<PAGE> 1
As filed with the Securities and Exchange Commission on April 30, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
AMERICAN ANNUITY GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 06-1356481
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
250 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 333-5300
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
AMERICAN ANNUITY GROUP CAPITAL TRUST II
(Exact name of Registrant as specified in its charter)
DELAWARE 31-6554645
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
250 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 333-5300
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
AAG HOLDING COMPANY, INC.
(Exact name of Registrant as specified in its charter)
OHIO 31-1475936
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
250 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 333-5300
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
---------------------------------
MARK F. MUETHING, ESQ.
Senior Vice President, General Counsel
and Secretary
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
(513) 333-5515
---------------------------------
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
-------------------
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SECURITY(1) PRICE (1) REGISTRATION FEE
--------------------------- ---------- --------------------- --------- ----------------
<S> <C> <C> <C> <C>
8 7/8% Capital Trust Preferred Securities
of American Annuity Group Capital
Trust II................................... $75,000,000 100% $75,000,000 $22,728
----------- --- ----------- -------
8 7/8% Subordinated Debentures
due January 15, 2027 of -- -- -- --
AAG Holding Company, Inc.(2)...............
----------- --- ----------- -------
Guarantee by American Annuity
Group, Inc. of the 8 7/8% Capital Trust -- -- -- --
Preferred Securities(3)....................
----------- --- ----------- -------
Guarantee by American Annuity -- --
Group, Inc. of 8 7/8% Subordinated -- --
Debentures due January 15, 2027 (3)........
Total(4)................................... $75,000,000 100% $75,000,000 $22,728
=========== === =========== =======
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) The 8 7/8% Subordinated Debentures due January 15, 2027 will be
exchanged for outstanding unregistered 8 7/8% Subordinated Debentures
due January 15, 2027 which were purchased by American Annuity Group
Capital Trust II with the proceeds of the sale of the unregistered 8
7/8% Capital Trust Preferred Securities. No separate consideration
will be received for the issuance of such Subordinated Debentures.
Pursuant to Rule 457(a), no separate fee is payable with respect to
such Subordinated Debentures.
(3) No separate consideration will be received for the issuance of the
Guarantees. Pursuant to Rule 457(a), no separate fee is payable with
respect to the Guarantees.
(4) This Registration Statement is deemed to cover the rights of holders
of Capital Trust Preferred Securities of American Annuity Group
Capital Trust II under the Declaration of Trust, the Subordinated
Debentures of AAG Holding Company, Inc. and the rights of holders of
Subordinated Debentures under the Indenture and the rights of holders
of Capital Trust Preferred Securities under the Guarantees. American
Annuity Group, Inc.'s obligations under the Declaration of Trust, the
Subordinated Debentures, the Subordinated Indenture and the
Guarantees provide a full and unconditional guarantee of the Capital
Trust Preferred Securities.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 28, 1997
PROSPECTUS
AMERICAN ANNUITY GROUP CAPITAL TRUST II
OFFER TO EXCHANGE ITS 8 7/8% CAPITAL TRUST PREFERRED SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ITS OUTSTANDING
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AMERICAN ANNUITY GROUP, INC.
---------------
American Annuity Group Capital Trust II, a Delaware statutory business
trust (the "Trust"), hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus (as the same may be amended or supplemented from
time to time, the "Prospectus") and in the accompanying Letter of Transmittal
(which together constitute the "Exchange Offer"), to exchange up to $75,000,000
aggregate liquidation amount of its 8 7/8% Capital Trust Preferred Securities
(the "New Preferred Securities") which have been registered under the Securities
Act of 1933 (the "Securities Act"), pursuant to a Registration Statement (as
defined herein) of which this Prospectus constitutes a part, for a like
liquidation amount of its outstanding 8 7/8% Capital Trust Preferred Securities
(the "Old Preferred Securities"), of which $75,000,000 aggregate liquidation
amount is outstanding. As soon as practicable after the Exchange Offer: American
Annuity Group, Inc., a Delaware corporation ("AAG" or the "Company"), will
exchange its guarantee of the payment of distributions and payments on
liquidation or redemption of the Old Preferred Securities (the "Old Trust
Guarantee") for a like guarantee of the New Preferred Securities (the "New Trust
Guarantee"); all of the 8 7/8% Subordinated Debentures of AAG Holding Company,
Inc., a wholly-owned subsidiary of the Company and an Ohio corporation ("AAG
Holding"), (the "Old Subordinated Debentures"), of which $77,320,000 aggregate
principal amount is outstanding will be exchanged for a like aggregate principal
amount of AAG Holding's 8 7/8% Subordinated Debentures (the "New Subordinated
Debentures"); and the Company will exchange its guarantee of the Old
Subordinated Debentures (the "Old Debt Guarantee") for a guarantee of the New
Subordinated Debentures (the "New Debt Guarantee"). The New Trust Guarantee, the
New Subordinated Debentures and the New Debt Guarantee also have been registered
under the Securities Act (the exchange of the Old Preferred Securities for the
New Preferred Securities, the exchange of the Old Trust Guarantee for the New
Trust Guarantee, the exchange of the Old Subordinated Debentures for the New
Subordinated Debentures and the exchange of the Old Debt Guarantee for the New
Debt Guarantee are referred to collectively herein as the "Exchange"). The Old
Preferred Securities, the Old Trust Guarantee, the Old Subordinated Debentures
and the Old Debt Guarantee are collectively referred to herein as the "Old
Securities" and the New Preferred Securities, the New Trust Guarantee, the New
Subordinated Debentures and the New Debt Guarantee are collectively referred to
herein as the "New Securities."
The terms of the New Securities are identical in all material respects to
the terms of the Old Securities, except that the New Securities have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Securities. See "Description of
the Old Securities."
The New Preferred Securities and the Old Preferred Securities (together,
the "Preferred Securities") represent undivided beneficial ownership interests
in the assets of the Trust. The Company indirectly owns all of the beneficial
ownership interests represented by common securities of the Trust (the "Common
Securities"; together with the Preferred Securities, the "Trust Securities").
The Trust exists for the sole purposes of issuing the Trust Securities and
investing the proceeds thereof in the Old Subordinated Debentures, which will be
exchanged for New Subordinated Debentures (together, the "Subordinated
Debentures").
(continued on next page)
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 4
(cover page continued)
The Subordinated Debentures will mature on January 15, 2027. The terms of the
Preferred Securities provide that they will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of Preferred Securities -- Subordination of Common Securities."
Holders of the Preferred Securities are entitled to receive cumulative
cash distributions at an annual rate of 8 7/8% of the liquidation amount of
$1,000 per Preferred Security, accruing from the date of original issuance and
payable semi-annually in arrears on January 15 and July 15 of each year,
commencing July 15, 1997 ("distributions"). The distribution rate and the
distribution and other payment dates for the Preferred Securities correspond to
the interest rate and interest and other payment dates on the Subordinated
Debentures, which, together with the Old Debt Guarantee and New Debt Guarantee
(collectively, the "Debt Guarantee") and interest and principal payments
received on the Subordinated Debentures, are the only assets of the Trust. As a
result, if principal or interest is not paid on the Subordinated Debentures, no
amounts will be paid on the Preferred Securities. The payment of distributions
out of moneys held by the Trust and payments on liquidation of the Trust or the
redemption of Preferred Securities, as set forth below, are guaranteed by the
Company as evidenced by the Old Trust Guarantee and the New Trust Guarantee
(collectively, the "Trust Guarantee") if and to the extent the Trust has funds
available therefor. The Company's obligations under the Trust Guarantee, the
Indenture and any applicable supplemental indentures, and the Debt Guarantee,
provide a full and unconditional guarantee by the Company of payments due on the
Preferred Securities. See "Effect of Obligations Under the Subordinated
Debentures, the Debt Guarantee and the Trust Guarantee" herein and "Description
of Trust Guarantee." If AAG Holding does not make principal or interest payments
on the Subordinated Debentures, as a result of the election to extend the
interest payment period on the Subordinated Debentures as described below, or
otherwise, and the Company does not make such payments under the Debt Guarantee,
the Trust will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Trust Guarantee will not apply to such
distributions until the Company or AAG Holding has made such principal or
interest payments. The obligations of AAG Holding under the Subordinated
Debentures are unsecured and will be subordinate and junior in right of payment,
to the extent set forth herein, to all existing and future Senior Indebtedness
(as defined herein) of AAG Holding and will be structurally subordinated to all
existing and future liabilities and obligations of AAG Holding's subsidiaries.
The obligations of the Company under the Debt Guarantee are subordinate and
junior in right of payment to all present and future Senior Indebtedness of the
Company. At March 31, 1997, the aggregate amount of Senior Indebtedness and
liabilities and obligations of AAG Holding's subsidiaries that would have
effectively ranked senior to the Subordinated Debentures was approximately $___
billion.
AAG Holding has the right to defer payments of interest on the
Subordinated Debentures by extending the interest payment period on the
Subordinated Debentures from time to time for up to 10 consecutive semi-annual
periods (each, an "Extension Period") provided that no Extension Period may
extend beyond the Maturity Date (as defined herein). If interest payments are so
deferred, distributions on the Preferred Securities will also be deferred.
During any Extension Period, distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at an annual rate of 8 7/8%
per annum compounded semi-annually, and during any Extension Period, holders of
Preferred Securities will be required to include deferred interest income in
their gross income for United States federal income tax purposes in advance of
receipt of the cash distributions with respect to such deferred interest
payments. There could be multiple Extension Periods of varying lengths
throughout the term of the Subordinated Debentures. See "Risk Factors-Option to
Extend Interest Payment Period or Change Maturity Date," "Risk Factors-Tax
Consequences of Extension of Interest Payment Period," "Description of the
Subordinated Debentures and Debt Guarantee-Option to Extend Interest Payment
Period," and "United States Federal Income Taxation-Interest Income and Original
Issue Discount."
The Subordinated Debentures are not redeemable prior to March 1, 2007
unless a Special Event (as defined herein) has occurred. The Subordinated
Debentures are redeemable prior to maturity at the option of AAG Holding, (i) on
or after March 1, 2007, in whole or in part, at a redemption price equal to
104.44% of the principal amount thereof on March 1, 2007, declining ratably on
each March 1 thereafter to 100% on or after March 1, 2017, or (ii) at any time,
in whole (but not in part), upon the occurrence and continuation of a Special
Event at a redemption price equal to 100% of the principal amount thereof. The
Subordinated Debentures mature on January 15, 2027, which date may be extended
at any time at the election of AAG Holding, but in no event later than the
earlier of (i) January 15, 2046 or (ii) the "Interest Deduction Date" (as
hereinafter defined under "Description of the Subordinated Debentures and Debt
Guarantee-Option to Change Scheduled Maturity Date"), provided certain financial
conditions are met, and may be shortened to a date not earlier than March 1,
2007 if AAG Holding exercises its right to liquidate the Trust and distribute
the Subordinated Debentures. See "Description of the Subordinated Debentures and
Debt Guarantee-Option to Change Scheduled Maturity Date."
At any time, AAG Holding will have the right to liquidate the Trust and
cause the Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust. If AAG Holding elects to liquidate the
Trust and thereby causes the Subordinated Debentures to be distributed to
holders of the Trust Securities in liquidation of the Trust, AAG Holding shall
have the right to shorten the maturity of such Subordinated Debentures, to a
date not earlier than January 15, 2007, or extend the maturity of such
Subordinated Debentures to a date not later than the earlier of (i) January 15,
2046 or (ii) the Interest Deduction Date, provided that it can extend the
maturity only if certain conditions are met. If the Subordinated Debentures are
distributed to the holders of the Trust Securities, AAG Holding will use its
best efforts to have the Subordinated Debentures listed on the exchange, if any,
on which the Preferred Securities are then listed. See "Description of the
Preferred Securities-Distribution of the Subordinated Debentures."
In the event of the involuntary or voluntary liquidation, dissolution,
winding up or termination of the Trust, the holders of the Preferred Securities
will be entitled to receive for each Preferred Security a liquidation amount of
$1,000 plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment, unless, in connection with such dissolution,
the Subordinated Debentures are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities-Liquidation
Distribution Upon Dissolution."
