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                                                                    EXHIBIT 4(b)

                          AMERICAN GENERAL CORPORATION

            STATEMENT OF RESOLUTION ESTABLISHING A SERIES OF SHARES

                     PROVIDING FOR THE ISSUANCE OF SERIES A
               CUMULATIVE CONVERTIBLE PREFERRED STOCK PURSUANT TO
               ARTICLE 2.13 OF THE TEXAS BUSINESS CORPORATION ACT


          Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares of its Preferred
Stock and fixing and determining the designations, preferences, limitations and
relative rights thereof:

          1. The name of the corporation is American General Corporation (the
"Corporation").

          2.  The following resolutions, establishing and designating a series
of shares and fixing and determining the designations, preferences, limitations
and relative rights thereof, was duly adopted by an authorized committee of the
Board of Directors of the Corporation on May 24, 1995:

     RESOLVED, that pursuant to Article Four of the Restated Articles of
     Incorporation of the Corporation, as amended, which authorizes the issuance
     of three hundred sixty million (360,000,000) shares, consisting of sixty
     million (60,000,000) shares of Preferred Stock of the par value of one
     dollar fifty cents ($1.50) per share (hereinafter referred to as the
     "Preferred Stock"), none of which is currently outstanding, and three
     hundred million (300,000,000) shares of Common Stock of the par value of
     fifty cents ($.50) per share (hereinafter referred to as the "Common
     Stock"), the Corporation hereby provides for the issuance of a series of
     Preferred Stock, designated as Series A Cumulative Convertible Preferred
     Stock, and hereby fixes the designations, preferences, limitations and
     relative rights of the shares of the Series A Cumulative Convertible
     Preferred Stock, in addition to those set forth in such Article Four, which
     shall be as follows:

     SECTION 1.  DESIGNATION AND AMOUNT; SPECIAL PURPOSE; RESTRICTION ON SENIOR
SERIES.

     (a) The shares of this series of Preferred Stock shall be designated as
"Series A Cumulative Convertible Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting such series shall be 5,000,000,
par value $1.50 per share.  The number of authorized shares of Series A
Preferred Stock may be reduced to a number not less than the number of shares
then issued plus the number of shares then issuable upon the conversion of the
then outstanding Subordinated Debentures (as defined in Section 1(b)) by further
resolution duly adopted by the Board of Directors of the Corporation or a duly

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authorized committee thereof and by the filing of a certificate pursuant to the
provisions of the Texas Business Corporation Act stating that such reduction has
been so authorized.

     (b) Shares of Series A Preferred Stock shall be issued only upon conversion
of 6% Series A Convertible Junior Subordinated Debentures due 2025 of the
Corporation (the "Subordinated Debentures").  Such conversion may occur
immediately following the exchange of all outstanding 6% Convertible Monthly
Income Preferred Securities, Series A (the "American General Delaware Series A
Preferred Securities") of American General Delaware, L.L.C., a Delaware limited
liability company ("American General Delaware"), for Subordinated Debentures
pursuant to a valid exchange election (the "Exchange Election") by the holders
of a majority of the aggregate liquidation preference of the American General
Delaware Series A Preferred Securities then outstanding in accordance with the
provisions of Section 9 of the Written Action, dated as of May 24, 1995, of the
Managing Member of American General Delaware establishing the terms of the
American General Delaware Series A Preferred Securities.

     (c) Prior to an Exchange Election and if any American General Delaware
Series A Preferred Securities are then outstanding, the Corporation shall not
authorize or issue any other class or series of capital stock ranking senior to
the Series A Preferred Stock as to the payment of dividends or distribution of
assets upon liquidation, dissolution or winding-up of the Corporation without
the approval of the holders of not less than 66-2/3% of the aggregate
liquidation preference of the American General Delaware Series A Preferred
Securities then outstanding.

     SECTION 2.  DIVIDENDS AND DISTRIBUTIONS.

     (a)(1) The holders of shares of Series A Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
at a rate per annum of 6% of the liquidation preference of $50 per share of
Series A Preferred Stock.  The amount of dividends payable for a full monthly
dividend period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period shorter than a full monthly dividend
period, shall be computed on the basis of the actual number of days elapsed in
such period.  Dividends on the Series A Preferred Stock shall accrue from the
date of the Exchange Election and, subject to the declaration of such dividends,
shall be payable in United States dollars monthly in arrears on the last day of
each calendar month of each year.

          (2) Dividends shall accrue and be cumulative whether or not they have
been earned or declared and whether or not there are funds of the Corporation
legally available for the payment of dividends.  Accrued but unpaid interest
(including additional interest, if any, payable in accordance with the terms of
the Subordinated Debentures) on the Subordinated Debentures converted into
Series A Preferred Stock, if any, on the date of the Exchange Election shall
constitute, and be treated as, accumulated and unpaid dividends on the Series A
Preferred Stock.

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     (b) Dividends will be payable to the holders of shares of Series A
Preferred Stock as of the relevant record dates, which, if and so long as the
Series A Preferred Stock is represented by one or more global certificates
through the book-entry system of a Clearing Agency (as defined below), will be
one Business Day (as defined below) prior to the related dividend payment dates.
In the event that the Series A Preferred Stock shall not continue to be so
represented, the Board of Directors shall have the right to select relevant
record dates that are more than one Business Day prior to the related dividend
payment dates.  A "Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that is acting as depositary for the
Series A Preferred Stock and in whose name (or nominee's name) shall be
registered one or more global certificates representing Series A Preferred Stock
and which shall undertake to effect book-entry transfers and pledges of
interests in the Series A Preferred Stock.  In the event that any date on which
dividends are payable on the Series A Preferred Stock is not a Business Day,
then payment of the dividend payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.  A "Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.

     (c) If full cumulative dividends on the Series A Preferred Stock have not
been declared and paid or irrevocably set apart for payment when due, then,
subject to the next succeeding sentence, the Corporation shall not declare or
pay any dividend on any Dividend Pari Passu Security or Dividend Junior Security
(each as defined below).  The preceding sentence, however, shall not apply to,
or prohibit (i) dividends as a result of a reclassification of Dividend Pari
Passu Securities or Dividend Junior Securities, (ii) dividends of any share
purchase rights issued by the Corporation pursuant to the Rights Agreement,
dated as of July 27, 1989, between the Corporation and First Chicago Trust
Company of New York, as amended from time to time, (iii) dividends or
distributions of similar share purchase rights in the future, (iv) dividends or
distributions in shares of Common Stock or another class or series of capital
stock of the Corporation that is junior to the Series A Preferred Stock as to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding-up of the Corporation, or (v) dividends with respect to
Dividend Pari Passu Securities in accordance with the following sentence.  If
full cumulative dividends have not been paid upon the shares of Series A
Preferred Stock and any other class or series of Dividend Pari Passu Securities,
all dividends declared upon shares of Series A Preferred Stock and any other
such class or series of Dividend Pari Passu Securities shall, if declared, be
declared pro rata so that the amount of cash dividends declared per share on the
Series A Preferred Stock and such other class or series of Dividend Pari Passu
Securities shall in all cases bear to each other the same ratio that accumulated
and unpaid dividends per share on the shares of Series A Preferred Stock and
such other class or series of Dividend Pari Passu Securities bear to each other.

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     The term "Dividend Pari Passu Security" means any preference stock or
preferred stock or other capital stock of the Corporation and any guarantee
entered into by the Corporation in respect of any preference stock or preferred
stock of any affiliate of the Corporation ranking pari passu with the Series A
Preferred Stock as to the payment of dividends.  "Dividend Junior Security"
means Common Stock, Series A Junior Participating Preferred Stock of the
Corporation and any other class or series of capital stock of the Corporation
and any guarantee entered into by the Corporation in respect of any preference
stock or preferred stock of any affiliate of the Corporation ranking junior to
the Series A Preferred Stock as to the payment of dividends.

     (d) Accruals of dividends on the Series A Preferred Stock shall not bear
interest, regardless of whether funds shall be legally available for the
declaration or payment thereof.

     SECTION 3.  VOTING RIGHTS.

     (a) The holders of the shares of Series A Preferred Stock shall have no
right or power to vote on any question or matter or in any proceeding or to be
represented at, or to receive notice of, any meeting of shareholders of the
Corporation, except as specifically required by the laws of the State of Texas
or by the provisions of the Restated Articles of Incorporation of the
Corporation, as amended, and except as provided in this Section 3.

