<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 33-62405
33-62405-01
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 29, 1995)
LOGO SunAmerica
7,000,000 PREFERRED SECURITIES
SUNAMERICA CAPITAL TRUST II
8.35% TRUST ORIGINATED PREFERRED SECURITIES SM ("TOPRS SM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
SUNAMERICA INC.
---------------
The 8.35% Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the
assets of SunAmerica Capital Trust II, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"). SunAmerica Inc., a Maryland
corporation ("SunAmerica"), will directly or indirectly own all the common
securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing common undivided beneficial
interests in the assets of the Trust. The Trust exists for the sole purpose of
issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in an equivalent amount of 8.35% Junior Subordinated
Debentures due 2044 (the "Junior Subordinated Debentures") of SunAmerica.
(continued on next page)
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-7 FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE JUNIOR
SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES.
The Preferred Securities have been approved for listing on the New York
Stock Exchange, Inc. (the "NYSE"), subject to notice of issuance. Trading of
the Preferred Securities on the NYSE is expected to commence within a 30-day
period after the date of this Prospectus Supplement. See "Underwriting."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SUNAMERICA
OFFERING PRICE(1) COMMISSION(2) CAPITAL TRUST II(3)(4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security... $25.00 (3) $25.00
- --------------------------------------------------------------------------------
Total(5)................. $175,000,000 (3) $175,000,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from October 11, 1995.
(2) SunAmerica has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures,
SunAmerica has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds, $.7875 per Preferred Security (or $5,512,500 in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be $.50 per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amount
specified in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by SunAmerica are estimated to
be $850,000.
(5) The Trust and SunAmerica have granted to the Underwriters an option for 30
days to purchase up to an additional 1,050,000 Preferred Securities at the
offering price per Preferred Security, solely to cover overallotments.
SunAmerica will pay Underwriters' Compensation in the amounts per
Preferred Security set forth in Note 3 with respect to such additional
Preferred Securities. If such option is exercised in full, the total
Initial Public Offering Price, Underwriters' Compensation and Proceeds to
SunAmerica Capital Trust II will be $201,250,000, $6,339,375 and
$201,250,000, respectively.
---------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company on or about
October 11, 1995.
---------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
---------------
The date of this Prospectus Supplement is October 5, 1995.
SM"TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
<PAGE>
(continued from previous page)
The Preferred Securities and the Common Securities will rank pari passu with
each other and will have equivalent terms; provided that (i) if an Event of
Default (as defined herein) under the Declaration (as defined herein) occurs
and is continuing, the holders of Preferred Securities will have a priority
over holders of the Common Securities with respect to payments in respect of
distributions and payments upon liquidation, redemption or otherwise and (ii)
holders of Common Securities have the exclusive right (subject to the terms of
the Declaration) to appoint, replace or remove Trustees (as defined in the
accompanying Prospectus) and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee (as defined in the accompanying Prospectus) upon the occurrence
of certain events described herein.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions at an annual rate of 8.35% of the liquidation amount of $25
per Preferred Security, accruing from the date of original issuance of the
Preferred Securities and payable quarterly in arrears on the 30th day of March,
June, September and December of each year, commencing on December 30, 1995
("distributions"). Cash distributions in arrears for more than one quarter will
bear interest thereon at the rate per annum of 8.35% of the stated liquidation
amount of $25 per Preferred Security (to the extent permitted by applicable
law), compounded quarterly. The term "distributions" as used herein includes
such cash distributions and any such interest payable unless otherwise stated.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and the interest and
other payment dates on the Junior Subordinated Debentures deposited in the
Trust as trust assets. As a result, if principal or interest is not paid on the
Junior Subordinated Debentures, including as a result of SunAmerica's election
to extend the interest payment period on the Junior Subordinated Debentures as
described below, the Trust will not make payments on the Trust Securities. The
Junior Subordinated Debentures provide that, so long as SunAmerica shall not be
in default in the payment of interest on the Junior Subordinated Debentures,
SunAmerica shall have the right to defer payments of interest on the Junior
Subordinated Debentures by extending the interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest periods
(each, an "Extension Period"). No interest shall be due and payable during an
Extension Period and, as a consequence, distributions on the Trust Securities
will also be deferred, but at the end of such Extension Period SunAmerica shall
pay all interest then accrued and unpaid on the Junior Subordinated Debentures,
together with interest thereon at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law, compounded
quarterly ("Compounded Interest"). All references herein to interest shall
include Compounded Interest unless otherwise stated. During any Extension
Period, holders of Preferred Securities will be required to include deferred
interest income in their gross income for United States federal income tax
purposes in advance of receipt of the cash interest payments attributable to
such deferred income. There could be multiple Extension Periods of varying
lengths (up to nine Extension Periods of 20 consecutive quarterly interest
periods each or more numerous shorter Extension Periods) throughout the term of
the Junior Subordinated Debentures. During any such Extension Period,
SunAmerica may not declare or pay dividends on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock; provided that (i) SunAmerica will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the conversion
of any of its Series D Mandatory Conversion Premium Dividend Preferred Stock
(the "Series D Preferred Stock") or upon the conversion of any other series of
preferred stock of SunAmerica as may be outstanding from time to time, in each
case in accordance with the terms of such stock, and (ii) the foregoing will
not apply to any stock dividends paid by SunAmerica. See "Risk Factors--Option
to Extend Interest Payment Period; Tax Impact of Extension"; "Description of
the Junior Subordinated Debentures--Interest" and "--Option to Extend Interest
Payment Period."
The payment of distributions out of moneys held by the Property Trustee (as
defined in the accompanying Prospectus) and payments on liquidation of the
Trust and the redemption of Preferred Securities, as set forth below, are
guaranteed by SunAmerica on a subordinated basis as and to the extent described
herein (the "Preferred Securities Guarantee"). See "Description of the
Preferred Securities
S-2
<PAGE>
(continued from previous page)
Guarantees" in the accompanying Prospectus. The Preferred Securities Guarantee
is a full and unconditional guarantee from the time of issuance of the
Preferred Securities, but the Preferred Securities Guarantee covers
distributions and other payments on the Preferred Securities only if and to the
extent that SunAmerica has made a payment to the Property Trustee of interest
or principal on the Junior Subordinated Debentures deposited in the Trust as
trust assets. The obligations of SunAmerica under the Preferred Securities
Guarantee are subordinate and junior in right of payment to all other
liabilities of SunAmerica, including the Junior Subordinated Debentures and any
other Junior Subordinated Debt Securities (as defined in the accompanying
Prospectus), and senior to all capital stock now or hereafter issued by
SunAmerica and to any guarantee now or hereafter entered into by SunAmerica in
respect of its capital stock. The obligations of SunAmerica under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the accompanying
Prospectus) of SunAmerica, which aggregated $472.8 million at June 30, 1995 on
an unconsolidated basis.
The Junior Subordinated Debentures are redeemable by SunAmerica (in whole or
in part) from time to time, on or after September 30, 2000 or at any time in
certain circumstances upon the occurrence of a Tax Event (as defined herein).
If SunAmerica redeems Junior Subordinated Debentures, the Trust must redeem
Preferred Securities and Common Securities on a pro rata basis, having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debentures so redeemed at $25 per Trust Security plus
accrued and unpaid distributions thereon (the "Redemption Price") to the date
of redemption. See "Description of the Preferred Securities--Mandatory
Redemption." The Preferred Securities will be redeemed upon maturity or earlier
redemption of the Junior Subordinated Debentures. The Junior Subordinated
Debentures mature on December 30, 2044. In addition, upon the occurrence of a
Special Event (as defined herein) arising from a change in law or a change in
legal interpretation, unless the Junior Subordinated Debentures are redeemed in
the limited circumstances described below, the Trust shall be dissolved, with
the result that the Junior Subordinated Debentures will be distributed to the
holders of the Preferred Securities, on a pro rata basis, in lieu of any cash
distribution. In the case of a Special Event that is a Tax Event, SunAmerica
will have the right in certain circumstances to redeem the Junior Subordinated
Debentures, which would result in the redemption by the Trust of the Preferred
Securities and Common Securities in the same amount on a pro rata basis. If the
Junior Subordinated Debentures are distributed to the holders of the Preferred
Securities, SunAmerica will use its best efforts to have the Junior
Subordinated Debentures listed on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed. See "Description of the
Preferred Securities--Special Event Redemption or Distribution" and
"Description of the Junior Subordinated Debentures."
In the event of the voluntary or involuntary dissolution, winding up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, the Junior
Subordinated Debentures are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution."
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE ACCOMPANYING PROSPECTUS.
S-3
<PAGE>
SUNAMERICA INC. SELECTED CONSOLIDATED FINANCIAL DATA
Reference is made to SunAmerica's Annual Report on Form 10-K for the fiscal
year ended September 30, 1994 (the "Form 10-K"), which is incorporated by
reference herein and which contains SunAmerica's audited consolidated financial
statements, including the consolidated income statement for SunAmerica's three
fiscal years in the period ended September 30, 1994, consolidated balance
sheets as of September 30, 1993 and 1994, and the related notes. Selected
unaudited financial information as of and for the nine months ended June 30,
1994 and 1995 should be read in conjunction with the audited consolidated
financial statements and related notes contained in the Form 10-K and the
unaudited consolidated financial statements contained in SunAmerica's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 (the "Form 10-Q"),
which report is also incorporated by reference herein. Such unaudited
information reflects, in the opinion of management, all adjustments, consisting
of only normal accruals, necessary for a consistent presentation with the
audited financial information. Results of operations for the nine months ended
June 30, 1995 may not necessarily be indicative of the results to be expected
for the full fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
----------------------------------------------------- -------------------
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- --------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net investment income... $ 132,947 $ 162,412 $ 219,384 $ 263,791 $ 294,454 $215,691 $ 259,529
Net realized investment
losses................. (29,319) (46,060) (56,364) (21,287) (21,124) (16,566) (24,550)
Fee income.............. 72,327 92,689 112,831 134,305 150,736 113,104 130,030
General and administra-
tive expenses.......... (112,860) (120,475) (133,058) (135,790) (132,743) (98,155) (118,582)
Provision for future
guaranty fund assess-
ments.................. -- -- -- (22,000) -- -- --
Amortization of deferred
acquisition costs...... (27,872) (40,088) (48,375) (51,860) (66,925) (48,574) (59,197)
Other income and ex-
penses, net............ 25,644 24,903 16,673 16,852 15,603 10,734 12,423
--------- --------- --------- --------- --------- -------- ---------
Pretax income........... 60,867 73,381 111,091 184,011 240,001 176,234 199,653
Income tax expense...... (22,100) (25,900) (34,300) (57,000) (74,700) (54,600) (58,900)
--------- --------- --------- --------- --------- -------- ---------
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME
TAXES.................. 38,767 47,481 76,791 127,011 165,301 121,634 140,753
Cumulative effect of
change in accounting
for income taxes....... -- -- -- -- (33,500) (33,500) --
--------- --------- --------- --------- --------- -------- ---------
NET INCOME.............. $ 38,767 $ 47,481 $ 76,791 $ 127,011 $ 131,801 $ 88,134 $ 140,753
========= ========= ========= ========= ========= ======== =========
EARNINGS PER SHARE:
INCOME BEFORE CUMULA-
TIVE EFFECT OF CHANGE
IN ACCOUNTING FOR IN-
COME TAXES............ $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 3.58 $ 2.63 $ 3.06
Cumulative effect of
change in accounting
for income taxes...... -- -- -- -- (.81) (.81) --
--------- --------- --------- --------- --------- -------- ---------
NET INCOME............. $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 2.77 $ 1.82 $ 3.06
========= ========= ========= ========= ========= ======== =========
CASH DIVIDENDS PER SHARE
PAID TO COMMON
SHAREHOLDERS:
Nontransferable Class B
Stock................. $ 0.180 $ 0.180 $ 0.180 $ 0.252 $ 0.360 $ 0.270 $ 0.405
Common Stock........... $ 0.200 $ 0.200 $ 0.200 $ 0.280 $ 0.400 $ 0.300 $ 0.450
========= ========= ========= ========= ========= ======== =========
</TABLE>
S-4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT JUNE 30,
----------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1994 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Investments............. $ 7,275,401 $ 7,596,275 $ 9,428,266 $10,364,952 $ 9,280,390 $ 9,187,445 $10,472,755
Variable annuity assets. 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093 4,368,102 4,893,894
Deferred acquisition
costs.................. 356,088 392,278 436,209 475,917 581,874 506,978 523,620
Other assets............ 301,906 279,007 245,833 231,582 280,868 277,239 305,279
----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL ASSETS............ $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225 $14,339,764 $16,195,548
=========== =========== =========== =========== =========== =========== ===========
Reserves for fixed
annuity contracts...... $ 5,523,320 $ 5,359,757 $ 5,143,339 $ 4,934,871 $ 4,519,623 $ 4,560,924 $ 4,887,635
Reserves for guaranteed
investment contracts... 1,294,338 1,598,963 2,023,048 2,216,104 2,783,522 2,481,110 3,276,686
Trust deposits.......... -- -- 367,458 378,986 442,320 441,755 430,868
Variable annuity
liabilities............ 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093 4,368,102 4,893,894
Other payables and
accrued liabilities.... 159,416 344,789 1,372,010 1,828,153 860,763 950,969 879,437
Long-term notes and
debentures............. -- -- 225,000 380,560 472,835 472,835 472,835
Collateralized mortgage
obligations and reverse
repurchase agreements.. 368,907 299,343 182,784 112,032 28,662 45,476 --
Other senior
indebtedness........... 43,503 38,035 25,919 15,119 -- -- --
Subordinated notes...... 119,485 117,985 -- -- -- -- --
Deferred income taxes... 40,353 58,779 40,682 96,599 74,319 69,417 136,585
SunAmerica-obligated
mandatorily redeemable
preferred securities of
grantor trust.......... -- -- -- -- -- -- 52,631
Shareholders' equity.... 384,073 449,909 730,068 1,110,027 961,088 949,176 1,164,977
----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY... $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225 $14,339,764 $16,195,548
=========== =========== =========== =========== =========== =========== ===========
BOOK VALUE PER SHARE.... $ 9.98 $ 12.24 $ 14.54 $ 22.64 $ 18.90 $ 18.62 $ 24.94
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
S-5
<PAGE>
THE FOLLOWING INFORMATION CONCERNING SUNAMERICA, SUNAMERICA CAPITAL TRUST II,
THE PREFERRED SECURITIES, THE PREFERRED SECURITIES GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES IS IN ADDITION TO, AND SHOULD BE READ IN CONJUNCTION
WITH, THE INFORMATION CONTAINED IN THE ACCOMPANYING PROSPECTUS. CAPITALIZED
TERMS USED IN THIS PROSPECTUS SUPPLEMENT HAVE THE SAME MEANINGS AS IN THE
ACCOMPANYING PROSPECTUS.
SUNAMERICA
SunAmerica is a diversified financial services company specializing in
retirement savings products and services. At June 30, 1995, SunAmerica held $27
billion of assets throughout its businesses, including $16.20 billion of assets
on its balance sheet, $2.08 billion of assets managed in mutual funds and
private accounts and $8.76 billion of assets under custody in retirement trust
accounts. Together, the SunAmerica life insurance companies rank among the
largest U.S. issuers of annuities. Complementing these annuity operations are
SunAmerica's asset management operations; its two broker-dealers, which
SunAmerica believes, based on industry data, represent the largest network of
independent registered representatives in the nation; and its trust company
which provides administrative and custodial services to qualified retirement
plans. Through these subsidiaries, SunAmerica specializes in the sale of tax-
deferred long-term savings products and investments to the expanding
preretirement savings market. SunAmerica markets fixed annuities and fee-
generating variable annuities, mutual funds and trust services, as well as
guaranteed investment contracts. SunAmerica's products are distributed through
a broad spectrum of financial services distribution channels, including
independent registered representatives of SunAmerica's broker-dealer
subsidiaries and unaffiliated broker-dealers, independent general insurance
agents and financial institutions.
SUNAMERICA CAPITAL TRUST II
SunAmerica Capital Trust II is a statutory business trust formed on August
31, 1995 under the Delaware Business Trust Act (the "Business Trust Act")
pursuant to a declaration of trust among the Trustees and SunAmerica and the
filing of a certificate of trust with the Secretary of State of the State of
Delaware on September 6, 1995. Such declaration will be amended and restated in
its entirety (as so amended and restated, the "Declaration") substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part, as of the
date the Preferred Securities are initially issued. The Declaration is
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the holders thereof
will own all of the issued and outstanding Preferred Securities. SunAmerica
will acquire Common Securities in an amount equal to at least 3% of the total
capital of the Trust and will own, directly or indirectly, all of the issued
and outstanding Common Securities. The Trust exists solely for the purpose of
(a) issuing its Trust Securities for cash and investing the proceeds thereof in
an equivalent amount of Junior Subordinated Debentures and (b) engaging in such
other activities as are necessary and incidental thereto. The rights of the
holders of the Trust Securities, including economic rights, rights to
information and voting rights, are as set forth in the Declaration, the
Business Trust Act and the Trust Indenture Act. The Declaration does not permit
the incurrence by the Trust of any indebtedness for borrowed money or the
making of any investment other than in the Junior Subordinated Debentures. In
the Declaration, SunAmerica has agreed to pay for all debts and obligations
(other than with respect to the Trust Securities) and all costs and expenses of
the Trust, including the fees and expenses of the Trustees and any income
taxes, duties and other governmental charges, and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United
States withholding taxes.
S-6
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters:
RANKING OF SUBORDINATED OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE AND
JUNIOR SUBORDINATED DEBENTURES; DEPENDENCE ON SUNAMERICA
The obligations of SunAmerica under the Junior Subordinated Debentures are
unsecured obligations of SunAmerica and will be subordinate and junior in right
of payment to Senior Indebtedness of SunAmerica but senior to its capital
stock. At June 30, 1995, Senior Indebtedness of SunAmerica (on an
unconsolidated basis) aggregated approximately $472.8 million. SunAmerica's
obligations under the Preferred Securities Guarantee are unsecured and will
rank (i) subordinate and junior in right of payment to all other liabilities of
SunAmerica, including the Junior Subordinated Debentures, except those made
pari passu or subordinate by their terms, and (ii) senior to all capital stock
now or hereafter issued by SunAmerica and to any guarantee now or hereafter
entered into by SunAmerica in respect of its capital stock. Because SunAmerica
is a holding company, the Junior Subordinated Debentures (and SunAmerica's
obligations under the Preferred Securities Guarantee) are also effectively
subordinated to all existing and future liabilities, including trade payables,
of SunAmerica's subsidiaries, except to the extent that SunAmerica is a
creditor of the subsidiaries recognized as such. Claims on SunAmerica's
subsidiaries by creditors other than SunAmerica include substantial claims for
policy benefits, as well as other liabilities incurred in the ordinary course
of business. At June 30, 1995, SunAmerica's subsidiaries had outstanding
approximately $9.17 billion of liabilities (excluding variable annuity
liabilities, with respect to which assets are segregated in separate accounts).
