders of USLIFE Common Stock will consider and
vote upon a proposal to approve and adopt the
Merger Agreement among USLIFE, American General
and Merger Sub. Holders of USLIFE Common Stock
will also consider and vote upon all other
matters as may properly be brought before the
USLIFE Special Meeting. See "THE USLIFE SPECIAL
MEETING"; "THE PROPOSED MERGER."
Record Date................. Only shareholders of record of USLIFE Common
Stock at the close of business on May 5, 1997
(the "USLIFE Record Date") are entitled to notice
of and to vote at the USLIFE Special Meeting. On
such date, there were outstanding 34,889,945
shares of USLIFE Common Stock held by 7,957
holders of record. See "THE USLIFE SPECIAL
MEETING--Record Date."
Voting Rights............... Each share of USLIFE Common Stock is entitled to
one vote with respect to all matters presented at
the USLIFE Special Meeting. See "THE USLIFE
SPECIAL MEETING--Votes Required; Voting Rights."
Quorum; Votes Required...... The presence, in person or by proxy, at the
USLIFE Special Meeting of the holders of a
majority of the shares of USLIFE Common Stock
8
<PAGE>
outstanding will be necessary to constitute a
quorum. The affirmative vote of the holders of at
least two-thirds of all outstanding shares of
USLIFE Common Stock is required to approve the
Merger Agreement.
Security Ownership of
USLIFE's Management........ As of the USLIFE Record Date, the directors and
executive officers of USLIFE (35 persons) owned
beneficially (including options vesting at the
Effective Time) an aggregate of 2,417,763 shares
of USLIFE Common Stock (constituting
approximately 6.9% of the outstanding shares).
See the USLIFE10-K incorporated herein by
reference.
Revocability of Proxy....... Any USLIFE 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 USLIFE at 125 Maiden Lane,
New York, New York 10038, (ii) granting a
subsequent proxy, or (iii) appearing in person
and voting at the USLIFE Special Meeting.
Attendance at the USLIFE 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, Merger Sub will
be merged with and into USLIFE, in accordance
with the applicable provisions of the New York
Business Corporation Law. USLIFE will continue in
existence as a wholly-owned subsidiary of
American General.
Closing; Effective Time..... The Merger will become effective when an
appropriate Certificate of Merger is executed,
verified and delivered to the Department of State
of the State of New York in accordance with
Section 904 of the New York Business Corporation
Law ("NYBCL"), or at such later time as may be
designated by the parties in such Certificate of
Merger as the effective time of the Merger (the
"Effective Time"). Such filing will be made as
soon as practicable after the date of the closing
of the Merger (the "Closing" or the "Closing
Date"). The Closing will take place on the date
of or as soon as practicable following the
approval of the Merger Agreement by USLIFE
shareholders, the approval of the Share Issuance
by the American General 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 USLIFE Common Stock
outstanding prior to the Effective Time (other
than dissenting shares) will be converted into,
exchanged for and represent the right to receive
the following: a fraction of a share of American
General Common Stock equal to the Exchange Ratio,
provided that no more than 1.2937 shares of
American General Common Stock will be issued for
each share of USLIFE Common Stock and provided
that no fewer than 1.0919 shares of American
General Common Stock will be issued for each
share of USLIFE Common Stock. Based on the
closing
9
<PAGE>
price as reported on the NYSE Composite Tape on
May 14, 1997 for the American General Common
Stock of $44.625 per share, shareholders of
USLIFE would receive 1.0980 shares of American
General Common Stock in exchange for each of
their shares of USLIFE Common Stock. Because the
Exchange Ratio will not be determined until the
end of the fifth Trading Day prior to the
Effective Time, the actual number of shares (or
fraction of a share) of American General Common
Stock exchangeable in the Merger for each share
of USLIFE Common Stock may differ from the number
of shares of American General Common Stock
indicated in the preceding example. For an
illustration of what the Exchange Ratio would be
at Trading Averages of $37.8750, $41.3750 and
$44.8750 per share of American General Common
Stock, the potential number of shares of American
General Common Stock exchangeable at such
Exchange Ratios and the percentage of American
General Common Stock outstanding after the Merger
represented by such shares, see "THE PROPOSED
MERGER--Conversion of Shares."
USLIFE STOCKHOLDERS SHOULD NOT SEND IN THEIR
STOCK CERTIFICATES UNTIL INSTRUCTED TO DO SO
AFTER THE MERGER IS FINAL.
Fractional Shares........... Fractional shares of American General Common
Stock will not be issued in the Merger. Holders
of USLIFE Common Stock will be paid cash in lieu
of such fractional shares. See "THE PROPOSED
MERGER--Fractional Shares."
Recommendation of the
American General Board and
American General's Reasons
for the Merger............. THE BOARD OF DIRECTORS OF AMERICAN GENERAL (THE
"AMERICAN GENERAL BOARD") BELIEVES THAT THE
MERGER AND THE SHARE ISSUANCE ARE IN THE BEST
INTERESTS OF AMERICAN GENERAL AND ITS
SHAREHOLDERS AND RECOMMENDS THAT AMERICAN GENERAL
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE SHARE
ISSUANCE. At a meeting held on February 12, 1997,
the American General Board, by a unanimous vote
of all directors present, approved the Merger and
resolved to recommend that the American General
shareholders vote for approval of the Share
Issuance. The American General Board's
recommendation is based upon a number of factors
described in this Joint Proxy
Statement/Prospectus. See "THE PROPOSED MERGER--
American General's Reasons for the Merger;
Recommendation of the American General Board."
Recommendation of the
USLIFE Board and USLIFE's
Reasons for the Merger..... THE BOARD OF DIRECTORS OF USLIFE (THE "USLIFE
BOARD") BELIEVES THAT THE MERGER IS FAIR TO AND
IN THE BEST INTERESTS OF USLIFE AND ITS
SHAREHOLDERS AND RECOMMENDS THAT USLIFE
SHAREHOLDERS VOTE FOR THE APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT. At a meeting held on
February 12, 1997, the USLIFE Board, by a
unanimous vote of all directors present, approved
the
10
<PAGE>
Merger and resolved to recommend that USLIFE
shareholders vote for approval and adoption of
the Merger Agreement. The USLIFE Board's
recommendation is based upon a number of factors
described in this Joint Proxy Statement/
Prospectus. See "THE PROPOSED MERGER--USLIFE's
Reasons for the Merger; Recommendation of the
USLIFE Board."
Opinion of American
General's Financial
Advisor.................... Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") has delivered its
written opinion dated February 12, 1997 to the
American General Board to the effect that, as of
the date thereof, the Exchange Ratio was fair,
from a financial point of view, to American
General.
Merrill Lynch's opinion was provided to the
American General Board for its information and is
directed only to the fairness from a financial
point of view of the Exchange Ratio to American
General and does not constitute a recommendation
to any American General shareholder as to how
such shareholder should vote on the Share
Issuance or any transaction related thereto.
The full text of the written opinion of Merrill
Lynch, which sets forth assumptions made, matters
considered and limitations on the review
undertaken in connection with such opinion, is
attached hereto as Annex B and is incorporated
herein by reference. AMERICAN GENERAL
SHAREHOLDERS ARE URGED TO, AND SHOULD, READ SUCH
OPINION IN ITS ENTIRETY. See "THE PROPOSED
MERGER--Opinion of American General's Financial
Advisor."
Opinion of USLIFE's
Financial Advisor.......... Goldman, Sachs & Co. ("Goldman Sachs") has
delivered its written opinion dated February 12,
1997 to the USLIFE Board that as of the date of
such opinion the Merger Consideration was fair to
the holders of shares of USLIFE Common Stock.
Goldman Sachs subsequently delivered an updated
written opinion dated the date of this Joint
Proxy Statement/Prospectus to the USLIFE Board to
the effect that as of the date hereof the Merger
Consideration was fair to the holders of USLIFE
Common Stock.
Goldman Sachs' opinions were provided for the
information and assistance of the USLIFE Board in
connection with its consideration of the
transaction contemplated by the Merger Agreement,
and such opinions do not constitute a
recommendation as to how any holder of shares of
USLIFE Common Stock should vote with respect to
such transaction.
The full text of the updated written opinion of
Goldman Sachs dated the date of this Joint Proxy
Statement/Prospectus, which sets forth
assumptions made, matters considered and
limitations on the review undertaken in
connection with the opinion, is attached hereto
as Annex C and is incorporated herein by
reference. HOLDERS OF SHARES OF USLIFE COMMON
STOCK ARE URGED TO, AND SHOULD, READ SUCH
11
<PAGE>
OPINION IN ITS ENTIRETY. See "THE PROPOSED
MERGER--Opinion of USLIFE's Financial Advisor."
Interests of Certain
Persons in the Merger...... In considering the recommendation of the USLIFE
Board with respect to the Merger Agreement,
shareholders should be aware that certain members
of USLIFE's management and the USLIFE Board have
interests in the Merger that are in addition to
the interests of shareholders of USLIFE
generally. The USLIFE Board was aware of those
interests and considered those interests, 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 USLIFE, Merger Sub
and American General to consummate the Merger are
subject to a number of conditions, including,
among others (i) the expiration or early
termination of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), which waiting period
terminated on March 17, 1997; (ii) the absence of
any statute, rule, regulation, executive order,
decree, ruling or preliminary or permanent
injunction prohibiting, restraining, enjoining or
restricting the consummation of the Merger; (iii)
the obtaining of certain non-governmental third
party consents and approvals; (iv) the making of
all filings and the obtaining of all permits,
authorizations, consents or approvals required by
any governmental entity, including as required by
the insurance laws and regulations of the States
of New York, Illinois, Wisconsin, Pennsylvania,
Arizona and Nebraska; (v) the approval and
adoption of the Merger Agreement and the Merger
by the requisite vote of the USLIFE shareholders;
(vi) the approval of the Share Issuance by the
requisite vote of the American General
shareholders; (vii) the Registration Statement
having become effective and not being the subject
of any stop order or stop order proceedings;
(viii) the authorization for listing on the NYSE
of the Merger Shares issuable in the Merger; (ix)
the performance in all material respects by the
parties to the Merger Agreement of their
obligations under such agreement and the parties'
respective representations and warranties being
true and correct in all material respects; (x)
the receipt by each of USLIFE and American
General of opinions from their respective special
counsel to the effect that, on the basis of
certain facts, representations by management of
the companies and assumptions to be set forth in
such opinions, 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 American General, Merger Sub and
USLIFE will each be a party to that
reorganization within the meaning of Section
368(b) of the Code; (xi) American General's
receipt of a letter of its independent public
accountants, dated the Closing Date, stating that
the Merger will qualify as a transaction to be
accounted for in accordance with the pooling of
interests method of accounting under
12
<PAGE>
the requirements of Accounting Principles Board
Opinion ("APB") No. 16; (xii) the redemption or
conversion into USLIFE Common Stock of all
outstanding shares of USLIFE's $4.50 Series A
Convertible Preferred Stock (the "USLIFE Series A
Preferred Stock") and $5.00 Series B Convertible
Preferred Stock, (the "USLIFE Series B Preferred
Stock" and, together with the USLIFE Series A
Preferred Stock, the "USLIFE Preferred Stock") in
accordance with the terms of the respective
certificates of designation of such USLIFE
Preferred Stock; and (xiii) the audited financial
statements prepared in accordance with generally
accepted accounting principles ("GAAP") of
American General and USLIFE, respectively, for
the year ended December 31, 1996, not reflecting
any event, change or effect having, or reasonably
likely to have, a material adverse effect on the
companies, respectively. USLIFE and American
General may determine to modify or waive any
condition to the consummation of the Merger,
provided that no modification or waiver by USLIFE
or American General which requires shareholder
approval under applicable law, the USLIFE
Restated Certificate of Incorporation (the
"USLIFE Charter"), the USLIFE Bylaws (the "USLIFE
Bylaws"), the American General Restated Articles
of Incorporation (the "American General
Articles") or the American General Amended and
Restated Bylaws (the "American General Bylaws")
will occur unless such approval is obtained. In
the event a modification or waiver by USLIFE or
American General is contemplated which requires
shareholder approval under applicable law, a
supplement to this Joint Proxy
Statement/Prospectus will be distributed to
shareholders, and proxies will be resolicited.
See "THE AMERICAN GENERAL SPECIAL MEETING--
Solicitation of Proxies"; and "THE USLIFE SPECIAL
MEETING--Solicitation of Proxies." Neither
American General nor USLIFE presently
contemplates 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 consummation of
the Merger or termination of the Merger
Agreement, USLIFE and its subsidiaries and
representatives and agents will not (i) solicit,
initiate or encourage the submission of an
Acquisition Proposal (defined below) or (ii)
participate in any discussions or negotiations
regarding, or furnish to any person any
information with respect to, or agree to or
endorse, or take any other action to facilitate
any Acquisition Proposal or any inquiries or the
making of any proposal that constitutes, or may
reasonably be expected to lead to, any
Acquisition Proposal, in each case subject to
certain exceptions that enable the USLIFE Board
to fulfill its fiduciary obligations to the
USLIFE shareholders. An "Acquisition Proposal"
means any tender or exchange offer involving the
capital stock of USLIFE or any of its significant
subsidiaries, any proposal for a merger,
consolidation, or other business combination
involving USLIFE or any of its significant
subsidiaries, any proposal or offer
13
<PAGE>
to acquire in any manner a substantial equity
interest in, or a substantial portion of the
business or assets of, USLIFE or any of its
significant subsidiaries, any proposal or offer
with respect to any recapitalization or
restructuring of USLIFE or any of its significant
subsidiaries, or any proposal or offer with
respect to any other transaction similar to any
of the foregoing with respect to USLIFE or any of
its significant subsidiaries, other than the
transactions contemplated by the Merger
Agreement. 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 written agreement
of USLIFE and American General; (ii) by either
the American General Board or the USLIFE Board,
if (a) the Merger Agreement and the Merger shall
fail to be approved and adopted by the USLIFE
shareholders at the USLIFE Special Meeting, (b)
the issuance of the Merger Shares as Merger
Consideration shall fail to receive the requisite
vote for approval by the American General
shareholders at the American General Special
Meeting, (c) the Merger shall not have been
consummated on or before October 31, 1997,
provided that under certain circumstances such
date may be extended to no later than December
31, 1997, (d) a United States state or federal
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 that certain conditions are
satisfied, or (e) the USLIFE Board shall have
exercised its rights under the Merger Agreement
to take action with respect to an Acquisition
Proposal as necessary to comply with its
fiduciary duties to USLIFE shareholders; (iii) by
the USLIFE Board if prior to the Effective Time
(a) there has been a breach by American General
of any representation or warranty in the Merger
Agreement which would have or would be reasonably
likely to have a material adverse effect on
American General, Merger Sub and American
General's subsidiaries taken as a whole, (b)
there has been a material breach by American
General of any of its covenants or agreements set
forth in the Merger Agreement which, in the case
of (a) and (b), is not curable or not cured
within 30 days after written notice of such
breach or (c) American General issues shares of
capital stock or other securities in connection
with a transaction requiring American General
shareholder approval, and USLIFE advises American
General, within 10 Trading Days of receipt of
notice of such event, of its intent to abandon
the Merger; and (iv) by the American General
Board if prior to the Effective Time (a) there
has been a breach by USLIFE of any representation
or warranty that would have or would be
reasonably likely to have a material adverse
effect on USLIFE and its subsidiaries taken as a
whole or (b) there has
14
<PAGE>
been a material breach by USLIFE of a covenant or
agreement set forth in the Merger Agreement
which, in the case of (a) and (b), is not curable
or not cured within 30 days after written notice
of such breach. See "THE PROPOSED MERGER--The
Merger Agreement--Termination."
Termination Fees............ In the event (a) the Merger Agreement is
terminated by either USLIFE or American General
after the USLIFE Board (i) withdraws or modifies,
or proposes to withdraw or modify, in a manner
adverse to American General or Merger Sub, its
approval or recommendation of the Merger
Agreement or the Merger, (ii) approves or
recommends, or proposes to approve or recommend,
any Acquisition Proposal, (iii) enters into any
agreement (other than a
confidentiality/standstill agreement) with
respect to any Acquisition Proposal or (iv)
terminates the Merger Agreement in response to an
Acquisition Proposal, or (b) prior to the
termination of the Merger Agreement, any person
or entity shall have commenced a tender or
exchange offer which would, if successful, result
in the acquisition by such person or entity of
20% or more of the outstanding shares of USLIFE
Common Stock and such tender or exchange offer is
completed not later than six months following the
termination of the Merger Agreement, USLIFE has
agreed to pay to American General, not later than
two business days after the date of such
termination (or the date of completion of such
tender or exchange offer, as the case may be), a
termination fee of $48 million in same day funds.
In the event that (i) an Acquisition Proposal (as
defined above but with respect to a proposal to
acquire American General and its subsidiaries)
shall have been made known to American General or
any of its subsidiaries or shall have been made
known directly to the shareholders of American
General or any person shall have publicly
announced an intention (whether or not
conditional) to make such Acquisition Proposal,
(ii) the American General Board shall have
withdrawn or modified, or have proposed to
withdraw or modify, in a manner adverse to USLIFE
the approval or recommendation by the American
General Board of the Share Issuance or approved
or recommended, or have proposed to approve or
recommend, any such Acquisition Proposal and
(iii) thereafter the Merger Agreement is
terminated by either USLIFE or American General
due to failure to receive the requisite vote for
approval by the American General shareholders of
the Share Issuance at the American General
Special Meeting, then American General has agreed
to pay to USLIFE, not later than two business
days after the date of any such termination, a
termination fee of $48 million in same day funds.
Regulatory Filings and
Approvals................... The consummation of the Merger is subject to
certain regulatory approvals, including approval
by (i) the New York Department of Insurance (for
which notification of approval is expected to be
received prior to the Closing Date), (ii) the
Illinois Department of Insurance (for which
notification of approval was received on April
10, 1997), (iii) the Wisconsin Department of
Insurance (for which
15
<PAGE>
notification of approval was received on May 15,
1997), (iv) the Pennsylvania Department of
Insurance (for which notification of approval was
received on May 6, 1997), (v) the Arizona
Department of Insurance (for which notification
of approval is expected to be received prior to
the Closing Date) and (vi) the Nebraska
Department of Insurance (for which notification
of approval was received on April 4, 1997) and
the expiration or early termination of the
relevant waiting period under the HSR Act (for
which oral notice of early termination was
received on March 17, 1997). See "THE PROPOSED
MERGER--Regulatory Filings and Approvals."
In connection with the Merger, USLIFE has agreed
to use all reasonable efforts to cause All
American Life Insurance Company ("All American
Life") and The Old Line Life Insurance Company
("Old Line Life"), each of which is a wholly
owned subsidiary of USLIFE, to pay dividends of
at least $78 million and at least $65 million,
respectively, to USLIFE on or before the date
immediately prior to the Closing Date. The
dividends are subject to the prior approval of
the Illinois and Wisconsin insurance regulatory
authorities, respectively. All American Life's
application was granted on April 16, 1997. Old
Line Life's application is expected to be granted
prior to the Closing Date. See "THE PROPOSED
MERGER--Intercompany Dividends."
Accounting Treatment........ Consummation of the Merger is conditioned upon
the receipt by American General of a letter from
its independent public accountants stating that
the Merger will qualify as a transaction to be
accounted for in accordance with the pooling of
interests method of accounting. See "THE PROPOSED
MERGER--Accounting Treatment."
Certain Federal Income Tax
Consequences of the
Merger.....................
Consummation of the Merger is conditioned upon
the receipt of opinions from Skadden, Arps,
Slate, Meagher & Flom LLP, special counsel to
American General, and from Debevoise & Plimpton,
special counsel to USLIFE, to the effect that the
Merger will qualify as a reorganization within
the meaning of Section 368(a) of the Code and
that American General, Merger Sub and USLIFE will
each be a party to that reorganization within the
meaning of Section 368(b) of the Code. As a
result, for federal income tax purposes the
Merger will not result in the recognition of gain
or loss by American General, Merger Sub, USLIFE
or, except to the extent they receive cash in
lieu of fractional shares, the shareholders of
USLIFE. Such opinions will be based upon facts,
representations by management of the companies
and assumptions set forth in such opinions. No
rulings have been or will be requested from the
Internal Revenue Service with respect to any tax
matters relating to the Merger. Shareholders are
urged to consult their tax advisors as to the tax
consequences of the Merger to them under federal,
state, local or any other applicable law. See
"THE PROPOSED MERGER--Certain Federal Income Tax
Consequences of the Merger."
16
<PAGE>
Dissenters' Rights.......... Holders of USLIFE Common Stock who comply with
the requirements of Section 623 of the NYBCL may
dissent from the Merger and obtain payment for
the fair value of their USLIFE Common Stock.
Excerpts from the NYBCL relating to dissenters'
rights are attached to this Joint Proxy
Statement/Prospectus as Annex D. See "THE
PROPOSED MERGER--Rights of Dissenting
Shareholders."
Comparison of Shareholder The rights of USLIFE shareholders are currently
Rights...................... governed by the NYBCL, the USLIFE Charter and the
USLIFE Bylaws. Upon consummation of the Merger,
USLIFE shareholders who receive American General
Common Stock in the Merger will become
shareholders of American General, and their
rights will be governed by the Texas Business
Corporation Act (the "TBCA"), the American
General Articles and the American General Bylaws.
For a summary of the material differences between
the rights of USLIFE shareholders and the rights
of American General shareholders, see "COMPARISON
OF SHAREHOLDER RIGHTS."
Certain Considerations...... In addition to the other information contained in
this Proxy Statement/Prospectus, the shareholders
of USLIFE and of American General, respectively,
should consider the factors set forth under "RISK
FACTORS" in deciding whether to approve the
Merger or the Share Issuance, respectively.
17
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL
The following table presents summary historical financial data of American
General and its consolidated subsidiaries for the periods indicated. The
historical financial data as of and for the five years ended December 31, 1996
was derived from American General's audited consolidated financial statements.
The financial data as of and for the three months ended March 31, 1997 and 1996
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 three months ended March 31, 1997 and 1996 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 Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------- ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total revenues(a)....... $ 1,692 $ 1,711 $ 6,887 $ 6,495 $ 4,841 $ 4,829 $ 4,602
Income before income tax
expense................ 308 276 964(b) 850(c) 802(d) 602(e) 775
Net income.............. 182 169 577(b) 545(c) 513(d) 204(f) 533
PER SHARE DATA
Net income.............. $ .88 $ .81 $ 2.75(b) $ 2.64(c) $ 2.45(d) $ .94(f) $ 2.45
Common dividend......... .35 .33 1.30 1.24 1.16 1.10 1.04
Book value (at end of
period)(g)............. 25.68 26.42 27.38 28.42 17.05 23.96 21.33
High market price....... 44.63 37.88 41.75 39.13 30.50 36.50 29.38
Low market price........ 39.38 33.25 32.88 27.50 24.88 26.25 20.13
Closing market price.... 40.75 34.50 40.88 34.88 28.25 28.63 28.50
Average shares
outstanding............ 210.7 212.7 213.6 208.9 209.4 216.6 217.7
<CAPTION>
MARCH 31, DECEMBER 31,
---------------- ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Assets(g)............... $66,667 $62,302 $66,254 $61,153 $46,295 $43,982 $39,742
Corporate debt.......... 1,565 1,827 1,533 1,723 1,836 1,686 1,987
Redeemable equity....... 1,725 730 1,227 729 47 -- --
Shareholders' equity(g). 5,198 5,534 5,621 5,801 3,457 5,137 4,616
- -------
(a)Includes realized investment gains (losses) as follows:
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------- ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
$ (7) $ 27 $ 67 $ 12 $ (172) $ 8 $ 18
(b)Includes $145 million ($93 million or $.44 per share aftertax) related to
loss on consumer finance assets held for sale.
(c)Includes $216 million ($140 million or $.67 per share aftertax) adjustment to
allowance for finance receivable losses.
(d)Includes $172 million ($114 million or $.55 per share aftertax) of realized
investment losses primarily from capital gains offset program.
(e)Includes $300 million write-down of goodwill.
(f) Includes effect of $300 million ($1.39 per share) write-down of goodwill and
$46 million ($.21 per share) aftertax charge for cumulative effect of
accounting changes.
(g) Includes effect of Statement of Financial Accounting Standards ("SFAS") 115
"Accounting for Certain Investments in Debt and Equity Securities," which
recognizes the impact of unrealized gains and losses on investment
securities and related adjustments. To facilitate analysis of period-to-
period balances, the effect of SFAS 115, which was adopted at December 31,
1993, on reported balances was as follows:
<CAPTION>
MARCH 31, DECEMBER 31,
---------------- ----------------------------------------
1997 1996 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
assets............... $ 205 $ 783 $ 843 $ 1,655 $ (986) $ 1,040
Increase (decrease) in
shareholders' equity. 128 505 542 1,069 (950) 676
Increase (decrease) in
book value per share. .62 2.38 2.60 5.18 (4.65) 3.14
</TABLE>
18
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA OF USLIFE
The following table presents summary historical financial data of USLIFE and
its consolidated subsidiaries for the periods indicated. The historical
financial data as of and for the five years ended December 31, 1996 was derived
from USLIFE's audited consolidated financial statements. The financial data as
of and for the three months ended March 31, 1997 and 1996 was derived from
USLIFE's unaudited quarterly financial statements, which, in the opinion of
USLIFE's management, reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of such data. The data for the
three months ended March 31, 1997 and 1996 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 USLIFE included or incorporated by reference in this
Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total revenues(a)....... $ 450 $ 435 $1,806 $1,740 $1,651 $1,600 $1,530
Income before income tax
expense................ 43 39 116(b) 160 147 152 104
Net income.............. 29 26 76(b) 105 96 97 32(c)
PER SHARE DATA
Net income.............. $ .82 $ .75 $ 2.18(b) $ 3.03 $ 2.79 $ 2.83 $ .92(c)
Common dividend......... .25 .23 .95 .91 .84 .81 .76
Book value (at end of
period)(d)............. 33.02 35.05 35.05 37.47 25.43 28.07 26.07
High market price....... 48.63 33.25 33.50 32.00 27.58 30.50 25.50
Low market price........ 32.25 29.00 26.88 22.58 20.58 23.83 18.75
Closing market price.... 46.63 29.38 33.25 29.88 23.25 25.58 24.17
Average shares
outstanding............ 35.1 34.9 34.9 34.8 34.5 34.3 34.1
<CAPTION>
MARCH 31, DECEMBER 31,
------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Assets(d)............... $7,777 $7,812 $7,880 $7,931 $7,004 $6,740 $6,095
Notes payable and long-
term debt.............. 593 593 568 572 546 515 527
Equity capital(d)(e).... 1,161 1,182 1,224 1,308 878 966 890
- --------
(a) Includes realized gains (losses) on investments as follows:
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1 $ -- $ (5) $ 6 $ (1) $ 9 $ (3)
</TABLE>
(b) Includes $50 million ($32 million or $.93 per share aftertax) charge to
recognize revised assumptions reflecting current experience on traditional
indemnity group major medical and related products. Sales of these products
were discontinued in January 1996. Following its January announcement,
USLIFE experienced deterioration in persistency. For the years 1991 through
1995, lapse rates on group business (lapses as percentage of in force
business) ranged from 23.3% to 34.5%, with an average of 28.9%. These lapse
rates, including the 34.5% rate experienced in 1995, were considered
consistent with the assumptions used in evaluating the deferred policy
acquisition cost asset. Following the January 1996 announcement discussed
above, data available in March, April and early May indicated lapse rates
on the discontinued business of 60.9%, 59.2%, and 51.3%, respectively,
resulting in an unacceptable overall increase in the lapse rates for all
group business. The business does not lapse uniformly in terms of quality.
The healthier groups tend to lapse more rapidly, leading to an overall
deterioration in the quality of the block of business. Evidence after
USLIFE's announcement that claims payments were accelerating required a
reevaluation of the assumptions used to extrapolate claims reserves into
the future. The extrapolation, with the new higher claims rates, caused the
reserves to be found inadequate. These circumstances required USLIFE to
reevaluate the deferred policy acquisition cost asset and the reserve for
policy benefits. The effects of this reevaluation resulted in a $37.2
million writedown of deferred policy acquisition costs and a $12.4 million
adjustment to increase policy reserves to the required level. For the first
quarter 1997, premium income on the remaining block of business was
approximately $12 million with an appropriate break even financial result.
19
<PAGE>
(c) Includes $38 million ($1.12 per share) aftertax charge for cumulative
effect of change in accounting principle related to adoption of SFAS 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
(d) Includes the effect of SFAS 115. To facilitate analysis of period-to-period
balances, the effect of SFAS 115, which was adopted at January 1, 1994, on
reported balances was as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------------- ------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in assets..... $ (29) $ 84 $ 109 $ 311 $ (247)
Increase (decrease) in equity cap-
ital............................. (18) 53 68 195 (156)
Increase (decrease) in book value
per share........................ (.51) 1.51 1.95 5.60 (4.53)
</TABLE>
(e) Includes total non-redeemable preferred stocks, common stock, and other
shareholders' equity.
19--1
<PAGE>
SUMMARY PRO FORMA PER SHARE AND OTHER DATA
The following table presents the net income, dividends, and book value per
share of American General and USLIFE, on a pro forma basis for American General
and an equivalent pro forma basis for USLIFE. Pro forma data for American
General was derived by combining the historical financial statements of
American General with USLIFE's historical financial information, giving effect
to the Merger using the pooling of interests method of accounting. Equivalent
pro forma information for USLIFE is presented on an equivalent share basis,
which reflects American General's pro forma amounts multiplied by an assumed
Exchange Ratio of 1.0980 shares of American General Common Stock per share of
USLIFE Common Stock, based on the closing price of American General Common
Stock on May 14, 1997 of $44.625.
Pro forma income statement-related per share amounts have been prepared as if
the Merger had occurred at the beginning of the earliest period presented.
These amounts do not include non-recurring items directly attributable to the
Merger of approximately $170 million ($167 million aftertax), including change
in control costs and fees for investment bankers, accountants, and attorneys,
or to American General's estimate of the expected annual operating expense
savings from the Merger of approximately $50 million ($33 million aftertax).
Pro forma book value per share amounts give effect to the Merger as though it
had been consummated on March 31, 1997 and December 31, 1996 and do not include
the effect of the expected retirement of USLIFE treasury stock prior to the
Merger, additional shares that may be issued as a result of the exercise of
USLIFE stock options, 6.4 million shares of American General Common Stock
repurchased by American General on April 15, 1997 or 9.5 million shares of
American General Common Stock issued for the acquisition of Home Beneficial on
April 16, 1997. See "CERTAIN INFORMATION CONCERNING AMERICAN GENERAL--Recent
Developments." Pro forma dividends per share assume dividends are consistent
with American General's historical dividend level.
The information set forth below should be read in conjunction with the "PRO
FORMA COMBINED FINANCIAL STATEMENTS" included herein and the respective audited
and unaudited consolidated financial statements and notes thereto of American
General and USLIFE, which are incorporated herein by reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED DECEMBER
MARCH 31, 31,
------------ -----------------------------
1997 1996 1996 1995 1994
------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C>
AMERICAN GENERAL COMMON STOCK
Net income per share
Historical.................... $ .88 $ .81 $ 2.75(a) $ 2.64(c) $ 2.45(d)
Pro forma..................... .86 .79 2.63(a)(b) 2.66(c) 2.46(d)
Dividends per share
Historical.................... $ .35 $ .33 $ 1.30 $ 1.24 $ 1.16
Pro forma..................... .35 .33 1.30 1.24 1.16
Book value per share (at end of
period)
Historical.................... $25.68 $27.38
Pro forma..................... 25.69 27.41
USLIFE COMMON STOCK
Net income per share
Historical.................... $ .82 $ .75 $ 2.18(b) $ 3.03 $ 2.79
Equivalent pro forma.......... .94 .87 2.89 2.92 2.70
Dividends per share
Historical.................... $ .25 $ .23 $ .95 $ .91 $ .84
Equivalent pro forma.......... .38 .36 1.43 1.36 1.27
Book value per share (at end of
period)
Historical.................... $33.02 $35.05
Equivalent pro forma.......... 28.21 30.10
</TABLE>
- --------
(a) Reflects aftertax charge of $93 million ($.44 per share and $.37 per pro
forma share) related to American General's loss on consumer finance assets
held for sale.
(b) Reflects aftertax charge of $32 million ($.93 per share and $.13 per pro
forma share) related to revised assumptions reflecting current experience on
USLIFE's traditional indemnity group major medical products. For a discussion
of such revised assumptions, see note (b) to SUMMARY HISTORICAL FINANCIAL
DATA OF USLIFE.
(c) Includes American General's aftertax charge of $140 million ($.67 per share
and $.57 per pro forma share) for adjustment to allowance for finance
receivable losses.
(d) Reflects American General's aftertax net realized investment losses of $114
million ($.55 per share and $.46 per pro forma share) primarily from capital
gains offset program.
20
<PAGE>
RISK FACTORS
In addition to the other information contained in this Joint Proxy
Statement/Prospectus, the shareholders of USLIFE and American General,
respectively, should consider the following factors in deciding whether to
approve the Merger or the Share Issuance, respectively.
DETERMINATION OF EXCHANGE RATIO
The Exchange Ratio will be determined based on an average of the high and
low sales prices of American General Common Stock as reported in The Wall
Street Journal during the ten consecutive 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 $49.00.
In addition, because under the terms of the Merger Agreement, the Average
American General Price used to calculate the Exchange Ratio cannot be less
than $37.875 per share, the Exchange Ratio is in effect subject to a maximum
of 1.2937 shares of American General Common Stock for each share of USLIFE
Common Stock received in the Merger. If the Trading Average of American
General Common Stock during the ten Trading Days ending on and including the
fifth Trading Day prior to the Effective Time is less than $37.875, the Merger
Consideration could be worth less than $49.00 per share of USLIFE Common
Stock. Conversely, however, because under the terms of the Merger Agreement,
the Average American General Price used to calculate the Exchange Ratio cannot
be greater than $44.875 per share, the Exchange Ratio is in effect subject to
a minimum of 1.0919 shares of American General Common Stock for each share of
USLIFE Common Stock received in the Merger. If the Average Trading Price of
American General Common Stock during the ten Trading Days ending on and
including the fifth Trading Day prior to the Effective Time is greater than
$44.875, the Merger Consideration could be worth more than $49.00 per share of
USLIFE Common Stock.
FLUCTUATIONS IN AMERICAN GENERAL'S CONSUMER FINANCE SEGMENT EARNINGS
Earnings in American General's Consumer Finance segment, which provides
consumer and home equity loans and other credit-related products, fluctuated
in 1995 and 1996 due to a decline in credit quality in finance receivables and
management's related actions. In 1995, the segment increased the allowance for
finance receivable losses in response to an unanticipated increase in
delinquencies and charge-offs. In 1996, in conjunction with an action program
to improve credit quality, the segment decided to offer for sale two non-
strategic, underperforming finance receivable portfolios totaling $875 million
and recorded them at net realizable value. American General management
believes that the planned sale of those portfolios, combined with the ongoing
credit quality improvement program, will result in improved earnings. However,
adverse changes in credit fundamentals within the consumer finance industry,
including the national trend of increasing numbers of personal bankruptcies,
could negatively impact expected future results in the Consumer Finance
segment. See "CERTAIN INFORMATION REGARDING AMERICAN GENERAL--Consumer
Finance."
UNCERTAINTIES IN INTEGRATING OPERATIONS AND ACHIEVING COST SAVINGS
The success of any merger, including the Merger, is in part dependent on the
ability following the merger to consolidate operations, integrate departments,
systems and procedures and thereby obtain business synergies and related cost
savings. While the management of American General, with the assistance of the
management of USLIFE, intends to work diligently to effectively integrate and
rationalize the operations of the two companies following the Merger, there
can be no assurance as to the timing or extent to which cost savings and
efficiencies will be achieved. In addition to the operational issues that may
arise in combining the two companies, American General anticipates that it
will incur a cost in respect of non-recurring items directly attributable to
the Merger of approximately $170 million ($167 million after tax), including
change in control costs and fees for investment bankers, accountants, and
attorneys. See "PRO FORMA COMBINED FINANCIAL STATEMENTS."
21
<PAGE>
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this Joint Proxy Statement/Prospectus
and in documents incorporated herein by reference may be considered forward-
looking statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, including, without limitation, (i) the
statements in "Unaudited Pro Forma Combined Condensed Consolidated Financial
Data," including, but not limited to, American General's belief that the
Merger is expected to result in a reduction in annual operating expenses of
approximately $50 million, (ii) the statements in "THE PROPOSED MERGER--
Recommendation of the American General Board and American General's Reasons
for the Merger," "--Recommendation of the USLIFE Board and USLIFE's Reasons
for the Merger," "--Opinion of American General's Financial Advisor," "--
Opinion of USLIFE's Financial Advisor" and "--Plans for USLIFE After the
Merger" concerning, among other things, (a) prospective considerations that
the American General Board and the USLIFE Board took into account in arriving
at their respective recommendations in favor of the Merger, (b) American
General management's belief with respect to the geographic and strategic fit
of USLIFE with American General's existing life insurance business and (c)
American General's plans for consolidating USLIFE's operations and American
General management's expectation concerning the time to complete such
consolidation, and (iii) variations in the foregoing statements whenever they
appear in this Joint Proxy Statement/Prospectus and the documents incorporated
herein by reference. Forward-looking statements are made based upon either
American General or USLIFE management's current expectations and beliefs
concerning future developments and their potential effects upon American
General or USLIFE, respectively. There can be no assurance that future
developments affecting either American General or USLIFE will be those
anticipated by their respective managements. Actual results may differ
materially from those included in the forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the following: changes in general economic conditions, including
the performance of financial markets, interest rates, and the level of
personal bankruptcies; customer responsiveness to both new products and
distribution channels; competitive, regulatory, or tax changes that affect the
cost of or demand for American General's products; adverse litigation results;
American General's failure to achieve anticipated levels of earnings or
operational efficiencies related to recently acquired companies, as well as
other cost-saving initiatives; and difficulties in combining the operations of
American General with the operations of each of USLIFE and Home Beneficial
Corporation, a Virginia corporation ("Home Beneficial"), which was acquired by
American General on April 16, 1997, and the potential loss of key personnel in
connection with each of the USLIFE and Home Beneficial transactions. American
General's Consumer Finance segment's future results could be adversely
affected if, despite American General's initiatives to improve credit quality,
finance receivable delinquencies and net charge-offs increase or remain at
current levels for a longer period than anticipated by management. Failure to
dispose of assets held for sale for carrying value could also adversely affect
this segment's future results.
While USLIFE and American General each reassess material trends and
uncertainties affecting each company's financial condition and results of
operations, in connection with its preparation of management's discussion and
analysis of financial condition and results of operations contained in each
company's quarterly and annual reports, neither USLIFE nor American General
intends to review or revise in light of future events any particular forward-
looking statement referenced in this Joint Proxy Statement/Prospectus or
incorporated herein by reference.
The information referred to above should be considered by American General
shareholders and USLIFE shareholders when reviewing any forward-looking
statements contained in this Joint Proxy Statement/Prospectus, in any
documents incorporated herein by reference, in any of USLIFE's or American
General's public filings or press releases or in any oral statements made by
either USLIFE or American General or any of their respective officers or other
persons acting on their behalf. By means of this cautionary note, each of
USLIFE and American General intends to avail itself of the safe harbor from
liability with respect to forward-looking statements that is provided by
Section 27A and Section 21E referred to above.
22
<PAGE>
CERTAIN INFORMATION CONCERNING AMERICAN GENERAL
GENERAL
American General, with assets of $67 billion and shareholders' equity of
$5.2 billion as of March 31, 1997, 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 services, life insurance and
consumer loans. 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.
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.
RECENT DEVELOPMENTS
On April 16, 1997, American General completed the acquisition of Home
Beneficial for $665 million, or $39.00 per share. The proceeds consisted of
$283 million in cash (43%) and 9.5 million shares of American General Common
Stock (57%). The acquisition will be treated as a purchase by American General
for accounting and financial reporting purposes.
On April 15, 1997, American General repurchased 6.4 million shares of
American General Common Stock from Goldman Sachs at an initial price of $234
million, based on the $36.50 closing price per share of American General
Common Stock on April 14, 1997. Goldman Sachs borrowed the shares of American
General Common Stock that it sold to American General, and will purchase
shares in the open market from time to time in order to replace the shares
that it borrowed. The initial purchase price will be adjusted to reflect the
average of the volume weighted average daily prices of American General Common
Stock during an averaging period. The aggregate price paid by American General
in respect of the shares of American General Common Stock it has repurchased
will depend on the price per share of American General Common Stock during the
averaging period, and may be higher or lower than the initial price paid by
American General. This buyback, combined with the 3.0 million shares
repurchased since the announcement of the definitive agreement to acquire Home
Beneficial, has the effect of repurchasing an amount of shares equal to the
number of shares issued in the Home Beneficial acquisition.
RATING AGENCIES
Following the disclosure of the Merger, Duff & Phelps Credit Rating Co.
("Duff & Phelps"), Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc. ("S&P")
and other rating agencies announced that the ratings of certain securities of
American General and certain of its subsidiaries and the claims-paying ability
ratings of American General's principal life insurance subsidiaries would be
reviewed for possible downgrade or other action. S&P has indicated that it
expects to reduce its rating of American General's commercial paper from "A-
1+" to "A-1"; its senior long-term debt from "AA-" to "A+"; the American
General preferred securities from "A+" to "A"; the senior long-term debt of
its finance subsidiary from "A+" to "A"; and the claims-paying ability ratings
of certain of its life insurance subsidiaries from "AAA" to "AA+", upon
completion of the Merger. Duff & Phelps subsequently reduced its rating of its
preferred securities, from "A+"' to "A". As of the date of this Joint Proxy
Statement/Prospectus, Moody's has not downgraded American General's ratings
but they remain under review by Moody's. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating organization.
23
<PAGE>
CERTAIN INFORMATION CONCERNING USLIFE
GENERAL
USLIFE, a New York business corporation formed in 1966, is a life insurance-
based holding company whose principal subsidiaries engage in the life
insurance business. USLIFE operates nationwide and offers, through its
subsidiaries, a broad portfolio of individual life insurance and annuity
policies as well as group and credit insurance. Other subsidiaries of USLIFE,
engaged in investment advisory, broker-dealer, marketing, real estate, data
processing and administrative operations, provide services to the life
insurance companies. The principal executive offices of USLIFE are located at
125 Maiden Lane, New York, New York 10038 and its telephone number is (212)
709-6000.
USLIFE Common Stock is listed and traded under the symbol "USH" on the New
York, Chicago, Pacific and London Stock Exchanges.
SUBSIDIARIES, PRODUCTS AND SERVICES
USLIFE's life insurance business is conducted by four operating life
insurance subsidiaries (the "Life Insurance Subsidiaries"): The United States
Life Insurance Company In The City of New York ("United States Life"), All
American Life Insurance Company ("All American Life"), The Old Line Life
Insurance Company of America ("Old Line Life"), and USLIFE Credit Life
Insurance Company ("USLIFE Credit Life").
The Life Insurance Subsidiaries are all domestic stock insurance
corporations with strong regional identifications. United States Life is the
oldest stock life insurance company in America, having been incorporated in
New York in February, 1850. While authorized to do business in all fifty
states and the District of Columbia, its business is heavily concentrated in
New York and adjacent eastern states. All American Life was incorporated in
Illinois in 1950, and is licensed to do business in all states, except New
York, and in the District of Columbia. Approximately 40% of its business in
1996 was derived from the central and southwestern regions of the United
States. Old Line Life, incorporated in Wisconsin in 1910, is authorized to do
business in all states, except New York, and in the District of Columbia; its
business is concentrated heavily in Wisconsin, California, New Jersey and the
north central region of the United States. USLIFE Credit Life, whose
predecessors date from 1890, derives most of its business from its home state
of Illinois and other midwestern and northwestern states.
The Life Insurance Subsidiaries offer a broad portfolio of individual life
insurance and annuity policies. Also, through United States Life, part of the
sales forces of the Life Insurance Subsidiaries offer group life and health
insurance policies with particular emphasis on small groups. Group life and
health insurance policies are also offered to associations. Several of the
Life Insurance Subsidiaries also offer products designed for funding pension,
profit sharing and other qualified plans. In addition, through USLIFE Equity
Sales Corp., securities products are available for the noninsurance portion of
these plans. Credit insurance is offered principally through USLIFE Credit
Life.
LITIGATION
Certain directors and officers of USLIFE and USLIFE have been named as
defendants in a class action suit filed on March 3, 1997 in New York state
court. The plaintiff, a USLIFE shareholder, is seeking to enjoin the Merger,
or alternatively, to obtain rescission and unspecified damages. The plaintiff
alleges, among other things, that the defendants violated certain of their
fiduciary duties in connection with the proposed Merger. USLIFE believes that
the action is without merit and intends to defend it vigorously. However,
since the suit is in its early stages, at present it is not possible to
determine with certainty the extent of damages, if any, that could be incurred
in connection with this suit.
24
<PAGE>
RATING AGENCY
USLIFE's senior long term debt is rated "A+," and the claims-paying ability
ratings of USLIFE's principal life insurance subsidiaries are rated "AA+" by
S&P. On February 12, 1997, S&P announced that the credit ratings of certain
securities of USLIFE and the claims-paying ability ratings of USLIFE's
principal life insurance subsidiaries would be reviewed for possible downgrade
or other action. On February 13, 1997, in light of the announcement of the
Merger, S&P revised upward to "developing" the credit-watch status of the
USLIFE companies. As of the date of this Joint Proxy Statement/Prospectus,
these ratings remain under review by S&P. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating organization.
25
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF AMERICAN GENERAL
The following table presents selected historical financial data of American
General and its consolidated subsidiaries for the periods indicated. The
historical financial data as of and for the five years ended December 31, 1996
was derived from American General's audited consolidated financial statements.
The financial data as of and for the three months ended March 31, 1997 and
1996 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 three months ended March 31, 1997
and 1996 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 Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------- -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------- ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Premiums and other
considerations......... $ 487 $ 480 $1,968 $1,753 $1,210 $1,252 $1,213
Net investment income... 846 800 3,271 3,095 2,493 2,437 2,327
Finance charges......... 320 371 1,450 1,492 1,248 1,083 994
Realized investment
gains (losses)......... (7) 27 67 12 (172)(a) 8 18
Equity in earnings of
investee............... 13 8 40 43 -- -- --
Other................... 33 25 91 100 62 49 50
------ ------- ------ ------ ------ ------ ------
Total revenues........ 1,692 1,711 6,887 6,495 4,841 4,829 4,602
------ ------- ------ ------ ------ ------ ------
Insurance and annuity
benefits............... 785 797 3,156 3,047 2,224 2,311 2,198
Operating costs and
expenses............... 391 373 1,589 1,350 1,075 970 986
Provision for finance
receivable losses...... 68 109 417 574(b) 214 163 135
Write-down of goodwill.. -- -- -- -- -- 300(c) --
Loss on assets held for
sale................... -- -- 145(d) -- -- -- --
Interest expense
Corporate.............. 27 30 123 156 110 108 116
Consumer Finance....... 113 126 493 518 416 375 392
------ ------- ------ ------ ------ ------ ------
Total benefits and
expenses............. 1,384 1,435 5,923 5,645 4,039 4,227 3,827
------ ------- ------ ------ ------ ------ ------
Income before income tax
expense................ 308 276 964 850 802 602 775
Income tax expense...... 109 97 347 286 289 352 242
------ ------- ------ ------ ------ ------ ------
Income before net
dividends on preferred
securities of
subsidiaries........... 199 179 617 564 513 250 533
Net dividends on
preferred securities of
subsidiaries........... 17 10 40 19 -- -- --
------ ------- ------ ------ ------ ------ ------
Income before cumulative
effect................. 182 169 577 545 513 250 533
Cumulative effect of
accounting changes..... -- -- -- -- -- (46) --
------ ------- ------ ------ ------ ------ ------
Net income............ $ 182 $ 169 $ 577(e) $ 545(f) $ 513 $ 204(g) $ 533
====== ======= ====== ====== ====== ====== ======
PER SHARE DATA
Net income.............. $ .88 $ .81 $ 2.75(e) $ 2.64(f) $ 2.45 $ .94(g) $ 2.45
Common dividend......... .35 .33 1.30 1.24 1.16 1.10 1.04
Book value (at end of
period)(h)............. 25.68 26.42 27.38 28.42 17.05 23.96 21.33
Average shares
outstanding............ 210.7 212.7 213.6 208.9 209.4 216.6 217.7
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------------- ----------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Assets(h)............... $66,667 $62,302 $66,254 $61,153 $46,295 $43,982 $39,742
Invested assets(h)...... 44,145 43,068 44,270 42,904 30,697 31,876 27,814
Finance receivables,
net.................... 7,064 7,533 7,230 7,918 7,694 6,390 6,038
Debt (including short-
term)
Corporate.............. 1,565 1,827 1,533 1,723 1,836 1,686 1,987
Consumer Finance....... 7,330 7,081 7,630 7,470 7,090 5,843 5,484
Total liabilities
(excluding debt)....... 50,849 47,130 50,243 45,430 33,865 31,316 27,655
Redeemable equity....... 1,725 730 1,227 729 47 -- --
Shareholders' equity(h). 5,198 5,534 5,621 5,801 3,457 5,137 4,616
- --------
(a) Results primarily from 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.