     (b) In the event that full cumulative dividends on the Series A Preferred
Stock are not paid for 18 consecutive monthly dividend periods (including for
this purpose any monthly periods in which full dividends were not paid on the
American General Delaware Series A Preferred Securities prior to the Exchange
Election), the number of directors of the Corporation constituting the entire
Board of Directors shall be increased by two persons and the holders of shares
of the Series A Preferred Stock, voting separately as a class together with the
holders of shares of all other series of capital stock of the Corporation
ranking pari passu with the Series A Preferred Stock as to the payment of
dividends and having the then present right to elect one or more directors as a
result of a dividend arrearage but not then entitled to other separate voting
rights to elect one or more directors in the event of such an arrearage (herein
referred to as "Class Voting Stock"), shall have the right to elect such
directors to fill such positions at any regular meeting of shareholders or
special meeting held in place thereof, or at a special meeting of the holders of
the Series A Preferred Stock and such other Class Voting Stock called as
provided in paragraph (c) below.  Whenever all arrearages of dividends on the
Series A Preferred Stock then outstanding shall have been paid or declared and
irrevocably set apart for payment, then the right of the holders of shares of
the Series A Preferred Stock (and, subject to the terms of such other Class
Voting Stock, such other Class Voting Stock) to elect such additional two
directors shall cease (but subject always to the same provisions for the vesting
of such voting rights in the case of any similar future arrearages in
dividends), and the terms of office of all persons previously elected as
directors by the holders of shares of the Series A Preferred Stock and such
other Class Voting Stock shall forthwith terminate and the number of the Board
of Directors shall be reduced accordingly.

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     (c) At any time after the voting power referred to in paragraph (b) above,
shall have been so vested in the holders of shares of the Series A Preferred
Stock, the Secretary of the Corporation may, and upon the written request of any
holder or the holders of at least 10% of the number of shares of Series A
Preferred Stock then outstanding (addressed to the Secretary at the principal
executive office of the Corporation) shall, call a special meeting of the
holders of shares of the Series A Preferred Stock and all other Class Voting
Stock for the election of the two directors to be elected by them; provided that
the Secretary shall not be required to call such special meeting if the request
for such meeting is received less than 45 calendar days before the date fixed
for the next ensuing annual meeting of shareholders.  Such call shall be made by
notice similar to that provided in the by-laws of the Corporation for a special
meeting of the shareholders or as required by law.  Subject to the foregoing
provisions, if any such special meeting required to be called as above provided
shall not be called by the Secretary within 20 calendar days after receipt of an
appropriate request, then any holder of shares of Series A Preferred Stock may
call such meeting, upon the notice above provided, and for that purpose shall
have access to the stock books and records of the Corporation.  Except as
otherwise provided by law, at any such meeting, the holders of a majority of the
number of shares of Series A Preferred Stock and such other Class Voting Stock
then outstanding shall constitute a quorum for the purpose of electing directors
as contemplated in paragraph (b) above.  If at any such meeting or adjournment
thereof a quorum of such holders of Series A Preferred Stock and such other
Class Voting Stock shall not be present, no election of directors by the Series
A Preferred Stock and such other Class Voting Stock shall take place, and any
such meeting may be adjourned from time to time for periods not exceeding 30
calendar days until a quorum of the Series A Preferred Stock and the Class
Voting Stock is present at such adjourned meeting.  Unless otherwise provided by
law, directors to be elected by the holders of shares of Series A Preferred
Stock and such other Class Voting Stock shall be elected by a plurality of the
votes cast by such holders at a meeting at which a quorum is present.
Notwithstanding the foregoing, the absence of a quorum of the Series A Preferred
Stock and such other Class Voting Stock shall not prevent the voting of,
including the election of, directors by the holders of Common Stock and other
classes of capital stock at such meeting.

     (d) Any director who shall have been elected by holders of shares of Series
A Preferred Stock (or by the holders of shares of Series A Preferred Stock,
voting separately as a class together with the holders of one or more other
series of Class Voting Stock), or any director so elected as provided below, may
be removed at any time during a class voting period, either for or without
cause, by, and only by, the affirmative vote of the holders of a majority of the
number of shares of Series A Preferred Stock then outstanding, voting separately
as a class together with the holders of all other series of Class Voting Stock
then outstanding, if any, given at a special meeting of such shareholders called
for the purpose, and any vacancy thereby created may be filled during such class
voting period only by the holders of shares of Series A Preferred Stock and the
other series, if any, of Class Voting Stock.  In case any vacancy (other than as
provided in the preceding sentence) shall occur among the directors elected by
the holders of shares of the Series A Preferred Stock (and such other Class
Voting Stock), a successor shall be elected by the Board of Directors to serve
until the next annual meeting of the shareholders or special meeting held in
place thereof upon the nomination of the then remaining director elected by the
holders of the

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Series A Preferred Stock (and such other Class Voting Stock) or the successor of
such remaining director.

     (e) So long as any shares of Series A Preferred Stock are outstanding, the
consent of the holders of not less than 66-2/3% of the number of shares of
Series A Preferred Stock then outstanding, given in person or by proxy either at
a regular meeting or at a special meeting called for that purpose or pursuant to
written consents, at which or pursuant to which, as the case may be, the holders
of Series A Preferred Stock shall vote separately as a series, shall be
necessary for effecting, validating or authorizing any one or more of the
following:

          (1) The amendment, alteration or repeal of any of the provisions of
     this Statement of Resolution Establishing a Series of Shares, the Restated
     Articles of Incorporation, or any amendment thereto, or any other
     certificate filed pursuant to law (including any such amendment, alteration
     or repeal effected by any merger or consolidation to which the Corporation
     is a party) that would adversely affect any of the designations,
     preferences, limitations or relative rights of the shares of Series A
     Preferred Stock then outstanding; provided, however, that any amendment or
     amendments to the provisions of the Restated Articles of Incorporation, as
     amended, so as to authorize or create, or to increase the authorized amount
     of, any capital stock of the Corporation ranking pari passu with or junior
     to the Series A Preferred Stock as to the payment of dividends and as to
     the distribution of assets upon any liquidation, dissolution or winding-up
     of the Corporation shall not be deemed to affect adversely the
     designations, preferences, limitations, or relative rights of the Series A
     Preferred Stock;

          (2) The authorization or creation of any shares of any class or
     series, or any security convertible into shares of any class or series, of
     capital stock ranking senior to the Series A Preferred Stock as to the
     payment of dividends or as to the distribution of assets upon any
     liquidation, dissolution or winding-up of the Corporation; or

          (3) Any merger or consolidation with or into, or any conveyance,
     transfer, or lease of all or substantially all of the assets of the
     Corporation to, any other corporation or other entity, in either case that
     would adversely affect any of the designations, preferences, limitations or
     relative rights of the shares of Series A Preferred Stock then outstanding.

     (f) In connection with any matter on which holders of shares of Series A
Preferred Stock are entitled to vote (including, without limitation, (i) with
respect to the election of directors as set forth in the preceding paragraphs of
this Section 3 or (ii) any matter on which holders of shares of Series A
Preferred Stock are entitled to vote as a class or otherwise pursuant to the
laws of the State of Texas or the provisions of the Restated Articles of
Incorporation, as amended), each holder of a share of Series A Preferred Stock
shall be entitled to one vote for such share of Series A Preferred Stock held by
such holder.

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Notwithstanding anything to the contrary herein, if the Restated Articles of the
Corporation, as amended, provide that shares of any Class Voting Stock are
entitled to more or less than one vote per share when voting together with the
Series A Preferred Stock every reference in this Section 3 to a majority or
another specified portion of the number of shares of Series A Preferred Stock
and Class Voting Stock shall mean a majority or such other portion of the votes
entitled to be cast in respect of such shares.

     SECTION 4.  REDEMPTION.

     (a) If at any time following the Conversion Expiration Date (as defined
below), less than ten percent (10%) of the number of shares of Series A
Preferred Stock issued upon the Exchange Election remains outstanding, such
shares of Series A Preferred Stock shall be redeemable, at the option of the
Corporation, in whole but not in part, at a cash redemption price of $50 per
share, plus accumulated and unpaid dividends (whether or not earned or
declared), to the date fixed for redemption thereof (the "Redemption Price").