In addition, since many of SunAmerica's subsidiaries are insurance companies
subject to regulatory control by various state insurance departments, the
ability of such subsidiaries to pay dividends or make loans or advances to
SunAmerica without prior regulatory approval is limited by applicable laws and
regulations. There are no terms in the Preferred Securities, the Junior
Subordinated Debentures or the Preferred Securities Guarantee that limit
SunAmerica's ability to incur additional indebtedness, including indebtedness
that ranks senior to or pari passu with the Junior Subordinated Debentures and
the Preferred Securities Guarantee, or the ability of its subsidiaries to incur
additional indebtedness. See "Description of the Preferred Securities
Guarantees--Status of the Preferred Securities Guarantees" and "Description of
the Junior Subordinated Debt Securities--Subordination" in the accompanying
Prospectus.
The Trust's ability to make distributions and other payments on the Preferred
Securities is solely dependent upon SunAmerica making interest and other
payments on the Junior Subordinated Debentures deposited as trust assets as and
when required. If SunAmerica were not to make distributions or other payments
on the Junior Subordinated Debentures for any reason, including as a result of
SunAmerica's election to defer the payment of interest on the Junior
Subordinated Debentures by extending the interest period on the Junior
Subordinated Debentures, the Trust will not make payments on the Trust
Securities. In such an event, holders of the Preferred Securities would not be
able to rely on the Preferred Securities Guarantee since distributions and
other payments on the Preferred Securities are subject to such Guarantee only
if and to the extent that SunAmerica has made a payment to the Property Trustee
of interest or principal on the Junior Subordinated Debentures deposited in the
Trust as trust assets. Instead, holders of Preferred Securities would rely on
the enforcement by the Property Trustee of its rights as registered holder of
the Junior Subordinated Debentures against SunAmerica pursuant to the terms of
the Indenture (as defined herein) and may vote to appoint a Special Regular
Trustee. However, if the Trust's failure to make distributions on the Preferred
Securities is a consequence of SunAmerica's exercise of its right to extend the
interest payment period for the Junior Subordinated Debentures, the Property
Trustee will have no right to enforce the payment of distributions on the
Preferred Securities until an Event of Default under the Declaration shall have
occurred. SunAmerica's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all other liabilities of
SunAmerica, including the Junior
S-7
<PAGE>
Subordinated Debentures, except those made pari passu (that is, equal in
priority) or subordinate by their terms to the Preferred Securities Guarantee,
and senior to its capital stock or to any guarantee of SunAmerica in respect of
its capital stock.
The Declaration provides that SunAmerica shall pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust, including any taxes and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United
States withholding taxes. No assurance can be given that SunAmerica will have
sufficient resources to enable it to pay such debts, obligations, costs and
expenses on behalf of the Trust.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX IMPACT OF EXTENSION
So long as SunAmerica shall not be in default in the payment of interest on
the Junior Subordinated Debentures, SunAmerica has the right under the
Indenture to defer payments of interest on the Junior Subordinated Debentures
by extending the interest payment period from time to time on the Junior
Subordinated Debentures for an Extension Period not exceeding 20 consecutive
quarterly interest periods, during which no interest shall be due and payable.
In such an event, quarterly distributions on the Preferred Securities would not
be made (but would continue to accrue with interest thereon at the rate of
8.35% per annum, compounded quarterly) by the Trust during any such Extension
Period. If SunAmerica exercises the right to extend an interest payment period,
SunAmerica may not during such Extension Period declare or pay dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock; provided that (i)
SunAmerica will be permitted to pay accrued dividends (and cash in lieu of
fractional shares) upon the conversion of any of its Series D Preferred Stock
or upon the conversion of any other series of preferred stock of SunAmerica as
may be outstanding from time to time, in each case in accordance with the terms
of such stock and (ii) the foregoing will not apply to stock dividends paid by
SunAmerica. SunAmerica has outstanding 5,002,500 $2.78 Depositary Shares (the
"Series D Depositary Shares"), each representing one-fiftieth of a share of
Series D Preferred Stock. Dividends accrue on each Series D Depositary Share at
the rate of $2.78 per year. On March 1, 1996, unless previously redeemed, each
of the outstanding Series D Depositary Shares will convert into one share of
SunAmerica's common stock and the right to receive an amount in cash equal to
all accrued and unpaid dividends. As of the date of this Prospectus Supplement,
SunAmerica had no other convertible preferred stock outstanding.
Prior to the termination of any Extension Period, SunAmerica may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and
the payment of all amounts then due, SunAmerica may commence a new Extension
Period, subject to the above requirements. SunAmerica may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths (up
to nine Extension Periods of 20 consecutive quarterly interest periods each or
more numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures. See "Description of the Preferred Securities--
Distributions" and "Description of the Junior Subordinated Debentures--Option
to Extend Interest Payment Period."
Because SunAmerica has the right to extend the interest payment period up to
20 consecutive quarterly interest periods on various occasions, the Junior
Subordinated Debentures will be treated as issued with "original issue
discount" for United States federal income tax purposes. As a result, holders
of Preferred Securities will be required to include their pro rata share of
original issue discount in gross income as it accrues for United States federal
income tax purposes in advance of the receipt of cash. Generally, all of a
Securityholder's taxable interest income with respect to the Junior
Subordinated Debentures will be accounted for as "original issue discount" and
actual distributions of stated interest will not be separately reported as
taxable income. See "Taxation--Accrual of Original Issue Discount and Premium"
and""--Potential Extension of Payment Period on the Junior Subordinated
Debentures."
S-8
<PAGE>
LISTING OF PREFERRED SECURITIES; TRADING PRICES
The Preferred Securities constitute a new issue of securities with no
established trading market. While the Preferred Securities have been approved
for listing on the NYSE, subject to notice of issuance, there can be no
assurance that an active market for the Preferred Securities will develop or be
sustained in the future on such exchange. Although the Underwriters have
indicated to SunAmerica and the Trust that they intend to make a market in the
Preferred Securities as permitted by applicable laws and regulations prior to
the commencement of trading on the NYSE, they are not obligated to do so and
may discontinue any such market-making at any time without notice. Accordingly,
no assurance can be given as to the liquidity of, or trading markets for, the
Preferred Securities.
The Preferred Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income, and to add such
amount to his adjusted tax basis in his pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. Accordingly, such a holder will
recognize a capital loss to the extent the selling price (which may not fully
reflect the value of accrued but unpaid interest) is less than the holders'
adjusted tax basis (which will include accrued but unpaid interest). Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes. See "Taxation--Accrual of
Original Issue Discount and Premium" and "--Disposition of the Preferred
Securities."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence and during the continuation of a Tax Event or Investment
Company Event (each as defined herein), which may occur at any time, the Trust
shall, unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, be dissolved with the result that, in the manner
described in "Description of the Preferred Securities--Liquidation Distribution
Upon Dissolution", Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, and bearing accrued
and unpaid distributions on, the Preferred Securities and Common Securities
would be distributed on a Pro Rata Basis (as defined under "The SunAmerica
Trusts" in the accompanying Prospectus) to the holders of the Preferred
Securities and Common Securities in liquidation of the Trust. In the case of a
Tax Event, in certain circumstances, SunAmerica shall have the right to redeem
at any time the Junior Subordinated Debentures, in whole or in part, in which
event the Trust will redeem Preferred Securities and Common Securities on a Pro
Rata Basis to the same extent as the Junior Subordinated Debentures are
redeemed. There can be no assurance as to the market prices for Preferred
Securities or the Junior Subordinated Debentures which may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive
on dissolution and liquidation of the Trust, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Junior Subordinated
Debentures upon the occurrence of a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities--Special
Event Redemption or Distribution" and "Description of the Junior Subordinated
Debentures--General."
Under current United States federal income tax law, a distribution of the
Junior Subordinated Debentures upon a Tax Event or Investment Company Event
would not be a taxable event to holders of the Preferred Securities. See
"Taxation--Distribution of Junior Subordinated Debentures to Holders of
Preferred Securities."
S-9
<PAGE>
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, subject
to the rights of holders of Preferred Securities to appoint a Special Regular
Trustee upon the occurrence of an Appointment Event (as defined herein), will
not be able to appoint, remove or replace, or to increase or decrease the
number of, Trustees, which rights are vested exclusively in the Common
Securities.
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, SunAmerica has the right to extend an interest payment
period on the Junior Subordinated Debentures from time to time for a period not
exceeding 20 consecutive quarterly interest periods. If SunAmerica determines
to extend an interest payment period, or if SunAmerica thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Preferred Securities is likely to be
affected. In addition, as a result of such rights, the market price of the
Preferred Securities (which represent an undivided interest in Junior
Subordinated Debentures) may be more volatile than other securities on which
original issue discount accrues that do not have such rights. A holder that
disposes of its Preferred Securities during an Extension Period, therefore, may
not receive the same return on its investment as a holder that continues to
hold its Preferred Securities. See "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period."
S-10
<PAGE>
CAPITALIZATION OF SUNAMERICA
The following table sets forth the unaudited consolidated capitalization of
SunAmerica at June 30, 1995, and as adjusted to reflect the sale of the
Preferred Securities (assuming no exercise of the Underwriters' overallotment
option). See "Use of Proceeds." The table should be read in conjunction with
SunAmerica's consolidated financial statements and notes thereto included in
the documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1995
---------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Indebtedness (interest rates are as of June 30,
1995):
Long-term notes and debentures:
Medium-term notes due 1998 through 2005 (5
3/8% to 6 3/4%)............................. $ 147,835 $ 147,835
8 1/8% debentures due April 28, 2023......... 100,000 100,000
9.95% debentures due February 1, 2012........ 100,000 100,000
9% notes due January 15, 1999................ 125,000 125,000
---------- ----------
Total indebtedness............................. 472,835 472,835
---------- ----------
SunAmerica-obligated mandatorily redeemable
preferred securities of grantor trusts........ 52,631(/1/) 227,631(/2/)
---------- ----------
Shareholders' equity:
Preferred Stock.............................. 321,642 321,642
Nontransferable Class B Stock................ 6,826 6,826
Common Stock................................. 29,398 29,398
Additional paid-in capital................... 201,277 201,277
Retained earnings............................ 614,800 614,800
Net unrealized losses on debt and equity se-
curities available for sale................. (8,966) (8,966)
---------- ----------
Total shareholders' equity................... 1,164,977 1,164,977
---------- ----------
Total capitalization........................... $1,690,443 $1,865,443
========== ==========
</TABLE>
- --------
(1) The sole asset of the existing grantor trust is $54.3 million principal
amount of 9.95% Junior Subordinated Debentures due 2044 of SunAmerica.
(2) As described in this Prospectus Supplement, the sole asset of the Trust
will be the Junior Subordinated Debentures.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with SunAmerica's
financial statements, with the Preferred Securities accounted for as minority
interests and captioned in the consolidated balance sheet as "Company-obligated
mandatorily redeemable preferred securities of grantor trusts whose sole assets
are junior subordinated debentures of the Company."
USE OF PROCEEDS
The proceeds of the sale of the Preferred Securities will be invested by the
Trust in Junior Subordinated Debentures of SunAmerica. The net proceeds from
the sale of the Junior Subordinated Debentures are expected to be used by
SunAmerica for general corporate purposes, including repayment or redemption of
outstanding debt or preferred stock, the possible acquisition of financial
services businesses or assets thereof, investments in portfolio assets and
working capital needs. SunAmerica routinely reviews opportunities to acquire
financial services businesses or assets thereof.
S-11
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration which is qualified under the Trust Indenture Act. The Property
Trustee, The Bank of New York, but not the other Trustees of the Trust, will
act as the indenture trustee for purposes of the Trust Indenture Act. The terms
of the Preferred Securities and the Declaration include those stated in the
Declaration and those made part of the Declaration by the Trust Indenture Act.
The following summarizes the material terms and provisions of the Preferred
Securities and is qualified in its entirety by reference to, the Declaration,
which has been filed as an exhibit to the Registration Statement of which this
Prospectus Supplement forms a part, the Business Trust Act and the Trust
Indenture Act.
GENERAL
The Declaration authorizes the Trust to issue the Preferred Securities, which
represent preferred undivided beneficial interests in the assets of the Trust,
and the Common Securities, which represent common undivided beneficial
interests in the assets of the Trust. All of the Common Securities will be
owned, directly or indirectly, by SunAmerica. The Common Securities and the
Preferred Securities rank pari passu with each other and will have equivalent
terms except that (i) if an Event of Default under the Declaration occurs and
is continuing, the rights of the holders of the Common Securities to payment in
respect of periodic distributions and payments upon liquidation, redemption or
otherwise are subordinated to the rights of the holders of the Preferred
Securities and (ii) holders of Common Securities have the exclusive right
(subject to the terms of the Declaration) to appoint, remove or replace
Trustees and to increase or decrease the number of Trustees, subject to the
right of holders of Preferred Securities to appoint a Special Regular Trustee
upon the occurrence of an Appointment Event. The Declaration does not permit
the issuance by the Trust of any securities or other evidences of beneficial
ownership of, or beneficial interests in, the Trust other than the Preferred
Securities and the Common Securities, the incurrence of any indebtedness for
borrowed money by the Trust or the making of any investment other than in the
Junior Subordinated Debentures. Pursuant to the Declaration, the Property
Trustee will own and hold the Junior Subordinated Debentures as trust assets
for the benefit of the holders of the Preferred Securities and the Common
Securities. The payment of distributions out of moneys held by the Property
Trustee and payments on redemption of the Preferred Securities or liquidation
of the Trust are guaranteed by SunAmerica on a subordinated basis as and to the
extent described under "Description of the Preferred Securities Guarantees" in
the accompanying Prospectus. The Property Trustee will hold the Preferred
Securities Guarantee for the benefit of holders of the Preferred Securities.
The Preferred Securities Guarantee is a full and unconditional guarantee from
the time of issuance of the Preferred Securities, but the Preferred Securities
Guarantee covers distributions and other payments on the Preferred Securities
only if and to the extent that SunAmerica has made a payment to the Property
Trustee of interest or principal on the Junior Subordinated Debentures
deposited in the Trust as trust assets. See "Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of 8.35% of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon
at the rate per annum of 8.35% of the stated liquidation amount of $25 per
Preferred Security (to the extent permitted by law), compounded quarterly. The
term "distributions" as used herein includes any such interest payable unless
otherwise stated. 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 shorter than a full quarterly period for which distributions are
computed, the amount of the distribution payable will be computed on the basis
of the actual number of days elapsed in such a 30-day month.
Distributions on the Preferred Securities will be cumulative, will accrue
from the original date of issuance and, except as otherwise described below,
will be payable quarterly in arrears, on March 30, June 30, September 30 and
December 30 of each year, commencing on December 30, 1995, but only if, and to
the extent that, interest payments are made in respect of Junior Subordinated
Debentures held by the Property Trustee.
S-12
<PAGE>
So long as SunAmerica shall not be in default in the payment of interest on
the Junior Subordinated Debentures, SunAmerica has the right under the
Indenture to defer payments of interest on the Junior Subordinated Debentures
by extending the interest payment period from time to time on the Junior
Subordinated Debentures for a period not exceeding 20 consecutive quarterly
interest periods and, as a consequence, quarterly distributions on the
Preferred Securities would not be made (but would continue to accrue with
interest thereon at the rate of 8.35% per annum, compounded quarterly) by the
Trust during any such Extension Period. If SunAmerica exercises the right to
extend an interest payment period, SunAmerica may not declare or pay dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock during such
Extension Period; provided that (i) SunAmerica will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion of any of
its Series D Preferred Stock or upon the conversion of any other series of
preferred stock of SunAmerica as may be outstanding from time to time, in each
case in accordance with the terms of such stock, and (ii) the foregoing will
not apply to any stock dividend by SunAmerica. Prior to the termination of any
such Extension Period, SunAmerica may further extend such Extension Period;
provided that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarterly interest periods.
Upon the termination of any Extension Period and the payment of all amounts
then due, SunAmerica may commence a new Extension Period, subject to the above
requirements. SunAmerica may also prepay at any time all or any portion of the
interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to nine Extension Periods of
20 consecutive quarterly interest periods each or more numerous shorter
Extension Periods) throughout the term of the Junior Subordinated Debentures.
See "Risk Factors--Option to Extend Interest Payment Period; Tax Impact of
Extension"; "Description of the Junior Subordinated Debentures--Interest" and
"--Option to Extend Interest Payment Period." Payments of accrued distributions
will be payable to holders of Preferred Securities as they appear on the books
and records of the Trust on the first record date after the end of an Extension
Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Property Trustee has cash on hand in the Property
Account to permit such payment. The funds available for distribution to the
holders of the Preferred Securities will be limited to payments received by the
Property Trustee in respect of the Junior Subordinated Debentures that are
deposited in the Trust as trust assets. See "Description of the Junior
Subordinated Debentures." If SunAmerica does not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not make
distributions on the Preferred Securities. Under the Declaration, if and to the
extent SunAmerica does make interest payments on the Junior Subordinated
Debentures deposited in the Trust as trust assets, the Property Trustee is
obligated to make distributions on the Trust Securities on a Pro Rata Basis.
The payment of distributions on the Preferred Securities is guaranteed by
SunAmerica on a subordinated basis as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the Preferred Securities but the
Preferred Securities Guarantee covers distributions and other payments on the
Preferred Securities only if and to the extent that SunAmerica has made a
payment to the Property Trustee of interest or principal on the Junior
Subordinated Debentures deposited in the Trust as trust assets.
