As filed with the Securities and Exchange Commission on April 12, 1995
Registration No. 33-56961 and 33-56961-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
AMENDMENT NO. 3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________
SUNAMERICA CAPITAL TRUST I SUNAMERICA INC.
(Exact name of Registrant as (Exact name of
specified in its charter) Registrant as specified in its charter)
Delaware Maryland
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
Applied For 86-0176061
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1 SunAmerica Center 1 SunAmerica Center
Los Angeles, California 90067-6022 Los Angeles, California 90067-6022
(310) 772-6000 (310) 772-6000
(Address and telephone number (Address and telephone number
of principal executive offices) of principal executive offices)
Susan L. Harris, Esq.
Vice President and General Counsel - Corporate Affairs
SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Name, address and telephone number
of agent for service)
__________
Copies to:
David W. Ferguson, Esq. Gregg A. Noel, Esq.
Davis Polk & Wardwell Skadden, Arps, Slate, Meagher & Flom
450 Lexington Avenue 300 South Grand Avenue, Suite 3400
New York, New York 10017 Los Angeles, California 90071
(212) 450-4000 (213) 687-5000
__________
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
CROSS REFERENCE SHEET
SUNAMERICA INC.
SUNAMERICA CAPITAL TRUST I
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
CAPTION IN OFFERING
FORM S-4 ITEM NO. CIRCULAR/PROSPECTUS
<TABLE>
<S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus. . . . . . . . . . . Outside Front Cover Page; Inside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page; Available Information;
Incorporation of Certain Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information . . . . . . . . . . . . . . . . . Offering Circular/Prospectus Summary; Special
Considerations Relating to the Offer; SunAmerica;
SunAmerica Capital Trust I; Ratio of Earnings to Fixed
Charges; Selected Consolidated Financial Data
4. Terms of the Transaction. . . . . . . . . . . . . . . . The Offer; Description of the Preferred Securities;
Description of the Junior Subordinated Debentures;
Description of the Preferred Securities Guarantee; Taxation
5. Pro Forma Financial Information. . . . . . . . . . . Not Applicable
6. Material Contacts with the Company Being
Acquired. . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters. . . . . . . . . . . . . . . . . . . . . . . Not Applicable
8. Interests of Named Experts and Counsel. . . . . . Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. . . Not Applicable
10. Information with Respect to S-3 Registrants. . . . Not Applicable
11. Incorporation of Certain Information by
Reference. . . . . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
14. Information with Respect to Registrants Other
than S-3 or S-2 Registrants. . . . . . . . . . . . . . Not Applicable
15. Information With Respect to S-3 Companies. . . . Not Applicable
16. Information with Respect to S-2 or S-3
Companies. . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies. . . . . . . . . . . . . . Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited. . . . . . . . . . Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer. . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
</TABLE>
SUBJECT TO COMPLETION, DATED APRIL 12, 1995
OFFERING CIRCULAR/PROSPECTUS
SUNAMERICA CAPITAL TRUST I
OFFER TO EXCHANGE ITS
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPrSSM")
(liquidation amount $25 per
Preferred Security and
guaranteed to the extent set forth herein
by SunAmerica Inc.)
FOR UP TO 5,500,000 OUTSTANDING SHARES OF
9 1/4% PREFERRED STOCK, SERIES B
OF
SUNAMERICA INC.
THE OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M. NEW YORK CITY TIME, ON MAY , 1995,
UNLESS THE OFFER IS EXTENDED.
SunAmerica Capital Trust I, a Delaware statutory business trust (the
"Trust"), hereby offers, upon the terms and subject to the conditions set
forth in this Offering Circular/Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal" which, together with this Offering
Circular/Prospectus, constitute the "Offer"), to exchange its % Trust
Originated Preferred Securities ("TOPrS"), representing preferred undivided
beneficial interests in the assets of the Trust (the "Preferred
Securities"), for up to 5,500,000 shares of outstanding 9 1/4% Preferred
Stock, Series B (the "Series B Preferred") of SunAmerica Inc., a Maryland
corporation ("SunAmerica"). Exchanges will be made on the basis of one
Preferred Security for each share of Series B Preferred validly tendered
and accepted for exchange in the Offer. Shares of Series B Preferred not
accepted for exchange because of proration will be returned. Concurrently
with the issuance of Preferred Securities in exchange for Series B
Preferred validly tendered in the Offer, SunAmerica will deposit in the
Trust as trust assets its % Junior Subordinated Debentures, Series A, due
2044 (the "Junior Subordinated Debentures") having an aggregate principal
amount equal to the aggregate stated liquidation amount of the Preferred
Securities to be issued by the Trust.
Holders of Series B Preferred may participate in the Offer by
properly completing and signing the Letter of Transmittal and tendering their
shares of Series B Preferred as described in "The Offer -- Procedures for
Tendering" in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the Expiration Date (as defined herein). In
order to participate in the Offer, holders of Series B Preferred must submit a
Letter of Transmittal and comply with the other procedures for tendering in
accordance with the instructions contained herein and in the Letter of
Transmittal prior to the Expiration Date.
For a description of the other terms of the Offer, see "The Offer --
Terms of the Offer"; "-- Expiration Date; Extensions; Amendments;
Termination"; "-- Withdrawal of Tenders" and "-- Acceptance of Shares and
Proration". Except as set forth below, the Trust expressly reserves the right
to extend, amend or modify the terms of the Offer, and not accept for exchange
any Series B Preferred, at any time prior to the Expiration Date for any
reason, including (without limitation) if fewer than 2,810,000 shares of
Series B Preferred are tendered (which condition may be waived). The
Preferred Securities have been approved for listing on the New York Stock
Exchange (the "NYSE"), subject to notice of issuance. In order to satisfy the
NYSE listing requirements, acceptance of Series B Preferred validly tendered
in the Offer is subject to the condition that as of the Expiration Date there
be at least 400 record or beneficial holders of Preferred Securities to be
issued in exchange for such Series B Preferred, which condition may not be
waived. See "The Offer -- Expiration Date; Extensions; Amendments;
Termination".
SunAmerica will own directly or indirectly all of the securities
representing common undivided beneficial interests in the assets of the Trust
(the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities"). The Trust exists for the purpose of (a) issuing (i) its
Preferred Securities in exchange for Series B Preferred validly tendered in
the Offer and delivering such Series B Preferred to SunAmerica in
consideration for the deposit by SunAmerica of Junior Subordinated Debentures
in the Trust as trust assets and (ii) its Common Securities to SunAmerica in
exchange 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 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 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 and to increase or decrease the number of Trustees, subject to the
right of holders of Preferred Securities to appoint a Trustee (the "Special
Regular Trustee") upon the occurrence of certain events described herein.
Cash distributions on the Preferred Securities will be cumulative
from the first day following the Expiration Date (the "Accrual Date") at an
annual rate of % of the liquidation amount of $25 per Preferred Security,
and will be payable quarterly in arrears on the 15th day of March, June,
September and December of each year, commencing on June 15, 1995
("distributions"). Cash distributions in arrears for more than one quarter
will bear interest thereon at the rate per annum of % 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. In addition, holders of the Preferred Securities
will be entitled to an additional cash distribution at the rate of 9 1/4%
per annum of the liquidation amount thereof from March 15, 1995 through the
Expiration Date in lieu of dividends accumulating after March 15, 1995 on
their Series B Preferred accepted for exchange, such additional
distribution to be made at the time the first distribution on the Preferred
Securities is made. 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. 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
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") in accordance with the terms of such stock. See "Risk Factors";
"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 herein) 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 Guarantee". 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. For a
description of redemption rights with respect to the Preferred Securities, the
possible dissolution of the Trust and distribution of Junior Subordinated
Debentures held by the Trust to holders of the Trust Securities and the
liquidation amount on the Preferred Securities, see "Risk Factors";
"Description of the Preferred Securities -- Special Event Redemption or
Distribution"; "-- Liquidation Distribution Upon Dissolution" and "Description
of the Junior Subordinated Debentures".
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO
THE PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE JUNIOR
SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES MAY BE DEFERRED AND THE
RELATED FEDERAL INCOME TAX CONSEQUENCES.
The Series B Preferred is listed and principally traded on the NYSE.
On December 19, 1994, the last full day of trading prior to the first public
announcement of the Offer, the closing sales price of the Series B Preferred
on the NYSE as reported on the Composite Tape was $25 3/8 per share. The
closing sales price of the Series B Preferred on the NYSE on April 10, 1995
was $26. Stockholders are urged to obtain current market quotations for the
Series B Preferred. To the extent that Series B Preferred is tendered and
accepted in the Offer, the terms on which untendered Series B Preferred could
subsequently be sold could be adversely affected. See "Listing and Trading of
Preferred Securities and Series B Preferred".
SunAmerica will pay to Soliciting Dealers (as defined herein) a
solicitation fee of $ per share of Series B Preferred validly tendered and
accepted for exchange pursuant to the Offer, subject to certain conditions.
See "The Offer -- Dealer Manager; Soliciting Dealers".
Neither the board of directors of SunAmerica nor SunAmerica nor the
Trustees nor the Trust makes any recommendation to holders of Series B
Preferred as to whether to tender or refrain from tendering in the Offer.
Holders of Series B Preferred are urged to consult their financial and tax
advisors in making their decisions on what action to take in light of their
own particular circumstances.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR/PROSPECTUS,
AND ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THE OFFER NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR/PROSPECTUS.
Merrill Lynch & Co. has been retained as Dealer Manager to solicit
exchanges of Series B Preferred for Preferred Securities. See "The Offer --
Dealer Manager". Georgeson & Company Inc. has been retained to act as
Information Agent to assist in connection with the Offer.
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
The date of this Offering Circular/Prospectus is April , 1995.
SM"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
DIAGRAM OF OFFERS
[GRAPHIC A]
(SEE APPENDIX A FOR DESCRIPTION OF GRAPHIC MATERIAL)
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN
THIS OFFERING CIRCULAR/PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
SUNAMERICA, THE TRUST, THE TRUSTEES OR THE DEALER MANAGER. NEITHER THE
DELIVERY OF THIS OFFERING CIRCULAR/PROSPECTUS NOR ANY EXCHANGE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF SUNAMERICA OR THE TRUST SINCE THE
RESPECTIVE DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT
BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS
OF SERIES B PREFERRED IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. HOWEVER, SUNAMERICA AND THE TRUST MAY, AT THEIR DISCRETION,
TAKE SUCH ACTION AS THEY MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH
JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF SERIES B PREFERRED IN SUCH
JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF
WHICH REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE
OFFER IS BEING MADE ON BEHALF OF THE TRUST BY THE DEALER MANAGER OR ONE OR
MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF
SUCH JURISDICTION.
AVAILABLE INFORMATION
SunAmerica is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information concerning SunAmerica can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Such material can also be inspected and copied at the
offices of the NYSE, 20 Broad Street, New York, N.Y. 10005.
This Offering Circular/Prospectus constitutes a part of a
registration statement on Form S-4 (together with all amendments and exhibits,
the "Registration Statement") filed by SunAmerica and the Trust with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). This Offering Circular/Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
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. Reference is made
to such Registration Statement and to the exhibits relating thereto for
further information with respect to SunAmerica, the Trust and the securities
offered hereby.
No separate financial statements of the Trust have been included or
incorporated by reference herein. SunAmerica and the Trust do not consider
that such financial statements would be material to holders of Preferred
Securities because the Trust 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 its holding as trust
assets the Junior Subordinated Debentures of SunAmerica and its issuance of
Trust Securities. See "SunAmerica Capital Trust I", "Description of the
Preferred Securities", "Description of the Preferred Securities Guarantee" and
"Description of the Junior Subordinated Debentures". The Trust is a statutory
business trust formed under the laws of the State of Delaware. SunAmerica, as
of the date hereof, beneficially owns all of the beneficial interests in the
Trust. Each holder of Preferred Securities will be furnished annually with
unaudited financial statements of the Trust as soon as available after the end
of the Trust's fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SunAmerica's Annual Report on Form 10-K for the year ended September
30, 1994, its Quarterly Report on Form 10-Q for the quarter ended December 31,
1994 and its Current Report on Form 8-K dated January 24, 1995, have been
filed with the Commission and are incorporated herein by reference.
All documents filed by SunAmerica pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Offering
Circular/Prospectus and prior to the Expiration Date shall be deemed to be
incorporated by reference in this Offering Circular/Prospectus and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of this
Offering Circular/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 and superseded, to constitute a part of this Offering
Circular/Prospectus.
This Offering Circular/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. SunAmerica will provide
without charge to each person, including any beneficial owner of the Series B
Preferred, to whom this Offering Circular/Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests for such documents should be directed to Shareholder
Communications of SunAmerica at 1 SunAmerica Center, Los Angeles, California
90067-6022 (Telephone (310) 772-6000). In order to ensure timely delivery of
the documents, any request should be made not later than five business days
prior to the Expiration Date.
TABLE OF CONTENTS
Page
Offering Circular/Prospectus Summary..................................... 4
Risk Factors. . . .......................................................15
Comparison of Preferred Securities
and Series B Preferred.................................................19
SunAmerica...............................................................24
SunAmerica Capital Trust I...............................................24
Ratio of Earnings to Fixed Charges.......................................28
Selected Consolidated Financial Data.....................................29
Capitalization...........................................................31
The Offer................................................................32
Listing and Trading of Preferred
Securities and Series B Preferred......................................40
Transactions and Arrangements Concerning
the Offer..............................................................40
Fees and Expenses; Transfer Taxes........................................40
Price Range of Series B Preferred........................................41
Description of the Preferred Securities..................................42
Description of the Preferred Securities Guarantee........................54
Description of the Junior Subordinated
Debentures.............................................................56
Description of the Series B Preferred....................................64
Relationship Between the Preferred
Securities, the Junior Subordinated
Debentures and the Preferred Securities Guarantee......................66
Taxation.................................................................68
Legal Matters............................................................71
Experts..................................................................72
ERISA Matters............................................................72
OFFERING CIRCULAR/PROSPECTUS SUMMARY
The following summary does not purport to be complete and is
qualified in its entirety by the detailed information contained elsewhere in,
or incorporated by reference in, this Offering Circular/Prospectus.
SunAmerica
SunAmerica is a diversified financial services company with more than
$24 billion of assets owned or under management. At December 31, 1994, these
assets consisted of $14.78 billion of assets owned by SunAmerica, $2.04
billion of assets managed in mutual funds and private accounts and $7.63
billion 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 I
SunAmerica Capital Trust I is a statutory business trust that was
formed under the Delaware Business Trust Act (the "Business Trust Act") on
March 22, 1995. The Trust's original declaration of trust will be amended and
restated in its entirety as of the date the Trust accepts Series B Preferred
in the Offer (as so amended and restated, the "Declaration") substantially in
the form filed as an exhibit to the Registration Statement of which this
Offering Circular/Prospectus forms a part. See "The Offer -- Terms of the
Offer" and "-- Acceptance of Shares and Proration" for information regarding
the Trust's acceptance of Series B Preferred in the Offer. 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 has agreed to 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
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 occurs and is continuing, the
holders of Preferred Securities will have a priority over the holders of the
Common Securities 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, replace or remove Trustees and to increase or decrease the number
of Trustees, subject to the right of holders of Preferred Securities to
appoint one additional Trustee of the Trust (the "Special Regular Trustee")
upon the occurrence of certain events described herein.
The number of trustees (the "Trustees") of the Trust shall initially
be five. Three of the Trustees (the "Regular Trustees") are individuals who
are employees or officers of SunAmerica. The fourth trustee is The Bank of
New York, which is unaffiliated with SunAmerica and which will serve as
property trustee (the "Property Trustee") and act as the indenture trustee for
purposes of the Trust Indenture Act. The fifth 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 the Declaration, legal title
to the Junior Subordinated Debentures will be held by the Property Trustee for
the benefit of the holders of the Trust Securities, and the Property Trustee
will have the power to exercise all rights, powers and privileges under the
Indenture (as hereinafter defined) pursuant to which the Junior Subordinated
Debentures will be issued. 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
Debentures 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 in the Property Account. The Property Trustee will
also hold the Preferred Securities Guarantee for the benefit of the holders of
the Preferred Securities. Subject to the right of holders of Preferred
Securities to appoint a Special Regular Trustee upon the occurrence of certain
events described herein, SunAmerica, as direct or indirect owner of all of the
Common Securities, has the exclusive right (subject to the provisions of the
Declaration) to appoint, remove or replace Trustees and to increase or
decrease the number of Trustees, provided that the number of Trustees shall at
least be three, a majority of which shall be Regular Trustees.
The Trust exists for the purpose of (a) issuing (i) its Preferred
Securities in exchange for Series B Preferred validly tendered in the Offer
and delivering such Series B Preferred to SunAmerica in consideration for the
deposit by SunAmerica of Junior Subordinated Debentures in the Trust as trust
assets, and (ii) its Common Securities to SunAmerica in exchange 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.
See "SunAmerica Capital Trust I" and "Description of the Preferred
Securities". 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 (and the Trust shall not be obligated to pay, directly
or indirectly, for any) 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. See "Risk Factors", "SunAmerica Capital Trust I" and "Description of
the Preferred Securities".
Certain Potential Benefits and Risks to Investors
Prospective investors should carefully review the information
contained elsewhere in this Offering Circular/Prospectus prior to making a
decision regarding the Offer and should particularly consider the following
matters:
Potential Benefits to Exchanging Holders
o The cash distributions rate on the Preferred Securities will
be basis points greater than the dividend rate on the Series B Preferred.
