<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 1998
REGISTRATION NOS. 333-40583
333-40583-01
333-40583-02
333-40583-03
333-40583-04
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C> <C>
AMERICAN GENERAL CORPORATION TEXAS 74-0483432
AMERICAN GENERAL CAPITAL I DELAWARE TO BE APPLIED FOR
AMERICAN GENERAL CAPITAL II DELAWARE TO BE APPLIED FOR
AMERICAN GENERAL CAPITAL III DELAWARE TO BE APPLIED FOR
AMERICAN GENERAL CAPITAL IV DELAWARE TO BE APPLIED FOR
(Exact name of each registrant (State or other jurisdiction of (I.R.S. Employer Identification No.)
as specified in its charter) incorporation or organization)
</TABLE>
MARK S. BERG, ESQ.
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019-2155
(713) 522-1111
(Address, including zip code, and telephone number, including area code,
of Registrants' principal executive offices and agent for service)
Copies to:
<TABLE>
<S> <C>
SCOTT N. WULFE, ESQ. JOHN H. NEWMAN, ESQ.
VINSON & ELKINS L.L.P. BROWN & WOOD LLP
1001 FANNIN, SUITE 2300 ONE WORLD TRADE CENTER
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10048
(713) 758-2222 (212) 839-5300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined in
light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains the following two separate prospectuses:
1. A form of prospectus to be used in connection with offerings by American
General Corporation of its Debt Securities, Common Stock, Preferred Stock,
and/or Warrants to purchase its Debt Securities, Common Stock or Preferred
Stock.
2. A form of prospectus to be used in connection with offerings by (i)
American General Corporation of its junior subordinated debt securities, and/or
(ii) American General Capital I, American General Capital II, American General
Capital III, and American General Capital IV of their preferred securities,
together with junior subordinated debt securities and guarantees of American
General Corporation.
<PAGE> 3
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 SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 9, 1998
LOGO
$1,500,000,000
AMERICAN GENERAL CORPORATION
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
PREFERRED STOCK AND PREFERRED STOCK WARRANTS
COMMON STOCK AND COMMON STOCK WARRANTS
------------------------
American General Corporation ("American General" or the "Company") may offer
from time to time, together or separately, (i) one or more series of its
unsecured debt securities ("Debt Securities") which may be either senior (the
"Senior Securities") or senior subordinated (the "Subordinated Securities") in
priority of payment, both of which may be convertible or exchangeable into
common stock, par value $.50 per share, of the Company ("Common Stock"),
preferred stock, par value $1.50 per share, of the Company ("Preferred Stock"),
other Debt Securities, Debt Warrants, Common Stock Warrants or Preferred Stock
Warrants (each as herein defined); (ii) warrants (without limitation as to
number or offering price) to purchase Debt Securities ("Debt Warrants"); (iii)
shares of Preferred Stock, which may be convertible into shares of Common Stock
or exchangeable for Debt Securities; (iv) warrants (without limitation as to
number or offering price) to purchase Preferred Stock ("Preferred Stock
Warrants"); (v) shares of Common Stock and (vi) warrants (without limitation as
to number or offering price) to purchase Common Stock ("Common Stock Warrants"),
in amounts, at prices and on terms to be determined at the time of the offering.
The Debt Securities, Debt Warrants, Preferred Stock, Preferred Stock Warrants,
Common Stock and Common Stock Warrants are collectively referred to herein as
the "Securities."
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
unsecured and subordinated as described under "Description of Debt
Securities -- Subordination."
When a particular series of Securities is offered, a supplement to this
Prospectus (a "Prospectus Supplement") setting forth certain terms of the
offered Securities will be delivered together with this Prospectus. The
applicable Prospectus Supplement, among other things and where applicable, will
include: (i) with regard to Debt Securities, the specific designation, priority,
aggregate principal amount, rate (which may be fixed or variable) and time of
payment of any interest, authorized denominations, maturity, offering price,
place or places of payment, redemption terms at the option of the Company, terms
of any repayment at the option of the holder, terms for sinking fund payments,
terms for conversion or exchange into other securities, provisions regarding
original issue discount securities, and other terms of such Debt Securities;
(ii) with regard to Preferred Stock, the specific designation, number of shares,
title, stated value and liquidation preference of each share, issuance price,
dividend rate or method of calculation, dividend periods, dividend payment
dates, any redemption or sinking fund provisions, any conversion or exchange
provisions, any voting rights, and other specific terms thereof; (iii) with
respect to Common Stock, the number of shares, issuance price and other terms
thereof; and (iv) with regard to Debt Warrants, Preferred Stock Warrants and
Common Stock Warrants, where applicable, the duration, amount, offering price,
exercise price, terms of the securities for which they are exercisable, any
voting rights, detachability and other terms thereof. The applicable Prospectus
Supplement may also contain applicable information about certain federal income
tax, accounting and other considerations relating to, and any listing on a
securities exchange of, the Securities covered by such Prospectus Supplement.
The aggregate initial public offering price of all Securities which may be
sold under this Prospectus shall not exceed $1,500,000,000, less the aggregate
initial public offering price of any securities of certain American General
funding entities which are sold under a separate prospectus which also
constitutes a part of the Registration Statement of which this Prospectus
constitutes a part. See "Available Information."
The Company may sell the Securities directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If any such agents, underwriters or dealers are involved in the sale of
the Securities in respect of which this Prospectus is being delivered, the names
of such agents, underwriters or dealers and any applicable agent's commission,
underwriter's discount or dealer's purchase price and the net proceeds to the
Company from such sale will be set forth in, or may be calculated on the basis
set forth in, the applicable Prospectus Supplement. See "Plan of Distribution"
for possible indemnification arrangements for any such agents, underwriters and
dealers.
This Prospectus may not be used to consummate sales of the Securities
without the delivery of one or more Prospectus Supplements.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
<PAGE> 4
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE OF THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New
York, New York 10048. Copies of such materials may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates, or from the Commission's Web site at
"http://www.sec.gov". In addition, such material may also be inspected and
copied at the offices of The New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005 and The Pacific Stock Exchange, Incorporated, 301 Pine
Street, San Francisco, California 94104.
The Company, American General Capital I, American General Capital II,
American General Capital III and American General Capital IV have filed with the
Commission a registration statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement.
In addition to this Prospectus, the Registration Statement contains another
prospectus which relates to the offer and sale from time to time of "Preferred
Securities" (as defined therein) of American General Capital I, American General
Capital II, American General Capital III and American General Capital IV and
junior subordinated debt securities and guarantees of the Company. Certain
payment obligations of such entities under any such Preferred Securities would
be guaranteed by the Company to the extent set forth in such prospectus and any
applicable prospectus supplement thereto. The $1,500,000,000 aggregate maximum
initial public offering price of Securities which may be sold under this
Prospectus will be reduced by the amount of the aggregate initial public
offering price of any Preferred Securities and any junior subordinated debt
securities sold separately from Preferred Securities under such other
prospectus.
Statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is made
to the copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
2
<PAGE> 5
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-7981), are incorporated
herein by reference:
- the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
- the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
- the Company's Current Report on Form 8-K dated February 12, 1997 with
respect to the announcement of the signing of a merger agreement with
USLIFE Corporation;
- the Company's Current Report on Form 8-K dated February 21, 1997 with
respect to the filing of the Company's historical Consolidated
Financial Statements for the three years ended December 31, 1996 and
the related Management's Discussion and Analysis;
- the Company's Current Report on Form 8-K dated August 15, 1997 with
respect to the consolidated total revenues, net income and net income
per share of the Company for the one month and seven months ended July
31, 1997, which reflect the acquisition of USLIFE Corporation using
the pooling of interests method of accounting;
- the Company's Current Report on Form 8-K dated September 11, 1997 with
respect to the announcement of a definitive agreement under which the
Company will acquire the remaining common equivalent shares of Western
National Corporation;
- the Company's Current Report on Form 8-K dated October 10, 1997 with
respect to the filing of the Company's consolidated balance sheets as
of December 31, 1996 and 1995, and the related consolidated statements
of income, shareholders' equity, common stock activity, and cash
flows, and Management's Discussion and Analysis, for the three years
ended December 31, 1996, restated to include the acquisition of USLIFE
Corporation using the pooling of interests method of accounting;
- the Company's Current Report on Form 8-K dated January 26, 1998 with
respect to certain management compensation information; and
- the Company's Current Report on Form 8-K dated January 27, 1998 with
respect to the Company's earnings release for the year ended December
31, 1997.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the filing of the
Registration Statement and prior to the termination of the offering of the
Securities made hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such document.
Any statement contained herein, in a Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, in a Prospectus
Supplement or in any subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to the Company, 2929 Allen Parkway,
Houston, Texas 77019-2155, Attention: Treasury Department, telephone (713)
831-1949.
3
<PAGE> 6
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained 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.
Forward-looking statements are made based upon American General's current
expectations and beliefs concerning future developments and their potential
effects upon American General. There can be no assurance that future
developments affecting American General will be those anticipated by its
management. 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 ability to render its computer systems
year 2000 compliant; 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 Western National
Corporation, USLIFE Corporation and Home Beneficial Corporation.
THE COMPANY
The Company, with assets of $80.6 billion and shareholders' equity of $7.6
billion as of December 31, 1997, is the parent company of one of the nation's
largest diversified financial services organizations. The Company provides
financial services to consumers, emphasizing personal service and frequent
customer contact.
Since American General is a holding company, rights to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise (and thus the ability of holders of Securities to benefit
indirectly from such distribution) are subject to the prior claims of creditors
of that subsidiary, except to the extent that American General may itself be a
creditor of that subsidiary. Claims on American General's subsidiaries by other
creditors include substantial claims for policy benefits and debt obligations,
as well as other liabilities incurred in the ordinary course of business. In
addition, since many of American General's subsidiaries are insurance companies
subject to regulatory control by various state insurance departments, the
ability of such subsidiaries to pay dividends to American General without prior
regulatory approval is limited by applicable laws and regulations. Further,
certain non-insurance subsidiaries are similarly restricted in their ability to
make dividend payments by long-term debt agreements. At December 31, 1996, the
amount available to the Company for dividends from subsidiaries not limited by
such restrictions was approximately $750 million.
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.
USE OF PROCEEDS
Except as may otherwise be provided in an applicable Prospectus Supplement,
the net proceeds to be received by the Company from the sale of the Securities
being offered hereby will be added to American General's general corporate funds
and may be used for the repayment of long- or short-term indebtedness or for
other general corporate purposes.
4
<PAGE> 7
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
ratio of earnings to combined fixed charges and preferred stock dividends for
the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
Consolidated operations.................... 2.3 2.7 2.5 2.3 2.6 2.3 2.5
Consolidated operations, corporate fixed
charges only............................ 5.6 7.2 6.4 5.3 6.3 5.3 5.5
Ratio of earnings to combined fixed charges
and preferred stock dividends:
Consolidated operations.................... 1.9 2.5 2.3 2.2 2.6 2.3 2.5
Consolidated operations, corporate fixed
charges and preferred stock dividends
only.................................... 3.3 5.4 4.7 4.7 6.3 5.3 5.5
</TABLE>
For purposes of computing these ratios, earnings represent income before
income tax expense, net dividends on preferred securities of subsidiaries, and
the cumulative effect of accounting changes, adjusted for undistributed income
of an equity investee and fixed charges (excluding capitalized interest). Fixed
charges consist primarily of interest expense (including capitalized interest)
on short-term and long-term borrowings. Preferred stock dividends consist of
dividends on preferred securities of subsidiaries and convertible preferred
stock.
DESCRIPTION OF DEBT SECURITIES
The Senior Securities are to be issued under a Senior Indenture, dated as
of November 15, 1997 (the "Senior Indenture"), between the Company and Bankers
Trust Company, as trustee, and the Subordinated Securities are to be issued
under a Senior Subordinated Indenture, dated as of November 15, 1997 (the
"Subordinated Indenture"), between the Company and Bankers Trust Company, as
trustee. Bankers Trust Company, in its capacity as trustee under the Senior
Indenture and the Subordinated Indenture, is referred to herein as the
"Trustee."
The forms of the Senior Indenture and the Subordinated Indenture (being
sometimes referred to herein collectively as the "Indentures" and each
individually as an "Indenture") are filed as exhibits to the Registration
Statement. The statements and descriptions in this Prospectus or in any
Prospectus Supplement regarding provisions of the Debt Securities and the
Indentures are summaries thereof, do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the Indentures and the Debt Securities, including the definitions therein of
certain terms. Certain capitalized terms used herein are defined in the
Indentures. Wherever particular sections of the Indentures or terms that are
defined in the Indentures are referred to herein or in a Prospectus Supplement,
it is intended that such sections or defined terms shall be incorporated by
reference herein or therein, as the case may be.
The Indentures allow for the issuance of Debt Securities denominated in
foreign currencies and/or in bearer form. The Company does not intend to issue
any such Debt Securities pursuant to this Prospectus. Accordingly, certain
provisions of the Indentures relating to such Debt Securities are not described
herein.
5
<PAGE> 8
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Subordinated Securities will be subordinated
in right of payment to the prior payment in full of the Superior Indebtedness of
the Company as described under "-- Subordination."
The Debt Securities may be issued in one or more series. The particular
terms of each series of Debt Securities, as well as any modifications or
additions to the general terms of the Debt Securities as described herein which
may be applicable in the case of a particular series of Debt Securities, are
described in the Prospectus Supplement relating to such series of Debt
Securities. Accordingly, for a description of the terms of a particular series
of Debt Securities, reference must be made to both the Prospectus Supplement
relating thereto and to the description of Debt Securities set forth in this
Prospectus.
Reference is made to the Prospectus Supplement for the terms of the
particular series of Debt Securities being offered thereby, including but not
limited to the following: (1) the title of such Debt Securities and the series
in which such Debt Securities shall be included; (2) any limit on the aggregate
principal amount of such Debt Securities; (3) the percentage of their principal
amount at which such Debt Securities will be issued and, in the case of Original
Issue Discount Securities, the principal amount thereof payable upon
acceleration of the maturity thereof; (4) the date or dates on which the
principal of such Debt Securities is payable or the manner in which such dates
are determined; (5) the rate or rates (which may be fixed or variable) or amount
or amounts per annum at which such Debt Securities will bear interest, if any,
or the method of determining such rate or amount; (6) the date from which such
interest, if any, on such Debt Securities will accrue, the dates on which such
interest, if any, will be payable, the date on which payment of such interest,
if any, will commence and the record dates for such interest payment dates, if
any; (7) the right, if any, of the Company to extend an interest payment period;
(8) the place of payment (if other than New York City) and the place where such
Debt Securities may be surrendered for registration of transfer or exchange or
for conversion; (9) the terms of any mandatory or optional redemption (including
any sinking fund provisions or any provisions for repayment at the option of a
Holder or upon the occurrence of a specified event); (10) whether such Debt
Securities shall be convertible or exchangeable for other securities and, if so,
the terms of any such conversion or exchange and the terms of such other
securities; (11) whether such Debt Securities are to be issued initially or
permanently in the form of a global Debt Security and, if so, the identity of
the Depository (hereinafter defined) for such global Debt Security; (12) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company with respect to such Debt Securities and any change in
the rights of the Trustee or the Holders to accelerate the maturity of such Debt
Securities; and (13) any other terms of such Debt Securities. Debt Securities
may also be issued under the Indentures upon the exercise of Debt Warrants. See
"Description of Warrants -- Debt Warrants."
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder or of any particular series of such
Debt Securities and provide that the Debt Securities may be issued thereunder
from time to time in one or more series up to the aggregate principal amount
which may be authorized from time to time by the Company. (Section 301 of each
Indenture) All Debt Securities issued under an Indenture will rank equally and
ratably with any additional Debt Securities issued thereunder.
Unless the Prospectus Supplement relating to a particular issuance of Debt
Securities specifies otherwise, Debt Securities will be issued in denominations
of $1,000 and integral multiples thereof. No service charge will be made for any
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 302 and 305 of each Indenture)
Some of the Debt Securities may be issued under the Indentures as Original
Issue Discount Securities (bearing no interest or interest at a rate which at
the time of issuance is below market rates) to be sold at a discount below their
stated principal amount. Federal income tax consequences and
6
<PAGE> 9
other special considerations applicable to any such Original Issue Discount
Securities will be described in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the principal of and any premium or
interest on Debt Securities issued in certificated form will be payable, and,
subject to certain limitations, the transfer of Debt Securities will be
registrable, at the office of the Trustee designated for that purpose in New
York City, provided that, at the option of the Company, interest may be paid by
check, wire transfer or any other means permitted in the form of such Debt
Securities. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on a Debt Security will be made to the
person in whose name such Debt Security is registered at the close of business
on the record date for such interest. In the case of global Debt Securities
(which will be registered in the name of the Depository or its nominee), payment
will be made to the Depository or its nominee in accordance with the
then-existing arrangements between the paying agent(s) for such global Debt
Securities and the Depository. See "-- Global Debt Securities." (Sections 305,
307 and 1002 of each Indenture)
The Indentures do not contain any provision that limits the ability of the
Company to incur indebtedness (either directly or through merger or
consolidation) or that would afford Holders of Debt Securities protection in the
event of a highly leveraged or similar transaction involving the Company, except
as described herein under "-- Limitations on Liens" and "-- Merger and
Consolidation." Reference is made to the Prospectus Supplement relating to the
series of Debt Securities offered thereby for information with respect to any
deletions from, modifications of, or additions to, the Events of Default or
covenants that may be included in the terms of such series of Debt Securities,
including any addition of a covenant or other provision providing event risk or
similar protection.
Under the Indentures, the Company will have the ability, in addition to the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, to "reopen" a previous issue of a series of Debt
Securities and issue additional Debt Securities of such series.
LIMITATIONS ON LIENS
The Senior Indenture provides that, unless otherwise specified in a
Prospectus Supplement relating to a particular Series of Debt Securities, the
Company will not, and will not permit any Designated Subsidiary (as defined
below) to, directly or indirectly, create, issue, assume, incur or guarantee any
indebtedness for money borrowed which is secured by a mortgage, pledge, lien,
security interest or other encumbrance of any nature on any of the present or
future common stock of a Designated Subsidiary, unless the Senior Securities
and, if the Company so elects, any other indebtedness of the Company ranking at
least pari passu with the Senior Securities, shall be secured equally and
ratably with (or prior to) such other secured indebtedness for money borrowed so
long as it is outstanding and is so secured. (Section 1007 of the Senior
Indenture) The Subordinated Indenture does not contain a comparable provision.
The term "Designated Subsidiary" means any present or future consolidated
Subsidiary of the Company the consolidated assets of which constitute 15 percent
or more of the consolidated assets of the Company. As of December 31, 1997, the
Company's Designated Subsidiaries were AGC Life Insurance Company, American
General Life Insurance Company and The Variable Annuity Life Insurance Company.
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an Event of Default with respect to any Debt Securities of any series
Outstanding under either of the Indentures shall occur and be continuing, the
Trustee under such Indenture or the Holders of at least 25% in principal amount
of the Debt Securities of that series Outstanding may declare, by notice as
provided in the applicable Indenture, the principal amount (or such lesser
amount as may be provided for in the Debt Securities of that series) of all the
Debt Securities of that series Outstanding to be due and payable immediately;
provided, that in the case of an Event of Default involving certain events in
7
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bankruptcy, insolvency or reorganization, acceleration is automatic; and,
provided further, that if all Events of Default with respect to Debt Securities
of that series shall have been cured, or waived as hereinafter provided, and all
amounts due otherwise than on account of such acceleration shall have been paid
or deposited with the Trustee, the Holders of a majority in aggregate principal
amount of the Debt Securities of that series then Outstanding may rescind and
annul such acceleration and its consequences. (Section 502 of each Indenture)
Upon acceleration of the Maturity of Original Issue Discount Securities, an
amount less than the principal amount thereof will become due and payable.
Reference is made to the Prospectus Supplement relating to any Original Issue
Discount Securities for the particular provisions relating to acceleration of
the Maturity thereof. Any past default under either Indenture with respect to
Debt Securities of any series, and any Event of Default arising therefrom, may
be waived by the Holders of a majority in principal amount of all Debt
Securities of such series Outstanding under such Indenture, except in the case
of (i) default in the payment of the principal of or any premium or interest on
any Debt Securities of such series or (ii) default in respect of a covenant or
provision which may not be amended or modified without the consent of the Holder
of each Outstanding Debt Security of such series affected. (Section 513 of each
Indenture)
Unless the Prospectus Supplement relating to a particular issuance of Debt
Securities specifies otherwise, each of the following constitutes an Event of
Default with respect to each series of Debt Securities under each Indenture: (a)
default in the payment of any interest upon any Debt Security of such series
when such interest becomes due and payable, and continuance of such default for
a period of 30 days; (b) default in the payment of the principal of and any
premium on any Debt Security of such series when it becomes due and payable,
whether at the Stated Maturity, upon redemption or repayment, by acceleration or
otherwise; (c) default in the making of any sinking fund payment on any Debt
Security of such series; (d) default in the performance or breach of any
covenant or warranty of the Company contained in the applicable Indenture for
the benefit of such series or in the Debt Securities of such series, and the
continuance of such default or breach for 90 days after written notice has been
given as provided in such Indenture; (e) acceleration of the maturity of any
indebtedness for money borrowed of the Company in a principal amount in excess
of $25,000,000 if such acceleration is not annulled or such indebtedness is not
discharged within 15 days after written notice as provided in such Indenture;
(f) certain events in bankruptcy, insolvency or reorganization; and (g) any
other Event of Default provided with respect to the Debt Securities of such
series. (Section 501 of each Indenture)
The Trustee is required, within 90 days after the occurrence of a default
with respect to the Debt Securities of any series which is known to the Trustee
and is continuing (without regard to any grace period or notice requirements),
to give to the Holders of the Debt Securities of such series notice of such
default; provided, however, that, except in the case of a default in the payment
of the principal of or any premium or interest on any Debt Securities of such
series or in the payment of any sinking fund installment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the interests of the Holders of the Debt Securities of such series; and
provided further that, in the case of any default referred to in clause (d) of
the preceding paragraph with respect to the Debt Securities of such series, no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. (Section 602 of each Indenture)
The Trustee, subject to its duties during default to act with the required
standard of care, may require indemnification by the Holders of the Debt
Securities of any series with respect to which a default has occurred before
proceeding to exercise any right or power under the Indentures at the request of
the Holders of the Debt Securities of such series. (Sections 601 and 603 of each
Indenture) Subject to such right of indemnification and to certain other
limitations, the Holders of a majority in principal amount of the Outstanding
Debt Securities of any series under either Indenture may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of such series. (Section 512 of each Indenture)
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No Holder of a Debt Security of any series may institute any action against
the Company under either of the Indentures (except actions for payment of
overdue principal of, premium, if any, or interest on such Debt Security or for
the conversion or exchange of such Debt Security in accordance with its terms)
unless the Holders of at least 25% in aggregate principal amount of the Debt
Securities of that series then Outstanding under such Indenture shall have
requested the Trustee to institute such action and offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request and the Trustee shall not have instituted such
action within 60 days of such request. (Sections 507 and 508 of each Indenture)
The Company is required to furnish annually to the Trustee statements as to
the Company's compliance with all conditions and covenants under each Indenture.
(Section 1005 of each Indenture)
MERGER AND CONSOLIDATION
The Company may consolidate with, merge with or into, or sell or convey all
or substantially all of its assets to, any other corporation, association,
company or business trust, provided that (a) (i) in the case of a merger, the
Company is the surviving company in the merger, or (ii) the entity surviving the
merger, formed by such consolidation or which acquires such assets shall be a
corporation, association, company or business trust organized and existing under
the laws of The United States of America or a state thereof and shall expressly
assume payment of the principal of and any premium and interest on the Debt
Securities and the performance and observance of all of the covenants and
conditions of the Indentures to be performed or observed by the Company and (b)
the Company or such successor entity, as the case may be, shall not immediately
thereafter be in default in the performance of any such covenant or condition.
The Senior Indenture also provides an additional condition that the Company or
such successor entity shall not immediately after such consolidation, merger or
sale have outstanding (or otherwise be liable for) any indebtedness for money
borrowed secured by a mortgage, pledge, lien, security interest or other
encumbrance prohibited by the provisions of the Senior Indenture relating to
limitations on liens or shall have secured the Outstanding Senior Securities
equally and ratably with (or prior to) such other secured indebtedness for money
borrowed so long as it is outstanding and is so secured. (Section 801 of each
Indenture)
MODIFICATION AND WAIVER
Modification and amendment of each of the Indentures may be made by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected thereby, provided that no such modification or amendment may, without
the consent of the Holder of each Outstanding Debt Security affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security; (b) reduce the principal amount
of or the amount of interest on or any premium payable with respect to any Debt
Security; (c) reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon acceleration of the Maturity thereof
or that would be provable in bankruptcy; (d) adversely affect any right of
repayment at the option of the Holder of any Debt Security; (e) change the place
or currency of payment of the principal of or any premium or interest on any
Debt Security; (f) impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity, or any date of redemption or
repayment, thereof; (g) adversely affect any right to convert or exchange any
Debt Security or, in the case of the Subordinated Indenture, modify the
subordination provisions in a manner adverse to the Holders of the Subordinated
Securities; (h) reduce the above-stated percentage in aggregate principal amount
of Outstanding Debt Securities of any series necessary to modify or amend the
Indentures with respect to any such series or reduce the percentage of
Outstanding Debt Securities of any series necessary to waive any past default or
compliance with certain restrictive provisions to less than a majority in
aggregate principal amount of such series, or reduce certain requirements of the
Indentures for quorum or voting; or (i) modify the provisions of the Indentures
described in this paragraph or those regarding waiver of compliance with certain
provisions of, or certain defaults and their consequences under, the Indentures,
except to increase the percentage
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of Outstanding Debt Securities necessary to modify and amend each Indenture or
to give any such waiver, and except to provide that certain other provisions of
each Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Debt Security affected thereby. The Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of any series may
waive compliance by the Company with certain restrictive provisions applicable
to such series. (Sections 902 and 1008 of the Senior Indenture and Sections 902
and 1007 of the Subordinated Indenture)
Modification and amendment of each of the Indentures may be made by the
Company and the Trustee without the consent of any Holder of Outstanding Debt
Securities, for any of the following purposes: (a) to evidence the succession of
another entity to the Company and the assumption of the covenants of the
Company; (b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Company; (c) to add any additional Events of Default
with respect to all or any series of Debt Securities; (d) to change or eliminate
any restrictions on the payment of the principal of or any premium or interest
on Debt Securities, to modify the provisions relating to global Debt Securities,
or to permit the issuance of Debt Securities in uncertificated form, provided
any such action does not adversely affect the interests of the Holders of the
Debt Securities of any series in any material respect; (e) to add to, change or
eliminate any provision of the Indentures, provided that such amendment shall
become effective only if there is no Outstanding Debt Security of any series
then entitled to the benefit of such provision or such amendment does not apply
to any then Outstanding Debt Security; (f) to secure the Debt Securities
pursuant to the requirements of the Indentures or otherwise; (g) to establish
the form or terms of the Debt Securities of any series; (h) to provide for the
acceptance of appointment by a successor Trustee with respect to the Debt
Securities of one or more series and to add to or change any of the provisions
as shall be necessary to provide for or facilitate the administration of the
trusts under the Indentures by more than one Trustee; (i) to provide for the
discharge of the Indenture with respect to the Debt Securities of any series by
the deposit of monies or Government Obligations in trust; (j) to change the
conditions, limitations and restrictions on the authorized amount, terms or
provisions of issuance, and authentication and delivery of the Debt Securities;
(k) to provide for conversion or exchange rights of any series of Debt
Securities pursuant to the requirements of the instrument authorizing such
series; (l) in the case of the Subordinated Indenture, to limit or terminate the
benefits to the holders of Superior Indebtedness of the subordination provisions
contained in the Subordinated Indenture; or (m) to cure any ambiguity, defect or
inconsistency in the Indentures or to make any other provisions with respect to
matters or questions arising under the Indentures, provided such action does not
adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect. (Section 901 of each Indenture)
SATISFACTION AND DISCHARGE
Unless the Prospectus Supplement relating to a particular issuance of Debt
Securities specifies otherwise, the Company and the Trustee, without the consent
of any Holder of Outstanding Debt Securities, may execute a supplemental
indenture to provide that the Company will be discharged from any and all
obligations in respect of the Debt Securities of any series (except for certain
obligations to register the transfer or exchange of Debt Securities, to convert
convertible Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in trust)
on the 91st day after the irrevocable deposit with the Trustee under the
applicable Indenture, in trust, of money or Government Obligations, or a
combination thereof, which through the payment of interest and principal thereof
in accordance with their terms will provide money in an amount sufficient to pay
the principal of, any premium and interest on, and any mandatory sinking fund
payments in respect of, the Debt Securities of such series on the Stated
Maturity or Redemption Date of such payments in accordance with the terms of the
applicable Indenture and such Debt Securities. Such a supplemental indenture may
only be executed if certain conditions have been satisfied, including a
condition that the Company has received from, or there has been published by,
the United States Internal Revenue Service a ruling, or there has been a change
in the applicable federal income tax law,
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in either case, to the effect that such a discharge will not cause the Holders
of the Debt Securities of such series to recognize income, gain or loss for
federal income tax purposes. The provisions of such a supplemental indenture
shall not be applicable to any series of Debt Securities then listed on the New
York Stock Exchange if the provisions would cause the Outstanding Debt
Securities of such series to be delisted. (Section 901 of each Indenture)
Each of the Indentures provides that, when the conditions set forth in
Section 401 thereof have been satisfied with respect to a series of Debt
Securities, upon the request of the Company, such Indenture will cease to be of
further effect with respect to such series (except as to any surviving right of
registration of transfer or exchange of Debt Securities expressly provided for
therein). Such conditions include that (i) all Debt Securities of such series
issued under such Indenture either shall have been delivered to the Trustee for
cancellation or shall be due, or are to be called for redemption, within one
year and (ii) with respect to all Debt Securities of such series issued under
such Indenture but not previously delivered to the Trustee for cancellation,
there shall have been irrevocably deposited with the Trustee, in trust, money or
Government Obligations, or a combination thereof, which through the payment of
interest and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, and any premium and interest
on, all such Debt Securities on the dates such payments are due in accordance
with the terms of the applicable Indenture and such Debt Securities. (Section
401 of each Indenture)
DEFEASANCE OF CERTAIN COVENANTS
Unless otherwise provided in the Prospectus Supplement relating to a series
of Debt Securities, the Company will have the option to omit to comply with the
covenants described under "-- Limitations on Liens" above, if applicable, and
any additional covenants not included in the original applicable Indenture that
may be specified as applicable to such series in the Prospectus Supplement with
respect thereto. The Company, in order to exercise such option, will be required
to irrevocably deposit with the Trustee under the applicable Indenture, in
trust, money or Government Obligations, or a combination thereof, which through
the payment of interest and principal thereof in accordance with their terms
will provide money in an amount sufficient to pay the principal of, any premium
and interest on, and any mandatory sinking fund payments in respect of, the Debt
Securities of such series on the dates such payments are due in accordance with
the terms of the applicable Indenture and such Debt Securities. The Company will
also be required to deliver to the Trustee under the applicable Indenture an
Opinion of Counsel to the effect that the deposit and related covenant
defeasance will not cause the Holders of the Debt Securities of such series to
recognize income, gain or loss for federal income tax purposes. Such covenant
defeasance would not be available in certain circumstances, including, with
respect to any series of Debt Securities then listed on the New York Stock
Exchange, if such defeasance would cause the Outstanding Debt Securities of such
series to be delisted. (Section 1009 of the Senior Indenture and Section 1008 of
the Subordinated Indenture) The Prospectus Supplement relating to a particular
issuance of Debt Securities may describe further provisions, if any, permitting
such an omission to comply.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global Debt Securities that will be deposited with, or on
behalf of, a depository (the "Depository"). Unless and until it is exchanged in
whole or in part for the individual Debt Securities represented thereby, a
global Debt Security may not be transferred except as a whole among the
Depository, any successor Depository and their respective nominees.
The specific terms of the depository arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Unless otherwise indicated in the applicable Prospectus Supplement,
the following provisions will apply to all depository arrangements.