2
<PAGE> 5
(cover page continued)
The Trust is making the Exchange Offer of the New Preferred Securities in
reliance on the position of the Staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions
relating to the transferability of the exchanged securities following
registration. However, none of the Company, AAG Holding nor the Trust has sought
its own interpretive letter and there can be no assurance that the Staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the Staff of the
Division of Corporation Finance, and subject to the two immediately following
sentences, the Company, AAG Holding and the Trust believe that New Preferred
Securities issued pursuant to this Exchange Offer in exchange for Old Preferred
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Preferred Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Preferred Securities. However, any holder of Old Preferred Securities
who is an "affiliate" of the Company, AAG Holding or the Trust (within the
meaning of Rule 405 under the Securities Act) or who intends to participate in
the Exchange Offer for the purpose of distributing New Preferred Securities, or
any broker-dealer who purchased Old Preferred Securities from the Trust to
resell them pursuant to Rule 144A under the Securities Act ("Rule 144A") or any
other available exemption under the Securities Act, (a) will not be able to rely
on the interpretations of the Staff of the Division of Corporation Finance of
the Commission set forth in the above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such Old Preferred Securities in the
Exchange Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Preferred Securities unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Preferred Securities acquired for its own account as a
result of market-making or other trading activities and exchanges such Old
Preferred Securities for New Preferred Securities, then such broker-dealer must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Preferred Securities.
Each holder of Old Preferred Securities who wishes to exchange Old
Preferred Securities for New Preferred Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Company, AAG
Holding or the Trust, (ii) any New Preferred Securities to be received by it are
being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Preferred Securities, and
(iv) if such holder is not a broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such New Preferred Securities. In addition, the Company, AAG
Holding and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company, AAG
Holding and the Trust (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934 (the "Exchange Act")) on behalf of whom such
holder holds the Preferred Securities to be exchanged in the Exchange Offer.
Each broker-dealer that receives New Preferred Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old
Preferred Securities for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Preferred Securities. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Company, AAG Holding and the Trust believe that broker-dealers who acquired Old
Preferred Securities for their own accounts, as a result of market-making
activities or other trading activities ("Participating Broker-Dealers") may
fulfill their prospectus delivery requirements with respect to the New Preferred
Securities received upon exchange of such Old Preferred Securities with this
Prospectus, as it may be amended or supplemented from time to time. Subject to
certain exceptions, the Company, AAG Holding and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New
Preferred Securities for a period ending 180 days after the Registration
Statement of which this Prospectus constitutes a part is declared effective. Any
Participating Broker-Dealer who is an "affiliate" of the Trust (within the
meaning of Rule 405 under the Securities Act) may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer--Resales of New Preferred Securities" and
"--Broker-Dealer Considerations."
Any Old Preferred Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Declaration
(except for those rights relating to the Exchange Offer which terminate upon
consummation of the Exchange Offer). Following consummation of the Exchange
Offer, the holders of Old Preferred Securities will not be entitled to any
increase in the distribution rate thereon and will continue to be subject to all
of the existing restrictions upon transfer thereof and none of the Company, AAG
Holding nor the Trust will have any further obligation to such holders (other
than under certain limited circumstances) to provide for registration under the
Securities Act of the Old Preferred Securities held by them. To the extent that
Old Preferred Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Preferred Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Old Preferred
Securities."
The New Preferred Securities will be a new issue of securities for which
there currently is no established trading market. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Preferred
Securities.
3
<PAGE> 6
(cover page continued)
Old Preferred Securities may be tendered for exchange on or prior to 5:00
p.m., Eastern Daylight Time, on May ____, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company, AAG Holding and the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended.) Tenders of Old Preferred Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon any
minimum liquidation amount of Old Preferred Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company or the Trust. The Company has
agreed to pay all expenses of the Exchange Offer. See "The Exchange Offer--Fees
and Expenses." This Prospectus, together with the Letter of Transmittal, is
being sent to all registered holders of Old Preferred Securities as of _______,
1997.
None of the Company nor the Trust will receive any cash proceeds from the
issuance of the New Preferred Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds."
---------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE DOCUMENTS
INCORPORATED OR DEEMED INCORPORATED BY REFERENCE HEREIN, AND ANY INFORMATION OR
REPRESENTATIONS NOT CONTAINED HEREIN OR THEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, AAG HOLDING OR THE TRUST OR BY ANY AGENT,
DEALER OR UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy and information statements and other
information with the Commission. The Company, AAG Holding and the Trust have
filed a Registration Statement on Form S-4 (the "Registration Statement") with
the Commission under the Securities Act of 1933 (the "Securities Act") with
respect to the New Securities. This Prospectus does not contain all the
information, exhibits and undertakings contained in the Registration Statement,
to which reference is hereby made. Statements contained in this Prospectus as to
the terms of any contract or other document are not necessarily complete with
respect to each such contract or other document filed as an exhibit to the
Registration Statement. Reference is made to the exhibits for a more complete
description of the matter involved. Such reports, proxy and information
statements, the Registration Statement and other information filed with the
Commission by the Company may be inspected at and obtained from the Commission
at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at Suite 1400, 500 West
Madison Avenue, Chicago, Illinois, and at 7 World Trade Center, 13th Floor, New
York, New York. Copies of such material can also be obtained, at prescribed
rates, by mail from the Public Reference Section of the Commission at its
Washington, D.C. address set forth above. In addition, material filed by the
Company can be obtained and inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005 on which AAG's Common Stock
is listed. Such material may also be accessed electronically by means of the
Commission's home page on the World Wide Web located at http://www.sec.gov.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company and AAG Holding do not believe
that such financial statements would be material to holders of the Preferred
Securities because (i) all of the voting securities of the Trust are owned by
AAG Holding, a wholly-owned subsidiary of the Company, (ii) the Trust has no
independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in its assets and investing the
proceeds thereof in Subordinated Debentures issued by AAG Holding, and (iii) the
obligations of the Trust under the Preferred Securities are, to the extent that
the Trust shall have funds available to meet such obligations, fully and
unconditionally guaranteed by the Company. See "Description of Preferred
Securities."
No separate financial statements of AAG Holding have been included or
incorporated by reference herein. The Company does not believe that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the common stock of AAG Holding will is owned by the Company,
a reporting company under the Exchange Act and (ii) the obligations of AAG
Holding under the Subordinated Debentures are fully and unconditionally
guaranteed by the Company. See "Description of the Subordinated Debentures and
Debt Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference certain documents relating to
the Company which are not delivered herewith. These documents (other than the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents) are available, without charge, on oral or
written request by any person to whom this Prospectus is delivered. Written or
telephone requests should be directed to Mark F. Muething, Senior Vice President
and General Counsel, 250 East Fifth Street, Cincinnati, Ohio 45202, telephone
(513) 333-5515. The Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 of AAG (File No. 1-11632) is hereby incorporated by reference
into this Prospectus.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
Exchange Offer shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of filing thereof.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this
4
<PAGE> 7
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATED DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
AAG AT THE ADDRESS AND TELEPHONE NUMBER SET FORTH ABOVE. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NO LATER THAN FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
5
<PAGE> 8
PROSPECTUS SUMMARY
This summary is qualified by the more detailed information and financial
statements appearing elsewhere, or incorporated by reference, in this
Prospectus.
THE COMPANY
AAG is a holding company which, through it subsidiaries, is engaged in
the life insurance business, principally the sale of tax-deferred annuities and
life and health insurance. AAG's primary operating subsidiary is Great American
Life Insurance Company ("GALIC"). GALIC sells annuities primarily to employees
of qualified not-for-profit organizations under Section 403(b) of the Internal
Revenue Code. AAG acquired GALIC in December 1992. At December 31, 1996, GALIC
had statutory assets in excess of $5.7 billion, representing a 30% compounded
annual growth in assets since 1976.
GALIC has several life insurance subsidiaries including (i) American
Memorial Life Insurance Company ("American Memorial"), which markets individual
life insurance and annuity policies for the pre-need industry, (ii) Annuity
Investors Life Insurance Company ("AILIC"), which markets group and individual
variable annuities, and (iii) Loyal American Life Insurance Company ("Loyal"),
which markets various forms of supplemental life insurance and health insurance
through payroll deduction plans and financial institutions.
American Financial Group, Inc. and its subsidiaries ("AFG") collectively
own approximately 81% of the Company's outstanding Common Stock.
AAG HOLDING COMPANY
AAG Holding is a wholly-owned subsidiary of the Company that owns all of
the stock of GALIC. AAG Holding also owns all of the Common Securities and will
issue the New Subordinated Debentures to the Trust.
THE TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, as amended (the "Declaration"), executed
by AAG Holding as sponsor for such trust (the "Sponsor"), and the Trustees (as
defined herein) of such trust and (ii) the filing of a certificate of trust with
the Secretary of State of the State of Delaware on March 4, 1997. The Trust
exists for the exclusive purposes of (i) issuing and selling the Preferred
Securities and Common Securities, (ii) using the gross proceeds from the sale of
the Trust Securities to acquire the Subordinated Debentures, and (iii) engaging
in only those other activities necessary or incidental thereto. All of the
Common Securities are owned by AAG Holding. The Common Securities rank pari
passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that, if a Declaration Event of Default (as defined herein)
has occurred and is continuing, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities.
The Trust's affairs will be conducted by the trustees (the "Trustees")
appointed by AAG Holding as the owner of all of the Common Securities. The
holder of the Common Securities is entitled to appoint, remove or replace any
of, or increase or reduce the number of, the Trustees (as defined herein). The
duties and obligations of the Trustees shall be governed by the Declaration. The
Trust will initially have four Trustees. Two Trustees (the "Regular Trustees")
are employees or officers of or otherwise affiliated with AAG. A third Trustee
(the "Property Trustee") of the Trust is a financial institution that is not
affiliated with AAG Holding and has a minimum amount of combined capital and
surplus of not less that $50,000,000, which shall act as property trustee and as
indenture trustee for the purposes of compliance with the provisions of Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The fourth
Trustee of the Trust is an entity having a principal place of business in, or a
natural person resident of, the State of Delaware (the "Delaware Trustee"). AAG
Holding will pay all fees and expenses related to the Trust and the offering of
the Trust Securities.
The Property Trustee for the Trust is The Bank of New York and its
principal corporate trust office is at 101 Barclay Street, 21st Floor, New York,
New York 10286, Attention: Corporate Trust Trustee Administration. The Delaware
Trustee for the Trust is The Bank of New York (Delaware) and its address in the
State of Delaware is 23 White Clay Center, Route 273, Newark, Delaware 19711.
The Delaware Trustee is an affiliate of the Property Trustee. The address for
the Trust is c/o American Annuity Group, Inc., at the Company's corporate
headquarters located at 250 East Fifth Street, Cincinnati, Ohio 45202, telephone
(513) 333-5300.
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<PAGE> 9
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer..................... Up to $75,000,000 aggregate liquidation amount of New Preferred Securities are
being offered in exchange for a like aggregate liquidation amount of Old Preferred
Securities. The Company will issue, promptly after the Expiration Date, $1,000
liquidation amount of New Preferred Securities in exchange for each $1,000
liquidation amount of outstanding Old Preferred Securities tendered and accepted
in connection with the Exchange Offer. For a description of the procedures for
tendering Old Preferred Securities, see "The Exchange Offer--Procedures for
Tendering Old Preferred Securities."
Expiration Date........................ 5:00 p.m., Eastern Daylight Time on May __, 1997 (such time on such date being
hereinafter called the "Expiration Date") unless the Exchange Offer is extended by
the Company and the Trust (in which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange Offer is extended) . See "The
Exchange Offer-Expiration Date; Extensions; Amendments."
Withdrawal Rights...................... Tenders of Old Preferred Securities may be withdrawn at any time prior to the
Expiration Date by delivering a written notice of such withdrawal to the Exchange
Agent which conforms with the procedures set forth below under "The Exchange
Offer--Withdrawal Rights."
Procedures for Tendering
Old Preferred Securities............... Tendering holders of Old Preferred Securities must complete and sign a Letter of
Transmittal in accordance with the instructions contained therein and forward the
same by mail, facsimile or hand delivery, together with any other required
documents, to the Exchange Agent, either with the Old Preferred Securities to be
tendered or in compliance with the specified procedures for guaranteed delivery of
Old Preferred Securities. Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect tenders by book-entry transfer.
Holders of Old Preferred Securities registered in the name of a broker, dealer,
commercial bank, trust company or other nominee are urged to contact such person
promptly if they wish to tender Old Preferred Securities pursuant to the Exchange
Offer. See "The Exchange Offer--Procedures for Tendering Old Preferred
Securities."
Letters of Transmittal and certificates representing Old Preferred Securities should
not be sent to the Company, AAG Holding, or the Trust. Such documents should
only be sent to the Exchange Agent. Questions regarding how to tender and
requests for information should be directed to the Exchange Agent. See "The
Exchange Offer-Exchange Agent."
Accrued Distributions.................. Each New Preferred Security will pay cumulative distributions from March 11,
1997. Holders of the Old Preferred Securities whose Old Preferred Securities are
accepted for exchange will not receive any accumulated distributions on such Old
Preferred Securities and will be deemed to have waived the right to receive any
distributions on such Old Preferred Securities accumulated from and after March
11, 1997.