     (b) The Series A Preferred Stock shall be redeemable, at the option of the
Corporation, in whole or in part, from time to time, on or after May 31, 2003,
at the Redemption Price.  The Corporation may not redeem the Series A Preferred
Stock in part unless all accumulated and unpaid dividends (whether or not earned
or declared) have been paid in full on all shares of Series A Preferred Stock
for all monthly dividend periods terminating on or prior to the date of
redemption.

     (c) Unless otherwise required by law, notice of any redemption of the
Series A Preferred Stock (a "Notice of Redemption") shall be irrevocable and
shall be given by the Corporation or sent to the holders of Series A Preferred
Stock by first-class mail, postage prepaid, not fewer than 30 nor more than 60
calendar days prior to the date fixed for redemption.  If all of the shares of
Series A Preferred Stock are held in the name of the Clearing Agency (or its
nominees), the Notice of Redemption shall be sent to such Clearing Agency.  Each
Notice of Redemption shall state:  (i) the fact that shares of Series A
Preferred Stock are being redeemed and the number of such shares; (ii) the date
fixed for redemption; (iii) the Redemption Price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the Redemption
Price; (v) that dividends on the shares to be redeemed will cease to accrue on
such redemption date; and (vi) that conversion rights with respect to the shares
to be redeemed will cease on the close of business on the third Business Day
preceding the date fixed for redemption.  If less than all outstanding shares of
Series A Preferred Stock are to be redeemed, the shares to be redeemed will be
selected ratably or by lot or in such other manner as may be fair and equitable
and the Notice of Redemption shall also specify the number of shares of Series A
Preferred Stock to be redeemed from each applicable holder.  Such notice shall
be deemed to be given on the day such notice is deposited in the United States
mail, postage prepaid, addressed to the shareholder at such shareholder's
address as it appears on the books of the Corporation or the stock transfer
agent for the Series A Preferred Stock.  No defect in the Notice of Redemption
or in the mailing thereof with respect to any share of Series A Preferred Stock
shall affect the validity of the proceedings for such redemption with respect to
any other share of Series A Preferred Stock.

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     (d) If the Corporation gives a Notice of Redemption, then, by 12:00 noon,
New York time, on the date fixed for redemption, if the Series A Preferred Stock
is represented by one or more global certificates through the book-entry system
of a Clearing Agency, the Corporation shall irrevocably deposit an amount
sufficient to pay the Redemption Price to the holders of the shares of Series A
Preferred Stock called for redemption with the Clearing Agency and give the
Clearing Agency irrevocable instructions and authority to pay, on and after the
date fixed for redemption, the Redemption Price to the holders of the Series A
Preferred Stock to be redeemed, and if the Series A Preferred Stock is not
represented by such global certificates through the book-entry system of a
Clearing Agency, the Corporation shall irrevocably deposit with any bank or
trust company in the State of Texas, or any bank or trust company in the United
States duly appointed and acting as transfer agent for the Corporation, as a
trust fund, an amount sufficient to pay the Redemption Price to the holders of
the shares of Series A Preferred Stock called for redemption, with irrevocable
instructions and authority to such bank or trust company to pay, on and after
the date fixed for such redemption, to the respective holders of shares of
Series A Preferred Stock, as evidenced by a list of holders of such shares
certified by the President, any Vice President, the Secretary or an Assistant
Secretary of the Corporation, the Redemption Price upon surrender of their
respective share certificates.  If a Notice of Redemption shall have been given
and funds irrevocably deposited as required, then immediately prior to the close
of business on the date fixed for redemption, such shares of Series A Preferred
Stock called for redemption shall no longer be deemed to be outstanding, and the
holders thereof shall cease to be shareholders with respect to such shares and
all rights of such holders will cease, except the right of such holders to
receive the Redemption Price (subject, in the case of holders of certificated
shares, to the surrender of their respective certificates therefor), but without
additional interest from and after such redemption date.  In case the holders of
such shares of Series A Preferred Stock shall not, within six years after such
deposit, claim the amount deposited for redemption thereof, such bank or trust
company shall upon demand pay over to the Corporation the balance of such amount
so deposited to be held in trust and such bank or trust company shall thereupon
be relieved of all responsibility to the holders of Series A Preferred Stock.
In the event that any date fixed for redemption of Series A Preferred Stock is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day.  In the event that payment of the Redemption
Price is improperly withheld or refused and not paid by the Corporation,
dividends on the Series A Preferred Stock called for redemption will continue to
accumulate at the then applicable rate, from the original redemption date to the
date that the Redemption Price is actually paid and the holders of such Series A
Preferred Stock may exercise all of their rights as holders thereof.

     (e) Subject to the next succeeding sentence, the Corporation may not, and
shall not permit any of its majority-owned subsidiaries to, purchase any shares
of Series A Preferred Stock or redeem, purchase, acquire or make a liquidation
payment with respect to any capital stock of the Corporation or make any
guarantee payment with respect to the foregoing, unless all accumulated
dividends shall have been declared and paid or irrevocably

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set apart for payment upon all shares of Series A Preferred Stock then
outstanding for all monthly dividend periods terminating on or prior to the date
thereof.  The preceding sentence, however, shall not apply to, or prohibit (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Corporation or any of its majority-owned subsidiaries of its
obligations under any employee benefit plans or the satisfaction by the
Corporation of its obligations pursuant to any put contract requiring the
Corporation to purchase Common Stock, (ii) any of the actions described in the
preceding sentence as a result of a reclassification of capital stock of the
Corporation or the exchange or conversion of one class or series of capital
stock of the Corporation for another class or series of capital stock of the
Corporation, (iii) redemptions or purchases of any share purchase rights issued
by the Corporation pursuant to the Rights Agreement, dated as of July 27, 1989,
between the Corporation and First Chicago Trust Company of New York, as amended
from time to time, (iv) the redemption or purchase of similar share purchase
rights in the future, or (v) the purchase of fractional interests in shares of
capital stock of the Corporation pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged.

     SECTION 5.  LIQUIDATION, DISSOLUTION OR WINDING-UP.

     (a) Upon any voluntary or involuntary liquidation, dissolution, or winding-
up of the Corporation, the holders of Series A Preferred Stock at the time
outstanding will be entitled to receive out of the net assets of the Corporation
legally available for distribution to shareholders after satisfaction of
liabilities to creditors as required by the Texas Business Corporation Act,
subject to the rights of the holders of any stock of the Corporation ranking
senior to the Series A Preferred Stock in respect of distributions of assets
upon liquidation, dissolution, or winding-up of the Corporation and holders of
Liquidation Pari Passu Securities (as defined below), but before any
distribution of assets is made with respect to any Liquidation Junior Securities
(as defined below), an amount equal to the aggregate of the liquidation
preference of $50 per share plus an amount equal to all accumulated and unpaid
dividends thereon (whether or not earned or declared) to the date of payment.
If, upon any liquidation, dissolution or winding-up of the Corporation, the
assets available for distribution are insufficient to pay in full the
liquidation preference to the holders of the Series A Preferred Stock and any
Liquidation Pari Passu Securities, the holders of the Series A Preferred Stock
and such Liquidation Pari Passu Securities shall share ratably in any
distribution of assets based on the proportion of their full respective
liquidation preferences to the aggregate amount of the unpaid liquidation
preferences of the Series A Preferred Stock and such Liquidation Pari Passu
Securities.  After payment of the full amount to which they are entitled as
provided by the foregoing provisions of this Section 5(a), the holders of shares
of Series A Preferred Stock shall not be entitled to any further right or claim
to any of the remaining assets of the Corporation.

     The term "Liquidation Pari Passu Security" means any preference stock or
preferred stock or other capital stock of the Corporation and any guarantee
entered into by the Corporation in respect of any preference stock or preferred
stock of any affiliate of the Corporation ranking pari passu with the Series A
Preferred Stock as to the distribution of assets upon liquidation, dissolution
or winding-up of the Corporation.  "Liquidation Junior

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Security" means Common Stock, Series A Junior Participating Preferred Stock of
the Corporation and any other class or series of capital stock of the
Corporation and any guarantee entered into by the Corporation in respect of any
preference stock or preferred stock of any affiliate of the Corporation ranking
junior to the Series A Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding-up of the Corporation.

     (b) Neither the merger or consolidation of the Corporation with or into any
other corporation or other entity, nor the merger or consolidation of any other
corporation with or into the Corporation or other entity, nor the conveyance,
transfer or lease of all or substantially all of the assets of the Corporation,
shall be deemed to be a liquidation, dissolution or winding-up, voluntary or
involuntary, of the affairs of the Corporation for purposes of this Section 5.