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Upon the issuance of a global Debt Security, the Depository for such global
Debt Security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual Debt
Securities represented by such global Debt Security to the accounts of persons
that have accounts with such Depository ("Participants"). Such accounts will be
designated by the underwriters or agents with respect to such Debt Securities or
by the Company if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a global Debt Security will be
limited to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such global Debt Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons other than Participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limitation and such laws may impair the
ability to transfer beneficial interests in a global Debt Security.
So long as the Depository for a global Debt Security, or its nominee, is
the registered owner of such global Debt Security, such Depository or such
nominee, as the case may be, will be considered the sole owner or Holder of the
Debt Securities represented by such global Debt Security for all purposes under
the applicable Indenture. (Section 308 of each Indenture) Except as provided
below, owners of beneficial interests in a global Debt Security will not be
entitled to have any of the individual Debt Securities of the series represented
by such global Debt Security registered in their names, will not receive or be
entitled to receive physical delivery of such Debt Securities in definitive
form, and will not be considered the owners or Holders thereof under the
applicable Indenture.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a global Debt Security registered in
the name of a Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the global Debt Security
representing such Debt Securities. None of the Company, the Trustee, any Paying
Agent, or the Security Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the global Debt
Security for such Debt Securities, for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other matter
relating to the actions and practices of the Depository, its nominee or its
Participants. None of the Company, the Trustee, any Paying Agent or the Security
Registrar for such Debt Securities will be liable for any delay by the
Depository, its nominee or any of its Participants in identifying the owners of
beneficial interests in a global Debt Security, and the Company and the Trustee
may conclusively rely on, and will be protected in relying on, instructions from
the Depository or its nominee for all purposes. (Section 308 of each Indenture)
The Company expects that the Depository for a series of Debt Securities, or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a global Debt Security representing any of such Debt Securities, will
immediately credit Participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such global
Debt Security for such Debt Securities as shown on the records of such
Depository or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such global Debt Security held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities registered in "street
name." Such payments will be the responsibility of such Participants.
If the Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is not
appointed by the Company within 90 days or if the Company executes and delivers
to the Trustee a Company Order to the effect that a global Debt Security shall
be exchangeable for certificated Debt Securities or if an Event of Default has
occurred and is continuing with respect to a series of Debt Securities, the
Company will issue individual certificated Debt Securities of such series in
definitive form in exchange for the global Debt Security or Debt Securities
representing such series of Debt Securities. (Section 305 of each Indenture)
Accordingly, the Company may at any time and in its sole discretion, subject to
any limitations described in the
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Prospectus Supplement relating to such Debt Securities, determine not to have
any Debt Securities of a series represented by one or more global Debt
Securities and, in such event, will issue individual certificated Debt
Securities of such series in definitive form in exchange for the global Debt
Security or Debt Securities representing such series of Debt Securities. In any
such instance, the individual certificated Debt Securities of such series issued
by the Company will be issued to Participants, as directed by the Depository or
its nominee, or to the beneficial owners holding Debt Securities of such series
through such Participants, as directed by such Participants, all in accordance
with standing instructions and customary practices, as is now the case with
securities registered in "street name." Certificated Debt Securities of such
series so issued in definitive form will be issued in denominations, unless
otherwise specified by the Company, of $1,000 and integral multiples thereof.
Unless otherwise provided in the Prospectus Supplement relating to a series
of Debt Securities, the Depository for each series of Debt Securities
represented by one or more global Debt Securities will be The Depository Trust
Company, New York, New York ("DTC"). DTC has advised the Company that it is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC holds securities that
its Participants deposit with DTC and facilitates the settlement among
Participants of securities transactions in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (which may include the
underwriters, dealers or agents, if any, involved in the offering of the
Securities), banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to DTC's book-entry system is
also available to others, such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to DTC and its
Participants are on file with the Commission.
SUBORDINATION OF SUBORDINATED SECURITIES
In the event of any distribution, division or application of all or any
part of the assets of the Company, or the proceeds thereof, occurring by reason
of the liquidation, dissolution or other winding up of the Company, or by reason
of any execution, sale, receivership, insolvency or bankruptcy proceedings, or
proceedings for reorganization, or readjustment of the Company or its
properties, payment or distribution of any kind upon the Subordinated Securities
of each series Outstanding (other than from the defeasance funds referred to
below) will be subordinated to the prior payment in full of all Superior
Indebtedness (including the payment of any interest accruing thereon after the
commencement of any such proceedings). (Sections 1501 and 1502 of the
Subordinated Indenture) The Subordinated Indenture also provides that in the
event of the acceleration of the principal amount of the Subordinated Securities
of any series (or, in the case of Original Issue Discount Securities, such
portion of the principal amount thereof as may be specified in the terms
thereof) as a result of the occurrence of an Event of Default with respect to
such series under the Subordinated Indenture, the holders of Superior
Indebtedness will be entitled to declare such Superior Indebtedness due and
payable and in such event to receive payment in full of all principal, premium
and interest on all Superior Indebtedness before the Holders of the Subordinated
Securities of such series are entitled to receive any payment. The Subordinated
Indenture further provides that in the event of a default in the payment of the
principal of or any premium or interest on any Superior Indebtedness, so long as
such payment shall not have been made or provided for, or in the event of the
acceleration of the maturity of any Superior Indebtedness which has not been
rescinded and annulled, no payment of principal or any premium or interest will
be made on the Subordinated Securities (other than, if applicable, payment from
funds which were deposited to defease the Subordinated Securities). (Sections
1502 of the Subordinated Indenture) The Holders of the Subordinated Securities
of each series will be subrogated to the rights of the holders of
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<PAGE> 16
the Superior Indebtedness to the extent of payments made to the holders of
Superior Indebtedness upon any distribution of assets in any such proceedings
out of the distributive share of the Subordinated Securities. (Section 1503 of
the Subordinated Indenture)
As a result of such subordination, upon the distribution of assets upon
insolvency, the holders of Superior Indebtedness, as well as certain general
creditors of the Company, may recover more, ratably, than Holders of the
Subordinated Securities. Additionally, the Company currently conducts certain of
its operations through subsidiaries, and the holders of Debt Securities (whether
or not Subordinated Securities) will be structurally subordinated to the
creditors of the Company's subsidiaries.
Superior Indebtedness is defined in the Subordinated Indenture as the
principal of, and premium, if any, and interest on, and any other payment due
pursuant to, any of the following, whether outstanding at the date of execution
of the Subordinated Indenture or thereafter incurred, created or assumed:
(a) all obligations of the Company for money borrowed;
(b) all obligations of the Company evidenced by notes, debentures,
bonds or other securities, including obligations incurred, created or
assumed in connection with the acquisition of property, assets or
businesses;
(c) all Capitalized Lease Obligations of the Company;
(d) all reimbursement obligations of the Company with respect to
letters of credit, bankers acceptances or similar facilities issued for the
account of the Company;
(e) all obligations of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business);
(f) all payment obligations of the Company under any interest rate,
currency or commodity swap agreement, option agreement, hedge agreement,
forward contract, or similar agreement designed to protect the Company or
another person against fluctuations in interest rates, exchange rates or
commodity prices;
(g) all obligations of the type referred to in clauses (a) through (f)
above of another person and all dividends of another person, the payment of
which, in either case, the Company has assumed or guaranteed, or for which
the Company is responsible or liable, directly or indirectly, jointly or
severally, as obligor, guarantor or otherwise; and
(h) all amendments, modifications, renewals, extensions, refinancings,
replacements and refundings by the Company of any such indebtedness
referred to in clauses (a) through (g) above (and of any such amended,
modified, renewed, extended, refinanced, refunded or replaced indebtedness
or obligations);
other than (i) any indebtedness, renewal, extension, refinancing, replacement,
refunding, assumption, guarantee or other obligation that expressly provides, or
in the instrument creating or evidencing the same or the assumption or guarantee
of the same it is expressly provided, that such indebtedness, renewal,
extension, refinancing, replacement, refunding, assumption, guarantee or other
refinancing is junior in right of payment to or is pari passu with the
Subordinated Securities; (ii) the Subordinated Securities and the 13 1/2%
Restricted Subordinated Notes Due 2002 of the Company, which notes rank pari
passu with the Subordinated Securities; (iii) the 6% Series A Convertible Junior
Subordinated Debentures due 2025, the 7.57% Junior Subordinated Deferrable
Interest Debentures, Series A, the 8 1/8% Junior Subordinated Deferrable
Interest Debentures, Series B, the 8 1/8% Series B Junior Subordinated
Debentures, and the 8.45% Series A Junior Subordinated Debentures of the Company
and any other junior subordinated debentures of the Company that may be issued
under the indentures pursuant to which such debentures were issued or under the
Junior Subordinated Indenture, dated as of November 15, 1997, between the
Company and Bankers Trust Company, as trustee; and (iv) any guarantee by the
Company of the payment obligations of American General Delaware, L.L.C.,
American General Capital, L.L.C., American General Institutional Capital A,
American General Institutional Capi-
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tal B, American General Capital I, American General Capital II, American General
Capital III and American General Capital IV with respect to their preferred
securities. (Section 101 of the Subordinated Indenture)
As of December 31, 1997, an aggregate of $2.1 billion of Superior
Indebtedness was outstanding. The Subordinated Indenture does not limit the
amount of Superior Indebtedness that may be incurred by the Company in the
future.
The subordination provisions of the Subordinated Indenture may be modified
or amended as provided under "-- Modification and Waiver," provided that no such
modification or amendment may adversely affect the rights of any holder of
Superior Indebtedness without the consent of such holder. (Section 907 of the
Subordinated Indenture)
CONVERSION
Certain Debt Securities may be convertible into other securities (the
"Convertible Debt Securities"). The Holders of such Convertible Debt Securities
of a specified series may be entitled (subject to prior redemption, repayment or
repurchase, if applicable), if so provided in the applicable Prospectus
Supplement, to convert any Convertible Debt Securities of such series (in
denominations set forth in the applicable Prospectus Supplement) into another
series of Debt Securities, Debt Warrants, Preferred Stock, Preferred Stock
Warrants, Common Stock, Common Stock Warrants or other securities, as the case
may be, at the conversion price set forth in the applicable Prospectus
Supplement, subject to adjustment as described in such Prospectus Supplement.
The relevant provisions for each series of Convertible Debt Securities will be
set forth in the applicable Prospectus Supplement. (Sections 301 and 1502 of the
Senior Indenture and Sections 301 and 1602 of the Subordinated Indenture)
TRUSTEE UNDER THE INDENTURES
The Company and certain of its affiliates maintain banking, borrowing and
other relations with Bankers Trust Company and certain of its affiliates.
Bankers Trust Company serves as trustee under other indentures maintained by the
Company and it may own Debt Securities.
The Indentures provide that an alternative Trustee may be appointed by the
Company with respect to any particular series of Debt Securities. Any such
appointment will be described in the Prospectus Supplement relating to such
series of Debt Securities.
The Trustee, prior to default, undertakes to perform only such duties as
are specifically set forth in the Indentures and, after default, is required to
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Trustee is
under no obligation to exercise any of the powers vested in it by an Indenture
at the request of any Holder of Debt Securities, unless offered reasonable
indemnity by such Holder against the costs, expenses and liabilities which might
be incurred thereby. The Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. Each Indenture contains other provisions limiting the
responsibilities and liabilities of the Trustee. (Sections 601 and 603 of each
Indenture)
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DESCRIPTION OF THE PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which an
applicable Prospectus Supplement may relate. Certain other terms of any series
of Preferred Stock offered by an applicable Prospectus Supplement will be
specified in such Prospectus Supplement. If so specified in the applicable
Prospectus Supplement, the terms of any series of Preferred Stock may differ
from the terms set forth below. The description of the terms of the Preferred
Stock set forth below and in an applicable Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Statement of Resolutions relating to the applicable series of
Preferred Stock, which will be filed as an exhibit to, or incorporated by
reference in, the Registration Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the Restated Articles of Incorporation of the Company, as
amended (the "Articles"), the Bylaws of the Company, and applicable Texas law,
the Board of Directors of the Company, or an authorized committee thereof, has
the authority, without further shareholder action, to issue up to 60,000,000
shares of Preferred Stock, $1.50 par value, in one or more series and in such
amounts and for such consideration, as may be determined from time to time by
resolution of the Board of Directors of the Company, or an authorized committee
thereof, and to fix before the issuance of any shares of Preferred Stock of a
particular series, the number of shares constituting that series and the
distinctive designation of that series; the dividend rate (or method of
determining the same); the voting rights; conversion privileges; redemption
rights; repurchase obligations; sinking fund availability; rights upon
liquidation, dissolution or winding up and the priority thereof; restrictions
upon the Company with respect to the creation of debt or the issuance of
additional Preferred Stock or other stock ranking prior to or on a parity
therewith with respect to dividends or upon liquidation; restrictions on the
Company with respect to the issuance of, payment of dividends upon, or the
making of other distributions with respect to, or the acquisition or redemption
of, shares ranking junior to the Preferred Stock; the priority of each series of
Preferred Stock in relation to other series of Preferred Stock; and any other
designations, powers, preferences and rights, including, without limitation, any
qualifications, limitations or restrictions thereof. The holders of any series
of Preferred Stock shall not have any preemptive rights to acquire any shares or
securities of any class which may at any time be issued, sold or offered for
sale by the Company.
As of the date of this Prospectus, the Company had no Preferred Stock
outstanding other than the 7% Convertible Preferred Stock described below under
"-- 7% Convertible Preferred Stock." As of such date, the Company had Preferred
Share Purchase Rights outstanding. A description of these rights is provided
under "Description of Common Stock -- Preferred Share Purchase Rights."
DIVIDENDS
The holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds legally available therefor, dividends at such rates and on such dates
as will be specified in the applicable Prospectus Supplement. Such rates may be
fixed or variable or both. If variable, the formula used for determining the
dividend rate for each dividend period will be specified in the applicable
Prospectus Supplement. Dividends will be payable to the holders of record as
they appear on the stock books of the Company on such record dates as will be
fixed by the Board of Directors of the Company.
Unless otherwise indicated in an applicable Prospectus Supplement, all
series of Preferred Stock will be senior in right as to dividends and in
liquidation to the Common Stock and any other class of stock of the Company
ranking junior to the Preferred Stock.
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VOTING RIGHTS
Except as indicated in the applicable Prospectus Supplement or as expressly
required by applicable law, the holders of the Preferred Stock will not be
entitled to vote. In the event the Company issues a series of Preferred Stock
with voting rights, unless otherwise specified in the Prospectus Supplement
relating to such series, each such share will be entitled to one vote on matters
on which holders of such series of the Preferred Stock are entitled to vote.
Since each full share of any series of Preferred Stock of the Company shall be
entitled to one vote, the voting power of such series, on matters on which
holders of such series and holders of other series of Preferred Stock are
entitled to vote as a single class, shall depend on the number of shares in such
series, not the aggregate stated value, liquidation preference or initial
offering price of the shares of such series of Preferred Stock.
CONVERSION AND EXCHANGE
The Prospectus Supplement relating to a series of the Preferred Stock will
set forth the conditions or terms, if any, upon which any such series will be
convertible or exchangeable, and the terms of the securities into which such
series will be convertible or exchangeable.
REDEMPTION RIGHTS
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of the Company or any holder thereof, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices specified in the applicable Prospectus
Supplement and subject to the rights of holders of other securities of the
Company. Preferred Stock redeemed by the Company will be restored to the status
of authorized but unissued preferred shares.
REPURCHASE OBLIGATION
The Prospectus Supplement relating to a series of the Preferred Stock will
state the conditions and terms, if any, upon which such series shall be subject
to repurchase by the Company.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock shall
be entitled to receive out of the assets of the Company available for
distribution to shareholders, before any distribution of assets is made to
holders of Common Stock or any other class or series of shares ranking junior to
such Preferred Stock upon liquidation, a liquidating distribution in the amount
per share as set forth in the Prospectus Supplement relating to such series of
Preferred Stock plus accrued and unpaid dividends. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company the amounts
payable with respect to Preferred Stock of any series and any other shares of
the Company ranking as to any such distribution on a parity with such Preferred
Stock of such series are not paid in full, the holders of such Preferred Stock
of such series and of such other shares will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. Neither the sale of all or
substantially all of the property or business of the Company nor the merger or
consolidation of the Company into or with any other corporation shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, of the
Company. Except as indicated in the applicable Prospectus Supplement, after
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of Preferred Stock of any series will not be entitled to
any further participation in any distribution of assets by the Company.
CONDITIONS AND RESTRICTIONS UPON THE COMPANY
The Prospectus Supplement relating to a series of the Preferred Stock will
describe any conditions or restrictions upon the Company which are for the
benefit of such series, including restrictions upon the
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creation of debt or other series of Preferred Stock; payment of dividends; or
distributions, acquisitions or redemptions of shares ranking junior to such
series.
7% CONVERTIBLE PREFERRED STOCK
As of December 31, 1997, there were issued and outstanding 2,317,701 shares
of the Company's 7% Convertible Preferred Stock. The 7% Convertible Preferred
Stock is entitled to receive annual cumulative dividends at a rate per annum of
7% of the stated liquidation preference of $36.7625. On March 1, 2001 (the
"Mandatory Conversion Date"), unless previously redeemed or converted, each
share of 7% Convertible Preferred Stock will mandatorily convert into (i) one
share of the Company's Common Stock, subject to adjustment in certain events,
and (ii) the right to receive cash in an amount equal to all accrued and unpaid
dividends thereon. Shares of 7% Convertible Preferred Stock are not redeemable
prior to March 1, 2000 (the "Initial Redemption Date"). At any time and from
time to time on and after the Initial Redemption Date, the Company may redeem
any or all of the outstanding shares of 7% Convertible Preferred Stock in
exchange for a number of shares of Common Stock equal to the quotient obtained
by dividing (i) 101.75% of the stated liquidation preference, declining
quarterly to 100% of the stated liquidation preference on the Mandatory
Conversion Date, plus all accrued and unpaid dividends thereon by (ii) the
Current Market Price (as defined) of the Common Stock on the applicable date of
determination, but in no event less than .8264 of a share of Common Stock. At
any time prior to the Mandatory Conversion Date, unless previously redeemed,
each share of 7% Convertible Preferred Stock is convertible at the option of the
holder into .8264 of a share of Common Stock, subject to certain adjustments.
The holders of shares of 7% Convertible Preferred Stock have the right to
vote in the election of Directors of the Company and upon each other matter
coming before any meeting of the holders of Common Stock on the basis of 4/5 of
one vote for each share of 7% Convertible Preferred Stock. On such matters, the
holders of shares of 7% Convertible Preferred Stock and the holders of Common
Stock will vote together as one class except as otherwise provided by law or the
Articles. In addition, holders of shares of 7% Convertible Preferred Stock have
additional voting rights with respect to certain other matters, including
certain rights to elect two directors in the event of specified dividend
arrearages. The shares of 7% Convertible Preferred Stock rank prior to the
Common Stock as to the payment of dividends and distribution of assets upon
liquidation.
6% CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES AND SERIES A PREFERRED STOCK
The Company has established a series of Preferred Stock designated as the
Series A Cumulative Convertible Preferred Stock (the "Series A Preferred
Stock"), no shares of which have been issued. The Series A Preferred Stock has
been established in connection with the issuance by American General Delaware,
L.L.C. ("American General Delaware"), a Delaware limited liability company and
an affiliate of the Company, of 5,000,000 of its 6% Convertible Monthly Income
Preferred Securities, Series A (the "Series A Preferred Securities"),
representing preferred limited liability company interests in American General
Delaware. The Series A Preferred Securities are subject to exchange, in whole
but not in part, for shares of Series A Preferred Stock, at the rate of one
share of Series A Preferred Stock for each Series A Preferred Security, upon a
vote of the holders of a majority of the aggregate liquidation preference of all
outstanding Series A Preferred Securities following the failure of holders of
Series A Preferred Securities to receive dividends in full (including
arrearages) for 15 consecutive months.
Holders of the Series A Preferred Securities are entitled to receive
cumulative cash distributions from American General Delaware at the annual rate
of 6% of the liquidation preference of $50 per Series A Preferred Security,
accruing from the date of original issuance and payable monthly in arrears on
the last day of each calendar month of each year. In the event of the
liquidation, dissolution or winding-up of American General Delaware, holders of
Series A Preferred Securities are entitled to receive for each Series A
Preferred Security a liquidation preference of $50 plus an amount equal to any
accumulated and unpaid dividends (whether or not earned or declared), to the
date of payment, subject to certain limitations. Each Series A Preferred
Security is convertible at the option of the holder, at any
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time prior to the expiration of such conversion rights as discussed below, into
shares of the Company's Common Stock, at the rate of 1.2288 shares of Common
Stock for each Series A Preferred Security (equivalent to a conversion price of
$40.69 per share of Common Stock), subject to adjustment in certain
circumstances. On any date on or after May 31, 2000, American General Delaware
may, at its option, cause the conversion rights of holders of the Series A
Preferred Securities to expire if certain conditions are then satisfied (the
"Conversion Expiration Date"). The Series A Preferred Securities are redeemable
at the option of American General Delaware, in whole or in part, from time to
time, on or after May 31, 2003, at a cash redemption price equal to the
liquidation preference for such Series A Preferred Securities plus accumulated
and unpaid dividends (whether or not earned or declared) to the date fixed for
redemption (the "Redemption Price"). The Series A Preferred Securities are also
redeemable at the option of American General Delaware, in whole but not in part,
at the Redemption Price if, at any time after the Conversion Expiration Date,
less than 10% of the Series A Preferred Securities that were originally issued
remains outstanding. The Series A Preferred Securities will be subject to
mandatory redemption on May 31, 2025, or earlier in certain circumstances.
The Series A Preferred Stock will have dividend, liquidation, optional
redemption and conversion provisions and certain other terms substantially
similar to those of the Series A Preferred Securities, except that, among other
things, the holders of Series A Preferred Stock will have the right (voting
together with holders of certain other series of capital stock of the Company
including, under certain circumstances, the holders of 7% Convertible Preferred
Stock) to elect two additional directors of the Company whenever dividends on
the Series A Preferred Stock are in arrears for 18 or more consecutive months,
no interest will accumulate or be payable on any dividend arrearages on the
Series A Preferred Stock and the Series A Preferred Stock will not be subject to
mandatory redemption. The Series A Preferred Stock, if issued, would be pari
passu with the 7% Convertible Preferred Stock as to the payment of dividends and
distributions of assets upon liquidation of the Company.
DESCRIPTION OF COMMON STOCK
The following summary does not purport to be complete and is qualified in
its entirety by reference to the Company's Articles and Bylaws, which are
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part.
GENERAL
The Company is authorized to issue 300,000,000 shares of Common Stock, par
value $.50 per share. As of December 31, 1997, there were outstanding
243,206,215 shares of the Company's Common Stock.
Holders of the Company's Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors of the Company out of any
funds legally available therefor, and are entitled upon liquidation, after
claims of creditors and preferences of any series of the Company's Preferred
Stock, to receive pro rata the net assets of the Company. See "Description of
the Preferred Stock."
The holders of the Common Stock are entitled to one vote for each share
held and are vested with all of the voting power, except as the Board of
Directors of the Company or an authorized committee thereof may provide with
respect to any series of Preferred Stock. Directors of the Company are elected
for a one-year term expiring upon the annual meeting of stockholders of the
Company. The holders of the Common Stock do not have cumulative voting rights.
The holders of Common Stock do not have any preemptive rights to acquire
any shares or other securities of any class which may at any time be issued,
sold or offered for sale by the Company. The holders of Common Stock have no
conversion rights and the Common Stock is not subject to redemption by either
the Company or a stockholder.
The rights of holders of Common Stock are subject to the preferential
rights of the holders of outstanding shares of the Company's 7% Convertible
Preferred Stock and the preferential rights of any Preferred Stock that may be
issued in the future.
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The Company's Common Stock is listed on the New York, Pacific, London and
Swiss Stock Exchanges. First Chicago Trust Company of New York is the transfer
agent, registrar and dividend disbursing agent for the Common Stock.
PREFERRED SHARE PURCHASE RIGHTS
On July 27, 1989, the Board of Directors of the Company authorized the
issuance of one preferred share purchase right (a "Right") for each share of
Common Stock outstanding on August 7, 1989 and for each share of 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 Common Stock and entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $1.50 per share, of the Company (the "Junior
Preferred Shares"), at a price of $120 per one one-hundredth of a 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 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
Common Stock and any other shares of capital stock of the Company 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 the Company's
assets, liquidation, dissolution or winding up of the Company (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 the Company 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 Common Stock (or under certain
circumstances, Common Stock-equivalent Junior Preferred Shares) having a market
value of two times the exercise price of the Rights.
At any time 10 business days after a person or group of affiliated or
associated persons has become an Acquiring Person and prior to the acquisition
by any person or group of 50% or more of the outstanding Voting Stock, the Board
of Directors of the Company may exchange the Rights (other than Rights acquired
or beneficially owned by such Acquiring Person, which Rights held by such
Acquiring Person shall then be null and void), in whole or in part, at an
exchange ratio of one share of Common Stock (or one one-hundredth of a share of
Junior Preferred Stock), appropriately adjusted to reflect any stock split,
stock dividend or similar transaction, for each two shares of Common Stock for
which the Right is then exercisable.
At any time prior to the close of business on the tenth day following the
first public announcement that a person or group of affiliated or associated
persons has become an Acquiring Person, the Board of Directors of the Company
may redeem the then outstanding Rights in whole, but not in part, at a price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction (the "Rights Redemption Price"). Any such
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company in its sole
discretion may establish.
The purchase price payable, and the number of Junior Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent
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dilution in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Junior Preferred Shares.
The number of outstanding Rights and the number of one one-hundredths of a
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 the Company or other transaction involving the Company
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 the Company or any of its subsidiaries beneficially owned by any
Acquiring Person, in any such case, prior to an exchange by the Company as
described above.
The terms of the Rights may be amended, including extending the expiration
date, by the Board of Directors of the Company 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 the Company
on terms not approved by the Board of Directors of the Company. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors of the Company since the Rights may be redeemed by the
Company 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 Junior Preferred Shares will be non-redeemable and rank junior to all
other series of the Company's Preferred Stock. Each whole Junior Preferred Share
will be entitled to receive a quarterly preferential dividend in an amount equal
to the greater of (i) $0.25 or (ii) subject to certain adjustments, 100 times
the dividend declared on each share of Common Stock. In the event of the
liquidation, dissolution or winding up of the Company, each whole Junior
Preferred Share will be entitled to receive a preferential liquidation payment
in an amount equal to the greater of (i) $1.50, or (ii) 100 times the aggregate
amount to be distributed per share to holders of Common Stock, plus, in either
case, an amount equal to all accrued and unpaid dividends thereon. In the event
of any merger, consolidation or other transaction in which Common Stock is
exchanged for or changed into other stock or securities, cash or other property,
each whole Junior Preferred Share will be entitled to receive 100 times the
amount received per each share of Common Stock. Each whole Junior Preferred
Share will be entitled to 100 votes on all matters submitted to a vote of the
shareholders of the Company, and Junior Preferred Shares will generally vote
together as one class with the Common Stock and any other voting capital stock
of the Company on all matters submitted to a vote of shareholders of the
Company.
If such registration is then required by applicable law, the Company will
use its best efforts to cause the offer and sale of Junior Preferred Shares
issuable upon exercise of the Rights to be registered pursuant to the Securities
Act at any such time as the Rights become exercisable.
The foregoing description of the Rights and the Junior Preferred Shares
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, as amended, which is an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Statement of Resolution
Establishing Series of Shares of the Junior Preferred Shares.
BUSINESS COMBINATION LAW
The Company is subject to Part Thirteen of the Texas Business Corporation
Act, known as the "Business Combination Law," which became effective September
1, 1997. In general, the Business Combination Law prevents an "affiliated
shareholder" (or its affiliates or associates) from entering into or engaging in
a "business combination" with an "issuing public corporation" during the
three-year period immediately following the date on which the affiliated
shareholder became an affiliated shareholder, unless (a) before the date such
person became an affiliated shareholder, the board of directors of the issuing
public corporation approves the business combination or the acquisition of
shares that caused the affiliated shareholder to become an affiliated
shareholder, or (b) not less than six months
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after the date such person became an affiliated shareholder, the business
combination is approved by the affirmative vote of holders of at least
two-thirds of the issuing public corporation's outstanding voting shares not
beneficially owned by the affiliated shareholder or its affiliates or
associates. For the purposes of the foregoing, "affiliated shareholder" is
defined generally as a person that is or was within the preceding three-year
period the beneficial owner of 20% or more of a corporation's outstanding voting
shares; "business combination" is defined generally to include (i) mergers,
share exchanges or conversions involving the affiliated shareholder, (ii)
dispositions of assets involving the affiliated shareholder having an aggregate
value equal to 10% or more of the market value of the assets or of the
outstanding common stock or representing 10% or more of the earning power or net
income of the corporation, (iii) certain issuances or transfers of securities by
the corporation to the affiliated shareholder other than on a pro rata basis,
(iv) certain plans or agreements relating to a liquidation or dissolution of the
corporation involving an affiliated shareholder, (v) certain reclassifications,
recapitalizations, distributions or other transactions that would have the
effect of increasing the affiliated shareholder's percentage ownership of the
corporation and (vi) the receipt of tax, guarantee, loan or other financial
benefits by an affiliated shareholder other than proportionately as a
shareholder of the corporation; and "issuing public corporation" is generally
defined to include most publicly held Texas corporations, including the Company.
ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS AND PROPOSALS
The Company's Bylaws provide that, subject to the rights of any class or
series of Preferred Stock to nominate and elect a specified number of directors
in certain circumstances, nominations of persons for election as directors of
the Company may be made by a shareholder only if the shareholder is a
shareholder of record and such shareholder gives timely written notice of such
shareholder's intent to make such nomination or nominations to the Secretary of
the Company in accordance with the Company's Bylaws. To be timely, the notice
must be given (a) in the case of an annual meeting, not less than 120 days nor
more than 150 days prior to the anniversary date of the immediately preceding
annual meeting of shareholders; provided, that in the event that such annual
meeting is called for a date that is not within 30 days before or after such
anniversary date, notice by the shareholder in order to be timely must be so
given not later than the close of business on the tenth day following the day on
which notice of the date of such annual meeting is mailed or public disclosure
of the date of such annual meeting is made, whichever first occurs, and (b) in
the case of a special meeting of shareholders called for the purpose of electing
directors, not later than the close of business on the tenth day following the
day on which notice of the date of such special meeting is mailed or public
disclosure of the date of such special meeting is made, whichever first occurs.
Each such notice must contain certain specified information with respect to the
shareholder making the proposal, and the nominee or nominees.
The Company's Bylaws also provide that no business may be brought before an
annual meeting of shareholders by a shareholder unless such shareholder is a
shareholder of record and such shareholder gives notice of such business to the
Secretary of the Company, in accordance with the Company's Bylaws, not less than
120 days nor more than 150 days prior to the anniversary date of the immediately
preceding annual meeting of shareholders; provided, that in the event that such
annual meeting is called for a date that is not within 30 days before or after
such anniversary date, notice by the shareholder in order to be timely must be
so given not later than the close of business on the tenth day following the day
on which notice of the date of such annual meeting is mailed or public
disclosure of the date of such annual meeting is made, whichever first occurs.
Each such notice must set forth certain specified information and
representations concerning the proposal and the shareholder making the proposal.
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DESCRIPTION OF WARRANTS
The Company may issue Debt Warrants, Preferred Stock Warrants, and Common
Stock Warrants (collectively, the "Warrants"). Each Debt Warrant will entitle
the holder thereof to purchase Debt Securities of a particular series at such
exercise price as shall be set forth in, or be determinable as set forth in, the
Prospectus Supplement relating to the Debt Warrants offered thereby. Similarly,
each Preferred Stock Warrant and Common Stock Warrant (collectively, the "Stock
Warrants") will entitle the holder thereof to purchase such number of shares of
Preferred Stock of a particular series or of Common Stock, as the case may be,
and at such exercise price, as shall be set forth in, or calculable from, the
applicable Prospectus Supplement. Warrants may be issued independently or
together with other Securities and may be attached to or separate from such
other Securities. Each series of Warrants may be issued under a separate warrant
agreement (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company designated in the applicable Prospectus Supplement
as warrant agent (the "Warrant Agent"). Each Warrant Agent will act solely as
the agent of the Company in connection with the applicable Warrants and will not
assume any obligation or relationship of agency or trust for or with holders or
beneficial owners of such Warrants.