Conditions to
the Exchange Offer................... The Exchange Offer is subject to certain conditions, which may be waived by the
Company and the Trust in their sole discretion. The Exchange Offer is not
conditioned upon any minimum liquidation amount of Old Preferred Securities
being tendered. See "The Exchange Offer--Conditions to the Exchange Offer."
Exchange Agent......................... The Company will serve as the Exchange Agent for the Exchange Offer (the
Company, in such capacity, is referred to as the "Exchange Agent") . The
addresses, and telephone and facsimile numbers, of the Exchange Agent are set
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<PAGE> 10
<TABLE>
<S> <C>
forth below under "The Exchange Offer--Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds........................ None of the Company, AAG Holding nor the Trust will receive any cash proceeds
from the issuance of the New Preferred Securities offered hereby. The New
Preferred Securities will be exchanged for Old Preferred Securities in like
liquidation amount which will be retired and canceled. The cash proceeds from the
sale of the Old Preferred Securities were used to purchase Old Subordinated
Debentures. See "Use of Proceeds.
Certain United States
Federal Income Tax
Considerations....................... Holders of Old Preferred Securities should review the information set forth under
"Certain United States Federal Income Tax Considerations" prior to tendering Old
Preferred Securities in the Exchange Offer.
Consequences of
Failure to Exchange.................. Any Old Preferred Securities not tendered and accepted in the Exchange Offer will
remain outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the Declaration (except for those
rights which terminate upon consummation of the Exchange Offer) . Following
consummation of the Exchange Offer, the holders of Old Preferred Securities will
not be entitled to any increase in the distribution rate thereon and will continue to
be subject to all of the existing restrictions upon transfer thereof and neither the
Company nor the Trust will have any further obligation to such holders to provide
for registration under the Securities Act of the Old Preferred Securities held by
them. To the extent that Old Preferred Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Preferred Securities could
be adversely affected. See "Risk Factors--Consequences of a Failure to Exchange
Old Preferred Securities."
THE NEW SECURITIES
The Trust.............................. American Annuity Group Capital Trust II, a Delaware statutory business trust. The
sole assets of the Trust are the Subordinated Debentures, the Debt Guarantee and
principal and interest payments on the Subordinated Debentures .
Securities Offered..................... Up to $75,000,000 aggregate liquidation amount of the Trust's 87/8% Capital Trust
Preferred Securities which have been registered under the Securities Act
(liquidation amount $1,000 per Preferred Security) . The terms of the New Preferred
Securities are identical in all material respects to the terms of the Old Preferred
Securities, except that the New Preferred Securities have been registered under the
Securities Act and therefore are not subject to certain restrictions on transfer
applicable to the Old Preferred Securities. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer," "Description of Capital Securities" and "Description
of the Old Securities." The Holders of the New Preferred Securities will be entitled
to a preference in certain circumstances with respect to distributions and amounts
payable on redemption, liquidation or otherwise over the Common Securities.
Distributions.......................... Holders of the New Preferred Securities will be entitled to receive cumulative cash
distributions at an annual rate of 87/8% of the liquidation amount of $1,000 per New
Preferred Security, accruing from March 11, 1997 and payable semi-annually in
arrears on the January 15 and July 15 of each year commencing on July 15, 1997.
The distribution rate and the distribution and other payment dates for the New
Preferred Securities will correspond to the interest rate and interest and other
payment dates on the New Subordinated Debentures. See "Description of Preferred
Securities."
Subordinated Debentures.............. The Trust has invested the proceeds from the issuance of the Old Preferred
Securities and the Old Common Securities in an equivalent amount of Old
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C>
Subordinated Debentures of AAG Holding. The Subordinated Debentures are
guaranteed by the Company. The Subordinated Debentures mature on January 15,
2027. The Subordinated Debentures are unsecured and will be subordinate and
junior in right of payment, to the extent set forth herein, to all Indebtedness of
AAG Holding and will be structurally subordinated to all existing and
future liabilities and obligations of AAG Holding's subsidiaries. The
obligations of the Company under the Debt Guarantee are subordinate and
junior in right of payment to all present and future Senior Indebtedness of
the Company. See "Risk Factors--Ranking of Subordinated Obligations Under
the Trust Guarantee, Debt Guarantee and Subordinated Debentures", "Risk
Factors--Status of Company as Holding Company" and "Description of Subordinated
Debentures and Debt Guarantee--Subordination."
Guarantee.............................. The payment of distributions out of moneys held by the Trust and payments on
liquidation of the Trust or the redemption of Preferred Securities, as set forth below,
are guaranteed by the Company as evidenced by the Old Trust Guarantee and the
New Trust Guarantee (collectively, the "Trust Guarantee") if and to the extent the
Trust has funds available therefor. The Company's obligations under the Trust
Guarantee, the Indenture and any applicable supplemental indentures, and the Debt
Guarantee, provide a full and unconditional guarantee by the Company of payments
due on the Preferred Securities. If AAG Holding does not make principal or
interest payments on the Subordinated Debentures, as a result of the election to
extend the interest payment period on the Subordinated Debentures as described
below, or otherwise, and the Company does not make such payments under the
Debt Guarantee, the Trust will not have sufficient funds to make distributions on
the Preferred Securities, in which event the Trust Guarantee will not apply to such
distributions until the Company or AAG Holding has made such principal or
interest payments. See "Description of Guarantee" and "Effect of Obligations under
the Subordinated Debentures, the Debt Guarantee and the Trust Guarantee." The
obligations of the Company under the Guarantees are subordinate and junior in
right of payment to all Senior Indebtedness of the Company. See "Risk Factors--
Ranking of Subordinated Obligations Under the Guarantee and the Subordinated
Debentures" and "Description of Guarantee."
Right to Defer Interest................ AAG Holding has the right to defer payment of interest on the Subordinated
Debentures by extending the interest payment period on the Subordinated
Debentures, from time to time, for up to 10 consecutive semi-annual periods,
provided that no Extension Period may extend beyond the Maturity Date. There
could be multiple Extension Periods of varying lengths throughout the term of the
Subordinated Debentures. If interest payments on the Subordinated Debentures are
so deferred, distributions on the Preferred Securities will also be deferred. During
an Extension Period, interest on the Subordinated Debentures will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the annual
rate of 87/8% per annum, compounded semi-annually. During an Extension Period,
holders of Preferred Securities will be required to include deferred interest income
in their gross income for United States Federal income tax purposes in advance of
receipt of the cash distributions with respect to such deferred interest payment. See
"Description of Subordinated Debentures and Debt Guarantee--Option to Extend
Interest Payment Period" and "Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
Redemption............................. The Subordinated Debentures are not redeemable prior to March 1, 2007 unless a
Special Event (as defined herein) has occurred. The Subordinated Debentures are
redeemable prior to maturity at the option of AAG Holding, (i) on or after March
1, 2007, in whole or in part, at a redemption price equal to 104.44% of the principal
amount thereof on March 1, 2007, declining ratably on each March 1 thereafter to
100% on or after March 1, 2017, or (ii) at any time, in whole (but not in part), upon
the occurrence and continuation of a Special Event at a redemption price equal to
100% of the principal amount thereof. The Trust Securities will be redeemed upon
</TABLE>
9
<PAGE> 12
<TABLE>
<S> <C>
maturity of the Subordinated Debentures. See "Description of Preferred Securities--
Redemption" and "--Special Event Redemption."
Option to Extend Maturity Date......... The Subordinated Debentures mature on January 15, 2027, which date may be
extended at any time at the election of AAG Holding, but in no event later than the
earlier of (i) January 15, 2046 or (ii) the "Interest Deduction Date" (as hereinafter
defined under "Description of the Subordinated Debentures and Debt Guarantee-
Option to Change Scheduled Maturity Date"), provided certain financial conditions
are met, and may be shortened to a date not earlier than March 1, 2007 if AAG
Holding exercises its right to liquidate the Trust and distribute the Subordinated
Debentures. See "Description of the Subordinated Debentures and Debt Guarantee-
Option to Change Scheduled Maturity Date."
Liquidation of the Trust............... At any time, AAG Holding will have the right to liquidate the Trust and cause the
Subordinated Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust. If AAG Holding elects to liquidate the Trust and thereby
cause the Subordinated Debentures to be distributed to holders of the Trust
Securities in liquidation of the Trust, AAG Holding shall have the right to shorten
the maturity of such Subordinated Debentures to a date not later than the earlier of
(i) January 15, 2046 or (ii) the Interest Deduction Date, provided that it can extend
the maturity only if certain conditions are met. See "Description of the Preferred
Securities-Distribution of the Subordinated Debentures."
Ratings ............................ The Preferred Securities have been assigned an investment grade rating of "BBB-"
by Standard & Poor's Ratings Group, a division of McGraw-Hill ("S&P") and an
investment grade rating of "BBB-" by Duff & Phelps Credit Rating Co. ("Duff &
Phelps"). Moody's Investors Service, Inc. ("Moody's") has assigned the Preferred
Securities a rating of "bal."
An explanation of the significance of ratings may be obtained from S&P, Duff & Phelps
and Moody's. Generally, rating agencies base their ratings on such material and
information, and such of their own investigations, studies and assumptions, as
they deem appropriate. A credit rating of a security is not a recommendation to
buy, sell or hold securities. There is no assurance that any rating will apply for any
given period of time or that a rating may not be adjusted or withdrawn.
Absence of Market for the
New Preferred Securities............. The New Preferred Securities will be a new issue of securities for which there
currently is no established trading market. Accordingly, there can be no assurance
as to the development or liquidity of any market for the New Preferred Securities.
The Company currently is obligated to apply for listing of the New Preferred
Securities on The New York Stock Exchange, or such other exchange on which
similar securities of AAG are listed, upon request of the holders of a majority in
aggregate liquidation amount of the New Preferred Securities, provided that the
New Preferred Securities so qualify for listing.
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<PAGE> 13
SUMMARY FINANCIAL INFORMATION
The summary financial data for the three-year period ended December
31, 1996 are derived from the Company's consolidated financial statements. The
summary financial data should be read in conjunction with the financial
statements and notes thereto in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, which is incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- -----------------------------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues ....................... 577.3 439.6 372.7
========= ========= =========
Income from continuing operations(1) . $ 61.70 $ 58.70 $ 40.90
Loss from discontinued operations .... -- (3.2) (2.6)
Extraordinary items .................. (6.0) (0.2) (1.7)
Change in accounting principle ....... -- -- (0.5)
--------- --------- ---------
Net income ........................... $ 55.1 $ 55.3 $ 36.1
========= ========= =========
Earnings (loss) per common share:
Continuing operations(1) ........ $ 1.39 $ 1.45 $ 1.05
Discontinued operations ......... -- (0.08) (0.07)
Extraordinary items ............. (0.14) -- (0.05)
Change in accounting principle .. -- -- (0.01)
Net income ...................... $ 1.25 $ 1.37 $ 0.92
========= ========= =========
Cash dividends per common share ...... $ 0.08 $ 0.07 $ 0.06
BALANCE SHEET DATA:
Total assets ......................... $7,024.10 $ 6,611.0 $ 5,089.9
Notes payable ........................ 114.9 167.7 183.3
Net unrealized gains (losses) included
in stockholders' equity ........... 61.8 89.3 (29.0)
Total stockholders' equity ........... 486.5 429.3 204.4
</TABLE>
- ----------------
(1) Reported amounts include realized gains and losses on sales of investments
and, in 1993, certain non-recurring relocation expenses. Management
believes that reported results which include these items are not indicative
of future results of operations. Results excluding these items were as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------
1997 1996 1996 1995 1994
---- ---- ----- ---- ----
(UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C>
Income from continuing operations before realized
investment gains (losses), equity in net earnings (loss)
of affiliate $61.70 $42.80 $42.80
Realized investment gains (losses), after tax 0.80 10.20 (0.1)
Equity in net earnings (loss) of affiliate, after tax (1.4) 0.1 (1.8)
------ ------ ------
Income from continuing operations $ 61.1 $ 58.7 $ 40.9
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C> <C> <C>
Earnings per share:
Continuing operations before realized investment
gains (losses), equity in earnings (loss) of affiliate $ 1.40 $ 1.20 $ 1.10
Realized investment gains (losses), after tax 0.02 0.25 --
Equity in net earnings (loss) of affiliate, after tax (0.03) -- (0.05)
From continuing operations $ 1.39 $ 1.45 $ 1.05
</TABLE>
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RISK FACTORS
Prospective purchasers of New Preferred Securities should consider
carefully all of the information contained in this Prospectus including the
information in the documents incorporated by reference and, in particular,
should evaluate the specific factors set forth below for risks involved with an
investment of the New Preferred Securities. To the extent any of the information
herein or incorporated by reference in this Prospectus constitutes a
"forward-looking statement" as defined in Section 21E(i)(1) of the Exchange Act,
the risk factors set forth below are cautionary statements identifying important
factors that could cause actual results to differ materially from those in the
forward-looking statement.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE TRUST GUARANTEE, DEBT GUARANTEE AND
SUBORDINATED DEBENTURES
The Company's obligations under the Trust Guarantee are unsecured and
rank (i) subordinate and junior in right of payment to all other liabilities of
the Company, including the Debt Guarantee, except those made pari passu or
subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company, and with any guarantee
now or hereafter issued by the Company in respect of any preferred stock or
preference stock of any affiliate of the Company, and (iii) senior to the
Company's common stock.