(b) See "Management's Discussion and Analysis" within American General's Annual
Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
(c) 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.
(d) See "Management's Discussion and Analysis" and Note 4.4 to Financial
Statements within American General's Annual Report on Form 10-K for the
year ended December 31, 1996, incorporated herein by reference.
(e) Includes effect of $93 million ($.44 per share) aftertax loss on consumer
finance assets held for sale (see Note (d) above).
(f) Includes effect of $140 million ($.67 per share) aftertax adjustment to
allowance for finance receivable losses (see Note (b) above).
(g) Includes effect of $300 million ($1.39 per share) write-down of goodwill
(see Note (c) above) and $46 million ($.21 per share) aftertax charge for
cumulative effect of accounting changes.
(h) 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 was as follows:
<CAPTION>
MARCH 31, DECEMBER 31,
--------------- --------------------------------
1997 1996 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
assets............... $ 205 $ 783 $ 843 $ 1,655 $ (986) $ 1,040
Increase (decrease) in
invested assets...... 305 1,180 1,296 2,623 (1,387) 1,594
Increase (decrease) in
shareholders' equity. 128 505 542 1,069 (950) 676
Increase (decrease) in
book value per share. .62 2.38 2.60 5.18 (4.65) 3.14
</TABLE>
See "Management's Discussion and Analysis" within American General's Annual
Report on Form 10-K for the year ended December 31, 1996, incorporated
herein by reference.
27
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF USLIFE
The following table presents selected historical financial data of USLIFE
and its consolidated subsidiaries for the periods indicated. The historical
financial data as of and for the five years ended December 31, 1996 was
derived from USLIFE's audited consolidated financial statements. The financial
data as of and for the three months ended March 31, 1997 and 1996 was derived
from USLIFE's unaudited quarterly financial statements, which, in the opinion
of USLIFE's management, reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of such data. The data
for the three months ended March 31, 1997 and 1996 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 USLIFE included or incorporated by
reference in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Premiums and other
considerations......... $ 311 $ 300 $1,260 $1,211 $1,161 $1,116 $1,091
Net investment income... 125 124 502 489 461 444 415
Realized gains (losses)
on investments......... 1 -- (5) 6 (1) 9 (3)
Other income............ 13 11 49 34 30 31 27
------ ------ ------ ------ ------ ------ ------
Total revenues........ 450 435 1,806 1,740 1,651 1,600 1,530
Benefits and expenses... 398 386 1,651(a) 1,540 1,468 1,416 1,392
Interest expense........ 9 10 39 40 36 32 34
------ ------ ------ ------ ------ ------ ------
Income before income tax
expense................ 43 39 116 160 147 152 104
Income tax expense...... 14 13 40 55 51 55 34
------ ------ ------ ------ ------ ------ ------
Income before cumulative
effect of change in
accounting principle... 29 26 76 105 96 97 70
Cumulative effect of
change in accounting
principle.............. -- -- -- -- -- -- (38)
------ ------ ------ ------ ------ ------ ------
Net income............ $ 29 $ 26 $ 76(a) $ 105 $ 96 $ 97 $ 32(b)
====== ====== ====== ====== ====== ====== ======
PER SHARE DATA
Net income.............. $ .82 $ .75 $ 2.18(a) $ 3.03 $ 2.79 $ 2.83 $ .92(b)
Common dividend......... .25 .23 .95 .91 .84 .81 .76
Book value (at end of
period)(c)............. 33.02 35.05 35.05 37.47 25.43 28.07 26.07
Average shares
outstanding............ 35.1 34.9 34.9 34.8 34.5 34.3 34.1
<CAPTION>
MARCH 31, DECEMBER 31,
------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Total assets(c)......... $7,777 $7,812 $7,880 $7,931 $7,004 $6,740 $6,095
Invested assets(c)...... 6,436 6,521 6,562 6,695 5,724 5,523 5,022
Notes payable and long-
term debt.............. 593 593 568 572 546 515 527
Liabilities (excluding
debt).................. 6,023 6,037 6,088 6,051 5,580 5,259 4,678
Equity capital(c)(d).... 1,161 1,182 1,224 1,308 878 966 890
</TABLE>
- --------
(a) Includes $50 million ($32 million or $.93 per share aftertax) charge to
recognize revised assumptions reflecting current experience on traditional
indemnity group major medical and related products. Sales of these
products were discontinued in January 1996. For a discussion of such
revised assumptions, see note (b) to SUMMARY HISTORICAL FINANCIAL DATA OF
USLIFE.
(b) Includes $38 million ($1.12 per share) aftertax charge for cumulative
effect of change in accounting principle related to adoption of SFAS 106.
28
<PAGE>
(c) Includes the effect of SFAS 115. To facilitate analysis of period-to-period
balances, the effect of SFAS 115, which was adopted at January 1, 1994, on
reported balances was as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------- --------------------
1997 1996 1996 1995 1994
------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in assets... $(29) $84 $109 $ 311 $ (247)
Increase (decrease) in invested
assets......................... 17 161 191 447 (253)
Increase (decrease) in equity
capital........................ (18) 53 68 195 (156)
Increase (decrease) in book
value per share................ (.51) 1.51 1.95 5.60 (4.53)
</TABLE>
(d) Includes total non-redeemable preferred stocks, common stock, and other
shareholders' equity.
29
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
The following table presents selected pro forma financial data giving effect
to the Merger of American General and USLIFE using the pooling of interests
method of accounting. The pro forma income statement items have been prepared
as if the Merger had occurred at the beginning of the earliest period
presented. The pro forma income statement items and related per share amounts
do not include non-recurring items directly attributable to the Merger of
approximately $170 million ($167 million aftertax), including change in
control costs and fees for investment bankers, accountants, and attorneys, or
to American General's estimate of the expected annual operating expense
savings from the Merger of approximately $50 million ($33 million aftertax).
The pro forma balance sheet items give effect to the Merger as though it had
been consummated on that date. The pro forma balance sheet items do not
include the effect of the expected retirement of USLIFE treasury stock prior
to the Merger, additional shares that may be issued as a result of the
exercise of USLIFE stock options, 6.4 million shares of American General
Common Stock repurchased by American General on April 15, 1997, or the 9.5
million shares of American General Common Stock issued for the acquisition of
Home Beneficial on April 16, 1997. See "CERTAIN INFORMATION CONCERNING
AMERICAN GENERAL--Recent Developments."
The pro forma information is based on the respective audited and unaudited
consolidated financial statements of American General and USLIFE and should be
read in conjunction with such financial statements and notes thereto of
American General and USLIFE, which are incorporated herein by reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------------- -----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total revenues.......... $ 2,142 $ 2,146 $ 8,693 $ 8,235 $ 6,492
Income before income tax
expense................ 351 315 1,080 1,010 949
Net income.............. 211 195 653(a)(b) 650(c) 609(d)
PER SHARE DATA
Net income.............. $ .86 $ .79 $ 2.63(a)(b) $ 2.66(c) $ 2.46(d)
Common dividend......... .35 .33 1.30 1.24 1.16
Book value (at end of
period)(e)............. 25.69 27.41
Average common and
common equivalent
shares outstanding (in
thousands)............. 249,220 250,994 251,908 247,094 247,334
<CAPTION>
MARCH 31, DECEMBER 31,
----------------- -----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Assets(e)............... $74,444 $70,114 $74,134 $69,084 $53,299
Corporate debt.......... 2,158 2,420 2,102 2,295 2,382
Redeemable equity....... 1,725 730 1,227 729 47
Shareholders' equity(e). 6,192 6,549 6,678 6,942 4,168
</TABLE>
- --------
(a) Reflects aftertax charge of $93 million ($.37 per share) related to
American General's loss on consumer finance assets held for sale.
(b) Reflects aftertax charge of $32 million ($.13 per share) related to
revised assumptions reflecting current experience on USLIFE's traditional
indemnity group major medical products.
30
<PAGE>
(c) Includes American General's aftertax charge of $140 million ($.57 per
share) for adjustment to allowance for finance receivable losses.
(d) Reflects American General's aftertax net realized investment losses of $114
million ($.46 per share) primarily from capital gains offset program.
(e) Includes the effect of SFAS 115. To facilitate analysis of period-to-period
balances, the effect of SFAS 115 on reported balances is as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------- ---------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in assets. $176 $867 $952 $1,966 $(1,233)
Increase (decrease) in
shareholders' equity......... 110 558 610 1,264 (1,106)
Increase (decrease) in book
value per share.............. .45 2.23 2.47 5.16 (4.57)
</TABLE>
31
<PAGE>
SPECIAL MEETING OF AMERICAN GENERAL SHAREHOLDERS
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to holders of
American General Common Stock and holders of American General 7% Preferred
Stock in connection with the solicitation of proxies by the American General
Board for use at the American General Special Meeting to be held at the
principal executive offices of American General, 2929 Allen Parkway, Houston,
Texas 77019, at 10:00 a.m. on June 17, 1997, and any adjournment or
postponement thereof.
At the American General Special Meeting, the holders of American General
Common Stock and American General 7% Preferred Stock will be asked to consider
and vote upon a proposal to approve the Share Issuance. Holders of American
General Common Stock and American General 7% Preferred Stock will also be
asked to consider and vote upon such other business as may properly come
before the American General Special Meeting.
RECORD DATE
The American General Board has fixed the close of business on May 7, 1997 as
the American General Record Date for the determination of holders of American
General Common Stock and American General 7% Preferred Stock entitled to vote
at the American General Special Meeting. Under the TBCA, all shareholders as
of the American General Record Date are entitled to notice of the American
General Special Meeting. Only holders of American General Common Stock and
American General 7% Preferred Stock as of the American General Record Date
will be entitled to vote at the American General Special Meeting. On the
American General Record Date, there were 203,752,159 shares outstanding of
American General Common Stock and 2,317,701 shares outstanding of American
General 7% Preferred Stock.
QUORUM
The presence, in person or by proxy, at the American General Special Meeting
of the holders representing a majority of the aggregate number of shares of
American General Common Stock and American General 7% Preferred Stock issued
and outstanding at the American General Special Meeting will be necessary to
constitute a quorum.
VOTES REQUIRED; VOTING RIGHTS
The affirmative vote of the holders of a majority of the aggregate shares of
American General Common Stock and American General 7% Preferred Stock
represented at the American General Special Meeting at which a quorum is
present is required to approve the Share Issuance. Each share of American
General Common Stock is entitled to one vote with respect to all matters
presented at the American General Special Meeting. Each share of American
General 7% Preferred Stock is entitled to 4/5 of one vote (voting together as
a single class with the holders of the American General Common Stock) with
respect to all matters presented at the American General Special Meeting.
If fewer shares of American General Common Stock and American General 7%
Preferred Stock are voted in favor of the Share Issuance than the number
required for approval, it is expected that the American General 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 Share Issuance will be deemed to have conferred discretionary authority to
vote for such adjournment, and shares voted against the Share Issuance will be
voted against a motion to adjourn such meeting. See "--Solicitation of
Proxies."
Under the rules of the NYSE, brokers who hold shares in "street name" have
the authority to vote on certain matters when they do not receive instructions
from beneficial owners. In accordance with NYSE rules, brokers and nominees
are precluded from exercising their voting discretion with respect to the
approval of the
32
<PAGE>
Share Issuance and thus, absent specific instructions from the beneficial
owner of such shares, are not empowered to vote such shares with respect to
the approval of such proposal. Therefore, a "broker non-vote" (i.e., shares
held by brokers or nominees which are represented at a meeting but with
respect to which the broker or nominee is not empowered to vote on a
particular proposal) will not be counted as a vote cast on the Share Issuance.
Shares represented by "broker non-votes" will, however, be counted for
purposes of determining whether there is a quorum at the American General
Special Meeting and will have the same effect as a vote against such matters.
As of the American General Record Date, the directors and executive officers
of American General (26 persons) owned beneficially an aggregate of 807,554
shares of the American General Common Stock (constituting approximately 0.4%
of the outstanding shares of American General Common Stock), and such persons
did not own any shares of the American General 7% Preferred Stock. See The
American General 10-K.
As of February 14, 1997, (i) INVESCO PLC owned beneficially 14,961,901
shares of American General Common Stock (constituting approximately 7.4% of
the outstanding shares), (ii) The Capital Group Companies, Inc. owned
beneficially 13,958,210 shares of American General Common Stock (constituting
approximately 6.9% of the outstanding shares), (iii) Putnam Investments, Inc.
owned beneficially 13,062,886 shares of American General Common Stock
(constituting approximately 6.4% of the outstanding shares), (iv) Fayez
Sarofim & Co. owned beneficially 13,010,479 shares of American General Common
Stock (constituting approximately 6.1% of the outstanding shares), (v) The
Lucy B. Gooding 1995 Living Trust owned beneficially 753,422 shares of
American General 7% Preferred Stock (constituting approximately 32.5% of the
outstanding shares), (vi) The Bryan Trust owned beneficially 479,236 shares of
American General 7% Preferred Stock (constituting approximately 20.7% of the
outstanding shares), and (vii) the Olive Julia Gibson Bryan Testamentary Trust
owned beneficially 186,506 shares of American General 7% Preferred Stock
(constituting approximately 8.1% of the outstanding shares). See "SECURITY
OWNERSHIP--Security Ownership of Certain Beneficial Owners of American
General."
SOLICITATION OF PROXIES
If a shareholder attends the American General Special Meeting, such
shareholder may vote by ballot. However, many of American General's
shareholders may be unable to attend the American General Special Meeting.
Therefore, the American General Board is soliciting proxies so that each
holder of American General Common Stock and American General 7% Preferred
Stock on the American General Record Date has the opportunity to vote on the
proposals to be considered at the American General 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 American
General Special Meeting, such shareholder's 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 American General Common Stock or
American General 7% Preferred 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 of the Share Issuance. A properly executed
proxy marked "ABSTAIN," although counted for purposes of determining whether
there is a quorum and for purposes of determining the aggregate voting power
and number of shares represented and entitled to vote at the American General
Special Meeting, will not be counted as a vote cast on the Share Issuance and
will have the same effect as a vote against such vote.
The American General Board does not know of any matters other than those
described in the notice of the American General Special Meeting that are to
come before the American General Special Meeting. If any other matters are
properly brought before the American General Special Meeting, including, among
other things, a motion to adjourn or postpone the American General 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 approve the Share Issuance, one
33
<PAGE>
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 American General Bylaws and the TBCA; provided, however, that no proxy
that is voted against the Share Issuance will be voted in favor of any
adjournment or postponement for the purpose of soliciting additional proxies.
At any subsequent reconvening of the American General Special Meeting, all
proxies will be voted in the same manner as such proxies would have been voted
at the original convening of the American General Special Meeting, except for
proxies that have been effectively revoked or withdrawn prior to such
reconvened meeting. See "--Votes Required; Voting Rights."
Any American General shareholder who executes and returns a proxy may revoke
such proxy at any time before it is voted by (i) executing a subsequent proxy
or (ii) appearing in person and voting at the American General Special
Meeting. Additional proxy cards are available from the Information Agent.
Attendance at the American General 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 American General in person or by
telephone, telegram or other means of communications. Such directors, officers
and employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation.
American General has retained Morrow & Co., Inc., a proxy solicitation firm,
to act as Information Agent to assist with soliciting and tabulating proxies
for the American General Special Meeting at an estimated expense of
approximately $17,000, 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 American General will reimburse
such custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith. American General will bear all costs and expenses of
this solicitation other than expenses incurred in connection with printing and
mailing of this Joint Proxy Statement/Prospectus, which will be shared equally
by American General and USLIFE.
AVAILABILITY OF PRINCIPAL ACCOUNTANTS
Representatives of Ernst & Young LLP, principal accountants to American
General, will be present at the American General Special Meeting, will have
the opportunity to make a statement should they desire to do so and are
expected to be available to respond to appropriate questions.
34
<PAGE>
SPECIAL MEETING OF USLIFE SHAREHOLDERS
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to holders of
USLIFE Common Stock in connection with the solicitation of proxies by the
USLIFE Board for use at the USLIFE Special Meeting to be held at Pace
University, Schimmel Center Auditorium, Spruce Street, New York, New York at
10:30 a.m., local time, on June 17, 1997, and any adjournment or postponement
thereof.
At the USLIFE Special Meeting, the holders of USLIFE Common Stock will be
asked to consider and vote upon a proposal (the "Merger Proposal") to approve
and adopt the Merger Agreement and the transactions contemplated thereby.
Holders of USLIFE Common Stock will also be asked to consider and vote upon
all other matters as may properly be brought before the USLIFE Special
Meeting.
RECORD DATE
The USLIFE Board has fixed the close of business on May 5, 1997 as the
USLIFE Record Date for the determination of holders of USLIFE Common Stock
entitled to vote at and receive notice of the USLIFE Special Meeting. Only
holders of USLIFE Common Stock as of the USLIFE Record Date will be entitled
to vote at the USLIFE Special Meeting. On the USLIFE Record Date, there were
34,889,945 shares outstanding of USLIFE Common Stock held by 7,957 holders of
record.
QUORUM
The presence, in person or by proxy, at the USLIFE Special Meeting of the
holders of a majority of USLIFE Common Stock will be necessary to constitute a
quorum.
VOTES REQUIRED; VOTING RIGHTS
The affirmative vote of the holders of at least two-thirds of all
outstanding shares of USLIFE Common Stock is required to approve and adopt the
Merger Agreement and the transactions contemplated thereby.
If fewer shares of USLIFE Common Stock are voted in favor of the Merger
Proposal than the number required for approval, it is expected that the USLIFE
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 Proposal will be deemed to have conferred
discretionary authority to vote for such adjournment, and shares voted against
the Merger Proposal shall be voted against a motion to adjourn such meeting.
See "--Solicitation of Proxies."
In accordance with NYSE rules, brokers and nominees are precluded from
exercising their voting discretion with respect to the approval of the Merger
Proposal and thus, absent specific instructions from the beneficial owner of
such shares, are not empowered to vote such shares with respect to such
proposal. Therefore, because the affirmative vote of at least two-thirds of
the shares of USLIFE Common Stock outstanding on the USLIFE Record Date is
required to approve the Merger Proposal, a "broker non-vote" with respect to
the Merger Proposal will have the effect of a vote against such proposal.
Shares represented by "broker non-votes" will, however, be counted for
purposes of determining whether there is a quorum at the USLIFE Special
Meeting.
As of the USLIFE Record Date, the directors and executive officers of USLIFE
(35 persons) owned beneficially (including option vesting at the Effective
Time) an aggregate of 2,417,763 shares of USLIFE Common Stock (constituting
approximately 6.9% of the outstanding shares). See the USLIFE 10-K.
As of December 31, 1996, Sanford Bernstein & Co., Inc. owned beneficially
3,128,883 shares of USLIFE Common Stock (constituting approximately 9.05% of
the outstanding shares). See "SECURITY OWNERSHIP--Security Ownership of
Certain Beneficial Owners of USLIFE Common Stock."
35
<PAGE>
DISSENTERS' RIGHTS
Holders of USLIFE Common Stock who comply with the applicable requirements
of the NYBCL may dissent from the Merger and obtain payment for the fair value
of their USLIFE Common Stock. See "THE PROPOSED MERGER--Rights of Dissenting
Shareholders" and the excerpted sections of the NYBCL attached hereto as Annex
D.
SOLICITATION OF PROXIES
If a shareholder attends the Special Meeting, he or she may vote by ballot.
However, many of USLIFE's shareholders may be unable to attend the USLIFE
Special Meeting. Therefore, the USLIFE Board is soliciting proxies so that
each holder of USLIFE Common Stock on the USLIFE Record Date has the
opportunity to vote on the proposals to be considered at the USLIFE Special
Meeting.
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 USLIFE
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 USLIFE 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. A
properly executed proxy marked "ABSTAIN", although counted for purposes of
determining whether there is a quorum and for purposes of determining the
aggregate voting power and number of shares represented and entitled to vote
at the USLIFE Special Meeting, will not be voted and will have the effect of a
vote against the Merger Proposal.
The USLIFE Board does not know of any matters other than those described in
the notice of the Special Meeting that are to come before the USLIFE Special
Meeting. If any other matters are properly brought before the USLIFE Special
Meeting, including, among other things, a motion to adjourn or postpone the
USLIFE 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 Merger Proposal, 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 USLIFE Bylaws and the NYBCL; provided, however, that no proxy
that is voted against the Merger Proposal will be voted in favor of any
adjournment or postponement for the purpose of soliciting additional proxies.
At any subsequent reconvening of the USLIFE Special Meeting, all proxies will
be voted in the same manner as such proxies would have been voted at the
original convening of the USLIFE Special Meeting, except for proxies that have
been effectively revoked or withdrawn prior to such reconvened meeting. See
"--Votes Required; Voting Rights."
Any USLIFE 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 USLIFE at 125 Maiden Lane, New York, New York 10038, (ii)
granting a subsequent proxy, or (iii) appearing in person and voting at the
USLIFE Special Meeting. 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 USLIFE in person or by telephone,
telegram or other means of communications. Such directors, officers and
employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. USLIFE
has retained Georgeson & Company, Inc., a proxy solicitation firm, to act as
Information Agent to assist with soliciting and tabulating proxies for the
Special Meeting at an estimated expense of approximately $20,000, 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 USLIFE will reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith. USLIFE
will bear all costs and expenses of this solicitation other than expenses
incurred in connection with printing and mailing of this
36
<PAGE>
Joint Proxy Statement/Prospectus, which will be shared equally by USLIFE and
American General. Additional proxy cards are available from the Information
Agent.
USLIFE SHAREHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. A TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK
CERTIFICATES FOR USLIFE COMMON STOCK WILL BE MAILED TO FORMER USLIFE
SHAREHOLDERS AS SOON AS PRACTICABLE AFTER THE CONSUMMATION OF THE MERGER.
AVAILABILITY OF PRINCIPAL ACCOUNTANTS
Representatives of KPMG Peat Marwick LLP, principal accountants to USLIFE,
will be present at the USLIFE Special Meeting, will have the opportunity to
make a statement should they desire to do so and are expected to be available
to respond to appropriate questions.
37
<PAGE>
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 Joint
Proxy Statement/Prospectus as Annex A and is incorporated herein by reference.
A description of the relative rights, privileges and preferences of USLIFE
Common Stock on the one hand, and American General Common Stock, on the other,
including certain material differences between the rights of holders of such
stock, is set forth under "COMPARISON OF SHAREHOLDER RIGHTS." The closing
price of USLIFE Common Stock on February 12, 1997, the last full trading day
prior to the public announcement of the Merger, as reported by the NYSE
Composite Tape, was $41.75 per share. The closing price of American General
Common Stock on February 12, 1997, the last full trading day prior to the
public announcement of the Merger, as reported by the NYSE Composite Tape, was
$41.50 per share. The closing price of USLIFE Common Stock on May 14, 1997, as
reported on the NYSE Composite Tape, was $48.75 per share. The closing price
of American General Common Stock on May 14, 1997, as reported on the NYSE
Composite Tape, was $44.625 per share.
Based on approximately 36.1 million shares of USLIFE Common Stock
outstanding as of April 30, 1997 (on a fully diluted basis) and using an
Exchange Ratio of 1.1232 based on the closing price of American General Common
Stock on April 30, 1997 of 43 5/8, the value of the aggregate consideration
that will be issued to USLIFE stockholders in the Merger would be
approximately $1.8 billion. The actual value of the consideration issued to
the USLIFE stockholders in the Merger will depend on the Exchange Ratio and
the market value of American General Common Stock at the Effective Time.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR AMERICAN
GENERAL COMMON STOCK.
CLOSING; EFFECTIVE TIME
The Closing will take place on, or as promptly as practicable following, the
date of the approval of the Share Issuance by the American General
shareholders at the American General Special Meeting and the approval and
adoption of the Merger and the Merger Agreement and the transactions
contemplated thereby by the USLIFE shareholders at the USLIFE Special Meeting
and the satisfaction or waiver of the other conditions to each party's
obligation to consummate the Merger. The Merger will become effective upon the
filing of the Certificate of Merger with the Department of State of the State
of New York in accordance with the NYBCL, or at such later time as may be
designated in such filings as the Effective Time. Such filings will be made as
soon as practicable after the Closing.
CONVERSION OF SHARES
Each share of USLIFE Common Stock outstanding prior to the Effective Time
(other than dissenting shares) will be converted into, exchanged for and
represent the right to receive a fraction of a share of American General
Common Stock equal to the Exchange Ratio, provided that no more than 1.2937
shares and no less than 1.0919 shares of American General Common Stock will be
issued for each share of USLIFE Common Stock.
The table below illustrates what the Exchange Ratio would be at Trading
Averages of $37.8750, $41.3750 and $44.8750 per share of American General
Common Stock, the potential number of shares of American General Common Stock
exchangeable at such Exchange Ratios and the percentage of American General
Common Stock outstanding after the Merger represented by such shares. As
illustrated in the table, as the Trading Average of American General Common
Stock increases, the number of shares (or fraction of a share) of American
General Common Stock that would be exchangeable for each share of USLIFE
Common Stock decreases, subject to the limit set forth in the table. BECAUSE
THE EXCHANGE RATIO WILL NOT BE DETERMINED UNTIL THE END OF THE FIFTH TRADING
DAY PRIOR TO THE EFFECTIVE TIME, THE ACTUAL NUMBER OF SHARES (OR FRACTION OF A
SHARE) OF AMERICAN GENERAL COMMON STOCK EXCHANGEABLE IN THE MERGER FOR EACH
SHARE OF USLIFE COMMON STOCK MAY DIFFER FROM THE EXAMPLES PROVIDED IN THE
TABLE. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR AMERICAN
GENERAL COMMON STOCK.
38
<PAGE>
ILLUSTRATION OF POTENTIAL EXCHANGE RATIOS AND EFFECT ON SHARES OF AMERICAN
GENERAL COMMON STOCK EXCHANGEABLE IN THE MERGER
<TABLE>
<CAPTION>
PERCENTAGE
OF
OUTSTANDING
SHARES OF
SHARES OF AMERICAN
AMERICAN GENERAL
GENERAL COMMON COMMON
EXCHANGE STOCK STOCK POST-
TRADING AVERAGE RATIO EXCHANGEABLE(1) MERGER(2)
--------------- -------- --------------- -----------
<S> <C> <C> <C>
$37.8750 (or below)........................ 1.2937 46,702,570 18.30%
$41.3750................................... 1.1843 42,752,870 17.39%
$44.8750 (or above)........................ 1.0919 39,417,590 16.25%
</TABLE>
- --------
(1) Based on 36,100,000 shares of USLIFE Common Stock outstanding on the date
hereof (on a fully diluted basis).
(2) Based on 203,090,677 shares of American General Common Stock outstanding
as of December 31, 1996 plus additional shares from the respective rows of
column 3.
Based on the closing price as reported on the NYSE Composite Tape on May 14,
1997 for the American General Common Stock of $44.625 per share, shareholders
of USLIFE would receive 1.0980 shares of American General Common Stock in
exchange for each of their shares of USLIFE Common Stock. Because the Exchange
Ratio will not be determined until the end of the fifth Trading Day prior to
the Effective Time, the actual number of shares (or fraction of a share) of
American General Common Stock exchangeable in the Merger for each share of
USLIFE Common Stock may differ from the number of shares of American General
Common Stock indicated in the preceding example.
FRACTIONAL SHARES
No fractional shares of American General Common 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 Common Stock. Instead, each record
holder of USLIFE Common Stock who would otherwise have been entitled to
receive a fraction of a share of American General Common Stock upon surrender
of certificates representing USLIFE Common Stock for exchange will, upon
surrender of USLIFE Common Stock certificates, be entitled to receive a cash
payment (without interest) equal to the product of such fraction multiplied by
the Trading Average, subject to certain limitations as set forth in the Merger
Agreement. Beneficial holders of USLIFE 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 USLIFE Common Stock certificates in the Merger.
EXCHANGE OF CERTIFICATES
USLIFE SHAREHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES EVIDENCING
SHARES OF USLIFE COMMON STOCK FOR EXCHANGE UNLESS AND UNTIL THE TRANSMITTAL
INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL ARE RECEIVED OR OBTAINED FROM
THE EXCHANGE AGENT (AS DEFINED BELOW).
39
<PAGE>
As of the Effective Time, American General shall deposit, or cause to be
deposited, in trust with First Chicago Trust Company of New York, as exchange
agent (the "Exchange Agent"), for the benefit of holders of USLIFE Common
Stock, (i) certificates representing the number of shares of American General
Common Stock issuable in the Merger and (ii) cash to be paid in lieu of the
issuance of fractional shares, as provided by the Merger Agreement. Promptly
after the Effective Time, the Exchange Agent will mail, or make available at
its principal office, letters of transmittal and instructions to the former
USLIFE stockholders, to be used in forwarding their certificates representing
shares of USLIFE Common Stock for surrender and exchange for the Merger
Consideration.
Upon surrender of each certificate representing shares of USLIFE Common
Stock, the Exchange Agent will pay to the holder of such certificate, as soon
as practicable after the Effective Time, the 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 USLIFE 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 USLIFE of any shares of USLIFE Common Stock. If, after the Effective
Time, certificates formerly representing shares of USLIFE Common Stock are
presented to the Exchange Agent or USLIFE, as the case may be, 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 Common Stock will be paid to
the holder of any unsurrendered certificate with respect to the shares of
American General Common 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 USLIFE Common Stock that are owned by
USLIFE as treasury stock and any shares of USLIFE Common Stock owned by
American General, Merger Sub or any other direct or indirect wholly owned
subsidiary of American General (other than such shares, if any, of USLIFE
Common Stock as may be held in a separate account or mutual fund managed by a
subsidiary of American General or a pension trust established for the benefit
of American General Corporation retirees) 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
The terms of the Merger Agreement are the result of arm's-length
negotiations between representatives, legal advisors and financial advisors of
American General and USLIFE. The following is a brief discussion of the
background of those negotiations.
Senior management of USLIFE was aware of the accelerating trend toward
consolidation in the life insurance industry and, during the summer and autumn
of 1996, began to consider the feasibility of enhancing shareholder value over
the long term through a strategic alliance. In particular, USLIFE began to
consider the prospects for producing a significant enhancement in shareholder
value through the synergies that might be achieved in a business combination.
At a regularly scheduled meeting of the USLIFE Board held on November 19,
1996, in an executive session of the non-employee members of the USLIFE Board,
the Board authorized the Chairman of USLIFE, Mr. Gordon E. Crosby, Jr., to
examine and pursue strategic alternatives for the corporation, including
principally affiliations with other companies and continuing the USLIFE
business in its present configuration on a stand-alone basis without
significant changes.
40
<PAGE>
Preliminary discussions were held with another company engaged in the life
insurance business concerning a potential strategic alliance between the two
companies. During January 1997, prior to the commencement of the negotiations
with American General that resulted in the Merger Agreement, senior management
of USLIFE, together with its legal counsel and Goldman Sachs, its financial
advisor, met with senior management of the other insurance company and its
legal and financial advisors to determine whether the two companies could
reach agreement on the terms of a business combination. These discussions did
not result in a specific merger proposal by the other company. In late January
1997, senior management of USLIFE concluded that it would not be possible to
reach an acceptable transaction with the other company and terminated such
discussions. At its regularly scheduled meeting held on January 28, 1997, Mr.
Crosby informed the USLIFE Board of the status of such discussions. The USLIFE
Board approved the termination of discussions with such company concerning a
possible strategic alliance.
During January 1997, representatives of American General and USLIFE
discussed setting up a meeting to explore the possibility of a business
combination involving the two companies. On January 27, 1997, Mr. Robert M.
Devlin, President and Chief Executive Officer of American General, called Mr.
Crosby to indicate that American General was interested in pursuing an
alliance with USLIFE and requesting permission to begin a mutual due diligence
process. In a letter delivered to Mr. Crosby later that day, Mr. Devlin
informed Mr. Crosby that, based on a preliminary review, American General
considered USLIFE to have a value in the range of $45 to $47 per share and
expressed a willingness to commence due diligence and to structure a tax free
transaction. Mr. Devlin's letter also indicated that in the course of due
diligence greater value may be demonstrated that would support a higher price.
A confidentiality agreement was executed on January 28, 1997.
At a special meeting of the USLIFE Board held on January 29, 1997, the
directors discussed American General's expression of interest. Following
discussion and consideration of the American General expression of interest
among the USLIFE directors, together with USLIFE's outside counsel, the USLIFE
Board authorized Mr. Crosby and other members of USLIFE's senior management to
enter into discussions regarding a possible strategic alliance with American
General.
On February 3, 1997, representatives of American General and its outside
advisors commenced a due diligence investigation of USLIFE at the offices of
USLIFE's outside counsel in New York City. On February 5, 1997,
representatives of USLIFE and its outside advisors commenced a due diligence
investigation of American General at its headquarters in Houston, Texas.
On February 6, 1997 the American General Board met at a regularly scheduled
meeting and reviewed in detail, together with members of management and
outside financial and legal advisors, a potential transaction involving the
merger of USLIFE with a wholly owned subsidiary of American General.
On February 5, 1997, American General delivered a draft merger agreement to
USLIFE and its outside counsel. From February 7 through February 11, 1997,
Debevoise & Plimpton, special counsel for USLIFE, and Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel for American General, held several
meetings in person and by telephone in which various terms of the Merger
Agreement were negotiated. The negotiations of the Merger Agreement focused on
the terms of the Exchange Ratio, the conditions to the Merger, employee
benefit issues, the respective rights of the parties to terminate the Merger
Agreement under certain circumstances, including upon receipt by USLIFE of an
Acquisition Proposal, and the representations, warranties and other covenants
contained in the Merger Agreement. See "THE PROPOSED MERGER--the Merger
Agreement." Following discussions on February 10, 1997, representatives of
both companies met at the offices of Goldman Sachs on February 11, 1997 to
finalize the pricing terms of the proposed transaction. After negotiation, the
parties agreed on a price of $49 per share of USLIFE Common Stock, subject to
a collar under which no more than 1.2937 shares and no less than 1.0919 shares
of American General Common Stock would be exchangeable for each share of
USLIFE Common Stock.
On February 12, 1997, at a special meeting, the American General Board
approved the terms of the proposed strategic alliance with USLIFE and the
Merger Agreement. At that meeting, Merrill Lynch rendered to
41
<PAGE>
the American General Board its oral opinion (later confirmed in writing) to
the effect that the Exchange Ratio was fair to American General from a
financial point of view.
On February 12, 1997, the USLIFE Board met in a special meeting to review,
with the advice and assistance of USLIFE's financial and legal advisors, the
proposed Merger Agreement with American General and the terms of the Merger,
and also to consider certain unsolicited contacts that had been received from
other companies. At the special meeting, Goldman Sachs and Debevoise &
Plimpton made presentations to the USLIFE Board concerning the proposed
transaction. Mr. Crosby reviewed the negotiations between USLIFE and American
General. USLIFE's legal advisor addressed the board's fiduciary duties to the
shareholders of USLIFE in the context of the proposed transaction and
summarized the material terms and conditions of the proposed Merger Agreement.
At the request of Mr. Crosby, Goldman Sachs and a senior USLIFE officer
reported on the due diligence inquiries that had been conducted with respect
to American General. Goldman Sachs then reviewed the proposed transaction with
American General, including the financial terms of the American General
proposal, and compared the proposed transaction to comparable recent
transactions in the industry and reviewed certain other analyses it had
conducted with respect to the proposed transaction with American General.
Goldman Sachs rendered to the USLIFE Board its oral opinion (confirmed in
writing later that day) to the effect that, as of such date, the Merger
Consideration to be received by the USLIFE shareholders pursuant to the Merger
Agreement was fair to such shareholders.
Mr. Crosby reported on the contacts which USLIFE had received from other
companies, including a letter that had been received on January 31, 1997 from
another company engaged in the life insurance business. In accordance with the
Chairman's prior response to such other company, which stated that the Board
would consider the letter at its next meeting, the Board discussed that
written expression of interest and considered information about such other
company, including such company's business, acquisition history, capital
structure, accounting practices, stock price performance and shareholder base.
Following extended discussion and review of the proposed American General
transaction and of such other company's written expression of interest, Mr.
Crosby and the other directors who were employees of USLIFE were excused from
the meeting. The remaining directors discussed further the proposed American
General transaction, the other company's expression of interest, and the
alternative of continuing as a stand-alone company. With respect to the other
company's expression of interest, and following further discussion of the
other company's overall business, the remaining directors were not in favor of
pursuing discussions with the other company. The employee-directors then
rejoined the meeting. The USLIFE Board determined that USLIFE should not
pursue a strategic alliance with the company that had sent the January 31
letter and, thereafter, by a unanimous vote of all directors present, approved
the Merger and the Merger Agreement with American General. For a discussion of
reasons for the USLIFE Board's decision and factors considered by the USLIFE
Board, including the opinion that Goldman Sachs delivered to the USLIFE Board,
see "--USLIFE's Reasons for the Merger; Recommendation of the USLIFE Board"
and "--Opinion of USLIFE's Financial Advisor."
Following the conclusion of the USLIFE Board's special meeting on the
evening of February 12, 1997, the Merger Agreement was executed and delivered
by all the parties thereto. On February 13, 1997, American General and USLIFE
issued a joint press release announcing the execution of the Merger Agreement.
AMERICAN GENERAL'S REASONS FOR THE MERGER; RECOMMENDATION OF THE AMERICAN
GENERAL BOARD
American General believes that the life insurance industry is experiencing a
period of consolidation, which is driven in part by the need for companies to
increase their overall size in order to take advantage of economies of scale,
expand their asset base, maintain and enhance a strong base of revenues, and
lower their cost structures. In line with this general trend, American General
views growth through strategic mergers and acquisitions as an important aspect
of its business development program.
42
<PAGE>
American General believes that the businesses of USLIFE represent an
excellent strategic fit with its existing businesses. Among other things, the
two companies have complementary distribution channels, and the addition of
the USLIFE agency force should create considerable new distribution
opportunities for American General, particularly in New York and the
Northeastern United States. American General believes that these opportunities
should lead to significant revenue growth.
In addition, American General believes that significant opportunities for
rationalization exist, which should result in cost savings for the combined
company. These opportunities include the combination of the corporate and
certain back-office operations, the credit life businesses and the New York
businesses of the two companies.
Upon completion of the Merger, American General believes that the combined
companies will enjoy significant economies of scale. The insurance operations
of the combined company will rank as one of the 5 largest life insurance
companies in the United States based on capital and surplus, which should
distinguish the combined company from the large majority of its competitors
and position it well to take advantage of further strategic business
opportunities. In addition, American General anticipates that, based on year-
end 1996 data, the combined company would have net income of over $650
million, assets of over $74 billion, and market capitalization of over $10
billion. Its competitive position should be enhanced by economies of scale in
technology and back office services, as well as in the development of new
products and the centralization of investment operations, which should produce
better overall service for its customers.
THE AMERICAN GENERAL BOARD HAS DETERMINED THAT THE MERGER AND THE SHARE
ISSUANCE ARE FAIR TO AND IN THE BEST INTERESTS OF AMERICAN GENERAL AND ITS
SHAREHOLDERS. ACCORDINGLY, THE AMERICAN GENERAL BOARD HAS APPROVED THE MERGER
AGREEMENT AND THE ISSUANCE OF THE MERGER SHARES AND UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS OF AMERICAN GENERAL VOTE FOR THE APPROVAL OF THE SHARE
ISSUANCE.
In reaching its conclusion with respect to the Merger and the Share
Issuance, the American General Board considered a variety of factors, although
it did not assign any relative or specific weight to the factors considered.
The American General Board considered the following principal factors:
(1) that the products and markets of the two companies are complementary;
(2) that the distribution system of USLIFE is expected to contribute
significantly to the revenues of American General following the merger;
(3) that the combined company should enjoy economies of scale in such
areas as the management of its investment portfolio, new product
development, technology and back-office functions, as described above;
(4) that the size of the combined company should increase its flexibility
to take advantage of opportunities for growth in the future;
(5) that American General expects the Merger to be non-dilutive to
American General on a pro forma basis, giving effect to anticipated
eventual annual cost savings of approximately $50 million;
(6) information concerning the historical financial position, results of
operation and stock prices of USLIFE, as well as the prospective financial
performance of the combined companies;
(7) the opinion of Merrill Lynch, delivered to the American General Board
at its February 12, 1997 special meeting that, as of the date of such
opinion, the Exchange Ratio is fair, from a financial point of view, to
American General, as well as the underlying financial analyses of Merrill
Lynch presented to the American General Board on February 6 and 12, 1997 in
connection therewith;
(8) The risks associated with combining two large, diverse companies;
(9) a review with American General's special counsel of the terms of the
Merger Agreement, including the circumstances under which either American
General or USLIFE may terminate the Merger Agreement (and the fees
triggered thereby), the conditions to closing contained therein and the
possibility of up to $200 million in non-recurring costs directly
attributable to the Merger, including change of control costs and fees to
investment bankers, accountants and attorneys;
43
<PAGE>
(10) that the Merger was structured as a tax-free transaction for
American General, USLIFE and the respective stockholders of both companies;
and
(11) that the Merger will be accounted for as a pooling of interests
transaction, thereby avoiding potential negative accounting consequences to
the earnings of the combined company following the closing of the Merger.
In reaching their respective determinations regarding eventual annual cost
savings anticipated to be derived from the Merger, American General and
Merrill Lynch each undertook independent analyses and employed varying
assumptions. American General considered the $50 million amount referred to in
paragraph (5), above, to be more appropriate than the $40 million amount
assumed by Merrill Lynch in its analysis. See "--Opinion of American General's
Financial Advisor--Modified Discounted Cash Flow Analysis." This consideration
was based on the recommendation of American General's management following
their due diligence and based on their experience in prior transactions.
After careful consideration of the foregoing factors and consultation with
its outside financial and legal advisors, the American General Board of
Directors concluded that the Merger and the Share Issuance are fair to and in
the best interests of the shareholders of American General.
THE AMERICAN GENERAL BOARD RECOMMENDS THAT AMERICAN GENERAL SHAREHOLDERS
VOTE FOR THE APPROVAL OF THE SHARE ISSUANCE.
USLIFE'S REASONS FOR THE MERGER; RECOMMENDATION OF THE USLIFE BOARD
The USLIFE Board has determined that the Merger is fair to and in the best
interests of USLIFE and its shareholders. At a meeting held on February 12,
1997, the USLIFE Board, by a unanimous vote of all directors present, approved
the Merger Agreement and resolved to recommend that the shareholders of USLIFE
vote for approval and adoption of the Merger and 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 and the Merger
Agreement, the USLIFE Board considered many factors. The USLIFE Board
considered the following principal factors:
(i) Information with respect to the financial condition, results of
operations and business of USLIFE, on both a historical and a prospective
basis, and the influence of current industry, economic and market
conditions;
(ii) Strategic alternatives (including continuing the USLIFE business in
its present configuration on a stand-alone basis without significant
changes), none of which the board believed to be as favorable to the
holders of the shares of USLIFE Common Stock as the Merger;
(iii) The recognition by USLIFE's management of the difficulties and
risks inherent in attempting to enhance shareholder value over the long-
term through internal processes due to increasing competitive pressures
from banks and other financial institutions to which a larger, better
capitalized company with stronger ratings would be better able to respond;
(iv) American General's business, assets, management, competitive
position and prospects and the advantages to USLIFE of an alliance with a
company having the financial resources, distribution system and breadth of
products of American General;
(v) The financial condition, results of operations, cash flows and
dividends of each of USLIFE and American General, on an historical basis,
before giving effect to the Merger;
(vi) Historical market prices and trading information with respect to the
common stock of USLIFE and American General;
44
<PAGE>
(vii) The treatment of the Merger as a "tax-free reorganization" for
federal income tax purposes (see "--Certain Federal Income Tax Consequences
of the Merger") and the fact that, because the value of the Merger
Consideration was significantly above USLIFE's trading range as recently as
November 1996, the tax-free nature of the proposed transaction would be
beneficial to many shareholders;
(viii) The good strategic fit between the two companies in view of their
respective product lines and markets and the potential efficiencies and
synergies (including the combination of the corporate and certain back-
office operations, the credit life businesses and the New York businesses
of the two companies) that could be realized by the combined operations of
USLIFE and American General 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;
(ix) The opportunity for all USLIFE shareholders to maintain an ownership
stake in the combined entity and realize the potential long-term benefits
of the Merger;
(x) The regulatory approvals required to consummate the Merger and the
prospects for receiving all such approvals;
(xi) The opinion received by the USLIFE Board from Goldman Sachs on
February 12, 1997 to the effect that, as of such date, the Merger
Consideration to be received by the USLIFE shareholders pursuant to the
Merger Agreement was fair to such shareholders and the analyses conducted
by Goldman Sachs in reaching its opinion, as described under "--Opinion of
USLIFE's Financial Advisor";
(xii) The compatibility of the business and operating strategies of both
companies and the proposed structure of the Merger under which the
operations of certain American General life insurance units and certain
USLIFE life insurance units would be combined;
(xiii) The likelihood that the American General transaction would be
completed; and
(xiv) The interests of certain members of USLIFE's management and
directors in the Merger (see "--Interests of Certain Persons in the
Merger");
(xv) The terms and conditions of the Merger Agreement.
The USLIFE Board also considered certain potential risks relating to the
Merger, including, but not limited to, (i) the risk that the Merger would not
be consummated, with resulting distraction in the interim to USLIFE's normal
business operations, and any adverse effect that might have on USLIFE's
ability to retain and attract key employees while the Merger was pending and
(ii) the risk that the price of American General Common Stock might drop below
the $37.875 price level that fixes the Exchange Ratio at a maximum of
approximately 1.29 shares of American General Common Stock for each share of
USLIFE Common Stock. The USLIFE Board believed, however, that these risks were
outweighed by the potential benefits to be realized from the Merger.
Based on this analysis, the USLIFE Board unanimously determined that the
Merger is fair to, and in the best interests of, USLIFE's shareholders. The
foregoing discussion of the information and factors considered by the USLIFE
Board is not intended to be exhaustive, and such information and factors were
considered collectively by the USLIFE Board in connection with its review of
the Merger Agreement and the proposed transactions. In view of the variety of
factors considered in connection with its evaluation of the Merger, the USLIFE
Board did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the USLIFE Board may have
given different weights to different factors.