See "Comparison of Preferred Securities and Series B Preferred".
o So long as payments of interest and other payments are made
when due on the Junior Subordinated Debentures, such payments will be
sufficient to cover cash distributions and other payments made on the
Preferred Securities (and the Common Securities) because (i) the aggregate
principal amount of Junior Subordinated Debentures deposited as trust assets
will be equal to the sum of (x) the aggregate stated liquidation amount of
the Preferred Securities issued by the Trust in exchange for the Series B
Preferred accepted in the Offer and (y) the amount of proceeds received by the
Trust from the issuance of the Common Securities to SunAmerica, which proceeds
will be used by the Trust to purchase an equal principal amount of Junior
Subordinated Debentures, (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 (and the Trust
shall not be obligated to pay, directly or indirectly, for any) debts and
obligations (other than with respect to the Trust Securities) and all costs
and expenses of the Trust, and (iv) the Declaration further provides that the
Trustees shall not permit the Trust to, among other things, engage in any
activity that is not consistent with the purposes of the Trust. See "Offering
Circular/Prospectus Summary -- The Offer -- Description of Preferred
Securities and Junior Subordinated Debentures" and "SunAmerica Capital Trust
I".
o The Trust will have no independent operations and will exist
for the sole purpose of effecting the Offer and issuing the Trust Securities
as described herein and owning and holding through the Property Trustee the
Junior Subordinated Debentures. See "SunAmerica Capital Trust I".
o If (i) the Trust fails to pay distributions in full on the
Preferred Securities for 6 consecutive quarterly distribution periods; (ii) an
Event of Default under the Declaration occurs and is continuing; or (iii)
SunAmerica is in default on any of its payment or other obligations under the
Preferred Securities Guarantee (each, an "Appointment Event"), then the
Declaration provides that the holders of the Preferred Securities may appoint
a Special Regular Trustee of the Trust who need not be an officer or employee
of or otherwise affiliated with SunAmerica. Under the Declaration, any such
Special Regular Trustee shall have the same rights, powers and privileges as
the Regular Trustees. See "Description of the Preferred Securities -- Voting
Rights".
o The Property Trustee will have the power to exercise all
rights, powers and privileges under the Indenture with respect to the Junior
Subordinated Debentures 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, after a period of 30 days has elapsed from such
holder's written request to the Property Trustee to enforce such rights or the
Preferred Securities Guarantee, 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".
o The Offer will allow SunAmerica to achieve certain tax
efficiencies while preserving its flexibility with respect to future
financings because, in contrast to dividend payments on the Series B Preferred
which are not deductible by SunAmerica, SunAmerica will be able to deduct
interest payments on the Junior Subordinated Debentures for United States
federal income tax purposes. See "The Offer -- Purpose of the Offer".
Potential Risks to Exchanging Holders
o Participation in the Offer will be a taxable event for holders
of Series B Preferred. See "Risk Factors -- Tax Consequences of the Offer".
o The obligations of SunAmerica under (i) the Junior Subordinated
Debentures are subordinate in right of payment to Senior Indebtedness (as
defined herein) of SunAmerica, (ii) SunAmerica's payment obligations under the
Preferred Securities Guarantee are subordinate in right of payment to all
liabilities of SunAmerica, including the Junior Subordinated Debentures,
except those made pari passu or subordinate by their terms, and (iii) the
Junior Subordinated Debentures and the Preferred Securities Guarantee are
effectively subordinated to all liabilities of subsidiaries of SunAmerica. See
"Risk Factors -- Subordination of Preferred Securities Guarantee and Junior
Subordinated Debentures; Dependence on SunAmerica".
o The Trust's ability to make distributions on the Preferred
Securities is entirely dependent upon SunAmerica making interest payments on
the Junior Subordinated Debentures when and as required, and the interest
payment period on the Junior Subordinated Debentures may be extended under
certain circumstances by SunAmerica in its sole discretion for up to 20
consecutive quarterly interest periods during which no interest would be
payable thereon. See "Risk Factors -- Subordination of Preferred Securities
Guarantee and Junior Subordinated Debentures; Dependence on SunAmerica; "--
Option to Extend Interest Payment Period; Tax Impact of Extension" and "--
Potential Market Volatility During Extension Period".
o Should SunAmerica not make interest or other payments on the
Junior Subordinated Debentures for any reason, including as a result of
SunAmerica's election to defer payments of interest on the Junior Subordinated
Debentures by extending the interest payment period on the Junior Subordinated
Debentures, the Trust will not make distributions or other 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 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 "Risk Factors --
Subordination of Preferred Securities Guarantee and Junior Subordinated
Debentures; Dependence on SunAmerica".
o If SunAmerica elects to defer payments of interest on the
Junior Subordinated Debentures by extending the interest period on the Junior
Subordinated Debentures, distributions on the Preferred Securities would also
be deferred but the Trust will continue to accrue interest income in respect
of such Debentures which will be taxable to beneficial owners of Preferred
Securities. As a result, beneficial owners of Preferred Securities during an
Extension Period will include their pro rata share of the interest in gross
income in advance of the receipt of cash. See "Taxation -- Income from the
Preferred Securities".
o Holders of Preferred Securities will have limited voting rights
and, subject to the right of holders of Preferred Securities to appoint a
Special Regular Trustee upon the occurrence of an Appointment Event, 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.
o While the Series B Preferred is not redeemable prior to June
15, 1997, the Junior Subordinated Debentures (and thus the Preferred
Securities) in certain circumstances will be redeemable prior to that date
upon the occurrence of a Tax Event (as defined herein).
o While dividends on the Series B Preferred are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders. See "Comparison of Preferred Securities and Series B
Preferred".
o While the Preferred Securities have been approved for listing
on the NYSE, subject to notice of issuance, the Preferred Securities are a new
issue of securities with no established trading market. See "Risk Factors --
Listing and Trading of Preferred Securities and Series B Preferred".
Potential Risk to Non-Exchanging Holders
o The liquidity and trading market for untendered Series B
Preferred could be adversely affected to the extent Series B Preferred is
tendered and accepted in the Offer. See "Risk Factors -- Listing and Trading
of Preferred Securities and Series B Preferred".
The Offer
Purpose of the Offer
The purpose of the Offer is to refinance the Series B Preferred with
the Preferred Securities and to achieve certain tax efficiencies, while
preserving SunAmerica's flexibility with respect to future financings. This
refinancing will permit SunAmerica to deduct interest payable on the Junior
Subordinated Debentures for United States federal income tax purposes;
dividends payable on the Series B Preferred are not deductible. See "The
Offer -- Purpose of the Offer".
Terms of the Offer
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal, the Trust hereby offers to exchange its Preferred
Securities for up to 5,500,000 outstanding shares of Series B Preferred of
SunAmerica. Exchanges will be made on the basis of one Preferred Security for
each share of Series B Preferred validly tendered and accepted for exchange in
the Offer. See "The Offer -- Terms of the Offer".
Expiration Date; Withdrawals
Upon the terms and conditions of the Offer, including the provisions
relating to proration described herein, the Trust will accept for exchange up
to 5,500,000 shares of Series B Preferred, validly tendered and not withdrawn
prior to 5:00 p.m., New York City time, on May , 1995, or if the Offer is
extended by the Trust, in its sole discretion, the latest date and time to
which the Offer has been extended (the "Expiration Date"). Tenders of Series
B Preferred pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless accepted for exchange by the Trust, may be
withdrawn at any time after 40 Business Days (as defined herein) after the
date of this Offering Circular/Prospectus. Shares of Series B Preferred not
accepted because of proration will be returned to the tendering Holders at the
Trust's expense as promptly as practicable following the Expiration Date. A
"Business Day" shall mean any day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close. See "The Offer -- Withdrawal of Tenders"; "-- Expiration Date;
Extensions; Amendments; Termination" and "-- Acceptance of Shares and
Proration".
Extensions; Amendments; Termination
Except as set forth in the following sentence, the Trust expressly
reserves the right to (i) extend, amend or modify the terms of the Offer in
any manner and (ii) withdraw or terminate the Offer and not accept for
exchange any Series B Preferred, at any time prior to the Expiration Date for
any reason, including (without limitation) if fewer than 2,810,000 shares of
Series B Preferred are tendered (which conditions may be waived by the Trust).
See "The Offer -- Expiration Date; Extensions; Amendments; Termination".
However, the Trust will not accept shares of Series B Preferred validly
tendered in the Offer if as of the Expiration Date there would be fewer than
400 record or beneficial holders of Preferred Securities to be issued in
exchange for such Series B Preferred, which condition may not be waived.
Procedures for Tendering
Each Holder of Series B Preferred wishing to participate in the Offer
must (i) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Offering Circular/Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) in accordance with
the instructions contained herein and in the Letter of Transmittal, together
with any required signature guarantees, and deliver the same to The First
National Bank of Chicago, as Exchange Agent, at one of its addresses set forth
in "The Offer -- Exchange Agent and Information Agent" prior to the Expiration
Date and either (a) certificates for the Series B Preferred must be received
by the Exchange Agent at such address or (b) such Series B Preferred must be
transferred pursuant to the procedures for book-entry transfer described
herein and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the Expiration Date or (ii) comply with
the guaranteed delivery procedures described herein.
In order to participate in the Offer, Holders of Series B Preferred
must submit a Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the Expiration Date.
LETTERS OF TRANSMITTAL, SERIES B PREFERRED AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO SUNAMERICA, THE TRUST, THE
DEALER MANAGER OR THE INFORMATION AGENT.
Special Procedure for Beneficial Owners
Any beneficial owner whose Series B Preferred is registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender such Series B Preferred should contact such registered
Holder promptly and instruct such registered Holder to tender on such
beneficial owner's behalf. If such beneficial owner wishes to tender on its
own behalf, such owner must, prior to completing and executing a Letter of
Transmittal and delivering its Series B Preferred, either make appropriate
arrangements to register ownership of the Series B Preferred in such owner's
name or obtain a properly completed stock power from the registered Holder.
The transfer of registered ownership may take considerable time and may not be
able to be completed prior to the Expiration Date. See "The Offer --
Procedures for Tendering -- Special Procedure for Beneficial Owners".
Guaranteed Delivery Procedures
If a Holder desires to accept the Offer and time will not permit a
Letter of Transmittal or Series B Preferred to reach the Exchange Agent before
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The Offer -- Procedures for
Tendering -- Guaranteed Delivery".
Acceptance of Shares and Proration
Upon the terms and subject to the conditions of the Offer, if
5,500,000 or fewer shares of Series B Preferred have been validly tendered and
not withdrawn prior to the Expiration Date, the Trust will accept for exchange
all such shares of Series B Preferred. Upon the terms and subject to the
conditions of the Offer, if more than 5,500,000 shares of Series B Preferred
(or, if decreased as described herein, such lesser number as the Trust may
elect to purchase pursuant to the Offer) have been validly tendered and not
withdrawn prior to the Expiration Date, the Trust will accept for exchange
shares of Series B Preferred from each tendering Holder on a pro rata basis,
subject to adjustment to avoid the acceptance for exchange of fractional
shares.
If the Trust decreases the amount of Series B Preferred sought, and
the Offer is scheduled to expire less than ten Business Days from and
including the date that notice of such decrease is first published, sent or
given in the manner specified in "Terms of the Offer -- Expiration Date;
Extensions; Amendments; Termination", then the Offer will remain open for a
minimum of ten Business Days from and including the date of such notice.
All shares of Series B Preferred not accepted pursuant to the Offer,
including shares not purchased because of proration, will be returned to the
tendering Holders at the Trust's expense as promptly as practicable following
the Expiration Date.
Delivery of Preferred Securities
Subject to the terms and conditions of the Offer, the delivery of the
Preferred Securities to be issued pursuant to the Offer will occur as promptly
as practicable following the Expiration Date. See "The Offer -- Terms of the
Offer" and "-- Expiration Date; Extensions; Amendments; Termination".
If proration of tendered shares of Series B Preferred is required,
because of the difficulty in determining the number of shares of Series B
Preferred validly tendered (including shares tendered by the guaranteed
delivery procedures described in "Terms of the Offer -- Procedures for
Tendering"), the Trust does not expect that it would be able to announce the
final proration factor or to commence the exchange for any shares of Series B
Preferred pursuant to the Offer until approximately seven Business Days after
the Expiration Date. Preliminary results of the proration will be announced
by press release as promptly as practicable after the Expiration Date.
Holders of shares of Series B Preferred may obtain such preliminary
information from the Dealer Manager or the Information Agent and may also be
able to obtain such information from their brokers.
Description of Preferred Securities and Junior Subordinated Debentures
The Preferred Securities evidence preferred undivided beneficial
interests in the assets of the Trust and will rank pari passu with, and have
terms equivalent to, the Common Securities; provided that (i) if an Event of
Default under the Declaration 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, remove and 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
beneficial interests in the assets of 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 investments other than in the
Junior Subordinated Debentures. The Declaration defines an event of default
with respect to the Trust Securities (an "Event of Default") as the occurrence
and continuance of an "event of default" under the Indenture with respect to
the Junior Subordinated Debentures (an "Indenture Event of Default").
Periodic cash distributions on each Preferred Security will be fixed
at a rate per annum of % 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 % of the stated liquidation
amount of $25 per Preferred Security (to the extent permitted by law),
compounded quarterly. Distributions on the Preferred Securities will be
cumulative, will accrue from the Accrual Date and, except as otherwise
described herein, will be made quarterly in arrears, on the 15th day of March,
June, September and December of each year, commencing on June 15, 1995, but
only if and to the extent that the Property Trustee has funds available in the
Property Account to make such distributions. In addition, holders of
Preferred Securities will be entitled to an additional cash distribution at
the rate of 9 1/4% per annum of the liquidation amount thereof from March 15,
1995 through the Expiration Date in lieu of dividends accumulating after March
15, 1995 on their Series B Preferred accepted for exchange, such additional
distribution to be made at the time the first distribution on the Preferred
Securities is made.
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 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 (each, an "Extension Period") 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 % per annum, compounded quarterly) by the Trust during any such
Extension Period. During an 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 or make any guarantee payments with respect thereto during such
Extension Period; provided that 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 in accordance with the terms of such
stock. 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"; "Description of the Junior Subordinated
Debentures -- Interest" and "-- Option to Extend Interest Payment Period".
There will be deposited in the Trust as trust assets (i) Junior
Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities issued by the
Trust in exchange for the Series B Preferred accepted in the Offer and (ii)
Junior Subordinated Debentures having an aggregate principal amount equal to
the amount of proceeds received by the Trust from the sale of the Common
Securities to SunAmerica. 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 promptly on the Preferred Securities. The payment of
distributions on the Preferred Securities and payments on liquidation of the
Trust and the redemption of Preferred Securities, as set forth below, in each
case out of moneys held by the Property Trustee in the Property Account, are
guaranteed by SunAmerica on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee". 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 Preferred Securities and Common Securities are redeemable on a
Pro Rata Basis (as defined below) from time to time, in whole or in part, to
the same extent as the Junior Subordinated Debentures are redeemable by
SunAmerica, on or after June 15, 1997, upon not less than 30 nor more than 60
days' notice, at $25 per Preferred Security plus accrued and unpaid
distributions thereon to the date of redemption, including distributions
accrued as a result of SunAmerica's election to defer payments of interest on
the Junior Subordinated Debentures, (the "Redemption Price"), payable in cash.
The Preferred Securities will be redeemed upon the maturity or earlier
redemption of the Junior Subordinated Debentures. See "Description of the
Preferred Securities -- Mandatory Redemption". As used in this Offering
Circular/Prospectus the term "Pro Rata Basis" shall mean pro rata to each
holder of Trust Securities according to the aggregate liquidation amount of
the Trust Securities held by the relevant holder in relation to the aggregate
liquidation amount of all Trust Securities outstanding unless, in relation to
a payment, the rights of the holders of the Common Securities to such payment
are subordinated under the Declaration to the rights of the holders of the
Preferred Securities to such payment, in which case any funds available to
make such payment shall be paid first to each holder of the Preferred
Securities 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 Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the holders of the Preferred Securities,
to each holder of Common Securities pro rata according to the aggregate
liquidation amount of the Common Securities held by the relevant holder in
relation to the aggregate liquidation amount of all the Common Securities
outstanding.
In addition, upon the occurrence and during the continuation of a Tax
Event or an Investment Company Event (each as hereinafter defined) arising
from a change in law or a change in legal interpretation or other specified
circumstances, the Trust shall, unless the Junior Subordinated Debentures are
redeemed in the limited circumstances described below, be dissolved with the
result that the Junior Subordinated Debentures will be distributed to the
holders of the Preferred Securities and the Common Securities on a Pro Rata
Basis, in lieu of any cash distribution. In the case of a Tax Event,
SunAmerica will have the right in certain circumstances to redeem the Junior
Subordinated Debentures with the result that the Trust will redeem the Trust
Securities on a Pro Rata Basis to the same extent as the Junior Subordinated
Debentures are redeemed. 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".
The Junior Subordinated Debentures will be issued pursuant to an
indenture, dated as of March 15, 1995 (as supplemented by the First
Supplemental Indenture (the "First Supplemental Indenture") to be dated as of
March 15, 1995, the "Indenture") between SunAmerica and The First National
Bank of Chicago, as trustee (the "Indenture Trustee"). See "Description of
the Junior Subordinated Debentures". The Junior Subordinated Debentures will
mature on , 2044 and will bear interest at an annual rate of
% from the Accrual Date. Interest will be payable quarterly in arrears on the
15th day of March, June, September and December of each year, commencing on
June 15, 1995; provided that, as described above, 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. However, should SunAmerica determine to
exercise such right in the future, the market price of the Preferred
Securities is likely to be affected. See "Risk Factors" and "Description of
the Junior Subordinated Debentures -- Option to Extend Interest Payment
Period".