The obligations of the Company under the Debt Guarantee are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company but will at all times be senior to common and
preferred equity of the Company.
The obligations of AAG Holding under the Subordinated Debentures are
unsecured and will rank subordinate and junior in right of payment, to the
extent set forth herein, to all present and future Senior Indebtedness of AAG
Holding and will be structurally subordinated to all existing and future
liabilities and obligations of AAG Holding's subsidiaries. The obligations of
AAG Holding under the Subordinated Debentures will at all times be senior to
common and preferred equity of AAG Holding.
At March 31, 1997, the aggregate amount of Senior Indebtedness and
liabilities and obligations of AAG Holding's subsidiaries that would have
structurally ranked senior to the Subordinated Debentures was approximately $___
billion. There are no terms in the Preferred Securities, the Subordinated
Debentures, the Debt Guarantee or the Trust Guarantee that limit the ability of
the Company, AAG Holding or any of their subsidiaries to incur additional
indebtedness, liabilities or obligations, including indebtedness, liabilities or
obligations that rank senior to the Subordinated Debentures, the Debt Guarantee
and the Trust Guarantee. See "Description of Trust Guarantee-Status of the Trust
Guarantee" and "Description of the Subordinated Debentures and Debt
Guarantee--Subordination."
HOLDING COMPANY STRUCTURE; DIVIDEND RESTRICTIONS
The Company and AAG Holding are insurance holding companies whose
operations are conducted through GALIC, their principal subsidiary, and other
subsidiaries. AAG Holding's cash flow is derived principally from dividends on
the capital stock of GALIC and tax allocation payments from GALIC. Accordingly,
the ability of the Company and AAG Holding to generate cash flow is dependent
primarily on such tax allocation payments and, subject to regulation and
limitations by the insurance laws and insurance department of Ohio, dividends
from GALIC. Claims of creditors of GALIC and the other subsidiaries of AAG
Holding, including policyholders, will have priority with respect to the assets
and earnings of such subsidiaries over the claims of creditors of AAG Holding,
even though such subsidiary obligations do not constitute Senior Indebtedness.
In addition, in the event of a default on AAG Holding's debt or an insolvency,
liquidation or other reorganization of AAG Holding, the creditors and
stockholders of AAG Holding will have no right to proceed against the assets of
GALIC or to cause it to be liquidated, rehabilitated or placed in receivership
or conservatorship. If GALIC were to be liquidated, such liquidations would be
conducted by or under the supervision of the Ohio Insurance Commissioner as the
receiver with respect to GALIC's property and business.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as a holder of the
Subordinated Debentures and Debt Guarantee against AAG Holding and the Company.
The holders of a majority in liquidation amount of the Preferred Securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the exercise of
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee to exercise the remedies
13
<PAGE> 16
available to it as a holder of the Subordinated Debentures and the Debt
Guarantee. If the Property Trustee fails to enforce its rights with respect to
the Subordinated Debentures or under the Debt Guarantee, any record holder of
Preferred Securities may institute legal proceedings directly against AAG
Holding to enforce the Property Trustee's rights under such Subordinated
Debentures or against the Company under the Debt Guarantee without first
instituting any legal proceedings against such Property Trustee or any other
person or entity, including, in the case of the Debt Guarantee, against the
Company. In addition, if a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of AAG Holding to pay
interest, principal or other required payments on the Subordinated Debentures
issued to the Trust on the date such interest, principal or other payments are
otherwise payable, then a record holder of Preferred Securities may institute a
proceeding directly against AAG Holding for enforcement of payment on the
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities held by such holder (a "Direct
Action") on or after the respective due dates specified in the Subordinated
Debentures. In connection with such Direct Action, the Company will be
subrogated to the rights of such record holder of Preferred Securities to the
extent of any payment made by the Company to such record holder of Preferred
Securities pursuant to the Debt Guarantee. The holders of Preferred Securities
will not be able to exercise directly any other remedy available to the holders
of the Subordinated Debentures unless the Property Trustee fails to do so. See
"Description of the Preferred Securities-Declaration Events of Default" and
"Description of the Subordinated Debentures and Debt Guarantee-Indenture Events
of Default."
TRUST DISTRIBUTIONS DEPENDENT ON AAG HOLDING'S PAYMENTS ON SUBORDINATED
DEBENTURES
The Trust's ability to make distributions and other payments on the
Preferred Securities is dependent upon AAG Holding making interest and other
payments on the Subordinated Debentures or upon the Company making such payments
pursuant to the Debt Guarantee. If AAG Holding were not to make payments on the
Subordinated Debentures for any reason, including as a result of AAG Holding's
election to defer the payment of interest on the Subordinated Debentures by
extending the interest payment period on the Subordinated Debentures and the
Company does not make such payments under the Debt Guarantee, the Trust will not
make payments on the Trust Securities. In such an event, holders of the
Preferred Securities would not be able to rely on the Trust Guarantee because
distributions and other payments on the Preferred Securities are subject to such
Trust Guarantee only if and to the extent that the Trust has funds available
therefor. See "Description of Trust Guarantee-General" and "Effect of
Obligations Under the Subordinated Debentures, the Debt Guarantee and the Trust
Guarantee."
OPTION TO EXTEND INTEREST PAYMENT PERIOD OR CHANGE MATURITY DATE
AAG Holding has the right under the Indenture to (a) defer payments
of interest on the Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Subordinated Debentures or (b)
extend or shorten the maturity date of the Subordinated Debentures. See
"Description of the Subordinated Debentures and Debt Guarantee-Option to Change
Scheduled Maturity Date" and "Description of the Subordinated Debentures and
Debt Guarantee-Option to Extend Interest Payment Period." As a consequence of an
extension of the interest payment period, semi-annual distributions on the
Preferred Securities would be deferred (but despite such deferral, to the extent
permitted by law, would continue to accrue with interest thereon compounded
semi-annually) by the Trust during any such Extension Period. AAG Holding has
the right to defer payments of interest on the Subordinated Debentures, from
time to time, for up to 10 consecutive semi-annual periods, provided that no
Extension Period may extend beyond the Maturity Date (as defined herein) of the
Subordinated Debentures. There could be multiple Extension Periods of varying
lengths throughout the term of the Subordinated Debentures. If AAG Holding
exercises this right to defer interest payments, then, prior to the payment of
all accrued interest on outstanding Subordinated Debentures, (a) the Company and
AAG Holding shall not declare or pay dividends on, or make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock and (b) the Company and AAG Holding shall
not, directly or indirectly, and will not allow any of their subsidiaries to,
make any payment of interest, principal or premium, if any, on, or repay,
repurchase or redeem any debt securities issued by the Company or AAG Holding
that rank pari passu with or junior to the Subordinated Debentures; provided,
however, that the restriction in clause (a) above does not apply (i) to
repurchases or acquisitions of shares of the common stock of the Company or AAG
Holding as contemplated by any employment arrangement, benefit plan or other
similar contract with or for the benefit of employees, officers or directors
entered into in the ordinary course of business, (ii) as a result of an exchange
or conversion of any class or series of the Company's or AAG Holding's capital
stock for common stock, (iii) to the purchase of fractional interests in shares
of the Company's or AAG Holding's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged or (iv) to the payment of any stock dividend by the Company or AAG
Holding payable in common stock of such company. AAG Holding may further extend
the interest payment period; provided that each Extension Period, if any, may
not exceed 10 consecutive semi-annual periods and may not extend beyond the
Maturity Date of the Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, AAG Holding may
14
<PAGE> 17
commence a new Extension Period, subject to the above requirements.
Consequently, there could be multiple Extension Periods of varying lengths prior
to the Maturity Date of the Subordinated Debentures. AAG Holding has no current
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Subordinated Debentures. However, should AAG
Holding determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be adversely affected. See "Description of the
Preferred Securities-Distributions" and "Description of the Subordinated
Debentures and Debt Guarantee-Option to Extend Interest Payment Period."
TAX CONSEQUENCES OF EXTENSION OF INTEREST PAYMENT PERIOD
Should AAG Holding exercise its right to defer payments of interest
by extending the interest payment period, each holder of Preferred Securities
will accrue income (as original issue discount ("OID")) in respect of the
deferred interest allocable to its Preferred Securities for United States
federal income tax purposes. Such income will be allocated but not distributed
to holders of the Preferred Securities. As a result, each such holder of the
Preferred Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash from
the Trust related to such income if such holder disposes of its Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of AAG Holding's right to defer interest payments, the
market price of the Preferred Securities (which represent an undivided
beneficial interest in the Subordinated Debentures) may be more volatile than
other securities that do not have such feature. See "United States Federal
Income Taxation-Interest Income and Original Issue Discount."
SPECIAL EVENT REDEMPTION
Upon the occurrence of a Special Event, AAG Holding will have the
right to redeem the Subordinated Debentures, in whole (but not in part), in
which event the Trust will redeem all outstanding Trust Securities. See
"Description of the Preferred Securities-Special Event Redemption."
DISTRIBUTION OF THE SUBORDINATED DEBENTURES
At any time, AAG Holding will have the right to terminate the Trust
and, after satisfaction of the liabilities to creditors of the Trust as provided
by applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Preferred Securities in liquidation of the Trust. Under current
United States federal income tax law and interpretation and assuming, as
expected, the Trust is treated as a grantor trust, a distribution of the
Subordinated Debentures should not be a taxable event to holders of the
Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Special Event or other circumstances, however, the
distribution could be a taxable event to the holders of the Preferred
Securities. In addition, a dissolution of the Trust in which holders of the
Preferred Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation-Receipt of Subordinated Debentures or
Cash Upon Liquidation of the Trust."
If AAG Holding elects to liquidate the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred Securities
in liquidation of the Trust, AAG Holding shall have the right to shorten the
maturity of such Subordinated Debentures to a date not earlier than January 15,
2007 or extend the maturity of such Subordinated Debentures to a date which is
not later than the earlier of (i) January 15, 2046 or (ii) the Interest
Deduction Date, provided that it can extend the maturity only if certain
conditions are met. See "Description of the Subordinated Debentures and Debt
Guarantee-Option to Change Scheduled Maturity Date."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution or liquidation of the Trust were to
occur. Accordingly, the Preferred Securities that an investor may acquire,
whether pursuant to the Exchange Offer made hereby or in the secondary market,
or the Subordinated Debentures that a holder of Preferred Securities may receive
on dissolution and liquidation of the Trust, may trade at a discount to the
price that the investor paid to purchase the Old Preferred Securities. In
addition, because AAG Holding has the right to shorten or extend the maturity of
the Subordinated Debentures upon the termination of the Trust and the
distribution of the Subordinated Debentures to the holders of the Preferred
Securities, there can be no assurance that AAG Holding will not exercise its
option to change the maturity of the Subordinated Debentures upon such an event.
Because holders of Preferred Securities may receive Subordinated Debentures
upon any election by AAG Holding to liquidate the Trust and cause the
Subordinated Debentures to be distributed to the holders of the Preferred
Securities, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the
15
<PAGE> 18
Subordinated Debentures and should review carefully all the information
regarding the Subordinated Debentures, the Company and AAG Holding contained
herein. See "Description of the Preferred Securities-Distribution of the
Subordinated Debentures" and "Description of the Subordinated Debentures and
Debt Guarantee."
PROPOSED TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the
"Bill") was introduced in the 104th Congress which would have, among other
things, generally denied interest deductions for interest or OID on an
instrument issued by a corporation that has a maximum term of more than 20 years
and that is not shown as indebtedness on the consolidated balance sheet of the
issuer. The above-described provisions of the Bill were proposed to be effective
generally for instruments issued on or after December 7, 1995. If these
provisions were to apply to the Subordinated Debentures, AAG Holding would not
be able to deduct interest on the Subordinated Debentures. However, leaders of
the Senate Finance and House Ways and Means Committees opposed application of
any such provisions, if adopted, to instruments issued prior to the date of
appropriate congressional action. The 104th Congress adjourned without enacting
the Bill. On February 7, 1997, as part of its 1998 budget proposal, the
Administration made proposals similar to those of March 19, 1996, except that
the denial of interest or OID deductions would apply to instruments with maximum
terms of over 15 years. However, the proposals would be effective only for
instruments issued on or after the date of first Committee action. No such
committee action has taken place. There can be no assurance, however, that
current or future legislative or administrative proposals or final legislation
will not adversely affect the ability of AAG Holding to deduct interest on the
Subordinated Debentures or otherwise affect the tax treatment described herein.