The following describes the type of information that will be set forth in a
Prospectus Supplement relating to a series of Warrants.
DEBT WARRANTS
If Debt Warrants are offered, the applicable Prospectus Supplement will
describe the terms of such Debt Warrants, the Warrant Agreement relating to such
Debt Warrants and the certificates, if any, representing such Debt Warrants,
including the following, where applicable: (1) the specific designation and
number of such Debt Warrants; (2) the offering price, if any, of such Debt
Warrants; (3) the designation, aggregate principal amount, denominations and
terms of the series of Debt Securities purchasable upon exercise of such Debt
Warrants and the procedures and conditions relating to the exercise of such Debt
Warrants; (4) the designation and terms of any related series of Securities with
which such Debt Warrants are issued and the number of such Debt Warrants issued
with each such Security; (5) the date, if any, on and after which such Debt
Warrants and the related Securities will be separately transferable; (6) the
principal amount of the series of Debt Securities purchasable upon exercise of
each such Debt Warrant and the price at which such principal amount of Debt
Securities may be purchased upon such exercise and whether such Debt Securities
may be purchased for consideration other than cash; (7) the date on which the
right to exercise such Debt Warrants shall commence and the date on which such
right shall expire; (8) any anti-dilution provisions of such Debt Warrants; (9)
any redemption or call provisions applicable to such Debt Warrants; (10) if the
series of Debt Securities purchasable upon exercise of such Debt Warrants are
Original Issue Discount Securities, a discussion of certain Federal income tax
considerations applicable thereto; (11) the place or places where the
certificates, if any, representing such Debt Warrants may be transferred and
registered; (12) information with respect to any book-entry procedures, if any;
and (13) any other terms of such Debt Warrants.
STOCK WARRANTS
If Stock Warrants are offered, the applicable Prospectus Supplement will
describe the terms of such Stock Warrants, the Warrant Agreement relating to
such Stock Warrants and the certificates, if any, representing such Stock
Warrants, including the following, where applicable: (1) the designation and
aggregate number of such Stock Warrants; (2) the offering price, if any, of such
Stock Warrants; (3) in the case of Preferred Stock Warrants, the designation and
terms of the series of Preferred Stock purchasable upon exercise of such
Preferred Stock Warrants and whether such series of Preferred Stock is
convertible or exchangeable for other Securities; (4) the aggregate number of
shares of Common Stock or such series of Preferred Stock purchasable upon
exercise of such Stock Warrants and the minimum number of Stock Warrants that
are exercisable; (5) the terms of the Securities with which such Stock Warrants
are being offered and the number of such Stock Warrants being offered with
23
<PAGE> 26
each such Security; (6) the date on and after which such Stock Warrants and the
related Security will be transferable separately; (7) the number of shares of
Common Stock or Preferred Stock purchasable upon exercise of each such Stock
Warrant and the price at which such number of shares of Common Stock or
Preferred Stock may be purchased upon such exercise; (8) the date on which the
right to exercise such Stock Warrants shall commence and the date on which such
right shall expire; (9) any anti-dilution provisions of such Stock Warrants;
(10) any redemption or call provisions applicable to such Stock Warrants; (11)
the place or places where the certificates, if any, representing such Stock
Warrants may be transferred and registered; (12) whether the Stock Warrants
represented by the warrant certificates will be issued in registered or bearer
form; (13) information with respect to book-entry procedures, if any; and (14)
any other terms of such Stock Warrants.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Securities to or through underwriters or dealers;
directly to other purchasers; through agents; or through any combination of such
methods of sale. Any such underwriter, dealer or agent involved in the offer and
sale of the Securities being offered will be named in an applicable Prospectus
Supplement or Prospectus Supplements (including any Pricing Supplement or
Pricing Supplements).
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agent. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any compensation paid by the Company to underwriters, dealers or
agents in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be described in an applicable Prospectus Supplement or Pricing Supplement.
Unless otherwise set forth in an applicable Prospectus Supplement, the
obligations of the underwriters or agents to purchase the Securities being
offered will be subject to conditions precedent and the underwriters will be
obligated to purchase all such Securities if any are purchased. The initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against and/or contribution by the
Company toward certain liabilities, including liabilities under the Securities
Act and to reimbursement for certain expenses.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in transactions with and perform services for the Company
or one or more of its affiliates in the ordinary course of business.
The Securities being offered may or may not be listed on a national
securities exchange. No assurances can be given that there will be a market for
such Securities.
24
<PAGE> 27
The specific terms and manner of sale, including the place and time of
delivery, of the Securities in respect of which this Prospectus is being
delivered, and whether such Securities will be listed on a national securities
exchange, will be set forth or summarized in the applicable Prospectus
Supplement.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Securities from the Company pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases purchases by such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL MATTERS
Unless otherwise indicated in a Prospectus Supplement, the validity of each
issue of the Securities will be passed upon for the Company by Vinson & Elkins
L.L.P., Houston, Texas, and certain legal matters relating to the Securities
offered hereby will be passed upon for any underwriters, dealers or agents of a
particular issue of Securities by Brown & Wood LLP, New York, New York. Brown &
Wood LLP may rely as to matters of Texas law on the opinion of Vinson & Elkins
L.L.P. J. Evans Attwell, an attorney in the firm of Vinson & Elkins L.L.P., is a
director of the Company.
EXPERTS
The consolidated financial statements and schedules of the Company and its
subsidiaries appearing in the Company's Current Report on Form 8-K dated October
10, 1997 have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. See "Incorporation by Reference." Such consolidated financial
statements and schedules are, and audited consolidated financial statements to
be included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such consolidated
financial statements (to the extent covered by consents filed with the
Commission) given upon the authority of such firm as experts in accounting and
auditing.
25
<PAGE> 28
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 SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 9, 1998
PROSPECTUS
[AMERICAN GENERAL LOGO]
$1,500,000,000
AMERICAN GENERAL CORPORATION
JUNIOR SUBORDINATED DEBENTURES
AMERICAN GENERAL CAPITAL I
AMERICAN GENERAL CAPITAL II
AMERICAN GENERAL CAPITAL III
AMERICAN GENERAL CAPITAL IV
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN,
BY
AMERICAN GENERAL CORPORATION
------------------
American General Corporation, a Texas corporation ("American General" or the
"Company"), may from time to time offer in one or more series or issuances its
junior subordinated debentures (the "Junior Subordinated Debentures"). The
Junior Subordinated Debentures will be unsecured and subordinate and junior in
right of payment to the extent and in the manner set forth herein to Senior
Indebtedness (as defined in "Description of Junior Subordinated Debentures
- --Subordination") of the Company. If provided in an accompanying Prospectus
Supplement, the Company will have the right to defer payments of interest on any
series of Junior Subordinated Debentures by extending the interest payment
period thereon at any time or from time to time for up to such number of
consecutive interest payment periods (which shall not extend beyond the Stated
Maturity Date (as defined herein) of the Junior Subordinated Debentures) with
respect to each deferral period as may be specified in such Prospectus
Supplement (each, an "Extension Period"). In such circumstance, however, the
Company would not be permitted, subject to certain exceptions set forth herein,
to declare or pay any dividends, distributions or other payments with respect
to, or repay, repurchase, redeem or otherwise acquire, the Company's capital
stock or debt securities that rank pari passu with or junior to such series of
Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Option to Defer Interest Payments" and "-- Restrictions on Certain
Payments."
American General Capital I, American General Capital II, American General
Capital III, and American General Capital IV, each a trust created under the
laws of the State of Delaware (each, a "Trust," and collectively, the "Trusts"),
may severally offer, from time to time, preferred securities (the "Preferred
Securities") representing beneficial ownership interests in such Trust. The
Company will be the owner of the common securities (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities") representing
common beneficial ownership interests in such Trust. Holders of the Preferred
Securities will be entitled to receive preferential cumulative cash
distributions ("Distributions") accumulating from the date of original issuance
and payable periodically as specified in an accompanying Prospectus Supplement.
(continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE> 29
(cover page continued)
Concurrently with the issuance by a Trust of its Preferred Securities, such
Trust will invest the proceeds thereof and of contributions received in respect
of the Common Securities in a corresponding series of the Company's Junior
Subordinated Debentures (the "Corresponding Junior Subordinated Debentures")
with terms corresponding to the terms of that Trust's Preferred Securities (the
"Related Preferred Securities"). Accordingly, if, as provided in an accompanying
Prospectus Supplement, the Company has the right to defer the payment of
interest on a series of Corresponding Junior Subordinated Debentures, then, if
interest payments are so deferred, Distributions on the Related Preferred
Securities would also be deferred, but would continue to accumulate at the rate
per annum set forth in the related Prospectus Supplement. See "Description of
Preferred Securities -- Distributions."
Taken together, the Company's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture and the related
Declaration and the related Guarantee (each, as defined herein), in the
aggregate, provide a full, irrevocable and unconditional guarantee of payments
of Distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees -- Full and Unconditional Guarantee."
The payment of Distributions with respect to the Preferred Securities of each
Trust and payments on liquidation of such Trust or redemption of such Preferred
Securities, in each case out of funds held by such Trust, are each irrevocably
guaranteed by the Company to the extent described herein (each, a "Guarantee").
See "Description of Guarantees." The obligations of the Company under each
Guarantee will be unsecured and subordinate and junior in right of payment to
all Senior Indebtedness of the Company to the extent and in the manner set forth
herein and in such Guarantee.
The Corresponding Junior Subordinated Debentures will be the sole assets of
each Trust, and payments under the Corresponding Junior Subordinated Debentures
will be the only revenue of each Trust. If so provided in an accompanying
Prospectus Supplement, the Company may redeem the Corresponding Junior
Subordinated Debentures (and thereby cause the redemption of the related Trust
Securities) or may dissolve a Trust and, after satisfaction of liabilities to
the creditors of such Trust as required by applicable law, cause the
Corresponding Junior Subordinated Debentures to be distributed to the holders of
the Related Preferred Securities in exchange therefor upon liquidation of their
interests in such Trust. See "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution."
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, that the aggregate initial public offering price of all
Junior Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus forms a part shall not exceed $1,500,000,000. See "Additional
Information." Certain specific terms of the Junior Subordinated Debentures or
Preferred Securities in respect of which this Prospectus is being delivered will
be described in an accompanying Prospectus Supplement, including without
limitation and where applicable and to the extent not set forth herein, (a) in
the case of Junior Subordinated Debentures, the specific designation, aggregate
principal amount, denominations, Stated Maturity Date (including any provisions
for the shortening or extension thereof), interest payment dates, interest rate
(which may be fixed or variable) or method of calculating interest, if any,
applicable Extension Period or interest deferral terms, if any, place or places
where principal, premium, if any, and interest, if any, will be payable, any
terms of redemption, any sinking fund provisions, any terms for any conversion
or exchange into other securities, initial offering or purchase price, methods
of distribution and any other special terms, and (b) in the case of Preferred
Securities, the identity of the Trust, specific title, aggregate stated
liquidation amount, number of securities, Distribution rate or method of
calculating such rate, Distribution payment dates, applicable Distribution
deferral terms, if any, place or places where Distributions will be payable, any
terms of redemption, any terms for conversion or exchange into other securities,
initial offering or purchase price, methods of distribution and any other
special terms.
(ii)
<PAGE> 30
(cover page continued)
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the Junior Subordinated Debentures or
Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
(iii)
<PAGE> 31
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE OF THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's Regional Offices at 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New
York, New York 10048. Copies of such materials may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates, or from the Commission's web site at
"http://www.sec.gov". In addition, such material may also be inspected and
copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005 and The Pacific Stock Exchange, Incorporated, 301 Pine
Street, San Francisco, California 94104.
The Company and the Trusts have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the securities offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made to the
Registration Statement.
In addition to this Prospectus, the Registration Statement contains another
prospectus which relates to the offer and sale from time to time of certain
other securities by the Company. The $1,500,000,000 aggregate maximum initial
public offering price of securities which may be sold under this Prospectus will
be reduced by the amount of the aggregate initial public offering price of any
securities sold under such other prospectus.
Statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is made
to the copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
No separate financial statements of any Trust have been included herein.
The Company and the Trusts do not consider that such financial statements would
be material to holders of the Preferred Securities because each Trust is a newly
formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Corresponding Junior Subordinated
Debentures of the Company and issuing the Trust Securities. See "The Trusts,"
"Description of Preferred Securities," "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" and "Description of
Guarantees." In addition, the Company does not expect that any of the Trusts
will file reports under the Exchange Act with the Commission.
2
<PAGE> 32
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-7981), are incorporated
herein by reference:
- the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
- the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997;
- the Company's Current Report on Form 8-K dated February 12, 1997 with
respect to the announcement of the signing of a merger agreement with
USLIFE Corporation;
- the Company's Current Report on Form 8-K dated February 21, 1997 with
respect to the filing of the Company's historical Consolidated Financial
Statements for the three years ended December 31, 1996 and the related
Management's Discussion and Analysis;
- the Company's Current Report on Form 8-K dated August 15, 1997 with
respect to the consolidated total revenues, net income and net income per
share of the Company for the one month and seven months ended July 31,
1997, which reflect the acquisition of USLIFE Corporation using the
pooling of interests method of accounting;
- the Company's Current Report on Form 8-K dated September 11, 1997 with
respect to the announcement of a definitive agreement under which the
Company will acquire the remaining common equivalent shares of Western
National Corporation;
- the Company's Current Report on Form 8-K dated October 10, 1997 with
respect to the filing of the Company's consolidated balance sheets as of
December 31, 1996 and 1995, and the related consolidated statements of
income, shareholders' equity, common stock activity, and cash flows, and
Management's Discussion and Analysis, for the three years ended December
31, 1996, restated to include the acquisition of USLIFE Corporation using
the pooling of interests method of accounting;
- the Company's Current Report on Form 8-K dated January 26, 1998 with
respect to certain management compensation information; and
- the Company's Current Report on Form 8-K dated January 27, 1998 with
respect to the Company's earnings release for the year ended December 31,
1997.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the filing of the
Registration Statement and prior to the termination of the offering of the
securities made hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such document.
Any statement contained herein, in a Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, in a Prospectus
Supplement or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to the Company, 2929 Allen Parkway,
Houston, Texas 77019-2155, Attention: Treasury Department, telephone (713)
831-1949.
3
<PAGE> 33
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained 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.
Forward-looking statements are made based upon American General's current
expectations and beliefs concerning future developments and their potential
effects upon American General. There can be no assurance that future
developments affecting American General will be those anticipated by its
management. 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 ability to render its computer systems
year 2000 compliant; 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 Western National
Corporation, USLIFE Corporation and Home Beneficial Corporation.
AMERICAN GENERAL CORPORATION
The Company, with assets of $80.6 billion and shareholders' equity of $7.6
billion as of December 31, 1997, is the parent company of one of the nation's
largest diversified financial services organizations. The Company provides
financial services to consumers, emphasizing personal service and frequent
customer contact.
Since American General is a holding company, rights to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise (and thus the ability of holders of Preferred Securities or Junior
Subordinated Debentures to benefit indirectly from such distribution) are
subject to the prior claims of creditors of that subsidiary, except to the
extent that American General may itself be a creditor of that subsidiary. Claims
on American General's subsidiaries by other creditors include substantial claims
for policy benefits and debt obligations, as well as other liabilities incurred
in the ordinary course of business. In addition, since many of American
General's subsidiaries are insurance companies subject to regulatory control by
various state insurance departments, the ability of such subsidiaries to pay
dividends to American General without prior regulatory approval is limited by
applicable laws and regulations. Further, certain non-insurance subsidiaries are
similarly restricted in their ability to make dividend payments by long-term
debt agreements. At December 31, 1996, the amount available to the Company for
dividends from subsidiaries not limited by such restrictions was approximately
$750 million.
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 TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to (i) a declaration of trust executed by the Company, as Sponsor of
the Trust, the Delaware Trustee and an Administrative Trustee (each as defined
herein) of such Trust and (ii) the filing of a certificate of trust with the
Delaware Secretary of State. Each declaration of trust will be amended and
restated in its entirety (each, as so amended and restated, a "Declaration")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Each Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Each Trust exists for the exclusive purposes of (i) issuing and
selling its Trust Securities, which represent undivided beneficial interests in
the assets of such Trust, (ii) investing the gross proceeds from the sale of
such Trust Securities in a series of Corresponding Junior Subordinated
Debentures issued by the Company, and
4
<PAGE> 34
(iii) engaging in only those other activities necessary, advisable or incidental
thereto (such as registering the transfer of Trust Securities). Accordingly, the
Corresponding Junior Subordinated Debentures will be the sole assets of each
Trust, and payments under the Corresponding Junior Subordinated Debentures will
be the sole source of revenue for each Trust.
All of the Common Securities of each Trust will be owned directly or
indirectly by the Company. The Common Securities of a Trust will rank pari
passu, and payments will be made thereon pro rata, with the Preferred Securities
of such Trust, except that upon the occurrence and continuance of an event of
default under a Declaration resulting from an event of default under the
Indenture, the rights of the Company as holder of the Common Securities to
payment in respect of Distributions and payments upon liquidation or redemption
will be subordinated to the rights of the holders of the Preferred Securities of
such Trust. See "Description of Preferred Securities -- Subordination of Common
Securities." The Company will acquire, directly or indirectly, Common Securities
in an aggregate Liquidation Amount equal to at least 3% of the total assets of
each Trust.
Each Trust will have a term that generally corresponds to the Stated
Maturity of the Corresponding Junior Subordinated Debentures specified in the
applicable Prospectus Supplement, but may dissolve earlier as provided in the
applicable Declaration. Each Trust's business and affairs are conducted by its
trustees, each appointed by the Company as holder of the Common Securities. The
trustees for each Trust will be Bankers Trust Company, as the Property Trustee
(the "Property Trustee"), Bankers Trust (Delaware), as the Delaware Trustee (the
"Delaware Trustee"), and three individual trustees (the "Administrative
Trustees") who are employees or officers of or affiliated with the Company
(collectively, the "Issuer Trustees"). Bankers Trust Company, as Property
Trustee, will act as sole trustee under each Declaration for purposes of
compliance with the Trust Indenture Act. Bankers Trust Company will also act as
trustee under the Guarantees and the Indenture. See "Description of Guarantees"
and "Description of Junior Subordinated Debentures." The holder of the Common
Securities of a Trust, or the holders of a majority in Liquidation Amount of the
Preferred Securities if an event of default under the Declaration for such Trust
has occurred and is continuing, will be entitled to appoint, remove or replace
the Property Trustee and/or the Delaware Trustee for such Trust. In no event
will the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights are vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the applicable Declaration. The Company
will pay all fees and expenses related to each Trust and the offering of the
Preferred Securities and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of each Trust.
The principal executive office of each Trust is c/o American General
Corporation, 2929 Allen Parkway, Houston, Texas 77019-2155, Attention: Treasury
Department, telephone (713) 831-1949.
USE OF PROCEEDS
Except as may otherwise be provided in an applicable Prospectus Supplement,
the net proceeds to be received by the Company from the sale of any Junior
Subordinated Debentures being offered hereby (including Corresponding Junior
Subordinated Debentures issued to the Trusts in connection with the investment
by the Trusts of all of the proceeds from the sale of Trust Securities) will be
added to American General's general corporate funds and may be used for the
repayment of long- or short-term indebtedness or for other general corporate
purposes.
5
<PAGE> 35
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
ratio of earnings to combined fixed charges and preferred stock dividends for
the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- ------------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
Consolidated operations................ 2.3 2.7 2.5 2.3 2.6 2.3 2.5
Consolidated operations, corporate
fixed charges only.................. 5.6 7.2 6.4 5.3 6.3 5.3 5.5
Ratio of earnings to combined fixed
charges and preferred stock dividends:
Consolidated operations................ 1.9 2.5 2.3 2.2 2.6 2.3 2.5
Consolidated operations, corporate
fixed charges and preferred stock
dividends only...................... 3.3 5.4 4.7 4.7 6.3 5.3 5.5
</TABLE>
For purposes of computing these ratios, earnings represent income before
income tax expense, net dividends on preferred securities of subsidiaries, and
the cumulative effect of accounting changes, adjusted for undistributed income
of an equity investee and fixed charges (excluding capitalized interest). Fixed
charges consist primarily of interest expense (including capitalized interest)
on short-term and long-term borrowings. Preferred stock dividends consist of
dividends on preferred securities of subsidiaries and convertible preferred
stock.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, dated as of November 15, 1997, as it may
be supplemented or amended from time to time (as so supplemented or amended, the
"Indenture"), between the Company and Bankers Trust Company, as trustee (the
"Debenture Trustee"). This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture, which summarizes the material
provisions thereof, does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, the form of which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and to the Trust Indenture Act, to each of which reference is hereby
made. The Indenture is qualified under the Trust Indenture Act. Whenever
particular defined terms of the Indenture are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Indebtedness (as defined below) of the
Company. See "--Subordination." Because the Company is a holding company, the
right of the Company to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of the holders of Junior Subordinated Debentures and
Related Preferred Securities to benefit indirectly from such distribution), is
subject to the prior claims of creditors of that subsidiary, except to the
extent that the Company may itself be recognized as a creditor of that
subsidiary. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Junior Subordinated Debentures should look only to
the assets of the Company for payments on the Junior
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Subordinated Debentures. In addition, since many of the Company's subsidiaries
are insurance companies subject to regulatory control by various state insurance
departments, the ability of such subsidiaries to pay dividends to the Company
without prior regulatory approval is limited by applicable laws and regulations.
Further, certain non-insurance subsidiaries are similarly restricted in their
ability to make dividend payments by long-term debt agreements. Except as
otherwise provided in the applicable Prospectus Supplement, the Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Indebtedness, whether under the Indenture, any other
existing indenture or any other indenture that the Company may enter into in the
future or otherwise or afford holders of Junior Subordinated Debentures
protection in the event of a highly leveraged or similar transaction that may
adversely affect the holders of the Junior Subordinated Debentures. See
"-- Subordination" and the applicable Prospectus Supplement relating to any
offering of Preferred Securities or Junior Subordinated Debentures.
The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Company's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of the Junior
Subordinated Debentures; (3) the date or dates on which the principal of the
Junior Subordinated Debentures is payable (the "Stated Maturity Date") or the
method of determination thereof, including the right, if any, of the Company to
shorten or extend the Stated Maturity Date in certain circumstances; (4) the
rate or rates, if any, at which the Junior Subordinated Debentures shall bear
interest, the dates on which any such interest shall be payable (the "Interest
Payment Dates"), the right, if any, of the Company to defer or extend an
Interest Payment Date, and the record dates for any interest payable on any
Interest Payment Date (the "Regular Record Dates") or the method by which any of
the foregoing shall be determined; (5) the place or places where, subject to the
terms of the Indenture as described below under "-- Payment and Paying Agents,"
the principal of and premium, if any, and interest on the Junior Subordinated
Debentures will be payable and where, subject to the terms of the Indenture as
described below under "-- Denominations, Registration and Transfer," the Junior
Subordinated Debentures may be presented for registration of transfer or
exchange and the place or places where notices and demands to or upon the
Company in respect of the Junior Subordinated Debentures and the Indentures may
be made ("Place of Payment"); (6) any period or periods within which, or date or
dates on which, the price or prices at which and the terms and conditions upon
which Junior Subordinated Debentures may be redeemed, in whole or in part, at
the option of the Company or a holder thereof; (7) the obligation, if any, of
the Company to redeem, purchase or repay the Junior Subordinated Debentures and
the period or periods within which, the price or prices at which, and the other
terms and conditions upon which the Junior Subordinated Debentures shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such obligation;
(8) the denominations in which any Junior Subordinated Debentures shall be
issuable if other than denominations of $1,000 and any integral multiple
thereof; (9) if other than in U.S. Dollars, the currency or currencies
(including currency unit or units) in which the principal of (and premium, if
any) and interest, if any, on the Junior Subordinated Debentures shall be
payable, or in which the Junior Subordinated Debentures shall be denominated;
(10) any additions, modifications or deletions in the events of default under
the Indenture or covenants of the Company specified in the Indenture with
respect to the Junior Subordinated Debentures; (11) if other than the principal
amount thereof, the portion of the principal amount of Junior Subordinated
Debentures that shall be payable upon declaration of acceleration of the
maturity thereof; (12) any additions or changes to the Indenture with respect to
a series of Junior Subordinated Debentures as shall be necessary to permit or
facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Junior Subordinated Debentures and the manner in which
such amounts will be determined; (14) the terms and conditions relating to the
issuance of a temporary Global Security representing all of the Junior
Subordinated Debentures of such series and the exchange of such temporary Global
Security for definitive Junior
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Subordinated Debentures of such series; (15) subject to the terms described
herein under "-- Global Junior Subordinated Debentures," whether the Junior
Subordinated Debentures of the series shall be issued in whole or in part in the
form of one or more Global Securities and, in such case, the depository for such
Global Securities, which depository shall be a clearing agency registered under
the Exchange Act; (16) the appointment of any paying, authenticating or
conversion agent or agents; (17) the terms and conditions of any obligation or
right of the Company or a holder to convert or exchange the Junior Subordinated
Debentures into Preferred Securities; (18) whether such Junior Subordinated
Debentures shall be convertible or exchangeable for other securities or property
and, if so, the terms of any such conversion or exchange and the terms of such
other securities; (19) the form of Declaration and Guarantee Agreement, if
applicable; (20) the relative degree, if any, to which such Junior Subordinated
Debentures of the series shall be senior to or be subordinated to other series
of such Junior Subordinated Debentures or other indebtedness of the Company in
right of payment, whether such other series of Junior Subordinated Debentures or
other indebtedness are outstanding or not; (21) the right, if any, of the
Company to defease any obligations under the Indenture, and the terms,
conditions and provisions relating thereto; and (22) any other terms of the
Junior Subordinated Debentures not inconsistent with the provisions of the
Indenture.
Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest on any
Junior Subordinated Debentures is payable in one or more foreign currencies or
currency units, the restrictions, elections, certain United States federal
income tax consequences, specific terms and other information with respect to
such series of Junior Subordinated Debentures and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. Junior
Subordinated Debentures of any series will be exchangeable for other Junior
Subordinated Debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same original issue
date and stated maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at the
office of any transfer agent designated by the Company for such purpose with
respect to any series of Junior Subordinated Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The Company
will appoint the Debenture Trustee as securities registrar under the Indenture.
If the applicable Prospectus Supplement refers to any transfer agents (in
addition to the securities registrar) initially designated by the Company with
respect to any series of Junior Subordinated Debentures, the Company may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, provided that the
Company maintains a transfer
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agent in each place of payment for such series. The Company may at any time
designate additional transfer agents with respect to any series of Junior
Subordinated Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures of that series and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that will
be deposited with, or on behalf of, a depository (the "Depository") identified
in the Prospectus Supplement relating to such series. Unless and until it is
exchanged in whole or in part for the individual Junior Subordinated Debentures
represented thereby, a Global Junior Subordinated Debenture may not be
transferred except as a whole among the Depository, one or more successor
Depositories or their respective nominees.
The specific terms of the depository arrangement with respect to a series
of Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable Prospectus
Supplement, the following provisions will apply to depository arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, the Depository
for such Global Junior Subordinated Debenture or its nominee will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the individual Junior Subordinated Debentures represented by such Global Junior
Subordinated Debenture to the accounts of persons that have accounts with such
Depository ("Participants"). Such accounts shall be designated by the
underwriters or agents with respect to such Junior Subordinated Debentures or by
the Company if such Junior Subordinated Debentures are offered and sold directly
by the Company. Ownership of beneficial interests in a Global Junior
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Junior Subordinated Debenture will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depository or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Junior Subordinated Debenture.
So long as the Depository for a Global Junior Subordinated Debenture, or
its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture governing such Junior Subordinated Debentures. Except as provided
below, owners of beneficial interests in a Global Junior Subordinated Debenture
will not be entitled to have any of the individual Junior Subordinated
Debentures of the series represented by such Global Junior Subordinated
Debenture registered in their names, will not receive or be entitled to receive
physical delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depository or its nominee will be made to
the Depository or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
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Debentures. None of the Company, the Debenture Trustee, any Paying Agent, or the
Securities Registrar for such Junior Subordinated Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depository for a series of Junior Subordinated
Debentures or its nominee, upon receipt of any payment of principal, premium, if
any, or interest in respect of a permanent Global Junior Subordinated Debenture
representing any of such Junior Subordinated Debentures, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of such Global Junior
Subordinated Debenture for such Junior Subordinated Debentures as shown on the
records of such Depository or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in such Global Junior
Subordinated Debenture held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depository for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by the Company within 90 days or there shall have
occurred and be continuing an Event of Default with respect to such Global
Security, the Company will issue individual Junior Subordinated Debentures of
such series in exchange for the Global Junior Subordinated Debenture
representing such series of Junior Subordinated Debentures. In addition, the
Company may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Junior Subordinated
Debentures, determine not to have any Junior Subordinated Debentures of such
series represented by one or more Global Junior Subordinated Debentures and, in
such event, will issue certificated Junior Subordinated Debentures of such
series in exchange for the Global Junior Subordinated Debenture. Further, if the
Company so specifies with respect to the Junior Subordinated Debentures of a
series, an owner of a beneficial interest in a Global Junior Subordinated
Debenture representing Junior Subordinated Debentures of such series may, on
terms acceptable to the Company, the Debenture Trustee and the Depository for
such Global Junior Subordinated Debenture, receive certificated Junior
Subordinated Debentures of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Junior Subordinated Debentures. In any such instance, an owner
of a beneficial interest in a Global Junior Subordinated Debenture will be
entitled to physical delivery of certificated Junior Subordinated Debentures of
the series represented by such Global Junior Subordinated Debenture equal in
principal amount to such beneficial interest and to have such Junior
Subordinated Debentures registered in its name. Individual Junior Subordinated
Debentures of such series so issued will be issued in denominations, unless
otherwise specified by the Company, of $1,000 and integral multiples thereof.
Any Global Junior Subordinated Debenture that is exchangeable pursuant to
the preceding paragraph shall be exchangeable for certificated Junior
Subordinated Debentures registered in such names as the Depository shall direct.
It is expected that such instructions will be based upon directions received by
the Depository from its Participants with respect to ownership of beneficial
interests in such Global Junior Subordinated Debenture. The Company and the
Trustee may conclusively rely on, and will be protected in relying on,
instructions from the Depository or its nominee for all purposes.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in The City of
New York or at the office of such paying agent or paying agents as the Company
may designate from time to time in the applicable Prospectus Supplement or
otherwise, except that at the option of the Company payment of any interest may
be made (i) except in the case of
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Global Junior Subordinated Debentures, by check mailed to the address of the
person entitled thereto as such address shall appear in the securities register
or (ii) by transfer to an account maintained by the person entitled thereto as
specified in the securities register, provided that proper transfer instructions
have been received by the Regular Record Date. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of any interest on Junior Subordinated
Debentures will be made to the person in whose name such Junior Subordinated
Debenture is registered at the close of business on the Regular Record Date for
such interest, except in the case of defaulted interest. The Company may at any
time designate additional paying agents or rescind the designation of any paying
agent; however the Company will at all times be required to maintain a paying
agent in each Place of Payment for each series of Junior Subordinated
Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Company will have
the right at any time and from time to time during the term of any series of
Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in such
Prospectus Supplement (each, an "Extension Period"), subject to the terms,
conditions and covenants, if any, specified in such Prospectus Supplement,
provided that such Extension Period may not extend beyond the Stated Maturity
Date of such series of Junior Subordinated Debentures. During an Extension
Period, the Company will be restricted from making certain payments described
below under "-- Restrictions on Certain Payments." Certain United States federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
To the extent set forth in the applicable Prospectus Supplement, the
Company may, or may be required to, redeem the Junior Subordinated Debentures of
any series at prices and on terms set forth in such Prospectus Supplement. If
the Junior Subordinated Debentures of any series are so redeemable only on or
after a specified date or event or upon the satisfaction of additional
conditions, the applicable Prospectus Supplement will specify such date or event
or describe such conditions.