The full text of the updated written opinion of Goldman Sachs dated the date
of this Joint Proxy Statement/Prospectus, which sets forth the assumptions
made, matters considered and limitations on the review undertaken in
connection with the opinion, is attached hereto as Annex C, and is
incorporated herein by reference. SHAREHOLDERS ARE URGED TO, AND SHOULD, READ
SUCH OPINION IN ITS ENTIRETY. See also "--Opinion of USLIFE's Financial
Advisor."
THE USLIFE BOARD RECOMMENDS THAT USLIFE SHAREHOLDERS VOTE "FOR" THE APPROVAL
AND ADOPTION OF THE MERGER AND THE MERGER AGREEMENT.
45
<PAGE>
OPINION OF AMERICAN GENERAL'S FINANCIAL ADVISOR
American General retained Merrill Lynch to act as its financial advisor in
connection with a possible business combination between American General and
USLIFE. On February 12, 1997, Merrill Lynch rendered to the American General
Board its oral opinion, later confirmed in writing (the "Merrill Lynch
Opinion") that, as of such date and based upon and subject to the factors and
assumptions set forth therein, the Exchange Ratio was fair to American General
from a financial point of view.
THE FULL TEXT OF THE MERRILL LYNCH OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY MERRILL LYNCH, IS ATTACHED AS ANNEX B TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE SUMMARY OF
THE MERRILL LYNCH OPINION SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
SHAREHOLDERS OF AMERICAN GENERAL ARE URGED TO READ SUCH OPINION IN ITS
ENTIRETY. THE MERRILL LYNCH OPINION WAS PROVIDED TO THE AMERICAN GENERAL BOARD
FOR ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL
POINT OF VIEW OF THE EXCHANGE RATIO TO AMERICAN GENERAL, DOES NOT ADDRESS THE
MERITS OF THE UNDERLYING DECISION BY AMERICAN GENERAL TO ENGAGE IN THE MERGER,
AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY AMERICAN GENERAL SHAREHOLDER
AS TO HOW SUCH SHAREHOLDER SHOULD VOTE ON THE SHARE ISSUANCE OR ANY
TRANSACTION RELATED THERETO.
The Exchange Ratio was determined through negotiations between American
General and USLIFE and was approved by the American General Board. Merrill
Lynch provided advice to American General during the course of such
negotiations.
The summary set forth below does not purport to be a complete description of
the analyses underlying the Merrill Lynch Opinion or the presentation made by
Merrill Lynch to the American General Board. The preparation of a fairness
opinion is a complex analytical process involving various determinations as to
the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description. In arriving at its opinion, Merrill Lynch did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis
and factor. Accordingly, Merrill Lynch believes that its analyses must be
considered as a whole and that selecting portions of its analyses, without
considering all analyses, would create an incomplete view of the process
underlying its opinion.
In performing its analyses, numerous assumptions were made with respect to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Merrill
Lynch, American General or USLIFE. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, estimates of the value of businesses
or securities do not purport to be appraisals or to reflect the prices at
which such businesses or securities might actually be sold. Accordingly, such
analyses and estimates are inherently subject to substantial uncertainty. In
addition, as described above, the Merrill Lynch Opinion and Merrill Lynch's
presentation to the American General Board were among several factors taken
into consideration by the American General Board in making its determination
to approve the Merger Agreement. Consequently, the Merrill Lynch analyses
described below should not be viewed as determinative of the decision of the
American General Board or American General's management with respect to the
fairness of the Exchange Ratio.
In arriving at its opinion, Merrill Lynch, among other things, reviewed
certain publicly available business and financial information relating to each
of American General and USLIFE, as well as a draft of the Merger Agreement.
Merrill Lynch also reviewed certain other limited information, including
information relating to the business, earnings, cash flow, assets, liabilities
and prospects of American General and USLIFE, certain publicly available
analysts' earnings forecasts with respect to USLIFE, information concerning
the estimated cost savings and related expenses and synergies expected to
result from the Merger (the "Expected Savings and Synergies"), and certain
financial forecast information relating to both American General and USLIFE
(although no financial forecast information was provided by USLIFE). Merrill
Lynch conducted discussions with members of senior
46
<PAGE>
management and representatives of American General concerning the foregoing,
including the businesses, prospects and financial forecasts of American
General, before and after giving effect to the Merger, and the Expected
Savings and Synergies and with members of senior management and
representatives of USLIFE concerning the business and prospects of USLIFE.
Merrill Lynch also considered certain financial and stock market data for
American General and USLIFE and compared the data with similar data for other
publicly held companies that Merrill Lynch deemed to be comparable to American
General and USLIFE. In addition, Merrill Lynch considered the financial terms
of certain other business combination transactions which Merrill Lynch deemed
relevant. Merrill Lynch reviewed such other financial studies and analyses and
performed such other investigations and took into account such other matters
as it deemed necessary, including its assessment of general economic, market
and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly
available, and further relied on the assurances of management of American
General and USLIFE that they were not aware of any facts that would make such
information materially inaccurate or misleading. Merrill Lynch has not assumed
any responsibility for independently verifying such information and has not
undertaken an independent appraisal of the assets and liabilities of American
General or USLIFE. Merrill Lynch did not rely on or consider any actuarial
appraisals in connection with the preparation of the Merrill Lynch Opinion.
Additionally, Merrill Lynch did not conduct a physical inspection of the
properties or facilities of American General or of USLIFE. In preparing its
opinion, Merrill Lynch was not provided with financial forecasts with respect
to USLIFE other than certain publicly available analysts' earnings forecasts
which Merrill Lynch discussed with management of American General and on which
Merrill Lynch relied. Furthermore, Merrill Lynch did not review with
management of USLIFE (i) the publicly available analysts' earnings forecasts
with respect to USLIFE or (ii) the Expected Savings and Synergies. However,
Merrill Lynch's procedures did include inquiries of USLIFE as to whether
USLIFE considered publicly available analysts' forecasts for the 1996 results
of operations of USLIFE to be reasonable and, as noted above, a review with
USLIFE's management of the general business and prospects of USLIFE. With
respect to the publicly available analysts' earnings forecasts for USLIFE,
Merrill Lynch assumed that they were reasonably prepared and reflected the
best publicly available information. With respect to the financial forecast
information and the Expected Savings and Synergies discussed with Merrill
Lynch by American General or its representatives, Merrill Lynch assumed that
they were reasonably prepared and reflected the best currently available
estimates and judgment of American General's management as to the expected
future financial performance of, or expenses or benefits to, American General
or USLIFE, as the case may be (including after taking into account the impact
of the Merger) and that in all material respects they will be realized in the
amounts and times indicated thereby. Merrill Lynch expressed no opinion as to
such financial forecast information, the publicly available analysts' earnings
forecasts or the Expected Savings and Synergies or the assumptions on which
they were based. In addition, Merrill Lynch assumed that the Merger will
qualify for pooling of interests accounting treatment in accordance with
generally accepted accounting principles and as a tax-free reorganization for
United States federal income tax purposes.
For purposes of rendering its opinion Merrill Lynch assumed, in all respects
material to its analysis, that the representations and warranties of each
party to the Merger Agreement and all related documents and instruments
(collectively, the "Documents") contained therein are true and correct, that
each party to the Documents will perform all of the covenants and agreements
required to be performed by such party under such Documents and that all
conditions to the consummation of the Merger will be satisfied without waiver
thereof. Merrill Lynch also assumed that all material governmental, regulatory
or other consents and approvals will be obtained in connection with the Merger
and that in the course of obtaining any necessary governmental, regulatory or
other consents and approvals, or any amendments, modifications or waivers to
any documents to which either of American General or USLIFE is party, no
restrictions will be imposed or amendments, modifications or waivers made that
would have any material adverse effect on the contemplated benefits to
American General of the Merger.
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The Merrill Lynch Opinion is necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. Merrill Lynch was not asked to consider, and the Merrill Lynch
Opinion does not in any manner address, the price at which shares of common
stock of American General will actually trade following consummation of the
Merger.
The following is a brief summary of the material analyses presented by
Merrill Lynch to the American General Board in connection with the rendering
of the Merrill Lynch Opinion.
Comparable Public Company Analysis
Using publicly available information, Merrill Lynch compared certain
financial and operating information and multiples for USLIFE with
corresponding financial and operating information and multiples for a group of
publicity traded companies that Merrill Lynch deemed to be comparable. The
companies included American General, Conseco Inc., Transamerica, Lincoln
National, Equitable Companies, Jefferson-Pilot Corporation, Torchmark
Corporation, ReliaStar Financial Corp., American National, PennCorp Financial,
Equitable of Iowa Companies and Protective Life (collectively, the "USLIFE
Comparables"). Merrill Lynch compared (i) calendarized estimated
price/earnings ("P/E") multiples for 1997 for the USLIFE Comparables (based on
information from First Call Earnings Estimates ("First Call")), which ranged
from 10.8x to 14.3x with a median of 11.9x, to USLIFE's estimated 1997 P/E
multiple of 11.9x, (ii) calendarized 1998 estimated P/E multiples for the
USLIFE Comparables (based on information from First Call), which ranged from
9.5x to 12.2x with a median of 10.4x, to USLIFE's estimated 1998 P/E multiple
of 10.9x, (iii) price/book value multiples for the USLIFE Comparables, which
ranged from 0.8x to 2.6x with a median of 1.6, to USLIFE's price/book value
multiple of 1.2x, (iv) dividend yields for the USLIFE Comparables, which
ranged from 0.3% to 3.5% with a median of 2.1%, to USLIFE's dividend yield of
2.4% and (v) projected return on equity ("ROE") for the USLIFE Comparables,
which ranged from 7.6% to 19.8% with a median of 13.0%, to USLIFE's projected
ROE of 10.3%.
No company utilized in the comparable companies analysis was identical to
USLIFE. Accordingly, an analysis of the results of this comparison is not
purely mathematical; rather, it involves complex considerations and judgments
concerning differences in historical and projected financial and operating
characteristics of the comparable companies and other factors that could
affect the value of such companies and USLIFE.
Comparable Acquisition Analysis
Merrill Lynch reviewed certain publicly available information regarding 20
selected life insurance and annuity acquisitions between January 1993 and
December 1996. The comparable acquisitions and the dates the transactions were
announced are as follows: AEGON's acquisition of Providian Life Insurance
(December 1996), American General's acquisition of Home Beneficial (December
1996), SunAmerica Inc.'s acquisition of John Alden Financial (December 1996),
PennCorp Financial's acquisition of Washington National (November 1996),
Conseco Inc.'s acquisition of American Life Holding Co. (August 1996), General
Electric Capital Corp.'s acquisition of First Colony (August 1996), Conseco
Inc.'s acquisition of Life Partners Group Inc. (March 1996), General Electric
Capital Corp.'s acquisition of Life Insurance Companies of Virginia (December
1995), Southwestern Financial's acquisition of Southwestern Life Insurance
Company (November 1995), G.E. Capital's acquisition of Union Fidelity Life
Insurance (November 1995), SunAmerica Inc.'s acquisition of Ford Life
Insurance Company (November 1995), Jefferson-Pilot's acquisition of Alexander
Hamilton Life Insurance Company of America (August 1995), American Annuity
Group Inc.'s acquisition of Laurentian Capital (May 1995), Zurich Insurance's
acquisition of Kemper Corp. (April 1995), Conseco Inc.'s acquisition of CCP
(February 1995), American General's acquisition of a minority interest in
Western National Corporation (December 1994), American General's acquisition
of Franklin Life Insurance Co. (November 1994), Torchmark Corp.'s acquisition
of American Income Holdings (September 1994), NWNL Companies Inc.'s
acquisition of USLICO Corp. (September 1994) and General Electric Capital
Corp.'s acquisition of GNA Corp. (January 1993) (collectively, the "Comparable
Acquisitions").
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Merrill Lynch compared the purchase price as a multiple of common equity
(including and excluding the impact of Financial Accounting Standard ("FAS")
115) and last twelve month's ("LTM") net operating income for the Comparable
Acquisitions to such multiples for USLIFE based on the Exchange Ratio and
including change of control costs. The analysis indicated a range of multiples
of (i) common equity (including FAS 115) from 0.7x to 2.7x with a mean of 1.4x
for the Comparable Acquisitions compared to a multiple of 1.6x for USLIFE,
(ii) common equity (excluding FAS 115) from 0.8x to 2.6x with a mean of 1.4x
for the Comparable Acquisitions compared to a multiple of 1.7x for USLIFE and
(iii) LTM net operating income from 8.0x to 20.8x with a mean of 14.1x for the
Comparable Acquisitions compared to a multiple of 17.2x for USLIFE.
No acquisition utilized in the comparable acquisition analysis was identical
to American General's acquisition of USLIFE. Accordingly, an analysis of the
results of this comparison is not purely mathematical; rather, it involves
complex considerations and judgments concerning differences in historical and
projected financial and operating characteristics of the comparable acquired
companies and other factors that could affect the acquisition value of such
companies and USLIFE.
Modified Discounted Cash Flow Analysis
Using a modified discounted cash flow methodology, Merrill Lynch calculated
a range of per share values for USLIFE based on projections prepared using
discounted statutory income as a proxy for cash flow and including a capital
charge for underlying surplus based on estimates of USLIFE's weighted average
cost of capital. The analysis assumed (i) 1996 statutory net income of
$86,000,000 for USLIFE, (ii) 10% growth per year in net income for USLIFE,
(iii) annual cost savings resulting from the Merger of $40,000,000 and (iv)
current excess capital of $90,000,000. Using a range of discount rates from
10% to 12%, the modified discounted cash flow methodology produced a summary
reference range of per share values for USLIFE of $44.00 to $55.00.
Historical Trading Data
Merrill Lynch compared (i) the daily closing stock prices of USLIFE and
American General to the S&P 500 Index for the period from February 8, 1996 to
February 7, 1997 and (ii) the weekly closing stock prices of USLIFE and
American General to the S&P 500 Index for the period from February 11, 1994 to
February 7, 1997. For the period from February 8, 1996 to February 7, 1997,
USLIFE's daily closing stock price outperformed American General and the S&P
500 by 14.06% and 6.68%, respectively. For the period from February 11, 1994
to February 7, 1997, USLIFE's weekly closing stock price underperformed
American General and the S&P 500 by 0.21% and 12.74%, respectively.
Engagement of Merrill Lynch
Pursuant to a letter agreement between American General and Merrill Lynch,
American General agreed to pay Merrill Lynch $1,500,000, payable upon the
closing of the Merger or such other business combination. American General
also agreed to reimburse Merrill Lynch for its reasonable out-of-pocket
expenses, including certain reasonable fees and disbursements of its legal
counsel. Additionally, American General agreed to indemnify Merrill Lynch and
certain related persons for certain liabilities related to or arising out of
its engagement, including liabilities under the federal securities laws.
American General retained Merrill Lynch based upon Merrill Lynch's
experience and expertise. Merrill Lynch is an internationally recognized
investment banking and advisory firm. Merrill Lynch, as part of its investment
banking business, is continuously engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Merrill Lynch has, in the past, provided financial advisory and/or
financing services to American General and/or USLIFE and may continue to do so
and has received, and may receive, fees for the rendering of such services. In
the ordinary course of its business, Merrill Lynch and its affiliates may
actively trade the debt and equity securities of
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American General and USLIFE (and anticipate trading after the Merger in the
securities of American General) for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
OPINION OF USLIFE'S FINANCIAL ADVISOR
On February 12, 1997, Goldman Sachs delivered its written opinion to the
USLIFE Board that as of the date of such opinion the Merger Consideration was
fair to the holders of USLIFE Common Stock. Goldman Sachs subsequently
delivered an updated written opinion dated the date of this Joint Proxy
Statement/Prospectus to the USLIFE Board to the effect that as of the date
hereof the Merger Consideration was fair to the holders of USLIFE Common
Stock.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED THE DATE HEREOF,
WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX C TO
THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE.
SHAREHOLDERS OF USLIFE ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS
ENTIRETY.
In connection with its opinion dated the date hereof, Goldman Sachs
reviewed, among other things, (i) the Merger Agreement; (ii) the Registration
Statement, including this Joint Proxy Statement/Prospectus; (iii) Annual
Reports to Shareholders and Annual Reports on Form 10-K for the five years
ended December 31, 1996 of USLIFE and American General; (iv) certain interim
reports to shareholders and Quarterly Reports on Form 10-Q of USLIFE and
American General; (v) Statutory Annual Statements filed by certain insurance
subsidiaries of USLIFE and American General with the Insurance Departments of
the States under the laws of which they are respectively organized for the
five years ended December 31, 1996; (vi) certain interim statutory financial
information filed by such subsidiaries with such Insurance Departments; (vii)
certain other communications from USLIFE and American General to their
respective shareholders; (viii) certain internal financial and actuarial
analyses and forecasts for USLIFE and American General prepared by their
respective managements; and (ix) certain estimates of cost savings and
operating synergies that the management of USLIFE expects will result from the
Merger. Goldman Sachs also held discussions with members of the senior
management of USLIFE and American General regarding the strategic rationale
for, and benefits of, the Merger and the past and current business operations,
financial condition, and future prospects of their respective companies. In
addition, Goldman Sachs reviewed the reported price and trading activity for
the USLIFE Common Stock and the American General Common Stock, compared
certain financial and stock market information for USLIFE and American General
with similar information for certain other companies the securities of which
are publicly traded, reviewed the financial terms of certain recent business
combinations in the life insurance industry specifically and in other
industries generally and performed such other studies and analyses as it
considered appropriate. Goldman Sachs' opinions were provided for the
information and assistance of the USLIFE Board in connection with its
consideration of the transaction contemplated by the Merger Agreement and such
opinion does not constitute a recommendation as to how any holder of USLIFE
Common Stock should vote with respect to such transaction.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it, including the information
furnished by USLIFE and American General relating to reserves and related
items, and Goldman Sachs assumed such accuracy and completeness for purposes
of rendering its opinion. In that regard, Goldman Sachs assumed, with the
consent of USLIFE, that the financial estimates of USLIFE, including, without
limitation, the projected synergies resulting from the Merger were reasonably
prepared and reflect the best currently available judgments of USLIFE and that
such estimates will be realized in the amounts and the times contemplated
thereby. Goldman Sachs is not an actuary, and Goldman Sachs' services did not
include actuarial determinations or evaluations by Goldman Sachs or an attempt
to evaluate actuarial assumptions. In addition, Goldman Sachs has not made an
independent evaluation or appraisal of the assets and liabilities of USLIFE or
American General or any of their subsidiaries and Goldman Sachs has not been
furnished with any such evaluation or appraisal. Goldman Sachs was informed by
USLIFE that no actuarial appraisals incorporating non-public information were
performed by independent actuarial consultants in connection with the
transaction contemplated by the Merger Agreement. Goldman Sachs understands
that USLIFE does not
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prepare financial forecasts and Goldman Sachs was not furnished with any such
forecasts. Goldman Sachs requested but was not furnished with financial
forecasts for American General. Goldman Sachs was not requested to, and did
not, solicit in the market indications of interest in acquiring all or part of
USLIFE or in engaging in a business combination or any other strategic
transaction with USLIFE.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its written opinion to the USLIFE
Board on February 12, 1997. Goldman Sachs utilized substantially the same type
of analyses in connection with providing the written opinion dated the date of
this Joint Proxy Statement/Prospectus attached hereto as Annex C.
(i) Historical Stock Trading Analysis. Goldman Sachs reviewed the daily
historical closing prices and trading volumes for shares of USLIFE Common
Stock during the period from February 12, 1996 to February 10, 1997. In
addition, Goldman Sachs reviewed the volume of shares of USLIFE Common
Stock traded at a range of prices between the periods from February 12,
1996 to February 10, 1997 and from February 10, 1994 to February 10, 1997;
this review indicated weighted average market prices of shares of USLIFE
Common Stock of $31.98 and $28.89, respectively, for the periods reviewed.
Goldman Sachs also reviewed the daily historical closing prices and trading
volumes for shares of American General Common Stock for the periods from
February 7, 1996 to February 7, 1997 and from February 11, 1994 to February
7, 1997.
(ii) Indexed Price Histories. Goldman Sachs reviewed the daily indexed
historical prices for shares of USLIFE Common Stock during the period from
February 7, 1996 to February 7, 1997 and monthly indexed historical trading
prices for shares of USLIFE Common Stock during the period from January 31,
1992 to January 31, 1997, as compared to the S&P 500, the daily and monthly
indexed historical trading prices for shares of American General Common
Stock and a composite index comprised of the following publicly-traded life
insurance companies: Lincoln National, UNUM Corporation, AFLAC
Incorporated, Equitable, Jefferson-Pilot Corporation, Torchmark
Corporation, Provident, ReliaStar Financial Corp. and Unitrin (the
"Selected Larger-Cap Life Companies").
(iii) Total Annual Return Analysis. Goldman Sachs reviewed and compared
total annual returns, based on stock price appreciation and dividends, to
shareholders of USLIFE and American General over the 1, 3, 5, 10 and 15
year periods ended on February 10, 1997 and also, in the case of USLIFE,
for the same periods ended on January 6, 1997. Goldman Sachs' analyses
indicated that for the periods ended on (i) February 10, 1997 the total
annual returns to (A) USLIFE shareholders were 33.0% (1 year), 20.0% (3
year), 19.8% (5 year), 11.7% (10 year) and 14.0% (15 year), and (B)
American General shareholders were 16.1% (1 year), 19.6% (3 year), 18.8% (5
year), 12.3% (10 year) and 17.4% (15 year), and (ii) January 6, 1997 the
total annual returns to USLIFE shareholders were 10.3% (1 year), 13.3% (3
year), 13.3% (5 year), 8.7% (10 year), and 12.0% (15 year).
(iv) Selected Companies Analysis. Goldman Sachs reviewed and compared
certain financial information relating to USLIFE and American General to
corresponding financial information, ratios and public market multiples for
the Selected Larger-Cap Life Companies and for selected publicly traded
smaller-capitalization life insurance companies and annuity companies. The
selected smaller-capitalization life insurance companies were Protective
Life, Liberty Corp., Kansas City Life, American Heritage Life Investment
Corporation and Security-Connecticut (the "Selected Smaller-Cap Life
Companies"). The selected annuity companies were Conseco, Sun American
Inc., Equitable of Iowa Companies and Western National Corporation (the
"Selected Annuity Companies," and together with the Selected Larger-Cap
Life Companies and the Selected Smaller-Cap Life Companies, the "Selected
Companies").
The multiples of USLIFE and American General were calculated using a
price of $41.88 per share of USLIFE Common Stock and a price of $41.00 per
share of American General Common Stock, the closing prices of such shares
on the NYSE on February 10, 1997. The multiples and ratios for USLIFE,
American General and the Selected Companies were based on the most recent
publicly available information and, in the case of USLIFE and American
General, on certain information provided by their respective managements.
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Goldman Sachs considered, among other multiples and ratios, (i) price-to-
earnings ratios for 1997 (the "1997 P/E Ratio") and 1998 (the "1998 P/E
Ratio"), in each case based on median Institutional Brokers Estimate System
("IBES") earnings estimates as of February 10, 1997 (the "IBES Estimates"),
(ii) earnings per share growth for the period between 1997 and 1998 based
on the IBES Estimates (the "One Year EPS Growth Rate"), (iii) IBES
projected five year earnings per share growth rates (the "Five Year EPS
Growth Rate"), (iv) price as a multiple of book value adjusted to exclude
the effect of FAS 115, (the "Price/Book Ratio"), (v) return on (A) common
equity ("ROCE") and (B) assets ("ROA"), in each case for the twelve months
ended September 30, 1996, excluding realized gains and one-time charges
calculated on end-of-period equity and asset balances, (vi) the dividend
yield (the "Dividend Yield"), and (vii) the debt to capital ratio (the
"Debt/Capital Ratio"), giving preferred Stock 50% credit as equity. Goldman
Sachs' analyses indicated that:
(a) 1997 P/E Ratios ranged from 9.0x to 11.9x for the Selected
Smaller-Cap Life Companies with a median of 11.6x, from 11.0x to 15.6x
for the Selected Larger-Cap Life Companies with a median of 13.8x, and
from 12.0x to 17.5x for the Selected Annuity Companies with a median of
13.5x, compared with 1997 P/E Ratios of 12.0x for USLIFE and 11.7x for
American General;
(b) 1998 P/E Ratios ranged from 8.6x to 10.9x for the Selected
Smaller-Cap Life Companies with a median at 10.2x, from 9.8x to 13.1x
for the Selected Larger-Cap Life Companies with a median of 11.6x, and
from 10.4x to 15.2x for the Selected Annuity Companies with a median of
11.2x, compared with 1998 P/E Ratios of 10.9x for USLIFE and of 10.3x
for American General;
(c) One Year EPS Growth Rates ranged from 5.0% to 14.5% for the
Selected Smaller-Cap Life Companies with a median of 9.2%, from 9.4% to
23.3% for the Selected Larger-Cap Life Companies with a median of
13.7%, and from 15.0% to 21.7% for the Selected Annuity Companies with
a median of 17.7%, compared with One Year EPS Growth Rates of 10.6% for
USLIFE and of 13.7% for American General;
(d) Five Year EPS Growth Rates ranged from 0.0% to 13.0% for the
Selected Smaller-Cap Life Companies with a median of 9.0%, from 10.0%
to 15.0% for the Selected Larger-Cap Life Companies with a median of
13.0%, and from 12.0% to 17.0% for the Selected Annuity Companies with
a median of 14.0%, compared with Five Year EPS Growth Rates of 8.0% for
USLIFE and of 10.0% for American General;
(e) Price/Book Ratios ranged from .91x to 2.10x for the Selected
Smaller-Cap Life Companies with a median of 1.5x, from 1.4x to 3.15x
for the Selected Larger-Cap Life Companies with a median of 1.74x, and
from 1.87x to 4.22x for the Selected Annuity Companies with a median of
2.33x, compared with Price/Book Ratios of 1.25x for USLIFE and of 1.75x
for American General;
(f) ROCE ranged from 6.9% to 14.1% for the Selected Smaller-Cap Life
Companies with a median of 9.2%, from 8.2% to 16.8% for the Selected
Larger-Cap Life Companies with a median of 11.3%, and from 10.4% to
21.5% for the Selected Annuity Companies with a median of 10.8%,
compared with ROCE of 9.1% for USLIFE and of 11.5% for American
General;
(g) ROA ranged from 1.01% to 1.89% for the Selected Smaller-Cap Life
Companies with a median of 1.35%, from .33% to 2.64% for the Selected
Larger-Cap Life Companies with a median of 1.33%, from .74% to 1.28%
for the Selected Annuity Companies with a median of 1%, compared with
ROA of 1.42% for USLIFE and of 1.03% for American General;
(h) Dividend Yields ranged from 1.1% to 4.5% for the Selected
Smaller-Cap Life Companies with a median of 1.8%, from .7% to 4.6% for
the Selected Larger-Cap Life Companies with a median of 2.0%, and from
.3% to 1.3% for the Selected Annuity Companies with a median of .8%,
compared with Dividend Yields of 2.4% for USLIFE and of 3.4% for
American General; and
(i) Debt/Capital Ratios ranged from 0.0% to 34.3% for the Selected
Smaller-Cap Life Companies with a median of 19.1%, from 8.5% to 36.0%
for the Selected Larger-Cap Life Companies with a
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median of 20.3%, and from 21.1% to 50.2% for the Selected Annuity
Companies with a median of 28.0%, compared with Debt/Capital Ratios of
33.0% for USLIFE and of 29.9% for American General.
(v) Standalone Net Present Value Analysis. Goldman Sachs performed a
standalone net present value analysis per share of USLIFE Common Stock
assuming (i) 1997 and 1998 earnings per share of $3.48 and $3.85,
respectively, based on the IBES Estimates, (ii) a dividend payout ratio of
28%, based upon USLIFE's 1997 annual indicated dividend payout ratio and an
assumed 1997 earnings per share of $3.48, (iii) EPS growth scenarios of
between 4% and 14% after 1998, (iv) sale of a share of USLIFE Common Stock
after five years at a hypothetical price to earnings ratio of 10x the
following year's earnings (based on the approximate multiple of price to
estimated 1997 earnings at January 6, 1997), and (v) that such dividend and
share values of USLIFE Common Stock are discounted at rates between 8% and
16%. This analysis indicated a range of values per share of USLIFE Common
Stock of between $27.01 and $51.17. The 8% EPS growth scenario (the five
year growth rate that reflects IBES estimates) indicated a range of values
between $30.93 and $41.89.
(vi) Selected Transactions Analysis. Goldman Sachs analyzed certain
information relating to the following selected transactions in the life
industry since 1993 (the "Selected Transactions"): AEGON/N.V./Providian
(announced), American General/Home Beneficial (announced), Conseco/Pioneer
Financial (announced), Penn Corp./Washington National (announced), Sun
America/John Alden Financial (annuity business) (announced),
Conseco/American Life (remaining 62%) (announced), Conseco/Capital American
(announced), Provident Life & Accident/Paul Revere Corp. (announced),
Conseco/Bankers Life (remaining 10%), Conseco/Transport Holdings,
Conseco/American Travellers, General Electric Capital Corp./First Colony
Corporation, Metropolitan Life/New England Mutual, Conseco, Inc./Life
Partners, Inc., Knightsbridge Capital Fund I L.P./United Companies Life
Insurance Co., General Electric Capital Corp./Life Insurance Co. of
Virginia, General Electric Capital Corp./Union Fidelity Life Insurance Co.,
Massachusetts Mutual/Connecticut Mutual, SunAmerica Inc./Ford Life,
American General/Independent Insurance Group, Inc., Zurich Insurance Group
and Insurance Partners/Kemper Corporation, PennCorp Financial Group
Inc./Southwestern Life, Union Bankers and Constitution Life, SunAmerica
Inc./CalFarm Life, American Annuity Group/Laurentian Capital Corp., Humana
Inc./EMPHESYS Financial Group, Inc., Jefferson-Pilot Corp./Alexander
Hamilton Life Insurance Co. of America, General Electric Capital Corp./Amex
Life Assurance, PennCorp Financial Group Inc./Integon Life Corp., Life
Partners Group Inc./Lamar Financial Group Inc., American General/The
Franklin Life Insurance Co., The NWNL Companies Inc./USLICO Corp., American
General/Western National Corp. (40%), Torchmark Corp./American Income
Holdings, General Electric Capital Corp./Harcourt General Insurance, Inc.,
Conseco, Inc./Statesman Group and General Electric Capital Corp./United
Pacific Life Insurance Co.
Such analysis indicated that for the Selected Transactions consummated or
announced after January 1, 1995, with several data points being
unavailable, aggregate equity consideration as a multiple of (i) last 12
months net income ranged from 10.4x to 30.5x, with a mean of 15.5x and a
median of 13.6x, (ii) tangible GAAP book value ranged from .84x to 4.63x,
with a mean of 1.65x and a median of 1.33x, and (ii) statutory surplus
ranged from 1.23x to 5.37x, with a mean of 2.33x and a median of 2.13x.
Goldman Sachs noted that, based on a transaction price of $49.00, the
consideration to be received by USLIFE shareholders pursuant to the Merger
Agreement (a) would represent a premium over the closing prices per Share
on February 10, 1997 and January 6, 1997 of 17% and 49%, respectively, and
(b) implied multiples of aggregate equity consideration to unaudited 1996
operating income excluding extraordinary charges, GAAP book value and
statutory surplus of 15.4x, 1.41x and 3.1x, respectively.
(vii) Recent Acquisitions by American General. Goldman Sachs also
analyzed certain information relating to the following acquisitions by
American General in the life insurance and annuity industries since 1994
(the "Selected American General Transactions"): Home Beneficial
(announced), Independent Insurance Group, Inc., The Franklin Life Insurance
Company, Western National Corporation (40%) and Unitrin Inc. (announced
unsolicited offer-withdrawn). Such analysis indicated that for the Selected
American General Transactions, with one data point being unavailable,
aggregate equity consideration as a
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multiple of (i) last twelve months net income ranged from 9.1x to 36.1x,
with a median of 17.8x, (ii) tangible GAAP book value ranged from 0.87x to
1.63x, with a median of 1.27x, and (iii) statutory surplus ranged from
1.84x to 3.12x, with a median of 1.94x.
(viii) Pro Forma Merger Analysis. Goldman Sachs prepared pro forma
analyses of the financial impact of the Merger. Using the IBES Estimates,
Goldman Sachs compared the earnings per share of shares of USLIFE Common
Stock, on a standalone basis, to the earnings per share of the common stock
of the combined companies on a pro forma basis. Goldman Sachs performed
this analysis based on a transaction price of $49.00 per share of USLIFE
Common Stock and a range of prices of shares of American General Common
Stock from $34.38 to $48.38.
Based on such analyses, the Merger would be accretive to USLIFE's
shareholders on an earnings per share basis in (a) 1997 in an amount
ranging from 13.7% to 31.0%, and 21.7% based on a price per share of
American General Common Stock of $41.38, and (b) 1998 in an amount ranging
from 15.8% to 33.4%, and 23.9% based on a price per share of American
General Common Stock of $41.38. Based on such analyses and the USLIFE
indicated 1997 annual dividend of $0.99 per share of USLIFE Common Stock,
the Merger would result in dividend accretion per share of USLIFE Common
Stock of 54.4% to 83.0%, and 67.5% based on a price per share of American
General Common Stock of $41.38. Based on such analyses and on a base book
value per share of USLIFE Common Stock of $33.10, the Merger would be
dilutive to book value per share in an amount ranging from 15.0% to 2.0%,
and 9.0% based on a price per share of American General Common Stock of
$41.38.
(ix) Contribution Analysis. Goldman Sachs reviewed certain historical and
estimated future operating and financial information (including, among
other things, earnings, operating earnings, net income, total equity and
total assets) for USLIFE, American General and the pro forma combined
entity resulting from the Merger based on publicly available information
and 1997 IBES earnings estimates as of February 10, 1997 for each of USLIFE
and American General. Goldman Sachs' analysis was based on a transaction
price of $49.00 and a price per share of American General Common Stock of
$41.38. The analysis indicated that USLIFE shareholders would contribute
17% to the outstanding total equity of the combined companies after the
Merger.
Goldman Sachs also analyzed the relative income statement contribution of
USLIFE and American General to the combined companies on a pro forma basis
before taking into account any of the possible benefits (including cost
savings or synergies) that may be realized following the Merger based on
last twelve month estimates and estimated 1997. This analysis indicated
that in the last twelve months USLIFE would have contributed 14.7% to
combined operating earnings (excluding realized gains and non-recurring
items), 15.8% to combined net income and 14.0% to 1997 estimated earnings.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying Goldman Sachs' opinion. In arriving at its fairness
determination, Goldman Sachs considered the results of all such analyses. No
company or transaction used in the above analyses as a comparison is directly
comparable to USLIFE or American General or the contemplated transaction. The
analyses were prepared solely for purposes of Goldman Sachs' providing its
opinion to the USLIFE Board as to the fairness of the Merger Consideration and
do not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts
of future results are not necessarily indicative of actual future results,
which may be significantly more or less favorable than suggested by such
analyses. Because such analyses are inherently subject to uncertainty, being
based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of USLIFE, American General, Goldman Sachs or
any other person assumes responsibility if future results are materially
different from those forecast.
As described above, Goldman Sachs' February 12, 1997 opinion delivered to
the USLIFE Board was one of many factors taken into consideration by the
USLIFE Board in making its determination to approve the
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Merger Agreement. The foregoing summary does not purport to be a complete
description of the analysis performed by Goldman Sachs and is qualified by
reference to the written opinion of Goldman Sachs set forth in Annex C hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with USLIFE, having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Merger Agreement. Goldman Sachs is also party to a retainer agreement with
USLIFE for certain investment banking services under which Goldman Sachs is
paid an annual fee. Goldman Sachs has also provided certain investment banking
services to American General from time to time, including having acted as lead
manager or as Initial Purchaser in five issues of fixed income or convertible
securities completed directly or through wholly owned subsidiaries by American
General in 1995 and 1996 and having sold 6.4 million shares of American
General Common Stock to American General in connection with an accelerated
stock buyback on April 15, 1997, and Goldman Sachs may provide investment
banking services to American General in the future. Charles A. Davis, a
limited partner of The Goldman Sachs Group L.P., is a director of USLIFE.
USLIFE selected Goldman Sachs as its financial advisor because it is a
nationally recognized investment banking firm that has substantial experience
in transactions similar to the Merger.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may from time to
time effect transactions and hold positions in the securities or options on
securities of USLIFE and/or American General for its own account and for the
account of customers. As of the date of its opinion, Goldman Sachs had in the
course of its normal trading activities (including the foregoing stock
buyback) accumulated (i) an aggregate net long position of 5,731 shares of
USLIFE Common Stock, (ii) an aggregate net short position of 5,076,893 shares
of American General Common Stock, and (iii) a long position in fixed-income
securities issued by American General and its subsidiaries with an aggregate
face value of $61 million.
Pursuant to a letter agreement dated January 17, 1997 (the "Engagement
Letter"), USLIFE engaged Goldman Sachs to act as its financial advisor in
connection with the Merger. Pursuant to the terms of the Engagement Letter,
USLIFE has agreed to pay Goldman Sachs upon consummation of the Merger a
transaction fee of 0.75% of the aggregate consideration paid in the Merger.
USLIFE has agreed to reimburse Goldman Sachs for its reasonable out-of-pocket
expenses, including attorney's fees, and to indemnify Goldman Sachs against
certain liabilities, including certain liabilities under the federal
securities laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Board of Directors and management of USLIFE, in
addition to their interests generally as shareholders of USLIFE, may receive
benefits under one or more of USLIFE's employee, director and executive
benefit plans and programs, which to the extent material, are described below.
To the best of USLIFE's knowledge, such persons have no other material
interests in the Merger apart from those of shareholders generally. USLIFE's
Board was aware of these interests of their directors and officers and
considered them, among other matters, in approving the Merger Agreement and
the transactions contemplated thereby.
Outside Directors
Under the USLIFE Corporation Non-Employee Directors' Deferred Compensation
Plan (the "Directors' Deferred Compensation Plan") non-employee directors may
elect to defer receipt of both their cash and equity compensation for serving
as directors. At or immediately following the Effective Time, all deferred
amounts, whether in cash or credited shares of USLIFE Common Stock, become
immediately payable in a lump sum to all participating non-employee directors,
regardless of any prior installment payment elections.
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Non-employee directors who have completed five years of Board service and
attained age 65 are eligible to receive a retirement benefit under the USLIFE
Corporation Retirement Plan for Outside Directors (the "Directors' Retirement
Plan"). The Directors' Retirement Plan provides a benefit equal to the product
of (i) 5% of the annual retainer fee payable in the year of retirement
multiplied by (ii) the number of years of Board service (up to a maximum of 20
years). Benefits are payable annually for the lesser of (i) 10 years and (ii)
the number of years of the director's Board service. At the Effective Time,
each non-employee director (regardless of age or length of service) will be
entitled to receive a benefit under the Directors' Retirement Plan based upon
the director's service rendered through the Effective Time, payable on the
later of age 65 or the director's termination of service on the Board. USLIFE
has established a trust to assist USLIFE in meeting its obligations to non-
employee directors in respect of the Directors Deferred Compensation Plan and
the Director's Retirement Plan in the event of a change in control, such as
the Merger. The trust has been funded with two standby letters of credit in
the aggregate amount of $4.2 million, which will be drawn upon at the
Effective Time.
Executive and Other Employee Benefit Plans and Programs
USLIFE has Key Executive Employment Protection Agreements ("KEEPAs") with
certain of its executive officers, including Messrs. Crosby, Henderson, Ruisi
and Simpson. USLIFE or a subsidiary has KEEPAs with other key officers of
USLIFE and its subsidiaries. Under the KEEPAs, upon a change in control, such
as the Merger, the covered individual receives certain payments if the
individual's employment terminates after the Effective Time. Each KEEPA also
provides that additional payments will be made in an amount sufficient to
compensate such individual for any Federal excise taxes payable by such
individual by reason of amounts payable or accelerated due to the Merger and
any Federal, state or local excise, income or employment tax payable in
respect of such additional payments for such additional taxes.
The agreements with Messrs. Crosby, Henderson, Ruisi and Simpson (the "Tier
I Agreements") provide each individual with employment protection for three
years following the Effective Time. If such person's employment is terminated
without Cause, or he terminates his employment for Good Reason (as each is
described in the Tier I Agreements), during this three year period, he will
receive a lump sum severance benefit (the "Severance Benefit") equal to three
times the sum of (i) his then current annual base salary (but excluding for
this purpose any salary increase granted in 1997), and (ii) the greater of (x)
the highest annual bonus payable to him with respect to either of the last two
fiscal years of USLIFE ended immediately prior to the Effective Time or (y)
his target bonus for the year in which the Merger occurs. In addition, under
the Tier I Agreements, a covered officer may voluntarily terminate his
employment for any reason within six months of the Merger and receive the
Severance Benefit. The agreements between USLIFE and each of its executive
vice presidents (the "Tier II Agreements") are similar to the Tier I
Agreements, except that under such Tier II Agreements a covered officer may
receive the Severance Benefits upon a voluntary termination of employment only
if such voluntary termination occurs within 90 days following the first
anniversary of the Effective Time.
USLIFE has also entered into five year renewable employment agreements with
Messrs. Crosby, Henderson, Ruisi and Simpson. These agreements which, among
other things, provide for the payment of a minimum level of base salary and
annual incentive compensation, if certain performance goals based on levels of
income attributable to USLIFE's core life insurance businesses are satisfied,
are suspended in the event of a change in control, and the rights of the
covered executives are determined pursuant to the terms and conditions of the
KEEPAs described above. The Executive Vice Presidents of USLIFE also signed
employment agreements, which have a renewable three year term.
The KEEPAs with Senior Vice Presidents and certain executive officers of
USLIFE's subsidiaries (the "Tier III Agreements") provide that, if such
officer is terminated without Cause or terminates employment for Good Reason
(as set forth in the Agreement), within one year after the Effective Time, the
individual will receive a lump sum severance benefit equal to two times the
sum of the executive's (i) then current base salary and (ii) highest annual
bonus actually paid with respect to either of the prior two fiscal years of
USLIFE ended immediately prior to the Merger. USLIFE has established a trust
to assist in making any payments due under the
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Tier I, Tier II and Tier III KEEPAs, which has been funded with two standby
letters of credit, currently in the aggregate amount of $43,800,000, that will
be drawn upon to make the required payments.
Under USLIFE's Restricted Stock Plan ("Restricted Stock Plan"), all
outstanding shares of unvested restricted stock will fully vest at the
Effective Time of the Merger, regardless of any restriction otherwise
applicable thereto. As of May 9, 1997, there were outstanding 302,212 shares
of restricted stock, and of this amount, the following executive officers and
directors hold the following number of restricted shares listed next to each
of their names: Mr. Crosby, 47,661 shares, Mr. Henderson, 82,186 shares, Mr.
Ruisi, 30,040 shares and Mr. Simpson, 50,182 shares. In addition, under
USLIFE's long term incentive program award, each person having the title of at
least Senior Vice President of USLIFE who exercises a stock option using
either cash or previously owned shares of stock receives a restricted stock
grant based on the number of shares for which the option is then being
exercised. One share of restricted stock is granted for every five options
exercised with stock, and for every three options exercised with cash. The
vesting of such additional restricted stock awards would ordinarily be subject
to the requirement that the corresponding option shares not be sold for a
period of at least three years, and in the case of Messrs. Crosby, Henderson,
Ruisi and Simpson, the attainment of certain performance objectives (such as
the achievement of certain earnings per share targets). However, any such
additional restricted stock awarded in connection with the exercise of a stock
option prior to the Effective Time of the Merger will become immediately
vested upon the Effective Time. As of May 9, 1997, up to an additional 116,919
shares of restricted stock could be issued in connection with the exercise of
stock options that are currently, or that will in the ordinary course become,
exercisable prior to the Effective Time. Of that number, the following
executive officers and directors would be entitled to receive up to the
following number of additional restricted shares: Mr. Crosby, 76,286 shares,
Mr. Henderson, 1,500 shares, Mr. Ruisi, 1,250 shares and Mr. Simpson, 7,638
shares. In the case of these officers other than Mr. Ruisi, all of the shares
of restricted stock held by each such officer would have become vested without
regard to the occurrence of the Merger upon such officer's retirement from
USLIFE.
Under the USLIFE 1991 Stock Option Plan ("Stock Option Plan"), at the
Effective Time of the Merger, all outstanding stock options, including reload
options, which have been outstanding for at least 6 months from their grant
date, vest and become immediately exercisable. All of USLIFE's stock options
outstanding at the Effective Time will automatically convert into options to
purchase shares of American General Common Stock as of the Effective Time.
Each option to purchase USLIFE Common Stock will be converted into an option
to purchase that number of shares of American General Common Stock equal to
the product of (i) the number of shares subject to USLIFE options and (ii) the
Exchange Ratio ("the Substitute Options"). The exercise price for a Substitute
Option to purchase American General stock will be determined by dividing the
aggregate exercise price of each of USLIFE's stock options by the total number
of American General shares subject to the Substitute Option. All Substitute
Options will generally be governed by the terms and provisions of the Stock
Option Plan. However, each individual who is party to a Tier I or Tier II
KEEPA has waived his right to receive reload options upon the exercise of
stock options from and after the date of the Merger Agreement, and has agreed
that the reload feature of the Stock Option Plan shall not be provided for
Substitute Options. As of May 9, 1997, there were outstanding options to
purchase 903,374 shares of USLIFE Common Stock, of which 695,354 are currently
exercisable or are expected to become exercisable in the ordinary course
through the passage of time prior to June 17, 1997. Of this total number of
options outstanding, the following executive officers and directors hold
options on the following number of shares (with the number of options that
will not be exercisable in the ordinary course on or before June 17, 1997 in
parentheses): Mr. Crosby, 228,860 shares (with 0 unvested), Mr. Henderson,
32,256 shares (with 0 unvested), Mr. Ruisi, 27,803 shares (with 6,295
unvested) and Mr. Simpson, 22,917 shares (with 0 unvested). Upon retirement,
all options held by Messrs. Crosby and Henderson would have continued to be
exercisable as though they remained in the employ of USLIFE without regard to
the occurrence of the Merger and any requirement of additional service would
have been waived. Upon retirement, with the consent of the Compensation
Committee of the Board of Directors, all options held by Mr. Simpson would
have continued to be exercisable as though he remained in the employ of
USLIFE, without regard to the occurrence of the Merger and any requirement of
additional service would have been waived.
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In connection with the Merger, USLIFE has agreed not to authorize any
additional grants of options to purchase shares of USLIFE Common Stock (other
than reload options issued in connection with the exercise of existing
options). In addition, USLIFE will not make any new awards of restricted
stock, except shares of restricted stock issuable upon exercise of options
vesting prior to the date of the Merger Agreement. Immediately following the
Effective Time of the Merger, American General will issue options under its
plans, for an aggregate of up to 210,000 shares multiplied by the Exchange
Ratio, to officers of USLIFE, listed on a list furnished by USLIFE, who are
employees of USLIFE at the time of the Merger.
Under the USLIFE Corporation Retirement Plan ("Retirement Plan"), which
provides all participants a retirement benefit based on average compensation
and years of service, a number of provisions are triggered at the Effective
Time of the Merger for individuals still employed as of such date. First, the
calculation of "Final Average Earnings" will include 1997 compensation for an
individual who terminates employment in 1997 (even if only a partial year) if
it will provide the participant with a higher average amount. Severance
benefits payable under USLIFE's severance allowance program will also be
included in calculating a participant's Final Average Earnings. In addition,
participants will also be credited with service equal to their severance
period which will be used in calculating their benefits. Participants also
become fully vested in their accrued benefits. Finally, each participant who
retires early after the Effective Time will receive a benefit based on an
early retirement adjustment as if he had completed thirty years of service.