Such a change, therefore, could give rise to a Tax Event, which would permit AAG
Holding to cause a redemption of the Preferred Securities or to dissolve the
Trust and distribute the Subordinated Debentures to the holders of Trust
Securities in liquidation of the Trust. See "Description of the Preferred
Securities-Special Event Redemption" and "United States Federal Income
Taxation."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have only limited voting rights,
primarily in connection with directing the activities of the Property Trustee as
the holder of the Subordinated Debentures. Such holders will not be entitled to
vote to appoint, remove or replace, or to increase or decrease the number of,
the Trustees (as defined herein). Voting rights with respect to Trustee matters
are vested exclusively in the holder of the Common Securities. See "Description
of the Preferred Securities-Voting Rights."
ABSENCE OF PUBLIC MARKET FOR SECURITIES
Although the New Preferred Securities will generally be permitted to
be resold or otherwise transferred by the holders (who are not affiliates of the
Company, AAG Holding or the Trust) without compliance with the registration
requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. Accordingly, no assurance can be
given that an active public or other market will develop for the New Preferred
Securities or as to the liquidity of or the trading market for the New Preferred
Securities. The New Preferred Securities will be a new issue of securities for
which there currently is no established trading market. Accordingly, there can
be no assurance as to the development or liquidity of any market for the New
Preferred Securities. The Company currently is obligated to apply for listing of
the New Preferred Securities on The New York Stock Exchange, or such other
exchange on which similar securities of AAG are listed, upon request of the
holders of a majority in aggregate liquidation amount of the New Preferred
Securities, provided that the New Preferred Securities so qualify for listing.
If an active public market does not develop, the market price and liquidity of
the New Preferred Securities may be adversely affected.
If a public trading market develops for the New Preferred Securities,
future trading prices of such securities will depend on many factors, including,
among other things, prevailing interest rates, results of operations and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the New Preferred Securities may trade at a discount.
Notwithstanding the registration of the New Preferred Securities,
holders who are "affiliates" (as defined under Rule 405 of the Securities Act)
of the Company , AAG Holding or the Trust may publicly offer for sale or resell
the New Preferred Securities only in compliance with the provisions of Rule 144
under the Securities Act.
16
<PAGE> 19
Each broker-dealer that receives New Preferred Securities for its own
account in exchange for Old Preferred Securities, where such Old Preferred
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Preferred Securities.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD PREFERRED SECURITIES
The Old Preferred Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions. Old
Preferred Securities that remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on transfer.
In addition, upon consummation of the Exchange Offer, holders of Old Preferred
Securities that remain outstanding will not be entitled to any increase in the
distribution rate thereon or any rights to have such old Preferred Securities
registered under the Securities Act by the Company. The Company, AAG Holding and
the Trust do not intend to register under the Securities Act any Old Preferred
Securities that remain outstanding after consummation of the Exchange Offer
(subject to such limited exceptions, if applicable).
EXCHANGE OFFER PROCEDURES
Issuance of the New Preferred Securities in exchange for Old
Preferred Securities pursuant to the Exchange Offer will be made only after a
timely receipt by the Trust of such Old Preferred Securities, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of the Old Preferred Securities desiring to tender
such Old Preferred Securities in exchange for New Preferred Securities should
allow sufficient time to ensure timely delivery. The Trust is under no duty to
give notification of defects or irregularities with respect to the tenders of
Old Preferred Securities for exchange.
USE OF PROCEEDS
None of the Company, AAG Holding nor the Trust will receive any cash
proceeds from the issuance of the New Preferred Securities offered hereby. The
New Preferred Securities will be exchanged for Old Preferred Securities in like
liquidation amount, which will be retired and canceled. The cash proceeds from
the sale of the Old Preferred Securities were used to purchase Old Subordinated
Debentures.
THE TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, as amended, executed by AAG Holding, as
sponsor (the "Sponsor"), and the trustees of the Trust (the "Trustees"), (the
"Declaration") and (ii) the filing of a certificate of trust with the Secretary
of State of Delaware on March 4, 1997. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). AAG Holding directly or indirectly owns all of the issued and
outstanding Common Securities of the Trust which represent over 3% of the total
capital of the Trust. The Trust exists for the exclusive purposes of (i) issuing
and selling the Trust Securities, (ii) using the gross proceeds from the sale of
the Trust Securities to acquire the Subordinated Debentures and (iii) engaging
in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of the Trustees will
initially be four. Two of the Trustees (the "Regular Trustees") are persons who
are employees or officers of, or who are affiliated with, AAG. The third trustee
is a financial institution that is not affiliated with AAG that will serve as
property trustee under the Declaration and as indenture trustee for the purposes
of the Trust Indenture Act (the "Property Trustee"). The fourth trustee is a
natural person who is a resident of the State of Delaware or a legal entity
which maintains its principal place of business in the State of Delaware (the
"Delaware Trustee"). The Bank of New York acts as the Property Trustee and The
Bank of New York (Delaware), an affiliate of the Property Trustee, acts as the
Delaware Trustee, in each case until removed or replaced by the holder of the
Common Securities. The Bank of New York also acts as indenture trustee under the
Trust Guarantee (the "Preferred Securities Guarantee Trustee") and as Exchange
Agent. See "Description of Trust Guarantee" and "The Exchange Offer."
The Property Trustee holds title to the Subordinated Debentures and
the Debt Guarantee for the benefit of the Trust and the holders of the Trust
Securities and, so long as the Subordinated Debentures and Debt Guarantee are
held by the Trust, the Property Trustee will have the power to exercise all
rights, powers, and privileges of a holder of Subordinated Debentures under the
Indenture (as defined in
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<PAGE> 20
"Description of the Subordinated Debentures and Debt Guarantee" herein) and Debt
Guarantee. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the Subordinated Debentures for the benefit of
the holders of the Trust Securities. The Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Preferred Securities Guarantee Trustee will hold the Trust Guarantee for the
benefit of the holders of the Preferred Securities.
AAG Holding, as the holder of all the Common Securities, has the
right to appoint, remove or replace any Trustee (subject to the limitations set
forth in the Declaration) and to increase or decrease the number of the
Trustees. AAG Holding pays all fees, expenses and obligations (other than with
respect to the Trust Securities) related to the Trust and the offering of the
Trust Securities. See "Description of the Preferred Securities."
The rights of the holders of the Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act, as amended (the "Trust Act"), the
Indenture and the Trust Indenture Act. See "Description of the Preferred
Securities."
THE COMPANY
AAG is a holding company which, through its subsidiaries, is engaged
in the life insurance business, principally the sale of tax-deferred annuities
and life and health insurance. AAG's primary operating subsidiary is Great
American Life Insurance Company ("GALIC"). GALIC sells annuities primarily to
employees of qualified not-for-profit organizations under Section 403(b) of the
Internal Revenue Code. AAG acquired GALIC in December 1992. At December 31,
1996, GALIC had statutory assets in excess of $5.7 billion.
GALIC has several life insurance subsidiaries including (i) American
Memorial Life Insurance Company ("American Memorial"), which markets individual
life insurance and annuity policies for the pre-need industry, (ii) Annuity
Investors Life Insurance Company ("AILIC"), which markets group and individual
variable annuities, and (iii) Loyal American Life Insurance Company ("Loyal"),
which markets various forms of supplemental life insurance and health insurance
through payroll deduction plans and financial institutions.
American Financial Group, Inc. and its subsidiaries ("AFG")
collectively own approximately 81% of the Company's outstanding Common Stock.
CAPITALIZATION
The following table sets forth the historical capitalization of the
Company at March 31, 1997.
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------
(Dollars in millions)
<S> <C>
Notes payable ........................................................ $121.8
Mandatorily redeemable preferred stock of
trust subsidiaries.................................................. 150.0
Stockholder's equity:
Common Stock, $1.00 par value ............................. 43.2
Capital surplus ........................................... 358.8
Accumulated deficit at December 31, 1992 .................. (212.6)
Retained earning since January 1, 1993 .................... 204.5
Unrealized gain on marketable securities .................. 22.5
------
Total stockholders' equity ...................... 416.4
------
Total capitalization ................................................. $688.2
======
</TABLE>
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<PAGE> 21
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with the
Company's financial statements with the Preferred Securities accounted for and
captioned in the consolidated balance sheet directly above stockholders' equity.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges for the Company and its subsidiaries. Fixed charges are computed on a
"total enterprise" basis. For purposes of calculating the ratios, earnings have
been computed by adding to pretax earnings (excluding discontinued operations)
the fixed charges and the minority interest in earnings of subsidiaries having
fixed charges and deducting (adding) the undistributed equity in earnings
(losses) of investees. Fixed charges include interest (excluding interest on
annuity benefits), amortization of debt issue expense, preferred dividend
requirements and a portion of rental expense deemed to be representative of the
interest factor.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Ratio of earnings to fixed charges (1) .......... 5.4 6.0 3.8
</TABLE>
(1) On March 31, 1994, AAG issued approximately 3.2 million shares of Common
Stock in exchange for all its outstanding Series A Preferred Stock. In December
1995, AAG sold 170,000 shares of $8.50 Series B Preferred Stock for $17 million.
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<PAGE> 22
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Preferred Securities, the Company,
AAG Holding and the Trust entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with the purchasers of the Old Preferred
Securities (the "Purchasers"), pursuant to which the Company, AAG Holding and
the Trust agreed to file and to use their reasonable efforts to cause to become
effective with the Commission a registration statement with respect to the
exchange of the Old Preferred Securities for preferred securities with terms
identical in all material respects to the terms of the Old Preferred Securities.
A copy of the Registration Rights Agreement is an exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company, AAG Holding and the Trust under the Registration Rights Agreement.
The form and terms of the New Preferred Securities are the same as the form and
terms of the Old Preferred Securities except that the New Preferred Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Old Preferred Securities
Upon consummation of the Exchange Offer, holders of Old Preferred Securities
will not be entitled to any increase in the distribution rate thereon or any
further registration rights under the Registration Rights Agreement, except
under limited circumstances. See "Risk Factors--Consequences of a Failure to
Exchange Old Preferred Securities" and "Description of Preferred Securities."
As soon as practicable after the Expiration Date, and as an integral part
of their obligations under the Registration Rights Agreement, the Company (or
AAG Holding, as the case may be) will exchange the Old Trust Guarantee for the
New Trust Guarantee, all of the Old Subordinated Debentures, of which
$77,320,000 aggregate principal amount is outstanding, for a like aggregate
principal of the New Subordinated Debentures and the Old Debt Guarantee for the
New Debt Guarantee. The New Trust Guarantee, the New Subordinated Debentures and
the New Debt Guarantee have been registered under the Securities Act.
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Preferred Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction. Holders
of Old Preferred Securities do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Preferred Securities
are registered on the books of the Company or any other person who has obtained
a properly completed bond power from the registered holder.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $75,000,000 aggregate liquidation amount of New Preferred
Securities for a like aggregate liquidation amount of Old Preferred Securities
properly tendered on or prior to the Expiration Date (as defined below) and not
properly withdrawn in accordance with the procedures described below. The
Company will issue, promptly after the Expiration Date, $1,000 liquidation
amount of New Preferred Securities in exchange for each $1,000 liquidation
amount of outstanding Old Preferred Securities tendered and accepted in
connection with the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Preferred Securities being tendered. As of the date of this Prospectus,
$75,000,000 aggregate liquidation amount of the Old Preferred Securities is
outstanding.
If any tendered Old Preferred Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Preferred
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Old Preferred Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Preferred Securities
20
<PAGE> 23
in connection with the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
Each holder who tenders Old Preferred Securities will warrant and agree in
the Letter of Transmittal that it has full power and authority to tender,
exchange, sell, assign and transfer Old Preferred Securities, that the Trust
will acquire good, marketable and unencumbered title to the tendered Old
Preferred Securities, free and clear of all liens, restrictions, charges and
encumbrances, and the Old Preferred Securities tendered for exchange are not
subject to any adverse claims or proxies. The holder also will warrant and agree
that it will, upon request, execute and deliver any additional documents deemed
by the Trust or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment, and transfer of the Old Preferred Securities
tendered pursuant to the Exchange Offer.