If set forth in the applicable Prospectus Supplement, a series of Junior
Subordinated Debentures may be redeemable in the event of certain changes in tax
law affecting the ability of the Company to deduct, for federal income tax
purposes, the interest payable on such Junior Subordinated Debentures. The
applicable Prospectus Supplement will describe the terms of any such right and
the status of any then pending changes in tax law relevant to such right.
For so long as an applicable Trust is the holder of Corresponding Junior
Subordinated Debentures, the proceeds of any redemption of such Corresponding
Junior Subordinated Debentures will be used by the Trust to redeem the related
Trust Securities in accordance with their terms.
Except as set forth in the applicable Prospectus Supplement, notice of any
redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of Junior Subordinated Debentures to be redeemed
at its registered address. Unless the Company defaults in
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payment of the redemption price, on and after the redemption date interest will
cease to accrue on such Junior Subordinated Debentures or portions thereof
called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
Except as otherwise specified in an applicable Prospectus Supplement, the
Company will covenant, as to each series of Junior Subordinated Debentures, that
it will not, and will not permit any subsidiary of the Company to, (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, (ii)
make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Company (including other series
of Junior Subordinated Debentures) that rank pari passu in all respects with or
junior in interest to the Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with or junior in interest to the Junior Subordinated Debentures (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Company, (b) any
declaration of a dividend in connection with the implementation or extension of
a stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee with respect to the series of Related Preferred
Securities, (d) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (e) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) acquisitions of common stock of
the Company in connection with the satisfaction by the Company or any of its
subsidiaries of its obligations under any benefit plan for its directors,
officers or employees), if at such time (i) there shall have occurred and be
continuing any event of which the Company has actual knowledge (a) that is, or
with the giving of notice or the lapse of time, or both, would constitute an
Event of Default under the Indenture with respect to the Junior Subordinated
Debentures of such series and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (ii) if such Junior Subordinated Debentures are
held by a Trust, the Company shall be in default with respect to its payment of
any obligations under the Guarantee relating to the Related Preferred Securities
or (iii) the Company shall have given notice of its election of an Extension
Period as provided in the Indenture with respect to the Junior Subordinated
Debentures of such series and shall not have rescinded such notice, and such
Extension Period, or any extension thereof, shall be continuing.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of any series of Junior Subordinated Debentures, amend or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies or to make any other provision
with respect to matters or questions arising under the Indenture (provided that
any such action does not materially adversely affect the interest of the holders
of any series of Junior Subordinated Debentures or the holders of any Related
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Company and the Debenture
Trustee, with the consent of the holders of a majority in principal amount of
each outstanding series of Junior Subordinated Debentures affected, to modify
the Indenture in any manner affecting the rights of the holders of such series
of the Junior Subordinated Debentures; provided, that no such modification may,
without the consent of the holder of each outstanding Junior Subordinated
Debenture so affected, (i) change the Stated Maturity Date of any series of
Junior Subordinated Debentures (except as otherwise specified in the applicable
Prospectus Supplement), or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures of any series,
the holders of which are required to consent to any such
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modification of the Indenture or (iii) effect certain other changes specified in
the Indenture. Notwithstanding the foregoing, in the case of Corresponding
Junior Subordinated Debentures, so long as any of the Related Preferred
Securities remain outstanding, no such modification may be made that adversely
affects the holders of such Related Preferred Securities in any material respect
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of such Related Preferred Securities and no amendment may be
made that would impair the right of the holders of such Related Preferred
Securities to institute a Direct Action as discussed under "-- Enforcement of
Certain Rights by Holders of Related Preferred Securities" without the consent
of each holder thereof.
In addition, the Company and the Debenture Trustee may execute, without the
consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures (whatever the reason
for such Debenture Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures when due (subject to the deferral of any due date
in the case of an Extension Period);
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debentures when due whether at maturity, upon
redemption, by acceleration of maturity or otherwise; provided that a valid
exchange upon its maturity of a Junior Subordinated Debenture in accordance
with its terms for another security shall not constitute such a default;
(iii) if applicable to such series of Junior Subordinated Debentures,
failure by the Company to issue any property or other securities into which
or for which the Junior Subordinated Debentures are convertible or
exchangeable upon an election by the holder or holders of such Junior
Subordinated Debentures to convert or exchange such Junior Subordinated
Debentures, as the case may be;
(iv) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Debenture Trustee or to the Company and the
Debenture Trustee from the holders of at least 25% in aggregate outstanding
principal amount of such affected series of outstanding Junior Subordinated
Debentures; or
(v) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of Junior Subordinated Debentures
of each series affected may declare the principal due and payable immediately
upon a Debenture Event of Default (other than a Debenture Event of Default
described in clause (v) above, which shall result in the immediate acceleration
of the maturity of all such Junior Subordinated Debentures). The holders of a
majority in aggregate outstanding principal amount of Junior Subordinated
Debentures of each series affected may annul such declaration and waive the
default if the default (other than the nonpayment of the principal of such
Junior Subordinated Debentures which has become due solely by such acceleration)
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee.
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The holders of a majority in aggregate outstanding principal amount of each
series of the Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures of such series, waive any
past default, except a default in the payment of principal or interest (unless
such default has been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture of such series. The
Company is required to file annually with the Debenture Trustee a certificate as
to whether or not the Company is in compliance with all the conditions and
covenants applicable to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing with
respect to a series of Corresponding Junior Subordinated Debentures, the
Property Trustee will have the right to declare the principal of and the
interest on such Corresponding Junior Subordinated Debentures, and any other
amounts payable thereon or with respect thereto under the Indenture, to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to such Corresponding Junior Subordinated Debentures. See "Description
of Preferred Securities -- Enforcement of Certain Rights by Holders of Preferred
Securities" and "-- Voting Rights; Amendment of Each Declaration."
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF RELATED PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest, or premium, if any,
on or principal of such Corresponding Junior Subordinated Debentures on the due
date, a holder of Related Preferred Securities may institute a legal proceeding
directly against the Company for enforcement of payment to such holder of the
principal of, or premium, if any, or interest on such Corresponding Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Related Preferred Securities of such holder (a "Direct
Action"). The Company may not amend the Indenture to remove the foregoing right
to bring a Direct Action without the prior written consent of the holders of all
of the Related Preferred Securities outstanding. Notwithstanding any payments
made to a holder of Related Preferred Securities by the Company in connection
with a Direct Action, the Company shall remain obligated to pay the principal of
or premium, if any, or interest on the Corresponding Junior Subordinated
Debentures, and the Company shall be subrogated to the rights of the holder of
such Related Preferred Securities with respect to payments on the Related
Preferred Securities to the extent of any payments made by the Company to such
holder in any Direct Action.
The holders of the Related Preferred Securities will not be able to
exercise directly any remedies other than those set forth in the preceding
paragraph available to the holders of the Corresponding Junior Subordinated
Debentures. See "Description of Preferred Securities -- Events of Default;
Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety to the Company, unless (i) in
case the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Company's obligations on the Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, no Debenture Event of
Default, and no event which, after notice or lapse of time or both, would become
a Debenture Event of Default, shall have occurred and be continuing; and (iii)
certain other conditions as prescribed by the Indenture are met.
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The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures of a particular series not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable or (ii) will
become due and payable at their Stated Maturity Date within one year of the date
of deposit or (iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense of, the Company, and the Company
deposits or causes to be deposited irrevocably with the Debenture Trustee funds,
in trust, for the purpose and in an amount in the currency or currencies in
which such Junior Subordinated Debentures are payable sufficient to pay and
discharge the entire indebtedness on such Junior Subordinated Debentures not
previously delivered to the Debenture Trustee for cancellation, for the
principal (and premium, if any) and interest to the date of the deposit or to
the Stated Maturity Date or redemption date, as the case may be, then the
Indenture will cease to be of further effect with respect to such series of
Junior Subordinated Debentures (except as to the Company's obligations to pay
all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein and obligations with
respect to transfer, exchange, conversion and certain other matters), and the
Company will be deemed to have satisfied and discharged the Indenture with
respect to such series of Junior Subordinated Debentures.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Junior Subordinated Debentures of another series, Preferred Securities or
other debt or equity securities or property. The specific terms on which Junior
Subordinated Debentures of any series may be so converted or exchanged will be
set forth in the applicable Prospectus Supplement. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Company, in which case the number of shares of
Preferred Securities or other securities to be received by the holders of Junior
Subordinated Debentures would be calculated as of a time and in the manner
stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture.
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of Senior
Indebtedness will be entitled to receive payment in full of all amounts due on
or to become due on or in respect of all Senior Indebtedness (including any
interest accruing thereon after commencement of such proceedings), before the
holders of Junior Subordinated Debentures will be entitled to receive any
payment (other than payment in shares of stock or other subordinated securities
issued in a reorganization proceeding or payments from funds previously
deposited in trust to defease the Junior Subordinated Debentures under the
Indenture) on account of the principal of, premium, if any, or interest on the
Junior Subordinated Debentures or on account of any purchase, redemption or
other acquisition of the Junior Subordinated Debentures by the Company.
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The holders of the Junior Subordinated Debentures will be subrogated to the
rights of the holders of the Senior Indebtedness to the extent of payments made
to the holders of Senior Indebtedness out of the distributive share of the
Junior Subordinated Debentures.
The Company may not make any payments in respect of the Junior Subordinated
Debentures or on account of the purchase, redemption or other acquisition of the
Junior Subordinated Debentures (other than payment in shares of stock or other
subordinated securities issued in a reorganization proceeding or payments from
funds previously deposited in trust to defease the Junior Subordinated
Debentures under the Indenture) if there has occurred and is continuing a
default in the payment of the principal of (or premium, if any) or interest on
any Senior Indebtedness (a "Senior Payment Default"). In addition, if any event
of default (other than a Senior Payment Default), or any event which after
notice or lapse of time (or both) would become an event of default, with respect
to Senior Indebtedness, permitting the holders thereof (or a trustee or agent on
behalf of the holders thereof) to accelerate the maturity thereof has occurred
and is continuing (a "Senior Nonmonetary Default"), and the Company or the
Debenture Trustee has received written notice thereof from a holder of such
Senior Indebtedness or a trustee on behalf of a holder of such Senior
Indebtedness, then the Company may not make any payments in respect of the
Junior Subordinated Debentures or on account of the purchase, redemption or
other acquisition of the Junior Subordinated Debentures (other than payment in
shares of stock or other subordinated securities issued in a reorganization
proceeding or payments from funds previously deposited in trust to defease the
Junior Subordinated Debentures under the Junior Subordinated Indenture), for a
period (a "blockage period") commencing on the date the Company or the Debenture
Trustee receive such written notice and ending on the earlier of (i) 179 days
after such date and (ii) the date, if any, on which the Senior Indebtedness to
which such default relates is discharged or such default is waived in writing or
otherwise cured or ceases to exist and any acceleration of Senior Indebtedness
to which such Senior Nonmonetary Default relates is rescinded or annulled.
In any event, not more than one blockage period may be commenced during any
period of 360 consecutive days, and there must be a period of at least 181
consecutive days in each period of 360 consecutive days when no blockage period
is in effect. Following the commencement of a blockage period, the holders of
Senior Indebtedness will be precluded from commencing a subsequent blockage
period until the conditions set forth in the preceding sentence are satisfied.
No Senior Nonmonetary Default that existed or was continuing on the date of
commencement of any blockage period with respect to the Senior Indebtedness
initiating such blockage period will be, or can be, made the basis for the
commencement of a subsequent blockage period, unless such default has been cured
for a period of not less than 90 consecutive days.
The term "Senior Indebtedness" shall mean the principal of, and any premium
and interest on, and any other payment due pursuant to, any of the following,
whether outstanding at the date of execution of the Indenture or thereafter
incurred, created or assumed:
(a) all obligations of the Company for money borrowed;
(b) all obligations of the Company evidenced by notes, debentures,
bonds or other securities, including, without limitation, the Company's
13 1/2% Restricted Subordinated Notes Due 2002 and obligations incurred,
created or assumed in connection with the acquisition of property, assets
or businesses;
(c) all Capitalized Lease Obligations of the Company (as defined in
the Indenture);
(d) all reimbursement obligations of the Company with respect to
letters of credit, bankers acceptances or similar facilities issued for the
account of the Company;
(e) all obligations of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business);
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(f) all payment obligations of the Company under any interest rate,
currency or commodity swap agreement, option agreement, hedge agreement,
forward contract, or similar agreement designed to protect the Company or
another person against fluctuations in interest rates, exchange rates or
commodity prices;
(g) all obligations of the type referred to in clauses (a) through (f)
above of another person and all dividends of another person, the payment of
which, in either case, the Company has assumed or guaranteed, or for which
the Company is responsible or liable, directly or indirectly, jointly or
severally, as obligor, guarantor or otherwise; and
(h) all amendments, modifications, renewals, extensions, refinancings,
replacements and refundings by the Company of any such indebtedness
referred to in clauses (a) through (g) above (and of any such amended,
modified, renewed, extended, refinanced, replaced or refunded indebtedness
or obligations);
other than (i) the Junior Subordinated Debentures and the 8.45% Series A Junior
Subordinated Debentures of the Company; the 6% Series A Convertible Junior
Subordinated Debentures due 2025 of the Company; the 8 1/8% Series B Junior
Subordinated Debentures of the Company; the 7.57% Junior Subordinated Deferrable
Interest Debentures, Series A of the Company; and the 8 1/8% Junior Subordinated
Deferrable Interest Debentures, Series B of the Company, each of which shall
rank pari passu with the Junior Subordinated Debentures; (ii) any Guarantee
executed with respect to a Trust; the Guarantee Agreement of the Company dated
as of May 24, 1995 in respect of certain securities issued by American General
Capital, L.L.C., a Delaware limited liability company; the Guarantee Agreement
of the Company dated as of May 24, 1995 in respect of certain securities issued
by American General Delaware, L.L.C., a Delaware limited liability company; the
Guarantee Agreement dated as of December 4, 1996 with respect to certain
securities issued by American General Institutional Capital A, a Delaware
business trust, and the Guarantee Agreement dated as of March 14, 1997 with
respect to certain securities issued by American General Institutional Capital
B, a Delaware business trust, and (iii) any indebtedness, renewal, extension,
refinancing, replacement, refunding, assumption, guarantee or other obligation
which expressly provides, or in the instrument creating or evidencing the same
or the assumption or guarantee of the same it is expressly provided, that such
indebtedness, renewal, extension, refinancing, replacement, refunding,
assumption, guarantee or other obligation is junior in right of payment to or is
pari passu with the Junior Subordinated Debentures. Such Senior Indebtedness
shall continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
By reason of such subordination, in the event of an insolvency, creditors
of the Company who are holders of Senior Indebtedness, as well as certain
general creditors of the Company, may recover more, ratably, than the holders of
the Junior Subordinated Debentures. Additionally, the Company currently conducts
substantially all of its operations through subsidiaries, and the holders of
Junior Subordinated Debentures will be structurally subordinated to the
creditors of the Company's subsidiaries.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued. As of December 31, 1997, Senior Indebtedness of the Company
aggregated approximately $2.1 billion.
TRUST EXPENSES
Pursuant to the Indenture, the Company will irrevocably and unconditionally
agree with each Trust that holds Junior Subordinated Debentures that the Company
will pay the full amount of any costs, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to the holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be. Such payment obligation will include any such
costs, expenses or liabilities of the Trust that are required by applicable law
to be satisfied in connection with a dissolution of such Trust.
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GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of laws principles thereof.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
The Company and certain of its affiliates maintain banking, borrowing and
other relations with Bankers Trust Company and certain of its affiliates.
Bankers Trust Company serves as trustee under other indentures maintained by the
Company and it may own Junior Subordinated Debentures. The Debenture Trustee
also serves as Property Trustee under each Declaration and as Guarantee Trustee
under each Guarantee.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance by a Trust of its Preferred Securities,
such Trust will invest the proceeds thereof and the consideration paid by the
Company for the Common Securities of such Trust in such series of Corresponding
Junior Subordinated Debentures issued by the Company to such Trust. Each series
of Corresponding Junior Subordinated Debentures will be in the principal amount
equal to the aggregate stated Liquidation Amount of the Related Preferred
Securities and the Common Securities of such Trust and will rank pari passu with
all other series of Junior Subordinated Debentures.
The Company will covenant, as to each series of Corresponding Junior
Subordinated Debentures, (i) to directly or indirectly maintain 100 percent
ownership of the Common Securities of the related Trust; provided, however, that
any permitted successor of the Company under the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) to use its reasonable efforts
to cause the relevant Trust (a) to remain a business trust, except as permitted
by the Declaration of such Trust, and (b) to continue to be classified as a
grantor trust and not as an association taxable as a corporation or a
partnership for United States federal income tax purposes and (iii) to use its
reasonable efforts to cause each holder of related Trust Securities to be
treated as owning an undivided beneficial interest in the Corresponding Junior
Subordinated Debentures.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Declaration for each Trust, the Issuer
Trustees on behalf of such Trust will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular issue will represent
beneficial ownership interests in the applicable Trust and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of such Trust, as well as other benefits as described in the
corresponding Declaration. This summary of certain provisions of the Preferred
Securities and each Declaration, which summarizes the material terms thereof,
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of each
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Declaration, including the definitions therein of certain terms, and the Trust
Indenture Act, to each of which reference is hereby made. Wherever particular
defined terms of a Declaration (as amended or supplemented from time to time)
are referred to herein or in a Prospectus Supplement, such defined terms are
incorporated herein or therein by reference. The form of the Declaration has
been filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. Each of the Trusts is a legally separate entity and the assets of
one are not available to satisfy the obligations of any of the others.
GENERAL
The Preferred Securities of a Trust will rank pari passu, and payments will
be made thereon pro rata, with the Common Securities of that Trust except as
described under "-- Subordination of Common Securities." Legal title to the
Corresponding Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the Related Preferred
Securities and Common Securities. Each Guarantee Agreement executed by the
Company for the benefit of the holders of a Trust's Trust Securities (the
"Guarantee") will be a guarantee on a subordinated basis with respect to the
related Trust Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Trust Securities when the
related Trust does not have funds on hand available to make such payments. See
"Description of Guarantees."
DISTRIBUTIONS
Unless otherwise specified in an applicable Prospectus Supplement,
Distributions on each series of Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. Except as set forth in the
applicable Prospectus Supplement, in the event that any date on which
Distributions are payable on a series of Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable (each date on which
Distributions are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a Saturday or a Sunday or
a day on which banking institutions in New York, New York are authorized or
required by law or executive order to close.
Each Trust's Preferred Securities will represent beneficial ownership
interests in the applicable Trust, and the Distributions on each Preferred
Security will be payable at a rate specified in the applicable Prospectus
Supplement for such Preferred Securities. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months and, for any period of less than a full calendar month, the number of
days elapsed in such month, unless otherwise specified in the applicable
Prospectus Supplement. Distributions to which holders of Preferred Securities
are entitled will accumulate additional Distributions at the rate per annum if
and as specified in the applicable Prospectus Supplement. The term
"Distributions" as used herein includes any such additional Distributions unless
otherwise stated.
If provided in the applicable Prospectus Supplement, the Company may have
the right under the Indenture pursuant to which it will issue the Corresponding
Junior Subordinated Debentures to elect to defer the payment of interest at any
time or from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods as may
be specified in such Prospectus Supplement relating to such series (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity Date of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the applicable Trust during any
such Extension Period.
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Unless otherwise specified in an applicable Prospectus Supplement, during
any such Extension Period, the Company will not, and will not permit any
subsidiary to (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Company (including other series of Junior Subordinated Debentures) that rank
pari passu in all respects with or junior in interest to the Corresponding
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Company, (b) any declaration of a dividend in connection
with the implementation or extension of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
with respect to the series of Related Preferred Securities, (d) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock, (e) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) acquisitions of common stock of the Company in connection with the
satisfaction by the Company or any of its subsidiaries of its obligations under
any benefit plan for its directors, officers or employees). See "Description of
Junior Subordinated Debentures -- Restrictions on Certain Payments."
The revenue of each Trust available for distribution to holders of its
Preferred Securities will be limited to payments made on the Corresponding
Junior Subordinated Debentures in which the Trust will invest the proceeds from
the issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If the
Company does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and only to the extent the Trust has funds sufficient and
legally available for the payment of such Distributions) will be guaranteed by
the Company on the basis set forth herein under "Description of Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Trust on the relevant record
dates as specified in the applicable Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the terms of such Corresponding Junior
Subordinated Debentures, the proceeds from such repayment or redemption shall be
applied by the Property Trustee to redeem a Like Amount (as defined below) of
the related Trust Securities, upon not less than 30 nor more than 60 days notice
(unless otherwise specified in the applicable Prospectus Supplement), at a
redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount (as specified in the applicable Prospectus Supplement) of such Trust
Securities plus accumulated and unpaid Distributions thereon to the date of
redemption (the "Redemption Date") and the related amount of the premium, if
any, paid by the Company upon the concurrent redemption of such Corresponding
Junior Subordinated Debentures. If less than all of any series of Corresponding
Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Related Preferred Securities and the Common
Securities of the applicable Trust. The amount of premium, if any, paid by the
Company upon the redemption of all or any part of any series of any
Corresponding Junior Subordinated Debentures to be repaid or redeemed
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on a Redemption Date shall be allocated to the redemption pro rata of the
Related Preferred Securities and the Common Securities of the applicable Trust.
The Company will have the right to redeem any series of Corresponding
Junior Subordinated Debentures on or after such dates or upon the occurrence of
such events as may be specified in the applicable Prospectus Supplement. If set
forth in the applicable Prospectus Supplement, a series of Corresponding Junior
Subordinated Debentures may be redeemable in the event of certain changes in tax
law affecting the ability of the Company to deduct, for federal income tax
purposes, the interest payable on such Junior Subordinated Debentures. The
applicable Prospectus Supplement will describe the terms of any such right and
the status of any then pending changes in tax law relevant to such right.
Distribution of Corresponding Junior Subordinated Debentures. Unless
otherwise specified in the applicable Prospectus Supplement and upon
satisfaction of any conditions set forth in such Prospectus Supplement, the
Company will have the right at any time to dissolve any Trust and, after
satisfaction of the liabilities of creditors of such Trust as provided by
applicable law, cause a Like Amount of Corresponding Junior Subordinated
Debentures in respect of the Related Preferred Securities and Common Securities
issued by such Trust to be distributed to the holders of such Related Preferred
Securities and Common Securities in exchange therefor upon liquidation of the
Trust.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Corresponding Junior Subordinated Debentures to be paid in accordance
with their terms and (ii) with respect to a distribution of Corresponding Junior
Subordinated Debentures upon the liquidation of the related Trust, Corresponding
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such
Corresponding Junior Subordinated Debentures are distributed.
After the liquidation date is fixed for any distribution of Corresponding
Junior Subordinated Debentures to holders of the related Trust Securities, (i)
the related Trust Securities will no longer be deemed to be outstanding, (ii)
each holder of such Trust Securities will receive a registered certificate or
certificates representing the Corresponding Junior Subordinated Debentures to be
delivered upon such distribution and (iii) such Trust Securities will be deemed
to represent Corresponding Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of such Trust Securities, and bearing
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Trust Securities, until such Trust Securities are
presented to the Administrative Trustees or their agent for cancellation,
whereupon the Company will issue to such holder, and the Debenture Trustee will
authenticate, a certificate representing such Corresponding Junior Subordinated
Debentures.
There can be no assurance as to the market price for the Corresponding
Junior Subordinated Debentures that may be distributed in exchange for Preferred
Securities if a dissolution and liquidation of a Trust were to occur.
Accordingly, the Corresponding Junior Subordinated Debentures that the investor
may subsequently receive on dissolution and liquidation of a Trust may trade at
a discount to the price of the Related Preferred Securities exchanged.
Conversion or Exchange. If and to the extent set forth in the applicable
Prospectus Supplement, the Trust Securities issued by a Trust may be convertible
or exchangeable for other debt or equity securities as described in such
Prospectus Supplement. The terms of any such conversion or exchange will be set
forth in the applicable Prospectus Supplement.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Trust's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if an Event of Default under the Declaration
of Trust occurs and is continuing, no payments in respect of Distributions on,
or payments upon liquidation, redemption or otherwise with respect to, the
Common Securities of such Trust shall be
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made until the holders of the Preferred Securities of such Trust shall be paid
in full the Distributions, Redemption Price, Liquidation Distribution and other
payments to which they are entitled at such time.
In the case of any Event of Default under the applicable Declaration, the
Company as holder of such Trust's Common Securities will be deemed to have
waived any right to act with respect to any such event of default under the
applicable Declaration until the effect of all such events of default with
respect to such Preferred Securities have been cured, waived or otherwise
eliminated. Until all events of default under the applicable Declaration with
respect to the Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the holders of
such Preferred Securities and not on behalf of the Company as holder of the
Trust's Common Securities, and only the holders of such Preferred Securities
will have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to each Declaration, unless otherwise specified in the applicable
Prospectus Supplement, each Trust shall automatically dissolve upon expiration
of its term and shall dissolve on the first to occur of: (i) certain events of
bankruptcy, dissolution or liquidation of the Company; (ii) the distribution of
a Like Amount of the Corresponding Junior Subordinated Debentures to the holders
of its Trust Securities if and as provided in the applicable Prospectus
Supplement; (iii) redemption of all of its Trust Securities if and as provided
in the applicable Prospectus Supplement; (iv) conversion or exchange of all of
its Trust Securities into other securities if and as provided in the applicable
Prospectus Supplement; and (v) upon the dissolution of such Trust after
obtaining the consent of a majority in Liquidation Amount of its Trust
Securities; and (vi) the entry of an order for the dissolution of such Trust by
a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii), (v) or
(vi) above, such Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of such Trust as
provided by applicable law, to the holders of such Trust Securities in exchange
therefor a Like Amount of the Corresponding Junior Subordinated Debentures,
unless such distribution is determined by the Property Trustee not to be
practicable, in which event such holders will be entitled to receive out of the
assets of the Trust available for distribution to holders, after satisfaction of
liabilities to creditors of such Trust as provided by applicable law, an amount
equal to, in the case of holders of Preferred Securities, the aggregate of the
Liquidation Amount plus accumulated and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because such Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by such Trust on its Trust
Securities shall be paid on a pro rata basis, except that if a Debenture Event
of Default has occurred and is continuing, the Preferred Securities of such
Trust shall have a priority over the Common Securities of such Trust.
EVENTS OF DEFAULT; NOTICE
The occurrence of a Debenture Event of Default with respect to a series of
Corresponding Junior Subordinated Debentures (see "Description of Junior
Subordinated Debentures -- Debenture Events of Default") constitutes an "Event
of Default" under the Declaration pursuant to which the Related Preferred
Securities are issued.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Trust's Preferred
Securities, the Administrative Trustees and the Company, as Sponsor, unless such
Event of Default shall have been cured or waived. The Company, as Sponsor, and
the Administrative Trustees of each Trust are required to file annually with the
Property Trustee a certificate as to whether or not they are in compliance with
all the conditions and covenants applicable to them under each Declaration.
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If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities as described
above. See " -- Subordination of Common Securities" and " -- Liquidation
Distribution Upon Termination." A waiver of a Debenture Event of Default will
constitute a waiver of the corresponding Event of Default. The existence of an
Event of Default does not entitle the holders of Preferred Securities to
accelerate the maturity thereof.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default occurs and is continuing, then the holders
of the Preferred Securities of the applicable Trust would rely on the
enforcement by the Property Trustee of its rights as a holder of the
Corresponding Junior Subordinated Debentures against the Company.
Notwithstanding the foregoing, if an Event of Default under a Declaration has
occurred and is continuing and such event is attributable to the failure of the
Company to pay the principal of or premium, if any, or interest on such
Corresponding Junior Subordinated Debentures on the date such principal, premium
or interest, as the case may be, is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of the Related Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal, premium or interest, as the case may be, on such
Corresponding Junior Subordinated Debentures having a principal amount equal to
the aggregate Liquidation Amount of the Related Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
Corresponding Junior Subordinated Debentures. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of the
Related Preferred Securities under the Declaration to the extent of any payment
made by the Company to such holder of Preferred Securities in such Direct
Action.
REMOVAL OF ISSUER TRUSTEES
Unless an Event of Default shall have occurred and be continuing with
respect to a Trust, any Issuer Trustee of such Trust may be removed at any time
by the holder of the Common Securities of such Trust. If an Event of Default
with respect to a Trust has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed by the holders of a majority in Liquidation
Amount of the outstanding Preferred Securities of such Trust. In no event will
the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees of any Trust, which voting rights
are vested exclusively in the Company as the holder of the Common Securities. No
resignation or removal of an Issuer Trustee and no appointment of a successor
trustee shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the applicable Declaration.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the trust
property of a Trust may at the time be located, the Company, as the holder of
the Common Securities of such Trust, shall have power to appoint one or more
persons either to act as a co-trustee, jointly with the Property Trustee, of all
or any part of such trust property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the applicable Declaration. In case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a
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party, or any Person succeeding to all or substantially all the corporate trust
business of such Issuer Trustee, shall be the successor of such Issuer Trustee
under each Declaration, provided such Person shall be otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUSTS
A Trust may not merge or convert with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other Person, except as
described below or under "-- Liquidation Distribution upon Dissolution" or as
otherwise provided in an applicable Prospectus Supplement. A Trust may, at the
request of the Company, with the consent of the Administrative Trustees but
without the consent of the holders of the Preferred Securities, the Property
Trustee or the Delaware Trustee, merge or convert with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized as
such under the laws of any State; provided, that (i) such successor entity
either (a) expressly assumes all of the obligations of such Trust with respect
to the Preferred Securities or (b) substitutes for the Preferred Securities
other securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Preferred Securities in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Company expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Corresponding Junior
Subordinated Debentures, (iii) the Successor Securities are listed or quoted, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed or quoted, if any, (iv) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any Successor
Securities) in any material respect (other than any dilution of such holders'
interests in the new entity), (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such merger,
conversion, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Company has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (a) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect (other than any dilution of such holders' interests in the new entity),
(b) following such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act"),and (c) following such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Trust (or successor entity) will continue to be
classified as a grantor trust for United States federal income taxes, and (viii)
the Company or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, a Trust shall not, except with
the consent of holders of 100% in Liquidation Amount of the Preferred
Securities, consolidate, amalgamate, merge or convert with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety or substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge or convert with or into, or
replace it if such consolidation, amalgamation, merger, conversion, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity not
to be classified as a grantor trust for United States federal income tax
purposes.
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VOTING RIGHTS; AMENDMENT OF EACH DECLARATION
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Declaration,
the holders of the Preferred Securities will have no voting rights.
Except as set forth in an applicable Prospectus Supplement, each
Declaration may be amended from time to time by the Administrative Trustees (and
in certain circumstances, the Company, the Delaware Trustee or the Property
Trustee), without the consent of the holders of the relevant Trust Securities
(i) to cure any ambiguity, correct or supplement any provisions in such
Declaration that may be inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under such
Declaration, which shall not be inconsistent with the other provisions of such
Declaration, (ii) add to the covenants, restrictions, or obligations of the
Company as Sponsor, or (iii) to modify, eliminate or add to any provisions of
such Declaration to such extent as shall be necessary to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust at all times that any Trust Securities are outstanding or to ensure that
the Trust will not be required to register as an "investment company" under the
Investment Company Act. Each Declaration may be amended by its Issuer Trustees
and the Company (i) with the consent of holders representing a majority (based
upon Liquidation Amounts) of the outstanding Trust Securities of the relevant
Trust, and (ii) upon receipt by the Issuer Trustees of such Trust of an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to such Issuer Trustees in accordance with such amendment will not
affect such Trust's status as a grantor trust for United States federal income
tax purposes or such Trust's exemption from status as an "investment company"
under the Investment Company Act, provided that, without the consent of each
holder of Trust Securities of such Trust, such Declaration may not be amended to
(i) change the amount or timing of any Distribution or other payment on the
Trust Securities of such Trust or otherwise adversely affect the amount of any
Distribution or other payment required to be made in respect of the Trust
Securities of such Trust as of a specified date or (ii) restrict the right of a
holder of such Trust Securities to institute suit for the enforcement of any
such payment on or after such date.