     (c) Written notice of any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, stating the payment date or dates when, and
the place or places where, the amounts distributable to holders of Series A
Preferred Stock in such circumstances shall be payable, shall be delivered
personally or given by first-class mail, postage prepaid, not fewer than 30
calendar days prior to any payment date stated therein, to the holders of Series
A Preferred Stock, at the addresses shown on the books of the Corporation or the
transfer agent for the Series A Preferred Stock.  No defect in such notice or in
the mailing thereof shall affect the Corporation's ability to consummate a
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation.

     SECTION 6.  CONVERSION RIGHTS OF SERIES A PREFERRED STOCK.

     (a) Each share of Series A Preferred Stock shall be convertible at any time
before the close of business on the Conversion Expiration Date, at the option of
the holder thereof, into such number of shares of Common Stock as is determined
by dividing $50.00 by the then applicable conversion price (the "Conversion
Price") determined as hereinafter provided.  The Conversion Price shall
initially be $40.69 per share and shall be adjusted as provided in Section 7.

     (b) Holders of record of Series A Preferred Stock at the close of business
on a dividend record date will be entitled to receive the dividend payable on
such shares of Series A Preferred Stock on the corresponding dividend payment
date notwithstanding the conversion thereof following such dividend payment
record date but on or prior to such dividend payment date.  Except as provided
in the immediately preceding sentence, the Corporation will make no payment,
allowance or adjustment for accumulated and unpaid dividends, whether or not in
arrears, on converted shares of Series A Preferred Stock.  American General will
make no payment or allowance for dividends on the shares of Common Stock issued
upon conversion, except to the extent that such shares of Common Stock are held
of record on the record date for such dividends.

     (c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Corporation based on the Current Market Price (as defined in Section
6(h)(4)) of the Common Stock on the date

                                       10
<PAGE>
 
on which the certificate or certificates for such shares of Series A Preferred
Stock were duly surrendered for conversion, or, if such date is not a Trading
Day for the Common Stock (as defined in Section 7(e), on the next Trading Day.

     (d) Shares of Series A Preferred Stock that have been called for redemption
will not be convertible after the close of business on the third Business Day
preceding the date fixed for redemption, unless the Corporation defaults in
making payment of the Redemption Price payable on redemption.

     (e) Any holder of shares of Series A Preferred Stock desiring to convert
such shares into shares of Common Stock shall surrender the certificate or
certificates representing the shares of Series A Preferred Stock being
converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto), at the offices of
the transfer agent for the Series A Preferred Stock or such office or offices in
the continental United States of an agent for conversion as may from time to
time be designated by notice to the holders of the Series A Preferred Stock by
the Corporation or the transfer agent for the Series A Preferred Stock,
accompanied by irrevocable notice of conversion, on any day that is a Business
Day.  Such notice of conversion (i) shall specify the number of shares of Series
A Preferred Stock to be converted and the name or names, if other than the
holder, in which the certificate or certificates for Common Stock, and for any
shares of Series A Preferred Stock not to be so converted, are to be issued
(subject to compliance with applicable legal requirements if any of such
certificates are to be issued in a name other than the name of the holder), (ii)
shall direct the Corporation or such transfer agent to convert such Series A
Preferred Stock into Common Stock, and (iii) shall specify the address to which
such holder wishes delivery to be made of such new certificates issued upon such
conversion (the "Notice of Conversion").

     (f) Upon surrender of a certificate representing a share or shares of
Series A Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery or by first-class mail, postage prepaid, to the holder thereof, at
the address designated by such holder, a certificate or certificates
representing the number of full shares of Common Stock to which such holder
shall be entitled upon conversion, together with the cash payment, if any, in
lieu of any fractional share of Common Stock.  If a certificate or certificates
representing shares of Series A Preferred Stock, only part of which are to be
converted, shall have been surrendered, then the Corporation shall also issue
and deliver to such holder or such holder's designee in the manner provided in
the immediately preceding sentence a new certificate or certificates
representing the number of shares of Series A Preferred Stock that shall not
have been converted.

     (g) Shares of Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day on which the
certificate or certificates for the shares of Series A Preferred Stock to be
converted are surrendered to the Corporation, or at the offices of the transfer
agent or conversion agent (in accordance with the provisions of Section 6(e)),
accompanied by a Notice of Conversion (the "Conversion Date").  The person or
persons entitled to receive the Common Stock issuable upon such

                                       11
<PAGE>
 
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock at such time.

     (h)(1) On and after May 31, 2000, the Corporation shall have the right, at
its option, to cause the conversion rights of holders of shares of Series A
Preferred Stock set forth in this Section 6 to expire if (A) the Corporation has
paid in full all accumulated and unpaid dividends on all shares of Series A
Preferred Stock for all monthly dividend periods terminating on or prior to such
date, and (B) for 20 Trading Days within any period of 30 consecutive Trading
Days, including the last Trading Day of such period, the Current Market Price of
the Common Stock of the Corporation on each of such 20 Trading Days shall have
exceeded 120% of the Conversion Price in effect on such Trading Day.

          (2) In order to exercise its option to cause the conversion rights of
holders of shares of Series A Preferred Stock to expire, the Corporation must
issue a press release for publication on the Dow Jones News Service or on a
comparable news service (the "Press Release") prior to the opening of business
on the second Trading Day after any period in which the conditions in the
preceding paragraph have been met, which shall state that the Corporation has
elected to exercise its right to extinguish the conversion rights of holders of
shares of Series A Preferred Stock, specify the Conversion Expiration Date and
provide the Conversion Price of the Series A Preferred Stock and the Current
Market Price of the Common Stock, in each case as of the close of business on
the Trading Day next preceding the date of the Press Release.  If the
Corporation exercises the option described in this Section 6(h), the "Conversion
Expiration Date" shall be the close of business on the Business Day selected by
the Corporation, which shall be not less than 30 or more than 60 calendar days
after the date on which the Corporation issues the Press Release; provided,
however, that if the Corporation does not exercise the option described in this
Section 6(h), the "Conversion Expiration Date" with respect to any shares of
Series A Preferred Stock called for redemption shall be the close of business on
the third Business Day prior to the date fixed for redemption pursuant to
Section 4, unless the Corporation defaults in making payment of the Redemption
Price payable on redemption.

          (3) In addition to the Press Release, notice of the expiration of
conversion rights (a "Notice of Conversion Expiration") must be given by the
Corporation by first-class mail to each holder of shares of Series A Preferred
Stock not more than four Business Days after the Corporation issues the Press
Release.  Each such mailed Notice of Conversion Expiration shall state:  (A) the
Conversion Expiration Date; (B) the Conversion Price of the Series A Preferred
Stock and the Current Market Price of the Common Stock, in each case as of the
close of business on the Trading Day next preceding the date of the Press
Release; (C) the place or places at which a Notice of Conversion may be given
and shares of Series A Preferred Stock may be surrendered prior to the
Conversion Expiration Date for certificates representing shares of Common Stock
in accordance with Section 6(e); and (D) such other information or instructions
as the Corporation deems necessary or advisable to enable a holder of shares of
Series A Preferred Stock to exercise its conversion right hereunder.  For
purposes of the calculation of the Conversion Expiration Date and the dates on
which notices are given pursuant to this Section 6(h), a Notice of Conversion
Expiration shall be deemed to have been given on the day such notice is first
mailed by first-class mail,

                                       12
<PAGE>
 
postage prepaid, to each holder of shares of Series A Preferred Stock at the
address of the holder appearing in the books and records of the Corporation
(whether or not the holder receives the Notice of Conversion Expiration).  No
defect in the Notice of Conversion Expiration or in the mailing thereof with
respect to any share of Series A Preferred Stock shall affect the validity of
such notice with respect to any other share of Series A Preferred Stock.  As of
the close of business on the Conversion Expiration Date, the shares of Series A
Preferred Stock shall be deemed to be non-convertible securities.

          (4) As used in this Section 6, "Current Market Price" of shares of
Common Stock for any day means the reported last sale price, regular way, on
such day, or, if no sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in either case as
reported on the New York Stock Exchange Composite Tape, or, if the Common Stock
is not listed or admitted to trading on the New York Stock Exchange (the
"NYSE"), on the principal national securities exchange on which the Common Stock
is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on a national securities exchange, on the National Market
System of the National Association of Securities Dealers, Inc., or, if the
Common Stock is not quoted or admitted to trading on such quotation system, on
the principal quotation system on which the Common Stock is listed or admitted
to trading or quoted, or, if not listed or admitted to trading or quoted on any
national securities exchange or quotation system, the average of the closing bid
and asked prices of the Common Stock in the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or, if not so available in such
manner, as furnished by any NYSE member firm selected from time to time by the
Board of Directors of the Corporation for that purpose or, if not so available
in such manner, as otherwise determined in good faith by the Board of Directors.