The Trust reserves the right in its sole discretion to (a) purchase or make
offers for any Old Preferred Securities that remain outstanding subsequent to
the Expiration Date, (b) as set forth under "--Expiration Date; Extensions;
Amendments," to terminate the Exchange Offer and (c) to the extent permitted by
applicable law, purchase Old Preferred Securities in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers may differ from the terms of the Exchange Offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on May __,
1997 unless the Exchange Offer is extended by the Company and the Trust (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Company, AAG Holding and the Trust expressly reserve the right in their
sole and absolute discretion, subject to applicable law, at any time and from
time to time, (i) to delay the acceptance of the Old Preferred Securities for
exchange or to terminate the Exchange Offer (whether or not any Old Preferred
Securities have theretofore been accepted for exchange) if the Company, AAG
Holding and the Trust determine, in their sole and absolute discretion, that any
of the events or conditions referred to under "--Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, (ii) to extend the
Expiration Date of the Exchange Offer and retain all Old Preferred Securities
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Old Preferred Securities to withdraw their tendered Old Preferred
Securities as described under "--Withdrawal Rights," and (iii) to waive any
condition or otherwise amend the terms of the Exchange Offer in any respect
deemed by them to be advantageous to the holders of the Old Preferred
Securities. If the Exchange Offer is amended in a manner determined by the
Company, AAG Holding and the Trust to constitute a material change, or if the
Company, AAG Holding and the Trust waive a material condition of the Exchange
Offer, the Trust will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old
Preferred Securities, and the Company , AAG Holding and the Trust will extend
the Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Trust may choose to make any public announcement and
subject to applicable law, the Trust shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
RESALES OF NEW PREFERRED SECURITIES
The Trust is making the Exchange Offer for the Old Preferred Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions relating to the transferability of the exchanged
securities following registration. However, none of the Company, AAG Holding nor
the Trust sought its own interpretive letter and there can be no assurance that
the staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two immediately
following sentences, the Company, AAG Holding and the Trust believe that New
Preferred Securities issued pursuant to this Exchange Offer in exchange for Old
Preferred Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Preferred Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New
21
<PAGE> 24
Preferred Securities. However, any holder of Old Preferred Securities who is an
"affiliate" of the Company, AAG Holding or the Trust (within the meaning of Rule
405 under the Securities Act ) or who intends to participate in the Exchange
Offer for the purpose of distributing New Preferred Securities, or any
broker-dealer who purchased Old Preferred Securities from the Trust to resell
them pursuant to Rule 144A or any other available exemption under the Securities
Act, (a) will not be able to rely on the interpretations of the staff of the
Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Preferred Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Preferred Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Preferred
Securities acquired for its own account as a result of market-making or other
trading activities and exchanges such Old Preferred Securities for New Preferred
Securities, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Preferred Securities.
Each holder of Old Preferred Securities who desires to exchange Old
Preferred Securities for New Preferred Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Company, AAG
Holding or the Trust, (ii) any New Preferred Securities to be received by it are
being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Preferred Securities, and
(iv) if such holder is not a broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such New Preferred Securities. In addition, the Company, AAG
Holding and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company, AAG
Holding and the Trust (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) on behalf of whom such holder holds the Preferred Securities to be
exchanged in the Exchange Offer. Each broker-dealer that receives New Preferred
Securities for its own account pursuant to the Exchange Offer must acknowledge
that it acquired the Old Preferred Securities for its own account as the result
of market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Preferred Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Company, AAG Holding and the Trust believe that
broker-dealers who acquired Old Preferred Securities for their own accounts, as
a result of market-making activities or other trading activities ("Participating
Broker-Dealers"), may fulfill their prospectus delivery requirements with
respect to the New Preferred Securities received upon exchange of such Old
Preferred Securities (other than Old Preferred Securities which represent an
unsold allotment from the original sale of the Old Preferred Securities) with
this Prospectus, as it may be amended or supplemented from time to time. Subject
to certain provisions set forth in the Registration Rights Agreement, the
Company, AAG Holding and the Trust have agreed that this Prospectus as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Preferred Securities for a
period ending 180 days after the Registration Statement of which this Prospectus
constitutes a part is declared effective. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate" of the Company or the Trust
may not rely on such interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction.
Each Participating Broker-Dealer who surrenders Old Preferred Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company, AAG
Holding or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating Broker
Dealer will suspend the sale of New Preferred Securities pursuant to this
Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Preferred
Securities may be resumed, as the case may be.
BROKER-DEALER CONSIDERATIONS
Each broker-dealer that receives New Preferred Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Preferred
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of New Preferred Securities received in
exchange for Old Preferred Securities if such Old Preferred Securities were
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<PAGE> 25
acquired by such Participating Broker-Dealers for their own accounts as a result
of market-making activities or other trading activities. The Company has agreed
that this Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of such
New Preferred Securities for a period ending 180 days after the Registration
Statement of which this Prospectus constitutes a part is declared effective. See
"Resales of New Preferred Securities". The Company will not receive any cash
proceeds from the issuance of the New Preferred Securities offered hereby. New
Preferred Securities received by broker-dealers for their own accounts in
connection with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Preferred Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchases of any such New Preferred Securities.
Any broker-dealer that resells New Preferred Securities that were received by it
for its own account in connection with the Exchange Offer and any broker or
dealer that participates in a distribution of such New Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any profit
on any such resale of New Preferred Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW PREFERRED SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Preferred
Securities for Old Preferred Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
Subject to the terms and conditions of the Exchange Offer, the Trust will
be deemed to have accepted for exchange, and thereby exchanged, Old Preferred
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Preferred Securities for exchange pursuant to the Exchange Offer. The
Exchange Agent will act as agent for the Trust for the purpose of receiving
tenders of Old Preferred Securities, Letters of Transmittal and related
documents, and as agent for tendering holders for the purpose of receiving Old
Preferred Securities, Letters of Transmittal and related documents and
transmitting New Preferred Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Old Preferred
Securities tendered pursuant to the Exchange Offer is delayed (whether before or
after the Trust's acceptance for exchange of Old Preferred Securities) or the
Company, AAG Holding and the Trust extend the Exchange Offer or they are unable
to accept for exchange or exchange Old Preferred Securities tendered pursuant to
the Exchange Offer, then, without prejudice to the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Trust and subject
to Rule 14e-1(c) under the Exchange Act, retain tendered Old Preferred
Securities and such Old Preferred Securities may not be withdrawn except to the
extent tendering holders are entitled to withdrawal rights as described under
"--Withdrawal Rights."
PROCEDURES FOR TENDERING OLD PREFERRED SECURITIES
Valid Tender. Except as set forth below, in order for Old Preferred
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under Exchange
Agent," and one of the following must apply: (i) tendered Old Preferred
Securities must be received by the Exchange Agent, or (ii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Preferred Securities represented by a
certificate are tendered, a tendering holder should fill in the amount of Old
Preferred Securities being tendered in the appropriate box on the Letter of
Transmittal. The entire amount of Old Preferred Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL,
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<PAGE> 26
RETURN RECEIPT REQUESTED, PROPERTY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. Certificates for the Old Preferred Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Preferred Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Preferred Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule l7Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein) : (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Preferred Securities
pursuant to the Exchange Offer and the certificates for such Old Preferred
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, such Old
Preferred Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with.
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates representing all tendered Old Preferred
Securities, in proper form for transfer, together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five New
York Stock Exchange trading days after the date of execution of such Notice
of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile or mailed to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provisions hereof, the delivery of New Preferred
Securities in exchange for Old Preferred Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Preferred Securities, and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees and any other documents required
by the Letter of Transmittal. Accordingly, the delivery of New Preferred
Securities might not be made to all tendering holders at the same time, and will
depend upon when Old Preferred Securities, book-entry confirmations with respect
to Old Preferred Securities and other required documents are received by the
Exchange Agent.
The Trust's acceptance for exchange of Old Preferred Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and subject
to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Preferred Securities will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all parties.
The Trust reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the Trust,
be unlawful. The Trust also reserves the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer as set forth under
"--Conditions to the Exchange Offer" or any condition or irregularity in any
tender of Old Preferred Securities of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The Trust's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Preferred Securities will be deemed to have
been validly made until all irregularities
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<PAGE> 27
with respect to such tender have been cured or waived. Neither the Trust, any
affiliates or assigns of the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in
tenders or incur any liability for failure to give such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Trust,
proper evidence satisfactory to the Trust, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Preferred Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Preferred Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "--Exchange Agent" on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Preferred Securities to be withdrawn,
the aggregate principal amount of Old Preferred Securities to be withdrawn, and
(if certificates for such Old Preferred Securities have been tendered) the name
of the registered holder of the Old Preferred Securities as set forth in the Old
Preferred Securities, if different from that of the person who tendered such Old
Preferred Securities. If Old Preferred Securities have been delivered or
otherwise identified to the Exchange Agent, then prior to the physical release
of such Old Preferred Securities, the tendering holder must submit the serial
numbers shown on the particular Old Preferred Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Preferred Securities tendered for the
account of an Eligible Institution. Withdrawals of tenders of Old Preferred
Securities may not be rescinded. Old Preferred Securities properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but may
be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Preferred Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties.
Neither the Trust, any affiliates or assigns of the Trust, the Exchange Agent
nor any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Preferred Securities which have been
tendered but which are withdrawn will be returned to the holder thereof promptly
after withdrawal.
DISTRIBUTIONS ON THE NEW PREFERRED SECURITIES
Each New Preferred Security will pay cumulative distributions from the most
recent date distributions were made on the Old Preferred Securities surrendered
in exchange for such New Preferred Securities or, if no distributions have been
paid on such Old Preferred Securities, from March 11, 1997. Holders of the Old
Preferred Securities whose Old Preferred Securities are accepted for exchange
will not receive accumulated distributions on such Old Preferred Securities for
any period from and after the last date distributions were made on such Old
Preferred Securities prior to the original issue date of the New Preferred
Securities or, if no such distributions have been paid, will not receive any
accumulated distributions on such Old Preferred Securities, and will be deemed
to have waived the right to receive any distributions on such Old Preferred
Securities accumulated from and after March 11, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Preferred Securities for any New Preferred
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Preferred Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
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(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Preferred Securities issued
pursuant to the Exchange Offer in exchange for Old Preferred Securities to
be offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Company, AAG Holding or the Trust within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Preferred
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distribution of such New Preferred Securities;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Trust's judgment, would reasonably be
expected to impair the ability of the Trust to proceed with the Exchange
Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Trust's judgment, would reasonably be expected to
impair the ability of the Trust to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Ohio state authorities which, in the Company's judgment, would
reasonably be expected to impair the ability of the Trust to proceed with
the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the
over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Trust's
judgment, would reasonably be expected to impair the ability of the Trust
to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company or the Trust, threatened for that purpose any governmental
approval has not been obtained, which approval the Trust shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby;
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the sole judgment of the Trust, might materially
impair the ability of the Trust to proceed with the Exchange Offer; or
(h) after conferring with counsel, a Tax Event has occurred after the
date of original issuance of the Old Preferred Securities or there is more
than an insubstantial risk that a Tax Event will occur prior to the time
that the Exchange Offer is consummated.
If the Company, AAG Holding and the Trust determine in their sole and
absolute discretion that any of the foregoing events or conditions has occurred
or exists or has not been satisfied, the Company, AAG Holding and the Trust may,
subject to applicable law, terminate the Exchange Offer (whether or not any Old
Preferred Securities have theretofore been accepted for exchange) or may waive
any such condition or otherwise amend the terms of the Exchange Offer in any
respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Company, AAG Holding and the Trust will promptly disclose
such waiver by means of a prospectus supplement that will be distributed to the
registered holders of the Old Preferred Securities, and the Company, AAG Holding
and the Trust will extend the Exchange Offer to the extent and in the manner
required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Company will serve as Exchange Agent for the Exchange Offer. Delivery
of the Letters of Transmittal and any other required documents, questions,
requests for assistance, and requests for additional copies of this Prospectus
or of the Letter of Transmittal should be directed to the Exchange Agent as
follows:
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By Registered or Certified Mail, Overnight Delivery or Hand Delivery
American Annuity Group, Inc.
250 East Fifth Street
10th Floor, Chiquita Center
Cincinnati, Ohio 45202
Attention: Mark F. Muething
Telephone: (513) 333-5515
Facsimile: (513) 357-3397
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Preferred Securities, and in handling or
tendering for their customers.
Holders who tender their Old Preferred Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Preferred Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Preferred Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Preferred Securities in connection with the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
None of the Company, AAG Holding nor the Trust will make any payment to
brokers, dealers or others soliciting acceptances of the Exchange Offer.