Except as set forth in an applicable Prospectus Supplement, so long as any
Corresponding Junior Subordinated Debentures are held by the Property Trustee of
a Trust, the Issuer Trustees of such Trust shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on the Debenture Trustee
with respect to such Corresponding Junior Subordinated Debentures, (ii) waive
any past default that is waivable under certain provisions of the Indenture,
(iii) exercise any right to rescind or annul a declaration of acceleration of
the maturity of principal of such Corresponding Junior Subordinated Debentures
or (iv) consent to any amendment, modification or termination of the Indenture
or such Corresponding Junior Subordinated Debentures, where such consent shall
be required, without, in each case, obtaining the prior approval of the holders
of a majority in aggregate Liquidation Amount of all outstanding Related
Preferred Securities; provided, however, that where a consent or other action
under the Indenture with respect to the Corresponding Junior Subordinated
Debentures would require the consent or act of holders of Corresponding Junior
Subordinated Debentures representing a specified percentage greater than a
majority in principal amount of the outstanding Corresponding Junior
Subordinated Debentures, no consent or act shall be given or taken without the
prior approval of the Holders of outstanding Related Preferred Securities
representing at least such specified percentage of the aggregate Liquidation
Amount of the Related Preferred Securities then outstanding. The Issuer Trustees
shall not revoke any action previously authorized or approved by a vote of the
holders of the Related Preferred Securities except by subsequent vote of the
holders of such Preferred Securities. The Property Trustee shall notify each
holder of Related Preferred Securities of any notice of default with respect to
the Corresponding Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Related Preferred Securities, prior to
taking any of the foregoing actions, the Issuer Trustees of such Trust shall
obtain an opinion of counsel experienced in such matters to the
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effect that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
Any required approval of holders of Preferred Securities of a Trust may be
given at a meeting of holders of such Preferred Securities convened for such
purpose or pursuant to written consent. The Property Trustee of such Trust will
cause a notice of any meeting at which holders of Preferred Securities of such
Trust are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be given to each holder of record of
such Preferred Securities in the manner set forth in each Declaration.
No vote or consent of the holders of Preferred Securities of a Trust will
be required for a Trust to redeem and cancel its Preferred Securities in
accordance with the applicable Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company or any affiliate of the Company shall,
for purposes of such vote or consent, be treated as if they were not
outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the Depository identified in the Prospectus Supplement relating
to such series. Unless otherwise indicated in the applicable Prospectus
Supplement for such series, the Depository will be DTC. Global Preferred
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Preferred Securities represented thereby, a Global Preferred Security
may not be transferred except as a whole among the Depository, one or more
successor depositories or their respective nominees.
The specific terms of the depository arrangement with respect to a series
of Preferred Securities will be described in the Prospectus Supplement relating
to such series. Unless otherwise specified in the applicable Prospectus
Supplement, the Company anticipates that the following provisions will generally
apply to depository arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depository, the Depository
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants. Such accounts shall be designated by
the dealers, underwriters or agents with respect to such Preferred Securities or
by the Company if such Preferred Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Preferred Security will
be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depository or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Preferred
Security.
So long as the Depository for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the Declaration governing such Preferred Securities. Except as
provided below, owners of beneficial interests in a Global Preferred Security
will not be entitled to have any of the individual Preferred Securities of the
series represented by such Global Preferred Security registered in their names,
will not receive or be entitled to receive physical delivery of any such
Preferred Securities
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of such series in definitive form and will not be considered the owners or
holders thereof under the applicable Declaration.
Payments of the Liquidation Amount, Redemption Price and Distributions or
other payments on individual Preferred Securities represented by a Global
Preferred Security registered in the name of a Depository or its nominee will be
made to the Depository or its nominee, as the case may be, as the registered
owner of the Global Preferred Security representing such Preferred Securities.
None of the Company, the Property Trustee, any Paying Agent, or the Securities
Registrar for such Preferred Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Global Preferred Security representing
such Preferred Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depository for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
Redemption Price, premium or Distributions in respect of a permanent Global
Preferred Security representing any of such Preferred Securities, immediately
will credit Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the records
of such Depository or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Preferred Security
held through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depository for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depository and a successor depository is not
appointed by the Trust within 90 days, the Trust will issue individual Preferred
Securities of such series in exchange for the Global Preferred Security
representing such series of Preferred Securities. In addition, the Trust may at
any time and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Preferred Securities, determine not to
have any Preferred Securities of such series represented by one or more Global
Preferred Securities and, in such event, will issue individual Preferred
Securities of such series in exchange for the Global Preferred Security or
Securities representing such series of Preferred Securities. Further, if the
Trust so specifies with respect to the Preferred Securities of a series, an
owner of a beneficial interest in a Global Preferred Security representing
Preferred Securities of such series may, on terms acceptable to the Trust, the
Property Trustee and the Depository for such Global Preferred Security, receive
individual Preferred Securities of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Preferred Securities. In any such instance, an owner of a
beneficial interest in a Global Preferred Security will be entitled to physical
delivery of individual Preferred Securities of the series represented by such
Global Preferred Security equal in principal amount to such beneficial interest
and to have such Preferred Securities registered in its name. Individual
Preferred Securities of such series so issued will be issued in denominations,
unless otherwise specified by the Trust, of $1,000 and integral multiples
thereof.
PAYMENT AND PAYING AGENCY
Unless otherwise specified in the applicable Prospectus Supplement,
payments in respect of the Preferred Securities of each Trust shall be made to
the Depository, which shall credit the relevant accounts at the Depository on
the applicable Distribution Dates or, if any Trust's Preferred Securities are
not held by the Depository, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee of
each Trust and any co-paying agent chosen by such Trust. The Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the
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Company. In the event that the Property Trustee shall no longer be the Paying
Agent, the Administrative Trustees of such Trust shall appoint a successor to
act as Paying Agent for such Trust.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee of each Trust will act as registrar and transfer agent for the
Preferred Securities of such Trust.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. No Trust will be required to register or cause to be registered the
transfer of its Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee of each Trust, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in each Declaration and, after any such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee of each Trust is under no obligation to exercise
any of the powers vested in it by the applicable Declaration at the request of
any holder of the Trust's Preferred Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
MISCELLANEOUS
The Administrative Trustees of each Trust are authorized and directed to
conduct the affairs of and to operate the Trusts in such a way that no Trust
will be deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Company for
United States federal income tax purposes.
Holders of the Preferred Securities have no preemptive or similar rights.
No Trust may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depository for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise set forth in the
Prospectus Supplement relating to an offering of Preferred Securities or Junior
Subordinated Debentures. The following discussion assumes that DTC will so act.
The Preferred Securities or the Junior Subordinated Debentures will be issued
only as fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global certificates will be issued for
the Preferred Securities of each Trust or for the Junior Subordinated
Debentures, representing in the aggregate the total number of such Trust's
Preferred Securities or aggregate principal balance of Junior Subordinated
Debentures, respectively, and will be deposited with DTC or its agent.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks,
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trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain custodial relationships with Direct Participants, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security and each Junior Subordinated Debenture ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased Preferred Securities or Junior Subordinated Debentures.
Transfers of ownership interests in the Preferred Securities or Junior
Subordinated Debentures are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Preferred
Securities or Junior Subordinated Debentures, except in the event that use of
the book-entry system for a series of Preferred Securities or Junior
Subordinated Debentures is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
a Trust's Preferred Securities or the Junior Subordinated Debentures are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities or Junior Subordinated Debentures. Under its usual
procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts such Preferred Securities or Junior Subordinated Debentures are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, or Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of Distributions to DTC is the responsibility of the
relevant Trustee, disbursement of such
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payments to Direct Participants is the responsibility of DTC, and disbursements
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to any of the Preferred Securities or Junior Subordinated Debentures at
any time by giving reasonable notice to the relevant Trustee and the Company. In
the event that a successor securities depository is not obtained, definitive
Preferred Security or Junior Subordinated Debenture certificates representing
such Preferred Securities or Junior Subordinated Debentures are required to be
printed and delivered. The Company, at its option, may decide to discontinue use
of the system of book-entry transfers through DTC (or a successor depository).
In any such event, definitive certificates for such Preferred Securities or
Junior Subordinated Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Trusts and the Company believe to be
accurate, but the Trusts and the Company assume no responsibility for the
accuracy thereof. Neither the Trusts nor the Company has any responsibility for
the performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Company concurrently with
the issuance by each Trust of its Preferred Securities for the benefit of the
holders from time to time of such Preferred Securities. Bankers Trust Company
will act as indenture trustee ("Guarantee Trustee") under each Guarantee for the
purposes of compliance with the Trust Indenture Act and each Guarantee will be
qualified as an indenture under the Trust Indenture Act. This summary of certain
provisions of the Guarantees, which summarizes the material terms thereof, does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of each Guarantee, including the definitions
therein of certain terms, and the Trust Indenture Act, to each of which
reference is hereby made. The form of the Guarantee has been filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. Reference
in this summary to Preferred Securities means the Preferred Securities of a
Trust to which a Guarantee relates. The Guarantee Trustee will hold each
Guarantee for the benefit of the holders of the related Trust's Preferred
Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Preferred Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that such Trust may have or assert other than
the defense of payment. The following payments with respect to the Preferred
Securities, to the extent not paid by or on behalf of the related Trust (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on such Preferred Securities, to the
extent that such Trust has funds on hand available therefor at such time, (ii)
the Redemption Price with respect to any Preferred Securities called for
redemption, to the extent that such Trust has funds on hand available therefor,
or (iii) upon a voluntary or involuntary dissolution and liquidation of such
Trust (unless the Corresponding Junior Subordinated Debentures are distributed
to holders of such Preferred Securities in exchange therefor), the lesser of (a)
the Liquidation Distribution and (b) the amount of assets of such Trust
remaining available for distribution to holders of Preferred Securities. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the applicable
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Trust's obligations under its Preferred Securities, but will apply
only to the extent that such Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
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If the Company does not make interest payments on the Corresponding Junior
Subordinated Debentures held by a Trust, the Trust will not be able to pay
Distributions on its Preferred Securities and will not have funds legally
available therefor. Each Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company to the extent and in the
manner set forth in the Guarantee. See "-- Status of the Guarantees." Because
the Company is a holding company, the right of the Company to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of that
subsidiary, except to the extent the Company may itself be recognized as a
creditor of that subsidiary. Accordingly, the Company's obligations under the
Guarantees will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and claimants should look only to the
assets of the Company for payments thereunder. See "American General
Corporation." Except as otherwise provided in the applicable Prospectus
Supplement, the Guarantees do not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Indenture, any other existing indenture or any other indenture that
the Company may enter into in the future or otherwise. See the applicable
Prospectus Supplement relating to any offering of Preferred Securities.
The Company will, through the applicable Guarantee, the applicable
Declaration, the applicable series of Corresponding Junior Subordinated
Debentures and the Indenture, taken together, fully, irrevocably and
unconditionally guarantee all of each Trust's obligations under its Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of a Trust's obligations under its
Preferred Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company in the same manner as the Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Subordination."
Each Guarantee will rank pari passu with each other Guarantee, with certain
guarantees previously issued by the Company with respect to certain preferred
securities and with all other guarantees (if any) to be issued by other issuers
to be established by the Company similar to the Trusts. Each Guarantee will
constitute a guarantee of payment and not of collection (i.e., the guaranteed
party may institute a legal proceeding directly against the Company to enforce
its rights under the Guarantee without first instituting a legal proceeding
against any other person or entity). Each Guarantee will be held by the
Guarantee Trustee of the relevant Trust for the benefit of the holders of the
related Preferred Securities. Each Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the relevant
Trust or upon distribution to the holders of the Preferred Securities of the
Corresponding Junior Subordinated Debentures. None of the Guarantees places a
limitation on the amount of additional Senior Indebtedness that may be incurred
by the Company. The Company expects from time to time to incur additional
indebtedness constituting Senior Indebtedness.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder or, if
applicable, the failure of the Company to deliver other securities in exchange
for the Preferred Securities upon the conversion or exchange of such Preferred
Securities into such other securities in accordance with their terms. The
holders of a majority in aggregate Liquidation Amount of the related Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in
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respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
Any holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the related Guarantee
without first instituting a legal proceeding against the applicable Trust, the
Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
CERTAIN COVENANTS OF THE COMPANY
Unless otherwise specified in an applicable Prospectus Supplement, in each
Guarantee, the Company will covenant, as long as any related Preferred
Securities are outstanding, that it will not, and will not permit any subsidiary
to, (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay or repurchase or redeem any debt securities of the Company
(including other series of Junior Subordinated Debentures) that rank pari passu
in all respects with or junior in interest to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu with or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Company, (b) any declaration of a dividend in connection with the
implementation or extension of a stockholders' rights plan, or the issuance of
stock under any such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under such Guarantee, (d) as a result
of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, and (f) acquisitions of common stock of the Company in connection
with the satisfaction by the Company or any of its subsidiaries of its
obligations under any benefit plan for its directors, officers or employees), if
at such time (i) there shall have occurred and be continuing any event of which
the Company has actual knowledge (a) that is, or with the giving of notice or
the lapse of time, or both, would constitute an Event of Default under the
Indenture with respect to the Corresponding Junior Subordinated Debentures with
respect to such series and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (ii) the Company shall be in default with
respect to its payment of any obligations under such Guarantee or (iii) the
Company shall have given notice of its election of an Extension Period as
provided in the Indenture with respect to the Corresponding Junior Subordinated
Debentures and shall not have rescinded such notice, and such Extension Period,
or any extension thereof, shall be continuing.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in the performance of each Guarantee, undertakes to
perform only such duties as are specifically set forth in such Guarantee and,
after default with respect to such Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. The Guarantee Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if it reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no vote
will be required), no Guarantee may be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding Preferred Securities. The manner of obtaining any such approval will
be as set forth under "Description of Preferred Securities -- Voting Rights;
Amendment of Each Declaration." All guarantees and agreements contained in each
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the related Preferred Securities then outstanding.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the Liquidation Amount payable upon liquidation of the related
Trust, upon distribution of Corresponding Junior Subordinated Debentures to the
holders of the related Preferred Securities in accordance with their terms or,
if applicable, upon the conversion or exchange of the related Preferred
Securities into other securities in accordance with their terms. Each Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of the Related Preferred Securities must restore payment of
any sums paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of laws principles
thereof.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on any Preferred Securities
(to the extent the issuing Trust has funds available for the payment of such
Distributions) will be irrevocably guaranteed by the Company as and to the
extent set forth under "Description of Guarantees." Taken together, the
Company's obligations under each series of Corresponding Junior Subordinated
Debentures, the Indenture, the related Declaration and the related Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Related Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of each Trust's obligations under its
Preferred Securities. If and to the extent that the Company does not make
payments on any series of Corresponding Junior Subordinated Debentures, the
Trust will not pay Distributions or other amounts due on such Preferred
Securities. The Guarantees do not cover payment of Distributions when the
related Trust does not have sufficient funds to pay such Distributions. In such
event, the remedy of a holder of Preferred Securities is to institute a legal
proceeding directly against the Company for the enforcement of payment of
amounts equal to such Distributions to such holder. The obligations of the
Company under each Guarantee are subordinate and junior in right of payment to
all Senior Indebtedness of the Company in the same manner as the Junior
Subordinated Debentures.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distributions and other payments due on the Related
Preferred Securities, primarily because (i) the aggregate
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principal amount of each series of Corresponding Junior Subordinated Debentures
will be equal to the sum of the aggregate stated Liquidation Amount of the
Related Preferred Securities and related Common Securities; (ii) the interest
rate and interest and other payment dates on each series of Corresponding Junior
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the Related Preferred Securities; (iii) the Company
shall pay for all and any costs, expenses and liabilities of the issuing Trust
except such Trust's obligations to holders of its Trust Securities under such
Trust Securities; and (iv) each Declaration further provides that the applicable
Trust will not engage in any activity that is not consistent with the limited
purposes of such Trust.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the related Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
related Trust or any other person or entity.
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Indebtedness
of the Company, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated
Debentures until such Senior Indebtedness has been paid in full or any payment
default thereunder has been cured or waived. Such subordination provisions also
provide that payments on the Corresponding Junior Subordinated Debentures may be
blocked for up to 180 days in the event of a Senior Nonmonetary Default with
respect to any Senior Indebtedness. See "Description of Junior Subordinated
Debentures -- Subordination." Failure to make required payments on any series of
Corresponding Junior Subordinated Debentures would constitute an Event of
Default under the Indenture.
LIMITED PURPOSE OF TRUSTS
Each Trust's Preferred Securities evidence a preferred beneficial interest
in such Trust, and each Trust exists for the sole purpose of issuing and selling
the Trust Securities, using the proceeds from the sale of the Trust Securities
to acquire the Corresponding Junior Subordinated Debentures and engaging in only
those other activities necessary, advisable or incidental thereto. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Corresponding Junior Subordinated Debenture is that a holder of a
Corresponding Junior Subordinated Debenture will be entitled to receive from the
Company the principal amount of and premium, if any, and interest on
Corresponding Junior Subordinated Debentures held, while a holder of Preferred
Securities will be entitled to receive Distributions from such Trust (or, in
certain circumstances, from the Company under the applicable Guarantee) if and
to the extent such Trust has funds available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Unless the Corresponding Junior Subordinated Debentures are distributed to
holders of the Trust Securities, upon any voluntary or involuntary dissolution
and liquidation of any Trust after satisfaction of liabilities to creditors of
such Trust as required by applicable law, the holders of the related Trust
Securities will be entitled to receive, out of the assets held by such Trust,
the Liquidation Distribution in cash. See "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Corresponding Junior Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated in right of payment to all
Senior Indebtedness as and in the manner set forth in the Indenture, but
entitled to receive payment in full of principal (and premium, if any) and
interest, before any stockholders of the Company receive payments or
distributions. Since the Company will be the guarantor under each Guarantee and
will agree to pay for all costs, expenses and liabilities of each Trust (other
than the Trust's obligations to the holders of its Trust Securities), the
positions of a holder of such Preferred Securities and a holder of such
Corresponding Junior Subordinated Debentures relative
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to other creditors and to stockholders of the Company in the event of
liquidation or bankruptcy of the Company are expected to be substantially the
same.
DESCRIPTION OF COMMON STOCK
If specified in the applicable Prospectus Supplement, any series of Junior
Subordinated Debentures or the Preferred Securities of any Trust may be
convertible into or exchangeable for Common Stock, par value $.50 per share, of
the Company ("Common Stock"). The following summary does not purport to be
complete and is qualified in its entirety by reference to the Company's Restated
Articles of Incorporation, as amended (the "Articles"), and the Bylaws of the
Company, which are incorporated by reference as an exhibit to the Registration
Statement of which this Prospectus is a part.
GENERAL
The Company is authorized to issue 300,000,000 shares of Common Stock. As
of December 31, 1997, there were outstanding 243,206,215 shares of the Company's
Common Stock.
Holders of the Company's Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors of the Company out of any
funds legally available therefor, and are entitled upon liquidation, after
claims of creditors and preferences of any series of the Company's Preferred
Stock, to receive pro rata the net assets of the Company. See "Description of
Preferred Stock."
The holders of the Common Stock are entitled to one vote for each share
held and are vested with all of the voting power, except as the Board of
Directors of the Company or an authorized committee thereof may provide with
respect to any series of Preferred Stock. Directors of the Company are elected
for a one-year term expiring upon the annual meeting of stockholders of the
Company. The holders of the Common Stock do not have cumulative voting rights.
The holders of Common Stock do not have any preemptive rights to acquire
any shares or other securities of any class which may at any time be issued,
sold or offered for sale by the Company. The holders of Common Stock have no
conversion rights and the Common Stock is not subject to redemption by either
the Company or a stockholder.
The rights of holders of Common Stock are subject to the preferential
rights of the holders of outstanding shares of the Company's 7% Convertible
Preferred Stock and the preferential rights of any Preferred Stock that may be
issued in the future.
The Company's Common Stock is listed on the New York, Pacific, London and
Swiss Stock Exchanges. First Chicago Trust Company of New York is the transfer
agent, registrar and dividend disbursing agent for the Common Stock.
PREFERRED SHARE PURCHASE RIGHTS
On July 27, 1989, the Board of Directors of the Company authorized the
issuance of one preferred share purchase right (a "Right") for each share of
Common Stock outstanding on August 7, 1989 and for each share of 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 Common Stock and entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $1.50 per share, of the Company (the "Junior
Preferred Shares"), at a price of $120 per one one-hundredth of a 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 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
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more of the outstanding Common Stock and any other shares of capital stock of
the Company 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 the Company's assets, liquidation, dissolution or winding up of the
Company (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 the Company 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 Common Stock (or under certain
circumstances, Common Stock-equivalent Junior Preferred Shares) having a market
value of two times the exercise price of the Rights.
At any time 10 business days after a person or group of affiliated or
associated persons has become an Acquiring Person and prior to the acquisition
by any person or group of 50% or more of the outstanding Voting Stock, the Board
of Directors of the Company may exchange the Rights (other than Rights acquired
or beneficially owned by such Acquiring Person, which Rights held by such
Acquiring Person shall then be null and void), in whole or in part, at an
exchange ratio of one share of Common Stock (or one one-hundredth of a share of
Junior Preferred Stock), appropriately adjusted to reflect any stock split,
stock dividend or similar transaction, for each two shares of Common Stock for
which the Right is then exercisable.
At any time prior to the close of business on the tenth day following the
first public announcement that a person or group of affiliated or associated
persons has become an Acquiring Person, the Board of Directors of the Company
may redeem the then outstanding Rights in whole, but not in part, at a price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction (the "Rights Redemption Price"). Any such
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company in its sole
discretion may establish.
The purchase price payable, and the number of 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 Junior
Preferred Shares.
The number of outstanding Rights and the number of one one-hundredths of a
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 the Company or other transaction involving the Company
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 the Company or any of its subsidiaries beneficially owned by any
Acquiring Person, in any such case, prior to an exchange by the Company as
described above.
The terms of the Rights may be amended, including extending the expiration
date, by the Board of Directors of the Company 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 the Company
on terms not approved by the Board of Directors of the Company. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors of the Company since the Rights may be redeemed by the
Company at the
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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 Junior Preferred Shares will be non-redeemable and rank junior to all
other series of the Company's Preferred Stock. Each whole Junior Preferred Share
will be entitled to receive a quarterly preferential dividend in an amount equal
to the greater of (i) $0.25 or (ii) subject to certain adjustments, 100 times
the dividend declared on each share of Common Stock. In the event of the
liquidation, dissolution or winding up of the Company, each whole Junior
Preferred Share will be entitled to receive a preferential liquidation payment
in an amount equal to the greater of (i) $1.50, or (ii) 100 times the aggregate
amount to be distributed per share to holders of Common Stock, plus, in either
case, an amount equal to all accrued and unpaid dividends thereon. In the event
of any merger, consolidation or other transaction in which Common Stock is
exchanged for or changed into other stock or securities, cash or other property,
each whole Junior Preferred Share will be entitled to receive 100 times the
amount received per each share of Common Stock. Each whole Junior Preferred
Share will be entitled to 100 votes on all matters submitted to a vote of the
shareholders of the Company, and Junior Preferred Shares will generally vote
together as one class with the Common Stock and any other voting capital stock
of the Company on all matters submitted to a vote of shareholders of the
Company.
If such registration is then required by applicable law, the Company will
use its best efforts to cause the offer and sale of Junior Preferred Shares
issuable upon exercise of the Rights to be registered pursuant to the Securities
Act at any such time as the Rights become exercisable.
The foregoing description of the Rights and the Junior Preferred Shares
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, as amended, which is an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Statement of Resolution
Establishing Series of Shares of the Junior Preferred Shares.
BUSINESS COMBINATION LAW
The Company is subject to Part Thirteen of the Texas Business Corporation
Act, known as the "Business Combination Law," which became effective September
1, 1997. In general, the Business Combination Law prevents an "affiliated
shareholder" (or its affiliates or associates) from entering into or engaging in
a "business combination" with an "issuing public corporation" during the
three-year period immediately following the date on which the affiliated
shareholder became an affiliated shareholder, unless (a) before the date such
person became an affiliated shareholder, the board of directors of the issuing
public corporation approves the business combination or the acquisition of
shares that caused the affiliated shareholder to become an affiliated
shareholder, or (b) not less than six months after the date such person became
an affiliated shareholder, the business combination is approved by the
affirmative vote of holders of at least two-thirds of the issuing public
corporation's outstanding voting shares not beneficially owned by the affiliated
shareholder or its affiliates or associates. For the purposes of the foregoing,
"affiliated shareholder" is defined generally as a person that is or was within
the preceding three-year period the beneficial owner of 20% or more of a
corporation's outstanding voting shares; "business combination" is defined
generally to include (i) mergers, share exchanges or conversions involving the
affiliated shareholder, (ii) dispositions of assets involving the affiliated
shareholder having an aggregate value equal to 10% or more of the market value
of the assets or of the outstanding common stock or representing 10% or more of
the earning power or net income of the corporation, (iii) certain issuances or
transfers of securities by the corporation to the affiliated shareholder other
than on a pro rata basis, (iv) certain plans or agreements relating to a
liquidation or dissolution of the corporation involving an affiliated
shareholder, (v) certain reclassifications, recapitalizations, distributions or
other transactions that would have the effect of increasing the affiliated
shareholder's percentage ownership of the corporation and (vi) the receipt of
tax, guarantee, loan or other financial benefits by an affiliated shareholder
other than proportionately as a shareholder of the corporation; and "issuing
public corporation" is generally defined to include most publicly held Texas
corporations, including the Company.
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ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS AND PROPOSALS
The Company's Bylaws provide that, subject to the rights of any class or
series of Preferred Stock to nominate and elect a specified number of directors
in certain circumstances, nominations of persons for election as directors of
the Company may be made by a shareholder only if the shareholder is a
shareholder of record and such shareholder gives timely written notice of such
shareholder's intent to make such nomination or nominations to the Secretary of
the Company in accordance with the Company's Bylaws. To be timely, the notice
must be given (a) in the case of an annual meeting, not less than 120 days nor
more than 150 days prior to the anniversary date of the immediately preceding
annual meeting of shareholders; provided, that in the event that such annual
meeting is called for a date that is not within 30 days before or after such
anniversary date, notice by the shareholder in order to be timely must be so
given not later than the close of business on the tenth day following the day on
which notice of the date of such annual meeting is mailed or public disclosure
of the date of such annual meeting is made, whichever first occurs, and (b) in
the case of a special meeting of shareholders called for the purpose of electing
directors, not later than the close of business on the tenth day following the
day on which notice of the date of such special meeting is mailed or public
disclosure of the date of such special meeting is made, whichever first occurs.
Each such notice must contain certain specified information with respect to the
shareholder making the proposal, and the nominee or nominees.
The Company's Bylaws also provide that no business may be brought before an
annual meeting of shareholders by a shareholder unless such shareholder is a
shareholder of record and such shareholder gives notice of such business to the
Secretary of the Company, in accordance with the Company's Bylaws, not less than
120 days nor more than 150 days prior to the anniversary date of the immediately
preceding annual meeting of shareholders; provided, that in the event that such
annual meeting is called for a date that is not within 30 days before or after
such anniversary date, notice by the shareholder in order to be timely must be
so given not later than the close of business on the tenth day following the day
on which notice of the date of such annual meeting is mailed or public
disclosure of the date of such annual meeting is made, whichever first occurs.
Each such notice must set forth certain specified information and
representations concerning the proposal and the shareholder making the proposal.
DESCRIPTION OF PREFERRED STOCK
If specified in the applicable Prospectus Supplement, any series of Junior
Subordinated Debentures or the Preferred Securities of any Trust may be
convertible into or exchangeable for shares of the Company's Preferred Stock,
par value $1.50 per share. The following description of the terms of the
Preferred Stock sets forth certain general terms and provisions of the Preferred
Stock. Certain other terms of any series of Preferred Stock into or for which
any Junior Subordinated Debentures or Preferred Securities may be convertible or
exchangeable will be specified in the Prospectus Supplement relating to such
Junior Subordinated Debentures or Preferred Securities. If so specified in any
such Prospectus Supplement, the terms of any series of Preferred Stock may
differ from the terms set forth below. The description of the terms of the
Preferred Stock set forth below and in an applicable Prospectus Supplement does
not purport to be complete and is subject to and qualified in its entirety by
reference to the Statement of Resolutions relating to the applicable series of
Preferred Stock, which will be filed as an exhibit to, or incorporated by
reference in, the Registration Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the Articles and Bylaws of the Company, and applicable Texas
law, the Board of Directors of the Company, or an authorized committee thereof,
has the authority, without further shareholder action, to issue up to 60,000,000
shares of Preferred Stock, $1.50 par value, in one or more series and in such
amounts and for such consideration, as may be determined from time to time by
resolution of the Board of Directors of the Company, or an authorized committee
thereof, and to fix
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<PAGE> 68
before the issuance of any shares of Preferred Stock of a particular series, the
number of shares constituting that series and the distinctive designation of
that series; the dividend rate (or method of determining the same); the voting
rights; conversion privileges; redemption rights; repurchase obligations;
sinking fund availability; rights upon liquidation, dissolution or winding up
and the priority thereof; restrictions upon the Company with respect to the
creation of debt or the issuance of additional Preferred Stock or other stock
ranking prior to or on a parity therewith with respect to dividends or upon
liquidation; restrictions on the Company with respect to the issuance of,
payment of dividends upon, or the making of other distributions with respect to,
or the acquisition or redemption of, shares ranking junior to the Preferred
Stock; the priority of each series of Preferred Stock in relation to other
series of Preferred Stock; and any other designations, powers, preferences and
rights, including, without limitation, any qualifications, limitations or
restrictions thereof. The holders of any series of Preferred Stock shall not
have any preemptive rights to acquire any shares or securities of any class
which may at any time be issued, sold or offered for sale by the Company.
As of the date of this Prospectus, the Company had no Preferred Stock
outstanding other than the 7% Convertible Preferred Stock described below under
"-- 7% Convertible Preferred Stock." As of such date, the Company had Preferred
Share Purchase Rights outstanding. A description of these rights is provided
under "Description of Common Stock -- Preferred Share Purchase Rights."
DIVIDENDS
The holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds legally available therefor, dividends at such rates and on such dates
as will be specified in the applicable Prospectus Supplement. Such rates may be
fixed or variable or both. If variable, the formula used for determining the
dividend rate for each dividend period will be specified in the applicable
Prospectus Supplement. Dividends will be payable to the holders of record as
they appear on the stock books of the Company on such record dates as will be
fixed by the Board of Directors of the Company.
Unless otherwise indicated in an applicable Prospectus Supplement, all
series of Preferred Stock will be senior in right as to dividends and in
liquidation to the Common Stock and any other class of stock of the Company
ranking junior to the Preferred Stock.
VOTING RIGHTS
Except as indicated in the applicable Prospectus Supplement or as expressly
required by applicable law, the holders of the Preferred Stock will not be
entitled to vote. In the event the Company issues a series of Preferred Stock
with voting rights, unless otherwise specified in the Prospectus Supplement
relating to such series, each such share will be entitled to one vote on matters
on which holders of such series of the Preferred Stock are entitled to vote.
Since each full share of any series of Preferred Stock of the Company shall be
entitled to one vote, the voting power of such series, on matters on which
holders of such series and holders of other series of Preferred Stock are
entitled to vote as a single class, shall depend on the number of shares in such
series, not the aggregate stated value, liquidation preference or initial
offering price of the shares of such series of Preferred Stock.
CONVERSION AND EXCHANGE
The Prospectus Supplement relating to a series of the Preferred Stock will
set forth the conditions or terms, if any, upon which any such series will be
convertible or exchangeable, and the terms of the securities into which such
series will be convertible or exchangeable.
REDEMPTION RIGHTS
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of the Company or any holder thereof, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices specified in the
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<PAGE> 69
applicable Prospectus Supplement and subject to the rights of holders of other
securities of the Company. Preferred Stock redeemed by the Company will be
restored to the status of authorized but unissued preferred shares.