Distributions on the Preferred Securities will be made to the holders thereof
as they appear on the books and records of the Trust on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day (as defined herein) prior to the relevant Distribution
payment date. Distributions payable on any Preferred Securities that are not
punctually paid on any Distribution payment date as a result of SunAmerica
having failed to make the corresponding interest payment on the Junior
Subordinated Debentures will forthwith cease to be payable to the person in
whose name such Preferred Security is registered on the relevant record date,
and such defaulted Distribution will instead be payable to the person in whose
name such Preferred Security is registered on the special record date
established by the Regular Trustees, which record date shall correspond to the
special record date or other specified date determined in accordance with the
Indenture; provided, however, that Distributions shall not
S-13
<PAGE>
be considered payable on any Distribution payment date falling within an
Extension Period unless SunAmerica has elected to make a full or partial
payment of interest accrued on the Junior Subordinated Debentures on such
Distribution payment date. Distributions on the Preferred Securities will be
paid through the Property Trustee who will hold amounts received in respect of
the Junior Subordinated Debentures in the Property Account for the benefit of
the holders of the Preferred and Common Securities. Subject to any applicable
laws and regulations and the provisions of the Declaration, each such payment
will be made as described under "Book-Entry Only Issuance--The Depository Trust
Company" below. In the event that the Preferred Securities do not continue to
remain in book-entry only form, the Regular Trustees shall have the right to
select relevant record dates, which shall be more than one Business Day prior
to the relevant payment dates. The Declaration provides that the payment dates
or record dates for the Preferred Securities shall be the same as the payment
dates and record dates for the Junior Subordinated Debentures. All
distributions paid with respect to the Trust Securities shall be paid on a Pro
Rata Basis to the holders thereof entitled thereto. If any date on which
distributions are to be made on the Preferred Securities is not a Business Day,
then payment of the distribution to be made on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banking institutions in New York, New York are
permitted or required by any applicable law to close.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be continuing,
the Trust shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be dissolved, with the result that,
after satisfaction of creditors of the Trust, Junior Subordinated Debentures
with an aggregate principal amount equal to the aggregate stated liquidation
amount of the Preferred Securities and the Common Securities would be
distributed on a Pro Rata Basis to the holders of the Preferred Securities and
the Common Securities in liquidation of such holders' interests in the Trust,
within 90 days following the occurrence of such Special Event; provided,
however, that in the case of the occurrence of a Tax Event, as a condition of
such dissolution and distribution, the Regular Trustees shall have received an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on any then
applicable published revenue rulings of the Internal Revenue Service, to the
effect that the holders of the Preferred Securities will not recognize any gain
or loss for United States federal income tax purposes as a result of such
dissolution and distribution of Junior Subordinated Debentures; and, provided,
further, that, if at the time there is available to the Trust the opportunity
to eliminate, within such 90 day period, the Special Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure, which has no adverse effect on the Trust
or SunAmerica or the holders of the Preferred Securities, the Trust will pursue
such measure in lieu of dissolution. Furthermore, if in the case of the
occurrence of a Tax Event, (i) the Regular Trustees have received an opinion (a
"Redemption Tax Opinion") of nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more
than an insubstantial risk that SunAmerica would be precluded from deducting
the interest on the Junior Subordinated Debentures for United States federal
income tax purposes even if the Junior Subordinated Debentures were distributed
to the holders of Preferred Securities and Common Securities in liquidation of
such holders' interests in the Trust as described above or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, SunAmerica shall have the right, upon
not less than 30 nor more than 60 days' notice, to redeem the Junior
Subordinated Debentures in whole or in part for cash within 90 days following
the occurrence of such Tax Event, and promptly following such redemption
Preferred Securities and Common Securities with an aggregate liquidation amount
equal to the aggregate principal amount of the Junior Subordinated Debentures
so redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
Basis; provided, however, that if at the time there is available to SunAmerica
or the Regular Trustees the opportunity to eliminate,
S-14
<PAGE>
within such 90 day period, the Tax Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Trust, SunAmerica or the
holders of the Preferred Securities, SunAmerica will pursue such measure in
lieu of redemption and provided further that SunAmerica shall have no right to
redeem the Junior Subordinated Debentures while the Regular Trustees on behalf
of the Trust are pursuing any such ministerial action. The Common Securities
will be redeemed on a Pro Rata Basis with the Preferred Securities, except that
if an Event of Default under the Declaration has occurred and is continuing,
the Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after the date of this
Prospectus Supplement as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof
or therein, (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of this Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to income
accrued or received on the Junior Subordinated Debentures, (ii) the Trust is,
or will be within 90 days of the date thereof, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by SunAmerica to the Trust on the Junior Subordinated
Debentures is not, or within 90 days of the date thereof will not be,
deductible by SunAmerica for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "1940 Act"),
that as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" which is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the date
of this Prospectus Supplement.
On the date fixed for any distribution of Junior Subordinated Debentures,
upon dissolution of the Trust, (i) the Preferred Securities and the Common
Securities will no longer be deemed to be outstanding, (ii) the depositary or
its nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution, and (iii) any
certificates representing Preferred Securities not held by the depositary or
its nominee will be deemed to represent Junior Subordinated Debentures having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued
and unpaid interest equal to accrued and unpaid distribution on, such Preferred
Securities, until such certificates are presented to SunAmerica or its agent
for transfer or reissuance.
There can be no assurance as to the market price for the Junior Subordinated
Debentures which may be distributed in exchange for Preferred Securities if a
dissolution and liquidation of the Trust were to occur. Accordingly, the Junior
Subordinated Debentures which the investor may subsequently receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
of the Preferred Securities exchanged. If the Junior Subordinated Debentures
are distributed to the holders of Preferred Securities upon the dissolution of
the Trust, SunAmerica will use its best efforts to list the Junior Subordinated
Debentures on the NYSE or on such other exchange on which the Preferred
Securities are then listed.
S-15
<PAGE>
MANDATORY REDEMPTION
Upon the repayment of the Junior Subordinated Debentures, whether at
maturity, upon redemption or otherwise, the proceeds from such repayment or
payment will be promptly applied to redeem Preferred Securities and Common
Securities having an aggregate liquidation amount equal to the Junior
Subordinated Debentures so repaid, upon not less than 30 nor more than 60 days'
notice, at the Redemption Price. The Common Securities will be entitled to be
redeemed on a Pro Rata Basis with the Preferred Securities, except that if an
Event of Default under the Declaration has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price. Subject to the foregoing, if fewer
than all outstanding Preferred Securities and Common Securities are to be
redeemed, the Preferred Securities and Common Securities will be redeemed on a
Pro Rata Basis. In the event fewer than all outstanding Preferred Securities
are to be redeemed, Preferred Securities registered in the name of and held by
DTC or its nominee will be redeemed as described under "Book-Entry-Only;
Delivery and Form" below.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all the outstanding Preferred Securities
unless all accrued and unpaid distributions have been paid on all Preferred
Securities for all quarterly distribution periods terminating on or prior to
the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable) then by 12:00 noon, New York City time, on
the redemption date and provided that SunAmerica has paid to the Property
Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Junior Subordinated Debentures, the Trust will irrevocably
deposit with the depositary funds sufficient to pay the applicable Redemption
Price and will give the depositary irrevocable instructions and authority to
pay the Redemption Price to the holders of the Preferred Securities. See "Book-
Entry Only Issuance--The Depository Trust Company." If notice of redemption
shall have been given and funds deposited as required, then, immediately prior
to the close of business on the date of such deposit, distributions will cease
to accrue on the Preferred Securities called for redemption, such Preferred
Securities shall no longer be deemed to be outstanding and all rights of
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither the
Trustees nor the Trust shall be required to register or cause to be registered
the transfer of any Preferred Securities which have been so called for
redemption. If any date fixed for redemption of Preferred Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If SunAmerica fails to repay
Junior Subordinated Debentures on maturity or on the date fixed for this
redemption or if payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid by the Property
Trustee or by SunAmerica pursuant to the Preferred Securities Guarantee
described under "Description of the Preferred Securities Guarantee" in the
accompanying Prospectus, distributions on such Preferred Securities will
continue to accrue, from the original redemption date of the Preferred
Securities to the date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed as described below
under "Book-Entry Only Issuance--The Depository Trust Company."
If a partial redemption of the Preferred Securities would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed,
SunAmerica pursuant to the Indenture will only redeem the Junior Subordinated
Debentures in whole and, as a result, the Trust may only redeem the Preferred
Securities in whole.
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Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), SunAmerica or any of its subsidiaries
may at any time and from time to time purchase outstanding Preferred Securities
by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, liquidation,
winding-up or termination of the Trust, the holders of the Preferred Securities
and Common Securities at the date of dissolution, winding-up or termination of
the Trust will be entitled to receive on a Pro Rata Basis solely out of the
assets of the Trust, after satisfaction of liabilities of creditors (to the
extent not satisfied by SunAmerica as provided in the Declaration), an amount
equal to the aggregate of the stated liquidation amount of $25 per Trust
Security plus accrued and unpaid distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, liquidation, winding-up or termination, Junior Subordinated
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Trust Securities and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid distributions on such
Trust Securities, shall be distributed on a Pro Rata Basis to the holders of
the Preferred Securities and Common Securities in exchange therefor.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and the Common Securities shall be paid on a
Pro Rata Basis. The holders of the Common Securities will be entitled to
receive distributions upon any such dissolution on a Pro Rata Basis with the
holders of the Preferred Securities, except that if an Event of Default under
the Declaration has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities with respect to payment of the
Liquidation Distribution.
Pursuant to the Declaration, the Trust shall terminate: (i) on December 31,
2044, (ii) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the holders of Trust Securities in accordance with the terms of the
Trust Securities, or (iii) when all of the Junior Subordinated Debentures shall
have been distributed to the holders of Trust Securities in exchange for all of
the Trust Securities in accordance with the terms of the Trust Securities.
NO MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets to, any corporation
or other entity.
DECLARATION EVENTS OF DEFAULT
An Indenture Event of Default (as defined in the accompanying Prospectus
Supplement) will constitute an event of default under the Declaration with
respect to the Trust Securities (an "Event of Default"); provided that pursuant
to the Declaration, the holder of the Common Securities will be deemed to have
waived any such Event of Default with respect to the Common Securities until
all Events of Default with respect to the Preferred Securities have been cured
or waived. Until all such Events of Default with respect to the Preferred
Securities have been so cured or waived, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities, and only
the holders of the Preferred Securities will have the right to direct the
Property Trustee with respect to certain matters under the Declaration and
consequently under the Indenture. In the event that any Event of Default with
respect to the Preferred Securities is waived by the holders of the Preferred
Securities as provided in the Declaration, the holders of Common Securities
pursuant to the Declaration have agreed that such waiver also constitutes a
waiver of such Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of the Common Securities. See "Voting Rights".
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Upon the occurrence of an Event of Default, the Property Trustee as the
holder of all of the Junior Subordinated Debentures will have the right under
the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. In addition, the
Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture. See "Description of the Junior Subordinated
Debentures".
VOTING RIGHTS
Except as provided below, under "Modification and Amendment of the
Declaration" and "Description of the Preferred Securities Guarantee--Amendments
and Assignment" in the accompanying Prospectus and as otherwise required by the
Business Trust Act, the Trust Indenture Act and the Declaration, the holders of
the Preferred Securities will have no voting rights.
If (i) the Trust fails to make distributions in full on the Preferred
Securities for 6 consecutive quarterly distribution periods, or (ii) an Event
of Default under the Declaration occurs and is continuing (each, an
"Appointment Event"), then the holders of the Preferred Securities, acting as a
single class, will be entitled, by the vote of holders of Preferred Securities,
representing a majority in aggregate liquidation amount of the outstanding
Preferred Securities, to appoint a Special Regular Trustee (who need not be an
officer or an employee of or otherwise affiliated with SunAmerica) who shall
have the same rights, powers and privileges under the Declaration as the
Regular Trustees. Any holder of Preferred Securities (other than SunAmerica or
any of its affiliates) shall have the right to nominate any person to be
appointed as Special Regular Trustee. For purposes of determining whether the
Trust has failed to pay distributions in full for 6 consecutive quarterly
distribution periods, distributions shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full cumulative
distributions have been or contemporaneously are paid with respect to all
quarterly distribution periods terminating on or prior to the date of payment
of such cumulative distributions. Not later than 30 days after such right to
appoint a Special Regular Trustee arises, the Regular Trustees will convene a
meeting for the purpose of appointing a Special Regular Trustee. If the Regular
Trustees fail to convene such meeting within such 30-day period, the holders of
Preferred Securities representing 10% in liquidation amount of the outstanding
Preferred Securities will be entitled to convene such meeting. The provisions
of the Declaration relating to the convening and conduct of the meetings of the
holders will apply with respect to any such meeting. If, at any such meeting,
holders of less than a majority in aggregate liquidation amount of Preferred
Securities entitled to vote for the appointment of a Special Regular Trustee
vote for such appointment, no Special Regular Trustee shall be appointed. Any
Special Regular Trustee may be removed without cause at any time by holders of
Preferred Securities representing a majority in liquidation amount of the
Preferred Securities and holders of Preferred Securities representing 10% in
liquidation amount of the Preferred Securities shall be entitled to convene a
meeting for such purpose. Any Special Regular Trustee appointed shall cease to
be a Special Regular Trustee if the Appointment Event pursuant to which the
Special Regular Trustee was appointed and all other Appointment Events have
been cured and cease to be continuing. Notwithstanding the appointment of any
such Special Regular Trustee, SunAmerica shall retain all rights under the
Indenture, including the right to extend the interest payment period as
provided under "Description of the Junior Subordinated Debentures--Option to
Extend Interest Payment Period". If such an extension occurs, there will be no
Indenture Event of Default for failure to make any scheduled interest payment
during the Extension Period on the date originally scheduled.
Subject to the requirements of the second to last sentence of this paragraph,
the holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right (a) on behalf of all holders of Preferred Securities,
to waive any past default that is waivable under the Declaration and (b) to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee, as the holder of the Junior Subordinated Debentures, to
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee (as defined herein), or executing any
trust or power conferred on the Indenture Trustee with respect to the Junior
Subordinated Debentures, (ii) waive any past default that is waivable under
Section 6.06 of the Indenture, or (iii) exercise
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any right to rescind or annul a declaration that the principal of all the
Junior Subordinated Debentures shall be due and payable; provided that where a
consent under the Indenture would require the consent of (1) holders of Junior
Subordinated Debentures representing a specified percentage greater than a
majority in principal amount of the Junior Subordinated Debentures or (2) each
holder of Junior Subordinated Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior consent of, in the
case of clause (1) above, holders of Preferred Securities representing such
specified percentage of the aggregate liquidation amount of the Preferred
Securities or, in the case of clause (2) above, each holder of Preferred
Securities affected thereby. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the holders of Preferred
Securities. The Property Trustee shall notify all holders of record of
Preferred Securities of any notice of default received from the Indenture
Trustee with respect to the Junior Subordinated Debentures. Other than with
respect to directing the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or the Indenture Trustee as
set forth above, the Property Trustee shall be under no obligation to take any
of the foregoing actions at the direction of the holders of the Preferred
Securities unless the Property Trustee shall have obtained an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust
for United States federal income tax purposes following such action. If the
Property Trustee fails to enforce its rights under the Declaration (including,
without limitation, its rights, powers and privileges as a holder of the Junior
Subordinated Debentures under the Indenture), any holder of Preferred
Securities may institute a legal proceeding directly against SunAmerica to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other
Person.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Trust Securities.
In the event the consent of the Property Trustee as the holder of the Junior
Subordinated Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, the Property Trustee shall request the direction of
the holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where any such amendment, modification or termination under the Indenture would
require the consent of holders of Junior Subordinated Debentures representing a
specified percentage greater than a majority in principal amount of the Junior
Subordinated Debentures, the Property Trustee may only give such consent at the
direction of the holders of Trust Securities representing such specified
percentage of the aggregate liquidation amount of the Trust Securities; and,
provided, further, that the Property Trustee shall be under no obligation to
take any such action in accordance with the directions of the holders of the
Trust Securities unless the Property Trustee has obtained an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust
for United States federal income tax purposes following such action.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be mailed to each holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
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No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the 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 at such time that are owned by SunAmerica or by any entity directly
or indirectly controlling or controlled by or under direct or indirect common
control with SunAmerica shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
The procedures by which persons owning Preferred Securities registered in the
name of and held by DTC or its nominee may exercise their voting rights are
described under "Book-Entry; Delivery and Form" below.
Subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event, holders of the
Preferred Securities will have no rights to increase or decrease the number of
Trustees or to appoint, remove or replace a Trustee, which rights are vested
exclusively in the holders of the Common Securities.
MODIFICATION AND AMENDMENT OF THE DECLARATION
The Declaration may be modified and amended on approval of a majority of the
Regular Trustees, provided, that, (i) if any proposed modification or amendment
provides for, or the Regular Trustees otherwise propose to effect, (A) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (B) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the
outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least 66 2/3% in liquidation amount of the Trust
Securities, provided that if any amendment or proposal referred to in clause
(i) above would adversely affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of 66 2/3% in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, (i) no amendment or modification may be made
to the Declaration unless the Regular Trustees shall have obtained (A) either a
ruling from the Internal Revenue Service or a written unqualified opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that such amendment will not cause the Trust to be classified for
United States federal income tax purposes as an association taxable as a
corporation or a partnership and to the effect that the Trust will continue to
be treated as a grantor trust for purposes of United States federal income
taxation and (B) a written unqualified opinion of nationally recognized
independent counsel experienced in such matters to the effect that such
amendment will not cause the Trust to be an "investment company" which is
required to be registered under the 1940 Act; (ii) certain specified provisions
of the Declaration may not be amended without the consent of all of the holders
of the Trust Securities, (iii) no amendment which adversely affects the rights,
powers and privileges of the Property Trustee shall be made without the consent
of the Property Trustee, (iv) Article IV of the Declaration relating to the
obligation of SunAmerica to purchase the Common Securities and to pay certain
obligations and expenses of the Trust as described under "The SunAmerica Trust"
in the accompanying Prospectus may not be amended without the consent of
SunAmerica, (v) the rights of holders of Common Securities under Article V of
the Declaration to increase or decrease the number of, and to appoint, replace
or remove, Trustees (other than a Special Regular Trustee) shall not be amended
without the consent of each holder of Common Securities and (vi) the rights of
holders of Preferred Securities under the Declaration to appoint or remove a
Special Regular Trustee shall not be amended without the consent of each holder
of Preferred Securities.
The Declaration further provides that it may be amended without the consent
of the holders of the Trust Securities to (i) cure any ambiguity, (ii) correct
or supplement any provision in the Declaration that may be defective or
inconsistent with any other provision of the Declaration, (iii) to add to the
covenants, restrictions
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or obligations of SunAmerica, and (iv) to conform to changes in, or a change in
interpretation or application of certain 1940 Act requirements by the
Commission, which amendment does not adversely affect the rights, preferences
or privileges of the holders.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as fully
registered securities registered in the name of DTC or its nominee. One or more
fully-registered global Preferred Securities certificates (each a "Preferred
Securities Global Certificate"), representing the total aggregate number of
Preferred Securities, will be issued and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Upon issuance of a Preferred Securities Global Certificate, DTC will credit
on its book-entry registration and transfer system the number of Preferred
Securities represented by such Preferred Securities Global Certificate to the
accounts of institutions that have accounts with DTC. Ownership of beneficial
interests in a Preferred Securities Global Certificate will be limited to
Participants or persons that may hold interests through Participants. The
ownership interest of each actual purchaser of each Preferred Security
("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. Transfers
of ownership interests in the Preferred Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers. So long as DTC, or its
nominee, is the owner of a Preferred Securities Global Certificate, DTC or such
nominee, as the case may be, will be considered the sole owner and holder of
record of the Preferred Securities represented by such Preferred Securities
Global Certificate for all purposes.