     (i) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of Series A Preferred Stock as herein provided, free from
any preemptive or other similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Series A Preferred Stock then outstanding.  Notwithstanding the foregoing, the
Corporation shall be entitled to deliver upon conversion of Series A Preferred
Stock, shares of Common Stock reacquired and held in the treasury of the
Corporation (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, claims, equities, security interests and encumbrances.  Any shares of
Common Stock delivered upon conversion of the Series A Preferred Stock shall be
duly authorized, validly issued, fully paid and non-assessable, free and clear
of all liens, charges, claims, equities, security interests and other
encumbrances, except for United States withholding taxes.  The Corporation shall
use its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of the Common
Stock (and all listing requirements of any stock exchange on which the Common
Stock is then listed that are at the time applicable), in order to enable the
Corporation lawfully to issue and deliver such number of shares of its Common
Stock as shall from time to time be sufficient to effect the conversion of all

                                       13
<PAGE>
 
shares of Series A Preferred Stock then outstanding and convertible into shares
of Common Stock.

     (j) Whenever the Corporation shall issue shares of Common Stock upon
conversion of Series A Preferred Stock, the Corporation shall issue, together
with each such share of Common Stock, one right to purchase Series A Junior
Participating Preferred Stock of the Corporation (or other securities in lieu
thereof) pursuant to the Rights Agreement, dated as of July 27, 1989, between
the Company and First Chicago Trust Company of New York, as amended, or any
similar rights issued to holders of Common Stock in addition thereto or in
replacement therefor (such rights, together with any additional or replacement
rights, being collectively referred to as the "Rights"), whether or not such
Rights shall be exercisable at such time, but only if such Rights are issued and
outstanding and held by other holders of Common Stock (or are evidenced by
outstanding share certificates representing Common Stock) at such time and have
not expired or been redeemed.

     SECTION 7.  ADJUSTMENT OF CONVERSION PRICE.

     (a) Adjustment of Conversion Price.  The Conversion Price shall be subject
to adjustment from time to time as follows:

          (i) If the Corporation shall pay or make a dividend or other
     distribution exclusively in Common Stock on any class or series of capital
     stock of the Corporation, then the Conversion Price in effect at the
     opening of business on the day following the date fixed for the
     determination of shareholders entitled to receive such dividend or other
     distribution shall be reduced by multiplying such Conversion Price by a
     fraction, of which the numerator shall be the number of shares of Common
     Stock outstanding at the close of business on the date fixed for such
     determination and the denominator shall be the sum of such number of shares
     and the total number of shares constituting such dividend or other
     distribution, such reduction to become effective immediately after the
     opening of business on the day following the date fixed for such
     determination.  For the purposes of this subparagraph (i), the number of
     shares of Common Stock at any time outstanding shall not include shares
     held in the treasury of the Corporation.  The Corporation shall not pay any
     dividend or make any distribution exclusively in Common Stock on shares of
     any class or series of capital stock of the Corporation held in the
     treasury of the Corporation.

          (ii) Subject to Section 7(g), if the Corporation shall pay or make a
     dividend or other distribution on the outstanding shares of Common Stock
     consisting exclusively of, or shall otherwise issue to all holders of the
     outstanding shares of Common Stock, rights (other than Rights) or warrants
     entitling the holders thereof to subscribe for or purchase shares of Common
     Stock at a price per share (taking into account the consideration received
     for the issuance of such right or warrant plus any consideration to be
     received upon the exercise thereof) less than the Current Price per share
     (determined as provided in subparagraph (vi) of this Section 7(a)) of the
     Common Stock on the date fixed for the determination of shareholders

                                       14
<PAGE>
 
     entitled to receive such rights or warrants, then the Conversion Price in
     effect at the opening of business on the day following the date fixed for
     such determination shall be reduced by multiplying such Conversion Price by
     a fraction, of which the numerator shall be the number of shares of Common
     Stock outstanding at the close of business on the date fixed for such
     determination plus the number of shares of Common Stock which the aggregate
     of the offering price of the total number of shares of Common Stock so
     offered for subscription or purchase would purchase at such Current Price
     per share and the denominator shall be the number of shares of Common Stock
     outstanding at the close of business on the date fixed for such
     determination plus the number of shares of Common Stock so offered for
     subscription or purchase, such reduction to become effective immediately
     after the opening of business on the day following the date fixed for such
     determination.  For the purposes of this subparagraph (ii), the number of
     shares of Common Stock at any time outstanding shall not include shares
     held in the treasury of the Corporation.  The Corporation shall not issue
     any rights or warrants in respect of shares of Common Stock held in the
     treasury of the Corporation.  In case any rights or warrants referred to in
     this subparagraph (ii) in respect of which an adjustment shall have been
     made shall expire or terminate unexercised, the Conversion Price shall be
     readjusted at the time of such expiration to the Conversion Price that
     would have been in effect if no adjustment had been made on account of the
     distribution or issuance of such expired rights or warrants.

          (iii)  If outstanding shares of Common Stock shall be subdivided into
     a greater number of shares of Common Stock, then the Conversion Price in
     effect at the opening of business on the day following the day upon which
     such subdivision becomes effective shall be proportionately reduced and,
     conversely, if outstanding shares of Common Stock shall be combined into a
     smaller number of shares of Common Stock, then the Conversion Price in
     effect at the opening of business on the day following the day upon which
     such combination becomes effective shall be proportionately increased, such
     reduction or increase, as the case may be, to become effective immediately
     after the opening of business on the day following the day upon which such
     subdivision or combination becomes effective.

          (iv) Subject to the last sentence of this subparagraph (iv), if the
     Corporation shall, by dividend or otherwise, pay or otherwise distribute to
     all holders of Common Stock evidences of its indebtedness, shares of any
     class or series of capital stock of the Corporation, cash, securities or
     other assets other than Excluded Dividends (as defined below), then the
     Conversion Price shall be reduced so that the same shall equal the price
     determined by multiplying (A) the Conversion Price in effect immediately
     prior to the effectiveness of the Conversion Price reduction contemplated
     by this subparagraph (iv) by (B) a fraction of which the numerator shall be
     the Current Price per share (determined as provided in subparagraph (vi) of
     this Section 7(a)) of the Common Stock on the date fixed for the payment of
     such distribution (the "Reference Date") less the fair market value, on the
     Reference Date, of the portion of the evidences of indebtedness, shares of
     capital stock of the Corporation, cash, securities or other assets so
     distributed (other than Excluded

                                       15
<PAGE>
 
     Dividends) applicable to one share of Common Stock and the denominator
     shall be such Current Price per share of the Common Stock, such reduction
     to become effective immediately prior to the opening of business on the day
     following the Reference Date.  "Excluded Dividends" shall mean (1) any
     dividend or distribution referred to in subparagraph (i) of this Section
     7(a), (2) any dividend, distribution or issuance of rights or warrants
     referred to in subparagraph (ii) of this Section 7(a) or of Rights, (3) any
     regular cash dividend on the Common Stock that does not exceed the per
     share amount of the immediately preceding regular cash dividend on the
     Common Stock (as adjusted to appropriately reflect any of the events
     referred to in subparagraphs (i) and (iii) of this Section 7(a)), and (4)
     in the case of any other dividend or distribution (cash or otherwise), that
     portion thereof which, when combined with the per share fair market value
     of all other dividends and distributions paid by the Corporation on Common
     Stock during the 365-day period ending on the date of declaration of such
     dividend or distribution (as adjusted to appropriately reflect any of the
     events referred to in subparagraphs (i) and (iii) of this Section 7(a) and
     excluding dividends and distributions referred to in clauses (1) and (2)
     and dividends and distributions, or portions thereof, that resulted in an
     adjustment to the Conversion Price (or would have but for the application
     of Section 7(a)(viii), 7(f) or 7(g)), does not exceed 15% of the Current
     Price per share of the Common Stock on the Trading Day immediately
     preceding the date of declaration of such dividend or distribution.  The
     fair market value of any dividend or distribution not paid in cash shall be
     determined in good faith by the Board of Directors of the Corporation,
     whose determination shall be conclusive and described in a resolution of
     the Board of Directors of the Corporation.  For purposes of this
     subparagraph (iv), any dividend or distribution that includes shares of
     Common Stock or rights or warrants to subscribe for or purchase shares of
     Common Stock shall be deemed instead to be (1) a dividend or distribution
     of the evidences of indebtedness, shares of capital stock of the
     Corporation, cash or assets other than such shares of Common Stock or such
     rights or warrants (making any Conversion Price reduction required by this
     subparagraph (iv)) immediately followed by (2) a dividend or distribution
     of such shares of Common Stock or such rights or warrants (making any
     further Conversion Price reduction required by subparagraphs (i) or (ii) of
     this Section 7(a) and, in the case of rights or warrants, subject to the
     last sentence of such subparagraph (ii)), except (A) the Reference Date of
     such dividend or distribution as defined in this subparagraph (iv) shall be
     substituted as "the date fixed for the determination of shareholders
     entitled to receive such dividend or other distribution," "the date fixed
     for the determination of shareholders entitled to receive such rights or
     warrants" and "the date fixed for such determination" within the meaning of
     subparagraphs (i) and (ii) of this Section 7(a) and (B) any shares of
     Common Stock included in such dividend or distribution shall not be deemed
     "outstanding at the close of business on the date fixed for such
     determination" within the meaning of subparagraph (i) of this Section 7(a).