The USLIFE Corporation Supplemental Retirement Plan (the "SERP") provides
each officer of USLIFE having the title of Senior Vice President or higher and
each Chief Executive Officer of each wholly-owned subsidiary as well as
certain other employees participating in the Retirement Plan whose benefits
are limited by the operation of certain provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), including the $160,000 earnings
limitation imposed by Section 401(a)(17) of the Code, with retirement benefits
that supplement the retirement benefits that can be provided under the
Retirement Plan. In calculating such benefits, the SERP takes into account
certain types and amounts of compensation, including the value of vested
restricted stock awards and each payment for units under the Book Unit Plan
(as defined below), that are not or cannot otherwise be taken into account
under the Retirement Plan. The SERP provides that any unvested benefits
accrued thereunder as of the Effective Time of the Merger will fully vest at
such time. As of the Effective Time, Mr. Simpson will not have otherwise
become vested in his SERP benefits.
In calculating the benefits payable under the SERP, certain modified
provisions take effect at the time of change of control including the Merger.
Compensation payable to each participant for calendar year 1997 will be taken
into account in calculating the individual's final average pay, if using such
compensation would result in the individual receiving a greater retirement
benefit. (Except for the change of control, the individual would have to
remain in USLIFE's employ or in the employ of one of its subsidiaries for the
entire calendar year to base his benefits in part on 1997 compensation.)
Because of the change of control, a participant's compensation will include
any amount payable in respect of USLIFE's severance allowance program (as
described below), but not the severance benefits payable under any KEEPA.
Except in the case of SERP participants who are eligible to retire at the
Effective Time of the Merger (which includes Messrs. Crosby, Henderson and
Simpson), the value of any restricted stock which becomes vested on account of
a change in control is not taken into account in calculating the individual's
SERP benefits. However, in no case will the value of any restricted stock
awarded to Messrs. Crosby, Henderson, Simpson or Chouinard (notwithstanding
their eligibility to retire) on or after February 12, 1997 be included in the
compensation used to determine their retirement benefits. Finally, in
calculating the participant's years of credited service for purposes of
determining his SERP benefits, he will be given credit for the period of the
participant's employment under a KEEPA and for any period for which severance
benefits would be payable. As a result of this provision, each of Messrs.
Crosby, Henderson, Ruisi and Simpson will be credited with approximately 3.6
years of service in calculating benefits under the SERP in addition to the
service each has actually completed at the Effective Time. All accrued
benefits under the SERP will, at the Effective Time, be payable on a single
lump sum basis using a discount rate of 5.86% to determine the present value
of such lump sum amount. It is anticipated that as a result of the special
change in control provisions under the SERP, the present value of the
retirement benefits otherwise payable to the following
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individuals will increase by an estimated amount indicated below (assuming
that, for purposes of calculating such increase, each officer who is eligible
to retire in 1997 would otherwise have retired as of the end of 1997):
Mr. Crosby, $10.7 million, Mr. Henderson, $1.7 million, Mr. Ruisi, $6.4
million, and Mr. Simpson, $6.3 million. To meet its obligations under the
SERP, including with respect to any increases in accrued benefits resulting
from certain changes in control, USLIFE has established certain trusts which
have been funded with two standby letters of credit, currently totalling
$66,000,000 in the aggregate.
The USLIFE Corporation Book Unit Plan ("Book Unit Plan") is a performance-
based compensation plan under which certain officers have been awarded "units"
equal in value to the increase in book value per share of USLIFE Common Stock
over the term of the award. Upon execution of the Merger Agreement, USLIFE
agreed that no additional awards would be granted under the Book Unit Plan
prior to the Effective Time of the Merger. At the Effective Time of the
Merger, all units under the Book Unit Plan become fully vested and payable,
and the following individuals will receive the following cash payments under
the Book Unit Plan: Mr. Crosby, $774,225, Mr. Henderson, $387,488, Mr. Ruisi,
$322,875, and Mr. Simpson, $215,063. In the case of each of these officers
other than Mr. Ruisi, the amount payable at the Effective Time is the same
amount that would have been payable to such officer if the officer had retired
prior to the end of 1997 without regard to the occurrence of the Merger. To
meet its obligations under the Book Unit Plan, USLIFE established a trust
which has been funded with a standby letter of credit, currently in the amount
of $5,000,000, that will be drawn upon to make the required payments.
Under the Annual Incentive Plan for Selected Key Officers of USLIFE
Corporation and its Subsidiaries (the "AIP"), certain select key officers are
awarded cash payments based on USLIFE's annual performance. The AIP provides
that upon the Effective Time of the Merger, awards for 1997 are to be paid out
as if all performance targets have been met to produce the maximum award.
Thus, at the Effective Time, each of the following individuals will receive
the following payments under the AIP: Mr. Crosby, $802,500, Mr. Henderson,
$290,000, Mr. Ruisi, $270,000, and Mr. Simpson, $260,000.
Under the USLIFE Corporation Executive Officer Deferred Compensation Plan
("Officers Deferred Plan"), eligible senior officers may elect to defer
receipt of a portion of their salary and all or a portion of their incentive
bonus and book unit payments. At or immediately following the Effective Time,
all amounts standing to the credit of a participant under the Officers
Deferred Plan will be immediately paid to such participant (or his beneficiary
or estate, as the case may be) in a single lump sum. Messrs. Crosby and
Henderson are participants in the Officers Deferred Plan. To meet its
obligations under the Officers Deferred Plan, USLIFE established a trust which
has been funded with a standby letter of credit, currently in the amount of
$900,000, that will be drawn upon to make the required payments.
Under the USLIFE Corporation Supplemental Employee Savings and Investment
Plan ("Supplemental SIP") employees participating in the Employee Savings and
Investment Plan (the "SIP") who cannot receive the full matching contribution
due to the earnings limitation imposed by the Code or their participation in
the Officers Deferred Plan receive an additional contribution to restore to
such employees the full matching contribution. The Supplemental SIP provides
that such contributions will fully vest at the Effective Time of the Merger
and that the account balances payable to each such employee upon termination
of employment will be paid out in a single lump sum. Additionally, in
calculating the amount payable as a matching contribution under the terms of
the Supplemental SIP, certain additional compensation (such as the vesting of
restricted stock awards at the time of the Merger, book unit payments and the
amount of any severance benefits payable under the terms of the KEEPAs or
USLIFE's severance allowance program) will be taken into account in
calculating the contribution payable in respect of 1997 services. Each of
Messrs. Crosby, Henderson, Ruisi and Simpson participate in the Supplemental
SIP, and each has already fully vested in his accrued benefits and will
receive payments upon termination of employment as follows: Mr. Crosby
$641,992, Mr. Henderson $365,576, Mr. Ruisi $243,623, and Mr. Simpson
$305,755. To meet its obligations under the Supplemental SIP, including any
increases in accrued benefits resulting from certain changes in control,
USLIFE established a trust which has been funded with a standby letter of
credit, currently in the amount of $2,100,000 that will be drawn upon to make
the required payments.
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Under USLIFE's severance allowance program, any employee, including Messrs.
Crosby, Henderson, Ruisi and Simpson, whose employment is terminated in a
company-initiated termination within a stated period following the Effective
Time will receive an enhanced severance allowance (two weeks pay for every
year of service not exceeding 30 weeks). In addition, each of Messrs. Crosby,
Henderson, Ruisi and Simpson will receive severance under this policy if he
also receives a payment pursuant to his KEEPA. The amounts payable under this
program to these officers are: Mr. Crosby $699,615, Mr. Henderson $474,038,
Mr. Ruisi $441,346, and Mr. Simpson $225,000. In all cases, severance
allowances are in addition to compensation owed for any unused earned vacation
or compensation owed or paid in connection with a KEEPA. Severance payments
are made in a lump sum on termination.
USLIFE used estimates of the benefits that would reasonably have been
expected to be due in the event of a change of control when it determined the
amounts of the various standby letters of credit used to fund the trust
established with respect to the plans, agreements and programs described
above. In connection with the Merger, the actual benefits due under each such
plan, agreement or program can be calculated with greater accuracy.
Accordingly, the amounts set aside in respect of each of the various trusts
are expected to be reallocated based on the actual payments due and owing in
respect of each such plan.
PLANS FOR USLIFE AFTER THE MERGER
As soon as is reasonably practicable after the Effective Time, American
General plans to combine certain USLIFE operations with operations of its
existing companies that utilize the general agency form of distribution, which
companies include American General Life Insurance Company, based in Houston,
Texas, and Franklin Life Insurance Company, based in Springfield, Illinois. As
part of this consolidation, the USLIFE insurance subsidiary domiciled in the
State of New York is expected to be combined under common management with
American General's New York-based subsidiary. Ultimately, these two New York
domiciled companies may be combined in a statutory merger.
Additionally, USLIFE's credit operations are expected to be combined with
the credit operations of American General's consumer finance segment. In
addition, USLIFE Systems and USLIFE Insurance Services, companies that perform
back-office services for certain USLIFE companies, may provide such services
for American General companies in the future.
American General expects to achieve additional efficiencies by combining
redundant operations in other areas. Management of investment operations will
be consolidated at American General's parent company, and broker-dealer, real
estate, and other redundant operations are expected to be combined, where
feasible. These combinations, together with the elimination of certain of
USLIFE's corporate operations, are expected to result in significant expense
savings.
Based on its current knowledge of USLIFE, except as described in the
foregoing three paragraphs, American General has no present plans or proposals
involving USLIFE or any of its subsidiaries which relate to or would result in
any extraordinary corporate transaction, such as a merger, reorganization,
liquidation, sale or transfer of a material amount of assets, nor does it plan
any material changes in USLIFE's businesses. However, American General is
continuing its review of USLIFE's assets, operations, properties, policies,
management and personnel, and American General reserves the right, subject to
the terms and conditions of the Merger Agreement and any required regulatory
approvals, to effect any such plans and proposals in connection therewith.
THE MERGER AGREEMENT
The following is a summary of certain material provisions of the Merger
Agreement not summarized elsewhere in this Joint Proxy Statement/Prospectus. A
copy of the Merger Agreement is attached as Annex A to this Joint 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.
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The Merger
The Merger Agreement provides that, as soon as practicable following the
approval of the Merger Agreement by USLIFE's shareholders, the approval of the
Share Issuance by American General's shareholders, and the satisfaction or
waiver of the other conditions to each party's obligation to consummate the
Merger, Merger Sub will be merged with and into USLIFE in accordance with the
NYBCL, the separate corporate existence of Merger Sub will cease, and USLIFE
will continue as the surviving corporation ("Surviving Corporation") in the
Merger.
Directors and Officers
Pursuant to the Merger Agreement, prior to the Effective Time, American
General and USLIFE will mutually agree on the composition of the Board of
Directors of the Surviving Corporation.
Charter and Bylaws
Pursuant to the Merger Agreement, the Certificate of Incorporation and
Bylaws of Merger Sub as in effect immediately prior to the Effective Time will
be the Certificate of Incorporation and Bylaws, respectively, of the Surviving
Corporation following the Merger.
Representations and Warranties
The Merger Agreement contains various customary representations and
warranties by USLIFE and American General concerning (i) organization,
standing and corporate power, (ii) capitalization, (iii) ownership of
subsidiaries, (iv) authorization of the Merger Agreement and related
transactions, (v) consents and approvals and absence of contravention of other
agreements, (vi) compliance with applicable federal securities law
requirements and absence of material misstatements or omissions in documents
and reports filed with the Commission, (vii) statutory financial statements,
(viii) the absence of undisclosed material adverse changes, (ix) the absence
of undisclosed material litigation, (x) the absence of undisclosed material
liabilities, (xi) the absence of material undisclosed violations, breaches or
defaults under any charter documents, agreements, order, statute, rule or
regulation, or governmental authorization, (xii) taxes, (xiii) title to
property and encumbrances, (xiv) the conduct of insurance business by each of
American General and USLIFE and their respective insurance subsidiaries in
compliance with applicable laws, (xv) regulatory filings, (xvi) investments,
(xvii) statutory reserves, (xviii) the accuracy of the information provided
for inclusion in this Joint Proxy Statement/Prospectus and the Registration
Statement, (xix) brokers being entitled to fees in connection with the Merger,
(xx) employee benefit plans and compliance with ERISA, (xxi) labor matters and
employee relations, (xxii) environmental matters, (xxiii) related party
transactions, (xxiv) the receipt of opinions of their respective financial
advisors, (xxv) derivatives, (xxvi) material contracts, (xxvii) intellectual
property, (xxviii) the Investment Advisers Act and the Investment Company Act,
(xix) the absence of material misstatements or omissions in the Merger
Agreement, reports or documents filed with the Commission, and statutory
financial statements, (xxx) the protection from liability of directors,
officers, employees, affiliates, agents and representatives on the basis of
information made available prior to the execution of the Merger Agreement and
(xxxi) the qualification for the pooling-of-interests accounting treatment.
American General also made representations and warranties concerning the
ownership by American General and its subsidiaries of USLIFE Common Stock.
USLIFE also made representations and warranties concerning the absence of
repurchases of USLIFE Common Stock by USLIFE since January 1997.
The respective representations and warranties of each of USLIFE and American
General will terminate at the Effective Time.
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Conduct of Business Pending the Merger
Pursuant to the Merger Agreement, USLIFE 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 as mutually
consented to in writing, each of USLIFE 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 USLIFE and American General have agreed not to:
(i) amend its articles of incorporation or certificate of incorporation, as
the case may be, or bylaws, (ii) declare or pay any dividends (except for
regular quarterly dividends), (iii) split, combine or reclassify any shares of
its capital stock, (iv) repurchase, redeem, purchase or otherwise acquire any
shares of capital stock of USLIFE, except pursuant to the Merger Agreement, or
permit their respective subsidiaries to do so, (v) 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 (subject to the USLIFE Board's
fiduciary duties to its shareholders in the case of USLIFE) and subject to
such mergers or acquisitions as American General may engage in consistent with
its corporate development strategy, (vi) sell, lease, license or otherwise
surrender, relinquish or dispose of any material facility owned or leased by
them or any of their subsidiaries or any assets or property which are material
to them and their subsidiaries, taken as a whole, except pursuant to existing
disclosed contracts or commitments or in the ordinary course of business
consistent with past practice, (vii) settle any material audit, make or change
any material tax election or file any material amendment to any material tax
returns, (viii) issue any capital stock or other securities (subject to
certain exceptions described in the Merger Agreement) 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 USLIFE employee
benefit plan 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 the Merger
Agreement, (ix) subject to certain exceptions set forth in the Merger
Agreement, grant any increase in the compensation or benefits of directors,
officers, employees, consultants or agents, or enter into or amend any
employment agreement or other employment arrangement, (x) make any change in
any accounting method or accounting practice followed by it or any of its
subsidiaries, except in specified circumstances and subject to certain
exceptions set forth in the Merger Agreement, (xi) enter into any agreement to
purchase, or to lease for a term in excess of one year, any real property,
provided that USLIFE or American General, or any of their subsidiaries (a) may
as a tenant, or a landlord, renew any existing lease for a term not exceeding
eighteen months, and (b) renew any lease pursuant to an option granted prior
to the date of the Merger Agreement, (xii) take any action that would
reasonably be expected to 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, (xiii) take any action that could
reasonably be expected to cause the Merger to fail to qualify for pooling-of-
interests accounting treatment or permit their respective subsidiaries to do
so, (xiv) 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, (xv)
agree or commit to, or permit any of their respective subsidiaries to agree or
permit to, any of the foregoing, (xvi) except to the extent necessary to
comply with the requirements of applicable laws and regulations, (a) take, or
agree or commit 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 (b) 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 USLIFE 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) (c) 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, or (xvii) make any material change in its underwriting, claims
management or reserving practices.
Pursuant to the Merger Agreement, on February 13, 1997, USLIFE amended and
restated its Amended and Restated Rights Agreement, dated as of June 24, 1986
and amended and restated as of January 24, 1989 and as
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further amended and restated as of September 27, 1994 (the "USLIFE Rights
Agreement"), between USLIFE and Chase Manhattan Bank, as Rights Agent, to
provide that (i) American General will not become an "Acquiring Person" as a
result of the transactions contemplated by the Merger Agreement, (ii) no
"Stock Acquisition Date" or "Separation Date" (as such terms are defined in
the USLIFE Rights Agreement) will occur as a result of the transactions
contemplated by the Merger Agreement, and (iii) all outstanding "Rights"
issued and outstanding under the USLIFE Rights Agreement will expire
immediately prior to the Merger.
Filings and Other Actions
Pursuant to the Merger Agreement, the parties have agreed that each of
USLIFE, American General and Merger Sub will (i) promptly prepare and file all
requisite applications and notifications with the New York Department of
Insurance, the Illinois Department of Insurance, the Wisconsin Department of
Insurance, the Pennsylvania Department of Insurance, the Arizona Department of
Insurance and the Nebraska Department of Insurance and, if any, the insurance
departments of any other applicable states and make all filings and
submissions under the HSR Act, (ii) use reasonable best 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 reasonable best 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; Certain Fees
The Merger Agreement provides that, from the date of the Merger Agreement
until the termination thereof, USLIFE will not, nor will it permit any of its
subsidiaries to, nor will it authorize or permit any officer, director of,
employee of, or any investment banker, attorney, accountant or other advisor
or representative of, USLIFE or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of an
Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or agree
to or endorse, or take any other action to facilitate any Acquisition Proposal
or any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal, in each case
subject to certain exceptions that enable the USLIFE Board to fulfill its
fiduciary obligations to the USLIFE shareholders.
USLIFE has agreed to notify American General as promptly as practicable of
the receipt by it of an Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal and the identity of the person making
any such Acquisition Proposal or inquiry. USLIFE will keep American General
promptly informed of the status and details of any such Acquisition Proposal.
Notwithstanding the foregoing, however, the USLIFE Board is not prohibited
from furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited bona fide Acquisition
Proposal if, and only to the extent that, (A) the USLIFE Board, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is necessary for the USLIFE Board to
comply with its fiduciary duties to USLIFE's shareholders under applicable law
and (B) prior to taking such action, USLIFE (x) provides reasonable notice to
American General to the effect that it is taking such action and (y) receives
from such person or entity an executed confidentiality/standstill agreement in
reasonably customary form. In addition, USLIFE has agreed to cease and
terminate any existing activities, discussions or negotiations (including
through its affiliates, subsidiaries or representatives) with any parties with
respect to any possible Acquisition Proposal and to notify each party that it,
or any officer, director, investment advisor, financial advisor, attorney or
other representative with which it has had discussions during the 30 days
prior to the date of Merger Agreement that the USLIFE Board no longer seeks
the making of any Acquisition Proposal.
The USLIFE Board has agreed that it will not (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to American General or
Merger Sub, the approval or recommendation by such Board of the Merger
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (iii) enter into any agreement (other
than a confidentiality/standstill agreement) with
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respect to any Acquisition Proposal or (iv) terminate the Merger Agreement in
response to an Acquisition Proposal, unless, in each case, USLIFE receives an
Acquisition Proposal and the USLIFE Board determines in good faith, following
consultation with independent legal counsel, that in order to comply with its
fiduciary duties to the USLIFE shareholders under applicable law it is
necessary for the USLIFE Board to withdraw or modify its approval or
recommendation of the Merger Agreement or the Merger, approve or recommend
such Acquisition Proposal, enter into an agreement with respect to such
Acquisition Proposal or terminate the Merger Agreement. In the event (A) the
Merger Agreement is terminated by either USLIFE or American General after the
USLIFE Board takes any of the foregoing actions in (i), (ii), (iii) or (iv) or
(B) prior to the termination of the Merger Agreement any person shall have
commenced a tender or exchange offer which would, if successful, result in the
acquisition by such person or entity of twenty percent (20%) or more of the
outstanding shares of USLIFE Common Stock and such tender or exchange offer is
completed not later than six months following the termination of the Merger
Agreement, USLIFE shall promptly, but not later than two business days after
the date of such termination (or the date of completion of such tender or
exchange offer, as the case may be) pay to American General $48 million in
same day funds. Nothing in this paragraph will prohibit USLIFE from taking and
disclosing to the USLIFE shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to USLIFE's
shareholders that, in the good faith reasonable judgment of the USLIFE Board
based on the advice of outside counsel, is required under applicable law;
provided that, except as otherwise permitted in this paragraph, USLIFE does
not withdraw or modify, or propose to withdraw or modify, its position with
respect to the Merger or approve or recommend, or propose to approve or
recommend, an Acquisition Proposal. Notwithstanding anything contained in the
Merger Agreement to the contrary, any action by the USLIFE Board permitted by
the provisions described in this paragraph will not constitute a breach of the
Merger Agreement by USLIFE.
In the event that (i) an Acquisition Proposal (as defined above but with
respect to American General and its subsidiaries) shall have been made known
to American General or any of its subsidiaries or shall have been made known
directly to the shareholders of American General or any person shall have
publicly announced an intention (whether or not conditional) to make such
Acquisition Proposal, (ii) the American General Board shall have withdrawn or
modified, or have proposed to withdraw or modify, in a manner adverse to
USLIFE the approval or recommendation by the American General Board of the
issuance of the Merger Shares, or approved or recommended, or have proposed to
approve or recommend, any such Acquisition Proposal and (iii) thereafter the
Merger Agreement is terminated by either USLIFE or American General due to
failure to receive the requisite vote for approval by the shareholders of
American General of the issuance of the Merger Shares at the American General
Special Meeting, then American General shall promptly, but not later than two
business days after the date of any such termination, pay to USLIFE $48
million in same day funds.
Expenses
The Merger Agreement provides that, except for the termination fee described
above, 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
Joint Proxy Statement/Prospectus, as well as the filing fees relating to the
Registration Statement and the HSR Act, will be shared equally by American
General and USLIFE.
Indemnification and Insurance
The Merger Agreement provides that all rights to indemnification existing in
favor of the Indemnified Parties (as defined in the Merger Agreement) as
provided in the USLIFE Charter or the USLIFE 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 USLIFE and any
of the Indemnified Parties with respect to matters occurring prior to the
Effective Time will survive the Merger and will continue in full force and
effect to the fullest extent and for the maximum term permitted by law, and
shall be enforceable by the Indemnified
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Parties against the Surviving Corporation. In addition, American General 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 USLIFE (provided that American General 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 American General or the
Surviving Corporation be required to pay to maintain or procure insurance
coverage any amount per annum in excess of 200% of the aggregate premiums paid
by USLIFE for such coverage on an annualized basis in 1996. 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
will purchase as much insurance as may be purchased for the amount indicated.
These obligations survive the consummation of the Merger and are intended to
benefit each of the Indemnified Parties.
Additional Agreements
Affiliates. The Merger Agreement provides that USLIFE use reasonable efforts
to cause its affiliates to enter into agreements to the effect that such
affiliates will only transfer shares of the American General common stock they
receive in the Merger in accordance with Rule 145 under the Securities Act. In
order to satisfy the SEC's requirements for pooling of interest accounting
treatment, affiliates of both American General and USLIFE are required to
agree not to sell shares for 30 days before the closing of the Merger and,
following the closing of the Merger, until combined financial results of
American General and USLIFE covering a 30 day period have been published.
Under the Merger Agreement, American General agrees to publish financial
results covering at least 30 days of combined operations as soon as
practicable after the Merger. See "--Restrictions on Sales of Shares by
Affiliates."
Employee Benefits. The Merger Agreement provides that American General will
honor and be bound by the terms and conditions of each employee and executive
benefit plan, program or agreement of USLIFE and administer and interpret such
plans, programs and agreements in accordance with the practices of USLIFE in
effect prior to the Merger. American General will also provide to all USLIFE
employees who become employees of American General and American General's
subsidiaries benefits that are either (a) no less favorable than those
provided to other American General employees or (b) no less favorable than
those provided under USLIFE's benefit plans prior to the effectiveness of the
Merger. For purposes of determining eligibility for benefits after
effectiveness of the Merger, the service of USLIFE employees prior to the
Merger will be recognized as service with American General, and benefits will
be provided to the extent required by applicable law. Pursuant to the Merger
Agreement, the Merger constitutes a "change in control" as defined under
USLIFE benefit plans. Prior to the Merger, USLIFE may grant certain salary
increases to employees and officers consistent with past practices. See
"Interests of Certain Persons in The Merger."
Intercompany Dividends. The Merger Agreement provides that on or before the
date immediately prior to the closing date of the Merger, subject to
compliance with applicable law, USLIFE will use reasonable efforts to cause
(i) All American Life Insurance Company to pay a dividend to USLIFE (presently
contemplated to be at least $78 million) and (ii) The Old Line Life Insurance
Company of America to pay a dividend to USLIFE (presently contemplated to be
at least $65 million), each such dividend to be paid in the form of demand
promissory notes or such other form as mutually agreed. Applications for such
dividends were filed with the requisite regulatory authorities by All American
Life on March 28, 1997 and by Old Line Life on March 28, 1997. All American
Life's application to pay a dividend of $78 million was granted on April 16,
1997. The payment of such dividends is not a condition to the Merger, and
American General believes that the failure to receive such dividends prior to
the Effective Time would not have a material adverse effect upon the
consolidated financial condition of American General following the Merger.
Conditions to the Merger
The Merger Agreement provides that the respective obligations of USLIFE,
Merger Sub and American General to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following
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conditions: (i) the waiting period 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; (ii) 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 consummation of the Merger; (iii)
such filings have been made, and such permits, authorizations, consents, or
approvals required by governmental authorities have been obtained, to
consummate the transactions contemplated by the Merger Agreement, and all
appropriate forms shall have been executed, filed and approved as required by
the corporate and insurance laws and regulations of the states of New York,
Illinois, Wisconsin, Pennsylvania, Arizona and Nebraska and such other states
as may have jurisdiction over the actions contemplated by the Merger Agreement
pursuant to insurance holding company or other insurance laws or regulations,
subject to certain exceptions; (iv) the Merger Agreement and the Merger shall
have been adopted and approved by the requisite vote of USLIFE shareholders;
(v) the American General shareholders shall have voted to approve the issuance
of the Merger Shares; (vi) 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; and (vii) the Merger Shares
issuable in the Merger shall have been authorized for listing on the NYSE.
The obligation of USLIFE to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions: (i) each of American General and Merger Sub shall have performed
in all material respects its obligations under the Merger Agreement required
to be performed by it at or prior to the Effective Time; (ii) the
representations and warranties of American General and Merger Sub contained in
the Merger Agreement shall be true and correct in all respects, in each case
as of the date of the Merger 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 Merger Agreement and except to the
extent that the failure of such representations and warranties to be true and
correct would not be reasonably likely to have, in the aggregate, a material
adverse effect upon American General and its subsidiaries taken as a whole;
(iii) USLIFE 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 as to the satisfaction of the
conditions in clauses (i) and (ii) of this paragraph; (iv) USLIFE shall have
received an opinion from Debevoise & Plimpton, special counsel to USLIFE, to
the effect, on the basis of certain facts, representations by management of
the companies and assumptions set forth in such opinion, 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 that American General, Merger Sub
and USLIFE will each be a party to that reorganization within the meaning of
Section 368(b) of the Code; and (v) the audited financial statements of
American General for the fiscal year ended December 31, 1996 shall not reflect
any event, change or effect having, or which would be reasonably likely to
have, in the aggregate, a material adverse effect on American General and its
subsidiaries taken as a whole.
The obligations of American General and Merger Sub to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions: (i) USLIFE shall have performed in all material
respects its obligations under the Merger Agreement required to be performed
by it at or prior to the Effective Time; (ii) the representations and
warranties of USLIFE contained in the Merger Agreement shall be true and
correct in all respects, in each case at and as of the date of the Merger
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 Merger Agreement and except to the extent that the failure
of such representations and warranties to be true and correct would not be
reasonably likely to have, in the aggregate, a material adverse effect upon
USLIFE and its subsidiaries taken as a whole; (iii) American General and
Merger Sub shall have received a certificate of the Chairman of the Board, the
President or a Vice President of USLIFE as to the satisfaction of the
conditions in clauses (i) and (ii) of this paragraph; (iv) American General
shall have received an opinion from Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel to American General, to the effect that, on the basis of
certain facts, representations by management of the companies and assumptions
set forth in such opinion, the Merger
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will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that American General, Merger Sub
and USLIFE will each be a party to that reorganization within the meaning of
Section 368(b) of the Code; (v) the audited financial statements of USLIFE for
the fiscal year ended December 31, 1996 shall not reflect any event, change or
effect having, or which would be reasonably likely to have, in the aggregate,
a material adverse effect on USLIFE and its subsidiaries taken as a whole;
(vi) American General shall have received a letter from its independent public
accountants, dated the Closing Date, stating that the Merger will qualify as a
transaction to be accounted for in accordance with the pooling-of-interests
method of accounting under applicable accounting standards; and (vii) all
outstanding shares of USLIFE Preferred Stock shall have been redeemed or
converted into shares of USLIFE Common Stock in accordance with the
certificate of designation of such USLIFE Preferred Stock.
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 written
agreement of USLIFE and American General, (ii) by the Board of Directors of
either American General or USLIFE, if (a) the Merger Agreement and the Merger
shall fail to receive the requisite vote for approval and adoption by the
shareholders of USLIFE at the USLIFE Special Meeting, (b) the Share Issuance
shall fail to receive the requisite vote for approval by American General's
shareholders, (c) the Merger shall not have been consummated by October 31,
1997, which date may be extended by written notice of either American General
or USLIFE to a date not later than December 31, 1997, if the Merger shall not
have been consummated as a direct result of the failure to obtain certain
regulatory approvals, provided that the party seeking to terminate the Merger
Agreement shall not have taken any action that would cause it to be in
material violation of any of its representations, warranties or covenants set
forth in the Merger Agreement, (d) 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 the
party seeking to terminate the Merger Agreement shall have used all reasonable
efforts to remove such injunction, order or decree, or (e) the USLIFE Board
shall have exercised its rights set forth in, and in accordance with the terms
of, the Merger Agreement with respect to an Acquisition Proposal, (iii) by the
USLIFE Board (a) if there has been a breach by American General of any
representation or warranty contained in the Merger Agreement which would have
or would be likely to have a material adverse effect on American General and
its subsidiaries taken as a whole, or (b) if there has been a breach by
American General of any of its covenants or agreements set forth in the Merger
Agreement, which breach, in the case of clauses (a) and (b), is not curable
or, if curable, not cured within thirty (30) days after written notice of such
breach has been given by USLIFE to American General, (c) the USLIFE Board
shall have taken or resolved to take action with respect to an Acquisition
Proposal pursuant to a fiduciary duty to the shareholders of USLIFE (as
described above); or (d) if American General issues shares of capital stock or
other securities in connection with a transaction requiring shareholder
approval; and (iv) by the Board of American General if (a) there has been a
breach by USLIFE of any representation or warranty which would be reasonably
likely to have a material adverse effect on USLIFE and its subsidiaries taken
as a whole, (b) there has been a material breach by USLIFE of any of its
covenants or agreements set forth in the Merger Agreement, which breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach by American General to USLIFE, or (c) the USLIFE Board
shall have taken or resolved to take action with respect to an Acquisition
Proposal regarding USLIFE pursuant to a fiduciary duty to the shareholders of
USLIFE (as described above).
In the event of termination of the Merger Agreement by either USLIFE or
American General as described above, the Merger will be abandoned and there
will generally be no liability or obligation on the part of American General,
USLIFE or their respective subsidiaries, officers and directors, and all
obligations of the parties shall terminate, except for, among other things,
(i) certain specified obligations including without limitation those relating
to financial advisory and brokerage fees and expenses of the Merger and (ii)
under the circumstances set forth under "--Other Acquisition Proposals;
Certain Fees" above.
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In the event that American General issues shares of capital stock or other
securities in connection with a transaction requiring shareholder approval
prior to the Effective Time, the Board of Directors of USLIFE shall have the
right to terminate the Merger Agreement. In considering whether to terminate
the Merger Agreement in this circumstance, the USLIFE Board would consider
such factors as it deems appropriate, including, but not limited to: (i) the
trading price of the USLIFE Common Stock and American General Common Stock;
(ii) recent developments in the business of USLIFE and American General as of
such time; (iii) whether to seek American General's consent to permit USLIFE
to resolicit its shareholders in consideration of an agreement not to
terminate the Merger Agreement; (iv) the nature of the proposed transaction;
and (v) such other factors as were taken into account initially in approving
the Merger and are relevant at such time. See "THE PROPOSED MERGER--USLIFE's
Reasons for the Merger; Recommendation of the USLIFE Board."
ACCOUNTING TREATMENT
It is intended that the Merger will qualify as a pooling of interests for
accounting and financial reporting purposes. Under this method of accounting,
the recorded assets and liabilities of USLIFE will be carried forward, at
their recorded amounts, to the consolidated financial statements of American
General; net income of American General will include net income of USLIFE for
the entire year in which the Merger occurs; and the reported net income of
American General and USLIFE for prior periods will be combined and restated as
net income of American General. The receipt by American General of a letter
from its independent public accountants, stating that the Merger will qualify
as a pooling of interests, is a condition precedent to the consummation of the
Merger by American General. This condition may be waived, but American General
presently has no intention to do so. See "THE MERGER AGREEMENT--Conditions to
the Merger."
REGULATORY FILINGS AND APPROVALS
The regulatory filings and approvals described below must be made before the
Merger can be effected and certain of such approvals may take a significant
period of time to obtain. Although USLIFE 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.
Approval by Insurance Regulators
Before the Merger can be effected, American General will be required to
obtain the prior approvals of each of the New York Department of Insurance,
the Illinois Department of Insurance, the Wisconsin Department of Insurance,
the Pennsylvania Department of Insurance, the Arizona Department of Insurance,
and the Nebraska Department of Insurance, respectively, pursuant to applicable
laws and regulations. American General has made the necessary filings with the
aforementioned insurance regulatory authorities to obtain such approvals and
is prepared to make any additional filings where necessary. Notification of
approval is expected to be received from the New York Department of Insurance
prior to the Closing Date; notification of approval was received from the
Illinois Department of Insurance on April 10, 1997; notification of approval
was received from the Wisconsin Department of Insurance on May 15, 1997;
notification of approval was received from the Pennsylvania Department of
Insurance on May 6, 1997; notification of approval is expected to be received
from the Arizona Department of Insurance prior to the Closing Date; and
notification of approval was received from the Nebraska Department of
Insurance on April 4, 1997.
In connection with the Merger, USLIFE has agreed to use all reasonable
efforts to cause All American Life to pay a dividend of at least $78 million
and Old Line Life to pay a dividend of at least $65 million (which may be in
the form of demand promissory notes) to USLIFE on or before the date
immediately prior to the Closing Date. Payment of the dividends are subject to
approval by the Department of Insurance of the States of Illinois and
Wisconsin, respectively, and the satisfaction or waiver of all conditions to
the Closing capable of being satisfied prior to the Closing Date. All American
Life's application to pay a dividend of $78 million was granted
68
<PAGE>
on April 16, 1997. Old Line's application to pay a dividend of $65 million is
expected to be granted prior to the Closing Date.
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. USLIFE and American
General made their respective filings with the DOJ and the FTC on March 6,
1997, and received oral notice of early termination of the waiting period on
March 17, 1997.
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 USLIFE. 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.
STATE ANTI-TAKEOVER STATUTES
Under the NYBCL, a corporation is generally prohibited from engaging in
certain business combinations (as defined by the statute to include certain
mergers and consolidations, dispositions of assets and issuances of
securities, as well as certain other transactions) with an interested
shareholder (as defined by the statute generally to include holders of 20% or
more of the outstanding stock of the corporation) for a period of five years
following the date that such shareholder became an interested shareholder,
unless the business combination or the purchase of stock by means of which the
interested shareholder became such is approved by the corporation's board of
directors in advance of such stock purchase. There are limited other
exceptions to this provision. Although a company may opt out of this
provision, USLIFE has not done so. On February 12, 1997, the USLIFE Board
approved the Merger. See "COMPARISON OF SHAREHOLDER RIGHTS--Anti-Takeover
Statutes."
USLIFE, directly or through its subsidiaries, conducts business in a number
of other states throughout the United States, some of which have also enacted
anti-takeover laws. USLIFE 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, USLIFE 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, USLIFE and American
General might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
USLIFE and American General might be delayed in, or prevented from,
consummating the Merger.
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. This discussion assumes that
shareholders hold USLIFE Common Stock as a capital asset as of the Effective
Time 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 shareholders whose stock was acquired
pursuant to the exercise of an employee stock option or otherwise as
compensation or 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) or
shareholders who exercise dissenters' rights under the
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<PAGE>
NYBCL (see "--Rights of Dissenting Shareholders"). This discussion also does
not address any aspects of state, local or foreign tax law. No rulings have
been or will be sought from the Internal Revenue Service with respect to any
tax matters relating to the Merger. EACH SHAREHOLDER IS ADVISED TO CONSULT HIS
OR HER OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX CONSEQUENCES OF THE MERGER.
The obligation of USLIFE to consummate the Merger is conditioned upon the
receipt by USLIFE of an opinion from Debevoise & Plimpton, and the obligation
of American General to consummate the Merger is conditioned upon the receipt
by American General of an opinion from Skadden, Arps, Slate, Meagher & Flom
LLP, in each case to the effect that, on the basis of certain facts,
representations by management of the companies and assumptions set forth in
such opinions, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and American
General, Merger Sub and USLIFE will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. Assuming that the Merger
does qualify for such treatment, in the opinion of Debevoise & Plimpton,
special counsel to USLIFE, and Skadden, Arps, Slate, Meagher & Flom
(Illinois), special counsel to American General, subject to the assumptions
and limitations described in the preceding paragraph, the following
discussion, to the extent it describes matters of law and legal conclusions,
is an accurate summary of the material federal income tax consequences of the
Merger to the shareholders under the law in effect as of the date hereof.
A shareholder who receives American General Common Stock in exchange for
USLIFE Common Stock will not recognize gain or loss upon such exchange (except
as described below with respect to cash that is received in lieu of fractional
shares). Accordingly, (i) the aggregate tax basis of the American General
Common Stock received by the shareholder will be the same as the aggregate tax
basis of the USLIFE 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 Common Stock will include the holding period of
the USLIFE 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 USLIFE Common Stock surrendered that is allocated to such
fractional shares. Such gain or loss will constitute long-term capital gain or
loss if, at the Effective Time of the Merger, such shareholder has held such
USLIFE Common Stock for more than one year.
EACH SHAREHOLDER IS STRONGLY ADVISED 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.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES
The shares of American General Common 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 USLIFE or
American General at the time of the Special Meetings. Affiliates may not sell
their shares of American General Common Stock acquired in connection with the
Merger except pursuant to (i) an effective Registration Statement under the
Securities Act covering the resale of 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 USLIFE or American General generally
include individuals or entities that may be deemed to control, be controlled
by or be under common control with USLIFE or American General, and may include
officers, directors and principal shareholders of USLIFE or American General.
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<PAGE>
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. The
approval by the NYSE for listing the shares is expected to be obtained prior
to the Closing Date, subject to offering notice of issuance. See "THE PROPOSED
MERGER--The Merger Agreement--Conditions to the Merger."
RIGHTS OF DISSENTING SHAREHOLDERS
Section 910 of the NYBCL ("Section 910") provides that any holder of USLIFE
Common Stock as of the USLIFE Record Date who has not voted in favor of the
Merger Agreement will have the right, as an alternative to receiving shares of
American General Common Stock in the Merger, to receive payment of the
judicially-determined "fair value" of his or her shares as of the date prior
to the USLIFE Special Meeting and certain other rights and benefits, subject
to Section 623 of the NYBCL ("Section 623"). The procedure that a dissenting
shareholder must follow to perfect these dissenters' rights is set forth in
Annex D to this Joint Proxy Statement/Prospectus, and any shareholder
contemplating the exercise of these dissenters' rights should review carefully
the provisions of Sections 623 and 910. USLIFE does not intend to waive
compliance with any of these statutory procedures. DISSENTERS RIGHTS WILL BE
LOST IF THE PROCEDURAL REQUIREMENTS SET FORTH IN THESE SECTIONS ARE NOT FULLY
AND PRECISELY SATISFIED.
Set forth below is a brief description of the procedures relating to the
exercise of dissenters' rights. The following description is not a complete
statement of the provisions of Section 623, and is qualified in its entirety
by reference thereto. The description should be read in conjunction with the
full text of Section 623 appearing in Annex D.
Under Section 623, a shareholder who wishes to exercise dissenters' rights
(the "Dissenter") must file with USLIFE (at USLIFE's address, 125 Maiden Lane,
New York, New York 10038, Attn: Senior Vice President-Investor Relations)
before the USLIFE Special Meeting (or at the USLIFE Special Meeting before the
shareholders' vote on the Merger (the "Merger Vote")) a written objection to
the Merger. The written objection must include a notice of the Dissenter's
election to dissent, the Dissenter's name and residence address, the number
and classes of shares as to which he or she dissents, and a demand for payment
of the fair value of his or her shares if the Merger receives approval and is
undertaken. A DISSENTER WHO VOTES IN FAVOR OF THE MERGER WILL BE DEEMED TO
HAVE ELECTED NOT TO ENFORCE HIS OR HER RIGHT TO RECEIVE PAYMENT FOR HIS OR HER
SHARES UNDER SECTION 623, EVEN IF THAT DISSENTER HAS FILED A WRITTEN OBJECTION
WITH USLIFE. IN ADDITION, A VOTE AGAINST THE MERGER WILL NOT, IN AND OF
ITSELF, CONSTITUTE A WRITTEN OBJECTION THAT WOULD SATISFY THE REQUIREMENTS OF
SECTION 623. However, a failure to vote will not affect the validity of an
otherwise valid written objection. If the Merger receives approval, USLIFE
must give written notice within ten (10) days of the date of the Merger Vote
of such approval to each Dissenter who (i) filed the necessary written
objection and (ii) did not vote his or her shares in favor of the Merger.
If the Dissenter holds shares represented by certificates, he or she must
submit the certificates to USLIFE at the above-listed address, or to USLIFE's
transfer agent, ChaseMellon Shareholder Services, at 450 West 33rd Street, New
York, New York, 10001, within one month after the Dissenter files his or her
written notice of dissent. Any Dissenter holding shares represented by
certificates who does not submit his or her shares in this manner may lose his
or her dissenters' rights under Section 623.
USLIFE must, within fifteen (15) days of the later of (i) the consummation
of the Merger or (ii) the expiration of the period within which shareholders
may file their notices of election to dissent, make a written offer (the
"Purchase Offer") to each Dissenter to pay for the Dissenter's shares at a
specified price which USLIFE or, if the Merger has been consummated, American
General (hereinafter for purposes of this section, unless otherwise specified,
"USLIFE" shall mean American General if the Merger has been consummated),
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<PAGE>
believes to be a "fair value" under Section 623. If the Merger has been
consummated, the Purchase Offer will be accompanied by (i) advance payment to
each Dissenter who has submitted his or her certificates to USLIFE as provided
above of an amount equal to eighty percent (80%) of the amount of such offer,
or (ii) if the Dissenter has not yet submitted his or her certificates to
USLIFE, a statement that advance payment of an amount equal to eighty percent
(80%) of the amount of such offer will be made to the Dissenter promptly upon
the Dissenter's submission of his or her certificates to USLIFE (this offer
will be made when the Merger has been consummated if the Merger has not been
consummated at the time of the Purchase Offer).
If the Dissenter accepts the Purchase Offer or the Dissenter and USLIFE
agree upon a value for the Dissenter's shares within thirty (30) days of the
Purchase Offer, any remaining payment due for the Dissenter's shares will be
made to the Dissenter within sixty (60) days of the later of the Purchase
Offer or the consummation of the Merger, upon the Dissenter's surrender of his
or her certificates for any such shares represented by certificates.
The following procedure shall apply to set the price of the Dissenter's
shares if USLIFE fails to make a Purchase Offer within the period of fifteen
(15) days referred to above, or if the Dissenter rejects the Purchase Offer,
and USLIFE and the Dissenter cannot agree upon a value for the Dissenter's
shares within thirty (30) days after the Purchase Offer is made:
(1) USLIFE will, within twenty (20) days after the expiration of such 15
day or 30 day period, as the case may be, institute a special
proceeding in the Supreme Court for New York County to determine the
Dissenter's rights and to fix the fair value for his or her shares.
(2) The court will determine (i) whether the Dissenter is entitled to
receive payment for his or her shares, and (ii) the fair value for such
shares. In fixing the fair value for the shares, the court will
consider the nature of the transaction giving rise to the Dissenter's
right to receive payment under Section 623, the concepts and methods
customarily used in the relevant securities and financial markets to
determine the value of shares of a corporation engaging in a similar
transaction under comparable circumstances, and all other relevant
factors.
(3) Each party to the proceeding must bear its own costs and expenses,
including attorneys' and experts' fees, unless the court in its
discretion assesses all or part of such costs and expenses against
either USLIFE or the Dissenter.
(4) Within sixty (60) days after the final determination of the court
proceeding, USLIFE will pay to the Dissenter the amount found by the
court to be due to such Dissenter for his or her shares, upon surrender
of the certificate for any such shares represented by the certificate.
Any dissenting shareholder who perfects his or her right to be paid the fair
value of his shares will generally recognize gain or loss, if any, for federal
income tax purposes upon the receipt of cash for his shares. The amount of
gain or loss and its character as ordinary or capital gain or loss will be
determined in accordance with applicable provisions of the Internal Revenue
Code. See "The Proposed Merger--Certain Federal Income Tax Consequences of the
Merger."
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<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."
USLIFE Common Stock is listed and traded on the NYSE, The Chicago Stock
Exchange, The Pacific Stock Exchange and The London Stock Exchange under the
symbol "USH." 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 USLIFE 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 USLIFE Common Stock,
as reported by the NYSE Composite Tape.
<TABLE>
<CAPTION>
DIVIDEND
PRICE OF DECLARED DIVIDEND
AMERICAN PER PRICE OF DECLARED
GENERAL AMERICAN USLIFE COMMON PER
COMMON STOCK GENERAL STOCK USLIFE
------------- COMMON ------------- COMMON
HIGH LOW SHARE HIGH LOW SHARE
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1992
First Quarter.................. $22.38 $20.13 $ .26 $21.25 $18.75 $.182
Second Quarter................. 24.63 20.50 .26 22.92 18.92 .187
Third Quarter.................. 25.19 23.69 .26 23.33 20.75 .191
Fourth Quarter................. 29.38 23.63 .26 25.50 19.58 .20
Year ended December 31, 1993
First Quarter.................. $32.88 $27.31 $.275 $28.42 $24.08 $ .20
Second Quarter................. 33.25 27.75 .275 27.67 23.83 .20
Third Quarter.................. 36.50 30.13 .275 29.25 26.50 .20
Fourth Quarter................. 34.75 26.25 .275 30.50 24.33 .207
Year ended December 31, 1994
First Quarter.................. $29.63 $25.50 $ .29 $27.58 $25.00 $.207
Second Quarter................. 29.38 24.88 .29 26.42 23.25 .207
Third Quarter.................. 30.50 26.88 .29 25.17 22.08 .207
Fourth Quarter................. 28.88 25.63 .29 23.92 20.58 .22
Year ended December 31, 1995
First Quarter.................. $33.25 $27.50 $ .31 $25.58 $22.58 $ .22
Second Quarter................. 35.50 31.13 .31 27.67 24.67 .22
Third Quarter.................. 38.88 33.63 .31 31.58 26.17 .233
Fourth Quarter................. 39.13 31.00 .31 32.00 26.88 .233
Year ended December 31, 1996
First Quarter.................. $37.88 $33.25 $.325 $33.25 $29.00 $.233
Second Quarter................. 37.63 32.88 .325 33.25 26.88 .233
Third Quarter.................. 38.75 34.00 .325 32.88 28.88 .233
Fourth Quarter................. 41.75 35.75 .325 33.50 29.63 .247
Year ended December 31, 1997
First Quarter.................. $44.63 $39.38 $ .35 $48.63 $32.25 $.247
Second Quarter (through May 14,
1997)......................... 44.88 36.50 .35 48.75 44.13 .247
</TABLE>
For a description of the recent repurchase by American General of American
General Common Stock from Goldman Sachs and the subsequent purchases of
American General Common Stock in the market by Goldman Sachs, see "CERTAIN
INFORMATION CONCERNING AMERICAN GENERAL--Recent Developments."