REPURCHASE OBLIGATION
The Prospectus Supplement relating to a series of the Preferred Stock will
state the conditions and terms, if any, upon which such series shall be subject
to repurchase by the Company.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock shall
be entitled to receive out of the assets of the Company available for
distribution to shareholders, before any distribution of assets is made to
holders of Common Stock or any other class or series of shares ranking junior to
such Preferred Stock upon liquidation, a liquidating distribution in the amount
per share as set forth in the Prospectus Supplement relating to such series of
Preferred Stock plus accrued and unpaid dividends. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company the amounts
payable with respect to Preferred Stock of any series and any other shares of
the Company ranking as to any such distribution on a parity with such Preferred
Stock of such series are not paid in full, the holders of such Preferred Stock
of such series and of such other shares will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. Neither the sale of all or
substantially all of the property or business of the Company nor the merger or
consolidation of the Company into or with any other corporation shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, of the
Company. Except as indicated in the applicable Prospectus Supplement, after
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of Preferred Stock of any series will not be entitled to
any further participation in any distribution of assets by the Company.
CONDITIONS AND RESTRICTIONS UPON THE COMPANY
The Prospectus Supplement relating to a series of the Preferred Stock will
describe any conditions or restrictions upon the Company which are for the
benefit of such series, including restrictions upon the creation of debt or
other series of Preferred Stock; payment of dividends; or distributions,
acquisitions or redemptions of shares ranking junior to such series.
7% CONVERTIBLE PREFERRED STOCK
As of December 31, 1997, there were issued and outstanding 2,317,701 shares
of the Company's 7% Convertible Preferred Stock. The 7% Convertible Preferred
Stock is entitled to receive annual cumulative dividends at a rate per annum of
7% of the stated liquidation preference of $36.7625. On March 1, 2001 (the
"Mandatory Conversion Date"), unless previously redeemed or converted, each
share of 7% Convertible Preferred Stock will mandatorily convert into (i) one
share of the Company's Common Stock, subject to adjustment in certain events,
and (ii) the right to receive cash in an amount equal to all accrued and unpaid
dividends thereon. Shares of 7% Convertible Preferred Stock are not redeemable
prior to March 1, 2000 (the "Initial Redemption Date"). At any time and from
time to time on and after the Initial Redemption Date, the Company may redeem
any or all of the outstanding shares of 7% Convertible Preferred Stock in
exchange for a number of shares of Common Stock equal to the quotient obtained
by dividing (i) 101.75% of the stated liquidation preference, declining
quarterly to 100% of the stated liquidation preference on the Mandatory
Conversion Date, plus all accrued and unpaid dividends thereon by (ii) the
Current Market Price (as defined) of the Common Stock on the applicable date of
determination, but in no event less than .8264 of a share of Common Stock. At
any time prior to the Mandatory Conversion Date, unless previously redeemed,
each share of 7% Convertible Preferred Stock is convertible at the option of the
holder into .8264 of a share of Common Stock subject to certain adjustments.
40
<PAGE> 70
The holders of shares of 7% Convertible Preferred Stock have the right to
vote in the election of Directors of the Company and upon each other matter
coming before any meeting of the holders of Common Stock on the basis of 4/5 of
one vote for each share of 7% Convertible Preferred Stock. On such matters, the
holders of shares of 7% Convertible Preferred Stock and the holders of Common
Stock will vote together as one class except as otherwise provided by law or the
Articles. In addition, holders of shares of 7% Convertible Preferred Stock have
additional voting rights with respect to certain other matters, including
certain rights to elect two directors in the event of specified dividend
arrearages. The shares of 7% Convertible Preferred Stock rank prior to the
Common Stock as to the payment of dividends and distribution of assets upon
liquidation.
6% CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES AND SERIES A PREFERRED STOCK
The Company has established a series of Preferred Stock designated as the
Series A Cumulative Convertible Preferred Stock (the "Series A Preferred
Stock"), no shares of which have been issued. The Series A Preferred Stock has
been established in connection with the issuance by American General Delaware,
L.L.C. ("American General Delaware"), a Delaware limited liability company and
an affiliate of the Company, of 5,000,000 of its 6% Convertible Monthly Income
Preferred Securities, Series A (the "Series A Preferred Securities"),
representing preferred limited liability company interests in American General
Delaware. The Series A Preferred Securities are subject to exchange, in whole
but not in part, for shares of Series A Preferred Stock, at the rate of one
share of Series A Preferred Stock for each Series A Preferred Security, upon a
vote of the holders of a majority of the aggregate liquidation preference of all
outstanding Series A Preferred Securities following the failure of holders of
Series A Preferred Securities to receive dividends in full (including
arrearages) for 15 consecutive months.
Holders of the Series A Preferred Securities are entitled to receive
cumulative cash distributions from American General Delaware at the annual rate
of 6% of the liquidation preference of $50 per Series A Preferred Security,
accruing from the date of original issuance and payable monthly in arrears on
the last day of each calendar month of each year. In the event of the
liquidation, dissolution or winding-up of American General Delaware, holders of
Series A Preferred Securities are entitled to receive for each Series A
Preferred Security a liquidation preference of $50 plus an amount equal to any
accumulated and unpaid dividends (whether or not earned or declared), to the
date of payment, subject to certain limitations. Each Series A Preferred
Security is convertible at the option of the holder, at any time prior to the
expiration of such conversion rights as discussed below, into shares of Common
Stock, at the rate of 1.2288 shares of Common Stock for each Series A Preferred
Security (equivalent to a conversion price of $40.69 per share of Common Stock),
subject to adjustment in certain circumstances. On any date on or after May 31,
2000, American General Delaware may, at its option, cause the conversion rights
of holders of the Series A Preferred Securities to expire if certain conditions
are then satisfied (the "Conversion Expiration Date"). The Series A Preferred
Securities are redeemable at the option of American General Delaware, in whole
or in part, from time to time, on or after May 31, 2003, at a cash redemption
price equal to the liquidation preference for such Series A Preferred Securities
plus accumulated and unpaid dividends (whether or not earned or declared) to the
date fixed for redemption (the "Redemption Price"). The Series A Preferred
Securities are also redeemable at the option of American General Delaware, in
whole but not in part, at the Redemption Price if, at any time after the
Conversion Expiration Date, less than 10% of the Series A Preferred Securities
that were originally issued remains outstanding. The Series A Preferred
Securities will be subject to mandatory redemption on May 31, 2025, or earlier
in certain circumstances.
The Series A Preferred Stock will have dividend, liquidation, optional
redemption and conversion provisions and certain other terms substantially
similar to those of the Series A Preferred Securities, except that, among other
things, the holders of Series A Preferred Stock will have the right (voting
together with holders of certain other series of capital stock of the Company
including, under certain circumstances, the holders of 7% Convertible Preferred
Stock) to elect two additional directors of the Company whenever dividends on
the Series A Preferred Stock are in arrears for 18 or more consecutive months,
no interest will accumulate or be payable on any dividend arrearages on the
Series A Preferred
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<PAGE> 71
Stock and the Series A Preferred Stock will not be subject to mandatory
redemption. The Series A Preferred Stock, if issued, would be pari passu with
the 7% Convertible Preferred Stock as to the payment of dividends and
distributions of assets upon liquidation of the Company.
PLAN OF DISTRIBUTION
The Company may sell the Junior Subordinated Debentures and any Trust may
sell Preferred Securities (such Junior Subordinated Debentures and Preferred
Securities, the "Offered Securities") in any of, or any combination of, the
following ways: (i) directly to purchasers, (ii) through agents and (iii)
through underwriters or dealers.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction
will be set forth in the applicable Prospectus Supplement, which will be used by
the underwriters to make resales of the Offered Securities in respect of which
this Prospectus is delivered to the public.
Unless otherwise set forth in the Prospectus Supplement relating thereto,
the obligations of the underwriters to purchase the Offered Securities will be
subject to conditions precedent and the underwriters will be obligated to
purchase all such Offered Securities if any are purchased. The initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, the Company and/or any Trust, as the case
may be, will sell such Offered Securities to the dealer, as principal. The
dealer may then resell such Offered Securities to the public at varying prices
to be determined by such dealer at the time of resale. The name of the dealer
and the terms of the transaction will be set forth in the Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under the relevant agreements
to indemnification by the Company and/or any Trust, as the case may be, against
certain liabilities, including liabilities under the Securities Act.
In connection with the offering of the Preferred Securities of any Trust,
such Trust may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Trust grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters, agents and dealers may engage in transactions with, or
perform services for, the Company and/or the applicable Trust and/or any of
their affiliates in the ordinary course of business.
The Offered Securities will be new issues of securities and will have no
established trading market. Any underwriters to whom Offered Securities are sold
for public offering and sale may make a market in such Offered Securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. Such Offered Securities may or may not be
listed on a national securities exchange or the Nasdaq National Market. No
assurance can be given as to the liquidity of or the existence of trading
markets for any Offered Securities.
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<PAGE> 72
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Company by Vinson & Elkins L.L.P., and
for the Trusts by Richards, Layton & Finger, P.A., special Delaware counsel to
the Trusts and the Company. Unless otherwise indicated in the applicable
Prospectus Supplement, the validity of the Guarantees and the Junior
Subordinated Debentures will be passed upon for the Underwriters by Brown & Wood
LLP. Vinson & Elkins L.L.P. and Brown & Wood LLP will rely on the opinion of
Richards, Layton & Finger, P.A. as to certain matters of Delaware law.
EXPERTS
The consolidated financial statements and schedules of the Company and its
subsidiaries appearing in the Company's Current Report on Form 8-K dated October
10, 1997 have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. See "Incorporation by Reference." Such consolidated financial
statements and schedules are, and audited consolidated financial statements to
be included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such consolidated
financial statements (to the extent covered by consents filed with the
Commission) given upon the authority of such firm as experts in accounting and
auditing.
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<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses to be incurred by the registrants
in connection with the offering described in this Registration Statement (other
than underwriting discount and commissions).
<TABLE>
<S> <C>
SEC registration fee........................................ $ 454,546
Printing.................................................... 200,000
Legal fees and expenses..................................... 450,000
Accounting fees and expenses................................ 200,000
Trustee's fees and expenses................................. 450,000
Rating agency fees.......................................... 430,000
Miscellaneous............................................... 15,454
----------
Total............................................. $2,200,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.01-1 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.
In addition, Article VI of the Company's Bylaws sets forth certain rights
of the Company's officers and directors to indemnification. The Company's
Bylaws, as in effect on the date hereof, are incorporated by reference herein as
Exhibit 4(f).
The agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of securities registered
hereunder may provide for the indemnification of the Company, the Trusts, their
respective controlling persons and directors and certain of their respective
officers by any agents, dealers or underwriters, as the case may be, against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
It is contemplated that the Amended and Restated Declaration of Trust to be
entered into with respect to each Trust at the time of any offering of
securities thereby will contain provisions under which the Company will
indemnify the Trustees of such Trust for liabilities arising in connection with
their duties as Trustee. See Exhibit 4(n) below.
The Company 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 Company 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.
See "Item 17. Undertakings" below for a description of the position of the
Securities and Exchange Commission with respect to such indemnification
provisions.
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<PAGE> 74
ITEM 16. EXHIBITS
The following exhibits are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
*1(a) -- Form of Underwriting Agreement (Debt Securities and
Warrants to purchase Debt Securities), including forms of
Pricing Agreement and Delayed Delivery Contract.
**1(b) -- Form of Underwriting Agreement (Common Stock and Warrants
to Purchase Common Stock), including forms of Pricing
Agreement and Delayed Delivery Contract.
**1(c) -- Form of Underwriting Agreement (Preferred Stock and
Warrants to Purchase Preferred Stock), including forms of
Pricing Agreement and Delayed Delivery Contract.
**1(d) -- Form of Underwriting Agreement (Convertible Preferred
Securities).
***1(e) -- Form of Underwriting Agreement (Non-Convertible Preferred
Securities), including form of Pricing Agreement.
*4(a) -- Form of Senior Indenture, dated as of November 15, 1997,
between the Company and Bankers Trust Company, as
Trustee. The form or forms of Senior Securities with
respect to each particular offering will be filed as an
exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
*4(b) -- Form of Senior Subordinated Indenture, dated as of
November 15, 1997, between the Company and Bankers Trust
Company, as Trustee. The form or forms of Senior
Subordinated Securities with respect to each particular
offering will be filed as an exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
*4(c) -- Form of Junior Subordinated Indenture, dated as of
November 15, 1997, between the Company and Bankers Trust
Company, as Trustee. The form or forms of Junior
Subordinated Debentures with respect to each particular
offering will be filed as an exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
4(d) -- Restated Articles of Incorporation of the Company
(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); Statement of Resolution
Establishing Series of Shares of Series A Cumulative
Convertible Preferred Stock (incorporated by reference to
Exhibit 4(o) to Registration Statement No. 33-58317); and
Statement of Resolution Establishing Series of Shares of
7% Convertible Preferred Stock (incorporated by reference
to Exhibit 4(d) to Registration Statement No. 333-00513).
4(e) -- 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 (incorporated by
reference to Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1989, and to
Exhibit 19 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1992, respectively).
4(f) -- Bylaws of the Company (incorporated by reference to
Exhibit 3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).
**4(g) -- Form of Debt Warrant Agreement, including form of Debt
Warrant Certificates.
**4(h) -- Form of Preferred Stock Warrant Agreement, including form
of Preferred Stock Warrant Certificates.
**4(i) -- Form of Common Stock Warrant Agreement, including form of
Common Stock Warrant Certificates.
*4(j) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital I.
*4(k) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital II.
</TABLE>
II-2
<PAGE> 75
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
*4(l) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital III.
*4(m) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital IV.
*4(n) -- Form of Amended and Restated Declaration of Trust to be
entered into with respect to each of the Trusts prior to
the offering of any securities thereby. The Amended and
Restated Declaration of Trust with respect to any
offering of Preferred Securities by a Trust will be filed
as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4(o) -- Form and Terms of the Preferred Securities (included in
Exhibit 4(n)).
*4(p) -- Certificate of Trust of American General Capital I.
*4(q) -- Certificate of Trust of American General Capital II.
*4(r) -- Certificate of Trust of American General Capital III.
*4(s) -- Certificate of Trust of American General Capital IV.
*4(t) -- Form of Preferred Securities Guarantee Agreement to be
entered into with respect to each of the Trusts prior to
the offering of any securities thereby.
*5(a) -- Opinion and Consent of Vinson & Elkins L.L.P. with
respect to the validity of securities of the Company.
*5(b) -- Opinions and Consents of Richards, Layton & Finger, P.A.
with respect to the validity of the securities of each
Trust.
**8 -- Opinion and Consent of Vinson & Elkins L.L.P. with
respect to certain tax matters.
12 -- Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends (incorporated by reference to Exhibit 12
to the Company's Current Report on Form 8-K dated October
10, 1997 and Exhibit 12 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997).
23(a) -- Consent of Vinson & Elkins L.L.P. (contained in their
opinions in Exhibits 5(a) and 8).
23(b) -- Consent of Richards, Layton & Finger, P.A. (contained in
their opinions in Exhibit 5(b)).
***23(c) -- Consent of Ernst and Young LLP, Independent Auditor.
*24 -- Powers of Attorney.
*25(a) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee
under the Senior Indenture.
*25(b) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee
under the Senior Subordinated Indenture.
*25(c) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital I and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
*25(d) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital II and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
*25(e) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital III and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
</TABLE>
II-3
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
*25(f) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital IV and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
</TABLE>
- ---------------
* Previously filed.
** To be filed as an exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
*** Filed herewith.
ITEM 17. UNDERTAKINGS.
The registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) 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;
(c) 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)(a) and (1)(b) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement;
(2) that, for the purpose of determining any liability under the Securities
Act, 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; and
(4) that, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 15 above, or
otherwise, the registrants have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants 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 registrants 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 Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE> 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, American
General Corporation certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on February 9, 1998.
AMERICAN GENERAL CORPORATION
(Registrant)
By: /s/ ELLEN H. MASTERSON
----------------------------------
Ellen H. Masterson
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, American
General Capital I certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on February 9, 1998.
AMERICAN GENERAL CAPITAL I
By: AMERICAN GENERAL CORPORATION, as
Sponsor
By: /s/ ELLEN H. MASTERSON
----------------------------------
Ellen H. Masterson
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, American
General Capital II certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on February 9, 1998.
AMERICAN GENERAL CAPITAL II
By: AMERICAN GENERAL CORPORATION, as
Sponsor
By: /s/ ELLEN H. MASTERSON
----------------------------------
Ellen H. Masterson
Senior Vice President and
Chief Financial Officer
II-5
<PAGE> 78
Pursuant to the requirements of the Securities Act of 1933, American
General Capital III certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas
on February 9, 1998.
AMERICAN GENERAL CAPITAL III
By: AMERICAN GENERAL CORPORATION, as
Sponsor
By: /s/ ELLEN H. MASTERSON
----------------------------------
Ellen H. Masterson
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, American
General Capital IV certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on February 9, 1998.
AMERICAN GENERAL CAPITAL IV
By: AMERICAN GENERAL CORPORATION, as
Sponsor
By: /s/ ELLEN H. MASTERSON
----------------------------------
Ellen H. Masterson
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities with American General Corporation indicated on February 9, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
ROBERT M. DEVLIN* Chairman of the Board, Chief Executive Officer
- ----------------------------------------------------- and Director (principal executive officer)
Robert M. Devlin
/s/ ELLEN H. MASTERSON Senior Vice President and Chief Financial
- ----------------------------------------------------- Officer (principal financial officer)
Ellen H. Masterson
/s/ PAMELA J. PENNY Vice President and Controller (principal
- ----------------------------------------------------- accounting officer)
Pamela J. Penny
J. EVANS ATTWELL* Director
- -----------------------------------------------------
J. Evans Attwell
</TABLE>
II-6
<PAGE> 79
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
BRADY F. CARRUTH* Director
- -----------------------------------------------------
Brady F. Carruth
JAMES S. D'AGOSTINO, JR.* Director
- -----------------------------------------------------
James D'Agostino, Jr.
W. LIPSCOMB DAVIS, JR.* Director
- -----------------------------------------------------
W. Lipscomb Davis, Jr.
LARRY D. HORNER* Director
- -----------------------------------------------------
Larry D. Horner
RICHARD J.V. JOHNSON* Director
- -----------------------------------------------------
Richard J.V. Johnson
MICHAEL E. MURPHY* Director
- -----------------------------------------------------
Michael E. Murphy
JON P. NEWTON* Director
- -----------------------------------------------------
Jon P. Newton
ROBERT E. SMITTCAMP* Director
- -----------------------------------------------------
Robert E. Smittcamp
ANNE M. TATLOCK* Director
- -----------------------------------------------------
Anne M. Tatlock
*By: /s/ MARK S. BERG
------------------------------------------------
Mark S. Berg, Attorney-in-Fact
</TABLE>
II-7
<PAGE> 80
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
*1(a) -- Form of Underwriting Agreement (Debt Securities and
Warrants to purchase Debt Securities), including forms of
Pricing Agreement and Delayed Delivery Contract.
**1(b) -- Form of Underwriting Agreement (Common Stock and Warrants
to Purchase Common Stock), including forms of Pricing
Agreement and Delayed Delivery Contract.
**1(c) -- Form of Underwriting Agreement (Preferred Stock and
Warrants to Purchase Preferred Stock), including forms of
Pricing Agreement and Delayed Delivery Contract.
**1(d) -- Form of Underwriting Agreement (Convertible Preferred
Securities).
***1(e) -- Form of Underwriting Agreement (Non-Convertible Preferred
Securities), including form of Pricing Agreement.
*4(a) -- Form of Senior Indenture, dated as of November 15, 1997,
between the Company and Bankers Trust Company, as
Trustee. The form or forms of Senior Securities with
respect to each particular offering will be filed as an
exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
*4(b) -- Form of Senior Subordinated Indenture, dated as of
November 15, 1997, between the Company and Bankers Trust
Company, as Trustee. The form or forms of Senior
Subordinated Securities with respect to each particular
offering will be filed as an exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
*4(c) -- Form of Junior Subordinated Indenture, dated as of
November 15, 1997, between the Company and Bankers Trust
Company, as Trustee. The form or forms of Junior
Subordinated Debentures with respect to each particular
offering will be filed as an exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
4(d) -- Restated Articles of Incorporation of the Company
(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); Statement of Resolution
Establishing Series of Shares of Series A Cumulative
Convertible Preferred Stock (incorporated by reference to
Exhibit 4(o) to Registration Statement No. 33-58317); and
Statement of Resolution Establishing Series of Shares of
7% Convertible Preferred Stock (incorporated by reference
to Exhibit 4(d) to Registration Statement No. 333-00513).
4(e) -- 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 (incorporated by
reference to Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1989, and to
Exhibit 19 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1992, respectively).
4(f) -- Bylaws of the Company (incorporated by reference to
Exhibit 3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).
**4(g) -- Form of Debt Warrant Agreement, including form of Debt
Warrant Certificates.
**4(h) -- Form of Preferred Stock Warrant Agreement, including form
of Preferred Stock Warrant Certificates.
**4(i) -- Form of Common Stock Warrant Agreement, including form of
Common Stock Warrant Certificates.
*4(j) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital I.
*4(k) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital II.
*4(l) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital III.
*4(m) -- Declaration of Trust, dated as of November 14, 1997, of
American General Capital IV.
*4(n) -- Form of Amended and Restated Declaration of Trust to be
entered into with respect to each of the Trusts prior to
the offering of any securities thereby. The Amended and
Restated Declaration of Trust with respect to any
offering of Preferred Securities by a Trust will be filed
as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
</TABLE>
<PAGE> 81
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4(o) -- Form and Terms of the Preferred Securities (included in
Exhibit 4(n)).
*4(p) -- Certificate of Trust of American General Capital I.
*4(q) -- Certificate of Trust of American General Capital II.
*4(r) -- Certificate of Trust of American General Capital III.
*4(s) -- Certificate of Trust of American General Capital IV.
*4(t) -- Form of Preferred Securities Guarantee Agreement to be
entered into with respect to each of the Trusts prior to
the offering of any securities thereby.
*5(a) -- Opinion and Consent of Vinson & Elkins L.L.P. with
respect to the validity of securities of the Company.
*5(b) -- Opinions and Consents of Richards, Layton & Finger, P.A.
with respect to the validity of the securities of each
Trust.
**8 -- Opinion and Consent of Vinson & Elkins L.L.P. with
respect to certain tax matters.
12 -- Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends (incorporated by reference to Exhibit 12
to the Company's Current Report on Form 8-K dated October
10, 1997 and Exhibit 12 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997).
23(a) -- Consent of Vinson & Elkins L.L.P. (contained in their
opinions in Exhibits 5(a) and 8).
23(b) -- Consent of Richards, Layton & Finger, P.A. (contained in
their opinions in Exhibit 5(b)).
***23(c) -- Consent of Ernst and Young LLP, Independent Auditor.
*24 -- Powers of Attorney.
*25(a) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee
under the Senior Indenture.
*25(b) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee
under the Senior Subordinated Indenture.
*25(c) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital I and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
*25(d) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital II and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
*25(e) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital III and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
*25(f) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bankers Trust Company, as Trustee,
relating to the Preferred Securities of American General
Capital IV and the Junior Subordinated Debentures and
related Preferred Securities Guarantee of the Company.
</TABLE>
- ---------------
* Previously filed.
** To be filed as an exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
*** Filed herewith.
<PAGE> 1
EXHIBIT 1(e)
AMERICAN GENERAL CAPITAL [ ]
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT THAT AMERICAN GENERAL CAPITAL [ ]
HAS FUNDS AVAILABLE BY
AMERICAN GENERAL CORPORATION
UNDERWRITING AGREEMENT
American General Capital [ ], a statutory business trust created
under the laws of the State of Delaware (the "Trust"), and American General
Corporation, a Texas corporation, as depositor of the Trust and as guarantor
(the "Company"), propose to enter into a Pricing Agreement (the "Pricing
Agreement") in the form of Annex I hereto, with such additions and deletions as
the parties thereto may determine, and, subject to the terms and conditions
stated herein and therein, to issue and sell to the firms named in Schedule I
to the Pricing Agreement (such firms constituting the "Underwriters") certain
preferred securities representing beneficial interests in the assets of the
Trust. The preferred securities representing undivided beneficial interests in
the assets of the Trust specified in Schedule II to the Pricing Agreement as
Initial Preferred Securities are referred to as the "Initial Preferred
Securities". If specified in the Pricing Agreement, the Trust may grant the
Underwriters the right to purchase at their election an additional number of
preferred securities representing undivided beneficial interests in the assets
of the Trust, specified as provided in the Pricing Agreement as provided in
Section 2 hereof (the "Option Preferred Securities"). The Initial Preferred
Securities and the Option Preferred Securities, if any, which the Underwriters
elect to purchase pursuant to Section 2 hereof are herein collectively referred
to as the "Preferred Securities". The Preferred Securities will be guaranteed
by the Company as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement
(the "Guarantee") between the Company and Bankers Trust Company, as trustee
(the "Guarantee Trustee"). The proceeds of the sale of the Preferred
Securities and of the Trust's common securities (the "Common Securities") will
be invested by the Trust in Junior Subordinated Debentures (the "Junior
Subordinated Debentures") of the Company to be issued pursuant to a Junior
Subordinated Indenture, dated as of November 15, 1997 (the "Indenture"),
between the Company and Bankers Trust Company, as trustee (the "Debenture
Trustee"). The Preferred Securities may be exchangeable into such Junior
<PAGE> 2
Subordinated Debentures or other property or securities if so specified in
Schedule II to the Pricing Agreement. The offer and sale of the Preferred
Securities, the Guarantee and the Junior Subordinated Debentures (referred to
herein, individually or together, as the "Securities") have been registered
under the registration statement referred to in Section 1(a) below.
The representative or representatives of the Underwriters, if any,
specified in the Pricing Agreement are referred to herein as the
"Representatives"; provided, however, that if the Pricing Agreement does not
specify any representative of the Underwriters, the term "Representatives"
shall mean the Underwriters.
The Pricing Agreement will incorporate by reference the provisions of
this Agreement, except as otherwise provided therein.