          (v) If a tender or exchange offer made by the Corporation or any
     subsidiary of the Corporation for all or any portion of the Corporation's
     Common Stock shall expire and such tender or exchange offer shall involve
     the payment by the

                                       16
<PAGE>
 
     Corporation or such subsidiary of consideration per share of Common Stock
     having a fair market value (as determined in good faith by the Board of
     Directors of the Corporation, whose determination shall be conclusive and
     described in a resolution of the Board of Directors) at the last time (the
     "Tender Expiration Time") tenders or exchanges may be made pursuant to such
     tender or exchange offer (as it may have been amended) that exceeds 110% of
     the Current Price per share (determined as provided in subparagraph (vi) of
     this Section 7(a)) of the Common Stock on the Trading Day next succeeding
     the Tender Expiration Time, then the Conversion Price shall be reduced so
     that the same shall equal the price determined by multiplying the
     Conversion Price in effect immediately prior to the effectiveness of the
     Conversion Price reduction contemplated by this subparagraph (v) by a
     fraction, of which the numerator shall be the number of shares of Common
     Stock outstanding (including any tendered or exchanged shares) at the
     Tender Expiration Time multiplied by the Current Price per share
     (determined as provided in subparagraph (vi) of this Section 7(a)) of the
     Common Stock on the Trading Day next succeeding the Tender Expiration Time
     and the denominator shall be the sum of (x) the fair market value
     (determined as aforesaid) of the aggregate consideration payable to
     shareholders based on the acceptance (up to any maximum specified in the
     terms of the tender or exchange offer) of all shares validly tendered or
     exchanged and not withdrawn as of the Tender Expiration Time (the shares
     deemed so accepted, up to any such maximum, being referred to as the
     "Purchased Shares") and (y) the product of the number of shares of Common
     Stock outstanding (less any Purchased Shares) at the Tender Expiration Time
     and the Current Price per share (determined as provided in subparagraph
     (vi) of this Section 7(a)) of the Common Stock on the Trading Day next
     succeeding the Tender Expiration Time, such reduction to become effective
     immediately prior to the opening of business on the day following the
     Tender Expiration Time.  Notwithstanding anything contained in this Section
     7(a)(v) to the contrary, no adjustment shall be made to the Conversion
     Price in the case of a tender or exchange offer of the character described
     in Rule 13e-4(h)(5) under the Exchange Act, or any successor rule thereto.

          (vi) For the purpose of any computation under subparagraphs (ii), (iv)
     and (v) of this Section 7(a), the "Current Price" per share of Common Stock
     on any date in question shall be deemed to be the average of the daily
     Closing Prices (as defined in Section 7(e)) for the five consecutive
     Trading Days selected by the Corporation commencing not more than 20
     Trading Days before, and ending not later than, the earlier of the day in
     question and, if applicable, the day before the "ex" date with respect to
     the issuance or distribution requiring such computation; provided, however,
     that if another event occurs that would require an adjustment pursuant to
     subparagraph (i) through (v), inclusive, the Board of Directors of the
     Corporation may make such adjustments to the Closing Prices during such
     five Trading Day period as it deems appropriate to effectuate the intent of
     the adjustments in this Section 7(a), in which case any such determination
     by the Board of Directors of the Corporation shall be set forth in a Board
     Resolution and shall be conclusive.  For purposes of this paragraph, the
     term "ex" date, (1) when used with respect to any issuance or distribution,
     means the first date on which the Common Stock trades

                                       17
<PAGE>
 
     regular way on the relevant exchange or in the relevant market from which
     the Closing Prices were obtained without the right to receive such issuance
     or distribution, and (2) when used with respect to any tender or exchange
     offer means the first date on which the Common Stock trades regular way on
     such exchange or in such market after the Tender Expiration Time of such
     offer.

          (vii)  The Corporation may make such reductions in the Conversion
     Price, in addition to those required by subparagraphs (i), (ii), (iii),
     (iv) and (v) of this Section 7(a), as it considers to be advisable to avoid
     or diminish any income tax to holders of Common Stock or holders of rights
     to acquire Common Stock or securities convertible into Common Stock,
     resulting from any dividend or distribution of stock (or rights to acquire
     stock) or from any event treated as such for income tax purposes.  The
     Corporation from time to time may reduce the Conversion Price by any amount
     selected by the Corporation for any period of time if the period is at
     least twenty days, and the Board of Directors of the Corporation shall have
     made a determination that such reduction would be in the best interest of
     the Corporation, which determination shall be conclusive.  Whenever the
     Conversion Price is reduced pursuant to the preceding sentence, the
     Corporation shall mail to holders of record of the Series A Preferred Stock
     a notice of the reduction at least fifteen days prior to the date the
     reduced Conversion Price takes effect, and such notice shall state the
     reduced Conversion Price and the period it will be in effect.

          (viii)  No adjustment in the Conversion Price shall be required unless
     such adjustment would require an increase or decrease of at least 1% in the
     Conversion Price; provided, however, that any adjustments which by reason
     of this subparagraph (viii) are not required to be made shall be carried
     forward and taken into account in any subsequent adjustment.  All
     calculations under this Section 7 shall be made to the nearest cent or to
     the nearest 1/100 of a share, as the case may be, with one-half cent and
     5/1000th of a share, respectively, being rounded upward.

          (ix) Whenever the Conversion Price is adjusted as herein provided:

               (1) the Corporation shall compute the adjusted Conversion Price
          and shall prepare a certificate signed by the Chief Financial Officer,
          the Treasurer or a Vice President of the Corporation setting forth the
          adjusted Conversion Price and showing in reasonable detail the facts
          upon which such adjustment is based, and such certificate shall
          forthwith be filed with the transfer agent for the Series A Preferred
          Stock; and

               (2) a notice stating that the Conversion Price has been adjusted
          and setting forth the adjusted Conversion Price shall, as soon as
          practicable, be mailed by the Corporation to all holders of shares of
          Series A Preferred Stock at their last addresses as they shall appear
          upon the stock transfer books of the Corporation.

                                       18
<PAGE>
 
     (b) Reclassification, Consolidation, Merger Or Sale Of Assets.  In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), any consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another person into the
Corporation (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock), any
sale or transfer of all or substantially all of the assets of the Corporation or
any compulsory share exchange, in each case pursuant to which the Common Stock
is converted into the right to receive other securities, cash or other
property), then lawful provision shall be made as part of the terms of such
transaction whereby each holder of shares of Series A Preferred Stock then
outstanding shall have the right thereafter to convert such shares only into (i)
in the case of any such transaction other than a Common Stock Fundamental Change
(as defined in Section 7(e)), the kind and amount of securities, cash and other
property receivable upon the consummation of such transaction by a holder of
that number of shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior to such transaction,
after giving effect, in the case of any Non-Stock Fundamental Change (as defined
in Section 7(e)), to any adjustment in the Conversion Price required by the
provisions of Section 7(d), and (ii) in the case of a Common Stock Fundamental
Change, common stock of the kind received by holders of Common Stock as a result
of such Common Stock Fundamental Change in an amount determined pursuant to the
provisions of Section 7(d).  The Corporation or the person formed by such
consolidation or resulting from such merger or which acquired such assets or
which acquired the Corporation's shares, as the case may be, shall make
provision in its certificate or articles of incorporation or other constituent
document to establish such right.  Such certificate or articles of incorporation
or other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such provisions in such certificate or
articles of incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
7.  The above provisions shall similarly apply to successive transactions of the
foregoing type.