The Junior Subordinated Debentures will also accrue interest at the
rate of 9 1/4% per annum of the principal amount thereof from March 15, 1995
through the Expiration Date, payable at the time of the first interest payment
on the Junior Subordinated Debentures. No extension of interest will be
permitted with respect to interest accruing from March 15, 1995 through the
Expiration Date.
SunAmerica shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after June 15, 1997,
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 as a
result of SunAmerica's election to defer payments of interest on the Junior
Subordinated Debentures, payable in cash. In addition, upon the occurrence of
a Tax Event, SunAmerica will also have the right if certain conditions are met
to redeem the Junior Subordinated Debentures at any time.
Certain United States Federal Income Tax Considerations
The exchange of Series B Preferred for Preferred Securities pursuant
to the Offer will be a taxable event. Gain or loss generally will be
recognized in an amount equal to the difference between the fair market value
on the Expiration Date of the holder's pro rata share of the Junior
Subordinated Debentures represented by the Preferred Securities received in
the exchange and the exchanging Holder's tax basis in the shares of Series B
Preferred surrendered. For this purpose, the fair market value of the Junior
Subordinated Debentures deemed issued in exchange for Series B Preferred on
the Expiration Date will equal the fair market value of the Preferred
Securities on that date. See "Taxation -- Exchange of Series B Preferred for
Preferred Securities".
The Junior Subordinated Debentures will be treated as issued with
"original issue discount" for United States federal income tax purposes.
Holders of Preferred Securities will be required to include their pro rata
share of original issue discount in gross income as it accrues on the Junior
Subordinated Debentures in advance of the receipt of cash. See "Taxation --
Accrual of Original Issue Discount and Premium" and "-- Potential Extension of
Payment Period on the Junior Subordinated Debentures".
No portion of the amounts received on the Preferred Securities will
be eligible for the dividends received deduction.
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.
Untendered Shares
Holders of Series B Preferred who do not tender their Series B
Preferred in the Offer or whose Series B Preferred is not accepted for
exchange will continue to hold such Series B Preferred and will be entitled to
all the rights and preferences, and will be subject to all of the limitations,
applicable thereto.
To the extent that Series B Preferred is tendered and accepted in the
Offer, the terms on which untendered Series B Preferred could subsequently be
sold could be adversely affected. See "Risk Factors -- Listing and Trading of
Preferred Securities and Series B Preferred".
Exchange Agent and Information Agent
The First National Bank of Chicago has been appointed as Exchange
Agent in connection with the Offer. Questions and requests for assistance,
requests for additional copies of this Offering Circular/Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to Georgeson & Company, Inc. which has been retained by SunAmerica
and the Trust to act as Information Agent for the Offer. The addresses and
telephone numbers of the Exchange Agent and the Information Agent are set
forth in "The Offer -- Exchange Agent and Information Agent" and on the
outside back cover of this Offering Circular/Prospectus.
Dealer Manager
Merrill Lynch & Co. has been retained as Dealer Manager in connection
with the Offer. Questions with respect to the Offer may be directed to the
Capital Markets Desk at (212) 449-4906. For information regarding fees
payable to the Dealer Manager and Soliciting Dealers (as defined herein), see
"The Offer -- Dealer Manager; Soliciting Dealers".
RISK FACTORS
Prospective exchanging Holders of Series B Preferred who plan to
participate in the Offer should carefully consider, in addition to the other
information set forth elsewhere in this Offering Circular/ Prospectus, the
following:
Tax Consequences of the Offer
The exchange of Series B Preferred for Preferred Securities pursuant
to the Offer will be a taxable event. Generally, gain or loss will be
recognized in an amount equal to the difference between the fair market value
on the Expiration Date of the holder's pro rata share of the Junior
Subordinated Debentures represented by the Preferred Securities received in
the exchange and the exchanging Holder's tax basis in the Series B Preferred
exchanged therefor. See "Taxation -- Exchange of Series B Preferred and
Issuance of Preferred Securities". All Holders of Series B Preferred are
advised to consult their tax advisors regarding the United States federal,
state, local and foreign tax consequences of the exchange of Series B
Preferred and the issuance of Preferred Securities.
Subordination of 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 December 31, 1994, Senior Indebtedness of SunAmerica
(on an unconsolidated basis) aggregated approximately $472.8 million. 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 December 31, 1994, SunAmerica's
subsidiaries had outstanding approximately $8.47 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 Guarantee -- Status of the Guarantee"
and "Description of the Junior Subordinated Debentures -- Subordination".
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 distribution 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 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 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 (and the
Trust shall not be obligated to pay, directly or indirectly, for any) 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 % 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 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. 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.
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 -- Dividends" 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. See
"Taxation -- Accrual of Original Issue Discount and Premium" and "-- Potential
Extension of Payment Period on the Junior Subordinated Debentures".
Listing and Trading of Preferred Securities and Series B Preferred
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 Dealer Manager
has indicated to SunAmerica and the Trust that it intends to make a market in
the Preferred Securities as permitted by applicable laws and regulations prior
to the commencement of trading on the NYSE, it is 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. In order to satisfy the NYSE listing
requirements, acceptance of Series B Preferred validly tendered in the Offer is
subject to the condition that as of the Expiration Date there be at least 400
record or beneficial holders of Preferred Securities to be issued in exchange
for such Series B Preferred, which condition may not be waived by SunAmerica
or the Trust.
To the extent Series B Preferred is tendered and accepted in the
Offer, the liquidity and trading market for the Series B Preferred to be
outstanding following the Offer, and the terms upon which such shares of
Series B Preferred could be sold, could be adversely affected. In addition,
if the Offer is substantially subscribed or oversubscribed, there would be a
significant risk that round lot holdings of Series B Preferred outstanding
following the Offer would be limited. See "Listing and Trading of Preferred
Securities and Series B Preferred."
The Offer is for up to 5,500,000 shares of Series B Preferred (or
97.9% of the 5,620,000 shares of Series B Preferred outstanding) rather than
for all the outstanding shares of Series B Preferred, to reduce the risk that
the Series B Preferred would be subject to delisting following consummation of
the Offer.
Under the rules of the NYSE, preferred securities such as the Series
B Preferred are subject to delisting if (i) the aggregate value of
publicly-held shares is less than $2 million and (ii) the number of
publicly-held shares is less than 100,000. Since at least 120,000 shares of
Series B Preferred will remain outstanding following consummation of the
Offer, the number of outstanding shares of Series B Preferred will exceed the
delisting criteria set forth in clause (ii) above. In addition, based on the
market price of the Series B Preferred on the NYSE ($25 3/8 on December 19,
1994, the closing sales price of the Series B Preferred on the NYSE on the
last full trading day immediately prior to SunAmerica's first public
announcement of the Offer, and $26 on April 10, 1995), the Company believes
that the aggregate value of the minimum number (120,000) of shares of Series B
Preferred which will be outstanding following consummation of the Offer should
exceed the delisting criteria set forth in clause (i) above. See "Price Range
of Series B Preferred". If less than 5,500,000 shares of Series B Preferred
are validly tendered, then the number of shares of Series B Preferred
remaining outstanding, and the market value thereof, will be even greater.
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 interest equal to accrued and unpaid
distributions on, the Preferred Securities and Common Securities would be
distributed on a Pro Rata Basis 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 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 or the Junior Subordinated Debentures
which the investor may receive on dissolution and liquidation of the Trust,
may trade at a discount to the price of the Series B Preferred exchanged. 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".
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, 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".
COMPARISON OF PREFERRED SECURITIES AND SERIES B PREFERRED
The following is a brief summary of certain terms of the Preferred
Securities and the Series B Preferred. For a more complete description of the
Preferred Securities, see "Description of the Preferred Securities". For a
complete description of the Junior Subordinated Debentures which will be
deposited in the Trust as trust assets and will represent the sole source for
the payment of distributions and other payments on the Preferred Securities,
see "Description of the Junior Subordinated Debentures".
<TABLE>
<CAPTION>
Preferred Securities Series B Preferred
--------------------------------- -------------------------------------------------
<S> <C> <C>
Issuer The Trust. Payment of SunAmerica.
distributions and on
liquidation or redemption is
guaranteed on a subordinated
basis as and to the extent
described herein by
SunAmerica.
Distribution/Dividend % per annum distribution 9 1/4% per annum dividend
Rate payable quarterly in arrears payable on the 15th day of
on the 15th day of March, March, June, September and
June, September and December December of each year, out
of each year, commencing June of funds legally available
15, 1995, from and including therefor, when, as and if
the Accrual Date, but only if, declared by SunAmerica's
and to the extent that, the Board of Directors.
Property Trustee has funds Dividends are cumulative.
available in the Property Accumulated unpaid
Account to make such dividends do not bear
distribution. During any interest.
Extension Period on the Junior
Subordinated Debentures,
distribution payments on the
Preferred Securities will not
be made but would continue to
accrue, and, in the case of
distributions in arrears for
more than one quarter, would
bear interest at the rate of
% per annum, compounded
quarterly.
Optional Redemption See "Maturity/Mandatory Redeemable at the option
Redemption" below. of SunAmerica on and after
June 15, 1997, in whole or
in part, at a redemption
price equal to 100% of the
liquidation preference of
the shares to be redeemed,
plus accrued and unpaid
dividends, if any, to the
redemption date.
Maturity/Mandatory The Preferred Securities will None.
Redemption be redeemed upon the maturity
or earlier redemption of the
Junior Subordinated
Debentures, at a redemption
price equal to 100% of the
liquidation amount of the
Preferred Securities to be
redeemed, plus accrued and
unpaid distributions, if any,
to the redemption date,
including distributions
accrued as a result of
SunAmerica's election to defer
payments of interest on the
Junior Subordinated
Debentures. The Junior
Subordinated Debentures have a
final maturity of , 2044.
See "Description of the
Preferred Securities --
Mandatory Redemption" and "--
Special Event Redemption or
Distribution".
Subordination Subordinated to claims of Subordinated to claims of
creditors of the Trust, if creditors of SunAmerica,
any. The Preferred Securities including holders of
and the Common Securities will SunAmerica's outstanding
rank pari passu with each debt securities and the
other and will have equivalent Junior Subordinated
terms; provided that (i) if an Debentures, and effectively subordinated to all
Event of Default under the obligations of
Declaration occurs and is SunAmerica's subsidiaries,
continuing, the holders of but senior to the common
Preferred Securities will have stock of SunAmerica and
a priority over holders of the pari passu with all other
Common Securities with respect outstanding series of
to payments in respect of preferred stock of
distributions and payments SunAmerica.
upon liquidation, redemption
or otherwise 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 Trust
is not permitted to incur any
indebtedness for borrowed
money. The Declaration
provides that SunAmerica shall
pay for all (and the Trust
shall not be obligated to pay,
directly or indirectly, for
any) debts and obligations
(other than with respect to
the Trust Securities) and all
costs and expenses of the
Trust, including 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.
SunAmerica's obligations under
the Preferred Securities
Guarantee will rank
subordinate and junior to all
other liabilities of
SunAmerica, including the
Junior Subordinated
Debentures, except those made
pari passu or subordinate by
their terms, and will be
effectively subordinated to
all obligations of
SunAmerica's subsidiaries, 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 any of its capital
stock.
Listing The Preferred Securities have The Series B Preferred is
been approved for listing on listed on the NYSE.
the NYSE, subject to notice of
issuance. In order to satisfy
the NYSE listing requirements,
acceptance of Series B
Preferred validly tendered in
the Offer is subject to the
condition that as of the
Expiration Date there be at
least 400 record or beneficial
holders of Preferred
Securities to be issued in
exchange for such Series B
Preferred, which condition may
not be waived.
Dividends Received Dividends are not eligible for Dividends are eligible for
Deduction the dividends received the dividends received
deduction for corporate deduction for corporate
holders. holders.
Voting Rights/ Holders of Preferred If dividends shall be in
Enforcement Securities have no voting arrears in an aggregate
rights other than as provided amount equivalent to six
under the Business Trust Act quarterly dividend
or the Trust Indenture Act payments, the Holders have
unless either (i) the right (together with
distributions on the Preferred other classes of preferred
Securities shall be in arrears stock ranking on a parity
for 6 consecutive quarterly with the Series B
distribution periods; (ii) an Preferred either as to
Event of Default under the dividends or on the
Declaration occurs and is distribution of assets
continuing with respect to the upon liquidation) to elect
Junior Subordinated two directors.
Debentures; or (iii)
SunAmerica is in default on
any of its payment obligations
under the Preferred Securities
Guarantee, in which case
holders have the right to
appoint a Special Regular
Trustee. The Property Trustee
has the power to exercise all
rights under the Indenture
with respect to the Junior
Subordinated Debentures and is
also authorized to enforce the
Preferred Securities Guarantee
on behalf of holders of the
Preferred Securities. If the
Trust's failure to make
distributions is a consequence
of SunAmerica's exercise of
its right to extend the
interest payment period for
the Junior Subordinated
Debentures as described under
"Distribution/Dividend Rate",
the Property Trustee will have
no right to enforce the
payment of distributions until
an Event of Default under the
Declaration shall have
occurred. 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,
after a period of 30 days has
elapsed from such holder's
written request to the
Property Trustee to enforce
such rights or the Preferred
Securities Guarantee,
institute a legal proceeding
against SunAmerica to enforce
such rights or the Preferred
Securities Guarantee, as the
case may be.
</TABLE>
SUNAMERICA
SunAmerica is a diversified financial services company with more than
$24 billion of assets owned or under management. At December 31, 1994, these
assets consisted of $14.78 billion of assets owned by SunAmerica, $2.04
billion of assets managed in mutual funds and private accounts and $7.63
billion 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.
The principal executive offices of SunAmerica are located at 1
SunAmerica Center, Los Angeles, California 90067-6022, telephone number (310)
772-6000.
SUNAMERICA CAPITAL TRUST I
The Trust is a statutory business trust that was formed under the
Trust Act on March 22, 1995 pursuant to a declaration of trust dated March 21,
1995 among the Trustees and SunAmerica and the filing of a certificate of
trust with the Secretary of State of Delaware. Such declaration of trust will
be amended and restated in its entirety as of the date the Trust accepts
Series B Preferred in the Offer (see "The Offer -- Terms of the Offer")
substantially in the form filed as an exhibit to the Registration Statement of
which this Offering Circular/Prospectus forms a part. The Declaration is
qualified under the Trust Indenture Act. Upon issuance of the Preferred
Securities, the holders thereof will own all of the issued and outstanding
Preferred Securities. SunAmerica has agreed to 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 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 under the Declaration 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, 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 number of Trustees of the Trust shall initially be five. Three
of the Trustees will be the Regular Trustees. The fourth trustee is The
Bank of New York, which is unaffiliated with SunAmerica and which will
serve as the Property Trustee and act as the indenture trustee for purposes
of the Trust Indenture Act. The fifth trustee is an affiliate of The Bank
of New York and will serve as the Delaware Trustee. Pursuant to the
Declaration, legal title to the Junior Subordinated Debentures will be held
by the Property Trustee for the benefit of the holders of the Trust
Securities and the Property Trustee will have the power to exercise all
rights, powers and privileges under the Indenture with respect to the
Junior Subordinated Debentures. In addition, the Property Trustee will
maintain exclusive control of the Property Account to hold all payments in
respect of the Junior Subordinated Debentures 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 Property Trustee will also hold the Preferred
Securities Guarantee for the benefit of the holders of the Preferred
Securities. Subject to the right of holders of Preferred Securities to
appoint a Special Regular Trustee upon the occurrence of an Appointment
Event, SunAmerica, as the direct or indirect owner of all of the Common
Securities, has 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, provided that the number of Trustees shall
at least be three, a majority of which shall be Regular Trustees.
The Trust exists for the purpose of (a) issuing (i) its Preferred
Securities in exchange for Series B Preferred validly tendered in the Offer
and delivering such Series B Preferred to SunAmerica in consideration for the
deposit by SunAmerica of Junior Subordinated Debentures in the Trust as trust
assets, and (ii) its Common Securities to SunAmerica in exchange 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 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 Declaration, the Business Trust Act and the Trust Indenture Act.
Under the Declaration, the Trust shall not, and the Trustees shall
cause the Trust not to, engage in any activity other than in connection with
the purposes of the Trust or other than as required or authorized by the
Declaration. In particular, the Trust shall not and the Trustees shall not
(a) invest any proceeds received by the Trust from holding the Junior
Subordinated Debentures but shall promptly distribute from the Property
Account all such proceeds to holders of Trust Securities pursuant to the terms
of the Declaration and of the Trust Securities; (b) acquire any assets other
than as expressly provided in the Declaration; (c) possess Trust property for
other than a Trust purpose; (d) make any loans, other than loans represented
by the Junior Subordinated Debentures; (e) possess any power or otherwise act
in such a way as to vary the Trust assets or the terms of the Trust Securities
in any way whatsoever; (f) issue any securities or other evidences of
beneficial ownership of, or beneficial interests in, the Trust other than the
Trust Securities; (g) incur any indebtedness for borrowed money or (h)(i)
direct the time, method and place of conducting any proceeding or any remedy
available to the Indenture Trustee or the Property Trustee, or executing any
trust or power conferred upon the Indenture Trustee with respect to the Junior
Subordinated Debentures or the Property Trustee with respect to the 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 Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Junior Subordinated Debentures 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 the Trust to be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership and that the Trust
will continue to be classified as a grantor trust for United States federal
income tax purposes.