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<PAGE> 30
DESCRIPTION OF THE PREFERRED SECURITIES
The Old Preferred Securities are, and the New Preferred Securities will be,
issued pursuant to the terms of the Declaration. The Declaration will be
qualified as an indenture under the Trust Indenture Act. The Property Trustee,
The Bank of New York, will act as the indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Preferred Securities include those stated in the Declaration, including those
required to be made part of the Declaration by the Trust Indenture Act. The
following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part, the
Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue, on behalf of the
Trust, the Preferred Securities, which represent undivided beneficial interests
in the assets of the Trust. All of the Common Securities are owned, directly or
indirectly, by AAG Holding. The Common Securities will have equivalent terms to
and rank pari passu, and payments will be made thereon on a pro rata basis, with
the Preferred Securities, except that upon the occurrence and during the
continuance of a Declaration Event of Default (as defined herein), the rights of
the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities. In
addition, holders of the Common Securities have the exclusive right (subject to
the terms of the Declaration) to appoint, replace or remove the Trustees and to
increase or decrease the number of the Trustees. The Declaration does not permit
the issuance by the Trust of any securities other than the Trust Securities or
the incurrence of any indebtedness by the Trust. Pursuant to the Declaration,
the Property Trustee will hold the Subordinated Debentures and the Debt
Guarantee for the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Preferred Securities or liquidation of the Trust, are guaranteed by the
Company to the extent described under "Description of Trust Guarantee." The
Trust Guarantee, the Indenture, the Subordinated Debentures and the Debt
Guarantee issued to the Trust, provide a full and unconditional guarantee by the
Company of the Preferred Securities. The Trust Guarantee will be held by The
Bank of New York, the Preferred Securities Guarantee Trustee, for the benefit of
the holders of the Preferred Securities. The Trust Guarantee only covers payment
of distributions when AAG Holding or the Company has made the corresponding
payment of interest or principal on the Subordinated Debentures or Debt
Guarantee held by the Trust. In the absence of such payment of interest or
principal, the remedy of a holder of Preferred Securities is to direct the
Property Trustee to enforce the Property Trustee's rights as the holder of the
Subordinated Debentures except in the limited circumstances where the holder may
take direct action against AAG Holding. See "Declaration Events of Default."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of 8 7/8% of the stated liquidation amount of $1,000 per Preferred Security.
Distributions in arrears for more than one semi-annual period will (to the
extent permitted by applicable law) bear interest thereon from and including the
last day of such semi-annual period at the rate per annum of 8 7/8% thereof
compounded semi-annually. The term "distributions" as used herein includes any
such interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full semi-annual period, on the
basis of the actual number of days elapsed in such 180 day period.
Distributions on the Preferred Securities will be cumulative, will accrue
from March 11, 1997 and will be payable semi-annually in arrears on January 15
and July 15 of each year, commencing July 15, 1997, when, as and if available
for payment by the Property Trustee, except as otherwise described below.
AAG Holding has the right under the Indenture to defer payments of interest
on the Subordinated Debentures by extending the interest payment period from
time to time on the Subordinated Debentures, which right, if exercised, would
defer semi-annual distributions on the Preferred Securities (although to the
extent permitted by law, such distributions would continue to accrue with
interest since interest would continue to accrue on the Subordinated Debentures)
during any such Extension Period. AAG Holding has the right to defer payments of
interest on the Subordinated Debentures, from time to time, for up to 10
consecutive semi-annual periods, provided that no Extension Period may extend
beyond the Maturity Date of the Subordinated Debentures. There could be multiple
Extension Periods of varying lengths throughout the term of the Subordinated
Debentures. If that AAG Holding exercises this right, then during any Extension
Period (a) neither the Company nor AAG Holding shall declare or pay dividends
on, make distributions with respect to, or redeem, purchase or acquire, or
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<PAGE> 31
make a liquidation payment with respect to, any of their capital stock and (b)
the Company and AAG Holding shall not, directly or indirectly, and will not
allow any of their subsidiaries to, make any payment of interest, principal or
premium, if any, on, or repay, repurchase or redeem, any debt securities issued
by the Company or AAG Holding that rank pari passu with or junior to the
Subordinated Debentures; provided, however, that the restriction in clause (a)
above does not apply (i) to repurchases or acquisitions of shares of the common
stock of the Company or AAG Holding as contemplated by any employment
arrangement, benefit plan or other similar contract with or for the benefit of
employees, officers or directors entered into in the ordinary course of
business, (ii) as a result of an exchange or conversion of any class or series
of the Company's or AAG Holding's capital stock for common stock, (iii) to the
purchase of fractional interests in shares of the Company or AAG Holding's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged or (iv) to the payment of any
stock dividend by the Company or AAG Holding payable in common stock. AAG
Holding may further extend the interest payment period; provided that each
Extension Period, if any, may not exceed 10 consecutive semi-annual periods and
may not extend beyond the Maturity Date of the Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, AAG
Holding may commence a new Extension Period, subject to the above requirements.
See "Description of the Subordinated Debentures and Debt Guarantee-Interest" and
"Description of the Subordinated Debentures and Debt Guarantee-Option to Extend
Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the books and records of the Trust on
the record date for distributions due at the end of such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from AAG Holding under the Subordinated Debentures or from the
Company under the Debt Guarantee. See "Description of the Subordinated
Debentures and Debt Guarantee." The payment of distributions out of moneys held
by the Trust is guaranteed by the Company to the extent set forth under
"Description of Trust Guarantee." The Trust Guarantee, the Indenture, the
Subordinated Debentures issued to the Trust and the Subordinated Debt Guarantee,
provide a full and unconditional guarantee by the Company of the Preferred
Securities.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. Such distributions will be paid through the Property Trustee,
which will hold amounts received in respect of the Subordinated Debentures and
Debt Guarantee in the Property Account for the benefit of the holders of the
Trust Securities.. The relevant record dates for the Preferred Securities shall
conform to the rules of any securities exchange on which the Preferred
Securities are listed and, if none, shall be selected by the Regular Trustees,
which dates shall be at least one Business Day but less than 60 Business Days
prior to the relevant payment dates. Such record date is currently fifteen days
prior to the applicable payment date. Distributions payable on any Preferred
Securities that are not punctually paid on any distribution payment date will
cease to be payable to the person in whose name such Preferred Securities are
registered on the relevant record date, and such defaulted distribution will
instead be payable to the person in whose name such Preferred Securities are
registered on the special record date or other specified date determined in
accordance with the Indenture. In the event that any date on which distributions
are to be made on the Preferred Securities is not a Business Day, then payment
of the distributions 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 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 record date. A "Business Day" shall mean any day other than a day on
which banking institutions in New York, New York are authorized or required by
law to close.
MANDATORY REDEMPTION
Unless a Special Event has occurred, the Preferred Securities will not be
redeemable prior to March 1, 2007. Upon the repayment or redemption, in whole or
in part, of the Subordinated Debentures, whether at Stated Maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem
Preferred Securities and Common Securities, on a pro rata basis, upon not less
than 30 nor more than 60 days' notice prior to the date fixed for repayment or
redemption. If less than all of the Subordinated Debentures are to repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Preferred
Securities and Common Securities.
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SPECIAL EVENT REDEMPTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of an independent tax counsel experienced in such matters to the effect that, as
a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of original issuance
of the Preferred Securities, there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days after the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Subordinated Debentures, (ii) the Trust is, or will be within 90 days after
the date thereof, subject to more than a de minimis amount of taxes, duties or
other governmental charges, or (iii) interest payable to the Trust on the
Subordinated Debentures is not, or within 90 days of the date thereof, will not
be deductible, in whole or in part, by AAG Holding for United States federal
income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act"), to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than insubstantial risk that the Trust is or will be considered an
"investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, AAG Holding
shall have the right, upon not less than 30 nor more than 60 days notice, to
redeem the Subordinated Debentures in whole (but not in part), for cash within
90 days following the occurrence of such Special Event, and, following such
redemption, all Trust Securities shall be redeemed by the Trust at the
Redemption Price.
DISTRIBUTION OF THE SUBORDINATED DEBENTURES
At any time, AAG Holding will have the right to terminate the Trust and,
after satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Subordinated Debentures and Debt Guarantee to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
Under current United States federal income tax law and interpretation and
assuming, as expected, the Trust is treated as a grantor trust, a distribution
of the Subordinated Debentures and Debt Guarantee should not be a taxable event
to holders of the Preferred Securities. Should there be a change in law, a
change in legal interpretation, a Special Event or other circumstances, however,
the distribution could be a taxable event to the holders of the Preferred
Securities. In addition, a dissolution of the Trust in which holders of the
Preferred Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation-Receipt of Subordinated Debentures or
Cash Upon Liquidation of the Trust."
After the date for any distribution of Subordinated Debentures, together
with the Debt Guarantee, upon dissolution of the Trust, (i) the Preferred
Securities will no longer be deemed to be outstanding and (ii) the record
holders of the Preferred Securities will receive certificates representing the
Subordinated Debentures to be delivered upon such distribution in exchange for
the Preferred Securities held by such holders.
If AAG Holding elects to liquidate the Trust and thereby causes the
Subordinated Debentures and Debt Guarantee to be distributed to holders of the
Preferred Securities in liquidation of the Trust, AAG Holding shall have the
right to shorten the maturity of such Subordinated Debentures to a date not
earlier than March 1, 2007 or extend the maturity of such Subordinated
Debentures to a date not later than the earlier of (a) January 15, 2046 or (b)
the Interest Deduction Date (as defined herein), provided that it can extend the
maturity only if certain conditions are met. See "Description of the
Subordinated Debentures and Debt Guarantee-Option to Change Scheduled Maturity
Date."
There can be no assurance as to the market prices for either the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for the Preferred Securities if a dissolution and liquidation of the Trust were
to occur. Accordingly, the Preferred Securities that an investor may acquire,
whether pursuant to the Exchange Offer made hereby or in the secondary market,
or the Subordinated Debentures that an investor may receive if a dissolution and
liquidation of the Trust were to occur, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities.
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On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
introduced in the 104th Congress which would have, among other things, generally
denied interest deductions for interest or OID on an instrument issued by a
corporation that has a maximum term of more than 20 years and that is not shown
as indebtedness on the consolidated balance sheet of the issuer. The
above-described provisions of the Bill were proposed to be effective generally
for instruments issued on or after December 7, 1995. If these provisions were to
apply to the Subordinated Debentures, AAG Holding would not be able to deduct
interest on the Subordinated Debentures. However, leaders of the Senate Finance
and House Ways and Means Committees opposed application of any such provisions,
if adopted, to instruments issued prior to the date of appropriate congressional
action. The 104th Congress adjourned without enacting the Bill. On February 7,
1997, as part of its 1998 budget proposal, the Administration made proposals
similar to those of March 19, 1996, except that the denial of interest or OID
deductions would apply to instruments with maximum terms of over 15 years.
However, the proposals would be effective only for instruments issued on or
after the date of first Committee action. No such committee action has taken
place. There can be no assurance, however, that current or future legislative or
administrative proposals or final legislation will not adversely affect the
ability of AAG Holding to deduct interest on the Subordinated Debentures or
otherwise affect the tax treatment described herein. Such a change, therefore,
could give rise to a Tax Event, which would permit AAG Holding to cause a
redemption of the Preferred Securities or to dissolve the Trust and distribute
the Subordinated Debentures to the holders of Trust Securities in liquidation of
the Trust. See "Description of the Preferred Securities-Special Event
Redemption" and "United States Federal Income Taxation."
REDEMPTION PROCEDURES
The Trust may not redeem any of the outstanding Preferred Securities unless
all accrued and unpaid distributions have been paid on all Preferred Securities
for all semi-annual distribution periods terminating on or prior to the date of
redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that AAG Holding has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debentures, the Trust will
irrevocably deposit with the depository funds sufficient to pay the applicable
Redemption Price and will give the depository irrevocable instructions to pay
the Redemption Price to the holders of the Preferred Securities. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day fails in the next calendar year,
such payment will be made on the immediately preceding Business Day. If AAG
Holding fails to repay the Subordinated Debentures on maturity or payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Trust or by the Company pursuant to the Trust
Guarantee, distributions on such Preferred Securities will continue to accrue at
the then applicable rate from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price.
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption. If less than all of the Preferred Securities
and Common Securities issued by the Trust are to be redeemed on a Redemption
Date, then the aggregate amount of such Preferred Securities and Common
Securities to be redeemed shall be allocated pro rata among the Preferred
Securities and the Common Securities. The particular Preferred Securities to be
redeemed shall be selected on a pro rata basis not more than 60 days prior to
the Redemption Date by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption, by such method as the Property
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to $1,000 or an integral multiple of $1,000 in
excess thereof) of the liquidation amount of Preferred Securities of a
denomination larger than $1,000. The Property Trustee shall promptly notify the
Trust registrar in writing of the Preferred Securities selected for redemption
and, in the case of any Preferred Security selected for partial redemption, the
liquidation amount thereof to be redeemed. For all purposes relating to the
redemption of Preferred Securities shall relate, in the case of any Preferred
Security redeemed or to be redeemed only in part, to the portion of the
aggregate liquidation amount of Preferred Securities which has been or is to be
redeemed.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company, AAG Holding or their
affiliates may at any time, and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
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LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Preferred Securities will be entitled to receive on a pro rata basis,
solely out of the assets of the Trust, after satisfaction of liabilities to
creditors, distributions in an amount equal to the aggregate of the stated
liquidation amount of $1,000 per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, Subordinated Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Preferred Securities have been distributed on a pro rata basis to the holders of
the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
The Trust Guarantee, when taken together with the back-up undertakings,
consisting of obligations of AAG Holding as set forth in the Declaration
(including the obligation to pay expenses of the Trust), the Indenture, the
Subordinated Debentures issued to the Trust and the Subordinated Debenture
Guarantee, provide a full and unconditional guarantee by the Company of the
Preferred Securities.