     (c) Prior Notice Of Certain Events.  In case:

          (i) the Corporation shall (1) declare any dividend (or any other
     distribution) on its Common Stock, other than (A) a dividend payable in
     shares of Common Stock or (B) a dividend payable in cash that would not
     require an adjustment pursuant to 7(a)(iv) or (2) authorize a tender or
     exchange offer that would require an adjustment pursuant to 7(a)(v); or

          (ii) the Corporation shall authorize the granting to all holders of
     Common Stock of rights or warrants to subscribe for or purchase any shares
     of stock of any class or series or of any other rights or warrants (other
     than Rights); or

          (iii)  of any reclassification of Common Stock (other than a
     subdivision or combination of the outstanding Common Stock, or a change in
     par value, or from par

                                       19
<PAGE>
 
     value to no par value, or from no par value to par value), or of any
     consolidation or merger to which the Corporation is a party and for which
     approval of any shareholders of the Corporation shall be required, or of
     the sale or transfer of all or substantially all of the assets of the
     Corporation or of any compulsory share exchange whereby the Common Stock is
     converted into other securities, cash or other property; or

          (iv) of the voluntary or involuntary dissolution, liquidation or
     winding up of the Corporation;

then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).

     (d) Adjustments In Case Of Fundamental Changes.  Notwithstanding any other
provision in this Section 7 to the contrary, if any Fundamental Change (as
defined in Section 7(e)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as described below.  In
addition, in the event of a Common Stock Fundamental Change, the Series A
Preferred Stock shall be convertible solely into common stock of the kind
received by holders of Common Stock as the result of such Common Stock
Fundamental Change as more specifically provided in the following clauses (d)(i)
and (d)(ii).

For purposes of calculating any adjustment to be made pursuant to this Section
7(d) in the event of a Fundamental Change, immediately after such Fundamental
Change:

          (i) in the case of a Non-Stock Fundamental Change, the Conversion
     Price shall thereupon become the lower of (A) the Conversion Price in
     effect immediately prior to such Non-Stock Fundamental Change, but after
     giving effect to any other prior adjustments effected pursuant to this
     Section 7, and (B) the result obtained by multiplying the greater of the
     Applicable Price (as defined in Section 7(e)) or the then applicable
     Reference Market Price (as defined in Section 7(e)) by a fraction, of which
     the numerator shall be $50 and the denominator shall be the amount set
     forth below (based on the date such Non-Stock Fundamental Change occurs):

                                       20
<PAGE>
 
<TABLE>
<CAPTION>
 
Twelve Months
Ending May 31,                    Denominator
--------------                   -------------
<S>                              <C>
 
          1996.................        $53.000
          1997.................        $52.625
          1998.................        $52.250
          1999.................        $51.875
          2000.................        $51.500
          2001.................        $51.125
          2002.................        $50.750
          2003.................        $50.375
          2004 and thereafter..        $50.000
</TABLE>

     ; and

          (ii) in the case of a Common Stock Fundamental Change, the Conversion
     Price in effect immediately prior to such Common Stock Fundamental Change,
     but after giving effect to any other prior adjustments effected pursuant to
     this Section 7, shall thereupon be adjusted by multiplying such Conversion
     Price by a fraction, of which the numerator shall be the Purchaser Stock
     Price (as defined in Section 7(e)) and the denominator shall be the
     Applicable Price; provided, however, that in the event of a Common Stock
     Fundamental Change in which (A) 100% of the value of the consideration
     received by a holder of Common Stock is common stock of the successor,
     acquiror or other third party (and cash, if any, is paid only with respect
     to any fractional interests in such common stock resulting from such Common
     Stock Fundamental Change) and (B) all of the Common Stock shall have been
     exchanged for, converted into or acquired for common stock (and cash with
     respect to fractional interests) of the successor, acquiror or other third
     party, the Conversion Price in effect immediately prior to such Common
     Stock Fundamental Change shall thereupon be adjusted by multiplying such
     Conversion Price by a fraction, of which the numerator shall be one (1) and
     the denominator shall be the number of shares of common stock of the
     successor, acquiror, or other third party received by a holder of one share
     of Common Stock as a result of such Common Stock Fundamental Change.

     (e) Definitions.  The following definitions shall apply to terms used in
this Section 7:

          (i) "Applicable Price" shall mean (i) in the event of a Non-Stock
     Fundamental Change in which the holders of the Common Stock receive only
     cash, the amount of cash received by a holder of one share of Common Stock
     and (ii) in the event of any other Non-Stock Fundamental Change or any
     Common Stock Fundamental Change, the average of the Closing Prices of the
     Common Stock for the ten consecutive Trading Days prior to and including
     the record date for the determination of the holders of Common Stock
     entitled to receive securities, cash or other property in connection with
     such Non-Stock Fundamental Change or Common

                                       21
<PAGE>
 
     Stock Fundamental Change, or, if there is no such record date, the date
     upon which the holders of the Common Stock shall have the right to receive
     such securities, cash or other property (such record date or distribution
     date being hereinafter referred to as the "Entitlement Date"), in each
     case, as adjusted in good faith by the Board of Directors of the
     Corporation to appropriately reflect any of the events referred to in
     subparagraphs (i), (ii), (iii), (iv) and (v) of Section 7(a).

          (ii) "Closing Price" of any common stock on any day shall mean the
     reported last sale price, regular way, on such day, or, if no sale takes
     place on such day, the average of the reported closing bid and asked prices
     on such day, regular way, in either case as reported on the principal
     national securities exchange on which such common stock is listed or
     admitted to trading, or, if such common stock is not listed or admitted to
     trading on a national securities exchange, on the National Market System of
     the National Association of Securities Dealers, Inc., or, if such common
     stock is not quoted or admitted to trading on such quotation system, on the
     principal quotation system on which such common stock is listed or admitted
     to trading or quoted, or, if not listed or admitted to trading or quoted on
     any national securities exchange or quotation system, the average of the
     closing bid and asked prices of such common stock in the over-the-counter
     market on the day in question as reported by the National Quotation Bureau
     Incorporated, or a similar generally accepted reporting service, or, if not
     so available in such manner, as furnished by any NYSE member firm selected
     from time to time by the Board of Directors of the Corporation for that
     purpose or, if not so available in such manner, as otherwise determined in
     good faith by the Board of Directors of the Corporation.

          (iii)  "Common Stock Fundamental Change" shall mean any Fundamental
     Change in which more than 50% of the value (as determined in good faith by
     the Board of Directors of the Corporation) of the consideration received by
     holders of Common Stock consists of common stock that for each of the ten
     consecutive Trading Days prior to the Entitlement Date has been admitted
     for listing or admitted for listing subject to notice of issuance on a
     national securities exchange or quoted on the National Market System of the
     National Association of Securities Dealers, Inc.; provided, however, that a
     Fundamental Change shall not be a Common Stock Fundamental Change unless
     either (i) the Corporation continues to exist after the occurrence of such
     Fundamental Change and the outstanding shares of Series A Preferred Stock
     continue to exist as outstanding shares of Series A Preferred Stock, or
     (ii) not later than the occurrence of such Fundamental Change, the
     outstanding shares of Series A Preferred Stock are converted into or
     exchanged for shares of convertible preferred stock of the entity
     succeeding to the business of the Corporation, which convertible preferred
     stock has designations, preferences, limitations and relative rights
     substantially similar to those of the Series A Preferred Stock.

          (iv) "Conversion Price" shall have the meaning given that term in
     Section 6(a).