Section 1. Representations and Warranties. Each of the Trust and the
Company, jointly and severally, represents and warrants to, and agrees with,
each of the Underwriters that:
(a) A registration statement (Nos. 333-40583,
333-40583-01, 333-40583-02, 333-40583-03 and 333- 40583-04) on Form
S-3 relating to, among other securities, the Securities, and all
post-effective amendments thereto required to the date of the Pricing
Agreement, have been filed with the Securities and Exchange Commission
(the "Commission") in the form heretofore delivered or to be delivered
to the Representatives (and, excluding exhibits to such registration
statement, but including all documents incorporated by reference in
the prospectus contained therein on or prior to the date of the
Pricing Agreement, to the Representatives for each of the other
Underwriters) and such registration statement and each such amendment
thereto, if any, have been declared effective by the Commission and no
stop order suspending the effectiveness thereof has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission. For purposes of this Agreement, (i) the term
"Registration Statement" shall mean the foregoing registration
statement, including all exhibits thereto and all documents
incorporated by reference therein as of the effective date thereof;
and any reference to the Registration Statement as amended (or similar
wording) shall mean the Registration Statement, including all
post-effective amendments thereto and all documents filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the effective date of the Registration
Statement and that are deemed to be incorporated by reference in the
Registration Statement upon the filing of such documents with the
Commission and the information, if any, deemed to be a part thereof
pursuant to Rule 434 under the Securities Act of
-2-
<PAGE> 3
1933, as amended (the "Act"); (ii) the term "Prospectus" shall mean
the prospectus, including all documents incorporated by reference
therein as of the date thereof, relating to the Securities in the form
included in the Registration Statement as of the effective date
thereof or, if different, in the form in which it has most recently
been filed or transmitted for filing with the Commission on or prior
to the date of the Pricing Agreement, as amended or supplemented to
reflect the terms of the offering of the Securities by (A) if the
Company elects not to rely on Rule 434 under the Act, the Prospectus
Supplement contemplated by Section 3(a) hereof, in the form in which
such Prospectus Supplement is filed with the Commission pursuant to
Rule 424(b) under the Act in accordance with Section 3(a) hereof or
(B) if the Company elects to rely on Rule 434 under the Act, the Term
Sheet contemplated by Section 3(a) hereof, in the form in which such
Term Sheet is filed with the Commission pursuant to Rule 424(b) (7)
under the Act in accordance with Section 3(a) hereof (and, in such
case, the term "Prospectus" shall include such Term Sheet and the Rule
434(c) (2) Prospectus referred to in Section 3(a), if any, each
individually and taken together); any reference to the date of the
Prospectus shall be deemed to refer to the date of such Prospectus
Supplement or Term Sheet, as the case may be, and any reference to the
Prospectus as amended or supplemented (or similar wording) shall mean
the Prospectus, including all supplements thereto and all documents
filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of the
Prospectus and that are deemed to be incorporated by reference in the
Prospectus upon the filing of such documents with the Commission; and
(iii) the term "Preliminary Prospectus" shall mean any preliminary
prospectus relating to the Securities, including all documents
incorporated by reference therein as of the date thereof, included in
the registration statement prior to the effectiveness thereof or filed
with the Commission pursuant to Rule 424(a) under the Act; and any
reference to any Preliminary Prospectus as amended or supplemented (or
similar wording) shall mean such Preliminary Prospectus, including all
documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of such
Preliminary Prospectus and that are deemed to be incorporated by
reference in the Preliminary Prospectus upon the filing of such
documents with the Commission. If the Company files a registration
statement to register a portion of the Securities and relies on Rule
462(b) under the Act for such registration statement to become
effective upon filing with the Commission (the "Rule 462 (b)
Registration Statement"), then any reference to "Registration
Statement" herein shall be deemed to be to both the registration
statement referred to above (Nos. 333-40583, 333-40583-01, 333-
40583-02, 333-40583-03 and 333-40583-04 (the "Original Registration
Statement")) and the
-3-
<PAGE> 4
Rule 462 (b) Registration Statement, as each such registration
statement may be amended pursuant to the Act;
(b) The documents incorporated by reference in the
Prospectus, as amended or supplemented, when they were filed with the
Commission, conformed in all material respects to the requirements of
the Exchange Act and the rules and regulations of the Commission
thereunder, and, when read together with the other information
included or incorporated by reference in the Prospectus at the time
the Registration Statement became effective, at the time any
post-effective amendment thereto became effective and at the time any
annual report on Form 10-K was filed by the Company and incorporated
by reference into the Prospectus, none of such documents contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed during the
period during which delivery of a prospectus is required in connection
with the offering or sale of the Preferred Securities, and
incorporated by reference in the Prospectus, when such documents are
filed with the Commission, will conform in all material respects to
the requirements of the Exchange Act and the rules and regulations of
the Commission thereunder and, when read together with the other
information included or incorporated by reference in the Prospectus at
the time such documents are filed with the Commission, none of such
documents will contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Trust or the Company by or on behalf of an
Underwriter through the Representatives expressly for use in the
Prospectus;
(c) The Registration Statement, as amended, and the
Prospectus, as amended, conform, and any amendments or supplements
thereto filed during the period during which delivery of a prospectus
is required in connection with the offering or sale of the Securities
will conform, in all material respects to the applicable requirements
of the Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission
thereunder. The Registration Statement, as amended, and the
Prospectus, as amended or supplemented, each as of the effective date
of the Registration Statement, as of the effective date of each
post-effective amendment to the Registration Statement, if any, and at
the time any annual report on Form 10-K was filed by the Company and
incorporated by reference into the Prospectus, did not, as of the date
of the Pricing Agreement do not, and as of the Time of Delivery
-4-
<PAGE> 5
(as hereinafter defined) and during the period during which delivery
of a prospectus is required in connection with the offering and sale
of the Securities, will not, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Trust or the Company by or on
behalf of an Underwriter through the Representatives expressly for use
in the Prospectus, or to the Statements of Eligibility on Form T-1
(the "Forms T-1"), except as to statements or omissions in such Forms
T-1 made in reliance upon information furnished in writing to the
Debenture Trustee or the Guarantee Trustee by or on behalf of the
Trust or the Company for use therein;
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has been
no material adverse change, nor any development or event involving a
prospective material adverse change, in the business, financial
condition, shareholders' equity (without considering the effect of
unrealized gains and losses on debt and equity securities classified
as "available for sale" under Statement of Financial Accounting
Standards (SFAS) No. 115) or results of operations of the Trust or of
the Company and its subsidiaries taken as a whole, other than as set
forth or contemplated in the Prospectus as amended or supplemented,
whether or not arising in the ordinary course of business;
(e) The Trust has been duly created and is validly existing
in good standing as a business trust under the Business Trust Act of
the State of Delaware (the "Delaware Business Trust Act") with the
power and authority to own its properties and conduct its business as
described in the Prospectus, and the Trust has conducted no business
to date, and it will conduct no business in the future that would be
inconsistent with the description of the Trust set forth in the
Prospectus; the Trust is not a party to or bound by any agreement or
instrument other than this Agreement, the Declaration of Trust dated
as of November 14, 1997 (the "Declaration") (and, at each Time of
Delivery, the Amended and Restated Declaration of Trust (the "Amended
Declaration") between the Company and the trustees named therein (the
"Trustees")), and the other agreements and instruments contemplated by
the Declaration or the Amended Declaration; the Trust has no
liabilities or obligations other than those arising out of the
transactions contemplated by this Agreement, the Declaration or the
Amended Declaration and described in the Prospectus; based on expected
operations and current law, the Trust is not and will not be
classified as an
-5-
<PAGE> 6
association taxable as a corporation for United States federal income
tax purposes; and the Trust is not a party to or subject to any
action, suit or proceeding of any nature;
(f) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Texas with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified
as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it
owns or leases substantial properties, or conducts business, and where
the failure so to qualify and be in good standing would have a
material adverse effect on the business of the Company and its
subsidiaries taken as a whole; each of the Company's consolidated
subsidiaries the consolidated assets of which constitute at least 15
percent of the consolidated assets of the Company (herein the
"Selected Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, has corporate power and authority to
own or lease its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases substantial
properties, or conducts business, and where the failure so to qualify
and be in good standing would have a material adverse effect on the
business of the Company and its subsidiaries taken as a whole; and
each of the Company and the Selected Subsidiaries has all required
authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies
(including, without limitation, each insurance regulatory authority
having jurisdiction over the Company or any insurance subsidiary of
the Company) to own or lease its properties and conduct its business
as described in the Prospectus, except such authorizations, approvals,
orders, licenses, certificates and permits which, if not obtained,
would not have a material adverse effect on the business of the
Company and its subsidiaries taken as a whole, and neither the Company
nor any of the Selected Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the business of
the Company and its subsidiaries taken as a whole;
(g) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus (except for
subsequent issuances, if any, pursuant to employee benefit
-6-
<PAGE> 7
plans, dividend reinvestment plans, or the exercise of convertible
securities or options referred to in the Prospectus or subsequent
purchases, if any, pursuant to the Company's share buyback program);
and all of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable, and conform in all material respects to the
description thereof contained in the Prospectus;
(h) All of the outstanding shares of capital stock of
each of the Selected Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable, and (except for any
directors' qualifying shares) are owned, directly or indirectly, by
the Company, free and clear of all liens and encumbrances;
(i) The Preferred Securities have been duly and validly
authorized by the Trust, and, when the Preferred Securities are issued
and delivered against payment therefor as provided herein and in the
Pricing Agreement, such Preferred Securities will be duly and validly
issued and fully paid and non-assessable undivided beneficial
interests in the assets of the Trust and will conform to the
description of the Preferred Securities contained in the Prospectus;
the issuance of the Preferred Securities is not subject to preemptive
or other similar rights; the Preferred Securities will have the rights
set forth in the Amended Declaration, and the terms of the Preferred
Securities are valid and binding on the Trust; the Preferred
Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware;
(j) The Common Securities of the Trust have been duly and
validly authorized by the Trust and upon delivery by the Trust to the
Company against payment therefor as described in the Prospectus will
be duly and validly issued undivided beneficial interests in the
assets of the Trust and will conform to the description thereof
contained in the Prospectus; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at each Time of
Delivery (as defined in Section 2 hereof), all of the issued and
outstanding Common Securities of the Trust will be directly or
indirectly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity;
(k) The issue and sale of the Preferred Securities and
the Common Securities by the Trust, the purchase of the Junior
Subordinated Debentures by the Trust, the exchange by the Trust of
Junior Subordinated Debentures for Preferred Securities, the
compliance by the Trust with all of the
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provisions of this Agreement and the Pricing Agreement, and the
consummation of the other transactions herein and therein contemplated
will not conflict with or result in any violation of (i) the
Declaration, the Amended Declaration or the Certificate of Trust dated
November 14, 1997 (the "Certificate of Trust") or (ii) to the best
knowledge of the Trust, any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Trust or any of its properties, in any manner which, in the case
of clause (ii), would have a material adverse effect on the Trust; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Preferred Securities and the
Common Securities by the Trust, the purchase of the Junior
Subordinated Debentures by the Trust, the exchange by the Trust of
Junior Subordinated Debentures for Preferred Securities, or the
consummation by the Trust of the other transactions contemplated by
this Agreement or the Pricing Agreement, except such as have been, or
will have been prior to the Time of Delivery, obtained under the Act
and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or "blue sky" or state insurance laws in
connection with the purchase and distribution of the Preferred
Securities by the Underwriters;
(l) The issue and sale of the Preferred Securities and
the Common Securities by the Trust, the issue by the Company of the
Guarantee, the issue and sale by the Company of the Junior
Subordinated Debentures, the exchange by the Trust of the Junior
Subordinated Debentures for Preferred Securities, the compliance by
each of the Trust and the Company with all of the provisions of this
Agreement, the Pricing Agreement, the Declaration, the Amended
Declaration, the Certificate of Trust, the Guarantee, the Junior
Subordinated Debentures and the Indenture, and the consummation of the
other transactions contemplated herein and therein will not (i)
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument for money borrowed to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, or (ii) result in any
violation of (x) the provisions of the Restated Articles of
Incorporation, as amended, or the Amended and Restated Bylaws of the
Company or (y) to the best knowledge of the Company, any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of the Selected
Subsidiaries or any of their properties, in any manner which, in the
case of clauses (i) and (ii)(y), would have a material
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<PAGE> 9
adverse effect on the business of the Company and its subsidiaries
taken as a whole; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue by the Company
of the Guarantee, the issue and sale by the Company of the Junior
Subordinated Debentures, the exchange by the Trust of Junior
Subordinated Debentures for Preferred Securities, or the consummation
by the Company of the other transactions contemplated by this
Agreement, the Pricing Agreement, the Declaration, the Amended
Declaration, the Certificate of Trust, the Indenture or the Guarantee,
except such as have been, or will have been prior to the Time of
Delivery, obtained under the Act and the Trust Indenture Act and such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or "blue sky" laws or state
insurance laws in connection with the purchase and distribution of the
Preferred Securities by the Underwriters;
(m) Other than as set forth or contemplated in the
Prospectus, there are no legal or governmental proceedings pending to
which the Trust, the Company or any of the Selected Subsidiaries is a
party or of which any property of the Trust, the Company or any of the
Selected Subsidiaries is subject which, individually or in the
aggregate, are expected to have a material adverse effect on the
business, financial condition, or results of operations of the Trust
or of the Company and its subsidiaries taken as a whole; and, to the
best of the Trust's and the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(n) Neither the Trust nor the Company is or, after giving
effect to the issue and sale of the Preferred Securities and the
Junior Subordinated Debentures, respectively, will be, an "investment
company" as such term is defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(o) The Junior Subordinated Debentures have been duly and
validly authorized and, when executed and authenticated pursuant to
the Indenture, and issued and delivered against payment therefor as
contemplated by this Agreement and the Pricing Agreement, will be duly
executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to the
benefits of the Indenture, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and
to general equity principles; the Indenture has been duly and validly
authorized by the Company and, when duly
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<PAGE> 10
executed and delivered by the Company and the Debenture Trustee, will
constitute a valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the
Indenture has been duly qualified under the Trust Indenture Act; and
the Junior Subordinated Debentures and the Indenture will conform in
all material respects with the descriptions thereof contained in the
Prospectus;
(p) The Guarantee has been duly and validly authorized by
the Company and, when executed and delivered by the Company as
contemplated by this Agreement and the Pricing Agreement, will have
been duly executed, issued and delivered, and assuming the valid
execution and delivery by the Guarantee Trustee, will constitute a
valid and legally binding obligation of the Company, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and
to general equity principles; the Guarantee has been duly qualified
under the Trust Indenture Act; and the Guarantee will conform in all
material respects with the description thereof contained in the
Prospectus;
(q) The Amended Declaration has been duly and validly
authorized and, when validly executed and delivered by the Company and
the Trustees, will constitute a valid and legally binding obligation
of the Company, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Amended Declaration will conform in all material respects to the
description thereof contained in the Prospectus; and
(r) In connection with the offering of the Preferred
Securities, neither the Trust nor the Company has taken or will take,
directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result
in a violation of the anti-manipulation provisions under the Exchange
Act, including Regulation M.
Section 2. Purchase and Offering of Securities. The obligation of
the Trust to issue and sell the Preferred Securities and the obligation of any
of the Underwriters to purchase the Preferred Securities shall be evidenced by
the Pricing Agreement, which shall specify the aggregate number of the Initial
Preferred Securities, the maximum member of Option Preferred Securities, if
any, the initial public offering price of such Initial Preferred
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<PAGE> 11
Securities and Option Preferred Securities, if any, or the manner of
determining such price, the variable terms of the Preferred Securities,
including whether and the terms on which and terms of the Junior Subordinated
Debentures into which the Preferred Securities may be exchangeable, the form of
the Preferred Securities, the purchase price to the Underwriters of such
Preferred Securities, the names of the Underwriters of such Preferred
Securities (subject to substitution as provided by Section 7 herein), the names
of the Representatives of such Underwriters, the number of such Preferred
Securities to be purchased by each Underwriter and the commission payable to
the Underwriters with respect thereto and shall set forth the date, time and
manner of delivery of such Initial Preferred Securities and Option Preferred
Securities, if any, and payment therefor. The Pricing Agreement shall be in
the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under this Agreement and the
Pricing Agreement shall be several and not joint. Upon the execution of the
Pricing Agreement and authorization by the Representatives of the release of
the Initial Preferred Securities, the several Underwriters propose to offer the
Initial Preferred Securities for sale upon the terms and conditions set forth
in the Prospectus.
The Trust may specify in the Pricing Agreement that the Trust thereby
grants to the Underwriters the right (an "Over-allotment Option") to purchase
at their election up to the number of Option Preferred Securities set forth in
such Pricing Agreement, on the same terms as the Initial Preferred Securities,
for the sole purpose of covering over- allotments in the sale of the Initial
Preferred Securities. Any such election to purchase Option Preferred
Securities may be exercised by written notice from the Representatives to the
Trust, given within a period specified in the Pricing Agreement, setting forth
the aggregate number of Option Preferred Securities to be purchased and the
date on which such Option Preferred Securities are to be delivered, as
determined by the Representatives but in no event earlier than the First Time
of Delivery (as defined below) or, unless the Representatives and the Trust
otherwise agree in writing, earlier than or later than the respective number of
business days after the date of such notice set forth in the Pricing Agreement.
The number of Option Preferred Securities to be added to the number of
Initial Preferred Securities to be purchased by each Underwriter as set forth
in Schedule I to the Pricing Agreement shall be, in each case, the number of
Option Preferred Securities which the Trust has been advised by the
Representatives have been attributed to such Underwriter; provided that, if the
Trust has not been so advised, the number of Option Preferred Securities to be
so added shall be, in each case, that proportion of Option Preferred
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<PAGE> 12
Securities which the number of Initial Preferred Securities to be purchased by
such Underwriter under the Pricing Agreement bears to the aggregate number of
Initial Preferred Securities (rounded as the Representatives may determine to
the nearest 100 shares). The total number of Preferred Securities to be
purchased by all the Underwriters pursuant to the Pricing Agreement shall be
the aggregate number of Initial Preferred Securities set forth in Schedule I to
the Pricing Agreement plus the aggregate number of Option Preferred Securities
which the Underwriters elect to purchase.
As compensation to the Underwriters for their commitments hereunder,
and in view of the fact that the proceeds of the sale of the Preferred
Securities will be used by the Trust to purchase the Junior Subordinated
Debentures, the Company hereby agrees to pay at each Time of Delivery to the
Representatives, for the accounts of the several Underwriters, an amount per
Preferred Security specified in the Pricing Agreement for the Preferred
Securities to be delivered hereunder at such Time of Delivery.
The Initial Preferred Securities and the Option Preferred Securities
to be purchased by each Underwriter pursuant to the Pricing Agreement, in the
form specified in the Pricing Agreement, shall be delivered by or on behalf of
the Trust to the Representatives, through the facilities of The Depository
Trust Company ("DTC"), for the account of each such Underwriter, against
payment by such Underwriter or on its behalf of the purchase price therefor by
wire transfer to the account specified by the Trust in same day funds, (i) with
respect to the Initial Preferred Securities, all in the manner and at the place
and time and date specified in the Pricing Agreement or at such other place and
time and date as the Representatives and the Trust may agree upon in writing
(such time and date being herein called the "First Time of Delivery") and (ii)
with respect to the Option Preferred Securities, if any, in the manner and at
the time and date specified by the Representatives in the written notice given
by the Representatives of the Underwriters' election to purchase such Option
Preferred Securities, or at such other time and date as the Representatives and
the Trust may agree upon in writing (such time and date, if not the First Time
of Delivery, being herein called the "Second Time of Delivery"). Each such
time and date for delivery is herein called a "Time of Delivery".
At each Time of Delivery, the Company will pay, or cause to be paid,
the compensation payable at such Time of Delivery to the Underwriters in the
same funds and manner as the purchase price for the Preferred Securities to be
paid by the Underwriters to the Trust (any such certified or official bank
check or checks to be payable to the order of the Representatives and any such
wire transfer to be to the account specified by the Representatives).
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<PAGE> 13
Section 3. Certain Agreements of the Company. Each of the Trust and
the Company, jointly and severally, agrees with each of the Underwriters:
(a) Immediately following the execution of the Pricing
Agreement, to prepare (i) if the Trust and the Company elect not to
rely on Rule 434 under the Act, an amendment or supplement to the
prospectus related to the Securities to reflect the terms of the
offering of the Securities (the "Prospectus Supplement") in a form
reasonably approved by the Representatives, and to file the Prospectus
Supplement pursuant to Rule 424(b) (2) or (5) under the Act by 3:00
p.m., New York City time, on the business day immediately succeeding
the date of the Pricing Agreement (or such other time as shall be
specified in the Pricing Agreement), or (ii) if the Trust and the
Company elect to rely on Rule 434 under the Act, (A) an abbreviated
term sheet relating to the Preferred Securities, the Guarantee and the
Junior Subordinated Debentures (the "Term Sheet") that complies with
the requirements of Rule 434(c) (3) and (e) under the Act in a form
reasonably approved by the Representatives, and (B) if required by
Rule 434(c) (2) under the Act, a form of Prospectus relating to the
Preferred Securities, the Guarantee and the Junior Subordinated
Debentures (the "Rule 434(c) (2) Prospectus") complying with Rule
434(c) (2) under the Act in a form reasonably approved by the
Representatives, and to file such Term Sheet pursuant to Rule 424(b)
(7) under the Act, and any such Rule 434(c) (2) Prospectus pursuant to
Rule 424(b) under the Act, in each case by 3:00 p.m., New York City
time, on the business day immediately succeeding the date of the
Pricing Agreement (or such other time as shall be specified in the
Pricing Agreement); except as otherwise required by law, to make no
amendment or supplement to the Registration Statement or Prospectus
after the date of the Pricing Agreement and prior to any Time of
Delivery which shall be reasonably disapproved by the Representatives
promptly after reasonable notice thereof; for so long as the delivery
of a prospectus is required in connection with the offering or sale of
the Preferred Securities, to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Trust or the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, and to advise the
Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed or transmitted for filing with the
Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating
to the Securities, of the suspension of the qualification of any of
the Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any
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<PAGE> 14
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Preferred
Securities, the Guarantee and the Junior Subordinated Debentures, or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal.
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Securities for
offering and sale under the securities and insurance laws of such
jurisdictions as the Representatives may reasonably request and to
comply with such laws to the extent necessary to permit the
continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Preferred
Securities; provided, however, that in connection therewith neither
the Trust nor the Company shall be required to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as the Representatives may from time to time
reasonably request, and, if the delivery of a prospectus is required
at any time in connection with the offering or sale of the Securities
and if at such time any event shall have occurred or condition exist
as a result of which the Prospectus, as it may then be amended or
supplemented, would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period, in
the opinion of the Representatives, the Trust or the Company, to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to
comply with the Act, the Exchange Act or the Trust Indenture Act, to
notify the Representatives of such event, condition, filing, amendment
or supplement and upon the Representatives' request to file such
document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives
may from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance;
(d) In the case of the Company, to make generally
available to its security holders as soon as practicable, but
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<PAGE> 15
in any event not later than 90 days following the close of the period
covered thereby, an earnings statement, covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter
next following the "effective date" (as defined in Rule 158 under the
Act) of the Registration Statement, of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including Rule 158);
(e) During the period beginning from the date of the
Pricing Agreement and continuing to and including the last Time of
Delivery, not to offer, sell, contract to sell or otherwise dispose of
any Preferred Securities, any other beneficial interests of the Trust,
or any preferred securities or any securities of the Trust or the
Company, as the case may be, that are substantially similar to the
Preferred Securities, including the Guarantee, and including but not
limited to any securities that are convertible into or exchangeable
for, or that represent the right to receive Preferred Securities,
preferred securities or any such substantially similar securities of
either the Trust or the Company, without the prior consent of the
Representatives;
(f) Not to be or become, at any time prior to the
expiration of three years after the Time of Delivery, an open-end
investment company, unit investment trust, closed-end investment
company or face-amount certificate company that is or is required to
be registered under Section 8 of the Investment Company Act;
(g) To use the net proceeds received by it from the sale
of the Preferred Securities, in the case of the Trust, and the Junior
Subordinated Debentures, in the case of the Company, as contemplated
in this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(h) In the case of the Company, to issue and deliver the
Guarantee and the Junior Subordinated Debentures concurrently with the
issuance and sale of the Preferred Securities; and
(i) If the Pricing Supplement specifies that the
Preferred Securities are to be listed on a securities exchange, to use
its best efforts to list on such securities exchange, subject to
notice of issuance, (i) the Preferred Securities, and (ii) the Junior
Subordinated Debentures, upon any distribution thereof to holders of
the Preferred Securities.
Section 4. Payment of Expenses. Each of the Trust and the Company
jointly and severally covenants and agrees with the several Underwriters to pay
or cause to be paid the following: (i) the
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<PAGE> 16
fees, disbursements and expenses of their counsel and accountants in connection
with the registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, the Pricing Agreement, the Declaration, the
Amended Declaration, the Indenture, the Junior Subordinated Debentures, the
Guarantee, any Blue Sky survey, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase,
sale and delivery of the Preferred Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities and insurance laws as provided in Section 3(b) hereof, including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and in connection with the Blue Sky survey; (iv) any
fees charged by securities rating services for rating the Securities; (v) any
filing fees incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Preferred Securities;
(vi) any fees and expenses in connection with listing on one or more securities
exchanges and under the Exchange Act of the Preferred Securities and, if
applicable, any Junior Subordinated Debentures distributed to holders of the
Preferred Securities; (vii) the cost of preparing certificates, if any, for the
Preferred Securities and any Junior Subordinated Debentures; (viii) the cost
and charges of any transfer agent or registrar or dividend disbursing agent;
(ix) the cost of qualifying the Preferred Securities and the Junior
Subordinated Debentures with DTC; (x) the cost and charges of any conversion
agent; (xi) the fees and expenses of the Debenture Trustee, the Guarantee
Trustee and the trustees of the Trust and the fees and disbursements of their
counsel; and (xii) all other costs and expenses incident to the performance of
its obligations hereunder and under any Over-allotment Option which are not
otherwise specifically provided for in this Section 4. It is understood,
however, that, except as provided in this Section 4, Section 6 and Section 8
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees and disbursements of their own counsel, transfer taxes on
resale of any of the Preferred Securities by them, and any advertising expenses
connected with any offers they may make.
Section 5. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters under the Pricing Agreement shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties of the Trust and the Company in or incorporated
by reference in the Pricing Agreement are, at and as of each Time of Delivery,
true and correct, the condition that the Trust and the Company shall have
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<PAGE> 17
performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus Supplement or, if the Company shall
have elected to rely on Rule 434 under the Act, the Term Sheet and any
Rule 434 (c) (2) Prospectus required by Rule 434 (c) (2) under the
Act, shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed therefor by Section 3(a)
hereof; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission
shall have been complied with to the Representatives' reasonable
satisfaction;
(b) Brown & Wood LLP, counsel for the Underwriters, shall
have furnished to the Representatives such opinion or opinions, dated
each Time of Delivery, with respect to the incorporation of the
Company and the formation of the Trust, the validity of the Preferred
Securities and the Junior Subordinated Debentures being delivered at
each Time of Delivery and with respect to the Registration Statement,
the Prospectus and such other related matters as the Representatives
may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them
to pass upon such matters (in rendering such opinion or opinions,
Brown & Wood LLP may rely as to matters of Texas law upon the opinions
of Vinson & Elkins L.L.P. and of the General Counsel, the Deputy
General Counsel or the Associate General Counsel - Corporate/Finance
of the Company referred to in subsections 5(c) and 5(d), respectively,
and as to matters of Delaware law upon the opinion of Richards, Layton
& Finger, P.A., referred to in subsection 5(e));
(c) Vinson & Elkins L.L.P., counsel for the Company,
shall have furnished to the Representatives their written opinion (in
rendering such opinion, Vinson & Elkins L.L.P. may rely as to matters
of Delaware law upon the opinion of Richards, Layton & Finger, P.A.,
referred to in subsection 5(e)), dated each Time of Delivery, in form
and substance satisfactory to the Representatives, to the effect that:
(i) The Declaration and the Amended Declaration
have each been duly and validly authorized, executed and
delivered by the Company and the Declaration and the Amended
Declaration each conforms in all material respects to the
description thereof contained in the Prospectus;
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<PAGE> 18
(ii) All of the issued and outstanding Common
Securities of the Trust are owned of record directly or
indirectly by American General, free and clear of all liens
and encumbrances known to such counsel;
(iii) This Agreement and the Pricing Agreement have
each been duly authorized, executed and delivered by each of
the Trust and the Company;
(iv) The issue and sale by the Trust of the
Preferred Securities and Common Securities being delivered at
such Time of Delivery, the purchase by the Trust of the Junior
Subordinated Debentures being purchased at such Time of
Delivery, the exchange by the Trust of Junior Subordinated
Debentures for such Preferred Securities, the compliance by
the Trust with all of the provisions of this Agreement and the
Pricing Agreement, and the consummation of the other
transactions contemplated herein and therein will not result
in any violation of the provisions of this Agreement, the
Pricing Agreement, the Amended Declaration or the Certificate
of Trust or any statute, or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over the Trust or any of its
properties (other than any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Trust or any of its properties solely as
a result of the Trust's affiliation with the Company or its
subsidiaries); and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
by the Trust of the Preferred Securities and the Common
Securities being delivered at such Time of Delivery, the
purchase by the Trust of the Junior Subordinated Debentures
being purchased at such Time of Delivery, the exchange by the
Trust of Junior Subordinated Debentures for such Preferred
Securities, or the consummation by the Trust of the other
transactions contemplated by this Agreement and the Pricing
Agreement, other than any such consent, approval,
authorization, order, registration or qualification of or with
any such court or governmental agency or body having
jurisdiction over the Trust or any of its properties solely as
a result of the Trust's affiliation with the Company or its
subsidiaries and except such as have been obtained under the
Act and the Trust Indenture Act prior to such Time of Delivery
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
"blue sky" laws or insurance laws in connection with the
purchase and distribution of the Preferred Securities by the
Underwriters;
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<PAGE> 19
(v) The statements set forth in the Prospectus
under the captions "Description of Junior Subordinated
Debentures", "Description of Preferred Securities",
"Description of Guarantees", "Relationship among the Preferred
Securities, the Corresponding Junior Subordinated Debentures
and the Guarantee", "Description of Common Stock",
"Description of Preferred Stock", and any similar caption in
the Prospectus as amended with respect to the Preferred
Securities, insofar as they purport to constitute a summary of
the terms of the Junior Subordinated Debentures, the Preferred
Securities, the Guarantee, the Common Stock, and the Preferred
Stock, respectively, are accurate summaries in all material
respects and fairly present in all material respects the
information set forth therein;
(vi) Such counsel confirms their opinion filed as
Exhibit 8 to the Registration Statement and the information in
the Prospectus under "Certain Federal Income Tax
Consequences", to the extent that it constitutes matters of
law, summaries of legal matters, documents or proceedings or
legal conclusions, is correct in all material respects;
(vii) The Junior Subordinated Debentures have been
duly and validly authorized and, when executed and
authenticated pursuant to the Indenture and issued and
delivered against payment therefor as contemplated by this
Agreement and the Pricing Agreement, will be duly executed,
authenticated, issued and delivered and will constitute valid
and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity
principles and will be entitled to the benefits provided by
the Indenture; the Junior Subordinated Debentures are in the
form authorized in or pursuant to the Indenture; the Indenture
has been duly authorized, executed and delivered by the
Company and (assuming the Indenture has been duly authorized,
executed and delivered by the Debenture Trustee) constitutes a
valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and
to general equity principles; the Indenture has been duly
qualified under the Trust Indenture Act; and the Junior
Subordinated Debentures and the Indenture conform
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in all material respects to the description thereof contained
in the Prospectus;
(viii) The Guarantee has been duly and validly
authorized by the Company and, when executed and delivered as
contemplated by this Agreement and the Pricing Agreement, will
have been duly executed, issued and delivered, and (assuming
the Guarantee has been duly authorized, executed and delivered
by the Guarantee Trustee) will constitute a valid and legally
binding obligation of the Company, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and
to general equity principles; and the Guarantee conforms in
all material respects to the description thereof contained in
the Prospectus;
(ix) The Registration Statement is effective under
the Act and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose
has been instituted or threatened by the Commission;
(x) The documents incorporated by reference in
the Prospectus (other than the financial statements and
related schedules therein, as to which such counsel need
express no opinion), when they became effective or were filed
with the Commission, as the case may be, appeared on their
face to comply as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder;
(xi) The Registration Statement, at the time it
became effective, and as amended or supplemented as of the
date of the Pricing Agreement (or, if the Company shall have
elected to rely on Rule 434 under the Act, as of the time the
Term Sheet was filed with the Commission pursuant to Rule
434(b) (7) under the Act) (other than the financial statements
and other financial information included therein or the Forms
T-1, as to which no opinion or belief need be expressed),
appeared on its face to be appropriately responsive in all
material respects to the applicable requirements of the Act,
the Trust Indenture Act and the respective rules and
regulations of the Commission thereunder; and
(xii) Neither the Trust nor the Company is or,
after giving effect to the issue and sale of the Preferred
Securities and the Junior Subordinated Debentures, will
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<PAGE> 21
be, an "investment company" as such term is defined in the
Investment Company Act.