The books and records of the Trust will be maintained at the
principal office of the Trust and will be open for inspection by a holder of
Preferred Securities or his representative for any purpose reasonably related
to its interest in the Trust during normal business hours. Each holder of
Preferred Securities will be furnished annually with unaudited financial
statements of the Trust as soon as available after the end of the 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. If (i) distributions on the Preferred Securities are in arrears for 6
consecutive quarterly distribution periods, (ii) an Event of Default under the
Declaration occurs and is continuing or (iii) SunAmerica is in default on any
of its payment obligations under the Preferred Securities Guarantee, holders
of Preferred Securities 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 SunAmerica. The Special Regular
Trustee shall have the same rights, powers and privileges under the
Declaration as the Regular Trustees. See "Description of the Preferred
Securities -- Voting Rights".
The Property Trustee, for the benefit of the holders of the Trust
Securities, is authorized under the Declaration to exercise all rights under
the Indenture with respect to the Junior Subordinated Debentures. The
Property Trustee shall also be authorized to enforce the rights of holders of
Preferred Securities under the Preferred Securities Guarantee. 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 shall have occurred. 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, after a period of 30 days
has elapsed from such holder's written request to the Property Trustee to
enforce such rights or the Preferred Securities Guarantee, 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 -- Voting Rights".
If an Indenture Event of Default occurs and is continuing with
respect to Junior Subordinated Debentures, an Event of Default under the
Declaration will occur and be continuing with respect to the Trust Securities.
In such event, the Declaration provides that the holders of Common Securities
will be deemed to have waived any such Event of Default with respect to the
Common Securities until such Event of Default with respect to the Preferred
Securities has been cured or waived. Until such Event of Default with respect
to the Preferred Securities has been 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. See "Description of the
Preferred Securities".
The Declaration provides that the Trustees may treat the person in
whose name a Preferred Security is registered on the books and records of the
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 the Trust shall have actual
or other notice thereof. Preferred Securities will be issued in fully
registered form. Investors may elect to hold their Preferred Securities
directly or, subject to the rules and procedures of The Depository Trust
Company ("DTC") described under "Description of the Preferred Securities --
Book-Entry; Delivery and Form", hold interests in a global certificate
registered on the books and records of the Trust in the name of DTC or its
nominee. Under the Declaration:
(i) the Trust and the Trustees shall be entitled to deal with
DTC (or any successor depositary) for all purposes, including the
payment of distributions and receiving approvals, votes or
consents under the Declaration, and except as set forth in the
Declaration with respect to the Property Trustee, shall have no
obligation to persons owning Preferred Securities ("Preferred
Security Beneficial Owners") registered in the name of and held by
DTC or its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall
be exercised only through DTC (or any successor depositary) and shall
be limited to those established by law and agreements between such
Owners and DTC and/or its participants. See "Description of the
Preferred Securities -- Book-Entry; Delivery and Form". With respect
to Preferred Securities registered in the name of and held by DTC or
its nominee, all notices and other communications required under the
Declaration shall be given to, and all distributions on such
Preferred Securities shall be given or made to, DTC (or its
successor).
In the Declaration, SunAmerica has agreed to pay for all (and the
Trust shall not be obligated to pay, directly or indirectly, for any) 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 taxes and all costs and expenses with respect thereto, to
which the Trust may become subject, except for United States withholding
taxes. See "Risk Factors" and "Description of the Preferred Securities". The
foregoing obligations of SunAmerica under the 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 hereof. Any such Creditor may enforce such
obligations of SunAmerica directly against SunAmerica and SunAmerica has
irrevocably waived any right or remedy to require that any such Creditor take
any action against the Trust or any other person before proceeding against
SunAmerica. SunAmerica has agreed in the Declaration to execute such
additional agreements as may be necessary or desirable in order to give full
effect to the foregoing.
The foregoing summary of certain provisions of the Declaration does
not purport to be complete and is qualified in its entirety by reference to
the Declaration which have been filed as exhibits to the Registration
Statement of which this Offering Circular/Prospectus is a part.
The business address of the Trust is c/o SunAmerica Inc., 1
SunAmerica Center, Los Angeles, California 90067-6022, telephone number (310)
772-6000.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
Three months ended
Years ended September 30, December 31,
---------------------------------------------------------- -------------------------------
1990 1991 1992 1993 1994 1993 1994
----- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (excluding interest
on fixed annuities,
guaranteed investment
contracts and trust
deposits) (1) 2.4 2.7 4.0 6.1 5.8 6.2 5.5
========= ========= ========= ========= ========== ============= =============
Ratio of earnings to fixed
charges (including interest
on fixed annuities,
guaranteed investment
contracts and trust
deposits) (2) 1.1 1.1 1.2 1.4 1.5 1.5 1.5
========= ========= ========= ========= ========== ============= =============
Ratio of earnings to combined
fixed charges and
preferred stock dividends
(excluding interest on
fixed annuities, guaranteed
investment contracts
and trust deposits) (3) 2.0 2.3 2.7 2.8 2.8 2.8 3.1
========= ========= ========= ========= ========== ============= =============
Ratio of earnings to combined
fixed charges and
preferred stock dividends
(including interest on
fixed annuities, guaranteed
investment contracts
and trust deposits) (4) 1.1 1.1 1.2 1.3 1.4 1.3 1.4
========= ========= ========= ========= ========== ============= =============
_______________
<FN>
<FN1>
In computing the ratio of earnings to fixed charges (excluding interest on fixed annuities, guaranteed investment contracts and
trust deposits), fixed charges consist of interest expense on senior and subordinated indebtedness. Earnings are computed by
adding interest incurred on senior and subordinated indebtedness to pretax income.
<FN2>
In computing the ratio of earnings to fixed charges (including interest on fixed annuities, guaranteed investment contracts and
trust deposits), fixed charges consist of interest expense on senior and subordinated indebtedness, fixed annuity contracts,
guaranteed investment contracts and trust deposits. Earnings are computed by adding interest incurred on senior and
subordinated indebtedness, fixed annuity contracts, guaranteed investment contracts and trust deposits to pretax income.
<FN3>
In computing the ratio of earnings to combined fixed charges and preferred stock dividends (excluding interest on fixed
annuities, guaranteed investment contracts and trust deposits), combined fixed charges and preferred stock dividends consist of
interest expense on senior and subordinated indebtedness and dividends on preferred stock on a tax equivalent basis. Earnings
are computed by adding interest incurred on senior and subordinated indebtedness to pretax income.
<FN4>
In computing the ratio of earnings to combined fixed charges and preferred stock dividends (including interest on fixed
annuities, guaranteed investment contracts 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 and dividends on preferred stock 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 to pretax
income.
</TABLE>
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 in this Offering Circular/Prospectus 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 three months ended December 31, 1993 and 1994
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 December 31, 1994 (the "Form 10-Q"), which
report is also incorporated by reference in this Offering Circular/Prospectus.
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 three months ended December 31, 1994 may not necessarily be indicative
of the results to be expected for the full fiscal year.
<TABLE>
Three months ended
Years ended September 30, December 31,
----------------------------------------------------------------- ------------------------
1990 1991 1992 1993 1994 1993 1994
---- ---- ---- ---- ---- ---- ----
(In thousands, except per common share amounts and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of operations
Net investment income ...... $ 132,947 $ 162,412 $ 219,384 $ 263,791 $ 294,454 $ 70,714 $ 78,109
Net realized investment
losses ........................ (29,319) (46,060) (56,364) (21,287) (21,124) (5,367) (7,066)
Fee income .................... 72,327 92,689 112,831 134,305 150,736 37,627 39,661
General and administrative
expenses....................... (112,860) (120,475) (133,058) (135,790) (132,743) (33,457) (33,108)
Provision for future
guaranty fund assessments . --- --- --- (22,000) --- --- ---
Amortization of deferred
acquisition costs ............. (27,872) (40,088) (48,375) (51,860) (66,925) (15,243) (18,674)
Other income and expenses,
net ........................... 25,644 24,903 16,673 16,852 15,603 2,990 4,612
------------- ----------- ----------- ----------- ----------- ------------- ---------
Pretax income ................. 60,867 73,381 111,091 184,011 240,001 57,264 63,534
Income tax expense ............ (22,100) (25,900) (34,300) (57,000) (74,700) (17,700) (18,400)
------------- ----------- ----------- ----------- ----------- ------------- ---------
Income before cumulative
effect of change in
accounting for income
taxes ........................ 38,767 47,481 76,791 127,011 165,301 39,564 45,134
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 $ 6,064 $ 45,134
============= =========== =========== =========== =========== ============= =========
Earnings per share:
Income before cumulative
effect of change in
accounting for income
taxes...................... $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 3.58 $ 0.85 $ 0.98
Cumulative effect of
change in accounting
for income taxes... . --- --- --- --- (.81) (0.80) ---
------------- --------- ----------- ----------- ----------- ------------- ---------
Net income .................. $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 2.77 $ 0.05 $ 0.98
============= =========== =========== =========== =========== ============= =========
Cash dividends per share
paid to common
shareholders:
Nontransferable Class B
Stock ................... $ 0.180 $ 0.180 $ 0.180 $ 0.252 $ 0.360 $ 0.090 $ 0.135
============= =========== =========== =========== =========== ============= =========
Common Stock ............. $ 0.200 $ 0.200 $ 0.200 $ 0.280 $ 0.400 $ 0.100 $ 0.150
============= =========== =========== =========== =========== ============= =========
</TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA (continued)
<TABLE>
At September 30, At December 31,
------------------------------------------------------------------------ -------------------------
1990 1991 1992 1993 1994 1993 1994
---- ---- ---- ---- ---- ---- ----
(In thousands, except book value per common share)
<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 $10,387,761 $ 9,493,129
Variable annuity assets...... 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093 4,432,876 4,359,290
Deferred acquisition costs... 356,088 392,278 436,209 475,917 581,874 483,092 603,954
Other assets ................ 301,906 279,007 245,833 231,582 280,868 237,346 322,176
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets ................ $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225 $15,541,075 $14,778,549
=========== =========== =========== =========== =========== =========== ===========
Reserves for fixed annuity
contracts.................... $ 5,523,320 $ 5,359,757 $ 5,143,339 $ 4,934,871 $ 4,519,623 $ 4,810,948 $ 4,545,686
Reserves for guaranteed
investment contracts........ 1,294,338 1,598,963 2,023,048 2,216,104 2,783,522 2,378,606 3,018,234
Trust deposits .............. --- --- 367,458 378,986 442,320 382,315 464,840
Variable annuity
liabilities................. 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093 4,432,876 4,359,290
Other payables and
accrued liabilities.......... 159,416 344,789 1,372,010 1,828,153 860,763 1,678,885 901,347
Long-term notes and
debentures................ --- --- 225,000 380,560 472,835 404,835 472,835
Collateralized mortgage
obligations and reverse
repurchase agreements..... 368,907 299,343 182,784 112,032 28,662 241,383 ---
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 74,319 119,396 54,369
Shareholders' equity......... 384,073 449,909 730,068 1,110,027 961,088 1,091,831 961,948
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity...... $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225 $15,541,075 $14,778,549
=========== =========== =========== =========== =========== =========== ===========
Book value per common
share..................... $ 9.98 $ 12.24 $ 14.54 $ 22.64 $ 18.90 $ 22.12 $ 18.76
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of
SunAmerica and its subsidiaries at December 31, 1994 and as adjusted to give
effect to the issuance of Preferred Securities in exchange for the Series B
Preferred. Interest rates are as of December 31, 1994. The "As Adjusted"
capitalization described in the table below assumes that Holders of 5,500,000
shares of Series B Preferred elect to participate in the Offer. To the extent
holders of Series B Preferred do not participate in the Offer, Minority
interests in consolidated subsidiary would be reduced and Preferred Stock
would be increased by an amount equal to the additional liquidation value of
the Series B Preferred which remained outstanding.
<TABLE>
December 31, 1994
-------------------------------
Actual As Adjusted
------------- --------------
(In thousands)
<S> <C> <C>
Indebtedness:
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
------------- --------------
Minority interests in consolidated
subsidiary (Preferred Securities of
the Trust)............................. --- 137,500
------------- --------------
Shareholders' equity:
Preferred Stock......................... 374,273 236,773
Nontransferable Class B Stock........... 6,826 6,826
Common Stock............................ 29,327 29,327
Additional paid-in capital.............. 201,536 201,536
Retained earnings....................... 545,020 545,020
Net unrealized losses on debt and
equity securities available for sale.. (195,034) (195,034)
------------- --------------
Total shareholders' equity ............. 961,948 824,448
------------- --------------
Total capitalization....................... $1,434,783 $1,434,783
============= ==============
</TABLE>
THE OFFER
Purpose of the Offer
The purpose of the Offer is to refinance the Series B Preferred with
the Preferred Securities and to achieve certain tax efficiencies while
preserving SunAmerica's flexibility with respect to future financings. This
refinancing will permit SunAmerica to deduct interest payable on the Junior
Subordinated Debentures for United States federal income tax purposes;
dividends payable on the Series B Preferred are not deductible.
Following the Offer, and depending on the number of shares of Series
B Preferred tendered, SunAmerica may take additional actions to reduce further
or eliminate the remaining Series B Preferred, including by making purchases
of Series B Preferred in the open market, by making subsequent tender or
exchange offers or by undertaking a recapitalization transaction. Such
transactions could be undertaken on terms which are more favorable or less
favorable than the exchange ratios in the Offer. SunAmerica has made no
decision to take any such actions, and there is no assurance that SunAmerica
will take any such actions.
General
Participation in the Offer is voluntary and Holders of Series B
Preferred should carefully consider whether to accept. Neither the board of
directors of SunAmerica nor SunAmerica nor the Trustees nor the Trust makes
any recommendation to Holders as to whether to tender or refrain from
tendering in the Offer. Holders of Series B Preferred are urged to consult
their financial and tax advisors in making their decisions on what action to
take in light of their own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect
to the Offer means (i) any person in whose name any shares of Series B
Preferred are registered on the books of SunAmerica or (ii) any other person
who has obtained a properly completed stock power from the registered holder,
or (iii) any person whose shares of Series B Preferred are held of record by
DTC who desires to deliver such Series B Preferred by book-entry transfer at
DTC.
Terms of the Offer
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal, the Trust will exchange its Preferred Securities
for up to 5,500,000 outstanding shares of Series B Preferred. The Offer will
be effected on a basis of one Preferred Security for each share of Series B
Preferred validly tendered and accepted for exchange. See " -- Procedures for
Tendering". Upon the terms and subject to the conditions set forth herein and
in the Letter of Transmittal, the Trust will accept up to 5,500,000 shares of
Series B Preferred validly tendered and not withdrawn prior to the Expiration
Date and, unless the Offer has been withdrawn or terminated, will deliver
Preferred Securities in exchange therefor to tendering Holders of Series B
Preferred as promptly as practicable following the Expiration Date. The Trust
expressly reserves the right, in its sole discretion, to delay acceptance for
exchange of Series B Preferred tendered under the Offer and the delivery of
the Preferred Securities with respect to the Series B Preferred accepted for
exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which
require that the Trust consummate the Offer or return the Series B Preferred
deposited by or on behalf of the Holders thereof promptly after the
termination or withdrawal of the Offer), or to withdraw or terminate the Offer
at any time prior to the Expiration Date for any reason.
In all cases, except to the extent waived by the Trust, delivery of
Preferred Securities issued with respect to the Series B Preferred accepted
for exchange pursuant to the Offer will be made only after timely receipt by
the Exchange Agent of Series B Preferred (or confirmation of book-entry
transfer thereof), a properly completed and duly executed Letter of
Transmittal and any other documents required thereby.
As of the date of this Offering Circular/Prospectus, there were
5,620,000 shares of Series B Preferred outstanding. This Offering
Circular/Prospectus, together with the Letter of Transmittal, is being sent to
all registered Holders as of April , 1995.
The Trust shall be deemed to have accepted validly tendered Series
B Preferred (or defectively tendered Series B Preferred with respect to which
the Trust has waived such defect) when, as and if the Trust has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering Holders for the purpose of receiving Series B
Preferred from, and remitting Preferred Securities to, tendering Holders who
are participating in the Offer. Upon the terms and subject to the conditions
of the Offer, delivery of Preferred Securities to tendering Holders will be
made as promptly as practicable following the Expiration Date.
If proration of tendered shares of Series B Preferred is required,
because of the difficulty in determining the number of shares of Series B
Preferred validly tendered (including shares tendered by the guaranteed
delivery procedures described in "-- Procedures for Tendering"), the Trust
does not expect that it would be able to announce the final proration factor
or to commence the exchange for any shares of Series B Preferred pursuant to
the Offer until approximately seven Business Days after the Expiration Date.
Preliminary results of the proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of shares of
Series B Preferred may obtain such preliminary information from the Dealer
Manager, the Information Agent or the Exchange Agent and may also be able to
obtain such information from their brokers.
If any tendered shares of Series B Preferred are not accepted for
exchange because of an invalid tender, proration, the occurrence of certain
other events set forth herein or otherwise, unless otherwise requested by the
Holder under "Special Delivery Instructions" in the Letter of Transmittal,
such shares of Series B Preferred will be returned, without expense, to the
tendering Holder thereof (or in the case of shares of Series B Preferred
tendered by book-entry transfer into the Exchange Agent's account at DTC, such
shares of Series B Preferred will be credited to an account maintained at DTC
designated by the participant therein who so delivered such Series B
Preferred), as promptly as practicable after the Expiration Date or the
withdrawal or termination of the Offer.
Holders of Series B Preferred will not have any appraisal or
dissenters' rights under the Maryland General Corporation Law in connection
with the Offer. The Trust intends to conduct the Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission thereunder.
Holders who tender Series B Preferred in the Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Series B Preferred pursuant to the Offer. See "Fees and Expenses; Transfer
Taxes".