                                       22
<PAGE>
 
          (v) "Fundamental Change" shall mean the occurrence of any transaction
     or event in connection with a plan pursuant to which all or substantially
     all of the Common Stock shall be exchanged for, converted into, acquired
     for or constitute solely the right to receive securities, cash or other
     property (whether by means of an exchange offer, liquidation, tender offer,
     consolidation, merger, combination, reclassification, recapitalization or
     otherwise); provided, however, that, in the case of a plan involving more
     than one such transaction or event, for purposes of adjustment of the
     Conversion Price, such Fundamental Change shall be deemed to have occurred
     when substantially all of the Common Stock shall be exchanged for,
     converted into, or acquired for or constitute solely the right to receive
     securities, cash or other property, but the adjustment shall be based upon
     the highest weighted average per share consideration that a holder of
     Common Stock could have received in such transactions or events as a result
     of which more than 50% of the Common Stock shall have been exchanged for,
     converted into, or acquired for or constitute solely the right to receive
     securities, cash or other property.

          (vi) "Non-Stock Fundamental Change" shall mean any Fundamental Change
     other than a Common Stock Fundamental Change.

          (vii)  "Purchased Shares" shall have the meaning given that term in
     Section 7(a)(v).

          (viii)  "Purchaser Stock Price" shall mean, with respect to any Common
     Stock Fundamental Change, the average of the daily Closing Prices of the
     common stock received in such Common Stock Fundamental Change for the ten
     consecutive Trading Days prior to and including the Entitlement Date, as
     adjusted in good faith by the Board of Directors of the Corporation to
     appropriately reflect any of the events referred to in subparagraphs (i),
     (ii), (iii), (iv), and (v) of Section 7(a);

          (ix) "Reference Date" shall have the meaning given that term in
     Section 13(a)(iv).

          (x) "Reference Market Price" shall initially mean $22.42 and in the
     event of any adjustment to the Conversion Price other than as a result of a
     Non-Stock Fundamental Change, the Reference Market Price shall also be
     adjusted so that the ratio of the Reference Market Price to the Conversion
     Price after giving effect to any such adjustment shall always be the same
     as the ratio of $22.42 to the initial Conversion Price.

          (xi) "Tender Expiration Time" shall have the meaning given that term
     in Section 7(a)(v).

          (xii)  "Trading Day" shall mean, with respect to any security listed
     or admitted to trading on the NYSE, any day on which such securities are
     traded on the NYSE, or, if such security is not listed or admitted to
     trading on the NYSE, on the principal national securities exchange on which
     such security is listed or admitted to

                                       23
<PAGE>
 
     trading, or, if such security is not listed or admitted to trading on a
     national securities exchange, on the National Market System of the National
     Association of Securities Dealers, Inc., or, if such security is not quoted
     or admitted to trading on such quotation system, on the principal quotation
     system on which such security is listed or admitted to trading or quoted,
     or, if not listed or admitted to trading or quoted on any national
     securities exchange or quotation system, in the over-the-counter market.

     (f) Dividend Or Interest Reinvestment Plans.  Notwithstanding the foregoing
provisions of this Section 7, no adjustment of the Conversion Price shall be
required to be made upon the issuance of any shares of Common Stock pursuant to
any present or future plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under any such plan, or
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any present or future employee, officer, director or
consultant benefit plan or program or agreement of the Corporation or a
subsidiary of the Corporation or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date the
Series A Preferred Stock was first designated pursuant to this Statement of
Resolution Establishing a Series of Shares.

     (g) Certain Rights.  Notwithstanding any other provision of this Section 7,
the issuance or distribution of Rights shall not be deemed to constitute an
issuance or a distribution or dividend of rights, warrants, or other securities
to which any of the adjustment provisions described above applies.

     (h) Certain Additional Rights.  In case the Corporation shall, by dividend
or otherwise, declare or make a distribution on its Common Stock referred to in
Section 7(a)(iv) (including, without limitation, dividends or distributions
referred to in the last sentence of Section 7(a)(iv) but excluding the Excluded
Dividends), the holder of each share of Series A Preferred Stock, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution and prior to
the effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which such share of Series A Preferred Stock is converted, the portion of
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Corporation (whose
election shall be evidenced by a resolution of the Board of Directors of the
Corporation or a committee thereof) with respect to all holders so converting,
the Corporation may, in lieu of distributing to such holders any portion of such
distribution not consisting of cash or securities of the Corporation, pay such
holders an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors of the Corporation or a
committee thereof).  If any conversion of a share of Series A Preferred Stock
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the holder of the share of
Series A Preferred Stock so converted is entitled to receive

                                       24
<PAGE>
 
in accordance with the immediately preceding sentence, the Corporation may elect
(such election to be evidenced by a resolution of the Board of Directors of the
Corporation or a committee thereof) to distribute to such holder a due bill for
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash or assets to which such holder is so entitled, provided
that such due bill (i) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock is then
traded, and (ii) requires payment or delivery of such shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.

     (i) One Adjustment.  There shall be no adjustment of the Conversion Price
in case of the issuance of any capital stock (or securities convertible into or
exchangeable for capital stock) of the Corporation or any other distribution or
event except as specifically described in this Section 7.  If any action would
require adjustment of the Conversion Price pursuant to more than one of the
provisions of this Section 7, only one adjustment shall be made and such
adjustment shall be the amount of adjustment that has the highest absolute value
to the holders of the Series A Preferred Stock.

     SECTION 8.  RANKING; RETIREMENT OF SHARES.

     (a) The Series A Preferred Stock shall rank senior to Common Stock and
Series A Junior Participating Preferred Stock of the Corporation to the payment
of dividends and distribution of assets upon the liquidation, dissolution or
winding-up of the Corporation.  The ranking of any subsequent series of
Preferred Stock, par value $1.50 per share, issued by the Corporation, or other
class or series capital stock of the Corporation, as compared to the Series A
Preferred Stock as to the payment of dividends and distribution of assets upon
the liquidation, dissolution or winding-up of the Corporation shall be as
specified in the Restated Articles of Incorporation, as amended, of the
Corporation, or the Statement of Resolution Establishing a Series of Shares
pertaining to such series.

     (b) Any shares of Series A Preferred Stock acquired by the Corporation by
reason of the conversion or redemption of such shares, or otherwise so acquired,
shall be retired as shares of Series A Preferred Stock and restored to the
status of authorized but unissued shares of Preferred Stock, par value $1.50 per
share, of the Corporation, without designation as to series, and may thereafter
be reissued.

     SECTION 9.  MISCELLANEOUS.

     (a) All notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon the earlier of receipt thereof
or three Business Days after the mailing thereof if sent by registered or
certified mail (unless first-class mail shall be specifically permitted for such
notice under the terms of this Section 9(a) with postage prepaid addressed:  (i)
if to the Corporation, to its principal executive offices (Attention:
Secretary) or to the transfer agent for the Series A Preferred Stock, or other
agent of the Corporation designated as permitted by this Section 9(a), or (ii)
if to any holder

                                       25
<PAGE>
 
of the Series A Preferred Stock or Common Stock, as the case may be, to such
holder at the address of such holder as listed in the stock record books of the
Corporation (which may include the records of any transfer agent for the Series
A Preferred Stock or Common Stock, as the case may be), or (iii) to such other
address as the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.

     (b) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of Series A Preferred Stock or shares of Common Stock or other securities issued
on account of Series A Preferred Stock pursuant hereto or certificates
representing such shares or securities.  The Corporation shall not, however, be
required to pay any such tax that may be payable in respect of any transfer
involving the issuance or delivery of shares of Series A Preferred Stock or
Common Stock or other securities in a name other than that in which the shares
of Series A Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than a payment
to the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid or is not payable.

     (c) In the event that a holder of shares of Series A Preferred Stock shall
not by written notice designate the name in which shares of Common Stock to be
issued upon conversion of such shares should be registered or to whom payment
upon redemption of shares of Series A Preferred Stock should be made or the
address to which the certificate or certificates representing such shares, or
such payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such Series A
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Corporation.

     (d) Registrar and Transfer Agent.  The Corporation may appoint, and from
time to time discharge and change, a transfer agent for the Series A Preferred
Stock.

     (e) Whenever possible, each provision hereof shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
hereof is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof.  If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of time were extended
or shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.

     3.   Such resolution was duly adopted by all necessary action on the part
of the Corporation.

                                       26
<PAGE>
 
     IN WITNESS WHEREOF, this Statement of Resolution Establishing a Series of
Shares has been made under the hand of the undersigned, the Senior Vice
President & Chief Financial Officer of the Corporation, this 30th day of May,
1995.

                                    AMERICAN GENERAL CORPORATION



                                    By: /S/ AUSTIN P. YOUNG
                                    Name:   Austin P. Young
                                    Title:  Senior Vice President &
                                              Chief Financial Officer
  

                                       27