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<PAGE>
The following table sets forth the closing prices of American General Common
Stock and USLIFE Common Stock as reported on the NYSE Composite Tape on
February 12, 1997, the last full trading day prior to the public announcement
of the Merger, and on May 14, 1997, and the equivalent per share prices (as
explained below) of USLIFE Common Stock on such dates.
<TABLE>
<CAPTION>
AMERICAN GENERAL USLIFE EQUIVALENT PER
COMMON STOCK COMMON STOCK SHARE PRICE
---------------- ------------ --------------
<S> <C> <C> <C>
February 12, 1997.................. $41.50 $41.75 $49.00
May 14, 1997....................... $44.625 $48.5625 $49.00
</TABLE>
The equivalent per share price of a share of USLIFE Common Stock represents
the closing price of a share of American General Common Stock on such date
multiplied by the Exchange Ratio computed as of such date.
Because the market price of American General Common Stock that holders of
USLIFE Common Stock will receive in the Merger may increase or decrease prior
to the Merger, stockholders 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 22 years. On February 6, 1997, American General declared a quarterly cash
dividend on common stock of $.35 per share for the first quarter of 1997 (an
annual rate of $1.40 per share) payable on March 1, 1997 to holders of record
as of February 17, 1997. 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, 1996, the amount of dividends available to
American General from subsidiaries during 1997 not limited by such
restrictions was $703 million.
USLIFE paid common stock dividends of $.95 per share in 1996. On January 28,
1997, USLIFE declared a quarterly cash dividend on common stock of $.247 per
share for the first quarter of 1997 payable on March 3, 1997 to holders of
record as of February 14, 1997. On April 22, 1997, USLIFE declared a quarterly
cash dividend on common stock of $.247 per share for the second quarter of
1997 payable on May 28, 1997 to holders of record as of May 21, 1997. Future
payment of dividends on the USLIFE Common Stock, in the event that the Merger
is not consummated, will depend on earnings, financial condition, capital
requirements and other relevant factors. Because USLIFE is a holding company,
its capacity to pay dividends is limited by the ability of its subsidiaries to
pay dividends. Since USLIFE's principal subsidiaries are insurance companies
subject to regulatory control by various state insurance departments, the
ability of such subsidiaries to pay dividends to USLIFE without prior
regulatory approval is limited by applicable laws and regulations.
On May 5, 1997, there were approximately 7,957 holders of record of USLIFE
Common Stock. On May 7, 1997, there were approximately 27,521 holders of
record of American General Common Stock.
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<PAGE>
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined financial statements give effect
to the Merger of American General and USLIFE using the pooling of interests
method of accounting. A pro forma combined balance sheet is provided as of
March 31, 1997, giving effect to the Merger as though it had been consummated
on that date. Pro forma combined statements of income are provided for the
quarters ended March 31, 1997 and 1996 and for the years ended December 31,
1996, 1995, and 1994, giving effect to the Merger as if the Merger had
occurred at the beginning of the earliest period presented.
The pro forma information is based on the historical consolidated financial
statements of American General and USLIFE and should be read in conjunction
with such financial statements and notes thereto, which are incorporated
herein by reference. The pro forma combined financial statements are presented
for comparative purposes only and do not purport to be indicative of the
combined financial position or results of operations of future periods or of
the combined financial position or results of operations which would have been
realized had the Merger been consummated as of the date or during the periods
for which the pro forma information is presented. The pro forma combined
balance sheet does not give effect to the anticipated retirement of USLIFE
treasury stock prior to the Merger, to additional shares that may be issued as
a result of the exercise of USLIFE stock options, to the 6.4 million shares of
American General Common Stock repurchased by American General on April 15,
1997, under an accelerated share repurchase agreement, or to the 9.5 million
shares of American General Common Stock issued for the acquisition of Home
Beneficial on April 16, 1997. The pro forma combined statements of income do
not give effect to non-recurring items directly attributable to the Merger of
approximately $170 million ($167 million aftertax), including change in
control costs and fees for investment bankers, accountants, and attorneys, or
to American General's estimate of the expected annual operating expense
savings from the Merger of approximately $50 million ($33 million aftertax).
The Merger Agreement provides for each share of USLIFE Common Stock to be
exchanged for a fraction of a share of American General Common Stock. The
Exchange Ratio will be calculated by dividing (x) $49 by (y) the average of
the high and low sales prices of American General Common Stock as reported in
The Wall Street Journal during the ten consecutive NYSE Trading Days ending on
(and including) the fifth NYSE Trading Day prior to the Effective Time of the
Merger, subject to a minimum of 1.0919 shares and a maximum of 1.2937 shares
of American General Common Stock for each share of USLIFE Common Stock. The
pro forma combined financial statements reflect an assumed Exchange Ratio of
1.0980 per share, based on the closing price of American General Common Stock
on May 14, 1997 of $44.625.
The following significant items affect year-to-year comparability of pro
forma combined net income and net income per share for the quarters ended
March 31, 1997 and 1996 and for the years ended December 31, 1996, 1995, and
1994:
. American General's results include the operations of Independent Life,
acquired February 29, 1996, and Franklin Life, acquired January 31, 1995,
from the date of their respective acquisitions.
. Pro forma combined net income for 1996 reflects an aftertax charge of $93
million ($.37 per share) resulting from American General's decision to
offer for sale $875 million of non-strategic, underperforming finance
receivable portfolios and an aftertax charge of $32 million ($.13 per
share) related to revised assumptions reflecting current experience on
USLIFE's traditional indemnity group major medical products. For a
discussion of such revised assumptions, see note (b) to SUMMARY HISTORICAL
FINANCIAL DATA OF USLIFE.
. Pro forma combined net income for 1995 includes American General's fourth
quarter aftertax charge of $140 million ($.57 per share) for an increase in
the allowance for finance receivable losses.
. Pro forma combined net income for 1994 reflects aftertax net realized
investment losses of $114 million ($.46 per share), primarily from American
General's capital gains offset program.
75
<PAGE>
AMERICAN GENERAL CORPORATION
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO
AMERICAN PRO FORMA FORMA
GENERAL USLIFE(B) ADJUSTMENTS(C) COMBINED
-------- --------- -------------- --------
<S> <C> <C> <C> <C>
Assets
Investments
Fixed maturity securities....... $38,138 $5,739 $ - $43,877
Mortgage loans on real estate... 2,944 258 - 3,202
Equity securities............... 116 4 - 120
Policy loans.................... 1,744 283 - 2,027
Investment real estate.......... 591 26 - 617
Other long-term investments..... 207 18 - 225
Short-term investments.......... 405 108 - 513
------- ------ ------ -------
Total investments............. 44,145 6,436 - 50,581
------- ------ ------ -------
Cash.............................. 164 43 - 207
Finance receivables, net.......... 7,064 - - 7,064
Investment in Western National
Corporation ..................... 506 - - 506
Deferred policy acquisition costs. 2,542 828 - 3,370
Cost of insurance purchased....... 796 - - 796
Acquisition-related goodwill...... 550 47 - 597
Assets held for sale.............. 634 - - 634
Other assets...................... 2,109 423 - 2,532
Assets held in Separate Accounts.. 8,157 - - 8,157
------- ------ ------ -------
Total assets.................. $66,667 $7,777 $ - $74,444
======= ====== ====== =======
Liabilities
Insurance and annuity liabilities. $40,614 $5,691 $ - $46,305
Debt
Corporate....................... 1,565 593 - 2,158
Consumer Finance................ 7,330 - - 7,330
Income tax liabilities............ 815 27 (3)(D) 839
Other liabilities................. 1,263 305 170 (D) 1,738
Liabilities related to Separate
Accounts......................... 8,157 - - 8,157
------- ------ ------ -------
Total liabilities............. 59,744 6,616 167 66,527
------- ------ ------ -------
Redeemable equity
Non-convertible................... 1,479 - - 1,479
Convertible....................... 246 - - 246
------- ------ ------ -------
Total redeemable equity....... 1,725 - - 1,725
------- ------ ------ -------
Shareholders' equity
Convertible preferred stock....... 85 - - 85
Common stock...................... 395 178 - 573
Net unrealized gains on
securities....................... 142 (18) - 124
Retained earnings................. 5,203 1,348 (167)(D) 6,384
Cost of treasury stock............ (627) (347) - (974)
------- ------ ------ -------
Total shareholders' equity.... 5,198 1,161 (167) 6,192
------- ------ ------ -------
Total liabilities and equity.. $66,667 $7,777 $ - $74,444
======= ====== ====== =======
Book value per share................ $ 25.68 $33.02 $ 25.69
======= ====== =======
Common and common equivalent shares
outstanding (in thousands)......... 205,538 35,166 3,447(E) 244,151
======= ====== ====== =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
76
<PAGE>
AMERICAN GENERAL CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO
AMERICAN PRO FORMA FORMA
GENERAL USLIFE(B) ADJUSTMENTS(C) COMBINED
-------- --------- -------------- --------
<S> <C> <C> <C> <C>
Revenues
Premiums and other
considerations................. $ 487 $ 311 $ - $ 798
Net investment income........... 846 125 - 971
Finance charges................. 320 - - 320
Realized investment gains
(losses)....................... (7) 1 - (6)
Equity in earnings of Western
National Corporation........... 13 - - 13
Other........................... 33 13 - 46
------- ------ ----- -------
Total revenues.............. 1,692 450 - 2,142
------- ------ ----- -------
Benefits and expenses
Insurance and annuity benefits.. 785 257 - 1,042
Operating costs and expenses.... 274 73 - 347
Commissions..................... 136 74 - 210
Change in deferred policy
acquisition costs and cost of
insurance purchased............ (19) (6) - (25)
Provision for finance receivable
losses......................... 68 - - 68
Interest expense
Corporate..................... 27 9 - 36
Consumer Finance.............. 113 - - 113
------- ------ ----- -------
Total benefits and expenses. 1,384 407 - 1,791
------- ------ ----- -------
Earnings
Income before income tax
expense........................ 308 43 - 351
Income tax expense.............. 109 14 - 123
------- ------ ----- -------
Income before net dividends on
preferred securities of
subsidiaries................... 199 29 - 228
Net dividends on preferred
securities of subsidiaries..... 17 - - 17
------- ------ ----- -------
Net income.................. $ 182 $ 29 $ - $ 211
======= ====== ===== =======
Net income per share.............. $ .88 $ .82 $ .86(G)
======= ====== =======
Average common and common
equivalent shares outstanding (in
thousands)....................... 210,709 35,074 3,437(F) 249,220
======= ====== ===== =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
77
<PAGE>
AMERICAN GENERAL CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO
AMERICAN PRO FORMA FORMA
GENERAL USLIFE(B) ADJUSTMENTS(C) COMBINED
-------- --------- -------------- --------
<S> <C> <C> <C> <C>
Revenues
Premiums and other
considerations................. $ 480 $ 300 $ - $ 780
Net investment income........... 800 124 - 924
Finance charges................. 371 - - 371
Realized investment gains
(losses)....................... 27 - - 27
Equity in earnings of Western
National Corporation........... 8 - - 8
Other........................... 25 11 - 36
------- ------ ----- -------
Total revenues.............. 1,711 435 - 2,146
------- ------ ----- -------
Benefits and expenses
Insurance and annuity benefits.. 797 255 - 1,052
Operating costs and expenses.... 264 67 - 331
Commissions..................... 125 77 - 202
Change in deferred policy
acquisition costs and cost of
insurance purchased............ (16) (13) - (29)
Provision for finance receivable
losses......................... 109 - - 109
Interest expense
Corporate..................... 30 10 - 40
Consumer Finance.............. 126 - - 126
------- ------ ----- -------
Total benefits and expenses. 1,435 396 - 1,831
------- ------ ----- -------
Earnings
Income before income tax
expense........................ 276 39 - 315
Income tax expense.............. 97 13 - 110
------- ------ ----- -------
Income before net dividends on
preferred securities of
subsidiaries................... 179 26 - 205
Net dividends on preferred
securities of subsidiaries..... 10 - - 10
------- ------ ----- -------
Net income.................. $ 169 $ 26 $ - $ 195
======= ====== ===== =======
Net income per share.............. $ .81 $ .75 $ .79(G)
======= ====== =======
Average common and common
equivalent shares outstanding (in
thousands)....................... 212,653 34,919 3,422(F) 250,994
======= ====== ===== =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
78
<PAGE>
AMERICAN GENERAL CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO
AMERICAN PRO FORMA FORMA
GENERAL USLIFE(B) ADJUSTMENTS(C) COMBINED
-------- --------- -------------- --------
<S> <C> <C> <C> <C>
Revenues
Premiums and other
considerations................. $ 1,968 $1,260 $ - $ 3,228
Net investment income........... 3,271 502 - 3,773
Finance charges................. 1,450 - - 1,450
Realized investment gains
(losses)....................... 67 (5) - 62
Equity in earnings of Western
National Corporation........... 40 - - 40
Other........................... 91 49 - 140
------- ------ -------- -------
Total revenues.............. 6,887 1,806 - 8,693
------- ------ -------- -------
Benefits and expenses
Insurance and annuity benefits.. 3,156 1,073 - 4,229
Operating costs and expenses.... 1,123 283 - 1,406
Commissions..................... 540 308 - 848
Change in deferred policy
acquisition costs and cost of
insurance purchased............ (74) (13) - (87)
Provision for finance receivable
losses......................... 417 - - 417
Loss on assets held for sale.... 145 - - 145
Interest expense
Corporate..................... 123 39 - 162
Consumer Finance.............. 493 - - 493
------- ------ -------- -------
Total benefits and expenses. 5,923 1,690 - 7,613
------- ------ -------- -------
Earnings
Income before income tax
expense........................ 964 116 - 1,080
Income tax expense.............. 347 40 - 387
------- ------ -------- -------
Income before net dividends on
preferred securities of
subsidiaries................... 617 76 - 693
Net dividends on preferred
securities of subsidiaries..... 40 - - 40
------- ------ -------- -------
Net income.................. $ 577 $ 76 $ - $ 653
======= ====== ======== =======
Net income per share.............. $ 2.75 $ 2.18 $ 2.63(G)
======= ====== =======
Average common and common
equivalent shares outstanding (in
thousands)....................... 213,613 34,877 3,418(F) 251,908
======= ====== ======== =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
79
<PAGE>
AMERICAN GENERAL CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO
AMERICAN PRO FORMA FORMA
GENERAL USLIFE(B) ADJUSTMENTS(C) COMBINED
-------- --------- -------------- --------
<S> <C> <C> <C> <C>
Revenues
Premiums and other considerations............. $ 1,753 $1,210 $ - $ 2,963
Net investment income......................... 3,095 488 - 3,583
Finance charges............................... 1,492 - - 1,492
Realized investment gains (losses)............ 12 6 - 18
Equity in earnings of Western National
Corporation.................................. 43 - - 43
Other......................................... 100 36 - 136
------- ------ ----- -------
Total revenues............................ 6,495 1,740 - 8,235
------- ------ ----- -------
Benefits and expenses
Insurance and annuity benefits................ 3,047 1,042 - 4,089
Operating costs and expenses ................. 1,007 265 - 1,272
Commissions................................... 511 301 - 812
Change in deferred policy acquisition costs
and cost of insurance purchased.............. (168) (67) - (235)
Provision for finance receivable losses....... 574 - - 574
Interest expense
Corporate................................... 156 39 - 195
Consumer Finance............................ 518 - - 518
------- ------ ----- -------
Total benefits and expenses............... 5,645 1,580 - 7,225
------- ------ ----- -------
Earnings
Income before income tax expense.............. 850 160 - 1,010
Income tax expense............................ 286 55 - 341
------- ------ ----- -------
Income before net dividends on preferred
securities of subsidiaries................... 564 105 - 669
Net dividends on preferred securities of
subsidiaries................................. 19 - - 19
------- ------ ----- -------
Net income................................ $ 545 $ 105 $ - $ 650
======= ====== ===== =======
Net income per share............................ $ 2.64 $ 3.03 $ 2.66(G)
======= ====== =======
Average common and common equivalent shares
outstanding (in thousands)..................... 208,872 34,811 3,411(F) 247,094
======= ====== ===== =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
80
<PAGE>
AMERICAN GENERAL CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO
AMERICAN PRO FORMA FORMA
GENERAL USLIFE(B) ADJUSTMENTS(C) COMBINED
-------- --------- -------------- --------
<S> <C> <C> <C> <C>
Revenues
Premiums and other
considerations................. $ 1,210 $1,162 $ - $ 2,372
Net investment income........... 2,493 461 - 2,954
Finance charges................. 1,248 - - 1,248
Realized investment gains
(losses)....................... (172) (1) - (173)
Other........................... 62 29 - 91
------- ------ ----- -------
Total revenues.............. 4,841 1,651 - 6,492
------- ------ ----- -------
Benefits and expenses
Insurance and annuity benefits.. 2,224 1,005 - 3,229
Operating costs and expenses.... 801 235 - 1,036
Commissions..................... 400 274 - 674
Change in deferred policy
acquisition costs and cost of
insurance purchased............ (126) (45) - (171)
Provision for finance receivable
losses......................... 214 - - 214
Interest expense
Corporate..................... 110 35 - 145
Consumer Finance.............. 416 - - 416
------- ------ ----- -------
Total benefits and expenses. 4,039 1,504 - 5,543
------- ------ ----- -------
Earnings
Income before income tax
expense........................ 802 147 - 949
Income tax expense.............. 289 51 - 340
------- ------ ----- -------
Net income.................. $ 513 $ 96 $ - $ 609
======= ====== ===== =======
Net income per share.............. $ 2.45 $ 2.79 $ 2.46(G)
======= ====== =======
Average common and common
equivalent shares outstanding (in
thousands)....................... 209,420 34,530 3,384(F) 247,334
======= ====== ===== =======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
81
<PAGE>
AMERICAN GENERAL CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(A) The unaudited pro forma combined financial statements give effect to the
Merger of American General and USLIFE using the pooling of interests
method of accounting. The pro forma information is based on the historical
consolidated financial statements of American General and USLIFE and
should be read in conjunction with such financial statements and notes
thereto, which are incorporated herein by reference. The pro forma
combined financial statements are presented for comparative purposes only
and do not purport to be indicative of the combined financial position or
results of operations of future periods or of the combined financial
position or results of operations which would have been realized had the
Merger been consummated as of the date or during the periods for which the
pro forma information is presented. The pro forma combined balance sheet
does not give effect to the anticipated retirement of USLIFE treasury
stock prior to the Merger, to additional shares that may be issued as a
result of the exercise of USLIFE stock options, to the 6.4 million shares
of American General Common Stock repurchased by American General on April
15, 1997, under an accelerated share repurchase agreement, or to the 9.5
million shares of American General Common Stock issued for the acquisition
of Home Beneficial by American General on April 16, 1997. The pro forma
combined statements of income do not give effect to non-recurring items
directly attributable to the Merger of approximately $170 million ($167
million aftertax), including change in control costs and fees for
investment bankers, accountants, and attorneys, or to American General's
estimate of the expected annual operating expense savings from the Merger
of approximately $50 million ($33 million aftertax).
(B) Certain items in USLIFE's historical financial statements have been
reclassified to conform to American General's presentation.
(C) The accounting policies of American General and USLIFE are in the process
of being reviewed for conformity. No adjustments have been included in the
pro forma combined financial statements to conform accounting policies;
however, any such adjustments are not expected to have a material impact
on the pro forma combined financial statements.
Transactions conducted in the ordinary course of business, if any, between
American General and USLIFE are immaterial and, accordingly, have not been
eliminated.
(D) The pro forma adjustment to other liabilities, income tax liabilities, and
retained earnings reflects the balance sheet impact of non-recurring items
directly attributable to the Merger of approximately $170 million ($167
million aftertax), including change in control costs and fees for
investment bankers, accountants, and attorneys. The expected tax benefit
associated with the non-recurring items reflects the fact that certain of
the costs and fees are not deductible for tax purposes, and includes an
increase in the deferred tax asset valuation allowance resulting from
limitations on American General's ability to utilize USLIFE's tax NOL
after the Merger.
(E) The pro forma adjustment to common shares outstanding at March 31, 1997
reflects the exchange of 38,008,143 shares of American General Common
Stock for the 34,615,795 shares of USLIFE Common Stock outstanding, using
an assumed Exchange Ratio of 1.0980 per share. This Exchange Ratio is
calculated by dividing $49 by $44.625, the closing price of American
General Common Stock on May 14, 1997.
(F) The pro forma adjustments to average fully diluted shares outstanding for
the quarters ended March 31, 1997 and 1996 and the years ended December
31, 1996, 1995, and 1994 reflect the conversion of each average common
share outstanding and common share equivalent of USLIFE to 1.0980 shares
of American General Common Stock.
(G) Net income per share is computed by dividing earnings available to common
shareholders by average common shares outstanding, including common share
equivalents. Earnings available to common shareholders is computed by
increasing net income by net dividends on convertible preferred securities
of subsidiaries of $3 million in the quarters ended March 31, 1997 and
1996, $11 million in 1996, and $6 million in 1995.
82
<PAGE>
COMPARISON OF SHAREHOLDER RIGHTS
The rights of shareholders of USLIFE are currently governed by the NYBCL,
the USLIFE Charter and the USLIFE Bylaws. Upon consummation of the Merger,
USLIFE shareholders 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
NYBCL, the USLIFE Charter and the USLIFE Bylaws. The following is a summary of
certain differences between the rights of USLIFE shareholders and those of
American General shareholders.
The following summary does not purport to be a complete description of the
rights of shareholders of USLIFE 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 NYBCL and the TBCA, to the USLIFE Charter and
USLIFE Bylaws, and to the American General Articles and American General
Bylaws. 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 USLIFE consists of 120,000,000 shares of
USLIFE Common Stock and 10,800,000 shares of USLIFE Preferred Stock. As of
February 27, 1997, there were outstanding 34,540,769 shares of USLIFE Common
Stock, 4,232 shares of USLIFE Series A Preferred Stock and 1,668 shares of
USLIFE Series B Preferred Stock. In connection with the Merger, on April 9,
1997 USLIFE called for redemption all outstanding shares of USLIFE Series A
Preferred Stock and USLIFE Series B Preferred Stock and deposited with Chase
Manhattan Bank, an amount sufficient to pay the redemption price together with
dividends accrued to the date of redemption. Accordingly, in accordance with
the USLIFE Charter and the NYBCL, as of April 9, 1997, no shares of USLIFE
Preferred Stock were deemed to be outstanding. 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, 1996, there were outstanding 203,090,677 shares of American
General Common Stock and 2,317,701 shares of American General 7% Preferred
Stock.
VOTING RIGHTS
Holders of USLIFE Common Stock are entitled to one vote per share on all
matters upon which shareholders are entitled to vote.
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.
Holders of American General 7% 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% Preferred Stock. In addition, if full cumulative
dividends on the American General 7% Preferred Stock are not paid for six
quarterly dividend periods, the number of directors of American General
constituting the entire American General Board shall be increased by two
persons and the holders of shares of American General 7% 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% 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% 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% 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.
83
<PAGE>
USLIFE COMMON SHARE PURCHASE RIGHTS
On July 10, 1986, the USLIFE Board authorized the issuance of one common
share purchase right (a "Right") for each share of USLIFE Common Stock
outstanding on that date and for each share of USLIFE Common Stock issued
thereafter but prior to the Expiration Date (as defined below). A Right is
attached to each share of USLIFE Common Stock and entitles the registered
holder to purchase from USLIFE one half of a share of its Common Stock, at a
price of $107 per each half share, subject to certain adjustments.
If the Merger is consummated, the Rights will expire immediately prior to
the Effective Time. Otherwise, the Rights will expire on the earlier of July
10, 2006 (or, if the Separation Date, as defined below, occurs subsequent to
July 10, 2003 but prior to July 10, 2006, the third anniversary of the
Separation Date) and the Redemption Date (as defined below) (any such date
being the "Expiration Date"). The Rights are not exercisable or transferable
separately from the shares of USLIFE Common Stock until the "Separation Date,"
which will occur on the tenth day after the earlier of (i) the first date of
public announcement that a person or group of affiliated or associated persons
(the "Acquiring Person") has acquired beneficial ownership of 20% or more of
the outstanding USLIFE Common Stock and any other shares of capital stock of
USLIFE entitled to vote generally in the election of directors (the "Voting
Stock") or (ii) the commencement of, or the first public announcement of an
intention to commence, a tender or exchange offer to acquire beneficial
ownership by a person or group of affiliated or associated persons of 20% or
more of the outstanding USLIFE Common Stock. In connection with the Merger,
USLIFE has amended the USLIFE Rights Agreement. See "THE PROPOSED MERGER--The
Merger Agreement--Conduct of Business Pending the Merger."
In the event USLIFE is acquired in a merger or other business combination
transaction, or 50% or more of its 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 an aggregate market price equal to twice the
exercise price of the Right. In the event the Separation Date occurs, each
holder of a Right will thereafter have the right to purchase upon exercise
thereof that number of shares of USLIFE Common Stock having a market price
equal to twice the exercise price of the Rights.
At any time prior to the close of business on the tenth day after the "Stock
Acquisition Date" (defined as the date of the first public announcement that a
person or group of affiliated or associated persons has become an Acquiring
Person), the USLIFE Board may redeem all, but not less than all, outstanding
Rights at a "Redemption Price" (defined as the result of dividing the price at
which a holder may purchase the USLIFE Common Stock issuable upon exercise of
one whole Right by 1,500); provided, however, that after the Stock Acquisition
Date such election must be approved by disinterested directors of USLIFE. In
connection with certain mergers, consolidations and sales of all or
substantially all assets, the Board of Directors of USLIFE may elect to redeem
the Rights at the Redemption Price at any time within two years after the
Stock Acquisition Date.
The purchase price payable, the number of Rights outstanding and the number
of shares of USLIFE Common Stock or other securities or property issuable upon
exercise of the Rights, are subject to adjustment from time to time in the
event of certain distributions to USLIFE shareholders, mergers, consolidations
or reorganizations, or a stock dividend on, or a subdivision, combination or
reclassification of, the USLIFE Common Stock.
The terms of the Rights may be amended, including extending the expiration
date, by the USLIFE Board without the approval 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 USLIFE on
terms not approved by the USLIFE Board. The Rights should not interfere with
any merger or other business combination approved by the USLIFE Board since
the Rights may be redeemed by USLIFE at the Redemption Price. See also
"Incorporation of Certain Documents by Reference" and "Available Information."
84
<PAGE>
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 American General 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 American General 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.
85
<PAGE>
The number of outstanding Rights and the number of one one-hundredth 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 rights
under the shareholders rights plan 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 a specified price prior to the
time that a person or group has acquired beneficial ownership of 50% or more
of the Voting Stock. See also "Incorporation of Certain Documents by
Reference" and "Available Information."
USLIFE shareholders will receive the associated American General Preferred
Share Purchase Rights with the shares of American General Common Stock they
receive in the Merger.
AMENDMENTS TO CHARTER AND BYLAWS
Under Section 801 of the NYBCL, a New York corporation can amend its
certificate of incorporation in any respect provided that the amendment
contains only provisions which are then lawful in an original certificate of
incorporation. Under Section 803 of the NYBCL, an amendment may be authorized
by a majority vote of the shares entitled to vote; however, Section 804 of the
NYBCL provides that, notwithstanding any provision in the certificate of
incorporation, and, in addition to the authorization by vote of the holders of
a majority of all outstanding shares entitled to vote thereon, the amendment
must also be authorized by a vote of the holders of a majority of all
outstanding shares of a class or series when the proposed amendment would,
among other things, (i) exclude or limit such holders' right to vote on any
matter; (ii) change such holders' shares by (a) reducing the par value, (b)
changing such shares into a different number of shares in the same class or
the same or different number of shares in a different class, (c) fixing,
changing or abolishing the designation or any relative rights, preferences or
limitations of such holders' shares, or (d) providing that such holders'
shares may be converted into shares of another class or series or altering the
terms or conditions upon which such shares are convertible, if such provisions
would adversely affect such holders; or (iii) subordinate such holders' rights
by authorizing shares having preferences superior, in any respect, to such
holders' rights. Section 804 further provides that if any proposed amendment
would adversely affect or subordinate the rights of the holders of shares of
one or more series of any class, but not the entire class, then only the
holders of each series whose rights would be adversely affected or
subordinated shall be considered a separate class for purposes of voting on
such amendment. Under the USLIFE Certificate of Incorporation, the vote of the
holders of at least 80% of the outstanding shares of USLIFE capital stock
regularly entitled to vote in the election of directors, (i.e., Common Stock
only following the redemption of the Series A and Series B Preferred Stock) is
required to amend, alter or repeal Article Seventh of the USLIFE Certificate
of Incorporation, which sets forth the voting requirements in connection with
a merger.
Under Section 601(a) of the NYBCL and the USLIFE Bylaws, the USLIFE Bylaws
may be adopted, amended or repealed by the shareholders entitled to vote in
the election of directors and by the board of directors.
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Under the USLIFE Bylaws, bylaws made by the USLIFE Board may be amended or
repealed by the shareholders entitled to vote thereon, provided that Section 3
of Article II and Section 3 of Article V of the USLIFE Bylaws, which relate to
the election and term of directors and amendments to the USLIFE Bylaws
respectively, may not be altered, amended or repealed by the vote of holders
of less than 80% of the outstanding shares of USLIFE Common Stock.
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 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
Holders of USLIFE Common Stock are not entitled to any preferential or
preemptive rights to subscribe for or purchase any shares of any class, or any
options or warrants for shares, or any rights to subscribe to or purchase
shares, or any securities convertible or exchangeable into shares, which may
be issued, sold or offered for sale by USLIFE. Holders of USLIFE Common Stock
are not entitled to cumulative voting in election of directors.
The shareholders of American General do not have any preemptive rights to
acquire unissued shares of its capital stock. The shareholders of American
General do not have any rights to cumulate votes with respect to the election
of directors.
BOARDS OF DIRECTORS
The USLIFE Board currently consists of 17 members, which is subject to
change by action of the USLIFE Board provided that, pursuant to the USLIFE
Bylaws, the USLIFE Board shall consist of a minimum of three and a maximum of
seventeen members. The USLIFE Board is divided into three classes of members
that are as nearly equal in number as possible, with members serving staggered
three-year terms.
The American General Board consists of eleven 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 American General are elected at each annual meeting of shareholders for
terms expiring at the succeeding annual meeting. American General does not
have a classified board of directors.
REMOVAL OF DIRECTORS
Under Section 706 of the NYBCL, shareholders may remove any or all directors
for cause by a vote of the shareholders and, if the certificate of
incorporation or bylaws so provide, without cause, provided, however, that (i)
if the corporation has cumulative voting no director may be removed when the
votes cast against removal would be sufficient to elect such director if voted
cumulatively and (ii) when the certificate of incorporation provides that a
class or series, voting as a class, is entitled to elect one or more
directors, any director so elected may be removed only by the applicable vote
of that class or series, voting as a class. In addition, if provided for
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in the certificate of incorporation, or by specific provisions of the bylaws
adopted by the shareholders, the board of directors may remove any director
for cause, except in the case of any director elected by the cumulative voting
or by any class or series, voting as a class, when so entitled by the
certificate of incorporation. The USLIFE Bylaws provide that one or more of
the directors may be removed for cause by action of the USLIFE Board or by
vote of the shareholders.
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 Section 705 of the NYBCL, newly created directorships resulting from
an increase in the number of directors and vacancies occurring for any reason,
other than the removal of a director without cause, may be filled by vote of
the board of directors. The USLIFE Bylaws provide that newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the USLIFE Board for any reason except the removal of
directors by shareholders shall be filled by a majority of the remaining
directors, though less than a quorum. A director elected to fill a vacancy
shall be elected to hold office for the unexpired term of the preceding
director.
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
Under the USLIFE Bylaws, nominations of persons for election as directors of
USLIFE may be made by any USLIFE shareholder entitled to vote for the election
of directors at the meeting who delivers to the Corporate Secretary of USLIFE
written notice of such nomination at least sixty but not more than ninety days
prior to the date of the annual meeting of shareholders or any other meeting
at which directors are to be elected. Such notice of nomination must contain
certain specified information with respect to 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,
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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.
SPECIAL MEETINGS OF SHAREHOLDERS
Under Section 602 of the NYBCL, special meetings of shareholders may be
called by the board of directors and by such other person or persons
authorized to do so by the corporation's certificate of incorporation or
bylaws. Under the USLIFE Bylaws, special meetings of shareholders may be
called by the USLIFE Board or, subject to control by the USLIFE Board, by the
Chairman of the Board.
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
Under Section 615 of the NYBCL, any action required to be taken at a
shareholder meeting may be taken by unanimous written consent, unless the
certificate of incorporation provides for less than unanimous written consent.
The USLIFE Certificate of Incorporation does not contain such a provision.
Under the USLIFE Bylaws, the unanimous written consent of all shareholders
entitled to vote is required in order to approve any action without a meeting.
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
Section 903 of the NYBCL provides that a plan of merger between two or more
New York corporations must be adopted by at least two-thirds of all
outstanding shares entitled to vote thereon and, in certain circumstances, by
a majority of the holders of all outstanding shares of each class or series.
Where the merger is between one or more New York corporations and one or more
foreign corporations and the surviving corporation is to be a foreign
corporation, the foregoing two-thirds vote (and the majority class or series
vote, if applicable) is required for the domestic corporation but the foreign
corporation should comply with the applicable provisions of the jurisdiction
in which it is incorporated. Article Seventh of the USLIFE Certificate of
Incorporation increases the vote required to approve a merger with a party
owning, directly or indirectly, 10% or more of the outstanding shares of
capital stock of USLIFE entitled to vote on such transaction (a "Related
Person"), to at least 80% of the outstanding shares of such capital stock
unless the merger has been approved by the USLIFE Board prior to such party's
becoming a Related Person. Because the USLIFE Board has approved the Merger
Agreement and the transactions contemplated thereby, the supermajority voting
required in the USLIFE Certificate of Incorporation is not applicable to the
Merger.
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
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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
Under Section 909 of the NYBCL, the vote of the holders of at least two-
thirds of the shares entitled to vote is required to approve the sale, lease,
exchange or other disposition of all or substantially all of the corporation's
assets if other than in the usual and regular course of business. Article
Seventh of the USLIFE Certificate of Incorporation increases the vote required
to approve the sale, lease, exchange or other disposition of all or
substantially all of the assets of USLIFE in a transaction with a Related
Person to at least 80% of the outstanding shares of Common Stock unless the
transaction has been approved by the USLIFE Board prior to such party's
becoming a Related Person.
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 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 transaction. The American General Articles do not contain any
provisions relating to shareholder approval of such dispositions.
ANTI-TAKEOVER STATUTES
Certain provisions of the NYBCL may have the effect of delaying, making more
difficult or preventing a change in control or acquisition of USLIFE by means
of a tender offer, a proxy contest or otherwise. These provisions are expected
to discourage certain types of coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of USLIFE
first to negotiate with USLIFE.
Requirements Relating to Certain Business Combinations
USLIFE is subject to Section 912 of the NYBCL ("Section 912"). Section 912
generally prohibits a publicly held New York corporation ("Resident
Corporation") from engaging in a "business combination" with an "interested
shareholder" for a period of five years after the date of the transaction in
which the person became an interested shareholder, unless (i) the board of
directors of the Resident Corporation approved the business combination prior
to the transaction in which the person became an interested shareholder or
(ii) the board of directors of the Resident Corporation approved in advance
the transaction in which the person became an interested shareholder. A
Resident Corporation may engage in a business combination with an interested
shareholder beginning five years after the date of the transaction in which
the person became an interested shareholder if the business combination is
approved by the affirmative vote of a majority of the disinterested
shareholders or if the business combination complies with certain statutory
fair price provisions.
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Subject to certain exceptions, under the NYBCL an "interested shareholder"
is a person who, together with affiliates and associates, beneficially owns
20% or more of the Resident Corporation's outstanding voting securities.
"Business combination" includes: (i) any merger or share exchange with an
interested shareholder; (ii) the transfer to any interested shareholder of
corporate assets with a fair market value greater than 10% of the Resident
Corporation's consolidated net worth; (iii) the issuance to any interested
shareholder of voting shares with a fair market value greater than 5% of the
fair market value of all outstanding voting shares of the Resident
Corporation; (iv) any reclassification of securities or corporate
reorganization that will have the effect of increasing the percentage of the
Resident Corporation's outstanding voting shares held by any interested
shareholder, except as a result of immaterial changes due to fractional share
adjustments; and (v) any plan or proposal for dissolution of the corporation
proposed by or on behalf of any interested shareholder.
Because the USLIFE Board has approved the Merger Agreement and the
transactions contemplated thereby, the provisions of Section 912 are not
applicable to the Merger.
The TBCA has no anti-takeover provisions similar to the New York statutes
described above.
SUPERMAJORITY VOTING PROVISIONS
For a discussion of supermajority voting requirements under the USLIFE
Certificate of Incorporation, see "--Vote Required for Mergers" and "--Vote
Required for Sales of Assets." Because the USLIFE Board has approved the
Merger Agreement and the transactions contemplated thereby, the supermajority
voting required in the USLIFE Certificate of Incorporation is not applicable
to the Merger.
The American General Bylaws and the American General Articles do not contain
any supermajority voting requirements.
DISSENTERS' RIGHTS
Under the NYBCL, a shareholder of a New York corporation who complies with
the statutory procedures is entitled to receive payment of the fair value for
such shareholder's shares provided the shareholder does not consent to the
merger or consolidation, sale, lease, share exchange, or exchange or
disposition of all or substantially all of the assets of the corporation;
however, no such appraisal rights are available where the corporation is to be
the surviving corporation in a merger of a parent with a 90% owned subsidiary
(except under certain circumstances) or in a merger in which certain rights of
shares remain unaffected. There are also no appraisal rights available where a
disposition of all or substantially all of the assets of the corporation is
wholly for cash and approval of the transaction is conditioned upon the
dissolution of the corporation and distribution of substantially all of its
net assets to shareholders within one year from the date of the transaction or
where the transaction is a share exchange and the petitioning shareholder's
shares were not acquired in the exchange.
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.
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LIMITATION ON DIRECTOR'S LIABILITY
Under Section 402 of the NYBCL, a corporation may limit or eliminate the
personal liability of directors to the corporation and its shareholders for
damages for breach of duty in such capacity. This limitation on liability is
not available for acts or omissions by a director which (i) were in bad faith,
(ii) involved intentional misconduct or a knowing violation of law, (iii)
involved financial profit or other advantage to which the director was not
entitled or (iv) resulted in a violation of a statute prohibiting certain
dividend declarations, certain payments to shareholders after dissolution and
particular types of loans. The USLIFE Certificate of Incorporation provides
that no USLIFE director shall be personally liable to USLIFE or its
shareholders except to the extent elimination or limitation of liability is
expressly prohibited by the NYBCL, as now or hereafter in effect.
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
Under Sections 722 and 723 of the NYBCL, a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another entity, provided that such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the corporation. The USLIFE
Bylaws require indemnification to the fullest extent permitted by the NYBCL,
as now or hereafter in effect.
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.
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DIVIDENDS
Under Section 510 of the NYBCL, a corporation may declare and pay dividends
or make other distributions in cash, bonds or property unless the corporation
is insolvent or would be made insolvent by the payment of such dividend or
distribution. Dividends may only be paid out of surplus. Holders of USLIFE
Common Stock are entitled to receive ratably such dividends when, if, and as
may be declared by the USLIFE Board out of funds legally available therefor.
In the event of any liquidation, dissolution or winding-up of USLIFE, the
holders of USLIFE Common Stock will be entitled to share pro rata in the net
assets of USLIFE remaining, if any, after payment or provision for payment in
respect of the debts and other liabilities of USLIFE.
Under the TBCA and subject to any restrictions in a corporation's articles
of incorporation, the board of directors of a corporation may authorize and
the corporation may make distributions; provided, that a distribution may not
be made if (i) after giving effect to the distribution, the corporation would
be insolvent or (ii) the distribution exceeds the surplus of the corporation.
Notwithstanding the limitations on distributions set forth in clauses (i) and
(ii) above, a corporation may make a distribution involving a purchase or
redemption of any of its own shares if the purchase or redemption is made by
the corporation to: (i) eliminate fractional shares, (ii) collect or
compromise indebtedness owed by or to the corporation, (iii) pay dissenting
shareholders entitled to payment for their shares under the TBCA or (iv)
effect the purchase or redemption of redeemable shares in accordance with the
TBCA.
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.
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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 or the American General 7%
Preferred 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 and the American General 7% Preferred Stock as
of December 31, 1996.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNED CLASS
- ------------------------------------ ------------------ ------------ -------
<S> <C> <C> <C>
INVESCO PLC
11 Devonshire Square
London EC2M 4YR
England............................ Common Stock 14,961,901(1) 7.4%
The Capital Group Companies, Inc.
333 South Hope Street
Los Angeles, CA 90071.............. Common Stock 13,958,210(2) 6.9%
Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109........ Common Stock 13,062,886(3) 6.4%
Fayez Sarofim & Co. ("Sarofim Co.")
and
Fayez S. Sarofim
Two Houston Center
Suite 2907
Houston, Texas..................... Common Stock 13,010,479(4) 6.4%
* * *
The Lucy B. Gooding
1995 Living Trust
2970 St. Johns Avenue
Jacksonville, FL................... 7% Preferred Stock 753,422(5) 32.5%
The Bryan Trust
One Independent Drive
Jacksonville, FL................... 7% Preferred Stock 479,236(6) 20.7%
The Olive Julia Gibson
Bryan Testamentary Trust
One Independent Drive
Jacksonville, FL................... 7% Preferred Stock 186,506(6) 8.1%
</TABLE>
- --------
(1) Based on a Schedule 13G dated February 10, 1997. 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 12, 1997. The Capital Group
Companies, Inc. reports sole voting power with respect to 59,350 of such
Shares and sole dispositive power with respect to 13,958,210 of such
shares and disclaims beneficial ownership with respect to 13,958,210 of
such shares.
(3) Based on a Schedule 13G dated January 27, 1997. Putnam Investments, Inc.
reports shared voting power with respect to 113,108 of the shares reported
in the table.
(4) Based on a Schedule 13G dated February 14, 1996. 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
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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 11,234,551 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 13,100 shares owned by family members of Mr. Sarofim, but as
to which Mr. Sarofim and Sarofim Co. disclaim beneficial ownership.
(5) Lucy B. Gooding, Jack E. Brooks, and Bonnie H. Smith are trustees of The
Lucy B. Gooding 1995 Living Trust.
(6) Jacob F. Bryan IV, G. Howard Bryan, and Julia Olive Craig Brooke are
beneficiaries and/or trustees of The Bryan Trust and The Olive Julia
Gibson Bryan Testamentary Trust. Such trusts are managed by a subsidiary
of The Capital Group Companies, Inc., and the shares held by such trusts
are included in the calculation of beneficial ownership of American
General Common Stock by The Capital Group Companies, Inc. In addition to
the shares reported in the table, G. Howard Bryan has direct beneficial
ownership of 8,033 shares of the American General 7% Preferred Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF USLIFE COMMON STOCK
USLIFE does not know of any person that owns more than five percent of the
USLIFE Common Stock, except for those listed below. The percentage ownership
has been calculated based on the number of issued and outstanding shares of
USLIFE Common Stock as of December 31, 1996.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY PERCENT
NAME AND ADDRESS OF 5% SHAREHOLDER OWNED OF CLASS
---------------------------------- ------------------- --------
<S> <C> <C>
Sanford C. Bernstein & Co., Inc................... 3,128,883 shares (1) 9.05%
One State Street Plaza
New York, NY 10004-1545
</TABLE>
- --------
(1) Based on a Schedule 13G filed January 30, 1997. Sanford C. Bernstein &
Co., Inc. has sole voting power with respect to 1,456,059 of these shares
and its clients have appointed an independent voting agent with
instructions to vote 494,421 of these shares in the same manner as Sanford
C. Bernstein & Co., Inc. Sanford C. Bernstein & Co., Inc. exercises sole
investment power with respect to all 3,128,883 shares.
LEGAL MATTERS
The legality of the American General Common Stock to be issued in the Merger
will be passed upon for American General by Susan A. Jacobs, Associate General
Counsel of American General. Debevoise & Plimpton, special counsel to USLIFE,
and Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to American
General, will each render opinions with respect to certain federal income tax
consequences of the Merger. See "THE PROPOSED MERGER--Certain Federal Income
Tax Consequences of the Merger."
EXPERTS
The consolidated financial statements of USLIFE Corporation at December 31,
1996 and 1995, and for each of the three years in the period ended December
31, 1996, incorporated by reference in the Joint Proxy Statement of American
General and USLIFE, which is referred to and made a part of this Prospectus
and Registration Statement, have been audited by KPMG Peat Marwick LLP,
independent auditors, as set forth in their report incorporated by reference
herein, and are incorporated by reference herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
Their report refers to a change in accounting in 1994 to adopt the provisions
of SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities."
95
<PAGE>
The consolidated financial statements and schedules of American General and
its subsidiaries at December 31, 1996, 1995, and 1994, and for each of the
three years in the period ended December 31, 1996, incorporated by reference
in the Joint Proxy Statement of American General and USLIFE, which is referred
to and made a part of this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports incorporated by reference herein, and are incorporated by reference
herein in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
FUTURE SHAREHOLDER PROPOSALS
USLIFE expects to hold an annual meeting of shareholders during the second
half of 1997 unless the Merger is completed prior thereto. Rules of the
Commission set forth standards as to what shareholder proposals are required
to be included in a proxy statement. Any USLIFE shareholder who intends to
submit a proposal for inclusion in the proxy materials for the 1997 annual
meeting of USLIFE must submit such proposal to the Secretary of USLIFE a
reasonable time before USLIFE mails such proxy materials. A copy of the USLIFE
Bylaws may be obtained from the Corporate Secretary of USLIFE.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the management, executive compensation,
various benefit plans (including stock plans), voting securities and the
principal holders thereof, certain relationships and related transactions and
other related matters as to American General and USLIFE may be set forth, in
the case of American General, in the American General 10-K, and in the case of
USLIFE, in the USLIFE 10-K, which are incorporated by reference in this Joint
Proxy Statement/Prospectus. All documents filed by American General pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the date of the final adjournment of the American General Special
Meeting shall be deemed to be incorporated herein by reference, and to be a
part hereof from the date of filing of such documents. All documents filed by
USLIFE pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date hereof and prior to the date of the final adjournment of the USLIFE
Special Meeting shall be deemed to be incorporated herein by reference, and to
be a part hereof from the date of filing of such documents. See "Incorporation
of Certain Documents by Reference." Any person, including any beneficial owner
to whom this Joint Proxy Statement/Prospectus is delivered, who wishes to
obtain copies of these documents may contact American General or USLIFE, as
applicable, at its address and telephone number set forth under "Incorporation
of Certain Documents by Reference."