Holders tendering Series B Preferred held in global form shall
receive Preferred Securities in global form and holders tendering Series B
Preferred held directly in certificated form shall receive Preferred
Securities in certificated form, in each case unless otherwise specified in
the Letter of Transmittal. See "Procedures for Tendering".
Expiration Date; Extensions; Amendments; Termination
The Offer will expire on the Expiration Date. The Trust reserves the
right to extend the Offer in its sole discretion at any time and from time to
time by giving oral or written notice to the Exchange Agent and by timely
public announcement communicated, unless otherwise required by applicable law
or regulation, by making a release to the Dow Jones News Service. During any
extension of the Offer, all Series B Preferred previously tendered pursuant to
the Offer and not withdrawn will remain subject to the Offer.
Except as provided below, the Trust expressly reserves the right to
(i) extend, amend or modify the terms of the Offer in any manner and (ii)
withdraw or terminate the Offer and not accept for exchange any Series B
Preferred at any time prior to the Expiration Date for any reason, including
(without limitation) if fewer than 2,810,000 shares of Series B are tendered
in the Offer (which conditions may be waived by SunAmerica and the Trust). If
the Trust makes a material change in the terms of the Offer or if it waives a
material condition of the Offer, the Trust will extend the Offer. The minimum
period for which the Offer will be extended following a material change or
waiver, other than a change in the amount of Series B Preferred sought for
exchange, will depend upon the facts and circumstances, including the relative
materiality of the change or waiver. With respect to a change in the amount
of Series B Preferred sought, if required, the Offer will remain open for a
minimum of ten Business Days following public announcement of such change.
Any withdrawal or termination of the Offer will be followed as promptly as
practicable by public announcement thereof. If the Trust withdraws or
terminates the Offer, it will give immediate notice to the Exchange Agent, and
all Series B Preferred theretofore tendered pursuant to the Offer will be
returned promptly to the tendering Holders thereof. See "-- Withdrawal of
Tenders". In order to satisfy the NYSE listing requirements, acceptance of
Series B Preferred validly tendered in the Offer is subject to the condition
that as of the Expiration Date there be at least 400 record or beneficial
holders of Preferred Securities to be issued in exchange for such Series B
Preferred, which condition may not be waived.
Procedures for Tendering
The tender of Series B Preferred by a Holder thereof pursuant to one
of the procedures set forth below will constitute an agreement between such
Holder and the Trust in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Each Holder of the Series B Preferred wishing to participate in the
Offer must (i) properly complete and sign the Letter of Transmittal in
accordance with the instructions contained herein and in the Letter of
Transmittal, together with any required signature guarantees, and deliver the
same to the Exchange Agent, at one of its addresses set forth in "-- Exchange
Agent and Information Agent" prior to the Expiration Date and either (a)
certificates for the Series B Preferred must be received by the Exchange Agent
at such address or (b) such Series B Preferred must be transferred pursuant to
the procedures for book-entry transfer described below and a confirmation of
such book-entry transfer must be received by the Exchange Agent, in each case
prior to the Expiration Date or (ii) comply with the guaranteed delivery
procedures described below.
In order to participate in the Offer, Holders of Series B Preferred
must submit a Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the Expiration Date.
LETTERS OF TRANSMITTAL, SERIES B PREFERRED AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE TRUST, THE DEALER
MANAGER OR THE INFORMATION AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose
Series B Preferred is registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered Holder promptly and instruct such registered Holder to tender
on such beneficial owner's behalf. If such beneficial owner wishes to tender
on its own behalf, such owner must, prior to completing and executing the
Letter of Transmittal and delivering its Series B Preferred, either make
appropriate arrangements to register ownership of the Series B Preferred in
such owner's name or obtain a properly completed stock power from the
registered Holder. The transfer of registered ownership may take considerable
time and may not be able to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF SERIES B PREFERRED AND ALL OTHER DOCUMENTS
IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, INSURANCE BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Signature Guarantees. If tendered Series B Preferred is registered
in the name of the signer of the Letter of Transmittal and the Preferred
Securities to be issued in exchange therefor are to be issued (and any
untendered Series B Preferred is to be reissued) in the name of the registered
Holder (which term, for the purposes described herein, shall include any
participant in DTC whose name appears on a security listing as the owner of
Series B Preferred), the signature of such signer need not be guaranteed. If
the tendered Series B Preferred is registered in the name of someone other
than the signer of the Letter of Transmittal, or if Preferred Securities
issued in exchange therefor are to be issued in the name of any other person
other than the signer of the Letter of Transmittal, such tendered Series B
Preferred must be endorsed or accompanied by written instruments of transfer
in form satisfactory to the Trust and duly executed by the registered Holder,
and the signature on the endorsement or instrument of transfer must be
guaranteed by a financial institution (including most banks, savings and loans
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program or the Stock Exchange Medallion Program (any
of the foregoing hereinafter referred to as an "Eligible Institution"). If
the Preferred Securities and/or the Series B Preferred not exchanged are to be
delivered to an address other than that of the registered Holder appearing on
the register for the Series B Preferred, the signature in the Letter of
Transmittal must be guaranteed by an Eligible Institution.
Book-Entry Transfer. The Trust understands that the Exchange Agent
will make a request promptly after the date of this Offering
Circular/Prospectus to establish accounts with respect to the Series B
Preferred at DTC for the purpose of facilitating the Offer, and subject to
the establishment thereof, any financial institution that is a participant
in DTC's system may make book-entry delivery of Series B Preferred by
causing DTC to transfer such Series B Preferred into the Exchange Agent's
account with respect to the Series B Preferred in accordance with DTC's
Automated Tender Offer Program ("ATOP") procedures for such book-entry
transfers. However, the exchange for the Series B Preferred so tendered
will only be made after timely confirmation (a "Book-Entry Confirmation")
of such Book-Entry Transfer of Series B Preferred into the Exchange Agent's
account, and timely receipt by the Exchange Agent of an Agent's Message (as
such term is defined in the next sentence) and any other documents required
by the Letter of Transmittal. The term "Agent's Message" means a message,
transmitted by DTC and received by the Exchange Agent and forming a part of
a Book-Entry Confirmation, which states that DTC has received an express
acknowledgment from a participant tendering Series B Preferred that is the
subject of such Book-Entry Confirmation that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal, and that
the Trust may enforce such agreement against such participant.
Guaranteed Delivery. If a Holder desires to participate in the Offer
and time will not permit a Letter of Transmittal or Series B Preferred to
reach the Exchange Agent before the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if the Exchange Agent has received at its office prior to the
Expiration Date, a letter, telegram or facsimile transmission from an Eligible
Institution setting forth the name and address of the tendering Holder, the
name(s) in which the Series B Preferred is registered and, if the Series B
Preferred is held in certificated form, the certificate numbers of the Series
B Preferred to be tendered, and stating that the tender is being made thereby
and guaranteeing that within five NYSE trading days after the date of
execution of such letter, telegram or facsimile transmission by the Eligible
Institution, the Series B Preferred in proper form for transfer together with
a properly completed and duly executed Letter of Transmittal (and any other
required documents), or a confirmation of book-entry transfer of such Series B
Preferred into the Exchange Agent's account at DTC, will be delivered by such
Eligible Institution. Unless the Series B Preferred being tendered by the
above-described method is deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents) or a confirmation of
book-entry transfer of such Series B Preferred into the Exchange Agent's
account at DTC in accordance with DTC's ATOP procedures is received, the Trust
may, at its option, reject the tender. In addition to the copy being
transmitted herewith, copies of a Notice of Guaranteed Delivery which may be
used by Eligible Institutions for the purposes described in this paragraph are
available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Series B Preferred will be determined by the Trust, whose determination will
be final and binding. The Trust reserves the absolute right to reject any or
all tenders not in proper form or the acceptance for exchange of which may, in
the opinion of the Trust's counsel, be unlawful. The Trust also reserves the
absolute right to waive any defect or irregularity in the tender of any Series
B Preferred, and the Trust's interpretation of the terms and conditions of the
Offer (including the instructions in the Letter of Transmittal) will be final
and binding. None of the Trust, the Exchange Agent, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Tenders of Series B Preferred involving any irregularities will not
be deemed to have been made until such irregularities have been cured or
waived. Series B Preferred received by the Exchange Agent that is not validly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering Holder (or in the case of
Series B Preferred tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Series B Preferred will be credited to an account
maintained at DTC designated by the participant therein who so delivered such
Series B Preferred), unless otherwise requested by the Holder in the Letter of
Transmittal, as promptly as practicable after the Expiration Date or the
withdrawal or termination of the Offer.
Letter of Transmittal
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Offer.
The party tendering Series B Preferred for exchange (the
"Transferor") exchanges, assigns and transfers the Series B Preferred to
the Trust, and irrevocably constitutes and appoints the Exchange Agent as
the Transferor's agent and attorney-in-fact to cause the Series B Preferred
to be assigned, transferred and exchanged. The Transferor represents and
warrants that it has full power and authority to tender, exchange, assign
and transfer the Series B Preferred and to acquire Preferred Securities
issuable upon the exchange of such tendered Series B Preferred and that,
when such Transferor's shares of Series B Preferred are accepted for
exchange, the Trust will acquire good and unencumbered title to such shares
of tendered Series B Preferred, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim. The
Transferor also warrants that it will, upon request, execute and deliver
any additional documents deemed by the Trust to be necessary or desirable
to complete the exchange, assignment and transfer of tendered Series B
Preferred or transfer ownership of such Series B Preferred on the account
books maintained by DTC. All authority conferred by the Transferor will
survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
Withdrawal of Tenders
Tenders of Series B Preferred pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for exchange by
the Trust, may be withdrawn at any time after 40 Business Days after the date
of this Offering Circular/Prospectus.
To be effective, a written notice of withdrawal delivered by mail,
hand delivery or facsimile transmission must be timely received by the
Exchange Agent at the address set forth below under "-- Exchange Agent and
Information Agent". The method of notification is at the risk and election of
the Holder. Any such notice of withdrawal must specify (i) the Holder named
in the Letter of Transmittal as having tendered Series B Preferred to be
withdrawn, (ii) if the Series B Preferred is held in certificated form, the
certificate numbers of the Series B Preferred to be withdrawn, (iii) that such
Holder is withdrawing his election to have such Series B Preferred exchanged
and (iv) the name of the registered Holder of such Series B Preferred, and
must be signed by the Holder in the same manner as the original signature on
the Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Trust that the person withdrawing
the tender has succeeded to the beneficial ownership of the Series B Preferred
being withdrawn. The Exchange Agent will return the properly withdrawn Series
B Preferred promptly following receipt of notice of withdrawal. If Series B
Preferred has been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn Series B Preferred and otherwise comply
with DTC's procedures. All questions as to the validity of notice of
withdrawal, including time of receipt, will be determined by the Trust, and
such determination will be final and binding on all parties. Withdrawals of
tenders of Series B Preferred may not be rescinded and any Series B Preferred
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. Properly withdrawn Series B Preferred, however, may be retendered by
following the procedures therefor described elsewhere herein at any time prior
to the Expiration Date. See "-- Procedures for Tendering."
Acceptance of Shares and Proration
Upon the terms and subject to the conditions of the Offer, if
5,500,000 or fewer shares of Series B Preferred have been validly tendered and
not withdrawn prior to the Expiration Date, the Trust will accept for exchange
all such shares of Series B Preferred. Upon the terms and subject to the
conditions of the Offer, if more than 5,500,000 shares of Series B Preferred
(or, if decreased as described herein, such lesser number as the Trust may
elect to purchase pursuant to the Offer) have been validly tendered and not
withdrawn prior to the Expiration Date, the Trust will accept for exchange
shares of Series B Preferred from each tendering Holder on a pro rata basis,
subject to adjustment to avoid the acceptance for exchange of fractional
shares.
If the Trust decreases the amount of Series B Preferred sought, and
the Offer is scheduled to expire less than ten Business Days from and
including the date that notice of such decrease is first published, sent or
given in the manner specified in "-- Expiration Date; Extensions; Amendments;
Termination", then the Offer will be extended for ten Business Days from and
including the date of such notice.
All shares of Series B Preferred not accepted pursuant to the Offer,
including shares not purchased because of proration, will be returned to the
tendering Holders at the Trust's expense as promptly as practicable following
the Expiration Date.
Exchange Agent and Information Agent
The First National Bank of Chicago has been appointed as Exchange
Agent for the Offer.
The Exchange Agent:
The First National Bank of Chicago
By Hand or Overnight Courier in By Hand or Overnight Courier in
Chicago: New York:
The First National Bank of Chicago, First Chicago Trust Company of
Exchange Agent New York
One North State Street 14 Wall Street
9th Floor 8th Floor - Window 2
Attention: Securities Processing New York, New York 10005
Suite 0124
Chicago, Illinois 60602
By Mail:
The First National Bank of Chicago,
Exchange Agent
Registered Securities Processing Unit
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
By Facsimile Transmission
(For Eligible Institutions Only):
(312) 407-1067 or (212) 240-8938
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 524-9472 (Chicago) or (212) 240-8800 (New York)
Georgeson & Company Inc. has been retained by SunAmerica and the
Trust as the Information Agent to assist in connection with the Offer.
Questions and requests for assistance regarding the Offer, requests for
additional copies of this Offering Circular/Prospectus, the Letter of
Transmittal and requests for Notice of Guaranteed Delivery may be directed to
the Information Agent at Wall Street Plaza, New York, New York 10005,
telephone (800) 223-2064.
SunAmerica will pay the Exchange Agent and Information Agent
reasonable and customary fees for their services and will reimburse them for
all their reasonable out-of-pocket expenses in connection therewith.
Dealer Manager; Soliciting Dealers
Merrill Lynch & Co., as Dealer Manager, has agreed to solicit
exchanges of Series B Preferred for Preferred Securities. SunAmerica will pay
the Dealer Manager a fee of $ per share of Series B Preferred accepted
pursuant to the Offer. The maximum fee payable to the Dealer Manager is
approximately $ million. SunAmerica will also reimburse the Dealer
Manager for certain reasonable out-of-pocket expenses in connection with the
Offer and will indemnify the Dealer Manager against certain liabilities,
including liabilities under the Securities Act. Merrill Lynch & Co. engages
in transactions with, and from time to time has performed services for,
SunAmerica, including acting as lead underwriter for the issuance of the
Series B Preferred.
The Company will pay to a Soliciting Dealer a solicitation fee of $
per share of Series B Preferred validly tendered and accepted for exchange
pursuant to the Offer. As used in this Offering Circular/Prospectus,
"Soliciting Dealer" includes (i) any broker or dealer in securities, including
the Dealer Manager in its capacity as a broker or dealer, who is a member of
any national securities exchange or of the National Association of Securities
Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for
membership in the NASD who agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (iii) any bank or trust company, any one of
whom has solicited and obtained a tender pursuant to the Offer. No such fee
shall be payable to a Soliciting Dealer in respect of shares of Series B
Preferred registered in the name of such Soliciting Dealer unless (i) such
shares are held by such Soliciting Dealer as nominee and such shares are being
tendered for the benefit of one or more beneficial owners identified on the
Letter of Transmittal or on the Notice of Solicited Tenders (included in the
materials provided to brokers and dealers) or (ii) such shares are being
tendered for the benefit of the Soliciting Dealer and such Soliciting Dealer
certifies on the Letter of Transmittal or on the Notice of Solicited Tenders
that such shares of Series B Preferred were acquired by the Soliciting Dealer
(x) after the announcement of the Offer, (y) at a price not in excess of $25
per share (the stated liquidation preference of the Series B Preferred) and (z)
from a holder solicited by the Soliciting Dealer. For purposes of clause (z),
"solicited" shall mean direct contact (other than the mailing of the tender
offer materials) with the holder relating to the tender of shares of Series B
Preferred beneficially owned by the holder that resulted in the purchase by
the Soliciting Dealer of such shares. No such fee shall be payable to a
Soliciting Dealer with respect to the tender of shares of Series B Preferred
by a holder unless the Letter of Transmittal accompanying such tender
designates such Soliciting Dealer as such in the box captioned "Solicited
Tenders" or the Notice of Solicited Tenders accompanying such tender
designates such Soliciting Dealer. No such fee shall be payable to the
Soliciting Dealer with respect to the tender of shares of Series B Preferred
by the holder of record, for the benefit of the beneficial owner, unless the
beneficial owner has designated such Soliciting Dealer. No such fee shall be
payable to the Soliciting Dealer unless the Soliciting Dealer returns a Notice
of Solicited Tenders to the Exchange Agent within 5 business days after the
Expiration Date. No such fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer the amount of such
fee to a depositing holder (other than itself). No broker, dealer, bank,
trust company or fiduciary shall be deemed to be the agent of SunAmerica, the
Trust, the Exchange Agent, the Information Agent or the Dealer Manager for
purposes of the Offer. The maximum fee payable to Soliciting Dealers is $
million.
Additional solicitation may be made by telephone or in person by
officers and regular employees of SunAmerica and its affiliates. No
additional compensation will be paid to any such officers and employees who
engage in soliciting tenders.
LISTING AND TRADING OF PREFERRED SECURITIES AND SERIES B PREFERRED
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 Dealer Manager
has indicated to the Trust that it intends to make a market in the Preferred
Securities as permitted by applicable laws and regulations prior to the
commencement of trading on the NYSE, it is 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. In order to satisfy the NYSE listing requirements,
acceptance of Series B Preferred validly tendered in the Offer is subject to
the condition that as of the Expiration Date there be at least 400 record or
beneficial holders of Preferred Securities to be issued in exchange for such
Series B Preferred, which condition may not be waived.