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 will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
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Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of interest
of each Direct Participant in the Preferred Securities in accordance with its
procedures.
Although voting with respect to the Preferred Securities is limited, in those
instances in which a vote is required, neither DTC nor Cede & Co. itself will
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus proxy).
Distribution payments on the Preferred Securities represented by a Preferred
Series Global Certificate will be made by the Property 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 Participants and not of DTC, the Trust or SunAmerica, 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 Trust,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, if a successor securities depository is
not obtained, Preferred Security certificates will be required to be printed
and delivered. Additionally, the Trust may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depository). In that
event, certificates for the Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Trust and SunAmerica believe to be
reliable. Neither the Trust nor SunAmerica has any responsibility for the
performance by DTC or its Participants of their respective obligations as
described hereunder or under the rules and procedures governing their
respective operations.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
In the event the Preferred Securities do not remain in book-entry only form,
the following provisions will apply:
Payment of distributions and payments on redemption of the Preferred
Securities will be payable, the transfer of the Preferred Securities will be
registrable, and Preferred Securities will be exchangeable for Preferred
Securities of other denominations of a like aggregate liquidation amount, at
the principal corporate trust office of the Property Trustee in The City of New
York; provided that payment of distributions may be made at the option of the
Regular Trustees on behalf of the Trust by check mailed to the address of the
persons entitled thereto and that the payment on redemption of any Preferred
Security will be made only upon surrender of such Preferred Security to the
Property Trustee.
The Bank of New York or one of its affiliates will act as registrar and
transfer agent for the Preferred Securities. The Bank of New York will also act
as paying agent and, with the consent of the Regular Trustees, may designate
additional paying agents.
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Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or SunAmerica may require) in respect of any tax or
other governmental charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to a default with respect to the Trust
Securities, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall 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 Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Property 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 Property Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
SunAmerica and certain of its affiliates maintain a deposit account and
banking relationship with the Property Trustee.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to take such action as they
deem reasonable in order that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act or that the Trust will
not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership and will be treated as a
grantor trust for United States federal income tax purposes. In this
connection, the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust or the Declaration,
that the Regular Trustees determine in their discretion to be reasonable and
necessary or desirable for such purposes, as long as such action does not
adversely affect the interests of holders of the Trust Securities.
SunAmerica and the Regular Trustees on behalf of the Trust will be required
to provide to the Property Trustee annually a certificate as to whether or not
SunAmerica and the Trust, respectively, is in compliance with all the
conditions and covenants under the Declaration.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated Debentures in
which the Trust will invest the proceeds from the issuance and sale of the
Trust Securities and which will be deposited in the Trust as trust assets. The
terms of the Junior Subordinated Debentures include those stated in the
Indenture dated March 15, 1995 (the "Base Indenture") between SunAmerica and
The First National Bank of Chicago, as trustee (the "Indenture Trustee") as
supplemented by the Second Supplemental Indenture to be dated as of October 11,
1995 between SunAmerica and the Indenture Trustee (as so supplemented, the
"Indenture"), forms of which have been filed as exhibits to the Registration
Statement of which this
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Prospectus Supplement forms a part, and those made part of the Indenture by the
Trust Indenture Act. This description supplements the description of the
general terms and provisions of the Subordinated Debt Securities set forth in
the accompanying Prospectus under the caption "Description of the Junior
Subordinated Debt Securities." The following description is qualified in its
entirety by reference to the Indenture and the Trust Indenture Act. Whenever
particular provisions or defined terms in the Indenture are referred to herein,
such provisions or defined terms are incorporated by reference herein. Section
and Article references used herein are references to provisions of the
Indenture.
The Indenture does not limit the aggregate principal amount of indebtedness
which may be issued thereunder and provides that junior subordinated debentures
may be issued thereunder from time to time in one or more series (collectively,
together with the Junior Subordinated Debentures, the "Subordinated
Debentures"). As of the date of this Prospectus Supplement, $54.3 million
principal amount of indebtedness was outstanding under the Base Indenture. The
Junior Subordinated Debentures constitute a separate series under the
Indenture.
Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Special Event, Junior Subordinated Debentures may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution".
GENERAL
The Junior Subordinated Debentures are unsecured, subordinated obligations of
SunAmerica, limited in aggregate principal amount to $181.2 million ($207.5
million if the Underwriters' overallotment option is exercised in full), which
amount is equal to the sum of (i) the stated liquidation amount of the
Preferred Securities issued by the Trust and (ii) the proceeds received by the
Trust upon issuance of the Common Securities to SunAmerica (which proceeds will
be used to purchase an equal principal amount of Junior Subordinated
Debentures).
The entire principal amount of the Junior Subordinated Debentures will become
due and payable, together with any accrued and unpaid interest thereon, on
December 30, 2044. The Junior Subordinated Debentures are not subject to any
sinking fund.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in dissolution of the Trust, such Junior Subordinated Debentures
will initially be issued as a Global Security (as defined below). As described
herein, under certain limited circumstances, Junior Subordinated Debentures may
be issued in certificated form in exchange for a Global Security. See "Book-
Entry and Settlement" below. In the event that Junior Subordinated Debentures
are issued in certificated form, such Junior Subordinated Debentures will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated
Debentures issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no depositary is used, to a paying agent for
the Junior Subordinated Debentures.
In the event that Junior Subordinated Debentures are issued in certificated
form, payments of principal and interest will be payable, the transfer of the
Junior Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office of the Indenture Trustee in The City of New York; provided that payment
of interest may be made at the option of SunAmerica by check mailed to the
address of the persons entitled thereto and that the payment of principal with
respect to any Junior Subordinated Debenture will be made only upon surrender
of such Junior Subordinated Debenture to the Indenture Trustee.
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the dissolution of the Trust, SunAmerica will use its
best efforts to list the Junior Subordinated Debentures on the NYSE or on such
other exchange on which the Preferred Securities are then listed.
S-24
<PAGE>
OPTIONAL REDEMPTION
Except as provided below, the Junior Subordinated Debentures may not be
redeemed prior to September 30, 2000. SunAmerica shall have the right to redeem
the Junior Subordinated Debentures, in whole or in part, from time to time, on
or after September 30, 2000, upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed, plus any accrued and unpaid interest, to the redemption date,
including interest accrued during an Extension Period. SunAmerica will also
have the right to redeem the Junior Subordinated Debentures at any time upon
the occurrence of a Tax Event if certain conditions are met as described under
"Description of the Preferred Securities--Special Event Redemption or
Distribution".
If SunAmerica gives a notice of redemption in respect of Junior Subordinated
Debentures (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, SunAmerica will deposit irrevocably with the
Indenture Trustee funds sufficient to pay the applicable redemption price and
will give irrevocable instructions and authority to pay such redemption price
to the holders of the Junior Subordinated Debentures. If notice of redemption
shall have been given and funds deposited as required, then upon the date of
such deposit, interest will cease to accrue on the Junior Subordinated
Debentures called for redemption, such Junior Subordinated Debentures will no
longer be deemed to be outstanding and all rights of holders of such Junior
Subordinated Debentures so called for redemption will cease, except the right
of the holders of such Junior Subordinated Debentures to receive the applicable
redemption price, but without interest on such redemption price. If any date
fixed for redemption of Junior Subordinated Debentures is not a Business Day,
then payment of the redemption price 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 falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the redemption price in
respect of Junior Subordinated Debentures is improperly withheld or refused and
not paid by SunAmerica, interest on such Junior Subordinated Debentures will
continue to accrue, from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price. If
fewer than all of the Junior Subordinated Debentures are to be redeemed, the
Junior Subordinated Debentures to be redeemed shall be selected by lot or pro
rata or in some other equitable manner determined by the Indenture Trustee.
In the event of any redemption in part, SunAmerica shall not be required to
(i) issue, register the transfer of or exchange any Junior Subordinated
Debentures during a period beginning at the opening of business 15 days before
any selection for redemption of Junior Subordinated Debentures and ending at
the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures to be redeemed and (ii) register the transfer of or exchange any
Junior Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Debentures being
redeemed in part. (Section 2.05).
INTEREST
The Junior Subordinated Debentures will bear interest at the rate of 8.35%
per annum from the original date of issuance. Interest will be payable
quarterly in arrears on March 30, June 30, September 30 and December 30 of each
year (each, an "Interest Payment Date"), commencing on December 30, 1995, to
the person in whose name such Junior Subordinated Debenture is registered,
subject to certain exceptions, at the close of business on the Business Day
next preceding such Interest Payment Date. In the event (i) the Preferred
Securities shall not continue to remain in book-entry only form or (ii) if
following distribution of the Junior Subordinated Debentures to holders of
Trust Securities upon dissolution of the Trust as described under "Description
of the Preferred Securities", the Junior Subordinated Debentures shall not
continue to remain in book-entry only form, SunAmerica shall have the right to
select record dates which shall be more than one Business Day prior to each
Interest Payment Date. Interest payable on any Junior Subordinated
S-25
<PAGE>
Debenture that is not punctually paid or duly provided for on any interest
payment date will forthwith cease to be payable to the person in whose name
such Junior Subordinated Debenture is registered on the relevant record date,
and such defaulted interest will instead be payable to the person in whose name
such Junior Subordinated Debenture is registered on the special record date or
other specified date determined in accordance with the Indenture; provided,
however, that interest shall not be considered payable by SunAmerica on any
interest payment date falling within an Extension Period unless SunAmerica has
elected to make a full or partial payment of interest accrued on the Junior
Subordinated Debentures on such interest payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and for any period shorter than a
full quarterly period for which interest is computed, the amount of interest
payable will be computed on the basis of the actual number of days lapsed in
such a 30-day month. If any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as SunAmerica shall not be in default in the payment of interest on
the Junior Subordinated Debentures, SunAmerica shall have the right to extend
the interest payment period from time to time for a period not exceeding 20
consecutive quarterly interest periods. SunAmerica has no current intention of
exercising its right to extend an interest payment period. No interest shall be
due and payable during an Extension Period, except at the end thereof. During
any Extension Period, SunAmerica shall not declare or pay any dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock or make any guarantee
payments with respect thereto; provided that (i) SunAmerica will be permitted
to pay accrued dividends (and cash in lieu of fractional shares) upon the
conversion of any of its Series D Preferred Stock or upon conversion of any
other series of preferred stock of SunAmerica as may be outstanding from time
to time, in each case in accordance with the terms of such stock and (ii) the
foregoing will not apply to stock dividends paid by SunAmerica. Prior to the
termination of any such Extension Period, SunAmerica may further extend the
interest payment period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. On the interest payment date occurring at the end
of each Extension Period, SunAmerica shall pay to the holders of Junior
Subordinated Debentures of record on the record date for such interest payment
date (regardless of who the holders of record may have been on other dates
during the Extension Period) all accrued and unpaid interest on the Junior
Subordinated Debentures, together with interest thereon at the rate specified
for the Junior Subordinated Debentures to the extent permitted by applicable
law, compounded quarterly ("Compounded Interest"). Upon the termination of any
Extension Period and the payment of all amounts then due, SunAmerica may
commence a new Extension Period, subject to the above requirements. SunAmerica
may also prepay at any time all or any portion of the interest accrued during
an Extension Period. Consequently, there could be multiple Extension Periods of
varying lengths (up to nine Extension Periods of 20 consecutive quarterly
interest periods each or more numerous shorter Extension Periods) throughout
the term of the Junior Subordinated Debentures. The failure by SunAmerica to
make interest payments during an Extension Period would not constitute a
default or an event of default under the Indenture or SunAmerica's currently
outstanding indebtedness.
If the Property Trustee shall be the sole holder of the Junior Subordinated
Debentures, SunAmerica shall give the Property Trustee notice of its selection
of such Extension Period one Business Day prior to the earlier of (i) the date
the distributions on the Preferred Securities are payable or (ii) the date the
Trust is required to give notice to the NYSE or other applicable self-
regulatory organization or to holders of the Preferred Securities of the record
date or the date such distribution is payable. The Trust shall give notice of
SunAmerica's selection of such Extension Period to the holders of the Preferred
Securities.
S-26
<PAGE>
If Junior Subordinated Debentures have been distributed to holders of Trust
Securities, SunAmerica shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
the date SunAmerica is required to give notice to the NYSE (if the Junior
Subordinated Debentures are then listed thereon) or other applicable self-
regulatory organization or to holders of the Junior Subordinated Debentures of
the record or payment date of such related interest payment.
COMPOUNDED INTEREST
Payments of Compounded Interest on the Junior Subordinated Debentures held by
the Trust will make funds available to pay any interest on distributions in
arrears in respect of the Preferred Securities pursuant to the terms thereof.
BOOK-ENTRY AND SETTLEMENT
If any Junior Subordinated Debentures are distributed to holders of Preferred
Securities (see "Description of the Preferred Securities"), such Junior
Subordinated Debentures will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the
Depositary or its nominee. Except under the limited circumstances described
below, Junior Subordinated Debentures represented by the Global Security will
not be exchangeable for, and will not otherwise be issuable as, Junior
Subordinated Debentures in definitive form. The Global Securities described
above may not be transferred except by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the depositary or if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest to exercise any rights of a holder under the Indenture. If
Junior Subordinated Debentures are distributed to holders of Preferred
Securities, DTC will act as securities depositary for the Junior Subordinated
Debentures.
For a description of DTC and DTC's book-entry system, see "Description of
Preferred Securities--Book-Entry Only Issuance--The Depository Trust Company."
As of the date of this Prospectus Supplement, the description herein of DTC's
book-entry system and DTC's practices as they relate to purchases, transfers,
notices and payments with respect to the Preferred Securities apply in all
material respects to any debt obligations represented by one or more Global
Securities held by DTC. SunAmerica may appoint a successor to DTC or any
successor depositary in the event DTC or such successor depositary is unable or
unwilling to continue as a depository for the Global Securities.
None of SunAmerica, the Indenture Trustee, any paying agent and any other
agent of SunAmerica or the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
S-27
<PAGE>
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the depositary or its nominee
only if (i) the depositary notifies SunAmerica that it is unwilling or unable
to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) SunAmerica, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Junior Subordinated Debentures. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Junior
Subordinated Debentures registered in such names as the depositary shall
direct. It is expected that such instructions will be based upon directions
received by the depositary from its Participants with respect to ownership of
beneficial interests in such Global Security.
RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the Trust exists for the sole purpose of (a)
issuing the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust, and investing the proceeds from such issuance and sale in
the Junior Subordinated Debentures and (b) engaging in such other activities as
are necessary and incidental thereto.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities primarily
because (i) the aggregate principal amount of Junior Subordinated Debentures
held as trust assets will be equal to the sum of the aggregate stated
liquidation amount of the Preferred Securities and the proceeds received by the
Trust upon issuance of the Common Securities to SunAmerica; (ii) the interest
rate and interest and other payment dates on the Junior Subordinated Debentures
will match the distribution rate and distribution and other payment dates for
the Preferred Securities; (iii) the Declaration provides that SunAmerica shall
pay for all debts and obligations (other than with respect to the Trust
Securities) and all costs and expenses of the Trust, including any taxes and
all costs and expenses with respect thereto, to which the Trust may become
subject, except for United States withholding taxes; and (iv) the Declaration
further provides that the Trustees shall not cause or permit the Trust, among
other things, to engage in any activity that is not consistent with the limited
purposes of the Trust. With respect to clause (iii) above, however, no
assurance can be given that SunAmerica will have sufficient resources to enable
it to pay such debts, obligations, costs and expenses on behalf of the Trust.
Payments of distributions and other payments due on the Preferred Securities
are guaranteed by SunAmerica on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee" in the
accompanying Prospectus. If SunAmerica does not make interest or other payments
on the Junior Subordinated Debentures, the Trust will not make distributions or
other payments on the Preferred Securities. Under the Declaration, if and to
the extent SunAmerica does make interest or other payments on the Junior
Subordinated Debentures, the Property Trustee is obligated to make
distributions or other payments on the Preferred Securities. The Preferred
Securities Guarantee is a full and unconditional guarantee from the time of
issuance of the Preferred Securities, but the Preferred Securities Guarantee
covers distributions and other payments on the Preferred Securities only if and
to the extent that SunAmerica has made a payment to the Property Trustee of
interest or principal on the Junior Subordinated Debentures deposited in the
Trust as trust assets.
If an Appointment Event occurs, the Declaration provides that the holders of
the Preferred Securities may appoint a Special Regular Trustee who will have
the same rights, powers and privileges under the Declaration as the Regular
Trustees. The Property Trustee will have the power to exercise all rights,
powers and privileges under the Indenture with respect to the Junior
Subordinated Debentures, including its rights as the holder of the Junior
Subordinated Debentures to enforce SunAmerica's obligations under the Junior
S-28
<PAGE>
Subordinated Debentures upon the occurrence of an Indenture Event of Default,
and will also have the right to enforce the Preferred Securities Guarantee on
behalf of the holders of the Preferred Securities. In addition, the holders of
at least a majority in liquidation amount of the Preferred Securities will have
the right to direct the Property Trustee with respect to certain matters under
the Declaration and the Preferred Securities Guarantee. If the Property Trustee
fails to enforce its rights under the Indenture or fails to enforce the
Preferred Securities Guarantee, any holder of Preferred Securities may
institute a legal proceeding against SunAmerica to enforce such rights or the
Preferred Securities Guarantee, as the case may be. See "Description of the
Preferred Securities" and "Description of the Preferred Securities Guarantee"
in the accompanying Prospectus.
SunAmerica's obligations under the Declaration, the Preferred Securities
Guarantee, the Indenture and the Junior Subordinated Debentures in the
aggregate provide a full and unconditional guarantee on a subordinated basis by
SunAmerica of payments due on the Preferred Securities.
TAXATION
In the opinion of Davis Polk & Wardwell, counsel to SunAmerica and the Trust,
the following are the material United States federal income tax consequences of
the ownership and disposition of Preferred Securities. Unless otherwise stated,
this summary deals only with Preferred Securities held as capital assets by
holders who acquire the Preferred Securities upon original issuance ("Initial
Holders"). It does not deal with special classes of holders, such as dealers in
securities or currencies, life insurance companies, persons holding Preferred
Securities as a hedge against or which are hedged against currency risks or as
part of a straddle, or persons whose functional currency is not the United
States dollar. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations thereunder and administrative and
judicial interpretations thereof as of the date hereof, all of which are
subject to change (possibly on a retroactive basis).