96
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN GENERAL CORPORATION,
TEXAS STARS CORPORATION
AND
USLIFE CORPORATION
DATED AS OF FEBRUARY 12, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
The Merger
<TABLE>
<C> <S> <C>
Section 1.1 The Merger................................................. A-1
Section 1.2 Closing.................................................... A-1
Section 1.3 Effective Time of the Merger............................... A-1
Section 1.4 Directors and Officers of the Surviving Corporation........ A-2
ARTICLE II
Shareholder Approval
Section 2.1 Shareholder Meetings....................................... A-2
Section 2.2 Proxy Statement/Prospectus; Registration Statement......... A-2
Section 2.3 No False or Misleading Statements.......................... A-3
</TABLE>
ARTICLE III
Conversion and Exchange of Securities
<TABLE>
<C> <S> <C>
Section 3.1 Conversion of Shares..................................... A-3
Section 3.2 Fractional Interests..................................... A-4
Section 3.3 Dissenting Shares........................................ A-4
Section 3.4 Exchange of Certificates................................. A-4
Section 3.5 No Liability............................................. A-5
ARTICLE IV
Represenations and Warranties of American General
Corporation and Merger Sub
Section 4.1 Organization............................................. A-6
Section 4.2 Capitalization........................................... A-6
Section 4.3 Merger Sub and American General Corporation Subsidiaries. A-7
Section 4.4 Authority Relative to this Agreement..................... A-7
Section 4.5 Consents and Approvals; No Violations.................... A-8
Section 4.6 American General Corporation SEC Reports................. A-8
Section 4.7 Statutory Financial Statements........................... A-9
Section 4.8 Absence of Certain Changes............................... A-9
Section 4.9 Litigation............................................... A-10
Section 4.10 Absence of Undisclosed Liabilities....................... A-10
Section 4.11 No Default............................................... A-10
Section 4.12 Taxes.................................................... A-10
Section 4.13 Title to Property........................................ A-11
Section 4.14 Insurance Practices; Permit and Insurance Licenses....... A-12
Section 4.15 Regulatory Filings....................................... A-12
Section 4.16 Investments.............................................. A-12
Section 4.17 Reserves................................................. A-13
Section 4.18 Ownership of Company Common Stock........................ A-13
Information in Proxy Statement/Prospectus and
Section 4.19 Registration Statement................................... A-13
Section 4.20 Brokers.................................................. A-13
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
Section 4.21 Employee Benefit Plans; ERISA............................ A-13
Section 4.22 Labor Relations; Employees............................... A-15
Section 4.23 Environmental Matters.................................... A-15
Section 4.24 Related Party Transactions............................... A-15
Section 4.25 Opinion of Financial Advisor............................. A-16
Section 4.26 Derivatives.............................................. A-16
Section 4.27 Contracts................................................ A-16
Section 4.28 Intellectual Property.................................... A-17
Section 4.29 Investment Advisor; Investment Company................... A-17
Section 4.30 Disclosure............................................... A-17
Section 4.31 Investigation by American General Corporation............ A-17
Section 4.32 Pooling of Interests..................................... A-17
ARTICLE V
Representations and Warranties of the Company
Section 5.1 Organization............................................. A-18
Section 5.2 Capitalization........................................... A-18
Section 5.3 Company Subsidiaries..................................... A-18
Section 5.4 Authority Relative to this Agreement..................... A-19
Section 5.5 Consents and Approvals: No Violations.................... A-19
Section 5.6 Company SEC Reports...................................... A-20
Section 5.7 Statutory Financial Statements........................... A-20
Section 5.8 Absence of Certain Changes............................... A-21
Section 5.9 Litigation............................................... A-21
Section 5.10 Absence of Undisclosed Liabilities; Actuarial Appraisal.. A-21
Section 5.11 No Default............................................... A-21
Section 5.12 Taxes.................................................... A-21
Section 5.13 Title to Property........................................ A-22
Section 5.14 Insurance Practices; Permits and Insurance Licenses...... A-22
Section 5.15 Regulatory Filings....................................... A-23
Section 5.16 Investments.............................................. A-23
Section 5.17 Reserves................................................. A-23
Section 5.18 Repurchases of Company Common Stock...................... A-23
Information in Proxy Statement/Prospectus and
Section 5.19 Registration Statement................................... A-24
Section 5.20 Brokers.................................................. A-24
Section 5.21 Employee Benefit Plans; ERISA............................ A-24
Section 5.22 Labor Relations; Employees............................... A-25
Section 5.23 Environmental Matters.................................... A-26
Section 5.24 Related Party Transactions............................... A-26
Section 5.25 Opinion of Financial Advisor............................. A-26
Section 5.26 Derivatives.............................................. A-26
Section 5.27 Contracts................................................ A-26
Section 5.28 Intellectual Property.................................... A-27
Section 5.29 Investment Advisor; Investment Company................... A-27
Section 5.30 Disclosure............................................... A-27
Section 5.31 Investigation by the Company............................. A-27
Section 5.32 Pooling of Interests..................................... A-28
</TABLE>
ii
<PAGE>
ARTICLE VI
Conduct of Business Pending the Merger
<TABLE>
<C> <S> <C>
Section 6.1 Conduct of Business by the Company Pending the Merger..... A-28
Conduct of Business by American General Corporation
Section 6.2 Pending the Merger........................................ A-29
Section 6.3 Amendment to Rights Plan.................................. A-31
Section 6.4 Redemption of Company Preferred Stock..................... A-31
ARTICLE VII
Additional Agreements
Section 7.1 Access and Information.................................... A-32
Section 7.2 Acquisition Proposals..................................... A-32
Section 7.3 Fiduciary Duties.......................................... A-33
Section 7.4 Filings; Other Action..................................... A-33
Section 7.5 Public Announcements...................................... A-33
Section 7.6 Employee Benefits......................................... A-34
Section 7.7 Stock Exchange Listing.................................... A-34
Section 7.8 Surviving Corporation Directors........................... A-34
Section 7.9 Employee Stock Options.................................... A-34
Section 7.10 Company Indemnification Provision......................... A-34
Section 7.11 Comfort Letters........................................... A-34
Section 7.12 Tax Matters; Pooling of Interests......................... A-35
Section 7.13 Intercompany Dividends.................................... A-35
Section 7.14 Affiliates................................................ A-35
Section 7.15 Additional Matters........................................ A-35
</TABLE>
ARTICLE VIII
Conditions to Consummation of the Merger
<TABLE>
<C> <S> <C>
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. A-36
Conditions to Obligation of the Company to Effect the
Section 8.2 Merger..................................................... A-36
Section 8.3 Conditions to Obligations of American General Corporation
and Merger Sub to
Effect the Merger......................................... A-37
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 Termination by Mutual Consent.............................. A-38
Termination by Either American General Corporation or the
Section 9.2 Company.................................................... A-38
Section 9.3 Termination by American General Corporation................ A-38
Section 9.4 Termination by the Company................................. A-38
Section 9.5 Effect of Termination and Abandonment...................... A-38
</TABLE>
iii
<PAGE>
ARTICLE X
General Provisions
<TABLE>
<C> <S> <C>
Survival of Representations, Warranties and
Section 10.1 Agreements.......................................... A-39
Section 10.2 Notices............................................. A-39
Section 10.3 Descriptive Headings................................ A-40
Section 10.4 Entire Agreement; Assignment........................ A-40
Section 10.5 Governing Law....................................... A-40
Section 10.6 Expenses............................................ A-40
Section 10.7 Amendment........................................... A-41
Section 10.8 Waiver.............................................. A-41
Section 10.9 Counterparts; Effectiveness......................... A-41
Section 10.10 Severability; Validity; Parties in Interest......... A-41
Section 10.11 Enforcement of Agreement............................ A-41
Section 10.12 Definition of "knowledge" of the Company and of
American General Corporation....................... A-41
EXHIBIT A CHARTER OF MERGER SUB [NOT INCLUDED]................ A-A-1
EXHIBIT B BYLAWS OF MERGER SUB [NOT INCLUDED]................. A-B-1
EXHIBIT C-1 FORM OF COMPANY AFFILIATE AGREEMENT [NOT INCLUDED].. A-C-1-1
EXHIBIT C-2 FORM OF AMERICAN GENERAL CORPORATION AFFILIATE
AGREEMENT [NOT INCLUDED]........................... A-C-2-1
EXHIBIT D EMPLOYEE BENEFITS MATTERS........................... A-D-1
</TABLE>
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 12, 1997, by and among
AMERICAN GENERAL CORPORATION, a Texas corporation ("American General
Corporation"), TEXAS STARS CORPORATION, a New York corporation and a wholly-
owned subsidiary of American General Corporation ("Merger Sub"), and USLIFE
CORPORATION, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of American General Corporation,
Merger Sub and the Company have approved the merger of Merger Sub with and
into the Company upon the terms and subject to the conditions set forth herein
(the "Merger"); and
WHEREAS, American General Corporation, Merger Sub and the Company intend
that the Merger qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and
qualify for pooling-of-interest accounting treatment.
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 1.3 hereof), Merger Sub shall be
merged with and into the Company in accordance with the applicable provisions
of the New York Business Corporation Law (the "NYBCL") and the separate
corporate existence of Merger Sub shall thereupon cease, and the Company shall
be the surviving corporation in the Merger (the "Surviving Corporation") and
all the properties, rights, privileges, immunities, powers and purposes of the
Company and of Merger Sub shall vest in the Surviving Corporation, and all
liabilities, obligations and penalties of Merger Sub and the Company shall
become the liabilities, obligations and penalties of the Surviving
Corporation, and the Merger shall have the other effects set forth in the
NYBCL. Pursuant to the Merger, (a) the Certificate of Incorporation of Merger
Sub as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended as provided by law and such Certificate of Incorporation and (b) the
Bylaws of Merger Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation, until thereafter amended as
provided by law, such Bylaws and the Certificate of Incorporation of the
Surviving Corporation.
Section 1.2 Closing. The Company shall as promptly as practicable notify
American General Corporation, and American General Corporation and Merger 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 LLP, 919 Third
Avenue, New York, New York, at 10:00 a.m., New York 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 April 30, 1997, or as soon as practicable
thereafter.
Section 1.3 Effective Time of the Merger. The Merger shall become effective
when an appropriate Certificate of Merger is executed, verified and delivered
to the Department of State of the State of New York as provided by the NYBCL,
or at such later time as the parties hereto shall have designated in such
Certificate of Merger 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.
<PAGE>
Section 1.4 Directors and Officers of the Surviving Corporation. Prior to
the Effective Time, American General Corporation and the Company shall
mutually agree on the composition of the Board of Directors and the officers
of the Surviving Corporation. 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 Certificate of Incorporation and
Bylaws of the Surviving Corporation.
ARTICLE II
Shareholder Approval
Section 2.1 Shareholder Meetings. In order to consummate the Merger, (i) the
Company, acting through its Board of Directors and subject to Section 7.3,
shall, in accordance with applicable law, its Certificate of Incorporation and
its By-Laws, duly call, give notice of, convene and hold a special meeting of
its shareholders (the "Company Special Meeting"), and (ii) American General
Corporation, 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 "American General Corporation Special Meeting" and,
together with the Company Special Meeting, the "Special Meetings"), in each
case as soon as practicable after the Registration Statement (as hereinafter
defined) is declared effective (the date on which such Company Special Meeting
is held, the "Company Meeting Date", and the date on which such American
General Corporation Special Meeting is held, the "American General Corporation
Meeting Date"), for the purpose of (A) in the case of the Company Special
Meeting, voting upon the adoption of this Agreement and (B) in the case of the
American General Corporation Special Meeting, authorizing the issuance of the
Shares (as hereinafter defined) as Merger Consideration (as hereinafter
defined). Each of the Company (subject to Section 7.3) and American General
Corporation shall include in the Proxy Statement/Prospectus (as hereinafter
defined) the recommendation of its respective Board of Directors that its
respective shareholders vote (i) in the case of the Company, in favor of the
approval of the Merger and the adoption of this Agreement, and (ii) in the
case of American General Corporation, in favor of the issuance of the Shares
as Merger Consideration.
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 and American General Corporation's
shareholders, the Company and American General Corporation shall as promptly
as practicable prepare and file with the Securities and Exchange Commission
(the "SEC") a preliminary joint proxy statement relating to the Merger and
this Agreement and use reasonable best efforts to obtain and furnish the
information required to be included by the SEC in the Proxy
Statement/Prospectus (as hereinafter defined). The Company and American
General Corporation 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 their respective
shareholders at the earliest practicable date. Such definitive proxy statement
shall also constitute a prospectus of American General Corporation with
respect to the American General Corporation Common 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 the American General
Corporation Common Stock under the Securities Act of 1933, as amended (the
"Securities Act"). American General Corporation shall as promptly as
practicable prepare and file with the SEC the Registration Statement. American
General Corporation, 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 reasonable best efforts to have the
Registration Statement declared effective by the SEC. American General
Corporation shall also take any action required to be taken under applicable
state securities laws in connection with the issuance of American General
Corporation Common Stock in the Merger, and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock (as
hereinafter defined) as may be reasonably requested by American General
Corporation in connection with such action.
A-2
<PAGE>
Section 2.3 No False or Misleading Statements. The information provided and
to be provided by each of American General Corporation 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 and American General Corporation or
on the date upon which approval of the Merger by the shareholders of the
Company and of American General Corporation 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
American General Corporation 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 shareholders of the Company and of
American General Corporation 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.
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) Each share of Common Stock , par value $1.00 per share, of the
Company (the "Company Common Stock" and the shares of such Common Stock,
the "Shares") issued and outstanding immediately prior to the Effective
Time (other than Shares to be cancelled pursuant to Section 3.1(c) hereof)
shall, at the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive a number of duly authorized, validly issued, fully paid and
nonassessable shares of common stock of American General Corporation
(together with the attached Series A Junior Participating Preferred Stock
Purchase Rights, issued in accordance with the Rights Agreement, dated as
of July 27, 1989, between Purchaser and Texas Commerce Bank, as Rights
Agent, as amended by the First Amendment Rights Agreement, dated as of
October 26, 1992, between Purchaser and the First Chicago Trust Company of
New York, as Rights Agent, as such amended agreement may be amended from
time to time, the "American General Corporation Common Stock"), par value
$0.50 per share (the "Merger Consideration"), calculated by dividing (x)
$49.00 by (y) the Average American General Price (as hereinafter defined),
rounded to four decimal places (such fraction being referred to herein as
the "Exchange Ratio"). As used herein, the "Average American General Price"
shall mean the average of the high and low sales prices, regular way, per
share of American General Corporation Common Stock as reported in The Wall
Street Journal during the ten consecutive New York Stock Exchange ("NYSE")
trading days (each, a "Trading Day") ending on (and including) the fifth
Trading Day prior to the Effective Time (the "Trading Average"); provided,
however, that if the Trading Average is less than $37.8750, then the
Average American General Price shall be $37.8750; and if the Trading
Average is greater than $44.8750, then the Average American General Price
shall be $44.8750. All Shares of Company Common Stock converted or
exchanged into Merger Consideration shall no longer be outstanding and
shall automatically be canceled 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 3.4, only
the Merger Consideration. The holders of such certificates previously
evidencing such 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.
A-3
<PAGE>
(b) Each share of Common Stock of Merger Sub, par value $1.00 per share,
issued and outstanding immediately prior to the Effective Time, shall, at
the Effective Time, by virtue of the Merger and without any action on the
part of American General Corporation, be converted into one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the
Surviving Corporation.
(c) All Shares of Company Common Stock that are owned by the Company as
treasury stock and (except for shares held in a separate account or mutual
fund managed by a American General Corporation Subsidiary or a pension
trust established for the benefit of American General Corporation retirees)
any Shares of Company Common Stock owned by American General Corporation or
Merger Sub or any other direct or indirect wholly owned American General
Corporation Subsidiary (as defined in Section 4.3(b) hereof) shall, at the
Effective Time, be canceled and retired and shall cease to exist and no
American General Corporation Common Stock or other consideration shall be
delivered in exchange therefor.
(d) On and after the Effective Time, holders of certificates which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") shall cease to have any rights as stockholders of the
Company, except the right to receive the Merger Consideration for each
Share held by them.
Section 3.2 Fractional Interests. No certificates or scrip representing
fractional shares of American General Corporation Common Stock shall be issued
in connection with the Merger, and such fractional interests will not entitle
the owner thereof to any rights as a shareholder of American General
Corporation. In lieu of a fractional interest in a share of American General
Corporation Common Stock, each holder of a Share or Shares of Company Common
Stock exchanged pursuant to Section 3.4 who would otherwise have been entitled
to receive a fraction of a share of American General Corporation Common Stock
shall receive cash (without interest) in an amount equal to the product of
such fractional interest multiplied by the Average American General Price.
Section 3.3 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, no Share of Company Common Stock outstanding immediately prior
to the Effective Time, the holder of which shall have complied with the
provisions of Sections 623 and 910 of the NYBCL 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 Sections 623 and 910 of
the NYBCL; provided, however, that (i) if any holder of Dissenting Shares
shall, under the circumstances permitted by the NYBCL, 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 Sections 623 and 910, 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 Sections 623 and 910, such holder or
holders (as the case may be) shall forfeit such right to payment for such
Dissenting Shares pursuant to such Sections 623 and 910, and each such Share
shall not be considered a Dissenting Share but shall thereupon be converted
into the Merger Consideration. The Company shall give American General
Corporation (X) prompt notice of any written demands for appraisal of any
Company Common Stock, attempted withdrawals of such demands, and any other
instruments received by the Company relating to shareholders' rights of
appraisal and (Y) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the NYBCL. The Company shall not,
except with the prior written consent of American General Corporation,
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 3.4 Exchange of Certificates.
(a) As soon as practicable after the execution and delivery of this
Agreement and, in any event, not less than five business days prior to the
mailing of the Proxy Statement/Prospectus to holders of Company Common
Stock, American General Corporation shall designate a bank or trust company
(or such other person or persons as shall be reasonably acceptable to
American General Corporation and the Company) to act as exchange agent (the
"Exchange Agent") in effecting the exchange of certificates that, prior to
the
A-4
<PAGE>
Effective Time, represented Shares of Company Common Stock (the
"Certificates") for the Merger Consideration pursuant to Section 3.1(a)
hereof (and cash in lieu of fractional interests in accordance with Section
3.2). Upon the surrender of each such Certificate representing Shares of
Company Common Stock, the Exchange Agent shall pay the holder of such
Certificate the Merger Consideration (and cash in lieu of fractional
interests in accordance with Section 3.2), 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 Shares of Company Common Stock to be cancelled in
accordance with Section 3.1(c)) shall represent solely the right to receive
Merger Consideration (and cash in lieu of fractional interests in
accordance with Section 3.2). No interest shall be paid or accrued on
Merger Consideration.
(b) As of the Effective Time, American General Corporation 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 Merger Consideration.
(c) 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 shares of American General Corporation Common Stock,
Certificates 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 Merger
Consideration (and cash in lieu of fractional interests in accordance with
Section 3.2), without any interest thereon.
(d) 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 3.2)
without any interest thereon, as provided in this Article III.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to shares of American General Corporation
Common Stock shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of American General Corporation Common Stock
such holder is entitled to receive, and no cash payment in lieu of
fractional interests shall be paid pursuant to Section 3.2, in each case,
until the holder of such Certificate shall surrender such Certificate, in
accordance with the provisions of this Agreement.
(f) The Exchange Agent or American General Corporation 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, American General Corporation 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 3.5 No Liability. Neither American General Corporation, 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 American
General Corporation, 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
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Consideration (and cash in lieu of fractional interests in accordance with
Section 3.2), without any interest or other payments thereon, upon due
surrender and delivery of such affidavit pursuant to this Agreement.
ARTICLE IV
Representations and Warranties of American General
Corporation and Merger Sub
Except as otherwise disclosed to the Company 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 "American General Corporation Disclosure Letter"),
American General Corporation represents and warrants to the Company as
follows:
Section 4.1 Organization. Each of American General Corporation and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the States of Texas and New York, 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. Each of American
General Corporation and Merger 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 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 American General Corporation, Merger Sub and the
American General Corporation Subsidiaries (as hereinafter defined), taken as a
whole (a "American General Corporation Material Adverse Effect").
Section 4.2 Capitalization. As of December 31, 1996: (i) the authorized
capital stock of American General Corporation consisted of 300,000,000 shares
of American General Corporation Common Stock and 60,000,000 shares of
Preferred Stock, par value $1.50 per share of American General Corporation
("American General Corporation Preferred Stock"), (ii) 203,090,677 shares of
American General Corporation Common Stock, and 2,317,701 shares of American
General Corporation Preferred Stock (all of which are shares in the series
designated 7% Convertible Preferred Stock), were issued and outstanding and
(iii) stock options to acquire 2,933,184 shares of American General
Corporation Common Stock (the "American General Corporation Stock Options")
were outstanding under all stock option plans of American General Corporation.
All the issued and outstanding shares of capital stock of American General
Corporation are validly issued, fully paid and nonassessable and free of
preemptive rights. All the shares of American General Corporation Common 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 December 31, 1996 to the date hereof, no shares of
American General Corporation's capital stock have been issued, except American
General Corporation Common Stock issued pursuant to the exercise of American
General Corporation Stock Options or upon conversion of shares of 7%
Convertible Preferred Stock. Except for (i) American General Corporation Stock
Options, (ii) 2,317,701 shares of 7% Convertible Preferred Stock of American
General Corporation, (iii) 4,500,000 shares of 6% Convertible Monthly Income
Preferred Securities, Series A, of American General Delaware, L.L.C. and (iv)
the Series A Junior Participating Preferred Stock Purchase Rights attached to
the American General Corporation 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 American
General Corporation to issue, transfer, sell, redeem, repurchase or otherwise
acquire any shares of its capital stock. American General Corporation has
delivered to the Company a complete and correct copy of the Rights Agreement,
dated as of July 29, 1989, as amended and supplemented as of the date hereof
(the "American General Rights Agreement") relating to the Series A Junior
Preferred Stock Purchase Rights issued thereunder.
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Section 4.3 Merger Sub and American General Corporation Subsidiaries.
(a) The authorized capital stock of Merger Sub consists of 100 shares of
Common Stock, par value $.01 per share. As of the date hereof,100 shares of
Common Stock of Merger Sub are issued and outstanding and are owned by
American General Corporation.
(b) Each subsidiary of American General Corporation set forth on Exhibit
21 to the Annual Report on Form 10-K for the year ended December 31, 1995
of American General Corporation, other than Merger Sub (collectively the
"American General Corporation 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 American General Corporation
Material Adverse Effect. Each American General Corporation 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 American General Corporation Material Adverse
Effect. Section 4.3(b) of the American General Corporation Disclosure
Letter sets forth the name of each of the American General Corporation
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 "American General Corporation Significant Subsidiaries")
and the state or jurisdiction of its incorporation.
(c) Section 4.3(c) of the American General Corporation Disclosure Letter
sets forth the name of each of the American General Corporation Significant
Subsidiaries that is as of the date hereof an insurance company
(collectively, the "American General Corporation Insurance Subsidiaries").
Except as set forth in the American General Corporation SEC Reports or in
Section 4.3(c) of the American General Corporation Disclosure Letter, each
of the American General Corporation 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) Except as set forth in the American General Corporation SEC Reports
or in Section 4.3(d) of the American General Corporation Disclosure Letter,
American General Corporation is, directly or indirectly, the record and
beneficial owner of all the outstanding shares of capital stock of Merger
Sub and of each of the American General Corporation Significant
Subsidiaries, there are no proxies with respect to any such shares, and no
equity securities of Merger Sub or of any American General Corporation
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 Merger
Sub or of any American General Corporation Significant Subsidiary, and
there are no contracts, commitments, understandings or arrangements by
which American General Corporation or any American General Corporation
Significant Subsidiary is or may be bound to issue, redeem, purchase or
sell additional shares of capital stock of Merger Sub or of any American
General Corporation Significant Subsidiary or securities convertible into
or exchangeable or exercisable for any such shares. Except as set forth in
the American General Corporation SEC Reports or in Section 4.3(d) of the
American General Corporation Disclosure Letter, all of such shares so owned
by American General Corporation are validly issued, fully paid and
nonassessable and are owned by it free and clear of any Encumbrances (as
hereinafter defined) securing obligations not reflected in the American
General Corporation SEC Reports.
Section 4.4 Authority Relative to this Agreement. Each of American General
Corporation and Merger 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 American General Corporation and
Merger Sub and the consummation by American General Corporation and Merger Sub
of the transactions contemplated
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hereby have been duly authorized by the Board of Directors of American General
Corporation and Merger Sub, and by American General Corporation as the sole
shareholder of Merger Sub by written consent, and, other than the approval of
the issuance of the shares of American General Corporation Common Stock as
Merger Consideration by the American General Corporation stockholders, no
other corporate proceedings on the part of American General Corporation or
Merger 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 American General Corporation and Merger Sub and (assuming
this Agreement constitutes a valid and binding obligation of the Company)
constitutes a valid and binding agreement of each of American General
Corporation and Merger Sub, enforceable against American General Corporation
and Merger 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, the rules of
the NYSE, state or foreign laws relating to takeovers, state securities or
blue sky laws, state insurance laws and the regulations promulgated thereunder
and the filing of the Certificate of Merger as required by the NYBCL
(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 American General Corporation
or Merger Sub from performing its respective obligations under this Agreement,
and would not individually or in the aggregate have a American General
Corporation 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 American
General Corporation and Merger Sub and the consummation of the transactions
contemplated by this Agreement. Except as set forth in Section 4.5 of the
American General Corporation Disclosure Letter, no material consent or
approval of any other party is required to be obtained by American General
Corporation or Merger Sub for the execution, delivery or performance of this
Agreement, or the performance by American General Corporation or Merger Sub of
the transactions contemplated hereby. Neither the execution, delivery or
performance of this Agreement by American General Corporation or Merger Sub,
nor the consummation by American General Corporation or Merger Sub of the
transactions contemplated hereby, nor compliance by American General
Corporation or Merger Sub with any of the provisions hereof, will (i) conflict
with or result in any breach of any provisions of the Articles or Certificate
of Incorporation, as the case may be, or Bylaws of American General
Corporation or Merger Sub or the Articles or Certificate of Incorporation, as
the case may be, or Bylaws of any of the American General Corporation
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
American General Corporation, Merger Sub or any of the American General
Corporation Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to American General
Corporation, Merger Sub, any American General Corporation Subsidiary or any of
their properties or assets, (iv) result in the creation or imposition of any
Encumbrance (as hereinafter defined) on any asset of American General
Corporation, Merger Sub or any American General Corporation Subsidiary, or (v)
cause the suspension or revocation of any permit, license, governmental
authorization, consent or approval necessary for American General Corporation,
Merger Sub or any of the American General Corporation 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 American
General Corporation Material Adverse Effect.
Section 4.6 American General Corporation SEC Reports. American General
Corporation has delivered to the Company true and complete copies of each
Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
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Current Report on Form 8-K, Proxy Statement, Schedule 13D filed with respect
to American General Corporation, Form S-4, and the prospectus included in any
other registration statement as presently in effect and as last amended,
pursuant to which American General Corporation has registered equity
securities for sale in underwritten offerings (including any amendments
thereto), filed by American General Corporation with the SEC since January 1,
1994 through the date hereof (collectively, the "American General Corporation
SEC Reports"). As of the respective dates such American General Corporation
SEC Reports were filed or, if any such American General Corporation SEC
Reports were amended, as of the date such amendment was filed, each of the
American General Corporation 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 and consolidated financial statements of
American General Corporation (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, 1995, and (ii) the unaudited consolidated
interim financial statements of American General Corporation (including any
related notes and schedules) included (or incorporated by reference) in its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, 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 American General Corporation
and the American General Corporation 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 American General Corporation Insurance
Subsidiaries, as filed with the departments of insurance for all applicable
domiciliary states for the years ended December 31, 1994 and December 31, 1995
(the "Annual Statutory Statements of American General Corporation") and the
quarters ended March 31, June 30 and September 30, 1995, and March 31, June
30, and September 30, 1996 (collectively, the "Quarterly Statutory Statements
of American General Corporation"), respectively, together with all exhibits
and schedules thereto (all Annual Statutory Statements of American General
Corporation and all Quarterly Statutory Statements of American General
Corporation, together with all exhibits and schedules thereto, referred to in
this Section 4.7 are hereinafter referred to as the "Statutory Financial
Statements of American General Corporation"), 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 respective 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 American General
Corporation present fairly in all material respects the financial position and
the results of operations for the American General Corporation Insurance
Subsidiaries as of the dates and for the periods therein in accordance with
State Statutory Accounting Principles. American General Corporation has
delivered to the Company true and complete copies of the Annual Statutory
Statements of American General Corporation and the Quarterly Statutory
Statements of American General Corporation.
Section 4.8 Absence of Certain Changes. Except as set forth in Section 4.8
of the American General Corporation Disclosure Letter, since September 30,
1996, there has been no event or condition (other than (i) any event or
condition resulting from general economic conditions (including without
limitation changes in interest rates), (ii) any occurrence or condition
affecting the life insurance, reinsurance and/or consumer finance industries
generally (including without limitation any change or proposed change in
insurance laws or regulations in any jurisdiction), or (iii) any occurrence or
condition arising out of the transactions contemplated by this Agreement or
the public announcement thereof, but excluding in the case of clauses (i) or
(ii), any such event, condition or occurrence that has had, or is reasonably
likely to have, a disproportionate effect on American General Corporation and
the American General Corporation Subsidiaries, taken as a whole) which has had
(or is reasonably likely to result in) a American General Corporation Material
Adverse Effect, and American General
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Corporation and the American General Corporation 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 Section 4.9 of the American
General Corporation Disclosure Letter or the American General Corporation 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 knowledge of American General Corporation, threatened
against or affecting American General Corporation, Merger Sub or any of the
American General Corporation Subsidiaries or any American General Corporation
Plan, the outcome of which, in the reasonable judgment of American General
Corporation, is likely individually or in the aggregate to have a American
General Corporation 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 American
General Corporation, Merger Sub or any of the American General Corporation
Subsidiaries having, or which, insofar as can reasonably be foreseen, in the
future would be reasonably likely to have, a American General Corporation
Material Adverse Effect.
Section 4.10 Absence of Undisclosed Liabilities. Except for liabilities or
obligations which are accrued or reserved against in American General
Corporation's financial statements (or reflected in the notes thereto)
included in the American General Corporation SEC Reports or disclosed in
Section 4.10 of the American General Corporation Disclosure Letter or which
were incurred after September 30, 1996 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 September 30, 1996, American General Corporation and
the American General Corporation 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 American General
Corporation.
Section 4.11 No Default. Except as set forth in the American General
Corporation SEC Reports or Section 4.11 of the American General Corporation
Disclosure Letter, neither American General Corporation, Merger Sub nor any of
the American General Corporation 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 Bylaws, (b) any note, bond, mortgage,
deed of trust, security interest, indenture, license, agreement, plan,
contract, lease, commitment or other instrument or obligation to which
American General Corporation, Merger Sub or any of the American General
Corporation 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 American General
Corporation, Merger Sub or any of the American General Corporation
Subsidiaries or any of their properties or assets, or (d) any permit, license,
governmental authorization, consent or approval necessary for American General
Corporation, Merger Sub or any of the American General Corporation
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 American
General Corporation Material Adverse Effect.
Section 4.12 Taxes.
(a) Except as set forth in the American General Corporation SEC Reports
or Section 4.12 of the American General Corporation Disclosure Letter:
(i) American General Corporation and the American General Corporation
Subsidiaries have (x) duly filed (or there has been filed on their
behalf) with the appropriate governmental authorities all income Tax
Returns (as hereinafter defined) and all other material Tax Returns
required to be filed by them on or prior to the date hereof, and (y)
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
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material Taxes (as hereinafter defined) for all periods or portions
thereof 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 the American General
Corporation or any American General Corporation Subsidiary wherein an
adverse determination or ruling in any one such proceeding or in all
such proceedings in the aggregate would have a American General
Corporation Material Adverse Effect;
(iii) the federal income Tax Returns of American General Corporation
and the American General Corporation 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, 1987, and
no material deficiencies were asserted as a result of such examinations
that have not been resolved and fully paid; and
(iv) to the knowledge of American General Corporation, no insurance
contracts or insurance policies issued by American General Corporation
or any American General Corporation Subsidiary fail to comply with the
applicable provisions of Code Section 7702 where the failure to so
comply, individually or in the aggregate, would reasonably be expected
to have a American General Corporation Material Adverse Effect.
(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 amendments to any of the foregoing relating
to Taxes.
Section 4.13 Title to Property.
(a) Except as set forth in the American General Corporation SEC Reports
or Section 4.13(a) of the American General Corporation Disclosure Letter,
each of American General Corporation and American General Corporation
Subsidiaries (i) has good and valid title to all the properties, assets and
other rights used in its business 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 American General Corporation
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
American General Corporation Material Adverse Effect.
(b) Except as set forth in the American General Corporation SEC Reports
or Section 4.13(b) of the American General Corporation Disclosure Letter or
as would not reasonably be expected to result in a American General
Corporation Material Adverse Effect, each of American General Corporation
and the American General Corporation Subsidiaries:
(i) owns and has good and valid title to the real property owned by
such party and used in its business, free and clear of all mortgages,
pledges, liens, charges, encumbrances, defects, security interests,
claims, options and restrictions of any 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
operation of American General Corporation or any of the American
General Corporation Subsidiaries and (B) liens for current taxes not
yet due and payable ("Permitted American General Corporation 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.
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Section 4.14 Insurance Practices; Permit and Insurance Licenses.
(a) The business of each of the American General Corporation Insurance
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) Each of the American General Corporation 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 American General
Corporation Material Adverse Effect. The business of each of the American
General Corporation Insurance Subsidiaries has been and is being conducted
in compliance, in all material respects, with all such permits and
insurance licenses. To the knowledge of American General Corporation, 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. American General Corporation has made
available for inspection by the Company complete copies of all material
registrations, filings and submissions made since January 1, 1994 by American
General Corporation or any of the American General Corporation Subsidiaries
with any Governmental Entity and any reports of examinations issued since
January 1, 1994 by any such Governmental Entity that relate to American
General Corporation or any of the American General Corporation Subsidiaries.
American General Corporation and the American General Corporation 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 reasonably be
expected to have a American General Corporation Material Adverse Effect; and,
to the knowledge of American General Corporation, 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) American General Corporation has made available to the Company a
list, which list is accurate and complete in all material respects, of all
securities, mortgages and other investments (collectively, the "American
General Corporation Investments") owned by American General Corporation and
the American General Corporation Insurance Subsidiaries as of December 31,
1996, together with their cost basis book or amortized value, as the case
may be, as of December 31, 1996. All transactions in American General
Corporation Investments by each of the American General Corporation
Insurance Subsidiaries from January 1, 1997 to the date hereof have
complied in all material respects with the investment policies of such
American General Corporation Insurance Subsidiary and all applicable
insurance laws and regulations.
(b) Except as set forth in Section 4.16(b) of the American General
Corporation Disclosure Letter, the American General Corporation Insurance
Subsidiaries have good and marketable title to the American General
Corporation Investments and to those securities, mortgages and other
investments acquired in the ordinary course of business since December 31,
1996, other than with respect to those American General Corporation
Investments which have been disposed of in the ordinary course of business
or redeemed in accordance with their terms since such date and other than
American General Corporation Permitted Liens and other than with respect to
statutory deposits which are subject to certain restrictions on transfer.
(c) Section 4.16(c) of the American General Corporation Disclosure Letter
identifies American General Corporation Investments which to the knowledge
of American General Corporation (i) are expected to be written down as of
December 31, 1996, or (ii) are as of December 31, 1996 in default in the
payment of principal or interest.
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Section 4.17 Reserves. The aggregate reserves of the American General
Corporation Insurance Subsidiaries as recorded in the Statutory Accounting
Statements of American General Corporation have been determined in accordance
with generally accepted actuarial principles consistently applied (except as
set forth therein). Except as disclosed in the American General Corporation
SEC Reports or Section 4.17 of the American General Corporation Disclosure
Letter, the insurance reserving practices and policies of the American General
Corporation Insurance Subsidiaries have not changed, in any material respect,
since December 31, 1995 and the results of the application of such practices
and policies are reflected in the Statutory Accounting Statements of the
American General Corporation Insurance Subsidiaries. All reserves of the
American General Corporation Insurance Subsidiaries set forth in the Statutory
Accounting Statements of American General Corporation are, to the knowledge of
American General Corporation, 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 American General Corporation Material
Adverse Effect.
Section 4.18 Ownership of Company Common Stock. As of the date hereof,
American General Corporation and the American General Corporation Subsidiaries
are not beneficial owners (as defined in Rule 16a-1(a) (2) of the Exchange
Act) of any shares of Company Common Stock except for any shares held in a
separate account or mutual fund managed by a American General Corporation
Subsidiary or in a pension trust for the benefit of American General
Corporation retirees.
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 Special
Meetings, 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 American
General Corporation 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 American General
Corporation for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will, at the date mailed to American General Corporation
shareholders and to the Company's shareholders and at the time of the Special
Meetings, 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. Except as set forth in Section 4.20 of the American
General Corporation Disclosure Letter, no person is entitled to any brokerage,
financial advisory, finder's or similar fee or commission payable by American
General Corporation in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of American General
Corporation.
Section 4.21 Employee Benefit Plans; ERISA.
(a) Section 4.21(a) of the American General Corporation Disclosure Letter
contains a true and complete list of each deferred compensation and each
incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each severance or
termination pay, medical, surgical, hospitalization, life insurance and
other "welfare" plan, fund or program (within the meaning of section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); each profit-sharing, stock bonus or other "pension" plan, fund
or program (within the meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan,
fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by American
General Corporation or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with American General
Corporation would be deemed a "single employer" within the meaning of
section 4001(b) of ERISA, or to which American General Corporation or an
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or
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former employee of American General Corporation or any American General
Corporation Subsidiary (the "Plans"). Each of the Plans that is subject to
section 302 or Title IV of ERISA or section 412 of the Code is hereinafter
referred to in this Section 4.21 as a "Title IV Plan." Neither American
General Corporation, any American General Corporation Subsidiary nor any
ERISA Affiliate has any commitment or formal plan, whether legally binding
or not, to create any additional employee benefit plan or modify or change
any existing Plan that would affect any employee or former employee of
American General Corporation or any American General Corporation
Subsidiary.
(b) With respect to each Plan, American General Corporation has
heretofore delivered or made available to the Company true and complete
copies of the Plan and any amendments thereto (or if the Plan is not a
written Plan, a description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the Code and the
most recent determination letter received from the Internal Revenue Service
with respect to each Plan intended to qualify under section 401 of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) No liability under Title IV or section 302 of ERISA has been incurred
by American General Corporation or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
American General Corporation or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC") (which premiums have been paid when due).
Insofar as the representation made in this section 4.21(c) applies to
sections 4064, 4069 or 4204 of Title IV of ERISA, it is made with respect
to any employee benefit plan, program, agreement or arrangement subject to
Title IV of ERISA to which American General Corporation or any ERISA
Affiliate made, or was required to make, contributions during the five (5)-
year period ending on the last day of the most recent plan year ended prior
to the Closing Date.
(d) The PBGC has not instituted proceedings to terminate any Title IV
Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
(e) As of the date hereof, with respect to each Title IV Plan, 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.
(f) No Title IV Plan or any trust established thereunder 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 Title IV Plan ended prior to the Closing
Date. All contributions required to be made with respect to any Plan on or
prior to the Closing Date have been timely made.
(g) No Title IV Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Title IV Plan a plan described in
section 4063(a) of ERISA. Neither American General Corporation nor any
ERISA Affiliate has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in sections 4203 and
4205 of ERISA (or any liability resulting therefrom has been satisfied in
full).
(h) Neither American General Corporation or any American General
Corporation Subsidiary, any Plan, any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection
with which American General Corporation, any American General Corporation
Subsidiary, or any American General Corporation Plan could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to section 4975 or 4976 of the Code that would
reasonably be expected to have a American General Corporation Material
Adverse Effect.
(i) Except as set forth in Section 4.21(i) of the American General
Corporation Disclosure Letter, 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.
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(j) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code. Each Plan intended
to satisfy the requirements of Section 501(c)(9) has satisfied such
requirements.
(k) Except as set forth in Section 4.21(k) of the American General
Corporation Disclosure Letter, no Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of American General Corporation or any
American General Corporation Subsidiary for periods extending beyond their
retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan,"
or (iii) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(l) There is no matter pending (other than routine qualification
determination filings, copies of which have been furnished to the Company
or will be promptly furnished to the Company when made) with respect to any
of the Plans before the Internal Revenue Service, Department of Labor or
PBGC.
Section 4.22 Labor Relations; Employees. Except as set forth in the American
General Corporation SEC Reports or Section 4.22 of the American General
Corporation Disclosure Letter:
(a) None of the employees of American General Corporation or any of the
American General Corporation Subsidiaries are represented by any labor
organization and, to the knowledge of American General Corporation, no
union claims to represent these employees have been made. To the knowledge
of American General Corporation, there have been no union organizing
activities with respect to employees of American General Corporation or
American General Corporation Subsidiaries within the past five years. To
the knowledge of American General Corporation, American General Corporation
and the American General Corporation 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) American General Corporation and the American General Corporation
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.
Section 4.23 Environmental Matters. Except as disclosed in Section 4.23 of
the American General Corporation Disclosure Letter or the American General
Corporation SEC Reports, with respect to real property owned or leased by
American General Corporation or any of the American General Corporation
Subsidiaries currently or within the past two years, including foreclosure
property, to the knowledge of American General Corporation, 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, American General Corporation or any of the American General
Corporation Subsidiaries, except for such claims or liabilities which in the
aggregate would not reasonably be expected to result in a American General
Corporation Material Adverse Effect.
Section 4.24 Related Party Transactions. Except for the transactions
described in the American General Corporation SEC Reports or Section 4.24 of
the American General Corporation Disclosure Letter, all transactions involving
American General Corporation or any of the American General Corporation
Subsidiaries that are required to be disclosed in the American General
Corporation SEC Reports in accordance with Item 404 of Regulation S-K have
been so disclosed, and to the knowledge of American General Corporation since
December 31, 1995, neither American General Corporation nor any of the
American General Corporation Subsidiaries has entered into any transactions
that would be required to be disclosed in future public filings under the
Exchange Act pursuant to such Item which have not already been disclosed in
the American General Corporation SEC Reports filed prior to the date hereof.
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Section 4.25 Opinion of Financial Advisor. American General Corporation has
received a written opinion from Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") dated as of the date hereof, to the effect that
the consideration to be paid by American General Corporation pursuant to the
Merger is fair to American General Corporation from a financial point of view.
Section 4.26 Derivatives. As of December 31, 1996, none of American General
Corporation or any of the American General Corporation Subsidiaries was
subject to any material exposure, individually or in the aggregate, under any
agreements relating to Derivatives.
Section 4.27 Contracts.
(a) Section 4.27 of the American General Corporation Disclosure Letter
sets forth a list of each contract to which American General Corporation or
any of the American General Corporation Subsidiaries is a party or by which
it is bound which:
(i) has been entered into since September 30, 1996 and would be
required to be filed by American General Corporation as an exhibit to a
American General Corporation SEC Report filed after such date under
Item 10 of Rule 601 of Regulation S-K under the Exchange Act;
(ii) is a reinsurance or retrocession contract which requires the
payment of premiums by American General Corporation or any of the
American General Corporation Subsidiaries of amounts in excess of
$2,000,000 per year;
(iii) contains covenants limiting the freedom of American General
Corporation or any of the American General Corporation 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 any of the
American General Corporation Subsidiaries to acquire equity securities
of any person or entity; or
(iv) is an employment or severance contract applicable to any
employee of American General Corporation or any of the American General
Corporation Subsidiaries, including without limitation contracts to
employ executive officers and other contracts with officers or
directors of American General Corporation or any of the American
General Corporation Subsidiaries, other than any such contract which
(A) by its terms is terminable by American General Corporation or any
of the American General Corporation Subsidiaries on not more than 60
days' notice without material liability, or (B) does not require
payments by American General Corporation or any American General
Corporation Subsidiary individually in excess of $100,000 or in the
aggregate in excess of $2,000,000 (collectively, together with such
contracts as are filed as exhibits to the American General Corporation
SEC Reports, the "American General Corporation Contracts").
(b) With respect to each of the American General Corporation Contracts,
to the knowledge of American General Corporation, except as disclosed in
Section 4.27 of the American General Corporation 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 American General Corporation or any of the American General
Corporation 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 American General
Corporation or the American General Corporation Subsidiaries resulting
from the declaration and/or payment of any of the extraordinary
dividends contemplated by Section 7.12 hereof.
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Section 4.28 Intellectual Property. Except as set forth on Section 4.28 of
the American General Corporation Disclosure Letter, American General
Corporation and each American General Corporation Subsidiary has the right to
use, free and clear of any royalty or other payment obligations, claims of
infringement or alleged infringement or other Liens, other than Permitted
American General Corporation Liens and other than contractual agreements with
respect to licensing and maintenance fees, all American General Intellectual
Property (as hereinafter defined) that is material to the conduct of its
business; and neither American General Corporation nor any American General
Corporation Subsidiary is in material default under any license or similar
agreements under which American General Corporation or any of the American
General Corporation Subsidiaries has obtained rights to use or permit its
customers or agents to use any American General Corporation Intellectual
Property owned by others and neither American General Corporation nor any of
the American General Corporation Subsidiaries has made a claim that the other
party thereto is in default. As used herein, "American General Intellectual
Property" shall mean all patents and trademarks, service marks, trade names,
jingles, assumed names, trade secrets and other proprietary information,
copyrights, licenses, permits and other similar intangible property rights and
interest applied for, issued to or presently owned or used by American General
Corporation or any of the American General Corporation Subsidiaries or under
which American General Corporation or any of the American General Corporation
Subsidiaries is licensed or franchised.
Section 4.29 Investment Advisor; Investment Company. Except as set forth in
Section 4.29 of the American General Corporation Disclosure Letter, neither
American General Corporation nor any of the American General Corporation
Subsidiaries conducts activities of an "investment advisor" as such term is
defined in Section 2 (a) (20) of the Investment Company Act of 1940, as
amended ("ICA"), whether or not registered under the Investment Advisers Act
of 1940, as amended. Except as disclosed in Section 4.29 of the American
General Corporation Disclosure Letter, neither American General Corporation
nor any of the American General Corporation Subsidiaries is an "investment
company" as defined under the ICA, and neither American General Corporation
nor any of the American General Corporation Subsidiaries sponsors any person
that is such an investment company.
Section 4.30 Disclosure. No representation or warranty by American General
Corporation or the American General Corporation Subsidiaries in this Agreement
(including the American General Corporation Disclosure Letter), and no
statement contained in the American General Corporation SEC Reports and the
Statutory Financial Statements of American General Corporation, contains any
untrue statement of a material fact or omits 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
American General Corporation which would reasonably be expected to have a
American General Corporation Material Adverse Effect which has not been set
forth in the American General Corporation SEC Reports, the Statutory Financial
Statements of American General Corporation or in this Agreement (including the
American General Corporation Disclosure Letter).
Section 4.31 Investigation by American General Corporation. American General
Corporation agrees, to the fullest extent permitted by law, that none of the
respective directors, officers, employees, affiliates, agents or
representatives of the Company or of any of the Company Subsidiaries shall
have any liability or responsibility whatsoever to American General
Corporation 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 American
General Corporation prior to the execution of this Agreement.
Section 4.32 Pooling of Interests. Following consultation with the
independent public accountants of American General Corporation, neither
American General Corporation nor Merger Sub has any reason to believe that the
Merger will not qualify for pooling of interests accounting treatment.