In addition, such opinion shall also contain a statement that
no facts have come to such counsel's attention that lead them to
believe that the Registration Statement (other than the financial
statements and other financial data contained therein, as to which
such counsel need not express any comment), at the time it became
effective, and if an amendment to the Registration Statement or an
annual report on Form 10-K has been filed by the Company with the
Commission subsequent to the effectiveness of the Registration
Statement, then at the time each such amendment became effective and
the most recent such Form 10-K was filed, as the case may be, and as
of the date of the Pricing Agreement, contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus (other than the financial statements
and other financial data contained therein, as to which such counsel
need not express any comment), as amended or supplemented to reflect
the terms of the offering of the Securities by the Prospectus
Supplement or Term Sheet, as the case may be, and as amended or
supplemented at the Time of Delivery, contains an untrue statement of
a material fact or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(d) The General Counsel, the Deputy General Counsel
or the Associate General Counsel - Corporate/Finance of the Company
shall have furnished to the Representatives his or her written
opinion, dated each Time of Delivery, in form and substance
satisfactory to the Representatives, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Texas, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus;
(ii) Each of the Selected Subsidiaries has been duly
incorporated and is validly existing as a business corporation or an
insurer, as the case may be, in good standing under the laws of its
jurisdiction of incorporation, provided, however, that "good standing"
means with respect to any corporation incorporated under the laws of
the State of Indiana that such corporation has filed its most recent
annual report required by the laws of the State of Indiana and
Articles of Dissolution have not been filed in the State of Indiana
with respect to such corporation; to the knowledge of such counsel,
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<PAGE> 22
each of the Company and the Selected Subsidiaries has been duly
qualified as a foreign corporation for the transaction of business or
licensed to transact business as an insurance company, as the case may
be, and is in good standing under the laws of each other jurisdiction
in which it owns or leases substantial properties, or conducts
business, and where the failure so to qualify would have a material
adverse effect on the business of the Company and its subsidiaries
taken as a whole; all of the outstanding shares of capital stock of
each Selected Subsidiary have been duly authorized and validly issued,
are fully paid and non-assessable, and (except for any directors'
qualifying shares) are owned, directly or indirectly, by the Company,
free and clear of all liens and encumbrances; and, to the knowledge of
such counsel, each of the Company and the Selected Subsidiaries has
all required authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and
bodies (including, without limitation, each insurance regulatory
authority having jurisdiction over the Company or any insurance
subsidiary of the Company) to own or lease its properties and to
conduct its business as described in the Prospectus, except such
authorizations, approvals, orders, licenses, certificates and permits
which, if not obtained, would not have a material adverse effect on
the business of the Company and its subsidiaries taken as a whole
(such counsel being entitled to rely in respect of the opinion in this
clause (ii) upon opinions (in form and substance reasonably
satisfactory to the Representatives) of local counsel and of counsel
for the Selected Subsidiaries, such counsel being acceptable to
counsel for the Underwriters, copies of which shall be furnished to
the Representatives; and in respect of matters of fact upon
certificates of officers of the Company or the Selected Subsidiaries,
provided that such counsel shall state that he or she believes that he
or she is justified in relying upon such opinions and certificates);
(iii) To the knowledge of such counsel, there are no
legal or governmental proceedings pending or threatened of a character
that are required to be disclosed in the Registration Statement and
Prospectus, other than as disclosed therein; and to the knowledge of
such counsel, there are no contracts, indentures, mortgages, deeds of
trust, loan agreements or other documents of a character required to
be described in the Registration Statement or Prospectus (or required
to be filed under the Exchange Act if upon such filing they would be
incorporated by reference therein) or to be filed as exhibits to the
Registration Statement that are not described and filed as required;
(iv) The issue and sale by the Trust of the Preferred
Securities and Common Securities being delivered at such Time of
Delivery, the purchase by the Trust of the Junior
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<PAGE> 23
Subordinated Debentures being purchased at such Time of Delivery, the
exchange by the Trust of Junior Subordinated Debentures for such
Preferred Securities, the compliance by the Trust with all of the
provisions of this Agreement and the Pricing Agreement, and the
consummation of the other transactions contemplated herein and therein
will not result in any violation of any statute or any order, rule or
regulation known to such counsel of any court or governmental agency
or body having jurisdiction over the Trust or any of its properties
solely as a result of the Trust's affiliation with the Company or its
subsidiaries, which violation would have a material adverse effect on
the business, financial condition, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale by the Trust of the Preferred
Securities and Common Securities being delivered at such Time of
Delivery, the purchase by the Trust of the Junior Subordinated
Debentures being purchased at such Time of Delivery, the exchange by
the Trust of Junior Subordinated Debentures for such Preferred
Securities, or the consummation by the Trust of the other transactions
contemplated by this Agreement or the Pricing Agreement solely as a
result of the Trust's affiliation with the Company or its
subsidiaries, except such as have been obtained under the Act and the
Trust Indenture Act prior to such Time of Delivery and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or "blue sky" laws or insurance laws
in connection with the purchase and distribution of the Preferred
Securities by the Underwriters; and
(v) The issue and sale by the Trust of the Preferred
Securities and Common Securities being delivered at such Time of
Delivery, the issue by the Company of the Guarantee, the issue and
sale by the Company of the Junior Subordinated Debentures, the
exchange by the Trust of Junior Subordinated Debentures for such
Preferred Securities, the compliance by each of the Trust and the
Company with all of the provisions of this Agreement, the Pricing
Agreement, the Declaration, the Amended Declaration, the Certificate
of Trust, the Guarantee, the Junior Subordinated Debentures and the
Indenture and the consummation of the other transactions herein and
therein contemplated will not (A) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument for money borrowed to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, or (B)
result
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<PAGE> 24
in any violation of (x) the provisions of the Restated Articles of
Incorporation or the Amended and Restated By-Laws of the Company or
(y) any statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties, in
any manner which, in the case of clauses (A) and (B)(y), would have a
material adverse effect on the business of the Company and its
subsidiaries taken as a whole (such counsel being entitled to rely in
respect of the opinion in this clause (v) with respect to subsidiaries
upon opinions (in form and substance reasonably satisfactory to the
Representatives) of counsel for the subsidiaries, such counsel being
acceptable to counsel for the Underwriters, copies of which shall be
furnished to the Representatives, provided that such counsel shall
state that he or she believes that he or she is justified in relying
upon such opinions); and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue by the Company
of the Guarantee, the issue and sale by the Company of the Junior
Subordinated Debentures, the exchange by the Trust of Junior
Subordinated Debentures for such Preferred Securities, or the
consummation by the Company of the other transactions contemplated by
this Agreement, the Pricing Agreement, the Indenture, the Amended
Declaration, the Certificate of Trust or the Guarantee, except such as
have been obtained under the Act and the Trust Indenture Act prior to
such Time of Delivery and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or "blue sky" laws or insurance laws in connection with the
purchase and distribution of the Preferred Securities by the
Underwriters;
(e) Richards, Layton & Finger, P.A., special Delaware counsel to
the Trust and the Company, shall have furnished to the Representatives their
written opinion, dated each Time of Delivery, in form and substance
satisfactory to the Representatives, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Business Trust Act, and, under the Amended Declaration and the
Delaware Business Trust Act, has the trust power and authority to own
its properties and conduct its business as described in the
Prospectus; and all filings required under the laws of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made;
(ii) The Amended Declaration constitutes a valid and
binding obligation of the Company and the trustees of the Trust and is
enforceable against the Company and such trustees
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<PAGE> 25
in accordance with its terms; and the Preferred Securities being
delivered at such Time of Delivery have the rights set forth in the
Amended Declaration subject to the effect upon the Amended Declaration
of (a) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance and transfer, and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (b) principles of equity, including applicable
law relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (c) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification;
(iii) Under the Amended Declaration and the Delaware
Business Trust Act, the Trust has the trust power and authority to (a)
execute and deliver, and to perform its obligations under this
Agreement and the Pricing Agreement and (b) issue and perform its
obligations under the Preferred Securities and the Common Securities
being delivered at such Time of Delivery;
(iv) Under the Amended Declaration and the Delaware
Business Trust Act, the execution and delivery by the Trust of this
Agreement and the Pricing Agreement, and the performance by the Trust
of its obligations hereunder, have been duly authorized by all
necessary trust action on the part of the Trust;
(v) The Common Securities of the Trust being delivered at
such Time of Delivery have been duly authorized by the Amended
Declaration and are validly issued undivided beneficial interests in
the assets of the Trust; the Preferred Securities being delivered at
such Time of Delivery have been duly and validly authorized by the
Amended Declaration and are duly and validly issued and, subject to
the qualifications set forth herein, fully paid and non-assessable
beneficial interests in the assets of the Trust; the holders of such
Preferred Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware; provided that such
counsel may note that such holders may be obligated, pursuant to the
Amended Declaration, to (a) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from
transfers or exchanges of certificates representing such Preferred
Securities and the issuance of replacement certificates and (b)
provide security and indemnity in connection with requests of or
directions to the Property Trustee (as defined in the Amended
Declaration) to exercise its rights and powers under the Amended
Declaration;
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<PAGE> 26
(vi) Under the Amended Declaration and the Delaware
Business Trust Act, the issuance of the Preferred Securities and the
Common Securities being delivered at such Time of Delivery is not
subject to preemptive or other similar rights;
(vii) The execution, delivery and performance of this
Agreement, the Pricing Agreement, the Declaration, the Amended
Declaration, the Preferred Securities and the Common Securities, the
consummation of the transactions contemplated herein and therein, and
the compliance by the Trust with its obligations hereunder and
thereunder do not and will not result in any violation of the Amended
Declaration, the Certificate of Trust or any applicable Delaware law
or administrative regulation thereunder;
(viii) Except as previously made or obtained, as the case
may be, no filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Delaware court or
Delaware governmental authority or agency is necessary or required to
be obtained by the Trust solely in connection with the execution or
delivery by the Trust of this Agreement or the Pricing Agreement, or
the performance by the Trust of the transactions contemplated hereby
or thereby, including the issuance and sale of the Preferred
Securities and the Common Securities being delivered at such Time of
Delivery; and
(ix) The holders of the Preferred Securities being
delivered at such Time of Delivery (other than those holders who
reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware solely as
a result of their participation in the Trust, and the Trust will not
be liable for any income tax imposed by the State of Delaware.
(f) Richards, Layton & Finger, P.A., special Delaware counsel to
Bankers Trust (Delaware), as Delaware Trustee under the Amended Declaration,
shall have furnished to the Representatives their written opinion, dated each
Time of Delivery, in form and substance satisfactory to the Representatives, to
the effect that Bankers Trust (Delaware) has been duly incorporated and is
validly existing in good standing as a banking corporation under the laws of
the State of Delaware and has the corporate power to act as trustee of a
Delaware business trust under the laws of the State of Delaware, 12 Del.C.
Section 3801, et seq.;
(g) On the date of the Pricing Agreement prior to the execution
thereof and also at each Time of Delivery, the independent certified public
accountants who have audited the consolidated financial statements of the
Company and its subsidiaries included or incorporated by reference in the
Registration Statement shall have furnished to the Representatives
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a letter or letters dated such Time of Delivery, with respect to such
consolidated financial statements, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in Annex II
hereto;
(h) Since the date of the Pricing Agreement and since the
respective dates as of which information is given in the Prospectus as amended
prior to the date of the Pricing Agreement, there shall have been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the business, financial condition, shareholders' equity or
results of operations of the Trust or of the Company and its subsidiaries taken
as a whole, whether or not arising in the ordinary course of business, the
effect of which is, in the reasonable judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Preferred Securities on the terms
and in the manner contemplated in the Prospectus;
(i) On or after the date of the Pricing Agreement, no downgrading
shall have occurred in the rating accorded the Preferred Securities or any of
the Company's long-term debt securities or preferred stock by either Moody's
Investors Service, Inc. or Standard & Poor's Ratings Services;
(j) On or after the date of the Pricing Agreement, there shall not
have occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or any other
exchange on which application shall have been made to list the Preferred
Securities; (ii) a suspension or material limitation in trading in the
Preferred Securities or any of the Company's securities on the New York Stock
Exchange or any other national securities exchange; (iii) a general moratorium
on commercial banking activities in New York declared by either Federal or New
York State authorities; or (iv) an outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
subsection 5(i), in the reasonable judgment of the Representatives, makes it
impracticable to proceed with the public offering or the delivery of the
Initial Preferred Securities or the Option Preferred Securities, if any, or
both on the terms and in the manner contemplated in the Prospectus;
(k) The Amended Declaration, the Guarantee and the Indenture shall
have been executed and delivered, in each case in a form reasonably
satisfactory to the Representatives;
(l) The Trust and the Company shall have furnished or caused to be
furnished to the Representatives at each Time of Delivery, a certificate or
certificates of the Trust and the Company satisfactory to the Representatives,
signed by the administrative
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<PAGE> 28
trustees of the Trust and the Chairman, the Vice Chairman, the President or a
Vice President of the Company, as the case may be, as to the accuracy of the
representations and warranties of the Trust and the Company herein at and as of
such Time of Delivery, as to the performance by the Trust and the Company of
all of their respective obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in the first two clauses of
subsection 5(a) and in subsection 5(h) and as to such other matters as the
Representatives may reasonably request; and
(m) If the Pricing Supplement specifies that the Preferred
Securities are to be listed on a securities exchange, the Preferred Securities,
at each Time of Delivery, shall have been duly listed, subject to notice of
issuance, on such securities exchange.
Section 6. Indemnification.
(a) The Trust and the Company, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, as incurred, to
which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in
connection with investigating, preparing for or defending against any
such action or claim, commenced or threatened; provided, however, that
neither the Trust nor the Company shall be liable in any such case to
the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement, the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any
Underwriter through the Representatives expressly for use therein; and
provided, further, that neither the Trust nor the Company shall be
liable to any Underwriter under the indemnity agreement in this
subsection (a) with respect to any Preliminary Prospectus to the
extent that any such loss, claim, damage or liability of such
Underwriter results from the fact that such Underwriter sold Preferred
Securities to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the
Prospectus as then amended or supplemented (excluding documents
incorporated by
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<PAGE> 29
reference therein) in any case where such delivery is required by the
Act if the Trust or the Company has previously furnished copies
thereof to such Underwriter and the loss, claim, damage or liability
of such Underwriter results from an untrue statement or omission or
alleged untrue statement or omission of a material fact contained in
the Preliminary Prospectus which was corrected in the Prospectus (or
the Prospectus as amended or supplemented).
(b) Each Underwriter will indemnify and hold harmless the
Trust and the Company against any losses, claims, damages or
liabilities, as incurred, to which the Trust or the Company may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement,
the Prospectus, or any such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Trust and
the Company by or on behalf of such Underwriter through the
Representatives expressly for use therein, and will reimburse the
Trust and the Company for any legal or other expenses reasonably
incurred by the Trust or the Company in connection with investigating,
preparing for or defending against any such action or claim, commenced
or threatened.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement or threat of
any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under such
subsection, notify such indemnifying party in writing of the
commencement or threat thereof; but the omission so to notify such
indemnifying party shall not relieve it from any liability which it
may have to any indemnified party otherwise than under such
subsection. In case any such action shall be commenced or threatened
against any indemnified party and it shall notify the indemnifying
party of the commencement or threat thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish and so elect within a reasonable time after receipt of such
notification, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
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indemnified party, be counsel to the indemnifying party and it being
understood that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (provided that local counsel
may be retained to the extent necessary) for all such indemnified
parties (treating the indemnified party and the persons referred to in
subsection (e) below to which the provisions of this Section 6 shall
extend as a single indemnified party for such purpose)), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include any statement as to, or
an admission of, fault, culpability or a failure to act, by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this Section 6
is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Trust and the Company on the one hand and the
Underwriters on the other hand from the offering of the Preferred
Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection
(c) above or is not entitled to receive the indemnification provided
for in subsection (a) above because of the second proviso thereof,
then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but
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also the relative fault of the Trust and the Company on the one hand
and the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by
the Trust and the Company on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total
net proceeds from such offering (before deducting expenses) received
by the Trust bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Trust and the Company on the one hand or the Underwriters on the
other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission, including, with respect to any Underwriter, the extent to
which such losses, claims, damages or liabilities (or actions in
respect thereof) with respect to any Preliminary Prospectus result
from the fact that such Underwriter sold Preferred Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus as then amended or
supplemented (excluding documents incorporated by reference) in any
case where such delivery is required by the Act, if either the Trust
or the Company has previously furnished copies thereof to such
Underwriter and the loss, claim, damage or liability results from an
untrue statement or omission or alleged untrue statement or omission
of a material fact contained in the Preliminary Prospectus which was
corrected in the Prospectus (or the Prospectus as amended or
supplemented). The Trust, the Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d).
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, preparing for or defending
against any such action or claim. Notwithstanding the provisions of
this subsection (d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which
the Preferred Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to
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<PAGE> 32
pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent is representation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this
subsection (d) to contribute are several in proportion to their
respective underwriting obligations with respect to the Preferred
Securities and not joint.
(e) The obligations of the Trust and the Company under
this Section 6 shall be in addition to any liability which the Trust
and the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any
liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer,
trustee and director of the Trust and of the Company, as the case may
be, and to each person, if any, who controls the Trust or the Company
within the meaning of the Act.
Section 7. Default of Underwriters.
(a) If any Underwriter shall default in its obligation to
purchase the Initial Preferred Securities or Option Preferred
Securities which it has agreed to purchase under the Pricing
Agreement, the Representatives may in their discretion arrange for
themselves or another party or other parties to purchase such Initial
Preferred Securities or Option Preferred Securities on the terms
contained herein. If within thirty-six hours after such default by
any Underwriter the Representatives do not arrange for the purchase of
such Initial Preferred Securities or Option Preferred Securities, as
the case may be, then the Trust and the Company shall be entitled to a
further period of thirty-six hours within which to procure another
party or other parties satisfactory to the Representatives to purchase
such Initial Preferred Securities or Option Preferred Securities on
such terms. In the event that, within the respective prescribed
periods, the Representatives notify the Trust and the Company that
they have so arranged for the purchase of such Initial Preferred
Securities or Option Preferred Securities, as the case may be, or the
Trust and the Company notify the Representatives that they have so
arranged for the purchase of such Initial Preferred Securities or
Option Preferred Securities, as the case may be, the Representatives
or the Trust and the Company shall have the right to postpone the
applicable Time of Delivery for such Initial Preferred Securities or
Option Preferred Securities for a period of not more than seven days,
in order to effect whatever changes may thereby be made
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<PAGE> 33
necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Trust and the Company agree
to file promptly any amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term "Underwriter"
as used in this Agreement and the Pricing Agreement shall include any
person substituted under this Section with like effect as if such
person had originally been a party to the Pricing Agreement.
(b) If, after giving effect to any arrangements for the
purchase of the Initial Preferred Securities or Option Preferred
Securities, as the case may be, of a defaulting Underwriter or
Underwriters by the Representatives and the Trust and the Company as
provided in subsection (a) above, the aggregate number of such Initial
Preferred Securities or Option Preferred Securities which remains
unpurchased does not exceed ten percent of the aggregate number of the
Initial Preferred Securities or Option Preferred Securities, as the
case may be, to be purchased at the respective Time of Delivery, then
the Trust and the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Initial Preferred
Securities or Option Preferred Securities, as the case may be, which
such Underwriter agreed to purchase under the Pricing Agreement and,
in addition, to require each non-defaulting Underwriter to purchase
its pro rata share (based on the number of the Initial Preferred
Securities or Option Preferred Securities, as the case may be, which
such Underwriter agreed to purchase under the Pricing Agreement) of
the Initial Preferred Securities or Option Preferred Securities, as
the case may be, of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Initial Preferred Securities or Option Preferred
Securities, as the case may be, of a defaulting Underwriter or
Underwriters by the Representatives and the Trust and the Company as
provided in subsection (a) above, the aggregate number of Initial
Preferred Securities or Option Preferred Securities, as the case may
be, which remains unpurchased exceeds ten percent of the aggregate
number of the Initial Preferred Securities or Option Preferred
Securities, as the case may be, to be purchased at the respective Time
of Delivery, as determined as set forth in subsection (b) above, or if
the Trust and the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to
purchase Initial Preferred Securities or Option Preferred Securities,
as the case may be, of a defaulting Underwriter or Underwriters, then
the Pricing Agreement shall thereupon terminate, without liability on
the
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<PAGE> 34
part of any non-defaulting Underwriter or the Trust or the Company,
except for the expenses to be borne by the Trust, the Company and the
Underwriters as provided in Section 4 hereof and the indemnity and
contribution agreements in Section 6 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
Section 8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Trust and the Company and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Trust
or the Company, or any officer, trustee or director or controlling person of
the Trust or the Company, and shall survive delivery of and payment for the
Preferred Securities. If the Pricing Agreement shall be terminated pursuant to
Section 7 hereof, neither the Trust nor the Company shall then be under any
liability to any Underwriter except as provided in Section 4 and Section 6
hereof; but, if for any other reason Preferred Securities are not delivered by
or on behalf of the Trust as provided herein, the Trust and the Company,
jointly and severally, will reimburse the Underwriters through the
Representatives for all reasonable out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Preferred Securities
not so delivered, but the Trust and the Company shall then be under no further
liability to any Underwriter with respect to such Preferred Securities except
as provided in Section 4 and Section 6 hereof.
Section 9. Parties and Notices.
(a) In all dealings hereunder, the Representatives shall act on
behalf of each of the Underwriters, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by such Representatives jointly or by such of the
Representatives, if any, as may be designated for such purpose in the Pricing
Agreement; and
(b) All statements, requests, notices and agreements hereunder
shall be in writing, or by telegram or facsimile transmission if promptly
confirmed in writing, and if to the Underwriters shall be sufficient in all
respects if delivered or sent by registered mail to the Representatives, as
such, at the address of the Representatives designated for such purpose as set
forth in the Pricing Agreement; and if to the Trust or the Company shall be
sufficient in all respects if delivered or sent by registered mail to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however,
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<PAGE> 35
that any notice to an Underwriter pursuant to Section 6(c) hereof shall be
delivered or sent by registered mail to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Trust and the Company by
the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
Section 10. Successors. This Agreement and the Pricing Agreement
shall be binding upon, and inure solely to the benefit of, the Underwriters,
the Trust, the Company and, to the extent provided in Section 6 and Section 8
hereof, the officers, trustees and directors of the Trust and the Company and
each person who controls the Trust, the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or the Pricing Agreement. No purchaser of any of the Preferred
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
Section 11. Governing Law. This Agreement and the Pricing Agreement
shall be governed by, and construed in accordance with, the laws of the State
of New York applicable to agreements made and to be performed in such State.
Section 12. Time of the Essence. Time shall be of the essence of the
Pricing Agreement.
Section 13. Counterparts. The Pricing Agreement may be executed by
any one or more of the parties thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
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<PAGE> 36
ANNEX I
PRICING AGREEMENT
[Name of Representative]
[Name(s) of Co-Representative(s),]
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o [Name of Representative]
[Representative's Address]
, 19..
Ladies and Gentlemen:
American General Capital [ ], a statutory business trust created under
the laws of the State of Delaware (the "Trust"), and American General
Corporation, a Texas corporation, as depositor of the Trust and as guarantor
(the "Company"), propose, subject to the terms and conditions stated herein and
in the Underwriting Agreement filed as an exhibit to the registration statement
filed by the Trust and the Company on Form S-3 (Nos. 333-40583, 333-40583-01,
333- 40583-02, 333-40583-03 and 333-40583-04) and attached hereto (the
"Underwriting Agreement"), to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters") the Preferred Securities specified in
Schedule II hereto, consisting of the Initial Preferred Securities and any
Option Preferred Securities granted to the Underwriters which the Underwriters
elect to purchase.
If so specified in Schedule II hereto, the Preferred Securities are
exchangeable into Junior Subordinated Debentures of the Company or other
property or securities specified in Schedule II hereto. The Preferred
Securities will be guaranteed by the Company on a limited basis as to the
payment of Distributions and as to payments on liquidation or redemption (the
"Guarantee").
Each of the provisions of the Underwriting Agreement is incorporated
herein by reference in its entirety, and shall be deemed to be a part of this
Pricing Agreement to the same extent as if such provisions had been set forth
in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 1 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented with respect to the Preferred Securities. Each
reference to the Representatives herein and in the provisions of the
Underwriting Agreement so incorporated by reference shall be
-1-
<PAGE> 37
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The Representatives
designated to act on behalf of the Representatives and on behalf of each of the
Underwriters pursuant to Section 9 of the Underwriting Agreement and the
address of the Representatives referred to in such Section 9 are set forth in
Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Preferred Securities, in the
form heretofore delivered to you, is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Trust agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Trust, at the time and
place and at the purchase price to the Underwriters set forth in Schedule II
hereto, the number of Initial Preferred Securities set forth opposite the name
of such Underwriter in Schedule I hereto and, (b) in the event and to the
extent that the Underwriters shall exercise the option, if any, to purchase
Option Preferred Securities, as provided below, the Trust agrees to issue and
sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Trust at the purchase price to
the Underwriters set forth in Schedule II hereto that portion of the number of
Option Preferred Securities as to which such option shall have been exercised.
If so specified in Schedule II, the Trust hereby grants to each of the
Underwriters the right to purchase at their option up to the number of Option
Preferred Securities set forth opposite the name of such Underwriter in
Schedule I hereto on the terms referred to in the preceding paragraph for the
sole purpose of covering over-allotments, if any, in the sale of the Initial
Preferred Securities. Any such option to purchase Option Preferred Securities
may be exercised by written notice from the Representatives to the Trust given
within a period of 30 calendar days after the date of this Pricing Agreement,
setting forth the aggregate number of Option Preferred Securities to be
purchased and the date on which such Option Preferred Securities are to be
delivered, as determined by the Representatives, but in no event earlier than
the First Time of Delivery or, unless the Representatives and the Trust
otherwise agree in writing, no earlier than two or later than ten business days
after the date of such notice.
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<PAGE> 38
If the foregoing is in accordance with your understanding, please sign
and return to us one counterpart hereof for the Trust and one for the Company,
one for each of the Representatives and one for each counsel, and upon
acceptance hereof by you, on behalf of each of the Underwriters, this letter
and such acceptance hereof, including the provisions of the Underwriting
Agreement incorporated herein by reference, shall constitute a binding
agreement between each of the Underwriters and the Trust and the Company. It
is understood that your acceptance of this letter on behalf of each of the
Underwriters is or will be pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the Trust
and the Company for examination, upon request, but without warranty on the part
of the Representatives as to the authority of the signers thereof.
Very truly yours,
American General Capital [ ],
By: American General Corporation,
as depositor
By:
-------------------------------
Name:
Title:
American General Corporation
By:
---------------------------------
Name:
Title:
Accepted as of the date hereof:
[Name of Representative]
[Name(s) of Co-Representative(s)]
By:
--------------------------------
[Name:
Title:
Name of Representative Partnership]
On behalf of each of the Underwriters
-3-
<PAGE> 39
SCHEDULE I
<TABLE>
<CAPTION>
[MAXIMUM NUMBER
NUMBER OF OF OPTION
INITIAL PREFERRED PREFERRED
SECURITIES TO BE SECURITIES WHICH
UNDERWRITER PURCHASED MAY BE
PURCHASED
<S> <C> <C>
[Name of Representative] . . . . . . . . . . . . . . . . . .
[Name(s) of Co-Representative(s)] . . . . . . . . . . . . . .
[Names of other Underwriters] . . . . . . . . . . . . . . . .
------------------ --------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ]
================== ====================
</TABLE>
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<PAGE> 40
SCHEDULE II
Title of Preferred Securities:
Filing Date:
[Time and date Prospectus Supplement and/or Term Sheet to be filed pursuant to
Rule 424 (b)]
Number of Preferred Securities:
Number of Initial Preferred Securities:
Maximum Number of Option Preferred Securities, if any:
Distribution Payments: [Monthly, Quarterly Semi-Annually, Other], on the
____ day of [the month] [____, ____, ____ and ____ in
each year] [____ and ____ in each year], commencing
..............., 19..., [at an annual rate of .....%
of the liquidation preference per share]
Record Dates:
Liquidation Preference: $........ per share, plus accumulated and unpaid
Distributions to the date of payment
Exchange Provisions:
Redemption Provisions:
Initial Offering Price to Public: $........ per Preferred Security
Purchase Price by Underwriters: $........ per Preferred Security
Underwriters' Compensation: $........ per Preferred Security
Method of and Specified Funds for Payment of Purchase Price and Underwriters'
Compensation:
By wire transfer to bank accounts specified by the Trust and the
Representative in same day funds
Form of Preferred Securities:
Book-entry-only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to each Time of Delivery at the office
of DTC.
[Securities Exchange: [NYSE]]
Time of Delivery: ........ a.m. (New York City time), ................., 19..
Closing Location: Brown & Wood LLP
One World Trade Center
New York, New York 10048
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.:
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<PAGE> 41
[Other Terms]:
Title of Junior Subordinated Debentures:
Aggregate Principal Amount:
Interest Payments: [Monthly, Quarterly Semi-Annually, Other], on the
____ day of [the month] [____, ____, ____ and ____ in
each year] [____ and ____ in each year], commencing
..............., 19..., [at an annual rate of .....%]
Record Dates:
Maturity Date:
Redemption Provisions:
Sinking Fund Provisions:
Extension Provisions:
* A DESCRIPTION OF PARTICULAR TAX, ACCOUNTING OR OTHER UNUSUAL
FEATURES OF THE PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES
SHOULD BE SET FORTH, OR REFERENCED TO AN ATTACHED AND ACCOMPANYING DESCRIPTION,
IF NECESSARY TO THE TRUST'S AND THE COMPANY'S UNDERSTANDING OF THE TRANSACTION
CONTEMPLATED. SUCH A DESCRIPTION MIGHT APPROPRIATELY BE IN THE FORM IN WHICH
SUCH FEATURES WILL BE DESCRIBED IN THE PROSPECTUS SUPPLEMENT FOR THE OFFERING.
-6-
<PAGE> 42
ANNEX II
Pursuant to subsection 5(f) of the Underwriting Agreement, the
Underwriters shall have received from the independent certified public
accountants who have audited the financial statements of the Company and its
subsidiaries included or incorporated by reference in the Registration
Statement and Prospectus, one or more letters, dated as of each Time of
Delivery, each of which shall be to the effect that they are independent
auditors with respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder and which, when read
together, shall be to the further effect that:
(i) In their opinion, the consolidated financial statements
audited by them and included or incorporated by reference in the
Registration Statement and Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations thereunder;
(ii) On the basis of performing the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement on Auditing
Standards No. 71, Interim Financial Information, on any unaudited
financial statements included or incorporated by reference in the
Registration Statement and Prospectus, a reading of any other
unaudited financial statement data included or incorporated by
reference in the Registration Statement and Prospectus, a reading of
the latest available interim unaudited financial statements of the
Company and its subsidiaries ("Interim Financials"), if any, a reading
of any unaudited pro forma financial statements included or
incorporated by reference in the Registration Statement and Prospectus
and a reading of the minutes of the Company's shareholder's meetings,
the meetings of the Board of Directors, the Executive Committee of the
Board of Directors, the Audit Committee of the Board of Directors and
the Terms Committee of the Board of Directors since the end of the
most recent fiscal year with respect to which an audit report has been
issued and inquiries of and discussions with certain officials of the
Company who have responsibility for financial and accounting matters
with respect to the unaudited financial statements and any other
unaudited financial statement data included or incorporated by
reference in the Registration Statement and Prospectus, any Interim
Financials, and any unaudited pro forma financial statements included
or incorporated by reference in the Registration Statement and
Prospectus, and as to whether (1) as of a specified date not more than
three days prior to the date of the letter, there was any change in
the consolidated capital stock (other than issuances of capital stock
upon the exercise of options or for purposes of employee compensation
plans, upon earn-outs of performance shares, upon conversions of
convertible securities and upon the exercise of put options, in each
case which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in consolidated long-term debt of the Company and its
subsidiaries (except for increases due to accretion of discount on
original issue discount securities, if any) or any decrease in the
consolidated net assets of the Company and its subsidiaries (before
considering the effect of unrealized gains and losses on debt and
equity securities classified as "available-for-sale" under Statement
of Financial Accounting Standards (SFAS) No. 115) as compared with the
amounts shown on the most recent consolidated balance sheet of the
Company and its subsidiaries included or incorporated by reference in
the Registration Statement and Prospectus (the "Recent Balance Sheet")
or (2) during the period, if any, from the date of the Recent Balance
Sheet to the date of the most recent balance sheet included in the
Interim Financials (the "Interim Period") there was any decrease, as
compared with the corresponding period in the preceding year, in
consolidated total revenues or in consolidated net income of the
Company and its subsidiaries, or (3) during the period from the date
of the Interim Financials or, if there are no Interim Financials, from
the date of the Recent Balance Sheet to a specified date not more than
three days prior to the date of the letter
<PAGE> 43
there was any decrease, as compared with the corresponding period in
the preceding year, in consolidated total revenues or in consolidated
net income of the Company and its subsidiaries, which reading,
inquiries and discussions would not necessarily reveal changes in the
financial position or results of operations or inconsistencies in the
application of generally accepted accounting principles or other
matters of significance with respect to the following, nothing came to
their attention that caused them to believe that (A) any material
modifications should be made to the unaudited financial statements of
the Company and its subsidiaries included or incorporated by reference
in the Registration Statement and Prospectus for them to be in
conformity with generally accepted accounting principles or that such
unaudited financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and the related published rules and regulations
thereunder, (B) the Interim Financials, if any, are not stated on a
basis substantially consistent with that of the audited consolidated
financial statements included or incorporated by reference in the
Registration Statement and Prospectus, (C) any other unaudited
financial statement data included or incorporated by reference in the
Registration Statement and Prospectus do not agree with the
corresponding items in the unaudited financial statements from which
such data were derived or any such unaudited financial statement data
were not determined on a basis substantially consistent with the
corresponding amounts in the audited financial statements included or
incorporated by reference in the Registration Statement and
Prospectus, (D) any unaudited pro forma financial statements included
or incorporated by reference in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or
the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements, (E)(1) as
of the date of the Interim Financials, if any, and as of a specified
date not more than three days prior to the date of the letter, there
was any change in the consolidated capital stock (other than issuances
of capital stock upon the exercise of options or for purposes of
employee compensation plans, upon earn-outs of performance shares,
upon conversions of convertible securities and upon the exercise of
put options, in each case which were outstanding on the date of the
latest balance sheet included or incorporated by reference in the
Prospectus) or any increase in consolidated long-term debt of the
Company and its subsidiaries (except for increases due to accretion of
discount on original issue discount securities, if any) or any
decrease in the consolidated net assets of the Company and its
subsidiaries (before considering the effect of unrealized gains and
losses on debt and equity securities classified as "available-for
sale" under Statement of Financial Accounting Standards (SFAS) No.
115) as compared with the amounts shown on the Recent Balance Sheet or
(2) during any Interim Period, there was any decrease, as compared
with the corresponding period in the preceding year, in consolidated
total revenues or in consolidated net income of the Company and its
subsidiaries, or (3) during the period from the date of the Interim
Financials or, if there are no Interim Financials, from the date of
the Recent Balance Sheet to a specified date not more than three days
prior to the date of the letter there was any decrease, as compared
with the corresponding period in the preceding year, in consolidated
total revenues or in consolidated net income of the Company and its
subsidiaries except in each such case for (1), (2) and (3) as set
forth in or contemplated by the Registration Statement and Prospectus
or except for such exceptions as may be enumerated in such letter; and
(iii) In addition to the limited procedures referred to in clause
(ii) above, they have carried out certain other specified procedures,
not constituting an audit, with respect to certain amounts,
percentages and financial information which are derived from the
general financial and accounting records of the Company and its
subsidiaries, which are included or incorporated by reference in the
Registration Statement and Prospectus and which are specified by the
Representatives and have compared such amounts, percentages and
financial information with the financial and accounting records of the
Company and its subsidiaries and have found them to be in agreement.
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<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" in
Pre-Effective Amendment No. 1 to the Registration Statement on Form S-3 and
related Prospectuses of American General Corporation ("AGC"), American General
Capital I, American General Capital II, American General Capital III, and
American General Capital IV (Nos. 333-40583, 333-40583-01, 333-40583-02,
333-40583-03, and 333-40583-04) for the registration of $1,500,000,000 of
securities and to the incorporation by reference therein of our report dated
February 14, 1997 (except Note 2.5, as to which the date is June 17, 1997), with
respect to the consolidated financial statements and schedules of AGC included
in its Current Report on Form 8-K dated October 10, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Houston, Texas
February 9, 1998