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF
ANY STATE, LOCAL OR OTHER TAX LAWS.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Davis Polk &
Wardwell, counsel to SunAmerica and the Trust, will render its opinion
generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration, the Trust will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, each holder of Preferred
Securities (a "Securityholder") will be considered the owner of a pro rata
portion of the Junior Subordinated Debentures held by the Trust. Accordingly,
each Securityholder will be required to include in gross income his pro rata
share of income accrued on the Junior Subordinated Debentures.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT AND PREMIUM
The Junior Subordinated Debentures will be considered to have been issued
with "original issue discount" and each Securityholder, including a taxpayer
who otherwise uses the cash method of accounting, will be required to include
his pro rata share of original issue discount on the Junior Subordinated
Debentures in income as it accrues, in accordance with a constant yield method
based on a compounding of interest, before the receipt of cash distributions on
the Preferred Securities. Generally, all of a Securityholder's taxable interest
income with respect to the Junior Subordinated Debentures will be accounted for
as "original issue discount" and actual distributions of stated interest will
not be separately reported as taxable income. So long as the interest payment
period is not extended, cash distributions received by an Initial Holder for
any
S-29
<PAGE>
quarterly interest period (assuming no disposition prior to the record date for
such distribution) will equal the sum of the daily accruals of income for such
quarterly interest period, assuming the issue price of the Junior Subordinated
Debentures (as defined below) is $25.
The total amount of "original issue discount" on the Junior Subordinated
Debentures will equal the difference between the "issue price" of the Junior
Subordinated Debentures and their "stated redemption price at maturity."
Because SunAmerica has the right to extend the interest payment period of the
Junior Subordinated Debentures, all of the stated interest payments on the
Junior Subordinated Debentures will be includible in determining their "stated
redemption price at maturity." The "issue price" of each $25 principal amount
of Junior Subordinated Debentures will be equal to the first price to the
public at which a substantial amount of the Preferred Securities is sold for
cash, which is expected to be $25.
A Securityholder's initial tax basis for his pro rata share of the Junior
Subordinated Debentures will be equal to his pro rata share of their "issue
price," as defined above, and will be increased by original issue discount
accrued with respect to his pro rata share of the Junior Subordinated
Debentures, and reduced by the amount of cash distributions with respect
thereto. No portion of the amounts received on the Preferred Securities will be
eligible for the dividends received deduction.
POTENTIAL EXTENSION OF PAYMENT PERIOD ON THE JUNIOR SUBORDINATED DEBENTURES
Securityholders will continue to accrue original issue discount with respect
to their pro rata share of the Junior Subordinated Debentures during an
extended interest payment period, and any holders who dispose of Preferred
Securities prior to the record date for the payment of interest following such
extended interest payment period will not receive from the Trust any cash
related thereto.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by the Trust of the Junior Subordinated
Debentures as described under the caption "Description of the Preferred
Securities--Special Event Redemption or Distribution", will be non-taxable and
will result in the Securityholder receiving directly his pro rata share of the
Junior Subordinated Debentures previously held indirectly through the Trust,
with a holding period and tax basis equal to the holding period and adjusted
tax basis such Securityholder was considered to have had in his pro rata share
of the underlying Junior Subordinated Debentures prior to such distribution.
MARKET DISCOUNT AND BOND PREMIUM
Securityholders other than Initial Holders may be considered to have acquired
their pro rata interest in the Junior Subordinated Debentures with market
discount, acquisition premium or amortizable bond premium. Such holders are
advised to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.
DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the Preferred Securities
(including a distribution of cash in redemption of a Securityholder's Preferred
Securities upon redemption or repayment of the underlying Junior Subordinated
Debentures, but excluding the distribution of Junior Subordinated Debentures),
a Securityholder will be considered to have disposed of all or part of his pro
rata share of the Junior Subordinated Debentures, and will recognize gain or
loss equal to the difference between the amount realized and the
Securityholder's adjusted tax basis in his pro rata share of the underlying
Junior Subordinated Debentures deemed disposed of. Gain or loss will be capital
gain or loss (except to the extent of any accrued market discount with respect
to such Securityholder's pro rata share of the Junior Subordinated Debentures
not previously included in income). See "Market Discount and Bond Premium"
above. Such gain or loss will be long-term capital gain or loss if the
Preferred Securities have been held for more than one year.
S-30
<PAGE>
The Preferred Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A Securityholder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will
nevertheless be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income, and to add such amount to his adjusted tax basis in his pro rata share
of the underlying Junior Subordinated Debentures deemed disposed of.
Accordingly, such a Securityholder will recognize a capital loss to the extent
the selling price (which may not fully reflect the value of accrued but unpaid
interest) is less than the Securityholder's adjusted tax basis (which will
include accrued but unpaid interest). Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust.
Under present United States Federal income tax law:
(i) payments by the Trust or any of its paying agents to any holder of a
Preferred Security who or which is a United States Alien Holder will not be
subject to United States federal withholding tax, provided that (a) the
beneficial owner of the Preferred Security does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of SunAmerica entitled to vote, (b) the beneficial owner
of the Preferred Security is not a controlled foreign corporation that is
related to SunAmerica through stock ownership, and (c) either (A) the
beneficial owner of the Preferred Security certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder
and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and holds the Preferred Security certifies to the Trust or
its agent under penalties of perjury that such statement has been received
from the beneficial owner by it or by a Financial Institution between it
and the beneficial owner and furnishes the Trust or its agent with a copy
thereof; and
(ii) A United States Alien Holder of a Preferred Security will not be
subject to United States federal withholding tax on any gain realized upon
the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
The Trust will report the original issue discount that accrued during the
year with respect to the Junior Subordinated Debentures, and any gross proceeds
received by the Trust from the retirement or redemption of the Junior
Subordinated Debentures, annually to the holders of record of the Preferred
Securities and the Internal Revenue Service. The Trust currently intends to
deliver such reports to holders of record prior to January 31 following each
calendar year. It is anticipated that persons who hold Preferred Securities as
nominees for beneficial holders will report the required tax information to
beneficial holders on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of Preferred Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax, provided the
required information is timely filed with the Internal Revenue Service.
S-31
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated the date hereof (the "Underwriting Agreement"), SunAmerica and the Trust
have agreed that the Trust will sell to each of the Underwriters named below,
and each of the Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Dean Witter Reynolds Inc., PaineWebber Incorporated, Prudential
Securities Incorporated and Smith Barney Inc. are acting as representatives
(the "Representatives"), has severally agreed to purchase the number of
Preferred Securities set forth opposite its name below. In the Underwriting
Agreement, the several Underwriters have agreed, subject to the terms and
conditions set forth therein, to purchase all the Preferred Securities offered
hereby if any of the Preferred Securities are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting Underwriters may
be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................ 1,020,000
Dean Witter Reynolds Inc......................................... 1,020,000
PaineWebber Incorporated......................................... 1,020,000
Prudential Securities Incorporated............................... 1,020,000
Smith Barney Inc. ............................................... 1,020,000
Advest, Inc. .................................................... 100,000
Robert W. Baird & Co. Incorporated............................... 100,000
Bear, Stearns & Co. Inc. ........................................ 100,000
Crowell, Weedon & Co. ........................................... 100,000
Dain Bosworth Incorporated....................................... 100,000
Dillon, Read & Co. Inc. ......................................... 100,000
Doft & Co., Inc. ................................................ 100,000
Donaldson, Lufkin & Jenrette Securities Corporation.............. 100,000
A.G. Edwards & Sons, Inc. ....................................... 100,000
EVEREN Securities, Inc. ......................................... 100,000
Gruntal & Co., Incorporated...................................... 100,000
Edward D. Jones & Co. ........................................... 100,000
Legg Mason Wood Walker, Incorporated............................. 100,000
Piper Jaffray Inc. .............................................. 100,000
Rauscher Pierce Refsnes, Inc. ................................... 100,000
Raymond James & Associates, Inc. ................................ 100,000
Sutro & Co. Incorporated......................................... 100,000
Tucker Anthony Incorporated...................................... 100,000
Wheat, First Securities, Inc. ................................... 100,000
---------
Total....................................................... 7,000,000
=========
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession of $.50 per Preferred Security, provided that such
concession for sales of 10,000 or more Preferred Securities to any single
purchaser will be $.30 per Preferred Security. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $.30 per Preferred
Security to certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred Securities
will be used to purchase the Junior Subordinated Debentures of SunAmerica, the
Underwriting Agreement provides that SunAmerica will agree to pay as
compensation ("Underwriters' Compensation") for the Underwriters' arranging the
S-32
<PAGE>
investment therein of such proceeds, an amount in New York Clearing House (next
day) funds of $.7875 per Preferred Security or $5,512,500 in the aggregate)
($6,339,375 in the aggregate if the Underwriters' overallotment option is
exercised in full) for the accounts of the several Underwriters, provided that
such compensation for sales of 10,000 or more Preferred Securities to any
single purchaser will be $.50 per Preferred Security. Therefore, to the extent
of such sales, the actual amount of Underwriters' Compensation will be less
than the aggregate amount specified in the preceding sentence.
Pursuant to the Underwriting Agreement, the Trust and SunAmerica have granted
to the Underwriters an option for 30 days to purchase up to an additional
1,050,000 Preferred Securities at the offering price per Preferred Security set
forth on the cover page hereof, solely to cover overallotments. SunAmerica will
pay Underwriters' Compensation in the amounts per Preferred Security set forth
above with respect to such additional Preferred Securities. To the extent such
option is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
Preferred Securities as the number set forth next to such Underwriter's name in
the preceding table bears to the total number of Preferred Securities offered
by the Underwriters hereby.
During a period of 30 days from the date of the Prospectus Supplement,
neither the Trust nor SunAmerica will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any Preferred Securities, any security
convertible into or exchangeable into or exercisable for Preferred Securities
or any equity securities substantially similar to the Preferred Securities
(except for any series of Junior Subordinated Debentures and the Preferred
Securities offered hereby).
The Preferred Securities have been approved for listing on the NYSE, subject
to notice of issuance. Trading of the Preferred Securities on the NYSE is
expected to commence within a 30-day period after the date of this Prospectus
Supplement. The Representatives have advised the Trust that they intend to make
a market in the Preferred Securities prior to the commencement of trading on
the NYSE. The Representatives will have no obligation to make a market in the
Preferred Securities, however, and may cease market making activities, if
commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or
more Preferred Securities to a minimum of 400 beneficial holders.
SunAmerica has agreed to indemnify the Underwriters against, or contribute to
payments that the Underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, SunAmerica and its subsidiaries in the
ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Trust by Richards, Layton & Finger,
Wilmington, Delaware, special Delaware counsel to the Trust. The validity of
the Preferred Securities Guarantee and the Junior Subordinated Debentures will
be passed upon for the Trust and SunAmerica by Davis Polk & Wardwell, New York,
New York, special counsel to SunAmerica and the Trust. Certain legal matters
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California. Davis Polk & Wardwell and Skadden, Arps, Slate,
Meagher & Flom will rely as to matters of Maryland law on Piper & Marbury
L.L.P., Baltimore, Maryland. Certain legal matters in connection with the
Preferred Securities, the Preferred Securities Guarantee and the Junior
Subordinated Debentures will be passed upon for the Trust and SunAmerica by
Susan L. Harris, Vice President and General Counsel--Corporate Affairs of
SunAmerica. Ms. Harris holds options, granted under SunAmerica's Employee Stock
Plan, to purchase in the aggregate less than 1% of SunAmerica's common stock.
David W. Ferguson, a partner of Davis Polk & Wardwell, is a director of First
SunAmerica Life Insurance Company, a subsidiary of SunAmerica. Skadden, Arps,
Slate, Meagher & Flom from time to time provides services to SunAmerica and its
subsidiaries.
S-33
<PAGE>
PROSPECTUS
LOGO SunAmerica
SUNAMERICA INC.
JUNIOR SUBORDINATED DEBT SECURITIES
SUNAMERICA CAPITAL TRUST II
SUNAMERICA CAPITAL TRUST III
SUNAMERICA CAPITAL TRUST IV
PREFERRED SECURITIES GUARANTEED TO THE EXTENT SET FORTH HEREIN BY SUNAMERICA
INC.
---------------
SunAmerica Inc. (the "Company") may offer and sell from time to time
unsecured junior subordinated debt securities (the "Junior Subordinated Debt
Securities") consisting of debentures, notes or other evidences of
indebtedness in one or more series and in amounts, at prices and on terms to
be determined at or prior to the time of any such offering. The Junior
Subordinated Debt Securities when issued will be unsecured obligations of the
Company. The Company's obligations under the Junior Subordinated Debt
Securities will be subordinate and junior in right of payment to all Senior
Indebtedness (as defined herein) of the Company.
SunAmerica Capital Trust II, SunAmerica Capital Trust III and SunAmerica
Capital Trust IV (each, a "SunAmerica Trust"), each a statutory business trust
formed under the laws of the State of Delaware, may offer and sell, from time
to time, preferred securities representing undivided beneficial interests in
the assets of the respective SunAmerica Trust ("Preferred Securities"). The
payment of periodic cash distributions ("distributions") with respect to
Preferred Securities of each of the SunAmerica Trusts out of moneys held by
the Property Trustee (as defined herein) of each of the SunAmerica Trusts, and
payments on liquidation of each SunAmerica Trust and on redemption of
Preferred Securities of such SunAmerica Trust, will be guaranteed by the
Company as and to the extent described herein (each, a "Preferred Securities
Guarantee"). See "Description of the Preferred Securities Guarantees". The
Company's obligation under each Preferred Securities Guarantee is an unsecured
obligation of the Company and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Company, including the Junior
Subordinated Debt Securities, except those made pari passu or subordinate by
their terms, and (ii) senior to all capital stock now or hereafter issued by
the Company and to any guarantee now or hereafter entered into by the Company
in respect of any of its capital stock. Junior Subordinated Debt Securities
may be issued and sold from time to time in one or more series by the Company
to a SunAmerica Trust, or a trustee of such trust, in connection with the
investment of the proceeds from the offering of Preferred Securities and
Common Securities (as defined herein) of such SunAmerica Trust. The Junior
Subordinated Debt Securities purchased by a SunAmerica Trust may be
subsequently distributed pro rata to holders of Preferred Securities and
Common Securities in connection with the dissolution of such SunAmerica Trust,
upon the occurrence of certain events as may be described in an accompanying
Prospectus Supplement.
Specific terms of the Junior Subordinated Debt Securities of any series or
the Preferred Securities of any SunAmerica Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
a Prospectus Supplement with respect to such Offered Securities, which will
describe, without limitation and where applicable, the following: (i) in the
case of Junior Subordinated Debt Securities, the specific designation,
aggregate principal amount, authorized denomination, maturity, premium, if
any, redemption or sinking fund provisions, if any, interest rate (which may
be fixed or variable), if any, the time and method of calculating interest
payments, if any, dates on which premium, if any, and interest, if any, will
be payable, the right of the Company, if any, to defer payments of interest on
the Junior Subordinated Debt Securities and the maximum length of such
deferral period, the initial public offering price, and any listing on a
securities exchange and other specific terms of the offering; and (ii) in the
case of Preferred Securities, the specific designation, number of securities,
liquidation amount per security, initial public offering price, and any
listing on a securities exchange, distribution rate (or method of calculation
thereof), dates on which distributions shall be payable and dates from which
distributions shall accrue, voting rights (if any), terms for any conversion
or exchange into other securities, any redemption or sinking fund provisions,
any other rights, preferences, privileges, limitations or restrictions
relating to the Preferred Securities and the terms upon which the proceeds of
the sale of the Preferred Securities shall be used to purchase a specific
series of Junior Subordinated Debt Securities of the Company.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering. Any Prospectus Supplement relating to
any series of Offered Securities will contain information concerning certain
United States federal income tax considerations, if applicable to the Offered
Securities. By separate prospectus, the form of which is included in the
Registration Statement of which this Prospectus is a part, the Company may
offer from time to time debt securities (both senior and subordinated),
Preferred Stock (or depositary shares representing Preferred Stock), Common
Stock or Warrants to purchase any of the foregoing. The aggregate initial
public offering price of the securities to be offered by this Prospectus and
such other prospectus shall not exceed $1,000,000,000.
---------------
The Company and/or each of the SunAmerica Trusts may sell the Offered
Securities directly, through agents designated from time to time or through
underwriters or dealers. See "Plan of Distribution" below. If any agents of
the Company and/or any SunAmerica Trust or any underwriters or dealers are
involved in the sale of the Offered Securities, the names of such agents,
underwriters or dealers and any applicable commissions and discounts will be
set forth in any related Prospectus Supplement. The managing underwriter or
underwriters with respect to each series sold to or through underwriters will
be named in the accompanying Prospectus Supplement. See "Plan of Distribution"
for possible indemnification arrangements for dealers, underwriters and
agents.
---------------
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 September 29, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed by the Company with the Commission can be inspected and
copied at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the public reference facilities of the regional
offices in Chicago and New York. The addresses of these regional offices are as
follows: 500 West Madison Street, Chicago, Illinois 60661, and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material also can
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington D.C. 20549, upon payment of the fees prescribed
by the rules and regulations of the Commission. Reports, proxy statements, and
other information concerning the Company may also be inspected at the offices
of the New York Stock Exchange, Inc. at 20 Broad Street, New York, New York
10005 and at the offices of the Pacific Stock Exchange at 301 Pine Street, San
Francisco, California 94104. The Company's Common Stock is listed on both
exchanges.
The Company and the SunAmerica Trusts have filed with the Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the Registration Statement and exhibits thereto. In addition, certain documents
filed by the Company with the Commission have been incorporated in this
Prospectus by reference. See "Incorporation of Certain Documents by Reference."
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
subject to and qualified in its entirety by such reference. For further
information with respect to the Company, the SunAmerica Trusts and the
securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, and the documents incorporated herein by
reference.
No separate financial statements of any of the SunAmerica Trusts have been
included or incorporated by reference herein. The Company and the SunAmerica
Trusts do not consider that such financial statements would be material to
holders of the Preferred Securities because (i) all of the voting securities of
each SunAmerica Trust will be owned, directly or indirectly, by the Company, a
reporting company under the 1934 Act, (ii) each of the SunAmerica Trusts is a
newly-formed special purpose entity, has no operating history, has no
independent operations and is not engaged in, and does not propose to engage
in, any activity other than issuing Trust Securities (as defined herein)
representing undivided beneficial interests in the assets of such SunAmerica
Trust and investing the proceeds thereof in Junior Subordinated Debt Securities
issued by the Company and (iii) the obligations of each of the SunAmerica
Trusts under the Preferred Securities of that SunAmerica Trust are fully and
unconditionally guaranteed by the Company as and to the extent described
herein. See "The SunAmerica Trusts", "Description of the Preferred Securities,"
"Description of the Preferred Securities Guarantees" and "Description of the
Junior Subordinated Debt Securities." The SunAmerica Trusts are statutory
business trusts formed under the laws of the State of Delaware. The Company, as
of the date of this Prospectus, beneficially owns all of the beneficial
interests in each SunAmerica Trust. Each holder of Preferred Securities of a
SunAmerica Trust will be furnished annually with unaudited financial statements
of such Trust as soon as available after the end of the Trust's fiscal year.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in the Prospectus the following
documents previously filed by the Company with the Commission pursuant to the
1934 Act:
1. Annual Report on Form 10-K for the fiscal year ended September 30, 1994.
2. Quarterly Reports on Form 10-Q for the quarters ended December 31, 1994,
March 31, 1995 and June 30, 1995.