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ARTICLE V
Representations and Warranties of the Company
Except as otherwise disclosed to American General Corporation 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 American General Corporation
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 New York
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 February 6, 1997: (i) the authorized
capital stock of the Company consisted of 120,000,000 shares of Company Common
Stock and 10,800,000 shares of Preferred Stock; (ii) 34,509,812 shares of
Company Common Stock, 4,232 shares of $4.50 Series A Convertible Preferred
Stock (the "Series A Preferred Stock") and 1,678 shares of $5.00 Series B
Convertible Preferred Stock (the "Series B Preferred Stock," and together with
the Series A Preferred Stock, the "Company Preferred Stock") were issued and
outstanding; and (iii) stock options to acquire 1,360,180 shares of Company
Common Stock (such options, together with (a) up to no more than 175,661
shares of restricted stock that may be issued in connection with the exercise
of such options under the Company's restricted stock plans and arrangements,
(b) any additional options as may be granted upon exercise of such options in
accordance with the "reload" provisions of the Company's stock option plans,
and (c) any additional shares of restricted stock that may be issued in
connection with the exercise of the "reload" options referred to in clause
(b), the "Company Stock Incentives") were outstanding under all stock option
plans of the Company. All the issued and outstanding shares of Company Common
Stock and Company Preferred Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. Since February 6, 1997 to the
date hereof, no shares of the Company's capital stock have been issued, except
Company Common Stock issued upon exercise of Company Stock Incentives or upon
conversion of Company Preferred Stock. Except for (i) Company Stock
Incentives, (ii) 4,232 shares of Series A Preferred Stock (iii) 1,678 shares
of Series B Preferred Stock and (iv) as set forth in Section 5.2 of the
Company Disclosure Letter, as of the date of this Agreement there are no
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.
Section 5.3 Company Subsidiaries.
(a) Each subsidiary of the Company set forth on Exhibit 21 to the Annual
Report on Form 10-K for the year ended December 31, 1995 of the Company
(collectively, together with USLIFE Financial Institution Marketing Group,
Inc., the "Company 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
governmental 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.
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(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 the Company SEC Reports (as defined below) or 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 the Company SEC Reports or 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 the Company SEC
Reports or 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, the Company Investments (as
hereinafter defined), and as set forth in the Company SEC Reports or
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. 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
hereof, 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 American General Corporation and
Merger Sub) constitutes a valid and binding agreement of the Company,
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.
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
by the Company of the transactions contemplated by this Agreement. Except as
set forth on Section 5.5 of the Company Disclosure Letter, no material consent
or approval of any other party (including, but not limited to, any party to
any Company Contracts (as defined below)) is required to be obtained by the
Company or any Company Subsidiary for the execution, delivery or performance
of this Agreement or the performance by the Company of the transactions
contemplated hereby. Except as set forth in Section 5.5 of the Company
Disclosure Letter, neither the execution, delivery or performance of this
Agreement by the
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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 or
Certificate of Incorporation, as the case may be, or Bylaws of the Company or
the Certificate or Articles of Incorporation, as the case may be, or Bylaws 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, 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 American
General Corporation 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, 1994
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, 1995 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
September 30, 1996, 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).
Section 5.7 Statutory Financial Statements. The Annual Statements and
Quarterly Statements of the Company Insurance Subsidiaries, as filed with the
respective departments of insurance for all applicable domiciliary states for
the years ended December 31, 1994 and December 31, 1995 (the "Annual Statutory
Statements of the Company") and the quarters ended March 31, June 30, and
September 30, 1995, and March 31, June 30, and September 30, 1996
(collectively, the "Quarterly Statutory Statements of the Company"),
respectively, together with all exhibits and schedules thereto (all Annual
Statutory Statements of the Company and all Quarterly 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
applicable 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 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
State Statutory Accounting Principles. The Company has delivered to American
General Corporation true and complete copies of the Annual Statutory
Statements of the Company and the Quarterly Statutory Statements of the
Company.
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Section 5.8 Absence of Certain Changes. Since September 30, 1996, there has
been no event or condition (other than (i) any event or condition resulting
from general economic conditions (including without limitation changes in
interest rates), (ii) any occurrence or condition affecting the life insurance
or reinsurance industry generally (including without limitation any change or
proposed change in insurance laws or regulations in any jurisdiction), (iii)
any occurrence or condition arising out of the transactions contemplated by
this Agreement or the public announcement thereof, but excluding in the case
of clauses (i) or (ii), any such event, condition or occurrence that has had,
or is reasonably likely to have, a disproportionate effect on the Company and
Company Subsidiaries taken as a whole) 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 knowledge of the
Company, threatened against or affecting the Company or any of the Company
Subsidiaries or any Company Plan, 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 or any Company Plan having, or which, insofar as
can reasonably be foreseen, in the future would be reasonably likely to have,
a Company Material Adverse Effect.
Section 5.10 Absence of Undisclosed Liabilities; Actuarial Appraisal. 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 September 30, 1996 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 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. The Company has not within the past three years obtained a detailed
actuarial appraisal which incorporates significant nonpublic information,
performed by an independent actuarial consultant, of the aggregate value of
the consolidated life insurance operations of the Company and the Company
Insurance Subsidiaries.
Section 5.11 No Default. Except as set forth in the Company SEC Reports or
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 Bylaws, (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 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 the Company SEC Reports or
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 income Tax Returns and all other material Tax
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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 or portions thereof 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 any Company Subsidiary wherein an
adverse determination or ruling in any one such proceeding or in all such
proceedings in the aggregate would 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, 1988, and no material deficiencies were asserted as a result
of such examinations that have not been resolved and fully paid; and
(d) to the knowledge of the Company, no insurance contracts or insurance
policies issued by the Company or any Company Subsidiary fail to comply
with the applicable provisions of Code Section 7702 where the failure to so
comply, individually or in the aggregate, would reasonably be expected to
have a Company Material Adverse Effect.
Section 5.13 Title to Property.
(a) Except as set forth in the Company SEC Reports or 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 the properties, assets and
other rights used in its business 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 the Company SEC Reports or Section 5.13(b) of
the Company Disclosure Letter or as would not reasonably be expected to
result in a Company Material Adverse Effect, each of the Company and the
Company Subsidiaries:
(i) owns and has good and valid title to the real property owned by
such party and used in its business, free and clear of all
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 operation 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 each of the Company Insurance 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) 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
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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 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 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 American General Corporation complete copies of all material
registrations, filings and submissions made since January 1, 1994 by the
Company or any of the Company Subsidiaries with any Governmental Entity and
any reports of examinations issued since January 1, 1994 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 reasonably be expected to have a Company
Material Adverse Effect; and, to the 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 Company has made available to American General Corporation 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 and the Company Insurance Subsidiaries
as of December 31, 1996, together with their cost basis, book or amortized
value, as the case may be, as of December 31, 1996. All transactions in
Company Investments by each Company Insurance Subsidiary from January 1,
1997 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 Section 5.16(b) of the Company Disclosure
Letter, the Company Insurance Subsidiaries have good and marketable title
to the Company Investments and to those securities, mortgages and other
investments acquired in the ordinary course of business since December 31,
1996, other than with respect to those Company Investments which have been
disposed of in the ordinary course of business 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, and none of the Company Investments consists of
securities loaned to third parties.
(c) Section 5.16(c) of the Company Disclosure Letter identifies the
Company Investments which to the knowledge of the Company (i) are expected
to be written down as of December 31, 1996 or (ii) are as of December 31,
1996 in default in the payment of principal or interest.
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 actuarial
principles consistently applied (except as set forth therein). Except as
disclosed in the Company SEC Reports or 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, 1995 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 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 Repurchases of Company Common Stock. Except as set forth in
Section 5.18 of the Company Disclosure Letter, since December 31, 1996, the
Company has not repurchased any shares of Company Common Stock, other than de
minimis amounts of shares repurchased from Company Plans (as hereinafter
defined).
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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 to
American General Corporation shareholders and at the time of the Special
Meetings, 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
American General Corporation in writing for including 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 Special Meetings, 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 for Goldman, Sachs & Co. ("Goldman Sachs"), 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 contains a true and
complete list of each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation
plan, program, agreement or arrangement; each severance or termination pay,
medical, surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (within the meaning of section 3(1) of ERISA); each
profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination
or severance agreement; and each other employee benefit plan, fund,
program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (a
"Company ERISA Affiliate"), that together with the Company would be deemed
a "single employer" within the meaning of section 4001(b) of ERISA, or to
which the Company or a Company ERISA Affiliate is party, whether written or
oral, for the benefit of any employee or former employee of the Company or
any Company Subsidiary (the "Company Plans"). Each of the Company Plans
that is subject to section 302 or Title IV of ERISA or section 412 of the
Code is hereinafter referred to in this Section 5.21 as a "Company Title IV
Plan." Neither the Company, any Company Subsidiary nor any Company ERISA
Affiliate has any commitment or formal plan, whether legally binding or
not, to create any additional employee benefit plan or modify or change any
existing Company Plan that would affect any employee or former employee of
the Companyor any Company Subsidiary.
(b) With respect to each Company Plan, the Company has heretofore
delivered or made available to American General Corporation true and
complete copies of the Company Plan and any amendments thereto (or if the
Company Plan is not a written plan, a description thereof), any related
trust or other funding vehicle, any reports or summaries required under
ERISA or the Code and the most recent determination letter received from
the Internal Revenue Service with respect to each Company Plan intended to
qualify under section 401 of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) No liability under Title IV or section 302 of ERISA has been incurred
by the Company or any Company ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the
Company or any Company ERISA Affiliate of incurring any such liability,
other than liability for premiums due the Pension Benefit Guaranty
Corporation ("PBGC") (which premiums have been paid when due). Insofar as
the representation made in this section 5.21(c) applies to sections 4064,
4069 or 4204 of Title IV of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which the Company or any Company ERISA Affiliate made, or was
required to make, contributions during the five (5)-year period ending on
the last day of the most recent plan year ended prior to the Closing Date.
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(d) The PBGC has not instituted proceedings to terminate any Company
Title IV Plan and no condition exists that presents a material risk that
such proceedings will be instituted.
(e) As of the date hereof, with respect to each Company Title IV Plan,
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.
(f) No Company Title IV Plan or any trust established thereunder 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 Company Title IV Plan ended
prior to the Closing Date. All contributions required to be made with
respect to any Company Plan on or prior to the Closing Date have been
timely made.
(g) No Company Title IV Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Company Title IV Plan a plan
described in section 4063(a) of ERISA. Neither the Company nor any Company
ERISA Affiliate has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in sections 4203 and
4205 of ERISA (or any liability resulting therefrom has been satisfied in
full).
(h) Neither the Company or any Company Subsidiary, any Company Plan, any
trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company, any Company
Subsidiary, or any Company Plan could be subject to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed
pursuant to section 4975 or 4976 of the Code that would reasonably be
expected to have a Company Material Adverse Effect.
(i) Except as set forth in Section 5.21(i) of the Company Disclosure
Letter, each Company 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.
(j) Each Company Plan intended to be "qualified" within the meaning of
section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code. Each
Company Plan intended to satisfy the requirements of Section 501(c)(9) has
satisfied such requirements.
(k) Except as set forth in Section 5.21(k) of the Company Disclosure
Letter, no Company Plan provides medical, surgical, hospitalization, death
or similar benefits (whether or not insured) for employees or former
employees of the Company or any Company Subsidiary for periods extending
beyond their retirement or other termination of service, other than (i)
coverage mandated by applicable law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which is borne by the current or
former employee (or his beneficiary).
(l) There is no matter pending (other than routine qualification
determination filings, copies of which have been furnished to American
General Corporation or will be promptly furnished to American General
Corporation when made) with respect to any of the Company Plans before the
Internal Revenue Service, Department of Labor or PBGC.
Section 5.22 Labor Relations; Employees. Except as set forth in the Company
SEC Reports or Section 5.22 of the Company Disclosure Letter:
(a) 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
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.
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(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.
Section 5.23 Environmental Matters. Except as disclosed in the Company SEC
Reports or Section 5.23 of the Company Disclosure Letter and in any
environmental report obtained by American General Corporation in connection
with its due diligence review of the Company, with respect to real property
owned or leased by the Company or any of the Company Subsidiaries currently or
within the last two years, 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 the Company SEC Reports or 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, 1995, neither the Company nor any
of the Company Subsidiaries has entered into any transactions that would be
required to be disclosed in future 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 Opinion of Financial Advisor. The Company has received an
opinion from Goldman Sachs dated the date hereof to the effect that the Merger
Consideration to be received by the shareholders of the Company pursuant to
this Agreement is fair as of the date hereof to such shareholders.
Section 5.26 Derivatives. As of December 31, 1996, none of the Company or
any of the Company Subsidiaries was subject to any material exposure,
individually or in the aggregate, under any agreements relating to
Derivatives.
Section 5.27 Contracts.
(a) Section 5.27 of the Company Disclosure Letter sets forth a list of
each contract to which the Company or any of the Company Subsidiaries is a
party or by which it is bound which:
(i) has been entered into since September 30, 1996 and would be
required to be filed by the Company as an exhibit to a Company SEC
Report filed after such date under Item 10 of Rule 601 of Regulation S-
K under the Exchange Act;
(ii) is a reinsurance or retrocession contract which requires the
payment of premiums by the Company or any of the Company Subsidiaries
of amounts in excess of $2,000,000 per year;
(iii) contains 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 any of the Company Subsidiaries to acquire equity
securities of any person or entity; or
(iv) is an employment or severance contract applicable to any
employee of the Company or any of 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 any such contract which (A) 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 (B)
does not require payments by the Company or any Company Subsidiary
individually in excess of $100,000 or in the aggregate in excess of
$2,000,000.
(collectively, together with such contracts as are filed as exhibits to the
Company SEC Reports, 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 5.27 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 any of the extraordinary
dividends contemplated by Section 7.12 hereof.
Section 5.28 Intellectual Property. Except as set forth on Section 5.28 of
the Company Disclosure Letter, the Company and each Company Subsidiary has the
right to use, free and clear of any royalty or other payment obligations,
claims of infringement or alleged infringement or other Liens, other than
Permitted Company Liens and other than contractual agreements with respect to
licensing and maintenance fees, all Company Intellectual Property (as
hereinafter defined) that is material to the conduct of its business; and
neither the Company nor any Company Subsidiary is in material default under
any license or similar agreements under which the Company or any of the
Company Subsidiaries has obtained rights to use or permit its customers or
agents to use any Company Intellectual Property owned by others and neither
the Company nor any of the Company Subsidiaries has made a claim that the
other party thereto is in default. As used herein, "Company Intellectual
Property" shall mean all patents and trademarks, service marks, trade names,
jingles, assumed names, trade secrets and other proprietary information,
copyrights, licenses, permits and other similar intangible property rights and
interest applied for, issued to or presently owned or used by the Company or
any of the Company Subsidiaries or under which the Company or any of the
Company Subsidiaries is licensed or franchised.
Section 5.29 Investment Advisor; Investment Company. Except as disclosed in
Section 5.29 of the Company Disclosure Letter, neither the Company nor any of
the Company Subsidiaries conducts activities of an "investment advisor" as
such term is defined in Section 2 (a) (20) of the ICA, whether or not
registered under the Investment Advisers Act of 1940, as amended. Except as
disclosed in Section 5.29 of the Company Disclosure Letter, neither the
Company nor any of the Company Subsidiaries is an "investment company" as
defined under the ICA, and neither the Company nor any of the Company
Subsidiaries sponsors any person that is such an investment company.
Section 5.30 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 any untrue statement
of a material fact or omits 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 the Company which would
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).
Section 5.31 Investigation by the Company. The Company agrees, to the
fullest extent permitted by law, that none of the respective directors,
officers, employees, affiliates, agents or representatives of American General
Corporation or of any of the American General Corporation Subsidiaries shall
have any liability or responsibility whatsoever to the Company 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 the Company prior to the execution of this
Agreement.
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Section 5.32 Pooling of Interests. Following consultation with its
independent public accountants, the Company has no reason to believe that the
Merger will not qualify for pooling of interests accounting treatment.
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 American General Corporation
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
American General Corporation:
(a) the Company shall not adopt or propose any change in its Restated
Certificate of Incorporation or Bylaws;
(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 payable in an amount no greater
than $.25 per share on the Company Common Stock, $1.125 per share on the
Series A Preferred Stock, and $1.25 per share on the Series B Preferred
Stock), 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) subject to Section 7.3, 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 material terms of which have been disclosed
to American General Corporation 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 any material amendment to any material Tax Return;
(f) except as set forth in a certificate of the President of the Company
previously delivered to American General Corporation, the Company and the
Company Subsidiaries shall not issue any capital stock (other than pursuant
to the Company Stock Incentives, and upon the conversion of Company
Preferred 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) except as set forth in a certificate of the President of the Company
previously delivered to American General Corporation, the Company shall
not, and shall not permit any Company Subsidiary to, (i) grant any
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increase in the compensation or benefits (including, but not limited to,
salary, bonus, stock option, restricted stock awards, annual incentive plan
or book unit plan of the Company) of directors, officers, employees,
consultants or agents of the Company or any Company Subsidiary, or (ii)
enter into or amend any employment agreement or other employment
arrangement with any employee of the Company or any Company Subsidiary;
(h) 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 applicable Statutory Accounting Principles;
(i) the Company shall not, and shall not permit any Company Subsidiary
to, take any action that would reasonably be expected to cause the Merger
to fail to qualify as a reorganization within the meaning of Section 368(a)
of the Code;
(j) the Company shall not, and shall not permit any Company Subsidiary
to, take any action that could, directly or indirectly, reasonably be
expected to cause the Merger to fail to qualify for pooling-of-interest
accounting treatment;
(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 in effect on the
date hereof 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 (other than real property constituting a
Company Investment), 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 VIII not being satisfied; and
(o) none of the Company Insurance Subsidiaries shall make any material
change in its underwriting, claims management or reserving practices.
Section 6.2 Conduct of Business by American General Corporation Pending the
Merger. From the date hereof until the Effective Time, unless the Company
shall otherwise agree in writing, or except as set forth in the American
General Corporation Disclosure Letter or as otherwise contemplated by this
Agreement, American General Corporation and American General Corporation
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 American General Corporation Disclosure Letter or as otherwise provided in
this Agreement, from the date hereof until the Effective Time, without the
prior written consent of the Company:
(a) American General Corporation shall not adopt or propose any change in
its Restated Articles of Incorporation or Bylaws;
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(b) American General Corporation 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 payable in an amount
no greater than $.35 per quarter per share of American General Corporation
Common Stock, and $.6453 per quarter per share of American General
Corporation 7% Convertible Preferred Stock), or split, combine or
reclassify any of American General Corporation's capital stock;
(c) American General Corporation shall not, and shall not permit any
American General Corporation 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) American General Corporation shall not, and shall not permit any
American General Corporation Subsidiary to, sell, lease, license or
otherwise surrender, relinquish or dispose of (i) any material facility
owned or leased by American General Corporation or any American General
Corporation Subsidiary or (ii) any assets or property which are material to
American General Corporation and the American General Corporation
Subsidiaries, taken as a whole, except pursuant to existing contracts or
commitments (the material terms of which have been disclosed to the Company
prior to the date hereof), or in the ordinary course of business consistent
with past practice;
(e) American General Corporation shall not, and shall not permit any
American General Corporation Subsidiary to, settle any material audit, make
or change any material Tax election or file any material amendment to any
material Tax Return;
(f) American General Corporation and the American General Corporation
Subsidiaries shall not issue any capital stock (other than pursuant to the
exercise of American General Corporation Stock Options or upon conversion
of shares of American General Corporation 7% Convertible Preferred Stock)
or other securities or enter into any amendment of any material term of any
outstanding security of American General Corporation, and American General
Corporation and the American General Corporation 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
American General Corporation 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) American General Corporation shall not, and shall not permit any
American General Corporation Subsidiary to, (i) grant any increase in the
compensation or benefits of directors, officers, employees, consultants or
agents of American General Corporation or any American General Corporation
Subsidiary, or (ii) enter into or amend any employment agreement or other
employment arrangement with any employee of American General Corporation or
any American General Corporation Subsidiary;
(h) American General Corporation shall not change any method of
accounting or accounting practice by American General Corporation or any
American General Corporation Subsidiary, except for any such required
change in GAAP or applicable Statutory Accounting Principles;
(i) American General Corporation shall not, and shall not permit any
American General Corporation Subsidiary to, take any action that would
reasonably be expected to cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code;
(j) American General Corporation shall not, and shall not permit any
American General Corporation Subsidiary to, take any action that could,
directly or indirectly, cause the Merger to fail to qualify for pooling-of-
interests accounting treatment;
(k) American General Corporation shall not permit any American General
Corporation Insurance Subsidiary to conduct transactions in American
General Corporation Investments except in compliance with the investment
policies of such American General Corporation Insurance Subsidiary in
effect on the date hereof and all applicable insurance laws and
regulations;
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(l) American General Corporation shall not, and shall not permit any
American General Corporation Subsidiary to, enter into any agreement to
purchase, or to lease for a term in excess of one year, any real property
(other than real property constituting a American General Corporation
Investment), provided that American General Corporation or any American
General Corporation 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 American General Corporation in its capacity
as a landlord, from renewing any lease pursuant to an option granted prior
to the date hereof;
(m) American General Corporation shall not, and shall not permit any
American General Corporation 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, American General Corporation shall not,
and shall not permit any American General Corporation Subsidiary to, (i)
take, or agree or commit to take, any action that would make any
representation and warranty of American General Corporation 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
American General Corporation 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 VIII not being
satisfied; and
(o) none of the American General Corporation Insurance Subsidiaries shall
make any material change in its underwriting, claims management or
reserving practices.
Section 6.3 Amendment to Rights Plan. Within one business day following the
execution of this Agreement, the Board of Directors of the Company (a) shall
amend the Amended and Restated Rights Agreement, dated as of June 24, 1986 and
amended and restated as of January 24, 1989 and as further amended and
restated as of September 27, 1994 (the "Company Rights Agreement"), between
the Company and Chemical Bank (as successor by merger to Manufacturers Hanover
Trust Company), as Rights Agent, so that (i) American General Corporation will
not become an "Acquiring Person" as a result of the consummation of the
transactions contemplated by this Agreement, (ii) no "Stock Acquisition Date"
or "Separation Date" (as such terms are defined in the Company Rights
Agreement) will occur as a result of the consummation of the transactions
contemplated by this Agreement, and (iii) all outstanding "Rights" (the
"Company Rights") issued and outstanding under the Company Rights Agreement
will expire immediately prior to the Effective Time. Except as provided above
with respect to the transactions contemplated by this Agreement, and subject
to the exercise of its fiduciary duties as provided in Section 7.3, the Board
of Directors of the Company shall not (a) amend the Company Rights Agreement,
or (b) take any actions with respect to, or make any determination under, the
Company Rights Agreement, including, but not limited to, any redemption of the
Company Rights or any action that would have the effect of facilitating an
Acquisition Proposal (as defined in Section 7.2), unless the Board of
Directors of the Company determines in good faith, following consultation with
independent legal counsel, that in order to comply with its fiduciary duties
to stockholders under applicable law it is necessary to make any such
amendment, take any such action or make any such determination.
Section 6.4 Redemption of Company Preferred Stock. The Board of Directors of
the Company shall take all action necessary to call for redemption all
outstanding shares of Company Preferred Stock at the redemption price stated
in the Company's Restated Certificate of Incorporation as soon as practicable
following the date of this Agreement.
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ARTICLE VII
Additional Agreements
Section 7.1 Access and Information. The Company and American General
Corporation 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 agreement between American General Corporation and the
Company, dated January 28, 1997 (the "Confidentiality Agreement").
Section 7.2 Acquisition Proposals. The Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney,
accountant or other advisor or representative of, the Company or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
the submission of any Acquisition Proposal (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or agree to or endorse, or take any
other action to facilitate, any Acquisition Proposal or any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that nothing contained in
this Section 7.2 shall prohibit the Board of Directors of the Company from
furnishing information to, or entering into discussions or negotiations with,
any person or entity that makes an unsolicited bona fide Acquisition Proposal
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 the Board
of Directors of the Company to comply with its fiduciary duties to the
Company's stockholders under applicable law and (B) prior to taking such
action, the Company (x) provides reasonable notice to American General
Corporation to the effect that it is taking such action and (y) receives from
such person or entity an executed confidentiality/standstill agreement in
reasonably customary form. The Company shall notify American General
Corporation of any Acquisition Proposal (including, without limitation, the
material terms and conditions thereof and the identity of the person making
it) as promptly as practicable after its receipt thereof, and shall provide
American General Corporation with a copy of any written Acquisition Proposal
or amendments or supplements thereto, and shall thereafter inform American
General Corporation on a prompt basis of the status of any discussions or
negotiations with such a third party, and any material changes to the terms
and conditions of such Acquisition Proposal, and shall promptly give American
General Corporation a copy of any information delivered to such person which
has not previously been reviewed by American General Corporation. The term
"Acquisition Proposal" as used herein means any tender or exchange offer
involving the capital stock of the Company or any of the Company Subsidiaries,
any proposal for a merger, consolidation or other business combination
involving the Company or any of the Company Subsidiaries, any proposal or
offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, the Company or any of the
Company Subsidiaries, any proposal or offer with respect to any
recapitalization or restructuring of the Company or any of the Company
Subsidiaries, or any proposal or offer with respect to any other transaction
similar to any of the foregoing with respect to the Company or any of the
Company Subsidiaries, other than the Merger contemplated by this Agreement.
Immediately after the execution and delivery of this Agreement, the Company
will, and will cause its Subsidiaries and affiliates, and their respective
officers, directors, employees, investment bankers, attorneys, accountants and
other agents to, cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
possible Acquisition Proposal and shall notify each party that it, or any
officer, director, investment advisor, financial advisor, attorney or other
representative retained by 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.
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Section 7.3 Fiduciary Duties. The Board of Directors of the Company shall
not (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to American General Corporation or Merger Sub, the approval or
recommendation by such Board of Directors of this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, (iii) enter into any agreement (other than a
confidentiality/standstill agreement entered into in accordance with Section
7.2(B)) with respect to any Acquisition Proposal, or (iv) terminate this
Agreement in response to an Acquisition Proposal unless, in each case, the
Company receives an unsolicited Acquisition Proposal and the Board of
Directors of the Company determines in good faith, following consultation with
independent legal counsel, that in order to comply with its fiduciary duties
to stockholders under applicable law it is necessary for the Board of
Directors to withdraw or modify its approval or recommendation of this
Agreement or the Merger, approve or recommend such Acquisition Proposal, enter
into an agreement with respect to such Acquisition Proposal or terminate this
Agreement. Nothing contained in this Section 7.3 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
the Company's stockholders which, in the good faith reasonable judgment of the
Board of Directors of the Company based on the advice of independent legal
counsel, is required under applicable law; provided that, except as otherwise
permitted in this Section 7.3, the Company does not withdraw or modify, or
propose to withdraw or modify, its position with respect to the Merger or
approve or recommend, or propose to approve or recommend, an Acquisition
Proposal. Notwithstanding anything contained in this Agreement to the
contrary, any action by the Board of Directors permitted by, and taken in
accordance with, this Section 7.3 shall not constitute a breach of this
Agreement by the Company.
Section 7.4 Filings; Other Action. Subject to the terms and conditions
herein provided, as promptly as practicable, the Company, American General
Corporation and Merger Sub shall: (i) promptly make all filings and
submissions under the HSR Act and all filings required by the insurance
regulatory authorities in New York, 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 reasonable best 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 reasonable best
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 American General Corporation, and American
General Corporation 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 American General Corporation 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 American General Corporation 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 7.4 or elsewhere in
this Agreement shall require any party hereto to take any action that would
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of American General Corporation
and its Subsidiaries taken as a whole (after giving effect to the consummation
of the Merger).
Section 7.5 Public Announcements. American General Corporation, 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
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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 7.6 Employee Benefits. From and after the Effective Time, American
General Corporation agrees to take, and following the Effective Time to cause
the Company to take, the actions described in Exhibit D hereto.
Section 7.7 Stock Exchange Listing. American General Corporation shall as
promptly as practicable prepare and submit to the New York Stock Exchange a
listing application covering the shares of American General Corporation Common
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 7.8 Surviving Corporation Directors. American General Corporation
shall take all necessary action to cause the persons mutually agreed upon by
American General Corporation and the Company to be appointed to the Board of
Directors of the Surviving Corporation as of the Effective Time, to serve
until the next annual election of directors of American General Corporation.
Section 7.9 Employee Stock Options. From and after the Effective Time, each
of the Employee Stock Options which is outstanding and unexercised at the
Effective Time shall be treated in accordance with the terms of Exhibit D
hereto.
Section 7.10 Company Indemnification Provision. American General Corporation
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 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 bylaw, and shall be
enforceable by the Indemnified Parties against the Surviving Corporation.
American General Corporation shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
American General Corporation 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 American General Corporation or the Surviving
Corporation be required to expend to maintain or procure insurance coverage
pursuant to this Section 7.10 any amount per annum in excess of 200% of the
aggregate premiums paid in 1996 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 7.10 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
Section 7.11 Comfort Letters.
(a) American General Corporation shall use all reasonable efforts to
cause Ernst & Young LLP, American General Corporation'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 American General Corporation 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.
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(b) The Company shall use all reasonable efforts to cause KPMG Peat
Marwick LLP, the Company's independent accountants, to deliver to American
General Corporation a letter dated as of the date of the Proxy
Statement/Prospectus and addressed to American General Corporation, in form
and substance reasonably satisfactory to American General Corporation, 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 7.12 Tax Matters; Pooling of Interests.
(a) The Company and American General Corporation shall each reasonably
cooperate in connection with obtaining the opinions of special counsel
described in Sections 8.2(b) and 8.3(b) including, without limitation,
providing to special counsel such representations that are reasonably
required by special counsel to enable them to render such opinions.
(b) The parties intend for the Merger to qualify as a reorganization
under Section 368(a) of the Code; each party and its affiliates shall use
all reasonable efforts to cause the Merger to so qualify; neither party nor
any affiliate shall take any action that would cause the Merger not to so
qualify; and the parties will take the position for all purposes that the
Merger so qualifies.
(c) The parties intend for the Merger to qualify as a pooling of
interests transaction for accounting purposes; each party shall use all
reasonable efforts to cause the Merger to so qualify; neither party nor any
affiliate shall take any action that would cause the Merger not to so
qualify; and the parties will take the position for all purposes that the
Merger so qualifies.
Section 7.13 Intercompany Dividends. On or before 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) All American Life Insurance Company to pay a dividend to the Company
of at least $86 million and (ii) The Old Line Life Insurance Company of
America to pay a dividend to the Company of at least $29 million
(collectively, such dividends are referred to as the "Intercompany
Dividends"), such Intercompany Dividends to be paid in the form of demand
promissory notes, or such other form as the parties may mutually agree.
Section 7.14 Affiliates. The Company and American General Corporation shall
use all reasonable efforts to obtain and deliver to each other prior to the
Closing executed letter agreements (i) in the case of the letter agreement to
be delivered by the Company, in the form attached as Exhibit C-1 hereto and
(ii) in the case of the letter agreement to be delivered by American General
Corporation, in the form attached as Exhibit C-2 hereto, from all persons who,
in the reasonable judgment of the Company or American General Corporation,
respectively, may be deemed to be affiliates of the Company or American
General Corporation, respectively, under Rule 145 of the Securities Act. For a
period of at least two years following the Effective Time, American General
Corporation or any successor issuer thereto shall make available adequate
current public information with respect to itself, within the meaning of Rule
144(c) under the Securities Act. In addition, American General Corporation
agrees to publish financial results covering at least 30 days of combined
operations as soon as practicable after the Effective Time.
Section 7.15 Additional Matters. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable best 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
any other third party consents 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 American General Corporation, Merger Sub and the
Company shall take all such necessary action.
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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 consummation of the Merger;
(c) each of the Company and American General Corporation shall have made
such filings, and obtained such permits, authorizations, consents, or
approvals, required by 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 New York and such other states as may
have jurisdiction over the transactions contemplated by this Agreement
pursuant to insurance holding company or other insurance laws or
regulations; provided, however, that such permits, authorizations, consents
and approvals may be subject to (i) conditions customarily imposed by
insurance regulatory authorities in transactions of the type contemplated
by this Agreement or (ii) other conditions that would not reasonably be
expected to have a material adverse effect on the business, financial
condition or results of operations of American General Corporation and its
Subsidiaries taken as a whole (after giving effect to the consummation of
the Merger);
(d) this Agreement and the Merger shall have been adopted and approved by
the requisite vote of the holders of the Company Common Stock in accordance
with the applicable provisions of the NYBCL;
(e) the shareholders of American General Corporation shall have voted to
approve the issuance of Shares of American General Corporation Common Stock
as Merger Consideration;
(f) 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; and
(g) the shares of American General Corporation Common Stock issuable to
the Company's shareholders pursuant to this Agreement shall have been
authorized for listing on the NYSE upon official notice thereof.
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 American General Corporation and Merger 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 American General Corporation and Merger
Sub contained in this Agreement shall be true and correct in all respects
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 except to the
extent that the failure of such representations and warranties to be true
and correct would not, in the aggregate, be reasonably likely to result in
a American General Corporation Material Adverse Effect; 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 American General Corporation as to the
satisfaction of this condition;
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(b) the Company shall have received an opinion from Debevoise & Plimpton,
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 American General Corporation, Merger 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 American General Corporation, Merger Sub and
the Company and their respective subsidiaries received pursuant to Section
7.12 hereof; and
(c) the audited GAAP financial statements of American General Corporation
for the fiscal year ended December 31, 1996 shall not reflect any event,
change or effect having, or which would be reasonably likely to have, in
the aggregate, a American General Corporation Material Adverse Effect.
Section 8.3 Conditions to Obligations of American General Corporation and
Merger Sub to Effect the Merger. The obligations of American General
Corporation and Merger 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 shall be true and correct in all
respects 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 except to the extent that the
failure of such representations and warranties to be true and correct would
not, in the aggregate, be reasonably likely to result in a Company Material
Adverse Effect; and American General Corporation and Merger Sub shall have
received a Certificate of the Chairman of the Board, the President, or a
Vice President of the Company as to the satisfaction of this condition;
(b) American General Corporation shall have receive an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to American
General Corporation, 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 American General Corporation, Merger 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 American General Corporation, Merger Sub and the Company and
their respective subsidiaries received pursuant to Section 7.12 hereof;
(c) the audited GAAP financial statements of the Company for the fiscal
year ended December 31, 1996 shall not reflect any event, change or effect
having, or which would be reasonably likely to have, in the aggregate, a
Company Material Adverse Effect;
(d) American General Corporation shall have received a letter of its
independent public accountants, dated the Closing Date, in form and
substance reasonably satisfactory to it stating that the Merger will
qualify as a transaction to be accounted for in accordance with the
pooling-of-interests method of accounting under the requirements of APB No.
16; and
(e) all outstanding shares of Company Preferred Stock shall either have
been redeemed or converted into Shares of Company Common Stock, in
accordance with the terms of the certificate of designation of such Company
Preferred Stock.
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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
American General Corporation and the Company.
Section 9.2 Termination by Either American General Corporation or the
Company. This Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of either American General Corporation or the
Company if (a) this Agreement and the transactions contemplated thereby shall
fail to receive the requisite vote for approval and adoption by the
shareholders of the Company at the Company Special Meeting, (b) the issuance
of American General Corporation Common Stock as Merger Consideration shall
fail to receive the requisite vote for approval by the shareholders of
American General Corporation at the American General Corporation Special
Meeting, (c) the Merger shall not have been consummated before October 31,
1997, provided, however, that this Agreement may be extended by written notice
of either American General Corporation or the Company to a date not later than
December 31, 1997, if the Merger shall not have been consummated as a direct
result of the condition set forth in Section 8.1(c) not having been satisfied
by such date or (d) 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 (c) shall not have taken any action that would cause it to
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 (d) shall have used all reasonable efforts to
remove such injunction, order or decree.
Section 9.3 Termination by American General Corporation. 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 American General
Corporation, 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, or (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, in the case of clauses (a)
and (b), is not curable or, if curable, is not cured within thirty (30) days
after written notice of such breach has been given by American General
Corporation to the Company; or (c) if the Board of Directors of the Company
shall have taken or resolved to take any of the actions set forth in clauses
(i), (ii), (iii), or (iv) of Section 7.3.
Section 9.4 Termination by the Company. 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 the Company, if (a) there has been a breach by
American General Corporation of any representation or warranty contained in
this Agreement which would have or would be likely to have a American General
Corporation Material Adverse Effect, or (b) there has been a material breach
of any of the covenants or agreements set forth in this Agreement on the part
of American General Corporation, which breach, in the case of clauses (a) and
(b), is not curable or, if curable, is not cured within thirty (30) days after
written notice of such breach has been given by the Company to American
General Corporation; or (c) if the Board of Directors of the Company shall
have taken or resolved to take any of the actions set forth in, and in
accordance with the terms of, clauses (i), (ii), (iii) or (iv) of Section 7.3.
Section 9.5 Effect of Termination and Abandonment. 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: (a) there shall be no liability or obligation on the part
of American General Corporation, the American General Corporation
Subsidiaries, the Company or the Company Subsidiaries or their respective
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officers and directors, and all obligations of the parties shall terminate,
except for (i) the obligations of the parties pursuant to this Section 9.5,
(ii) the provisions of Sections 4.20, 5.20, 7.5, 10.4, 10.5, 10.6 and 10.10,
(iii) the obligations of the parties set forth in the Confidentiality
Agreement referred to in Section 7.1 hereof (provided, however, that if this
Agreement is terminated by the Company pursuant to Section 9.4(c), American
General Corporation shall no longer be bound by any standstill provisions of
the Confidentiality Agreement), and except that (iv) 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 (b) 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.
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, 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 American General Corporation or Merger Sub, to:
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Telecopy: (713) 831-1300
Attention: Jon P. Newton, Esq.
With copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopy: (212) 735-2000
Attention: Morris J. Kramer, Esq.
(b) If to the Company, to:
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Telecopy: (212) 709-6410
Attention: Wesley E. Forte, Esq.
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<PAGE>
with copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Telecopy: (212) 909-6836
Attention: Michael W. Blair, 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, American General Corporation 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 Agreement, 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
Merger Sub may assign all of its rights and obligations hereunder to any
direct wholly-owned subsidiary of American General Corporation which shall
then be substituted for Merger 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 New York without giving
effect to the provisions thereof relating to conflicts of law, provided, that
the laws of the respective states of incorporation of the parties hereto shall
govern the respective internal rights and obligations of the parties and the
effects of the Merger contemplated hereby.
Section 10.6 Expenses. (a) Except as provided in clause (b) and clause (c)
of this Section 10.6, 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 American
General Corporation and the Company.
(b) In the event that (i) this Agreement is terminated by American
General Corporation pursuant to Section 9.3(c), (ii) this Agreement is
terminated by the Company pursuant to Section 9.4(c), or (iii) prior to the
termination of this Agreement any person or entity shall have commenced a
tender or exchange offer which would, if successful, result in the
acquisition by such person or entity of twenty percent (20%) or more of the
outstanding shares of Company Common Stock and such tender or exchange
offer is completed not later than six (6) months following the termination
of this Agreement, the Company shall promptly, but not later than two
business days after the date of any such termination (or the date of
completion of such tender or exchange offer, as the case may be), pay to
American General Corporation in same day funds $48 million. The Company
acknowledges that the agreements contained in this Section 10.6(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, American General Corporation would not enter into
this Agreement.
(c) In the event that (i) an Acquisition Proposal (as defined in Section
7.2 but with respect to American General Corporation and the American
General Corporation Subsidiaries) shall have been made known to American
General Corporation or any of its subsidiaries or shall have been made
known directly to the shareholders of American General Corporation or any
person shall have publicly announced an intention (whether or not
conditional) to make such Acquisition Proposal, (ii) the Board of Directors
of American General Corporation shall have withdrawn or modified, or have
proposed to withdraw or modify, in a
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manner adverse to the Company the approval or recommendation by such Board
of Directors of the issuance of American General Corporation Common Stock
as Merger Consideration, or approved or recommended, or have proposed to
approve or recommend, any such Acquisition Proposal and (iii) thereafter
this Agreement is terminated by either the Company or American General
Corporation pursuant to Section 9.2(b), American General Corporation shall
promptly, but not later than two business days after the date of any such
termination, pay to the Company in same day funds $48 million. American
General Corporation acknowledges that the agreements contained in this
Section 10.6(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Company would not
enter into this Agreement.
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. Except as provided in Sections 7.6, 7.9, 7.10, 7.14 and
Exhibit D, 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.
Section 10.12 Definition of "knowledge" of the Company and of American
General Corporation. As used herein, the term "knowledge of the Company" shall
mean the actual knowledge of the officers of the Company and its subsidiaries
set forth on Section 10.12 of the Company Disclosure Letter; and the term
"knowledge of American General Corporation" shall mean the actual knowledge of
any individual holding the title of "Senior Vice President" or higher of
American General Corporation.
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<PAGE>
IN WITNESS WHEREOF, each of American General Corporation, Merger Sub and the
Company has caused this Agreement to be executed as of the date first above
written.
AMERICAN GENERAL CORPORATION
By: /s/ Robert M. Devlin
----------------------------------
Name: Robert M. Devlin
Title:President & Chief Executive
Officer
TEXAS STARS CORPORATION
By: /s/ Robert M. Devlin
----------------------------------
Name: Robert M. Devlin
Title:President & Chairman
USLIFE CORPORATION
By: /s/ Gordon E. Crosby, Jr.
----------------------------------
Name: Gordon E. Crosby, Jr.
Title:Chairman of the Board
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<PAGE>
EXHIBIT D
EMPLOYEE BENEFITS MATTERS
1. Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Agreement and Plan of Merger dated as of February
12, 1997, by and among American General Corporation, Texas Stars Corporation
and USLIFE Corporation.
2. From and after the Effective Time, American General Corporation shall, or
shall cause the Company, to honor and be bound by the terms and conditions of
each employee or executive benefit plan, program or agreement sponsored or
maintained by the Company or to which the Company is party (a "Company Benefit
Arrangement") and to administer and interpret any such Company Benefit
Arrangement in accordance with the practices of the Company as in effect prior
to the Effective Time. Nothing in the immediately preceding sentence shall be
construed to limit the right of American General Corporation or the Company,
as the case may be, following the Effective Time to amend, modify or terminate
any such Company Benefit Arrangement pursuant to the terms and conditions
thereof as in effect immediately prior to the Effective Time, provided that
(a) no such amendment, modification or termination shall reduce any of the
benefits or compensation payable thereunder which are accrued as of the
Effective Time (or as of the date of such action, whichever is greater) and
(b) in no event shall the severance and/or other termination benefits payable
to any employee whose employment terminates prior to the first anniversary of
the Effective Time be less than the amount that would have been payable to
such employee under the terms of any and all such Company Benefit Arrangements
as in effect immediately prior to such amendment, modification or termination.
3. Without limiting the generality of the foregoing, from and after the
Effective Time, American General Corporation shall, or shall cause the Company
and its subsidiaries to, make available to each person who is an employee of
the Company and its subsidiaries at the Effective Time (the "Company
Employees") employee benefit plans and programs which are either (a) the same
as are made available to the employees of American General Corporation, on
terms and conditions which are no less favorable to the Company Employees than
the terms and conditions generally applicable to the employees of American
General Corporation or (b) no less favorable to the Company Employees than the
terms and conditions of the Company Benefit Arrangements in which they were
participating immediately prior to the Effective Time. To the extent service
is a factor in determining eligibility for and vesting in the benefits
provided thereunder (including, without limitation eligibility for any early
retirement benefits and similar benefit subsidies), the plans and programs in
which each Company Employee participates after the Effective Time in
accordance with the preceding sentence shall recognize service with the
Company and its subsidiaries (as taken into account for purposes of
administering the corresponding Company Benefit Arrangement immediately prior
to the Effective Time and as enhanced upon the Effective Time under the terms
and conditions of any such Company benefit Arrangement) as service with
American General Corporation (i) for purposes of determining each such Company
Employee's eligibility to participate in, and vest in the benefits provided
under, such plan or program and (ii) for purposes of determining the benefits
accrued under such plan or program to the extent required by applicable law.
Notwithstanding the foregoing, in no event shall any employee receive
duplicate benefits with respect to any period of prior service. To the extent
any welfare benefit plan in which any Company Employee participates after the
Effective Time (x) imposes any pre-existing condition limitation, such
condition shall be waived or (y) has a deductible or requires a co-payment by
the Company Employee that is subject to a maximum out-of-pocket limitation,
there shall be credited against any such deductible or limitation any costs
incurred by such Company Employee during the comparable period under the terms
of the corresponding Company Benefit Arrangement prior to the Effective Time.
4. For the avoidance of doubt, American General Corporation agrees and
acknowledges that upon the Effective Time a "change of control" shall have
occurred under the terms and conditions of any Company Benefit Arrangement.
A-D-1
<PAGE>
5. At the Effective Time, each option to purchase Company Common Stock
("Company Stock Options") which is outstanding and unexercised at the
Effective Time shall be converted automatically into an option to purchase
American General Corporation Shares (a "Substituted Option") in an amount and
at an exercise price determined as provided below (and otherwise subject to
the terms of the Company Stock Option Plans:
a. The number of American General Corporation Shares to be subject to the
Substituted Option shall be equal to the product of the number of Shares
subject to the corresponding Company Stock Option and the Exchange Ratio,
provided that any fractional American General Corporation Shares resulting
from such multiplication shall be rounded down to the nearest share and,
except with respect to any options which are intended to qualify as
"incentive stock options" (as defined in Section 422 of the Code ("ISOs")),
American General Corporation shall pay an amount in cash to the holder of
such Company Stock Option equal to the product of such fractional interest
multiplied by the Average American General Price; and
b. The exercise price per American General Corporation Share under the
Substituted Option shall be equal to the aggregate exercise price of the
corresponding Employee Stock Option divided by the total number of full
American General Corporation Shares subject to the Substituted Option (as
determined under paragraph 1 immediately above), provided that such
exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any ISOs shall be and is
intended to be effected in a manner that is consistent with section 424(a) of
the Code. To the extent required by law, the duration and other terms of the
Substituted Option shall be the same as that of the corresponding Company
Stock Option, except to the extent that the holder of such option shall have
waived the "reload" feature associated with such option, and except that all
references to the Company shall be deemed to be references to American General
Corporation. American General Corporation shall file with the SEC a
registration statement on Form S-8 (or other appropriate form) or a post-
effective amendment to the Registration Statement for purposes of registering
all American General Corporation Shares issuable after the Effective Time upon
exercise of the Company Stock Options, which shall be effective at the
Effective Time, and shall comply, to the extent applicable, with state
securities or blue sky laws with respect thereto at the Effective Time.
6. American General Corporation will adopt a procedure, in consultation with
the Company, whereby employees and directors of the Company shall each have
the right to exercise Substituted Options immediately upon the occurrence of,
and at any time following, the Effective Time, including without limitation,
through the use of the American General Corporation Shares to be received in
connection with the Merger, by delivering written notice (including prior to
the Effective Time) to a person designated by American General Corporation at
least 10 business days prior to the Effective Time. American General
Corporation will allow Substitute Options to be exercised by the same means
and methods as were permitted by the Company prior to the Effective Time and
by such other methods of exercise as are available to employees of American
General Corporation and its subsidiaries.