To the extent that Series B Preferred is tendered and accepted in the
Offer, the terms on which untendered Series B Preferred could subsequently be
sold could be adversely affected. In addition, if the Offer is substantially
subscribed or oversubscribed, there would be a significant risk that round lot
holdings of Series B Preferred outstanding following the Offer would be
limited. See "Risk Factors -- Listing and Trading of Preferred Securities and
Series B Preferred".
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Offer between
SunAmerica or any of its directors or executive officers, the Trust or the
Trustees and any person with respect to any securities of SunAmerica or the
Trust, including the Junior Subordinated Debentures, the Series B Preferred
and the Preferred Securities.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Series B Preferred will be
borne by SunAmerica. For compensation to be paid to the Dealer Manager and
Soliciting Dealers, see "The Offer -- Dealer Manager; Soliciting Dealers".
The total cash expenditures to be incurred by SunAmerica in connection with
the Offer, other than fees payable to the Dealer Manager and Soliciting
Dealers, but including the expenses of the Dealer Manager, printing,
accounting and legal fees, and the fees and expenses of the Exchange Agent,
the Information Agent, the Property Trustee, the Delaware Trustee and the
Indenture Trustee, are estimated to be approximately $750,000.
SunAmerica will pay all transfer taxes, if any, applicable to the
exchange of Series B Preferred pursuant to the Offer. If, however,
certificates representing Preferred Securities or shares of Series B Preferred
not tendered or accepted for exchange, are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the
Series B Preferred tendered or if a transfer tax is imposed for any reason
other than the exchange of Series B Preferred pursuant to the Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder or
any other persons) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
PRICE RANGE OF SERIES B PREFERRED
The Series B Preferred is listed and principally traded on the NYSE.
The following table sets forth, for each period shown, the high and low sales
prices of the Series B Preferred as reported on the NYSE Composite Tape.
Fiscal Year Ended High Low
September 30, 1993
1st Quarter.............................. $26 3/8 $24 7/8
2nd Quarter.............................. $27 $25 1/2
3rd Quarter.............................. $27 7/8 $26 5/8
4th Quarter.............................. $28 1/4 $27 1/8
Fiscal Year Ended High Low
September 30, 1994
1st Quarter.............................. $28 5/8 $26 1/2
2nd Quarter.............................. $27 7/8 $25 1/2
3rd Quarter.............................. $26 1/2 $25
4th Quarter.............................. $26 1/2 $25 1/4
Fiscal Year Ending High Low
September 30, 1995
1st Quarter.............................. $25 1/2 $24 1/2
2nd Quarter.............................. $26 1/2 $25
3rd Quarter (through April 10, 1995)...... $26 $25 7/8
On December 19, 1994, the last full day of trading prior to the first
public announcement of the Offer, the closing sales price of the Series B
Preferred on the NYSE as reported on the Composite Tape was $25 3/8 per share.
Stockholders are urged to obtain a current market quotation for the Series B
Preferred.
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 summary of certain material terms and provisions of the Preferred
Securities and the Declaration set forth below does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the
Declaration, which has been filed as an exhibit to the Registration Statement
of which this Offering Circular/Prospectus 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 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 Guarantee." 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 % 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 % 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 first day following the Expiration Date (the "Accrual Date")
and, except as otherwise described below, will be payable quarterly in
arrears, on March 15, June 15, September 15 and December 15 of each year,
commencing on June 15, 1995, but only if, and to the extent that, the Property
Trustee has funds available in the Property Account to make such distribution.
In addition, holders of Preferred Securities will be entitled to an additional
cash distribution at the rate of 9 1/4% per annum of the liquidation amount
thereof from March 15, 1995 through the Expiration Date in lieu of dividends
accumulating after March 15, 1995 on their Series B Preferred accepted for
exchange, such additional distribution to be made at the time the first
distribution on the Preferred Securities is made.
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 % 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 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 in accordance with the terms of such stock.
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";
"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 Guarantee". 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. As used in this Offering Circular/Prospectus the term "Pro
Rata Basis" shall mean pro rata to each holder of Trust Securities
according to the aggregate liquidation amount of the Trust Securities held
by the relevant holder in relation to the aggregate liquidation amount of
all Trust Securities outstanding unless, in relation to a payment, the
rights of the holders of the Common Securities to such payment are
subordinated under the Declaration to the rights of the holders of the
Preferred Securities to such payment, in which case any funds available to
make such payment shall be paid first to each holder of the Preferred
Securities 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 outstanding,
and only after satisfaction of all amounts owed to the holders of the
Preferred Securities, to each holder of Common Securities pro rata
according to the aggregate liquidation amount of the Common Securities held
by the relevant holder in relation to the aggregate liquidation amount of
all the Common Securities outstanding.
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 will be the March 1, June 1, September 1 or December 1
prior to the relevant payment date. 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.
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. 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.
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, after receipt of a Dissolution Tax
Opinion (as defined below), (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, 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
Expiration Date 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 Expiration Date, 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"), 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 Expiration Date. In case of
any uncertainty regarding an Investment Company Event, the good faith
determination of the Regular Trustees (based on the advice of counsel) shall
be conclusive.
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 and (ii)
certificates representing Preferred Securities will be deemed to represent
Junior Subordinated Debentures having an aggregate principal amount equal to
the stated liquidation amount of, and bearing accrued and unpaid interest
equal to accrued and unpaid distributions 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.
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 pro rata 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 immediately prior to the
close of business on the redemption date, 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,
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",
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.
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 Debentures in whole and,
as a result, the Trust may only redeem the Preferred Securities in whole.
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 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
substantially as an entirety to, any corporation or other entity.
Declaration Events of Default
An Indenture Event of Default 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 any such Event of Default with respect
to the Preferred Securities has been cured or waived. Until such Event of
Default with respect to the Preferred Securities has been 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. See
"Voting Rights".
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" 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; (ii) an Event
of Default under the Declaration occurs and is continuing; or (iii)
SunAmerica is in default on any of its payment or other obligations under
the Preferred Securities Guarantee (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 or otherwise affiliated with SunAmerica) who shall
have the same rights, powers and privileges under the Declaration as the
Regular Trustees. 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 at any time by
holders of Preferred Securities representing a majority in liquidation
amount of the Preferred Securities. 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.
The holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right (i) on behalf of all holders of Preferred
Securities, to waive any past default that is waivable under the Declaration
and (ii) to direct the time, method and place of conducting 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, 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, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required; 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 (a "Specified Percentage") 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 all 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. 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.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Event of Default under the Declaration in respect of the
Preferred Securities.
Any required approval or directions 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.
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, if any proposed modification or
amendment provides for, or the Regular Trustees otherwise propose to effect,
(i) any action that would adversely affect the powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the
Declaration or otherwise, or (ii) the dissolution, winding-up or termination
of the Trust other than pursuant to the terms of the Declaration, then the
holders of the outstanding Preferred 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 Preferred Securities affected thereby.
Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause the
Trust to be classified as other than a grantor trust for United States federal
income tax purposes, (ii) reduce or otherwise adversely affect the rights,
powers or privileges of the Property Trustee, (iii) cause the Trust to be
classified as an investment company under the Investment Company Act of 1940,
or (iv) reduce the aforesaid percentage of Preferred Securities required to
consent to any such modification or amendment, without the consent of the
holders of each outstanding Preferred Security affected thereby.
Book-Entry; Delivery and Form
Preferred Securities will be issued in fully registered form.
Investors may elect to hold their Preferred Securities directly or, subject to
the rules and procedures of DTC described below, hold interests in a global
certificate (the "Preferred Securities Global Certificate") registered in the
name of DTC or its nominee. However, tendering holders of Series B Preferred
held in global form shall initially receive an interest in the Preferred
Securities Global Certificate and tendering holders of Series B Preferred held
directly in certificated form shall initially receive Preferred Securities in
certificated form, in each case unless otherwise specified in the Letter of
Transmittal. See "The Offer - Procedures for Tendering".
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.
Redemption notices shall be sent to Cede & Co. If less than all of
the Preferred Securities are being redeemed, DTC will reduce pro rata
(subject to adjustment to eliminate fractional Preferred Securities) the
amount of interest of each Direct Participant in the Preferred Securities
to be redeemed.
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.
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, but the Trust and SunAmerica take no responsibility for the
accuracy thereof.
Registrar, Transfer Agent and Paying Agent
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.
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 expand 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 Preferred Securities have been approved for listing on the NYSE,
subject to notice of issuance.
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 PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by SunAmerica for the
benefit of the holders from time to time of Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Preferred
Securities Guarantee, which is filed as an exhibit to the Registration
Statement of which this Offering Circular/Prospectus forms a part.
General
Pursuant to the Preferred Securities Guarantee, SunAmerica will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities, the Guarantee Payments
(as defined below) (without duplication of amounts theretofore paid by the
Trust), to the extent not paid by the Trust, regardless of any defense, right
of set-off or counterclaim that the Trust may have or assert. The following
payments or distributions with respect to the Preferred Securities to the
extent not paid or made by the Trust (the "Guarantee Payments") will be
subject to the Guarantee (without duplication): (i) any accrued and unpaid
distributions on the Preferred Securities and the redemption price, including
all accrued and unpaid distributions to the date of the redemption, with
respect to the Preferred Securities called for redemption by the Trust but if
and only to the extent that in each case SunAmerica has made a payment to the
Property Trustee of interest or principal on the Junior Subordinated
Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Junior Subordinated Debentures to holders of Preferred Securities or the
redemption of all of the Preferred Securities upon the maturity or redemption
of the Junior Subordinated Debentures), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of payment, to the extent the Trust has funds available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Securities in liquidation of the Trust.
SunAmerica's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by SunAmerica to the holders of Preferred
Securities or by causing the Trust to pay such amounts to such holders.
Certain Covenants of SunAmerica
In the Preferred Securities Guarantee, SunAmerica will covenant that,
so long as the Preferred Securities remain outstanding, SunAmerica will 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 payment with respect thereto
if at such time (i) SunAmerica 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 Event of Default
under the Declaration or (iii) SunAmerica shall have given notice of its
selection of an Extension Period as provided in the Indenture and such
period, or any extension thereof, is continuing; provided that 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 in
accordance with the terms of such stock. In addition, so long as the
Preferred Securities remain outstanding, SunAmerica has agreed (i) to
remain the sole direct or indirect owner of all of the outstanding Common
Securities and shall not cause or permit the Common Securities to be
transferred except to the extent permitted by the Declaration; provided
that any permitted successor of SunAmerica under the Indenture may succeed
to SunAmerica's ownership of the Common Securities and (ii) to use
reasonable efforts to cause the 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 Debentures.
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), the 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. The manner of obtaining any such
approval of holders of the Preferred Securities will be as set forth under
"Description of the Preferred Securities -- Voting Rights". All guarantees
and agreements contained in the Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of SunAmerica and
shall inure to the benefit of the holders of the Preferred Securities then
outstanding. Except in connection with a consolidation, merger or sale
involving SunAmerica that is permitted under the Indenture, SunAmerica may not
assign its obligations under the Preferred Securities Guarantee.
Termination of the Preferred Securities Guarantee
The Preferred Securities Guarantee will terminate and be of no
further force and effect as to the Preferred Securities upon full payment of
the Redemption Price of all Preferred Securities, or upon distribution of the
Junior Subordinated Debentures to the holders of Preferred Securities in
exchange for all of the Preferred Securities, or upon full payment of the
amounts payable upon liquidation of the Trust. Notwithstanding the foregoing,
the 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 must restore payment of any sums paid with respect to the Preferred
Securities or the Preferred Securities Guarantee.
Status of the Preferred Securities Guarantee
SunAmerica's obligations under the Preferred Securities Guarantee to
make the Guarantee Payments will constitute an unsecured obligation of
SunAmerica 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 any of its capital
stock. Because SunAmerica is a holding company, 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. The Declaration provides that each holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee.
The 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). The Preferred Securities Guarantee will be deposited with
the Property Trustee to be held for the benefit of the holders of the
Preferred Securities. The Property Trustee shall enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities.
The holders of not less than a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the Preferred
Securities Guarantee, including the giving of directions to the Property
Trustee. If the Property Trustee fails to enforce the Preferred Securities
Guarantee as above provided, any holder of Preferred Securities may, after a
period of 30 days has elapsed from such holder's written request to the
Property Trustee to enforce the Preferred Securities Guarantee, institute a
legal proceeding directly against SunAmerica to enforce its rights under the
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Trust or any other person or entity.
Governing Law
The Preferred Securities Guarantee will be governed by and construed
in accordance with the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated
Debentures 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 between SunAmerica and The First National Bank of Chicago, as
trustee (the "Indenture Trustee") as supplemented by the First Supplemental
Indenture dated March 15, 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 Offering
Circular/Prospectus forms a part, and those made part of the Indenture by the
Trust Indenture Act. The following description does not purport to be
complete 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.
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"). 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 an amount
equal to the sum of (i) the stated liquidation amount of the Preferred
Securities issued by the Trust in the Offer 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 , 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 be so issued in certificated form in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.
Payments of principal and interest on Junior Subordinated Debentures
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.
Optional Redemption
Except as provided below, the Junior Subordinated Debentures may not
be redeemed prior to June 15, 1997. SunAmerica shall have the right to redeem
the Junior Subordinated Debentures, in whole or in part, from time to time, on
or after June 15, 1997, 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 then 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 in 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 an annual
rate of % from the Accrual Date. In addition, holders of the Junior
Subordinated Debentures will be entitled to interest ("Pre-issuance Accrued
Interest") at the rate of 9 1/4% per annum of the principal amount thereof
from March 15, 1995 through the Expiration Date, payable at the time of the
first interest payment on the Junior Subordinated Debentures. Interest
will be payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (each, an "Interest Payment Date"), commencing on
June 15, 1995, to the person in whose name such Junior Subordinated
Debenture is registered, subject to certain exceptions, at the close of
business on the March 1, June 1, September 1 or December 1 next preceding
such Interest Payment Date. Interest payable on any Junior Subordinated
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
elapsed 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.
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.
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 extension of interest will be permitted with respect to interest
accruing from March 15, 1995 through the Expiration Date. 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 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 in accordance with
the terms of such stock. 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 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, but in
any event not less than one Business Day prior to such record date. The Trust
shall give notice of SunAmerica's selection of such Extension Period to the
holders of the Preferred Securities.
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, but in any event not less than two Business Days prior to such record
date.
Set-Off
Notwithstanding anything to the contrary in the Indenture, SunAmerica
shall have the right to set-off any payment it is otherwise required to make
with respect to the Junior Subordinated Debentures if and to the extent
SunAmerica has theretofore made, or is concurrently on the date of such
payment making, a payment under the Preferred Securities Guarantee.
Certain Covenants of SunAmerica Applicable to the
Junior Subordinated Debentures
In the Indenture, SunAmerica will covenant that, so long as the
Preferred Securities remain outstanding, SunAmerica will 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 payment with respect thereto if at such time (i)
SunAmerica 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 Indenture Event of Default with respect to the Junior
Subordinated Debentures or (iii) SunAmerica shall have given notice to its
selection of an Extension Period as provided in the Indenture and such period,
or any extension thereof, is continuing; provided that 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 in accordance with
the terms of such stock. In addition, so long as the Preferred Securities
remain outstanding, SunAmerica has agreed (i) to remain the sole direct or
indirect owner of all of the outstanding Common Securities and shall not cause
or permit the Common Securities to be transferred except to the extent
permitted by the Declaration; provided that any permitted successor of
SunAmerica under the Indenture may succeed to SunAmerica's ownership of the
Common Securities, (ii) to comply fully with all of its obligations and
agreements contained in the Declaration and (iii) not to take any action which
would cause the 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 Debentures.
Subordination
The Indenture provides that the Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness of
SunAmerica. In the event (a) of any insolvency or bankruptcy proceedings,
or any receivership, liquidation, reorganization or other similar
proceedings in respect of SunAmerica or its property or any proceeding for
voluntary liquidation, dissolution or other winding up of SunAmerica, or
(b) that Subordinated Debentures of any series are declared due and payable
before their expressed maturity because of the occurrence of an 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 Subordinated
Debentures are entitled to receive a payment on account of the principal
of, premium, if any, or interest on the indebtedness evidenced by such
Subordinated Debentures. 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 of, premium, if any, or interest on the Subordinated
Debentures shall be made. (Section 14.02)
The term "Senior Indebtedness" shall mean the principal of and
premium, if any, and interest on (a) all indebtedness of SunAmerica, whether
outstanding on the date of the Indenture or thereafter created, (i) for money
borrowed by SunAmerica (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 SunAmerica, (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 SunAmerica at the time of the acquisition of
such property by SunAmerica, for the payment of which SunAmerica 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 SunAmerica.
Notwithstanding anything to the contrary in the Indenture or the Subordinated
Debentures, Senior Indebtedness shall not include (i) any indebtedness of
SunAmerica 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
Subordinated Debentures, as the case may be, and, in particular, the
Subordinated Debentures 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 SunAmerica which is a financing
vehicle of SunAmerica in connection with the issuance of preferred securities
by such financing vehicle, or (ii) any indebtedness of SunAmerica to a
subsidiary of SunAmerica. (Section 1.01)
The Indenture does not limit the aggregate amount of indebtedness,
including Senior Indebtedness, that may be issued. As of December 31, 1994,
Senior Indebtedness of SunAmerica (on an unconsolidated basis) aggregated
approximately $472.8 million all of which is unsecured. Because SunAmerica is
a holding company, the Junior Subordinated Debentures 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 December 31, 1994, SunAmerica's subsidiaries had outstanding
approximately $8.47 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 Guarantee -- Status of the Preferred Securities
Guarantee".