3. Current Reports on Form 8-K filed on November 14, 1994, January 24,
1995, April 25, 1995, May 26, 1995, July 14, 1995, July 28, 1995 and
September 6, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference in the Prospectus and to be part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any and all of the information that has
been incorporated by reference in the Prospectus (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this
Prospectus incorporates). Requests for such document shall be directed to
SunAmerica Inc., 1 SunAmerica Center, Los Angeles, California 90067-6022,
Attention: Vice President, Investor Relations (telephone (310) 772-6000).
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SUNAMERICA TRUST OR ANY UNDERWRITER, DEALER OR
AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO
WHICH IT RELATES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY OR ANY SUNAMERICA TRUST SINCE
THE DATE HEREOF.
----------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars" or
"U.S.$").
3
<PAGE>
THE COMPANY
The Company is a diversified financial services company specializing in
retirement savings products and services. At June 30, 1995, the Company held
$27 billion of assets throughout its businesses, including $16.20 billion of
assets on its balance sheet, $2.08 billion of assets managed in mutual funds
and private accounts and $8.76 billion of assets under custody in retirement
trust accounts. Together, the Company's life insurance companies rank among the
largest U.S. issuers of annuities. Complementing these annuity operations are
the Company's asset management operations; its two broker-dealers, which the
Company believes, based on industry data, represent the largest network of
independent registered representatives in the nation; and its trust company,
which provides administrative and custodial services to qualified retirement
plans. Through these subsidiaries, the Company specializes in the sale of tax-
deferred long-term savings products and investments to the expanding
preretirement savings market. The Company markets fixed annuities and fee-
generating variable annuities, mutual funds and trust services, as well as
guaranteed investment contracts. The Company's products are distributed through
a broad spectrum of financial services distribution channels, including
independent registered representatives of the Company's broker-dealer
subsidiaries and unaffiliated broker-dealers, independent general insurance
agents and financial institutions.
The principal executive offices of the Company are located at 1 SunAmerica
Center, Los Angeles, California 90067-6022, telephone number (310) 772-6000.
RECENT DEVELOPMENTS
On September 20, 1995, the Company's wholly owned subsidiary, Anchor National
Life Insurance Company, signed a definitive agreement pursuant to which it or
an affiliate will acquire CalFarm Life Insurance Company ("CalFarm Life") from
its parent, Zenith National Insurance Corp., for approximately $120 million in
cash. Completion of the acquisition, expected by year-end 1995, is subject to
receipt of normal regulatory approvals and other customary terms and
conditions. CalFarm Life is headquartered in Sacramento, California and
currently markets a range of life and health insurance and annuity products,
specializing in the qualified 403(b) market for teachers and other non-profit
organizations. At June 30, 1995, CalFarm Life had approximately $739 million in
annuity and life reserves, and approximately $2.8 billion of life insurance in
force. Under terms of the agreement, Zenith National will retain CalFarm Life's
health insurance business.
On September 11, 1995, the Company's Board of Directors approved for
submission to shareholder vote an amendment to the Articles of Incorporation to
increase the Company's authorized capital from (i) 50,000,000 to 175,000,000
shares of Common Stock and (ii) 15,000,000 to 25,000,000 shares of
Nontransferable Class B Stock. The Company has scheduled a special
shareholders' meeting on October 30, 1995 (for shareholders of record as of
September 21, 1995) for consideration of the proposed increase in authorized
capital stock. On September 11, 1995, the Board of Directors also approved a
three-for-two stock split, to be effected in the form of a stock dividend, of
its outstanding Common Stock and Nontransferable Class B Stock, contingent upon
shareholder approval of the proposed increase in authorized capital stock.
4
<PAGE>
THE SUNAMERICA TRUSTS
Each of SunAmerica Capital Trust II, SunAmerica Capital Trust III and
SunAmerica Capital Trust IV is a statutory business trust formed on August 31,
1995 under the Delaware Business Trust Act (the "Business Trust Act") pursuant
to a separate declaration of trust among the Trustees (as defined herein) of
such SunAmerica Trust and the Company and the filing of a certificate of trust
with the Secretary of State of the State of Delaware on September 6, 1995. Such
declaration will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus forms a part, as of the
date the Preferred Securities of such SunAmerica Trust are initially issued.
Each Declaration is qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). Upon issuance of any Preferred Securities by a
SunAmerica Trust, the holders thereof will own all of the issued and
outstanding Preferred Securities of such SunAmerica Trust. The Company will
acquire securities representing common undivided beneficial interests in the
assets of each SunAmerica Trust (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") in an amount equal to at least 3%
of the total capital of such SunAmerica Trust and will own, directly or
indirectly, all of the issued and outstanding Common Securities of each
SunAmerica Trust. The Preferred Securities and the Common Securities will rank
pari passu with each other and will have equivalent terms; provided that (i) if
a Declaration Event of Default (as defined herein) under the Declaration of a
SunAmerica Trust occurs and is continuing, the holders of Preferred Securities
of such SunAmerica Trust will have a priority over holders of the Common
Securities of such SunAmerica Trust with respect to payments in respect of
distributions and payments upon liquidation, redemption and maturity and (ii)
holders of Common Securities have the exclusive right (subject to the terms of
the Declaration) to appoint, remove or replace the Trustees and to increase or
decrease the number of Trustees, subject to the right of holders of Preferred
Securities to appoint one additional Regular Trustee (as defined below) of such
SunAmerica Capital Trust (a "Special Regular Trustee") in certain limited
circumstances set forth in the Prospectus Supplement. Each SunAmerica Trust
exists for the purpose of (a) issuing its Preferred Securities, (b) issuing its
Common Securities to the Company, (c) investing the gross proceeds from the
sale of the Trust Securities in Junior Subordinated Debt Securities of the
Company and (d) engaging in such other activities as are necessary or
incidental thereto. The rights of the holders of the Preferred Securities,
including economic rights, rights to information and voting rights, are set
forth in the applicable Declaration, the Business Trust Act and the Trust
Indenture Act.
The number of trustees (the "Trustees") of each SunAmerica Trust shall
initially be five. Three of such Trustees (the "Regular Trustees") are
individuals who are employees or officers of the Company. The fourth such
trustee will be The Bank of New York, which is unaffiliated with the Company
and which will serve as the property trustee (the "Property Trustee") and act
as the indenture trustee for purposes of the Trust Indenture Act. The fifth
such trustee is an affiliate of The Bank of New York that has its principal
place of business in the State of Delaware (the "Delaware Trustee"). Pursuant
to each Declaration, legal title to the Junior Subordinated Debt Securities
purchased by a SunAmerica Trust will be held by the Property Trustee for the
benefit of the holders of the Trust Securities of such SunAmerica Trust and the
Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined under "Description of the Junior
Subordinated Debt Securities") with respect to the Junior Subordinated Debt
Securities. In addition, the Property Trustee will maintain exclusive control
of a segregated non-interest bearing bank account (the "Property Account") to
hold all payments in respect of the Junior Subordinated Debt Securities
purchased by a SunAmerica Trust for the benefit of the holders of Trust
Securities. The Property Trustee will promptly make distributions to the
holders of the Trust Securities out of funds from the Property Account. The
Preferred Securities Guarantees are separately qualified under the Trust
Indenture Act and will be held by The Bank of New York, acting in its capacity
as indenture trustee with respect thereto, for the benefit of the holders of
the applicable Preferred Securities. As used in this Prospectus and any
accompanying Prospectus Supplement, the term "Property Trustee" with respect to
a SunAmerica Trust refers to The Bank of New York acting either in its capacity
as a Trustee under the Declaration and the holder of legal title to the Junior
Subordinated Debt Securities purchased by that Trust or in its capacity as
indenture trustee under, and the holder of, the applicable Preferred Securities
Guarantee, as the context may
5
<PAGE>
require. Subject to the right of holders of Preferred Securities to appoint a
Special Regular Trustee as described above, the Company, as the direct or
indirect owner of all of the Common Securities of each SunAmerica Trust, will
have the exclusive right (subject to the terms of the related Declaration) to
appoint, remove or replace Trustees and to increase or decrease the number of
Trustees, provided that the number of Trustees shall be at least three, a
majority of which shall be Regular Trustees. A Special Regular Trustee need not
be an employee or officer of, or otherwise affiliated with, the Company. The
term of a SunAmerica Trust will be set forth in the Prospectus Supplement, but
may terminate earlier as provided in such Declaration.
The duties and obligations of the Trustees of a SunAmerica Trust shall be
governed by the Declaration of such SunAmerica Trust. Under its Declaration,
each SunAmerica Trust shall not, and the Trustees shall cause such SunAmerica
Trust not to, engage in any activity other than in connection with the purposes
of such SunAmerica Trust or other than as required or authorized by the related
Declaration. In particular, each SunAmerica Trust shall not and the Trustees
shall not (a) invest any proceeds received by such SunAmerica Trust from
holding the Junior Subordinated Debt Securities purchased by such SunAmerica
Trust but shall promptly distribute from the Property Account all such proceeds
to holders of Trust Securities pursuant to the terms of the related Declaration
and of the Trust Securities; (b) acquire any assets other than as expressly
provided in the related Declaration; (c) possess Trust property for other than
a Trust purpose; (d) make any loans, other than loans represented by the Junior
Subordinated Debt Securities; (e) possess any power or otherwise act in such a
way as to vary the assets of such SunAmerica Trust or the terms of its Trust
Securities in any way whatsoever; (f) issue any securities or other evidences
of beneficial ownership of, or beneficial interests in, such SunAmerica Trust
other than its Trust Securities; (g) incur any indebtedness for borrowed money
or (h)(i) direct the time, method and place of exercising any trust or power
conferred upon the Indenture Trustee (as defined under "Description of the
Junior Subordinated Debt Securities") with respect to the Junior Subordinated
Debt Securities deposited in that SunAmerica Trust as trust assets or upon the
Property Trustee of that SunAmerica Trust with respect to its Preferred
Securities, (ii) waive any past default that is waivable under the Indenture or
the Declaration, (iii) exercise any right to rescind or annul any declaration
that the principal of all of the Junior Subordinated Debt Securities deposited
in that SunAmerica Trust as trust assets shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture or such
Junior Subordinated Debt Securities or the Declaration, in each case where such
consent shall be required, unless in the case of this clause (h) the Property
Trustee shall have received an unqualified opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
such action will not cause such SunAmerica Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation
or a partnership and that such SunAmerica Trust will continue to be classified
as a grantor trust for United States federal income tax purposes.
The books and records of each SunAmerica Trust will be maintained at the
principal office of such SunAmerica Trust and will be open for inspection by a
holder of Preferred Securities of such SunAmerica Trust or his representative
for any purpose reasonably related to its interest in such SunAmerica Trust
during normal business hours. Each holder of Preferred Securities will be
furnished annually with unaudited financial statements of the applicable
SunAmerica Trust as soon as available after the end of such SunAmerica Trust's
fiscal year.
Except as provided below or under the Business Trust Act and the Trust
Indenture Act, holders of Preferred Securities will have no voting rights. In
certain circumstances set forth in a Prospectus Supplement, holders of
Preferred Securities of a SunAmerica Trust shall have the right to vote, as a
single class, for the appointment of a Special Regular Trustee who need not be
an employee or officer of or otherwise affiliated with the Company. The Special
Regular Trustee shall have the same rights, powers and privileges under the
Declaration as the Regular Trustees.
The Property Trustee, for the benefit of the holders of the Trust Securities
of a SunAmerica Trust, is authorized under each Declaration to exercise all
rights under the Indenture with respect to the Junior
6
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Subordinated Debt Securities deposited in such SunAmerica Trust as trust
assets, including its rights as the holder of such Junior Subordinated Debt
Securities to enforce the Company's obligations under such Junior Subordinated
Debt Securities upon the occurrence of an Indenture Event of Default. The
Property Trustee shall also be authorized to enforce the rights of holders of
Preferred Securities of a SunAmerica Trust under the Preferred Securities
Guarantee. If any SunAmerica Trust's failure to make distributions on the
Preferred Securities of a SunAmerica Trust is a consequence of the Company's
exercise of any right under the terms of the Junior Subordinated Debt
Securities deposited in such SunAmerica Trust as trust assets to extend the
interest payment period for such Junior Subordinated Debt Securities, the
Property Trustee will have no right to enforce the payment of distributions on
such Preferred Securities until a Declaration Event of Default shall have
occurred. Holders of a least a majority in liquidation amount of the Preferred
Securities held by a SunAmerica Trust will have the right to direct the
Property Trustee for that SunAmerica Trust with respect to certain matters
under the Declaration for that SunAmerica Trust and the related Preferred
Securities Guarantee. If the Property Trustee fails to enforce its rights under
the Indenture or fails to enforce the Preferred Securities Guarantee, any
holder of Preferred Securities may institute a legal proceeding against the
Company to enforce such rights or the Preferred Securities Guarantee, as the
case may be.
Pursuant to each Declaration, distributions on the Preferred Securities of a
SunAmerica Trust must be paid on the dates payable to the extent that the
Property Trustee for that SunAmerica Trust has cash on hand in the applicable
Property Account to permit such payment. The funds available for distribution
to the holders of the Preferred Securities of a SunAmerica Trust will be
limited to payments received by the Property Trustee in respect of the Junior
Subordinated Debt Securities that are deposited in the SunAmerica Trust as
trust assets. If the Company does not make interest payments on the Junior
Subordinated Debt Securities deposited in a SunAmerica Trust as trust assets,
the Property Trustee will not make distributions on the Preferred Securities of
such SunAmerica Trust. Under the Declaration, if and to the extent the Company
does make interest payments on the Junior Subordinated Debt Securities
deposited in a SunAmerica Trust as trust assets, the Property Trustee is
obligated to make distributions on the Trust Securities of such SunAmerica
Trust on a Pro Rata Basis (as defined below). The payment of distributions on
the Preferred Securities of a SunAmerica Trust is guaranteed by SunAmerica on a
subordinated basis as and to the extent set forth under "Description of the
Preferred Securities Guarantee". A Preferred Securities Guarantee is a full and
unconditional guarantee from the time of issuance of the applicable Preferred
Securities but the Preferred Securities Guarantee covers distributions and
other payments on the applicable Preferred Securities only if and to the extent
that the Company has made a payment to the Property Trustee of interest or
principal on the Junior Subordinated Debt Securities deposited in the
SunAmerica Trust as trust assets. As used in this Prospectus, the term "Pro
Rata Basis" shall mean pro rata to each holder of Trust Securities of a
SunAmerica Trust according to the aggregate liquidation amount of the Trust
Securities of such SunAmerica Trust held by the relevant holder in relation to
the aggregate liquidation amount of all Trust Securities of such SunAmerica
Trust outstanding unless, in relation to a payment, a Declaration Event of
Default under the Declaration has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each holder of the
Preferred Securities of such SunAmerica Trust pro rata according to the
aggregate liquidation amount of the Preferred Securities held by the relevant
holder in relation to the aggregate liquidation amount of all the Preferred
Securities of such SunAmerica Trust outstanding, and only after satisfaction of
all amounts owed to the holders of such Preferred Securities, to each holder of
Common Securities of such SunAmerica Trust pro rata according to the aggregate
liquidation amount of such Common Securities held by the relevant holder in
relation to the aggregate liquidation amount of all Common Securities of such
SunAmerica Trust outstanding.
If an Indenture Event of Default occurs and is continuing with respect to
Junior Subordinated Debt Securities deposited in a SunAmerica Trust as trust
assets, an Event of Default under the Declaration (a "Declaration Event of
Default") of such SunAmerica Trust will occur and be continuing with respect to
any outstanding Trust Securities of such SunAmerica Trust. In such event, each
Declaration provides that the holders of Common Securities of such SunAmerica
Trust will be deemed to have waived any such Declaration Event of Default with
respect to the Common Securities until all Declaration Events of Default with
respect
7
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to the Preferred Securities of such SunAmerica Trust have been cured or waived.
Until all such Declaration Events of Default with respect to the Preferred
Securities of such SunAmerica Trust have been so cured or waived, the Property
Trustee will be deemed to be acting solely on behalf of the holders of the
Preferred Securities of such SunAmerica Trust and only the holders of such
Preferred Securities will have the right to direct the Property Trustee with
respect to certain matters under such Declaration and consequently under the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities of such SunAmerica Trust is waived by the holders of
the Preferred Securities of such SunAmerica Trust as provided in the
Declaration, the holders of Common Securities pursuant to such Declaration have
agreed that such waiver also constitutes a waiver of such Declaration Event of
Default with respect to the Common Securities for all purposes under the
Declaration without any further act, vote or consent of the holders of the
Common Securities.
Each Declaration provides that the Trustees of such SunAmerica Trust may
treat the person in whose name a Certificate representing its Preferred
Securities is registered on the books and records of such SunAmerica Trust as
the sole holder thereof and of the Preferred Securities represented thereby for
purposes of receiving distributions and for all other purposes and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such certificate or in the Preferred Securities represented thereby
on the part of any person, whether or not such SunAmerica Trust shall have
actual or other notice thereof. Preferred Securities will be issued in fully
registered form. Unless otherwise specified in a Prospectus Supplement,
Preferred Securities will be represented by a global certificate registered on
the books and records of such SunAmerica Trust in the name of a depositary (the
"Depositary") named in an accompanying Prospectus Supplement or its nominee.
Under each Declaration:
(i) such SunAmerica Trust and the Trustees thereof shall be entitled to
deal with the Depositary (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the related Declaration, and except as set forth in the
related Declaration with respect to the Property Trustee, shall have no
obligation to persons owning a beneficial interest in Preferred Securities
("Preferred Security Beneficial Owners") registered in the name of and held
by the Depositary or its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall be
exercised only through the Depositary (or any successor depositary) and
shall be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Depositary and/or its
participants. With respect to Preferred Securities registered in the name
of and held by the Depositary or its nominee, all notices and other
communications required under each Declaration shall be given to, and all
distributions on such Preferred Securities shall be given or made to, the
Depositary (or its successor).