7. American General Corporation will take such action as shall be necessary
to cause each holder of a Substituted Option at the Effective Time to have the
right to exercise such Substituted Option for a period of not less than 60
days following the Effective Time (the "Minimum Exercise Period"), it being
understood that continued employment of any employee holding such a
Substituted Option during the Minimum Exercise Period will satisfy this
requirement without any further action on the part of American General
Corporation and that the termination of any such holder's service with the
Company shall not shorten the Minimum Exercise Period. In the case of any
individual who enters into an agreement with American General Corporation or
with any other person at the request of American General Corporation which
limits the ability of such individual to sell American General Corporation
Shares until a date which is after the Effective Time (e.g., until after the
first publication of combined financial results of American General
Corporation and the Company), the Minimum Exercise Period shall not be less
than 30 days following the expiration of the period during which such
individual is so limited.
A-D-2
<PAGE>
ANNEX B
[LETTERHEAD OF MERRILL LYNCH & CO., INC.]
February 12, 1997
Board of Directors
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Members of the Board:
You have informed us that American General Corporation (the "Acquiror"),
Texas Stars Corporation, a wholly owned subsidiary of the Acquiror ("Merger
Sub"), and USLIFE Corporation (the "Company") propose to enter into an
Agreement and Plan of Merger (the "Agreement"), pursuant to which Merger Sub
will be merged with and into the Company with the result that the Company will
be the surviving corporation and a wholly owned subsidiary of the Acquiror (the
"Merger"). In the Merger each outstanding share of Common Stock, par value
$1.00 per share, of the Company (the "Company Shares") issued and outstanding
immediately prior to the effective time of the Merger not owned directly or
indirectly by the Acquiror or the Company will be converted, subject to certain
limitations, into the right to receive a number (the "Exchange Ratio") of
shares of common stock, par value $0.50 per share of the Acquiror (the
"Acquiror Common Stock") calculated by dividing $49.00 by the Average American
General Price (as defined in the Agreement) in accordance with and subject to
the limitations set forth in the Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair to the
Acquiror from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) reviewed certain publicly available business and financial information that
we deemed relevant relating to the Company and the Acquiror and the
respective industries in which they operate;
(2) reviewed certain limited information, including financial forecasts
relating to the business, earnings, cash flow, assets, liabilities and
prospects of the Acquiror and the Company (with respect to the Company,
such financial forecasts were limited to publicly available analysts'
earnings forecasts), as well as information regarding the estimated cost
savings and related expenses and synergies expected to result from the
Merger (the "Expected Savings and Synergies"), furnished to us by the
Acquiror ;
(3) conducted discussions with members of senior management and representatives
of the Acquiror concerning the foregoing, including the businesses,
prospects and financial forecasts of the Acquiror and the Company, before
and after giving effect to the Merger and the Expected Savings and
Synergies , with members of senior management and representatives of the
Company concerning the business and prospects of the Company;
(4) reviewed the historical market prices and trading activity for the Company
Shares and compared them with those of certain publicly traded companies
that we deemed to be comparable;
B-1
<PAGE>
(5) compared the historical and projected results of operations of the
Acquiror and the Company (after giving effect to the Merger) with those of
certain companies that we deemed to be comparable to the Acquiror and the
Company, including after giving effect to the Merger, respectively;
(6) compared the proposed financial terms of the Merger with the financial
terms of certain other mergers and acquisitions that we deemed to be
relevant;
(7) reviewed a draft of the Agreement in the form provided to us and have
assumed that the final form of the Agreement will not vary in any manner
that is material to our analysis; and
(8) reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we deemed
necessary, including our assessment of general economic, market and
monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available and have
further relied on the assurances of management of the Acquiror and the Company
that they are not aware of any facts that will make such information
inaccurate or misleading. We have not assumed any responsibility for
independently verifying such information and we have not undertaken an
independent appraisal of the assets or liabilities of the Acquiror or the
Company. We have not relied on or considered any actuarial appraisals in
connection with the preparation of our opinion. Additionally, we have not
conducted a physical inspection of the properties or facilities of the
Acquiror or the Company. In preparing our opinion we were not provided with
financial forecasts with respect to the Company other than certain publicly
available analysts' earnings forecasts which we discussed with the Acquiror's
management and on which we relied. Furthermore we did not review with
management of the Company (i) the publicly available analysts' forecasts with
respect to the Company or (ii) the Expected Savings and Synergies. However,
our procedures did include inquiries of the Company as to whether the Company
considered publicly available analysts' earnings forecasts for the Company's
1996 results of operations to be reasonable and a review with the Company's
management of the general business and prospects of the Company. With respect
to the publicly available analysts' earnings forecasts for the Company, we
have assumed that they have been reasonably prepared and reflect the best
publicly available information. With respect to the financial forecast
information and the Expected Savings and Synergies furnished to or discussed
with us by the Acquiror or its representatives, we have assumed that they have
been reasonably prepared and reflect the best currently available estimates
and judgment of the Acquiror's management as to the expected future financial
performance of, or expenses or benefits to, the Acquiror or the Company, as
the case may be (including after taking into account the impact of the Merger)
and that in all material respects they will be realized in the amounts and
time indicated thereby. We express no opinion as to such financial forecast
information, the publicly available analysts' earnings forecasts or the
Expected Savings and Synergies or the assumptions on which they were based. In
addition, we have assumed that the Merger will be accounted for as a pooling
of interests under generally accepted accounting principles and that the
Merger will qualify as a tax-free reorganization for United States Federal
income tax purposes.
For purposes of rendering this opinion we have assumed, in all respects
material to our analysis, that the representations and warranties of each
party in the Agreement and all related documents and instruments
(collectively, the "Documents") contained therein are true and correct, that
each party to the Documents will perform all of the covenants and agreements
required to be performed by such party under such Documents, and that all
conditions to the consummation of the Merger will be satisfied without waiver
thereof. We have also assumed that all material governmental, regulatory or
other consents and approvals will be obtained in connection with the Merger
and that in the course of obtaining any necessary governmental, regulatory or
other consents and approvals, or any amendments, modifications or waivers to
any documents to which either of the Acquiror or the Company are party, no
restrictions will be imposed or amendments, modifications or waivers made that
would have any material adverse effect on the contemplated benefits to the
Acquiror of the Merger.
Our opinion is necessarily based upon market, economic and other conditions
as they exist on, and can be evaluated as of, the date of this letter. Our
opinion does not address the merits of the underlying decision by the Acquiror
to engage in the Merger.
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<PAGE>
In connection with the preparation of this opinion, we have not been asked to
consider, and this opinion does not in any manner address, the price at which
the shares of Acquiror Common Stock will actually trade following consummation
of the Merger.
We have, in the past, provided financial advisory and/or financing services
to the Acquiror and may continue to do so and have received, and may receive,
fees for the rendering of such services. We are acting as financial advisor to
the Acquiror in connection with the Merger and will receive a fee for our
services. In addition, the Acquiror has agreed to indemnify us for certain
liabilities arising out of our engagement. In the ordinary course of our
business, we actively trade in the securities of the Acquiror and the Company
for our own account and for the accounts of our customers and, accordingly, may
at any time hold a long or short position in such securities.
On the basis of, and subject to the foregoing, we are of the opinion, as of
the date hereof, that the Exchange Ratio is fair to the Acquiror from a
financial point of view.
This opinion is for the use of the Board of Directors of the Acquiror and
does not constitute a recommendation to any shareholder as to how such
shareholder should vote on the proposed merger.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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<PAGE>
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Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004
Tel: 212-902-1000
[GOLDMAN SACHS LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
ANNEX C
PERSONAL AND CONFIDENTIAL
May , 1997
Board of Directors
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $1.00 per share (the "Shares"),
of USLIFE Corporation ("USLIFE") of the consideration to be received for the
Shares pursuant to the Merger (the "Merger") contemplated by the Agreement and
Plan of Merger dated as of February 12, 1997 by and among American General
Corporation ("American General"), Texas Stars Corporation, a New York
corporation and a wholly-owned subsidiary of American General, and USLIFE (the
"Agreement"). Pursuant to the Agreement, each outstanding Share will be
converted into the right to receive $49.00 in Common Stock, par value $0.50 per
share (the "Common Stock"), of American General, computed and subject to
adjustment as set forth in the Agreement (the "Merger Consideration").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with USLIFE, having acted as its financial advisor in connection with,
and having participated in certain of the negotiations leading to, the
Agreement. We also have provided certain investment banking services to
American General from time to time, including having acted as lead manager or
as Initial Purchaser in five issues of fixed income or convertible securities
completed directly or through wholly-owned subsidiaries by American General in
1995 and 1996 and having sold 6,400,000 shares of Common Stock to American
General in connection with an accelerated stock buyback on April 15, 1997, and
we may provide investment banking services to American General in the future.
Charles A. Davis, a limited partner of The Goldman Sachs Group L.P., is a
director of USLIFE. Goldman, Sachs & Co. is a full service securities firm and
in the course of our normal trading activities (including the foregoing stock
buyback) we have accumulated (i) an aggregate net long position of 5,731
Shares, (ii) an aggregate net short position of 5,076,893 shares of Common
Stock, and (iii) a long position in fixed-income securities issued by American
General and its subsidiaries with an aggregate face value of $61 million.
New York | London | Tokyo | Boston | Chicago | Dallas | Frankfurt | George
Town | Hong Kong | Houston | Los Angeles | Memphis
Miami | Milan | Montreal | Osaka | Paris | Philadelphia | San
Francisco | Singapore | Sydney | Toronto | Vancouver | Zucrich
C-1
<PAGE>
In connection with this opinion, we have reviewed, among other things, the
Agreement; American General's Registration Statement on Form S-4, including
the Joint Proxy Statement/Prospectus relating to the Special Meetings of
Shareholders of USLIFE and American General to be held in connection with the
Agreement; Annual Reports to Shareholders and Annual Reports on Form 10-K for
the five years ended December 31, 1996 of USLIFE and American General; certain
interim reports to shareholders and Quarterly Reports on Form 10-Q of USLIFE
and American General; Statutory Annual Statements filed by certain insurance
subsidiaries of USLIFE and American General with the Insurance Departments of
the States under the laws of which they are respectively organized for the
five years ended December 31, 1996; certain interim statutory financial
information filed by such subsidiaries with such Insurance Departments;
certain other communications from USLIFE and American General to their
respective shareholders; certain internal financial and actuarial analyses and
forecasts for USLIFE and American General prepared by their respective
managements; and certain estimates of cost savings and operating synergies
that the management of USLIFE expects will result from the Merger. We also
have held discussions with members of the senior management of USLIFE and
American General regarding the strategic rationale for, and benefits of, the
Merger and the past and current business operations, financial condition and
future prospects of their respective companies. In addition, we have reviewed
the reported price and trading activity for the Shares and the Common Stock,
compared certain financial and stock market information for USLIFE and
American General with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the life insurance industry
specifically and in other industries generally and performed such other
studies and analyses as we considered appropriate. Our advisory services and
the opinion expressed herein are provided for the information and assistance
of the Board of Directors of USLIFE in connection with its consideration of
the transaction contemplated by the Agreement and such opinion does not
constitute a recommendation as to how any holder of the Shares should vote
with respect to such transaction.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us, including the information furnished by
USLIFE and American General relating to reserves and related items, and have
assumed such accuracy and completeness for purposes of rendering this opinion.
In that regard, we have assumed, with your consent, that the financial
estimates of USLIFE, including, without limitation, the projected synergies
resulting from the Merger have been reasonably prepared and reflect the best
currently available judgments of USLIFE and that such estimates will be
realized in the amounts and the times contemplated thereby. We are not
actuaries and our services did not include actuarial determinations or
evaluations by us or an attempt to evaluate actuarial assumptions. In
addition, we have not made an independent evaluation or appraisal of the
assets and liabilities of USLIFE or American General or any of their
subsidiaries and we have not been furnished with any such evaluation or
appraisal. We understand that USLIFE does not prepare financial forecasts and
we were not furnished with any such forecasts. We requested but were not
furnished with financial forecasts for American General. We were not requested
to, and did not, solicit in the market indications of interest in acquiring
all or part of USLIFE or in engaging in a business combination or any other
strategic transaction with USLIFE. We also have assumed with your consent that
the Merger will be accounted for as a pooling of interests under generally
accepted accounting principles.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Merger
Consideration pursuant to the Agreement is fair to the holders of Shares.
Very truly yours,
/s/ Goldman, Sachs & Co.
- ---------------------------------
GOLDMAN, SACHS & CO.
C-2
<PAGE>
ANNEX D
SECTIONS 623 AND 910 FROM THE
NEW YORK BUSINESS CORPORATION LAW
REGARDING DISSENTERS' RIGHTS
623 PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES.
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting before the vote, written objection to the action. The objection shall
include a notice of his election to dissent, his name and residence address,
the number and classes of shares as to which he dissents and a demand for
payment of the fair value of his shares if the action is taken. Such objection
is not required from any shareholder to whom the corporation did not give
notice of such meeting in accordance with this chapter or where the proposed
action is authorized by written consent of shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall
give written notice of such authorization or consent by registered mail to
each shareholder who filed written objection or from whom written objection
was not required, 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.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence 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 who elects to dissent from a merger under section 905 (Merger of
subsidiary corporation) or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations) or from a share exchange
under paragraph (g) of section 913 (Share exchanges) shall file a written
notice of such election to dissent within twenty days after the giving to him
of a copy of the plan of merger or exchange or an outline of the material
features thereof under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the
fair value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his
acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer
is made. Upon expiration of such time, withdrawal of a notice of election
shall require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder as
provided in paragraph (g). If a notice of election is withdrawn, or the
corporate action is rescinded, or a court shall determine that the shareholder
is not entitled to receive payment for his shares, or the shareholder shall
otherwise lose his dissenter's rights, 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 consummation of the corporate action, 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
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<PAGE>
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.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the
shareholder or other person who submitted them on his behalf. Any shareholder
of shares represented by certificates who fails to submit his certificates for
such notation as herein specified shall, at the option of the corporation
exercised by written notice to him within forty-five days from the date of
filing of such notice of election to dissent, lose his dissenter's rights
unless a court, for good cause shown, shall otherwise direct. Upon transfer of
a certificate bearing such notation, each new certificate issued therefor
shall bear a similar notation together with the name of the original
dissenting holder of the shares and a transferee shall acquire no rights in
the corporation except those which the original dissenting shareholder had at
the time of the transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later
(but in no case later than ninety days from the shareholders' authorization
date), the corporation or, in the case of a merger or consolidation, the
surviving or new corporation, shall make a written offer by registered mail to
each shareholder who has filed such notice of election to pay for his shares
at a specified price which the corporation considers to be their fair value.
Such offer shall be accompanied by a statement setting forth the aggregate
number of shares with respect to which notices of election to dissent have
been received and the aggregate number of holders of such shares. If the
corporate action has been consummated, such offer shall also be accompanied by
(1) advance payment to each such shareholder who has submitted the
certificates representing his shares to the corporation, as provided in
paragraph (f), of an amount equal to eighty percent of the amount of such
offer, or (2) as to each shareholder who has not yet submitted his
certificates a statement that advance payment to him of an amount equal to
eighty percent of the amount of such offer will be made by the corporation
promptly upon submission of his certificates. If the corporate action has not
been consummated at the time of the making of the offer, such advance payment
or statement as to advance payment shall be sent to each shareholder entitled
thereto forthwith upon consummation of the corporate action. Every advance
payment or statement as to advance payment shall include advice to the
shareholder to the effect that acceptance of such payment does not constitute
a waiver of any dissenters' rights. If the corporate action has not been
consummated upon the expiration of the ninety-day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the
making of such offer, and a profit and loss statement or statements for not
less than a twelve month period ended on the date of such balance sheet or, if
the corporation was not in existence throughout such twelve month period, for
the portion thereof during which it was in existence. Notwithstanding the
foregoing, the corporation shall not be required to furnish a balance sheet or
profit and loss statement or statements to any shareholder to whom such
balance sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the shareholders' authorization
for or consent to the proposed corporate action the shareholders were
furnished with a proxy or information statement, which included financial
statements, pursuant to Regulation 14A or Regulation 14C of the United States
Securities and Exchange Commission. If within thirty days after the making of
such offer, the corporation making the offer and any shareholder agree upon
the price to be paid for his shares, payment therefor shall be made within
sixty days after the making of such offer or the consummation of the proposed
corporate action, whichever is later, upon the surrender of the certificates
for any such shares represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen 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 their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
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<PAGE>
the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall
be brought in the county where the office of the domestic corporation,
whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall 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 does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such rate
as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest,
the court shall consider all relevant factors, including the rate of
interest which the corporation would have had to pay to borrow money during
the pendency of the proceeding. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
(7) Each party to such proceeding shall bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided in this section was arbitrary,
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<PAGE>
vexatious or otherwise not in good faith. In making any determination as
provided in clause (A), the court may consider the dollar amount or the
percentage, or both, by which the fair value of the shares as determined
exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificate for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section
515 (Reacquired shares), except that, in the case of a merger or
consolidation, they may be held and disposed of as the plan of merger or
consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it is
liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the non-dissenting shareholders, and if it is
not liquidated, retain his right to be paid for his shares, which right the
corporation shall be obliged to satisfy when the restrictions of this
paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for his
shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except
that this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to be
given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations). (Last amended by Ch. 117, L. '86, eff. 9-1-86.)
910 RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ASSETS, OR
SHARE EXCHANGE. (a) A shareholder of a domestic corporation shall, subject to
and by complying with section 623 (Procedure to enforce shareholder's right to
receive payment for shares), have the right to receive payment of the fair
value of his shares and the other rights and benefits provided by such
section, in the following cases:
(1) Any shareholder entitled to vote who does not assent to the taking of
an action specified in subparagraphs (A), (B) and (C).
(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of
his shares shall not be available:
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<PAGE>
(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary
corporations), or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations); and
(ii) To a shareholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in
subparagraph (i), unless such merger effects one or more of the
changes specified in subparagraph (b)(6) of section 806 (Provisions
as to certain proceedings) in the rights of the shares held by such
shareholder.
(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires
shareholder approval under section 909 (Sale, lease, exchange or other
disposition of assets) other than a transaction wholly for cash where
the shareholders' approval thereof is conditioned upon the dissolution
of the corporation and the distribution of substantially all its net
assets to the shareholders in accordance with their respective
interests within one year after the date of such transaction.
(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the
right to receive payment of the fair value of his shares shall not be
available to a shareholder whose shares have not been acquired in the
exchange.
(2) Any shareholder of the subsidiary corporation in a merger authorized
by section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation
a written notice of election to dissent as provided in paragraph (c) of
section 623. (Last amended by Ch. 390. L. '91. eff. 7-15-91.)
D-5
<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(b).
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>
<C> <S>
*2 Agreement and Plan of Merger by and among the Registrant, Texas Stars
Corporation and USLIFE Corporation, dated as of February 12, 1997
(included as Annex A to the Joint Proxy Statement/ Prospectus in Part I
of this Registration Statement).
3(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).
3(b) 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(a) 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(b) 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).
*5 Opinion and Consent of Susan A. Jacobs, Associate General Counsel of
American General, with respect to the legality of the securities to be
issued in the Merger.
*8(a) Form of Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom LLP,
with respect to the consequences of the Merger contained in the Joint
Proxy Statement/Prospectus.
*8(b) Form of Opinion and Consent of Debevoise & Plimpton, with respect to the
consequences of the Merger contained in the Joint Proxy
Statement/Prospectus.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S> <C>
*23(a) Consent of Susan A. Jacobs, Associate General Counsel of American
General (contained in opinion in Exhibit 5).
*23(b) Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained in
their opinion on the tax consequences of the Merger contained in
the Joint Proxy Statement/Prospectus in Exhibit 8(a)).
*23(c) Consent of Debevoise & Plimpton (contained in their opinion on
the tax consequences of the Merger contained in the Joint Proxy
Statement/Prospectus in Exhibit 8(b)).
*23(d) Consent of Ernst & Young LLP.
*23(e) Consent of KPMG Peat Marwick LLP.
*23(f) Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
*23(g) Consent of Goldman, Sachs & Co.
*24 Powers of Attorney: J. Evans Attwell, Brady F. Carruth, James S.
D'Agostino, Jr., W. Lipscomb Davis, Jr., Robert M. Devlin, Larry
D. Horner, Richard J.V. Johnson, Jon P. Newton, Robert E.
Smittcamp and Anne W. Tatlock.
*99(a) Form of Common Stock Proxy of American General Corporation
(relating to the special meeting of shareholders of American
General Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
*99(b) Form of 7% Convertible Preferred Stock Proxy of American General
Corporation (relating to the special meeting of shareholders of
American General Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
*99(c) Form of Thrift Plans Voting Instructions of American General
Corporation (relating to the special meeting of shareholders of
American General Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
*99(d) Form of Proxy of USLIFE Corporation (relating to the special
meeting of shareholders of USLIFE Corporation described in the
Joint Proxy Statement/Prospectus in Part I of this Registration
Statement).
*99(e) Form of USLIFE Corporation Employee Savings and Investment Plan
Confidential Voting Instructions (relating to the special meeting
of shareholders of USLIFE Corporation described in the Joint
Proxy Statement/Prospectus in Part I of this Registration
Statement).
</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.
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;
II-2
<PAGE>
(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 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-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 MAY 19, 1997.
AMERICAN GENERAL CORPORATION
By: /s/ Carl J. Santillo
By __________________________________
Carl J. Santillo
Senior Vice President--Finance
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Robert M. Devlin* Chairman, Chief Executive May 19, 1997
____________________________________ Officer and Director
Robert M. Devlin (Principal Executive
Officer)
/s/ Carl J. Santillo Senior Vice President-- May 19, 1997
____________________________________ Finance (Principal Financial
Carl J. Santillo Officer)
/s/ Pamela J. Penny Vice President and May 19, 1997
____________________________________ Controller
Pamela J. Penny (Principal Accounting
Officer)
J. Evans Attwell* Director May 19, 1997
____________________________________
J. Evans Attwell
Brady F. Carruth* Director May 19, 1997
____________________________________
Brady F. Carruth
James S. D'Agostino, Jr.* Director May 19, 1997
____________________________________
James S. D'Agostino, Jr.
W. Lipscomb Davis, Jr.* Director May 19, 1997
____________________________________
W. Lipscomb Davis, Jr.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Larry D. Horner* Director May 19, 1997
____________________________________
Larry D. Horner
Richard J.V. Johnson* Director May 19, 1997
____________________________________
Richard J.V. Johnson
Jon P. Newton* Director May 19, 1997
____________________________________
Jon P. Newton
Robert E. Smittcamp* Director May 19, 1997
____________________________________
Robert E. Smittcamp
Anne M. Tatlock* Director May 19, 1997
____________________________________
Anne M. Tatlock
*By:
/s/ Carl J. Santillo May 19, 1997
____________________________________
Carl J. Santillo
(Attorney-in-fact)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
*2 Agreement and Plan of Merger by and among the Registrant, Texas Stars
Corporation and USLIFE Corporation, dated as of February 12, 1997
(included as Annex A to the Joint Proxy Statement/ Prospectus in Part
I of this Registration Statement).
3(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).
3(b) 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(a) 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(b) 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).
*5 Opinion and Consent of Susan A. Jacobs, Associate General Counsel of
American General, with respect to the legality of the securities to be
issued in the Merger.
*8(a) Form of Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois), with respect to the consequences of the Merger contained
in the Joint Proxy Statement/Prospectus.
*8(b) Form of Opinion and Consent of Debevoise & Plimpton, with respect to
the consequences of the Merger contained in the Joint Proxy
Statement/Prospectus.
*23(a) Consent of Susan A. Jacobs, Associate General Counsel of American
General (contained in opinion in Exhibit 5).
*23(b) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois) (contained
in their opinion on the tax consequences of the Merger contained in
the Joint Proxy Statement/Prospectus in Exhibit 8(a)).
*23(c) Consent of Debevoise & Plimpton (contained in their opinion on the tax
consequences of the Merger contained in the Joint Proxy
Statement/Prospectus in Exhibit 8(b)).
*23(d) Consent of Ernst & Young LLP.
*23(e) Consent of KPMG Peat Marwick LLP.
*23(f) Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
*23(g) Consent of Goldman, Sachs & Co.
*24 Powers of Attorney: J. Evans Attwell, Brady F. Carruth, James S.
D'Agostino, Jr., W. Lipscomb Davis, Jr., Robert M. Devlin, Larry D.
Horner, Richard J.V. Johnson, Jon P. Newton, Robert E. Smittcamp and
Anne W. Tatlock.
*99(a) Form of Common Stock Proxy of American General Corporation (relating
to the special meeting of shareholders of American General Corporation
described in the Joint Proxy Statement/Prospectus in Part I of this
Registration Statement).
*99(b) Form of 7% Convertible Preferred Stock Proxy of American General
Corporation (relating to the special meeting of shareholders of
American General Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
*99(c) Form of Thrift Plans Voting Instructions of American General
Corporation (relating to the special meeting of shareholders of
American General Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
*99(d) Form of Proxy of USLIFE Corporation (relating to the special meeting
of shareholders of USLIFE Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
*99(e) Form of USLIFE Corporation Employee Savings and Investment Plan
Confidential Voting Instructions (relating to the special meeting of
shareholders of USLIFE Corporation described in the Joint Proxy
Statement/Prospectus in Part I of this Registration Statement).
</TABLE>
- --------
*Filed Herewith
<PAGE>
Exhibit 5
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
May 19, 1997
I have acted as counsel to American General Corporation, a Texas
corporation (the "Company" or "American General") in connection with the
acquisition (the "Merg er") by the Company of USLIFE Corporation ("USLIFE")
pursuant to the Agreement and Plan of Merger (the "Merger Agreement") dated as
of February 12, 1997, among the Company, Texas Stars Corporation, a New York
corporation, and USLIFE. The Company has prepared a Registration Statement on
Form S-4 (the "Registration Statement") to be filed by the Company with the
Securities and Exchange Commission (the "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 the Company's Common
Stock, par value $.50 per share (the "Shares") (together with the attached
Preferred Share Purchase Rights, "Common Stock"), pursuant to the Merger
Agreement.
This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act.
In connection with rendering this opinion, I have examined and am familiar
with originals or copies, certified or otherwise identified to my satisfaction,
of such documents as I have deemed necessary or appropriate as a basis for the
opinion set forth herein, including, with out limitation, (i) the Registration
Statement, including the Joint Proxy Statement/Prospectus; (ii) the Restated
Articles of Incorporation of the Company; (iii) the Amended and Restated Bylaws
of the Company; (iv) the 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
Company and First Chicago Trust Company of New York, as Rights Agent; (v) the
Merger Agreement; (vi) resolutions of the Board of Directors of the Company
relating to the transactions contemplated by the
<PAGE>
American General Corporation
May 19, 1997
Page 2
Registration Statement; (vii) a specimen certificate evidencing the Common
Stock; and (viii) such other certificates, instruments and documents as I
considered necessary or appropriate for the purposes of this opinion.
As to any facts material to the opinions expressed herein which I have not
independently established or verified, I have relied upon statements and
representations of certain public officials, officers and other representatives
of the Company, and others.
For purposes of this opinion, I have assumed that prior to the issuance of
any of the Shares (i) the Registration Statement, as finally amended (including
all necessary post-effective amendments), will be effective; (ii) the Merger
Agreement will be approved by the USLIFE stockholders; (iii) the issuance of
shares of Common Stock to be used as consideration in the Merger will be
approved by the American General stockholders; (iv) the Certificate of Merger,
which will give effect to the Merger, will be properly executed, verified and
delivered to the Department of State of the State of New York as provided by the
New York Business Corporation Law; (v) the transactions contemplated by the
Merger Agreement will be consummated; and (vi) the certificates representing
the Shares will be manually signed by an authorized officer of the transfer
agent for the Common Stock and will be registered by the registrar for the
Common Stock and will conform to the specimen thereof examined by me.
I am admitted to the bar in the State of Texas, and I do not express any
opinion as to the laws of any other jurisdiction.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the opinion
that 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 issued in exchange for shares of capital stock of USLIFE pursuant to the
<PAGE>
American General Corporation
May 19, 1997
Page 3
Merger will be validly issued, fully paid and non-assess able.
I hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. I also consent to the reference to my
name under the caption "Legal Matters" in the Joint Proxy Statement/Prospectus
forming a part of the Registration Statement. In giving this consent, I do not
thereby admit that I am included in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Susan A. Jacobs
Susan A. Jacobs
Associate General Counsel
<PAGE>
Exhibit 8(a)
------------
May __, 1997
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Re: Joint Proxy Statement and Prospectus of American General
Corporation and USLIFE Corporation Regarding Proposed Merger
of USLIFE Corporation with Texas Stars Corporation
------------------------------------------------------------
Ladies and Gentlemen:
We are acting as your special counsel in con nection with the filing
with the Securities and Exchange Commission of the Joint Proxy Statement and
Prospectus (the "Proxy Statement") relating to the proposed merger (the
"Merger") of Texas Stars Corporation ("Texas Stars"), a New York corporation and
wholly-owned subsid iary of American General Corporation, a Texas corporation
("American General"), with and into USLIFE Corporation, a New York corporation
("USLIFE"), pursuant to an Agreement and Plan of Merger, dated as of February
12, 1997, by and among USLIFE, American General, and Texas Stars.
We hereby confirm our opinion as set forth in the Proxy Statement
under the heading "THE PROPOSED MERGER -- Certain Federal Income Tax
Consequences of the Merger."
This opinion is limited to the federal law of the United States and
administrative rulings of the Internal Revenue Service as in effect on the date
hereof. We have no obligation to advise you or any other person of changes in
law or in the administrative rulings of the Internal Revenue Service that occur
after the date here of.
<PAGE>
American General Corporation
May __, 1997
Page 2
We are delivering this opinion to you, and without our prior written
consent, no other persons are entitled to rely on this opinion. We hereby
consent to the filing of this opinion as an exhibit to the Proxy Statement and
to the use of our name under the heading "THE PROPOSED MERGER -- Certain Federal
Income Tax Conse quences of the Merger" in the Proxy Statement. In giving such
consent, we do not thereby concede that we are within the category of persons
whose consent is required under Section 7 of this Securities Act of 1933, as
amend ed, or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
<PAGE>
EXHIBIT 8(b)
Draft of Tax Opinion
[Dated as of the Effective Date]
USLIFE Corporation
125 Maiden Lane
New York, New York 10038
Proxy Statement of USLIFE Corporation
Regarding Proposed Merger with Texas Stars Corporation
------------------------------------------------------
To Those Concerned:
We are acting as your special counsel in connection with the filing
with the Securities and Exchange Commission of your Notice of Special Meeting of
Shareholders and Proxy Statement (the "Proxy Statement") relating to the
proposed merger (the "Merger") of Texas Stars Corporation ("Texas Stars"), a New
York corporation and wholly-owned subsidiary of American General Corporation, a
Texas corporation ("American General"), with and into USLIFE Corporation, a New
York corporation ("USLIFE"), pursuant to an Agreement and Plan of Merger, dated
as of February 12, 1997, by and among USLIFE, American General, and Texas Stars.
We hereby confirm our opinion as set forth in the Proxy Statement
under the heading "THE PROPOSED MERGER--Certain Federal Income Tax Consequences
of the Merger."
This opinion is limited to the federal law of the United States and
administrative rulings of the Internal Revenue Service as in effect on the date
hereof. We have no obligation to advise you or any other person of changes in
law or in the administrative rulings of the Internal Revenue Service that occur
after the date hereof.
We are delivering this opinion to you, and without our prior written
consent, no other persons are entitled to rely on this opinion. We hereby
consent to the filing of this opinion as an exhibit to the Proxy Statement and
to the use of our name under the heading "THE PROPOSED MERGER--Certain Federal
Income Tax Consequences of the Merger" in the Proxy Statement. In giving such
consent, we do not thereby concede that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
<PAGE>
EXHIBIT 23(d)
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
to be issued pursuant to the Merger Agreement by and among American General
Corporation, Texas Stars Corporation, and USLIFE Corporation and to the
incorpora tion by reference therein of our report dated February 14, 1997, 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, 1996, and our report dated March 19, 1997 with respect to the
related financial statement schedules included therein, all filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Houston, Texas
May 14, 1997
<PAGE>
EXHIBIT 23(e)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
USLIFE Corporation:
We consent to the use of our report on USLIFE Corporation and subsidiaries (the
"Company") incorporated herein by reference in the Registration Statement on
Form S-4 dated May 16, 1997 and the related Joint Proxy Statement/Prospectus
(the "Registration Statement") and to the reference to our firm under the
heading "Experts" in the prospectus.
Our report refers to the Company's adoption of the provisions of the Financial
Accounting Standards Board's Statements of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" in
1994.
New York, New York
May 16, 1997
<PAGE>
EXHIBIT 23(F)
[LETTERHEAD OF MERRILL LYNCH & CO., INC.]
We hereby consent to the use of our opinion letter dated as of February 12,
1997 to the Board of Directors of American General Corporation included as
Annex B to the Joint Proxy Statement/Prospectus which forms a part of the
Registration Statement on Form S-4 relating to the proposed merger of Texas
Stars Corporation, a wholly owned subsidiary of American General Corporation,
with and into USLIFE Corporation and to the references to such opinion in such
Joint Proxy Statement/Prospectus. In giving such consent, we do not admit that
we come within the category of persons whose consent is required under Section
7 of the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder, nor do we thereby admit that
we are experts with respect to any part of such Registration Statement within
the meaning of the term "experts" as used in the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
May 14, 1997
<PAGE>
- --------------------------------------------------------------------------------
Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004
Tel: 212-902-1000
[GOLDMAN SACHS LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
EXHIBIT 23(G)
PERSONAL AND CONFIDENTIAL
May 16, 1997
Board of Directors
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Re: Registration Statement of American General Corporation ("American General")
relating to Common Stock, par value $0.50 per share, of American General to
be issued in exchange for shares of Common Stock, par value $1.00 per
share, of USLIFE Corporation ("USLIFE") in connection with the merger of a
wholly owned subsidiary of American General with and into USLIFE.
Gentlemen:
Reference is made to our opinion letter dated May , 1997 with respect to the
fairness to the holders of the outstanding shares of Common Stock, par value
$1.00 per share (the "Shares"), of USLIFE of the consideration to be received
for the Shares pursuant to the Merger (the "Merger") contemplated by the
Agreement and Plan of Merger dated as of February 12, 1997 by and among
American General, Texas Stars Corporation, a New York corporation and a wholly-
owned subsidiary of American General, and USLIFE (the "Agreement").
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of USLIFE in connection with its consideration of the
transaction contemplated by the Agreement and is not to be used, circulated,
quoted or otherwise referred to for any other purpose, nor is it to be filed
with, included in or referred to in whole or in part in any registration
statement, proxy statement or any other document, except in accordance with our
prior written consent. We understand that USLIFE has determined to include our
opinion in the above-referred Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary of Joint Proxy Statement/Prospectus--The Proposed
Merger--Opinion of USLIFE's Financial Advisor," "The Proposed Merger--
Background of the Merger," "The Proposed Merger--USLIFE's Reasons for the
Merger; Recommendation of the USLIFE Board" and "The Proposed Merger--Opinion
of USLIFE's Financial Advisor" and to the inclusion of the foregoing opinion in
the Joint Proxy Statement included in the above-mentioned Registration
Statement. In providing such consent, except as may be required by the federal
securities laws, we do not intend that any person
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<PAGE>
EXHIBIT 24.1
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ J. Evans Attwell
_____________________________________
J. Evans Attwell
<PAGE>
EXHIBIT 24.2
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Brady F. Carruth
_____________________________________
Brady F. Carruth
<PAGE>
EXHIBIT 24.3
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ James S. D'Agostino, Jr.
_____________________________________
James S. D'Agostino, Jr.
<PAGE>
EXHIBIT 24.4
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ W. Lipscomb Davis, Jr.
_____________________________________
W. Lipscomb Davis, Jr.
<PAGE>
EXHIBIT 24.5
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Robert M. Devlin
_____________________________________
Robert M. Devlin
<PAGE>
EXHIBIT 24.6
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Richard J.V. Johnson
_____________________________________
Richard J.V. Johnson
<PAGE>
EXHIBIT 24.7
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Jon P. Newton
_____________________________________
Jon P. Newton
<PAGE>
EXHIBIT 24.8
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Robert E. Smittcamp
_____________________________________
Robert E. Smittcamp
<PAGE>
EXHIBIT 24.9
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Anne M. Tatlock
_____________________________________
Anne M. Tatlock
<PAGE>
EXHIBIT 24.10
American General Corporation: Board of Directors
Date:March 13, 1997
Subject:Form S-4; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the Company to execute, on behalf of the undersigned
person, the Company's Registration Statement on Form S-4, in
connection with the acquisition of all of the outstanding capital
stock of USLIFE Corporation, with such amendments thereto as may be
necessary or appropriate, together with any and all exhibits and
other related documents, and to file the Form S-4 and any such
amendments with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (the "Company"),
will file with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, its Registration Statement on Form S-
4, with such amendments thereto as may be necessary or appropriate, together
with any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his/her capacity as a director or officer
or both, as the case may be, of the Company, does hereby appoint JON P. NEWTON
and CARL J. SANTILLO, and each of them, severally, his/her true and lawful
attorney or attorneys-in-fact with or without the other and with full power of
substitution and resubstitution, to execute in his/her name, place, and stead,
in his/her capacity as a director or officer or both, as the case may be, of
the Company, the Form S-4 and any and all amendments thereto as said
attorneys-in-fact or either of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable in connection with the
Form S-4, as fully and for all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
thirteenth day of March, 1997.
/s/ Larry D. Horner
_____________________________________
Larry D. Horner
<PAGE>
EXHIBIT 99(a)
[LOGO]
P
R
O
X
Y
COMMON STOCK PROXY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby (1) acknowledges receipt of the Notice of the
Special Meeting of Shareholders of American General Corporation, a Texas
corporation ("American General"), to be held on June 17, 1997, at 10:00 a.m.,
local time ("Special Meeting") at the principal executive offices of American
General at 2929 Allen Parkway, Houston, Texas 77019, and the Proxy Statement in
connection therewith; and (2) appoints Robert M. Devlin, James S. D'Agostino
Jr., and Jon P. Newton as proxies, each with the power to act alone and appoint
his substitute, and hereby authorizes them to represent the undersigned and to
vote, as designated on the reverse side, all shares of American General Common
Stock, par value $0.50 per share, which the undersigned would be entitled to
vote at the Special Meeting or any adjournment thereof, upon the matter referred
to on the reverse side, and upon any and all other matters which properly may be
brought before such meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
SEE REVERSE
SIDE
/\ FOLD AND DETACH HERE /\
3147
/X/
Please mark your
vote as in this
example.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE CAST
"FOR" ITEM 1. This Proxy may be revoked at any time prior to its exercise.
1. To consider and vote on a proposal to issue shares of American General Common
Stock (estimated to be a minimum of approximately 39 million and a maximum of
approximately 47 million) as consideration in connection with the acquisition
of the outstanding common stock of USLIFE Corporation.
FOR AGAINST ABSTAIN
/ / / / / /
2. When shares are held by joint tenants, both should sign. When signing as
attorney, administrator, executor, guardian or trustee, please add your title
as such. If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in partnership
name by authorized person.
_________________________________________
_________________________________________
SIGNATURE (S) DATE
/\ FOLD AND DETACH HERE /\
IMPORTANT: PLEASE VOTE, SIGN, AND DATE THE CARD
AND RETURN IT IN THE ENVELOPE PROVIDED
AMERICAN GENERAL CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
JUNE 17, 1997
<PAGE>
EXHIBIT 99(b)
[LOGO OF AMERICAN GENERAL]
P
R
O
X
Y
7% CONVERTIBLE PREFERRED STOCK PROXY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby (1) acknowledges receipt of the Notice of the
Special Meeting of Shareholders of American General Corporation, a Texas
corporation ("American General"), to be held on June 17, 1997, at 10:00 a.m.,
local time ("Special Meeting") at the principal executive offices of American
General at 2929 Allen Parkway, Houston, Texas 77019, and the Proxy Statement in
connection therewith; and (2) appoints Robert M. Devlin, James S. D'Agostino
Jr., and Jon P. Newton as proxies, each with the power to act alone and appoint
his substitute, and hereby authorizes them to represent the undersigned and to
vote, as designated on the reverse side, all shares of American General 7%
Convertible Preferred Stock, par value $1.50 per share, which the undersigned
would be entitled to vote at the Special Meeting or any adjournment thereof,
upon the matter referred to on the reverse side, and upon any and all other
matters which properly may be brought before such meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
/\ FOLD AND DETACH HERE /\
SEE REVERSE
SIDE
7566
/X/
Please mark your
vote as in this
example.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE CAST
"FOR" ITEM 1. This Proxy may be revoked at any time prior to its exercise.
1. To consider and vote on a proposal to issue shares of American General Common
Stock (estimated to be a minimum of approximately 39 million and a maximum of
approximately 47 million) as consideration in connection with the acquisition
of the outstanding common stock of USLIFE Corporation.
FOR AGAINST ABSTAIN
/ / / / / /
2. In their discretion, the proxies are authorized to vote upon any other matter
that may properly come before the meeting.
When shares are held by joint tenants, both should sign. When signing as
attorney, administrator, executor, guardian or trustee, please add your title as
such. If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
_________________________________________
_________________________________________
SIGNATURE (S) DATE
/\ FOLD AND DETACH HERE /\
IMPORTANT: PLEASE VOTE, SIGN, AND DATE THE CARD
AND RETURN IT IN THE ENVELOPE PROVIDED
AMERICAN GENERAL CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
JUNE 17, 1997
<PAGE>
EXHIBIT 99(c)
[LOGO OF AMERICAN GENERAL]
THRIFT PLANS VOTING INSTRUCTIONS
This Solicitation Is Made on Behalf of the Board of Directors
As a participant in one of the American General Thrift Plans (American
General Employees' Thrift and Incentive Plan, American General Agents' and
Managers' Thrift Plan, and The Variable Annuity Life Insurance Company Agents'
and Managers' Thrift Plan), the undersigned hereby (1) acknowledges receipt of
the Notice of the Special Meeting of Shareholders of American General
Corporation, a Texas corporation ("American General"), to be held on June 17,
1997, at 10:00 a.m., local time ("Special Meeting") at the principal executive
offices of American General at 2929 Allen Parkway, Houston, Texas 77019, and the
Proxy Statement in connection therewith; and (2) instructs State Street Bank &
Trust Company, Trustee of the American General Thrift Plans, to vote all shares
of American General Common Stock, par value $0.50 per share, that are allocated
to my plan account at the Special Meeting or any adjournment thereof, upon the
matter referred to on the reverse side, and upon any and all other matters which
properly may be brought before such meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
SEE REVERSE
SIDE
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6045
/X/
Please mark your
vote as in this
example.
The Trustee will vote in the manner directed herein the shares allocated to the
account of the participant whose name and signature appear hereon. If no
direction is given, the Trustee will vote such shares in accordance with the
instructions received from a majority of participants' shares for which the
Trustee does receive instructions and in accordance with its fiduciary duty.
1. To consider and vote on a proposal to issue shares of American General Common
Stock (estimated to be a minimum of approximately 39 million and a maximum of
approximately 47 million) as consideration in connection with the acquisition
of the outstanding common stock of USLIFE Corporation.
FOR AGAINST ABSTAIN
/ / / / / /
2. The Trustee is instructed to authorize the proxies (Robert M. Devlin,
James S. D'Agostino Jr., and Jon P. Newton) to vote in their discretion upon any
other matter that may properly come before the meeting.
Please sign exactly as your name appears hereon.
_________________________________________
_________________________________________
SIGNATURE DATE
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IMPORTANT: PLEASE VOTE, SIGN, AND DATE THE CARD
AND RETURN IT IN THE ENVELOPE PROVIDED
AMERICAN GENERAL CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
JUNE 17, 1997
<PAGE>
EXHIBIT 99(d)
USLIFE COPRORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby (1) acknowledges receipt of the Notice of the Special
Meeting of Shareholders of USLIFE Corporation, a New York corporation (the
Corporation), to be held on June 17, 1997, at 10:30 a.m., local time (Special
MeetingO) at Pace University, Schimmel Center Auditorium, Spruce Street, New
York, New York, and the Joint Proxy Statement/Prospectus in connection
therewith, and (2) appoints Gordon E. Crosby, Jr., Christopher S. Ruisi and
Richard G. Hohn as Proxies, each with the power to act alone and to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of common stock in the Corporation which the undersigned
is entitled to vote as of May 5, 1997, the record date, at the Special Meeting
or any adjournment thereof, upon the matter referred to below, and upon any and
all other matters which properly may be brought before the meeting.
The Board of Directors unanimously recommends a vote "FOR" Proposal 1.
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
WHEN OK TO PRINT-
REMOVE ALL RED ITEMS
US LIFE CORPORATION Please mark [X]
your votes
NO TEXT PRINTING IN THIS AREA as indicated
PLEASE SIGN, DATE AND MAIL
THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
1. PROPOSAL TO APPROVE AND ADOPT THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF FEBRUARY 12 1997, BY
AND AMONG AMERICAN GENERAL CORPORATION, TEXAS STARS
CORPORATION AND USLIFE CORPORATION, AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, the shares represented by
this Proxy will be voted FOR Item 1.
NO TEXT PRINT IN THIS ADDRESS AREA
Please sign exactly as name appears below. When shares are held by joint tenants
both should sign. When signing as attorney, or as executor, administrator,
trustee or guardian, please give full title. If a corporation please sign in
full corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
---------------------------
Signature
---------------------------
Signature if held jointly
Dated: ______________, 1997
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
EXHIBIT 99(e)
USLIFE CORPORATION EMPLOYEE SAVINGS AND INVESTMENT PLAN
CONFIDENTIAL VOTING INSTRUCTIONS TO AMERICAN EXPRESS TRUST COMPANY AS TRUSTEE
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
USLIFE CORPORATION. UNLESS THESE VOTING INSTRUCTIONS ARE SIGNED AND RETURNED
BY JUNE 10, 1997 THE SHARES WILL BE VOTED AS PROVIDED IN THE PLAN.
To the Trustee:
In accordance with the provisions of the USLIFE Corporation Employee Savings and
Investment Plan, I hereby instruct you, as Trustee, to vote as indicated on the
reverse, at the Special Meeting of Shareholders of USLIFE Corporation to be held
on June 17, 1997 at 10:30 a.m., local time (Special Meeting) at Pace
University, Schimmel Center Auditorium, Spruce Street, New York, New York and at
any adjournment thereof, all the shares of Common Stock of USLIFE Corporation
credited to my account in the Plan which I am entitled to vote as of May 5,
1997, the record date, upon the matters set forth herein, as provided in the
Joint Proxy Statement/Prospectus, and upon any other matters which may properly
come before the Special Meeting.
THIS PROXY IS CONTINUED ON THE REVERSE
PLEASE SIGN ON THE REVERSE
AND RETURN PROMPTLY.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
US LIFE CORPORATION
Please mark
your votes [X]
as indicated
NO TEXT PRINTING IN THIS AREA
These Voting Instructions when properly executed will be voted in the manner
directed herein by the undersigned Plan participant. If no direction is made,
the shares will be voted FOR Item 1.
The Board of Directors of USLIFE Corporation unanimously
recommends a vote FOR Item 1.
PLEASE SIGN, DATE AND MAIL YOUR
VOTING INSTRUCTIONS PROMPTLY
Item 1. Proposal to approve and adopt the agreement and plan of merger, dated
as of February 12, 1997, by and among American General Corporation,
Texas Stars Corporation and USLIFE Corporation, and the transactions
contemplated thereby.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 2. In its discretion, the Trustee is authorized to vote upon such other
business as may properly come before the meeting.
NO TEXT PRINT IN THIS ADDRESS AREA
Signature(s)___________________________________ Dated_________
NOTE: Please sign as name appears hereon.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