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 a series of Subordinated
Debentures:
(a) failure for 30 days to pay interest on the Subordinated
Debentures of such series when due; provided that a valid extension of the
interest payment period by SunAmerica 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
Subordinated Debentures 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
SunAmerica from the Indenture Trustee or the holders of at least 25% in
principal amount of the outstanding Subordinated Debentures of such series; or
(d) certain events in bankruptcy, insolvency or reorganization of
SunAmerica.
In each and every such case, unless the principal of all the
Subordinated Debentures 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 Subordinated Debentures of that series then
outstanding, by notice in writing to SunAmerica (and to the Indenture Trustee
if given by such holders), may declare the principal of all the Subordinated
Debentures 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 Subordinated Debentures 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 Subordinated Debentures of that series may declare the
principal due and payable immediately upon an Event of Default with respect
to such series, but the holders of a majority in aggregate outstanding
principal amount of Subordinated Debentures 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 Subordinated Debentures of that series may, on behalf of the holders of
all the Subordinated Debentures 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 Debentures. (Section 6.06). SunAmerica is
required to file annually with the Indenture Trustee a certificate as to
whether or not SunAmerica is in compliance with all the conditions and
covenants under the Indenture.
An Indenture Event of Default also constitutes an Event of Default
under the Declaration. See "Description of the Preferred Securities --
Declaration Events of Default".
Modification of the Indenture
The Indenture contains provisions permitting SunAmerica and the
Indenture Trustee, with the consent of the holders of not less than a majority
in principal amount of the outstanding Subordinated Debentures of each series
affected, to modify the Indenture or any supplemental indenture affecting the
rights of the holders of such Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each outstanding
Subordinated Debenture affected thereby, (i) extend the fixed maturity of any
Subordinated Debentures 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 Subordinated Debenture so affected or (ii) reduce the
percentage of Subordinated Debentures, the holders of which are required to
consent to any such modification, without the consent of the holders of each
Subordinated Debenture then outstanding and affected thereby. (Section 9.02).
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 fully registered form. In
such event, investors may elect to hold their Junior Subordinated Debentures
directly or, subject to the rules and procedures of DTC, hold interests in a
global certificate registered in the name of DTC or its nominee.
For a description of DTC and DTC's book-entry system, see
"Description of the Preferred Securities -- Book-Entry; Delivery and Form".
As of the date of this Offering Circular/Prospectus, 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 Junior Subordinated Debentures registered in
the name of and held by DTC or its nominee.
Consolidation, Merger and Sale
The Indenture will provide that SunAmerica 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 SunAmerica unless (i) either SunAmerica 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 SunAmerica'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, SunAmerica will be discharged from
any and all obligations in respect of the Junior Subordinated Debentures
(except in each case for certain obligations to register the transfer or
exchange of Junior Subordinated Debentures, replace stolen, lost or
mutilated Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) if (i) SunAmerica 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 Debentures; (ii) SunAmerica delivers to
the Indenture Trustee an opinion of counsel to the effect that the holders
of the Junior Subordinated Debentures 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 such holders'
United States federal income tax treatment of principal, premium and
interest payments on such Junior Subordinated Debentures (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 certain provisions
described under "Subordination" above, would prevent SunAmerica from making
payments of principal of, premium, if any, and interest on the Junior
Subordinated Debentures at the date of the irrevocable deposit referred to
above. (Section 11.01).
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed
by, and construed in accordance with, the laws of the State of New York.
(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 Debentures, 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 SunAmerica and its subsidiaries
maintain ordinary banking and trust relationships.
Miscellaneous
SunAmerica 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 SunAmerica; provided, that, in the event of any such assignment,
SunAmerica 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 SunAmerica to a successor or purchaser pursuant to a
consolidation, merger or sale permitted by the Indenture. (Section 13.11).
DESCRIPTION OF THE SERIES B PREFERRED
The summary of the terms of the Series B Preferred set forth below
does not purport to be complete and is subject to, and qualified in its
entirety by reference to the provisions of SunAmerica's Articles of
Incorporation and the Articles Supplementary for the Series B Preferred,
copies of which may be obtained from SunAmerica upon request.
The Series B Preferred ranks on a parity as to payment of dividends
and distribution of assets upon dissolution, liquidation or winding-up of
SunAmerica with the outstanding Adjustable Rate Cumulative Preferred Stock,
Series C and the Series D Preferred Stock of SunAmerica and senior to the
Common Stock and Nontransferable Class B Stock of SunAmerica as to the payment
of dividends and distribution of assets upon dissolution, liquidation or
winding-up of SunAmerica. The transfer agent, registrar, dividend disbursing
agent and redemption agent for the Series B Preferred is Bank of America, N.T.
and S.A.
Dividends. Subject to the rights of holders of other classes of
stock of SunAmerica ranking on a parity with or senior to the Series B
Preferred which may from time to time be issued by SunAmerica, the holders of
Series B Preferred are entitled to receive, when, as and if the Board of
Directors declares a dividend on the Series B Preferred, out of assets legally
available for dividends, cumulative preferential cash dividends from the issue
date of the Series B Preferred (June 29, 1992), accruing at the rate per share
of Series B Preferred of $2.3125 per annum or $.5781 per quarter, payable
quarterly in arrears on the 15th day of each March, June, September and
December or, if any such date is not a business day on the next succeeding
business day.
Dividends on the Series B Preferred accrue whether or not SunAmerica
has earnings, whether or not there are funds legally available for the payment
of such dividends and whether or not such dividends are declared and
accumulate to the extent they are not paid on the dividend payment date for
the quarter for which they accrue. Accumulated unpaid dividends do not bear
interest.
So long as any shares of Series B Preferred are outstanding, no
dividend (other than a dividend in shares of Common Stock, Nontransferable
Class B Stock or any other class of stock of SunAmerica at any time ranking
junior as to dividends and assets to the Series B Preferred and any other
class of outstanding Preferred Stock (collectively, the "Junior Stock")) shall
be paid or declared or any other distribution ordered or made upon any Junior
Stock, nor shall any sum or sums be set aside for or applied to the purchase
or redemption of Series B Preferred or any other class of outstanding
Preferred Stock or the purchase, redemption or other acquisition for value of
any Junior Stock, unless, in each case, full cumulative dividends accumulated
on all shares of Series B Preferred and all other shares of outstanding
Preferred Stock shall have been paid in full. All dividends declared upon the
Series B Preferred and any other class of outstanding Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share on the
Series B Preferred and such other class of Preferred Stock shall in all cases
bear to each other the same ratio that the respective dividend rights per
share of the Series B Preferred and such other class of Preferred Stock bear
to each other. Holders of Series B Preferred shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends as described herein.
Liquidation Rights. Subject to the rights of holders of other
classes of stock of SunAmerica ranking on a parity with or senior to Series B
Preferred, in the event of any liquidation, dissolution or winding-up of the
business of SunAmerica, whether voluntary or involuntary (any such event, a
"Liquidation"), the holders of Series B Preferred, after payment or provisions
for payment of the debts and other liabilities of SunAmerica, will be entitled
to receive for each share of Series B Preferred, an amount equal to the sum of
$25 and all accrued and unpaid dividends thereon, and no more. If, upon any
Liquidation, there are insufficient assets to permit full payment to holders
of Series B Preferred and shares of any other class of outstanding Preferred
Stock, the holders of shares of Series B Preferred and such other shares shall
be paid ratably in proportion to the full distributable amounts to which
holders of shares of Series B Preferred and such other shares are respectively
entitled upon Liquidation. The full preferential amount payable to holders of
Series B Preferred and shares of any other class of outstanding Preferred
Stock upon Liquidation will be paid in full before any distribution or payment
is made to holders of Junior Stock.
Redemption. The Series B Preferred is not redeemable prior to June
15, 1997. On and after such date, the Series B Preferred is redeemable in
cash at the option of SunAmerica, in whole or in part, from time to time upon
not less than 30 or more than 60 days notice, at a redemption price of $25.00
per share plus an amount equal to the sum of all accrued and unpaid dividends
thereon to the date fixed for redemption.
The Series B Preferred is not entitled to the benefits of any sinking
fund.
Voting Rights. The Series B Preferred does not entitle holders
thereof to voting rights, except (i) SunAmerica may not alter any of the
provisions of the Articles of Incorporation of SunAmerica or the Articles
Supplementary relating to the Series B Preferred which would materially and
adversely affect any right, preference or privilege of the Series B Preferred
without the affirmative vote of the holders of at least two-thirds of the
Series B Preferred outstanding at the time (voting separately as a class);
provided, however, that any such alteration that would authorize, create or
issue any additional shares of Preferred Stock or any other shares of stock
(whether or not already authorized) ranking senior to, on a parity with or
junior to the Series B Preferred as to dividends or on the distribution of
assets upon Liquidation shall be deemed not to materially and adversely affect
such rights, preferences or privileges, (ii) in the event dividends payable
on the Series B Preferred are in arrears in an aggregate amount equivalent to
six full quarterly dividends (a "Series B Preferred Dividend Default"), or
(iii) as required by law. In the event of a Series B Preferred Dividend
Default, the holders of the outstanding shares of Series B Preferred will be
entitled to elect, together with the holders of all other outstanding classes
of Preferred Stock ranking on parity with Series B Preferred and entitled to
participate in such election, voting as a single class, two directors at a
special meeting called by the Board of Directors for such purpose. Such two
directors shall serve until the full dividends accumulated on all outstanding
shares of Series B Preferred and all other outstanding classes of Preferred
Stock ranking on a parity with Series B Preferred are paid.
Miscellaneous. The holders of Series B Preferred have no preemptive
rights. Shares of Series B Preferred validly tendered and accepted for
exchange in the Offer will be delivered to SunAmerica by the Trust and will
assume the status of authorized but unissued shares of Preferred Stock and may
thereafter be reissued in the same manner as other authorized but unissued
shares of Preferred Stock.
RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
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 (and the Trust shall not be
obligated to pay, directly or indirectly, for any) 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". 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 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,
after a period of 30 days has elapsed from such holder's written request to
the Property Trustee to enforce such rights or the Preferred Securities
Guarantee, 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".
If a Special Event shall occur and be continuing, the Trust shall be
dissolved unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, with the result that Junior
Subordinated Debentures held by the Trust having an aggregate principal amount
equal to the aggregate stated liquidation amount of the Preferred Securities
and Common Securities will be distributed on a Pro Rata Basis in exchange for
the outstanding Preferred Securities and Common Securities, subject in the
case of a Tax Event to SunAmerica's right in certain circumstances to redeem
Junior Subordinated Debentures as described under "Description of the
Preferred Securities -- Special Event Redemption or Distribution". The
Preferred Securities represent preferred undivided beneficial interests in the
assets of the Trust, a statutory business trust which exists for the purpose
of (a) issuing (i) its Preferred Securities in exchange for Series B
Preferred validly tendered in the Offer and delivering such Series B Preferred
to SunAmerica in consideration for the deposit by SunAmerica of Junior
Subordinated Debentures in the Trust as trust assets, and (ii) its Common
Securities to SunAmerica in exchange 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 or incidental thereto.
Upon any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of Preferred Securities will be entitled
to receive the Liquidation Distribution in cash or Junior Subordinated
Debentures and will be entitled to the benefits of the Preferred Securities
Guarantee with respect to any such distribution. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Dissolution". Upon any
voluntary or involuntary liquidation or bankruptcy of SunAmerica, the holders
of Junior Subordinated Debentures would be subordinated creditors of
SunAmerica, subordinated in right of payment to all Senior Indebtedness, but
entitled to receive payment in full of principal, premium, if any, and
interest, before any stockholders of SunAmerica receive payments or
distributions.
A default or event of default under any Senior Indebtedness would not
constitute a default or event of default under the Junior Subordinated
Debentures. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Junior
Subordinated Debentures provide that no payments may be made in respect of the
Junior Subordinated Debentures. Failure to make required payments on the
Junior Subordinated Debentures would constitute an event of default under the
Indenture.
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 issuance of Preferred Securities in exchange for the
Series B Preferred pursuant to the Offer, and 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 pursuant to the Offer ("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).
ALL SERIES B PREFERRED HOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF SERIES B
PREFERRED FOR PREFERRED SECURITIES AND 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.
Exchange of Series B Preferred for Preferred Securities
The exchange of Series B Preferred for Preferred Securities pursuant
to the Offer will be a taxable transaction. In the case of an Initial Holder
who owns solely Series B Preferred, or not more than one percent of such stock
and not more than one percent of any other class of SunAmerica stock, gain or
loss will be recognized in an amount equal to the difference between the fair
market value on the Expiration Date of the Preferred Securities (representing
an undivided interest in the Junior Subordinated Debentures) received in the
exchange and the exchanging Holder's tax basis in the Series B Preferred
exchanged therefor and will be long-term capital gain or loss if the Series B
Preferred has been held for more than one year as of such date. A holder's
aggregate tax basis in his pro rata share of the underlying Junior
Subordinated Debentures will be equal to his pro rata share of their "issue
price" on the Expiration Date as defined below.
Holders of Series B Preferred who actually or constructively own more
than one percent of any other class of SunAmerica stock are advised to consult
their tax advisors as to the income tax consequences of exchanging Series B
Preferred.
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 the 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. So long as the interest payment
period is not extended, cash distributions received by an initial Holder for
any quarterly interest period (assuming no disposition prior to the record
date for such distribution) will equal or exceed the sum of the daily accruals
of income for such quarterly interest period, unless the issue price of the
Junior Subordinated Debentures (as defined below) is less than $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 the Junior Subordinated Debentures will be equal
to the fair market value of a Preferred Security on the Expiration Date
(reduced by Pre-Issuance Accrued Interest), which may be more or less than
$25, with the result that the total amount of original issue discount on the
Junior Subordinated Debentures may be more or less than the amount of stated
interest payable with respect thereto.
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 thereto, and reduced by the amount of cash
distributions (including the amount of Pre-issuance Accrued Interest) paid to
such Securityholder. 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.
Treatment of the Payment of Pre-issuance Accrued Interest
"Pre-issuance Accrued Interest" payable on the first interest payment
date should be treated as a return of capital with respect a Securityholder's
pro rata interest in the Junior Subordinated Debentures, reducing the
Securityholder's tax basis in his pro rata share of the Junior Subordinated
Debentures.
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 on 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.
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;
(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;
and
(iii) any gain realized by a United States Alien Holder upon
the exchange of Series B Preferred for Preferred Securities will not
be subject to United States federal withholding tax.
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.
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.
Davis Polk & Wardwell will rely as to matters of Maryland law on Piper &
Marbury, 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.
EXPERTS
The consolidated financial statements incorporated in this Offering
Circular/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.
ERISA MATTERS
SunAmerica and certain affiliates of SunAmerica, including Anchor
National Life Insurance Company and Sun Life Insurance Company of America, 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 Code with respect to many
employee benefit plans. Prohibited transactions within the meaning of ERISA
or the Code may arise, for example, if the securities offered hereby are
acquired by a pension or other employee benefit plan with respect to which
SunAmerica or any of its affiliates is a service provider, unless such
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 securities offered hereby should consult with its
legal counsel.
Facsimile copies of the Letter of Transmittal will be accepted.
Letters of Transmittal, certificates representing shares of Series B Preferred
and any other required documents should be sent by each Holder of Series B
Preferred or his broker, dealer, commercial bank, trust company or other
nominee to the Exchange Agent at one of the addresses as set forth below:
The Exchange Agent is:
The First National Bank of Chicago
By Hand or Overnight Courier in By Hand or Overnight Courier in
Chicago: New York:
The First National Bank of Chicago, First Chicago Trust Company of
Exchange Agent New York
One North State Street 14 Wall Street
9th Floor 8th Floor - Window 2
Attention: Securities Processing New York, New York 10005
Suite 0124
Chicago, Illinois 60602
By Mail:
The First National Bank of Chicago,
Exchange Agent
Registered Securities Processing Unit
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
By Facsimile Transmission
(For Eligible Institutions Only):
(312) 407-1067 or (212) 240-8938
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 524-9472 (Chicago) or (212) 240-8800 (New York)
The Information Agent is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Call Toll-Free: (800) 223-2064
Any questions or requests for assistance or additional copies of this
Offering Circular/Prospectus, the Letter of Transmittal or for copies of the
Notice of Guaranteed Delivery may be directed to the Information Agent at its
telephone number and location set forth above. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
APPENDIX A
Appendix A - Graphic Information Omitted from Electronic Filing
The diagram is entitled "Diagram of Offer". The diagram includes boxes
representing the Trust, the three Regular Trustees, the Property Trustee
and the Delaware Trustee, SunAmerica and the Holders of Series B Preferred.
Arrows between such boxes depict the exchange of Preferred Securities for
Series B Preferred in the Offer, the purchase of Common Securities of the
Trust by SunAmerica for cash, the purchase by the Trust with such cash of
Junior Subordinated Debentures of SunAmerica and the deposit of Junior
Subordinated Debentures of SunAmerica in the Trust in respect of the
aggregate liquidation amount of the Preferred Securities issued in
connection with the Offer. There are two explanatory notes at the bottom
of the diagram, which state:
o Existing Holders of Series B Preferred who participate in the Offer
will receive one Preferred Security of the Trust for each outstanding
share of Series B Preferred that is validly tendered and accepted
for exchange.
o The principal amount of Junior Subordinated Debentures delivered to
SunAmerica Capital Trust I as trust assets will be equal to the sum
of (i) the aggregate liquidation amount of the Preferred Securities
issued in connection with the Offer and (ii) the purchase price of
the Common Securities issued to SunAmerica.