The specific terms of the depositary arrangement with respect to the Preferred
Securities will be disclosed in the applicable Prospectus Supplement.
In each Declaration, the Company has agreed to pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the applicable SunAmerica Trust, including the fees and expenses of
its Trustees and any taxes and all costs and expenses with respect thereto, to
which such SunAmerica Trust may become subject, except for United States
withholding taxes. The foregoing obligations of the Company under each
Declaration are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against any SunAmerica Trust or any
other person before proceeding against the Company. The Company has agreed in
each Declaration to execute such additional agreements as may be necessary or
desirable in order to give full effect to the foregoing.
The foregoing description summarizes the material terms of the Declarations
and is qualified in its entirety by reference to the form of Declaration which
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
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The business address of each SunAmerica Trust is c/o SunAmerica Inc., 1
SunAmerica Center, Los Angeles, California 90067-6022, telephone number (310)
772-6000.
USE OF PROCEEDS
Each SunAmerica Trust will use all proceeds received from the sale of its
Trust Securities to purchase Junior Subordinated Debt Securities from the
Company.
Unless otherwise set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of the Junior Subordinated Debt Securities are expected
to be used by the Company for general corporate purposes, including repayment
or redemption of outstanding debt or preferred stock, the possible acquisition
of financial services businesses or assets thereof, investments in portfolio
assets and working capital needs. The Company routinely reviews opportunities
to acquire financial services businesses or assets thereof.
9
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES ANDEARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends
for the Company for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER JUNE 30,
30, (UNAUDITED)
------------------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- -------- --------
Ratio of earnings to fixed charges
(excluding interest incurred on
reserves and trust deposits)(1) 2.4x 2.7x 4.0x 6.1x 5.8x 5.9x 5.8x
Ratio of earnings to fixed charges
(including interest incurred on
reserves and trust deposits)(2) 1.1x 1.1x 1.2x 1.4x 1.5x 1.5x 1.5x
Ratio of earnings to combined
fixed charges and preferred stock
dividends (excluding interest
incurred on reserves and trust
deposits)(3) 2.0x 2.3x 2.7x 2.8x 2.8x 2.8x 3.3x
Ratio of earnings to combined
fixed charges and preferred stock
dividends (including interest
incurred on reserves and trust
deposits)(4) 1.1x 1.1x 1.2x 1.3x 1.4x 1.4x 1.4x
</TABLE>
- --------
(1) In computing the ratio of earnings to fixed charges (excluding interest
incurred on reserves and trust deposits), fixed charges consist of interest
expense on senior and subordinated indebtedness and dividends on the
preferred securities of a subsidiary grantor trust. Earnings are computed
by adding interest incurred on senior and subordinated indebtedness and
dividends paid on the preferred securities of a subsidiary grantor trust to
pretax income.
(2) In computing the ratio of earnings to fixed charges (including interest
incurred on reserves and trust deposits), fixed charges consist of interest
expense on senior and subordinated indebtedness, fixed annuity contracts,
guaranteed investment contracts and trust deposits, and dividends on the
preferred securities of a subsidiary grantor trust. Earnings are computed
by adding interest incurred on senior and subordinated indebtedness, fixed
annuity contracts, guaranteed investment contracts and trust deposits, and
dividends paid on the preferred securities of a subsidiary grantor trust to
pretax income.
(3) In computing the ratio of earnings to combined fixed charges and preferred
stock dividends (excluding interest incurred on reserves and trust
deposits), combined fixed charges and preferred stock dividends consist of
interest expense on senior and subordinated indebtedness, dividends on the
preferred securities of a subsidiary grantor trust and dividends on
preferred stock of the Company on a tax equivalent basis. Earnings are
computed by adding interest incurred on senior and subordinated
indebtedness and dividends paid on the preferred securities of a subsidiary
grantor trust to pretax income.
(4) In computing the ratio of earnings to combined fixed charges and preferred
stock dividends (including interest incurred on reserves and trust
deposits), combined fixed charges and preferred stock dividends consist of
interest expense on senior and subordinated indebtedness, fixed annuity
contracts, guaranteed investment contracts and trust deposits; dividends on
the preferred securities of a subsidiary grantor trust; and dividends on
preferred stock of the Company on a tax equivalent basis. Earnings are
computed by adding interest incurred on senior and subordinated
indebtedness, fixed annuity contracts, guaranteed investment contracts and
trust deposits and dividends paid on the preferred securities of a
subsidiary grantor trust to pretax income.
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<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
Each SunAmerica Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each SunAmerica Trust authorizes the
Regular Trustees of such SunAmerica Trust to issue on behalf of such SunAmerica
Trust one series of Preferred Securities. Each Declaration will be qualified as
an indenture under the Trust Indenture Act. The Preferred Securities will have
such terms, including distributions, redemption, voting, liquidation rights and
such other preferred, deferred or other special rights or such restrictions as
shall be set forth in the related Declaration or made part of such Declaration
by the Trust Indenture Act. Reference is made to any Prospectus Supplement
relating to the Preferred Securities of a SunAmerica Trust for specific terms,
including (i) the specific designation of such Preferred Securities, (ii) the
number of Preferred Securities issued by such SunAmerica Trust, (iii) the
annual distribution rate (or method of calculation thereof) for Preferred
Securities issued by such SunAmerica Trust, the date or dates upon which such
distributions shall be payable and the record date or dates for the payment of
such distributions, (iv) whether distributions on Preferred Securities issued
by such SunAmerica Trust shall be cumulative, and, in the case of Preferred
Securities having such cumulative distribution rights, the date or dates or
method of determining the date or dates from which distributions on Preferred
Securities issued by such SunAmerica Trust shall be cumulative, (v) the amount
or amounts which shall be paid out of the assets of such SunAmerica Trust to
the holders of Preferred Securities of such SunAmerica Trust upon voluntary or
involuntary dissolution, winding-up or termination of such SunAmerica Trust,
(vi) the obligation or right, if any, of such SunAmerica Trust to purchase or
redeem Preferred Securities issued by such SunAmerica Trust and the price or
prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities issued by such SunAmerica Trust
shall or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of Preferred Securities
issued by such SunAmerica Trust in addition to those required by law, including
the number of votes per Preferred Security and any requirement for the approval
by the holders of Preferred Securities, or of Preferred Securities issued by
one or more SunAmerica Trusts, or of both, as a condition to specified actions
or amendments to the Declaration of such SunAmerica Trust, (viii) terms for any
conversion or exchange into other securities and (ix) any other relevant
rights, preferences, privileges, limitations or restrictions of Preferred
Securities issued by such SunAmerica Trust consistent with the Declaration of
such SunAmerica Trust or with applicable law. All Preferred Securities offered
hereby will be guaranteed by the Company as and to the extent set forth below
under "Description of the Preferred Securities Guarantees." Certain United
States federal income tax considerations applicable to any offering of
Preferred Securities will be described in the Prospectus Supplement relating
thereto.
In connection with the issuance of Preferred Securities, each SunAmerica
Trust will issue one series of Common Securities. The Declaration of each
SunAmerica Trust authorizes the Regular Trustees of such trust to issue on
behalf of such SunAmerica Trust one series of Common Securities having such
terms including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. The terms of the Common Securities
issued by a SunAmerica Trust will be substantially identical to the terms of
the Preferred Securities issued by such SunAmerica Trust and the Common
Securities will rank pari passu, and payments will be made thereon on a Pro
Rata Basis with the Preferred Securities except that if a Declaration Event of
Default occurs and is continuing, the rights of the holders of such Common
Securities to payments in respect of distributions and payments upon
liquidation, redemption and maturity will be subordinated to the rights of the
holders of such Preferred Securities. Except in certain limited circumstances,
the Common Securities issued by a SunAmerica Trust will also carry the right to
vote and to appoint, remove or replace any of the Trustees of that SunAmerica
Trust. All of the Common Securities of a SunAmerica Trust will be directly or
indirectly owned by the Company.
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<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees that will be executed and delivered by the Company for
the benefit of the holders from time to time of Preferred Securities. Each
Preferred Securities Guarantee will be separately qualified under the Trust
Indenture Act and will be held by the Bank of New York, acting in its capacity
as indenture trustee with respect thereto, for the benefit of holders of the
Preferred Securities of the applicable SunAmerica Trust. The terms of each
Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Guarantee by the Trust
Indenture Act. This description summarizes the material terms of the Preferred
Securities Guarantees and is qualified in its entirety by reference to the form
of Preferred Securities Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the Preferred Securities issued by a SunAmerica Trust, the
Guarantee Payments (as defined herein) (without duplication of amounts
theretofore paid by such SunAmerica Trust), to the extent not paid by such
SunAmerica Trust, regardless of any defense, right of set-off or counterclaim
that such SunAmerica Trust may have or assert. The following payments or
distributions with respect to Preferred Securities issued by a SunAmerica
Trust, to the extent not paid or made by such SunAmerica Trust (the "Guarantee
Payments"), will be subject to the Preferred Securities Guarantee (without
duplication): (i) any accrued and unpaid distributions on such Preferred
Securities, and the redemption price, including all accrued and unpaid
distributions to the date of redemption, with respect to any Preferred
Securities called for redemption by such SunAmerica Trust but only if and to
the extent that in each case the Company has made a payment to the related
Property Trustee of interest or principal on the Junior Subordinated Debt
Securities deposited in such SunAmerica Trust as trust assets and (ii) upon a
voluntary or involuntary dissolution, winding-up or termination of such
SunAmerica Trust (other than in connection with the distribution of such Junior
Subordinated Debt Securities to the holders of Preferred Securities or the
redemption of all of the Preferred Securities upon the maturity or redemption
of such Junior Subordinated Debt Securities) the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment, to the extent such SunAmerica
Trust has funds available therefor or (b) the amount of assets of such
SunAmerica Trust remaining available for distribution to holders of such
Preferred Securities in liquidation of such SunAmerica Trust. 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 Preferred Securities or
by causing the applicable SunAmerica Trust to pay such amounts to such holders.
The Preferred Securities Guarantee is a full and unconditional guarantee from
the time of issuance of the applicable Preferred Securities but the Preferred
Securities Guarantee covers distributions and other payments on such Preferred
Securities only if and to the extent that the Company has made a payment to the
Property Trustee of interest or principal on the Junior Subordinated Debt
Securities deposited in the applicable SunAmerica Trust as trust assets. If the
Company does not make interest or principal payments on the Junior Subordinated
Debt Securities deposited in the applicable SunAmerica Trust as trust assets,
the Property Trust will not make distributions of the Preferred Securities of
such SunAmerica Trust and the SunAmerica Trust will not have funds available
therefor.
The Company's obligations under the Declaration for each Trust, the Preferred
Securities Guarantee issued with respect to Preferred Securities issued by that
Trust, the Junior Subordinated Debt Securities purchased by that Trust and the
related Indenture (as defined below) in the aggregate will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities issued by that Trust.
12
<PAGE>
CERTAIN COVENANTS OF THE COMPANY
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable SunAmerica Trust
remain outstanding, the Company will not (A) declare or pay any dividends on,
or redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock or make any guarantee
payment with respect thereto or (B) make any payment of interest, premium (if
any) or principal on any debt securities issued by the Company which rank pari
passu with or junior to the Junior Subordinated Debt Securities, if at such
time (i) the Company shall be in default with respect to its Guarantee Payments
or other payment obligations under the Preferred Securities Guarantee, (ii)
there shall have occurred any Declaration Event of Default under the related
Declaration or (iii) in the event that Junior Subordinated Debt Securities are
issued to a SunAmerica Trust in connection with the issuance of Trust
Securities by such SunAmerica Trust, the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debt
Securities by extending the interest payment period as provided in the terms of
the Junior Subordinated Debt Securities and such period, or any extension
thereof, is continuing; provided that (a) the Company will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the conversion
of any of its Series D Mandatory Conversion Premium Dividend Preferred Stock
(the "Series D Preferred Stock") or upon the conversion of any other preferred
stock of the Company as may be outstanding from time to time, in each case in
accordance with the terms of such stock and (b) the foregoing will not apply to
any stock dividends paid by the Company. In addition, so long as any Preferred
Securities remain outstanding, the Company has agreed (i) to remain the sole
direct or indirect owner of all of the outstanding Common Securities issued by
the applicable SunAmerica Trust and shall not cause or permit the Common
Securities to be transferred except to the extent permitted by the related
Declaration; provided that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of the Common Securities
issued by the applicable SunAmerica Trust and (ii) to use reasonable efforts to
cause such SunAmerica Trust to continue to be treated as a grantor trust for
United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debt Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights of
holders of Preferred Securities (in which case no consent will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than 66 2/3% in liquidation amount of the
outstanding Preferred Securities issued by the applicable SunAmerica Trust. The
manner of obtaining any such approval of holders of such Preferred Securities
will be set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assignees, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the Preferred Securities of
the applicable SunAmerica Trust then outstanding. Except in connection with a
consolidation, merger or sale involving the Company that is permitted under the
Indenture, the Company may not assign its obligations under any Preferred
Securities Guarantee.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEES
Each Preferred Securities Guarantee will terminate and be of no further force
and effect as to the Preferred Securities issued by the applicable SunAmerica
Trust upon full payment of the redemption price of all Preferred Securities of
such SunAmerica Trust, or upon distribution of the Junior Subordinated Debt
Securities to the holders of the Preferred Securities of such SunAmerica Trust
in exchange for all of the Preferred Securities issued by such SunAmerica
Trust, or upon full payment of the amounts payable upon liquidation of such
SunAmerica Trust. Notwithstanding the foregoing, each Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable
SunAmerica Trust must restore payment of any sums paid under such Preferred
Securities or such Guarantee.
13
<PAGE>
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Company's obligations under each Preferred Securities Guarantee to make
the Guarantee Payments will constitute an unsecured obligation of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, including the Junior Subordinated Debt Securities,
except those made pari passu or subordinate by their terms and (ii) senior to
all capital stock now or hereafter issued by the Company and to any guarantee
now or hereafter entered into by the Company in respect of any of its capital
stock. The Company's obligations under each Preferred Securities Guarantee will
rank pari passu with each other Preferred Securities Guarantee. Because the
Company is a holding company, the Company's obligations under each Preferred
Securities Guarantee are also effectively subordinated to all existing and
future liabilities, including trade payables, of the Company's subsidiaries,
except to the extent that the Company is a creditor of the subsidiaries
recognized as such. Each Declaration provides that each holder of Preferred
Securities issued by the applicable SunAmerica Trust by acceptance thereof
agrees to the subordination provisions and other terms of the related Preferred
Securities Guarantee.
Each Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). Each Preferred Securities Guarantee will be deposited with The Bank
of New York, as indenture trustee, to be held for the benefit of the holders of
the Preferred Securities issued by the applicable SunAmerica Trust. The Bank of
New York shall enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities issued by the applicable SunAmerica Trust.
The holders of not less than a majority in aggregate liquidation amount of the
Preferred Securities issued by the applicable SunAmerica Trust have the right
to direct the time, method and place of conducting any proceeding for any
remedy available in respect of the related Preferred Securities Guarantee,
including the giving of directions to The Bank of New York. If The Bank of New
York fails to enforce such Preferred Securities Guarantee as above provided,
any holder of Preferred Securities issued by the applicable SunAmerica Trust
may institute a legal proceeding directly against the Company to enforce its
rights under such Preferred Securities Guarantee, without first instituting a
legal proceeding against the applicable SunAmerica Trust or any other person or
entity.
MISCELLANEOUS
The Company will be required to provide annually to The Bank of New York a
statement as to the performance by the Company of certain of its obligations
under the Preferred Securities Guarantees and as to any default in such
performance. The Company is required to file annually with The Bank of New York
an officer's certificate as to the Company's compliance with all conditions
under Preferred Securities Guarantees.
The Bank of New York, prior to the occurrence of a default, undertakes to
perform only such duties as are specifically set forth in the applicable
Preferred Securities Guarantee and, after default with respect to a Preferred
Securities Guarantee, shall 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 Bank of New York is under no obligation to exercise any of
the powers vested in it by a Preferred Securities Guarantee at the request of
any holder of Preferred Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
laws of the State of New York.
14
<PAGE>
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Junior Subordinated Debt Securities may be issued from time to time in one or
more series under an Indenture dated March 15, 1995 (the "Indenture") between
the Company and The First National Bank of Chicago, as trustee (the "Indenture
Trustee"). The Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following description
summarizes the material terms of the Indenture, and is qualified in its
entirety by reference to the Indenture and the Trust Indenture Act. Whenever
particular provisions or defined terms in the Indenture are referred to herein,
such provisions or defined terms are incorporated by reference herein. Section
and Article references used herein are references to provisions of the
Indenture.
GENERAL
The Junior Subordinated Debt Securities will be unsecured, junior
subordinated obligations of the Company. The Indenture does not limit the
amount of additional indebtedness the Company or any of its subsidiaries may
incur. Since the Company is a holding company, the Company's rights and the
rights of its creditors, including the holders of Junior Subordinated Debt
Securities, to participate in the assets of any subsidiary upon the latter's
liquidation or recapitalization will be subject to the prior claims of the
subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against the subsidiary. Claims on the Company's
subsidiaries by creditors other than the Company 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 the Company's
subsidiaries are insurance companies subject to regulatory control by various
state insurance departments, the ability of such subsidiaries to pay dividends
or make loans or advances to the Company without prior regulatory approval is
limited by applicable laws and regulations.
The Indenture does not limit the aggregate principal amount of indebtedness
which may be issued thereunder and provides that Junior Subordinated Debt
Securities may be issued thereunder from time to time in one or more series.
The Junior Subordinated Debt Securities are issuable in one or more series
pursuant to an indenture supplemental to the Indenture.
In the event Junior Subordinated Debt Securities are issued to a SunAmerica
Trust or a Trustee of such trust in connection with the issuance of Trust
Securities by such SunAmerica Trust, such Junior Subordinated Debt Securities
subsequently may be distributed pro rata to the holders of such Trust
Securities in connection with the dissolution of such SunAmerica Trust upon the
occurrence of certain events described in the Prospectus Supplement relating to
such Trust Securities. Only one series of Junior Subordinated Debt Securities
will be issued to a SunAmerica Trust or a trustee of such trust in connection
with the issuance of Trust Securities by such SunAmerica Trust.
Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Junior Subordinated Debt
Securities being offered thereby (to the extent such terms are applicable to
the Junior Subordinated Debt Securities): (i) the specific designation of such
Junior Subordinated Debt Securities, aggregate principal amount and purchase
price; (ii) any limit on the aggregate principal amount of such Junior
Subordinated Debt Securities; (iii) the date or dates on which the principal of
such Junior Subordinated Debt Securities is payable and the right, if any, to
extend such date or dates; (iv) the rate or rates at which such Junior
Subordinated Debt Securities will bear interest or the method of calculating
such rate or rates; (v) the date or dates from which such interest shall
accrue, the interest payment dates on which such interest will be payable or
the manner of determination of such interest payment dates and the record dates
for the determination of holders to whom interest is payable on any such
interest payment dates; (vi) the right, if any, to extend the interest payment
periods and the duration of such extension; (vii) the period or periods within
which, the price or prices at which, and the terms and conditions upon which,
such Junior Subordinated Debt Securities may be redeemed, in whole or in part,
at the option of the Company; (viii) the right and/or obligation, if any, of
the Company to redeem or purchase such Junior Subordinated Debt Securities
pursuant to any sinking fund or analogous provisions or at the option of the
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<PAGE>
holder thereof and the period or periods for which, the price or prices at
which, and the terms and conditions upon which, such Junior Subordinated Debt
Securities shall be redeemed or purchased, in whole or part, pursuant to such
right and/or obligation; (ix) any applicable United States federal income tax
consequences, including whether and under what circumstances the Company will
pay additional amounts on the Junior Subordinated Debt Securities held by a
person who is not a U.S. person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the Company will
have the option to redeem such Junior Subordinated Debt Securities rather than
pay such additional amounts; (x) the form of such Junior Subordinated Debt
Securities; (xi) if other than denominations of $25 or any integral multiple
thereof, the denominations in which such Junior Subordinated Debt Securities
shall be issuable; (xii) any and all other terms with respect to such series,
including any modification of or additions to the events of default or
covenants provided for with respect to the Junior Subordinated Debt Securities,
and any terms which may be required by or advisable under applicable laws or
regulations not inconsistent with the Indenture; and (xiii) whether such Junior
Subordinated Debt Securities are issuable as a global security, and in such
case, the identity of the depositary.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Junior Subordinated Debentures will be issued in United States dollars in fully
registered form without coupons in denominations of $25 or integral multiples
thereof. Junior Subordinated Debt Securities may be presented for exchange and
Junior Subordinated Debt Securities in registered form may be presented for
transfer in the manner, at the places and subject to the restrictions set forth
in the Junior Subordinated Debt Securities and the Prospectus Supplement. Such
services will be provided without charge, other than any tax or other
governmental charge payable in connection therewith, but subject to the
limitations provided in the Indenture. Junior Subordinated Debt Securities in
bearer form and the coupons, if any, appertaining thereto will be transferable
by delivery.
Junior Subordinated Debt Securities may bear interest at a fixed rate or a
floating rate. Junior Subordinated Debt Securities bearing no interest or
interest at a rate that at the time of issuance is below the prevailing market
rate will be sold at a discount below their stated principal amount. Special
United States federal income tax considerations applicable to any such
discounted Junior Subordinated Debt Securities or to certain Junior
Subordinated Debt Securities issued at par which are treated as having been
issued at a discount for United States federal income tax purposes are
described in the relevant Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO THE JUNIOR SUBORDINATED DEBT
SECURITIES
If Junior Subordinated Debt Securities are issued to a SunAmerica Trust in
connection with the issuance of Trust Securities by such SunAmerica Trust, the
Company will covenant in the Indenture that, so long as the Preferred
Securities issued by the applicable SunAmerica Trust remain outstanding, the
Company will not (a) declare or pay any dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock or make any guarantee payment with respect
thereto if at such time (i) the Company shall be in default with respect to its
Guarantee Payments or other payment obligations under the related Preferred
Securities Guarantee, (ii) there shall have occurred any Indenture Event of
Default with respect to the Junior Subordinated Debt Securities or (iii) in the
event that Junior Subordinated Debt Securities are issued to a SunAmerica Trust
in connection with the issuance of Trust Securities by such SunAmerica Trust,
the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the terms of such Junior Subordinated Debt
Securities and such period, or any extension thereof, is continuing; provided
that (x) the Company will be permitted to pay accrued dividends (and cash in
lieu of fractional shares) upon the conversion of any of its Series D Preferred
Stock or upon the conversion of any other preferred stock of the Company as may
be outstanding from time to time, in each case in accordance with the terms of
such stock and (y) the foregoing will not apply to any stock dividends paid by
the Company. In addition, if Junior Subordinated Debt Securities are issued to
a SunAmerica Trust in connection with the issuance of Trust Securities by such
SunAmerica Trust, for so long as the Preferred Securities issued by the
applicable SunAmerica Trust remain outstanding, the Company has agreed (i) to
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<PAGE>
remain the sole direct or indirect owner of all of the outstanding Common
Securities issued by the applicable SunAmerica Trust and shall not cause or
permit the Common Securities to be transferred except to the extent permitted
by the related Declaration; provided that any permitted successor of the
Company under the Indenture may succeed to the Company's ownership of the
Common Securities issued by the applicable SunAmerica Trust, (ii) to comply
fully with all of its obligations and agreements contained in the related
Declaration and (iii) not to take any action which would cause the applicable
SunAmerica Trust to cease to be treated as a grantor trust for United States
federal income tax purposes except in connection with a distribution of Junior
Subordinated Debt Securities.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debt Securities are
subordinate and junior in right of payment to all Senior Indebtedness of the
Company. In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or its property or any proceeding for voluntary
liquidation, dissolution or other winding up of the Company or (b) that Junior
Subordinated Debt Securities of any series are declared due and payable before
their expressed maturity because of the occurrence of an Indenture Event of
Default pursuant to Section 6.01 of the Indenture (under circumstances other
than as set forth in clause (a) above), then the holders of all Senior
Indebtedness shall first be entitled to receive payment of the full amount due
thereon in money, before the holders of any of the Junior Subordinated Debt
Securities are entitled to receive payment on account of the principal of,
premium, if any, or interest on the indebtedness evidenced by such Junior
Subordinated Debt Securities. In the event and during the continuation of any
default in payment of any Senior Indebtedness or if any event of default shall
exist under any Senior Indebtedness, as "event of default" is defined therein
or in the agreement under which the same is outstanding, no payment of the
principal or, premium, if any, or interest on the Junior Subordinated Debt
Securities shall be made. (Section 14.02 and 14.03) If this Prospectus is being
delivered in connection with a series of Junior Subordinated Debt Securities,
the accompanying Prospectus Supplement will set forth the approximate amount of
Senior Indebtedness outstanding as of the end of the most recent fiscal
quarter.
The term "Senior Indebtedness" shall mean the principal of and premium, if
any, and interest on (a) all indebtedness of the Company, whether outstanding
on the date of the Indenture or thereafter created, (i) for money borrowed by
the Company (including, without limitation, indebtedness issued or to be issued
pursuant to the Indenture dated as of April 15, 1993 between SunAmerica and The
First National Bank of Chicago, as Trustee), (ii) for money borrowed by, or
obligations of, others and either assumed or guaranteed, directly or
indirectly, by the Company, (iii) in respect of letters of credit and
acceptances issued or made by banks or (iv) constituting purchase money
indebtedness, or indebtedness secured by property included in the property,
plant and equipment accounts of the Company at the time of the acquisition of
such property by the Company for the payment of which the Company is directly
liable and (b) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any such indebtedness. As used in
the preceding sentence the term "purchase money indebtedness" means
indebtedness evidenced by a note, debenture, bond or other instrument (whether
or not secured by any lien or other security interest) issued or assumed as all
or a part of the consideration for the acquisition of property, whether by
purchase, merger, consolidation or otherwise, unless by its terms such
indebtedness is subordinate to other indebtedness of the Company.
Notwithstanding anything to the contrary in the Indenture or the Junior
Subordinated Debt Securities, Senior Indebtedness shall not include (i) any
indebtedness of the Company which, by its terms or the terms of the instrument
creating or evidencing it, is subordinate in right of payment to or pari passu
with the Junior Subordinated Debt Securities, as the case may be, and in
particular, the Junior Subordinated Debt Securities shall rank pari passu with
respect to all other debt securities and guarantees in respect thereof issued
to any other trusts, partnerships or other entity affiliated with the Company
which is a financing vehicle of the Company in connection with the issuance of
preferred securities by such financing vehicle or (ii) any indebtedness of the
Company to a subsidiary of the Company. (Section 1.01) The Subordinated
Indenture does not contain any limitation on the amount of Senior Indebtedness
that can be incurred by the Company.
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INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Indenture Event
of Default" with respect to each series of Junior Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Junior Subordinated Debt
Securities of such series when due; provided that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose; or
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debt Securities of such series when due whether at maturity,
upon redemption, by declaration or otherwise; or
(c) failure to observe or perform any other covenant contained in the
Indenture with respect to such series for 90 days after written notice to
the Company from the Indenture Trustee or the holders of at least 25% in
principal amount of the outstanding Junior Subordinated Debt Securities of
such series; or
(d) certain events in bankruptcy, insolvency or reorganization of the
Company.
In each and every such case, unless the principal of all the Junior
Subordinated Debt Securities of that series shall have already become due and
payable, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debt Securities of that
series then outstanding, by notice in writing to the Company (and to the
Indenture Trustee if given by such holders), may declare the principal of all
the Junior Subordinated Debt Securities of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable. (Section 6.01)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities of that series have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee. (Section 6.06) The Indenture Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debt Securities of that series may declare the principal due and
payable immediately upon an Indenture Event of Default with respect to such
series, but the holders of a majority in aggregate outstanding principal amount
of Junior Subordinated Debt Securities of such series may annul such
declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal otherwise
than by acceleration and any premium has been deposited with the Indenture
Trustee. (Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities of that series may, on behalf of the
holders of all the Junior Subordinated Debt Securities of that series, waive
any past default, except a default in the payment of principal, premium, if
any, or interest (unless such default has been cured and a sum sufficient to
pay all matured installments of interest and principal otherwise than by
acceleration and any premium has been deposited with the Indenture Trustee) or
a call for redemption of Junior Subordinated Debt Securities. (Section 6.06)
The Company is required to file annually with the Indenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants under the Indenture.
If Junior Subordinated Debt Securities are issued to a SunAmerica Trust in
connection with the issuance of Trust Securities of such SunAmerica Trust, then
under the applicable Declaration an Indenture Event of Default with respect to
such series of Junior Subordinated Debt Securities will constitute a
Declaration Event of Default.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Junior Subordinated Debt Securities of each
series affected, to modify the Indenture or any supplemental indenture
affecting the rights
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of the holders of such Junior Subordinated Debt Securities; provided that no
such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debt Security affected thereby, (i) extend the fixed
maturity of any Junior Subordinated Debt Securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Junior Subordinated Debt Security so
affected or (ii) reduce the percentage of Junior Subordinated Debt Securities,
the holders of which are required to consent to any such modification, without
the consent of the holders of each Junior Subordinated Debt Security then
outstanding and affected thereby. (Section 9.02)
BOOK-ENTRY AND SETTLEMENT
If any Junior Subordinated Debt Securities of a series are represented by one
or more global securities (each, a "Global Security"), the applicable
Prospectus Supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such Global Security may exchange such
interests for Junior Subordinated Debt Securities of such series and of like
tenor and principal amount in any authorized form and denomination. Principal
of and any premium and interest on a Global Security will be payable in the
manner described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Junior Subordinated Debt Securities to be represented by a
Global Security will be described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER AND SALE
The Indenture will provide that the Company may not consolidate with or merge
into any other person or transfer or lease its properties and assets
substantially as an entirety to any person and may not permit any person to
merge into or consolidate with the Company unless (i) either the Company will
be the resulting or surviving entity or any successor or purchaser is a
corporation organized under the laws of the United States of America, any State
or the District of Columbia, and any such successor or purchaser expressly
assumes the Company's obligations under the Indenture and (ii) immediately
after giving effect to the transaction no Event of Default shall have occurred
and be continuing.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, the Company will be discharged from any and
all obligations in respect of the Junior Subordinated Debt Securities of a
series (except in each case for certain obligations to register the transfer or
exchange of such Junior Subordinated Debt Securities, replace stolen, lost or
mutilated Junior Subordinated Debt Securities of that series, maintain paying
agencies and hold moneys for payment in trust) if (i) the Company irrevocably
deposits with the Indenture Trustee cash or U.S. Government Obligations, as
trust funds in an amount certified to be sufficient to pay at maturity (or upon
redemption) the principal of, premium, if any, and interest on all outstanding
Junior Subordinated Debt Securities of such series; (ii) the Company delivers
to the Indenture Trustee an opinion of counsel to the effect that the holders
of the Junior Subordinated Debt Securities of such series will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such defeasance and that defeasance will not otherwise alter holders' United
States federal income tax treatment of principal, premium and interest payments
on such Junior Subordinated Debt Securities of such series (such opinion must
be based on a ruling of the Internal Revenue Service or a change in United
States federal income tax law occurring after the date of such Indenture, since
such a result would not occur under current tax law) and (iii) no event or
condition shall exist that, pursuant to the subordination provisions applicable
to such series, would prevent the Company from making payments of principal of,
premium, if any, and interest on the Junior Subordinated Debt Securities of
such series at the date of the irrevocable deposit referred to above. (Section
11.01)
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GOVERNING LAW
The Indenture and the Junior Subordinated Debt Securities will be governed
by, and construed in accordance with, the laws of the State of New York.
(Section 13.05)
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to default, undertakes to perform only such
duties as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (Section 7.01) Subject to such provision,
the Indenture 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 Debt Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that might be incurred
thereby. (Section 7.02) The Indenture 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. (Section 7.01) The
Indenture Trustee is one of a number of banks with which the Company and its
subsidiaries maintain ordinary banking and trust relationships.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of the Company; provided that, in the event of any such assignment, the Company
will remain jointly and severally liable for all such obligations. Subject to
the foregoing, the Indenture will be binding upon and inure to the benefit of
the parties thereto and their respective successors and assigns. The Indenture
provides that it may not otherwise be assigned by the parties thereto other
than by the Company to a successor or purchaser pursuant to a consolidation,
merger or sale permitted by the Indenture. (Section 13.11)
PLAN OF DISTRIBUTION
The Company may sell any series of Junior Subordinated Debt Securities and
the SunAmerica Trusts may sell the Preferred Securities being offered hereby
directly or through agents, underwriters or dealers.
Offers to purchase Offered Securities may be solicited by agents designated
by the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Offered Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Prospectus Supplement. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment. The Company may also sell Offered
Securities to an agent as principal. Agents may be entitled under agreements
which may be entered into the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
If any underwriters are utilized in the sale of Offered Securities in respect
of which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters and the names of the underwriters
and the terms of the transaction will be set forth in the 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. Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The underwriters may be entitled, under the
relevant underwriting agreement, to indemnification by the Company against
certain liabilities, including liabilities
20
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under the Securities Act, and may be customers of, engage in transactions with
or perform services for the Company in the ordinary course of business.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, the Company 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. Dealers may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act,
and may be customers of, engage in transactions with or perform services for
the Company in the ordinary course of business.
Offered Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or
otherwise, by one or more firms ("remarketing firms"), acting as principals for
their own accounts or as agents for the Company. Any remarketing firm will be
identified and the terms of its agreement, if any, with the Company and its
compensation will be described in the Prospectus Supplement. Remarketing firms
may be deemed to be underwriters in connection with the Offered Securities
remarketed thereby. Remarketing firms may be entitled under agreements which
may be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company
in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase Offered Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to only those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such offers.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, certain
matters of Delaware law relating to the validity of the Preferred Securities
will be passed upon for the SunAmerica Trusts by Richards, Layton & Finger,
Wilmington, Delaware, special Delaware counsel to the SunAmerica Trusts. The
validity of the Preferred Securities Guarantees and the Junior Subordinated
Debt Securities will be passed upon for the SunAmerica Trusts and the Company
by Davis Polk & Wardwell, New York, New York, special counsel to the Company
and the SunAmerica Trusts. Certain legal matters in connection with the
Preferred Securities, the Preferred Securities Guarantees and the Junior
Subordinated Debt Securities will be passed upon for the SunAmerica Trusts and
the Company by Susan L. Harris, Vice President and General Counsel--Corporate
Affairs of the Company. Ms. Harris and Davis Polk & Wardwell will rely as to
matters of Maryland law on Piper & Marbury L.L.P., Baltimore, Maryland. Ms.
Harris holds stock, restricted stock and options to purchase stock granted
under the Company's employee stock plan, which in the aggregate represents less
than 1% of the Company's common stock. David W. Ferguson, a partner of Davis
Polk & Wardwell, is a director of First SunAmerica Life Insurance Company, a
subsidiary of the Company.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended September 30,
1994, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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ERISA MATTERS
The Company and certain affiliates of the Company, including Anchor National
Life Insurance Company and SunAmerica Life Insurance Company, may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or a "disqualified person"
within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code") with respect to many employee benefit plans. Prohibited transactions
within the meaning of ERISA or the Code may arise, for example, if the Offered
Securities are acquired by a pension or other employee benefit plan with
respect to which the Company or any of its affiliates is a service provider,
unless such Offered Securities are acquired pursuant to an exemption for
transactions effected on behalf of such plan by a "qualified professional asset
manager" or pursuant to any other available exemption. Any such pension or
employee benefit plan proposing to invest in the Offered Securities should
consult with its legal counsel.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY SUNAMERICA INC., SUNAMERICA CAPITAL TRUST II
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SUNAMERICA INC. OR SUNAMERICA
CAPITAL TRUST II SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SunAmerica Inc. Selected Consolidated Financial Data..................... S-4
SunAmerica............................................................... S-6
SunAmerica Capital Trust II.............................................. S-6
Risk Factors............................................................. S-7
Capitalization of SunAmerica............................................. S-11
Accounting Treatment..................................................... S-11
Use of Proceeds.......................................................... S-11
Description of the Preferred Securities.................................. S-12
Description of the Junior Subordinated Debentures........................ S-23
Relationship Between the Preferred Securities, the Junior Subordinated
Debentures and the Preferred Securities Guarantee....................... S-28
Taxation................................................................. S-29
Underwriting............................................................. S-32
Legal Matters............................................................ S-33
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 3
The Company.............................................................. 4
Recent Developments...................................................... 4
The SunAmerica Trusts.................................................... 5
Use of Proceeds.......................................................... 9
Consolidated Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends............................. 10
Description of the Preferred Securities.................................. 11
Description of the Preferred Securities Guarantees....................... 12
Description of the Junior Subordinated Debt Securities................... 15
Plan of Distribution..................................................... 20
Legal Matters............................................................ 21
Experts.................................................................. 21
Erisa Matters............................................................ 22
</TABLE>
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7,000,000
PREFERRED SECURITIES
SUNAMERICA CAPITAL TRUST II
8.35% TRUST ORIGINATED
PREFERRED SECURITIES SM ("TOPRS SM")
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
SUNAMERICA INC.
-------------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
INCORPORATED
SMITH BARNEY INC.
OCTOBER 5, 1995
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