PART II
INFORMATION NOT REQUIRED IN OFFERING CIRCULAR/PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 2-418 of the Maryland General Corporation law permits the
indemnification of directors, officers, employees and agents of Maryland
corporations. Article Eighth of SunAmerica's Restated Articles of
Incorporation (the "Articles") authorizes the indemnification of directors
and officers to the full extent required or permitted by the General Laws
of the State of Maryland, now or hereafter in force, whether such persons
are serving SunAmerica, or, at its request, any other entity, which
indemnification shall include the advance of expenses under the procedures
and to the full extent permitted by law. Article Eighth further provides
that the foregoing rights of indemnification shall not be exclusive of any
other rights to which those seeking indemnification may be entitled and
that no amendment or repeal of Article Eighth shall apply to or have any
effect on any right to indemnification provided thereunder with respect to
acts or omissions occurring prior to such amendment or repeal. In
addition, SunAmerica's officers and directors are covered by certain
directors' and officers' liability insurance policies maintained by
SunAmerica. Reference is made to section 2-418 of the Maryland General
Corporation Law and Article Eighth of the Articles, which are incorporated
herein by reference.
The Declaration provides that no Trustee, affiliate of any Trustee
or any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee or any employee or agent of the
Trust or its affiliates (each an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to any employee or agent
of the Trust or its affiliates, or any officers, directors, shareholders,
employees, representatives or agents of SunAmerica or its affiliations or
to any holders of Trust Securities of the Trust for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by
such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by the Declaration or
by law, except that an Indemnified Person shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omission. The Declaration also
provides that, to the fullest extent permitted by applicable law,
SunAmerica shall indemnify and hold harmless each Trustee, any affiliate of
a Trustee or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Trustees, or any employee or
agent of the Trust or its affiliates (each, an "Indemnified Person") from
and against any loss, damage or claim incurred by such Indemnified Person
by reason of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by the Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence (or, in the case of the Property Trustee, negligence) or
willful misconduct with respect to such acts or omissions. The Declaration
further provides that to the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by SunAmerica prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by SunAmerica of an
undertaking by or on behalf of the Indemnified Person to repay such amount
if it shall be determined that the Indemnified Person is not entitled to be
indemnified pursuant to the Declaration.
Item 21. Exhibits.
EXHIBIT NO. DOCUMENT
1.1 Form of Dealer Manager Agreement*
4.1 Form of Indenture between SunAmerica and The
First National Bank of Chicago, as Trustee***
4.2 Form of First Supplemental Indenture to
Indenture***
4.3 Declaration of Trust of SunAmerica Capital
Trust I**
4.4 Certificate of Trust of SunAmerica Capital
Trust I (included in Exhibit 4.3)**
4.5 Form of Amended and Restated Declaration of
Trust of SunAmerica Capital Trust I*
4.6 Form of Preferred Security (included in Exhibit
4.5 above)*
4.7 Form of Junior Subordinated Debenture (included
in Exhibit 4.2)***
4.8 Form of Guarantee Agreement with respect to
Preferred Securities*
4.9 Senior Indenture, dated as of December 15,
1991, between SunAmerica and Bank of America NT
& SA (formerly Security Pacific National Bank),
as Trustee, defining the rights of the holders
of SunAmerica's 9% Notes due January 15, 1995
and 9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit No.
4.1 to SunAmerica's Registration Statement No.
33-44084 on Form S-3, filed November 20, 1991.
4.10 Senior Debt Indenture, dated as of April 15,
1993, between SunAmerica and The First National
Bank of Chicago, as Trustee, defining the
rights of the holders of SunAmerica's 8 1/8%
Debentures due April 28, 2023 and certain other
debt securities of SunAmerica, is incorporated
herein by reference to Exhibit 4(h) to
SunAmerica's Annual Report on Form 10-K, filed
December 16, 1993.
4.11 Tri-Party Agreement, dated as of July 1, 1993,
among The First National Bank of Chicago, Bank
of America, NT & SA and SunAmerica, appointing
The First National Bank of Chicago as Successor
Trustee to Bank of America NT & SA for
SunAmerica's 9% Notes due January 15, 1995 and
9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit
4(i) to SunAmerica's Annual Report on Form
10-K, filed December 16, 1993.
5.1 Opinion of Davis Polk & Wardwell***
5.2 Opinion of Piper & Marbury***
5.3 Opinion of Richards, Layton & Finger***
8.1 Tax Opinion of Davis Polk & Wardwell***
12.1 Computations of consolidated ratio of earnings
to fixed charges and consolidated ratio of
earnings to combined fixed charges and
preferred stock dividends*
23.1 Consent of Price Waterhouse LLP**
23.2 Consents of Davis Polk & Wardwell (included in
Exhibits 5.1 and 8.1 above)***
23.3 Consent of Piper & Marbury (included in Exhibit
5.2 above)***
23.4 Consent of Richards, Layton & Finger (included
in Exhibit 5.3 above)***
24.1 Powers of Attorney for SunAmerica (included on
signature pages)*
24.2 Powers of Attorney for SunAmerica, as sponsor,
to sign this Registration Statement on behalf
of SunAmerica Capital Trust I (included in
Exhibit 4.3)**
25.1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of
The First National Bank of Chicago, as Trustee
under the Indenture*
25.2 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of the Bank
of New York, as Property Trustee under the
Amended and Restated Declaration of Trust***
99.1 Proposed Form of Letter of Transmittal*
99.2 Proposed Form of Notice of Guaranteed Delivery*
99.3 Proposed Form of Letter to Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees*
99.4 Proposed Form of Letter to Clients*
99.5 Form of Exchange Agent Agreement*
99.6 Form of Information Agent Agreement*
99.7 Form of Newspaper Announcement*
99.8 Proposed Form of SunAmerica Letter to Holders
of 9 1/4% Preferred Stock, Series B*
_________________________________
*Previously filed.
**Filed herewith.
***To be filed by amendment.
Item 22. Undertakings.
Each of the Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of SunAmerica's Annual Report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless
in the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(3) To respond to requests for information that is incorporated by
reference into the Offering Circular/Prospectus pursuant to Item 4, 10(b), 11
or 13 of Form S-4, within one business day of receipt of such request, and to
send the incorporated documents by first-class mail or equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date responding to
the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when it
became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
SunAmerica Inc. has duly caused this Amendment No. 3 to the Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on this 11th
day of April, 1995.
SUNAMERICA INC.
By /s/ James R. Belardi
------------------------------
Name: James R. Belardi
Title: Senior Vice President
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 3 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
Signature Title Date
- ------------------------------------------ ------------------------------------ ----------------
<S> <C> <C>
* Chairman, President and Chief April 11, 1995
-------------------------------- Executive Officer (Principal
Eli Broad Executive Officer) of SunAmerica
Inc. and President (Principal
Executive Officer) of SunAmerica
Financial, Inc.
* Senior Vice President and April 11, 1995
-------------------------------- Treasurer (Principal Financial
James R. Belardi Officer)
* Senior Vice President and April 11, 1995
-------------------------------- Controller (Principal
Scott L. Robinson Accounting Officer)
* Director April 11, 1995
--------------------------------
Ronald J. Arnault
* Director April 11, 1995
--------------------------------
Karen Hastie-Williams
* Director April 11, 1995
--------------------------------
David O. Maxwell
* Director April 11, 1995
--------------------------------
Barry Munitz
* Director April 11, 1995
--------------------------------
Lester Pollack
* Director April 11, 1995
--------------------------------
Richard D. Rohr
* Director April 11, 1995
--------------------------------
Sanford C. Sigoloff
* Director April 11, 1995
--------------------------------
Harold M. Williams
* By /s/ Susan L. Harris
(Attorney-in-Fact)
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
SunAmerica Capital Trust I has duly caused this Amendment No. 3 to the
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on this 11th day of April, 1995.
SUNAMERICA CAPITAL TRUST I
By: SunAmerica Inc., as Sponsor
By /s/ James R. Belardi
------------------------------
Name: James R. Belardi
Title: Senior Vice President
and Treasurer
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DOCUMENT PAGE
- ------ -------- ----
<S> <C> <C>
1.1 Form of Dealer Manager Agreement*
4.1 Form of Indenture between SunAmerica and The First National
Bank of Chicago, as Trustee***
4.2 Form of First Supplemental Indenture to Indenture***
4.3 Declaration of Trust of SunAmerica Capital Trust I**
4.4 Certificate of Trust of SunAmerica Capital Trust I (included in
Exhibit 4.3)**
4.5 Form of Amended and Restated Declaration of Trust of SunAmerica
Capital Trust I*
4.6 Form of Preferred Security (included in Exhibit 4.5 above)*
4.7 Form of Junior Subordinated Debenture (included in Exhibit
4.2)***
4.8 Form of Guarantee Agreement with respect to Preferred Securities*
4.9 Senior Indenture, dated as of December 15, 1991, between
SunAmerica and Bank of America NT & SA (formerly Security
Pacific National Bank), as Trustee, defining the rights of the holders
of SunAmerica's 9% Notes due January 15, 1995 and 9.95%
Debentures due February 1, 2012, is incorporated herein by
reference to Exhibit No. 4.1 to SunAmerica's Registration Statement
No. 33-44084 on Form S-3, filed November 20, 1991.
4.10 Senior Debt Indenture, dated as of April 15, 1993, between
SunAmerica and The First National Bank of Chicago, as Trustee,
defining the rights of the holders of SunAmerica's 8 1/8%
Debentures due April 28, 2023 and certain other debt securities of
SunAmerica, is incorporated herein by reference to Exhibit 4(h) to
SunAmerica's Annual Report on Form 10-K, filed December 16,
1993.
4.11 Tri-Party Agreement, dated as of July 1, 1993, among The First
National Bank of Chicago, Bank of America, NT & SA and
SunAmerica, appointing The First National Bank of Chicago as
Successor Trustee to Bank of America NT & SA for SunAmerica's
9% Notes due January 15, 1995 and 9.95% Debentures due
February 1, 2012, is incorporated herein by reference to Exhibit 4(i)
to SunAmerica's Annual Report on Form 10-K, filed December 16,
1993.
5.1 Opinion of Davis Polk & Wardwell***
5.2 Opinion of Piper & Marbury***
5.3 Opinion of Richards, Layton & Finger***
8.1 Tax Opinion of Davis Polk & Wardwell***
12.1 Computations of consolidated ratio of earnings to fixed charges and
consolidated ratio of earnings to combined fixed charges and
preferred stock dividends*
23.1 Consent of Price Waterhouse LLP**
23.2 Consents of Davis Polk & Wardwell (included in Exhibits 5.1 and
8.1 above)***
23.3 Consent of Piper & Marbury (included in Exhibit 5.2 above)***
23.4 Consent of Richards, Layton & Finger (included in Exhibit 5.3
above)***
24.1 Powers of Attorney for SunAmerica (included on signature pages)*
24.2 Powers of Attorney for SunAmerica, as sponsor, to sign this
Registration Statement on behalf of SunAmerica Capital Trust I
(included in Exhibit 4.3)**
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee under
the Indenture*
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Property Trustee under the
Amended and Restated Declaration of Trust***
99.1 Proposed Form of Letter of Transmittal*
99.2 Proposed Form of Notice of Guaranteed Delivery*
99.3 Proposed Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees*
99.4 Proposed Form of Letter to Clients*
99.5 Form of Exchange Agent Agreement*
99.6 Form of Information Agent Agreement*
99.7 Form of Newspaper Announcement*
99.8 Proposed Form of SunAmerica Letter to Holders of 9 1/4% Preferred
Stock, Series B*
_________________________________
<FN>
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
</TABLE>
DECLARATION OF TRUST, dated as of March 21, 1995, between
SunAmerica Inc., a Maryland corporation, as Sponsor, and James R. Belardi,
Scott Richland, Scott L. Robinson, The Bank of New York, a New York banking
corporation, and The Bank of New York (Delaware), a Delaware banking
corporation, not in their individual capacities but solely as Trustees. The
Sponsor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "SunAmerica
Capital Trust I", in which name the Trustees, or the Sponsor to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets
over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt
of such amount in trust from the Sponsor, which amount shall constitute the
initial trust estate. The Trustees hereby declare that they will hold the
trust estate in trust for the Sponsor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under Chapter
38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801 et seq. (the
"Business Trust Act"), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware Secretary of State
in the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party and
substantially in the form included as Exhibit 4.5 to the 1933 Act Registration
Statement referred to below, to provide for the contemplated operation of the
Trust created hereby and the issuance of the Preferred Securities and Common
Securities referred to therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any duty
or obligation hereunder or with respect of the trust estate, except as
otherwise required by applicable law or as may be necessary to obtain prior to
such execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct
the Sponsor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-4 (File Nos. 33-56961 and
33-56961-01) (the "1933 Act Registration Statement") including Amendment No. 3
thereto and any further pre-effective or post-effective amendments to such
Registration Statement, relating to the registration under the Securities Act
of 1933, as amended, of the Preferred Securities of the Trust, (b) a
Registration Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating
to the registration of the Preferred Securities of the Trust under Section
12(b) of the Securities Exchange Act of 1934, as amended and (c) an Issuer
Tender Offer Statement on Schedule 13E-4 and any other tender offer statement
required to be filed by the Trust with the Commission (including, if
necessary, Schedule 14D-1) relating to the exchange offer (the "Offer")
described in the 1933 Act Registration (collectively, the "Tender Offer
Schedules") and any amendment or supplement thereto; (ii) to file with the New
York Stock Exchange and execute on behalf of the Trust a listing application
and all other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the New York Stock Exchange; (iii) to file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and other
papers and documents as shall be necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable and (iv) to execute on behalf of the Trust that certain Dealer
Manager Agreement among the Trust, the Sponsor and Merrill Lynch, Pierce,
Fenner & Smith Incorporated relating to the Offer, substantially in the form
included as Exhibit 1.1 to the 1933 Act Registration Statement. In the event
that any filing referred to in clauses (i)-(iii) above is required by the
rules and regulations of the Commission, the New York Stock Exchange or state
securities or blue sky laws, to be executed on behalf of the Trust by the
Trustees, James R. Belardi, Scott Richland and Scott L. Robinson, in their
capacities as Trustees of the Trust, are hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and all of
the foregoing, it being understood that The Bank of New York and The Bank of
New York (Delaware), in their capacities as Trustees of the Trust, shall not
be required to join in any such filing or execute on behalf of the Trust any
such document unless required by the rules and regulations of the Commission,
the New York Stock Exchange or state securities or blue sky laws. In
connection with all of the foregoing, the Sponsor and each Trustee, solely in
its capacity as Trustee of the Trust, hereby constitutes and appoints Eli
Broad, Jay S. Wintrob, Susan L. Harris and James M. Lurie, and each of them,
as his, her or its, as the case may be, true and lawful attorneys-in-fact, and
agents, with full power of substitution and resubstitution, for the Sponsor or
such Trustee or in the Sponsor's or such Trustee's name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to the 1933 Act Registration Statement, the 1934
Act Registration Statement and the Tender Offer Schedules and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in connection therewith, as fully to all intents and
purposes as the Sponsor or such Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his or her substitute or substitutes, shall do or cause to
be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be five (5) and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor which may increase
or decrease the number of Trustees; provided, however, that the number of
Trustees shall in no event be less than five (5); and provided, further that
to the extent required by the Business Trust Act, one Trustee shall either be
a natural person who is a resident of the State of Delaware or, if not a
natural person, an entity which has its principal place of business in the
State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any Trustee at any time. The Trustees may
resign upon thirty days prior notice to the Sponsor.
IN WITNESS WHEREOF, the parties hereto have caused this
Declaration of Trust to be duly executed as of the day and year first above
written.
SunAmerica Inc.,
as Sponsor
By: /s/ James R. Belardi
----------------------------------
Name: James R. Belardi
Title: Senior Vice President and
Treasurer
The Bank of New York,
not in its individual capacity
but solely as Trustee
By: /s/ Betty A. Cocozza
----------------------------------
Name: Betty A. Cocozza
Title: Assistant Treasurer
The Bank of New York (Delaware),
not in its individual capacity
but solely as Trustee
By: /s/ David Ruley
----------------------------------
Name: David Ruley
Title: Senior Vice President
/s/ James R. Belardi
----------------------------------
James R. Belardi,
not in his individual capacity
but solely as Trustee
/s/ Scott Richland
----------------------------------
Scott Richland,
not in his individual capacity
but solely as Trustee
/s/ Scott L. Robinson
----------------------------------
Scott L. Robinson,
not in his individual capacity
but solely as Trustee
CERTIFICATE OF TRUST
OF
SUNAMERICA CAPITAL TRUST I
This Certificate of Trust of SunAmerica Capital Trust I (the
"Trust"), dated March 21, 1995, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del.C. Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is
SunAmerica Capital Trust I.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of
Delaware is The Bank of New York (Delaware), a Delaware banking corporation,
White Clay Center, Route 273, Newark, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of
the Trust, have executed this Certificate of Trust as of the date first above
written.
The Bank of New York,
as trustee
By: /s/ Betty A. Cocozza
----------------------------------
Name: Betty A. Cocozza
Title: Treasurer
The Bank of New York (Delaware),
as trustee
By: /s/ David Ruley
----------------------------------
Name: David Ruley
Title: Senior Vice President
/s/ James R. Belardi
----------------------------------
James R. Belardi,
as trustee
/s/ Scott Richland
----------------------------------
Scott Richland,
as trustee
/s/ Scott L. Robinson
----------------------------------
Scott L. Robinson,
as trustee
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our report
dated November 9, 1994 appearing on page F-2 of SunAmerica Inc.'s Annual
Report on Form 10-K for the year ended September 30, 1994. We also consent to
the incorporation by reference of our report on the Financial Statement
Schedules, which appears on page S-2 of such Annual Report on Form 10-K. We
also consent to the reference to us under heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Los Angeles, California
April 11, 1995