DISSOLUTION AND TERMINATION
Pursuant to the Declaration, the Trust shall dissolve upon the earliest of
(i) March 1, 2046, (ii) the bankruptcy of the Company or AAG Holding, (iii) the
filing of a certificate of dissolution or its equivalent with respect to the
Company or AAG Holding, the consent of the holders of at least a majority in
liquidation amount of the Trust Securities to the filing of a certificate of
cancellation with respect to the Trust or the revocation of the charter of the
Company or AAG Holding and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iv) upon satisfaction of the
liabilities of creditors of the Trust as provided by applicable law, in the
event the Subordinated Debentures shall have been distributed to holders of the
Preferred Securities in liquidation of the Trust, (v) the entry of a decree of a
judicial dissolution of the Company, AAG Holding or the Trust, or (vi) the
redemption of all the Trust Securities. Pursuant to the Declaration, as soon as
practicable after the dissolution of the Trust and upon completion of the
winding of the Trust, the Trustee shall file a certificate of cancellation
terminating the Trust.
DECLARATION EVENTS OF DEFAULT
An Event of Default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Event of Default
with respect to the Preferred Securities has been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf of
the holders of the Preferred Securities and only the holders of the Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration, and therefore the Indenture.
Upon the occurrence of a Declaration Event of Default, the Indenture
Trustee (as defined herein) or the Property Trustee as the holder of the
Subordinated Debentures will have the right under the Indenture to declare the
principal of and interest on the Subordinated Debentures to be immediately due
and payable. Each of AAG Holding and the Company is required to file annually
with the Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Subordinated Debentures or Debt Guarantee held by the Trust, any record holder
of Preferred Securities may institute legal proceedings directly against AAG
Holding or the Company to enforce the Property Trustee's rights under such
Subordinated Debentures or Debt Guarantee without first instituting any legal
proceedings against such Property Trustee or any other person or entity. In
addition, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of AAG Holding to pay interest,
principal or other required payment on the Subordinated Debentures issued to
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the Trust on the date such interest, principal or other payment is otherwise
payable, then a record holder of Preferred Securities may institute a proceeding
directly against AAG Holding for enforcement of payment on the Subordinated
Debentures on or after the respective due dates specified in the Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities held by such holder. In connection with such Direct
Action, AAG Holding will be subrogated to the rights of such record holder of
Preferred Securities to the extent of any payment made by AAG Holding to such
record holder of Preferred Securities.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act
and under "Description of Trust Guarantee-Modification of the Trust Guarantee;
Assignment," and as otherwise required by law and the Declaration, the holders
of the Preferred Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
in certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as holder of
the Subordinated Debentures and Debt Guarantee, to (i) exercise the remedies
available under the Indenture with respect to the Subordinated Debentures and
Debt Guarantee, (ii) waive any past Indenture Event of Default that is waivable
under the Indenture, or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debentures shall be due
and payable, or consent to any amendment, modification or termination of the
Indenture or the Subordinated Debentures, where such consent should be required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a majority in
principal amount of Subordinated Debentures affected thereby (a
"Super-Majority"), the Property Trustee may only give such consent or take such
action at the written direction of the holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Subordinated Debentures
outstanding. The Property Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Indenture Trustee with
respect to the Subordinated Debentures. Except with respect to directing the
time, method and place of conducting a proceeding for a remedy, the Property
Trustee shall not take any of the actions described in clauses (i), (ii) or
(iii) above unless the Property Trustee has obtained an opinion of tax counsel
to the effect that, as a result of such action, the Trust will not be classified
as other than a grantor trust for United States federal income tax purposes.
If the consent of the Property Trustee, as the holder of the Subordinated
Debentures and Debt Guarantee, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or the Subordinated
Debentures, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendment, modification or termination
and shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; provided, however, that where a consent under the
Indenture would require the consent of a Super-Majority, the Property Trustee
may only give such consent at the direction of the holders of at least the
proportion in liquidation amount of the Trust Securities which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Debentures outstanding. The Property Trustee shall not take any such action in
accordance with the directions of the holders of the Trust Securities unless the
Property Trustee has obtained an opinion of tax counsel to the effect that the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes on account of such action.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
and cancel Preferred Securities or distribute Subordinated Debentures in
accordance with the Declaration.
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Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
Holders of the Preferred Securities will have no rights to appoint or
remove the Trustees, who may be appointed, removed or replaced solely by AAG
Holding as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of
the Regular Trustees (and in certain circumstances the Property Trustee),
provided that, if any proposed amendment provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of the Declaration,
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of at least a majority in
liquidation amount of the Trust Securities affected thereby; provided that, if
any amendment or proposal referred to in clause (i) above would adversely affect
only the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified as other than a grantor trust for United States federal income tax
purposes, (il) reduce or otherwise adversely affect the powers of the Property
Trustee or (iii) cause the Trust to be deemed an "investment company" which is
required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Property Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or
into, or be replaced by a trust organized as such under the laws of any State;
provided that, (i) such successor entity either (x) expressly assumes all of the
obligations of the Trust under the Trust Securities or (y) substitutes for the
Trust Securities other securities having substantially the same terms as the
Trust Securities (the "Successor Securities"), so long as the Successor
Securities rank the same as the Trust Securities rank with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) AAG
Holding expressly acknowledges a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Subordinated
Debentures and the Company expressly acknowledges such trustee of such successor
entity as the holder of the Debt Guarantee, (iii) the Preferred Securities or
any Successor Securities with respect to the Preferred Securities are listed, or
any such Successor Securities will be listed upon notification of issuance, on
any national securities exchange or with another organization on which the
Preferred Securities are then listed or quoted, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Preferred Securities (including
any Successor Securities with respect to the Preferred Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, the Company
has received an opinion of an independent counsel to the Trust experienced in
such matters to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (C) the
Trust will continue to be classified as a grantor trust for federal income tax
purposes, and (viii) the Company guarantees the obligations of such successor
entity under the Successor Securities at least to the extent provided by the
Trust Guarantee. Notwithstanding the foregoing, the Trust shall not, except with
the consent of holders of 100% in liquidation amount of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it, if such consolidation, amalgamation, merger or replacement would
cause the Trust or the Successor Entity
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to be classified as other than a grantor trust for United States federal income
tax purposes and each holder of the Trust Securities not to be treated as owning
an undivided interest in the Subordinated Debentures.
EXPENSES AND TAXES
In the Indenture, AAG Holding has agreed to pay all debts and other
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust (including costs and expenses relating to the organization
of the Trust, the fees and expenses of the Trustees and the costs and expenses
relating to the operation of the Trust) and to pay any and all taxes and all
costs and expenses with respect thereto (other than United States withholding
taxes) to which the Trust might become subject. The foregoing obligations of AAG
Holding under the Indenture are for the benefit of, and shall be enforceable by,
any person to whom any such debts, obligations, costs, expenses and taxes are
owed (a "Creditor") whether or not such Creditor has received notice thereof.
Any such Creditor may enforce such obligations of AAG Holding directly against
AAG Holding, and AAG Holding has irrevocably waived any right or remedy to
require that any such Creditor take any action against the Trust or any other
person before proceeding against AAG Holding. AAG Holding has also agreed in the
Indenture to execute such additional agreements as may be necessary or desirable
to give full effect to the foregoing.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration, in the terms of the Trust Securities or in the
Trust Indenture Act and, after default, shall exercise the same degree of care
as a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Preferred Securities will not be required to offer such
indemnity in the event such holders, by exercising their voting rights, direct
the Property Trustee to take any action following a Declaration Event of
Default. The Property Trustee also serves as Preferred Securities Guarantee
Trustee.
PAYING AGENT
The Property Trustee acts as the initial paying agent. The Company may
designate an additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or AAG Holding may require) in respect of any tax or
other government charges that may be imposed in relation to it
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or be characterized as other than a grantor trust
for United States federal income tax purposes. AAG Holding is authorized and
directed to conduct its affairs so that the Subordinated Debentures will be
treated as indebtedness of AAG Holding for United States federal income tax
purposes. In this connection, AAG Holding and the Regular Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Articles of Incorporation of AAG
Holding, that each of AAG Holding and the Regular Trustees determines in their
discretion to be necessary or desirable to achieve such end, as long as such
action does not adversely affect the interests of the holders of the Preferred
Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
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DESCRIPTION OF TRUST GUARANTEE
The Old Trust Guarantee was executed and delivered by the Company
concurrently with the issuance of the Old Preferred Securities for the benefit
of the holders from time to time of the Preferred Securities. As soon as
practicable after the Expiration Date, the Old Trust Guarantee will be exchanged
by the Company for the New Trust Guarantee. The New Trust Guarantee will be
qualified as an indenture under the Trust Indenture Act. The Bank of New York
will act as independent indenture trustee for Trust Indenture Act purposes under
the New Trust Guarantee (the "Preferred Securities Guarantee Trustee"). The
terms of the Trust Guarantee will be those set forth in such Trust Guarantee and
those made part of such Trust Guarantee by the Trust Indenture Act. The summary
of certain provisions of the Trust Guarantee does not purport to be complete and
is subject to and qualified in its entirety by reference to the provisions of
the form of New Trust Guarantee, a copy of which has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part, and the Trust
Indenture Act. The New Trust Guarantee will be held by the Preferred Securities
Guarantee Trustee for the benefit of the holders of the Preferred Securities of
the Trust.
GENERAL
Pursuant to the Trust Guarantee, the Company will agree, to the extent set
forth therein, to pay in full to the holders of the Preferred Securities, the
Trust Guarantee Payments (as defined below) (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities (the "Trust Guarantee
Payments"), to the extent not paid by the Trust, will be subject to the Trust
Guarantee (without duplication): (i) any accrued and unpaid distributions that
are required to be paid on such Preferred Securities, to the extent the Trust
shall have funds available therefor, (ii) the redemption price, including all
accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), to the extent the Trust has funds available therefor, with respect to
any Preferred Securities called for redemption by the Trust and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Subordinated Debentures to
the holders of Preferred Securities or the redemption of all of the Preferred
Securities upon maturity or redemption of the Subordinated Debentures) the
lesser of (a) the aggregate of the liquidation amount and ail accrued and unpaid
distributions on such Preferred Securities to the date of payment, to the extent
the Trust has funds available therefor or (b) the amount of assets of the Trust
remaining for distribution to holders of such Preferred Securities in
liquidation of the Trust. The Company's obligation to make a Trust Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of Preferred Securities or by causing the Trust to pay
such amounts to such holders.
The Trust Guarantee will not apply to any payment of distributions except
to the extent the Trust shall have funds available therefor. If AAG Holding does
not make interest or principal payments on the Subordinated Debentures purchased
by the Trust and the Company does not fulfill its obligations under the Debt
Guarantee, the Trust will not pay distributions on the Preferred Securities
issued by the Trust and will not have funds available therefor.
The Company has also agreed to guarantee the obligations of the Trust with
respect to the Common Securities (the "Trust Common Guarantee") to the same
extent as the Trust Guarantee, except that, if an Event of Default under the
Indenture has occurred and is continuing, holders of Preferred Securities under
the Trust Guarantee shall have priority over holders of the Common Securities
under the Trust Common Guarantee with respect to distributions and payments on
liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Trust Guarantee, the Company will covenant that, so long as any
Preferred Securities remain outstanding, if there shall have occurred any event
of default under the Trust Guarantee or a Declaration Event of Default under the
Declaration, then (a) the Company will not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock; (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
the Company which rank pari passu with or junior to the Trust Guarantee and (c)
the Company shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Trust Guarantee or the Debt Guarantee); provided,
however, that the Company may declare and pay a stock dividend where the
dividend is paid in the form of the same stock as that on which the dividend is
being paid.
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MODIFICATION OF THE TRUST GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent of such holders
will be required), the Trust Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of such Preferred Securities is set forth above under "Description of
the Preferred Securities-Voting Rights." All guarantees and agreements contained
in the Trust Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Company and shall inure to the benefit of the holders
of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Trust Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Preferred Securities Guarantee Trustee in respect of
the Trust Guarantee or to direct the exercise of any trust or power conferred
upon the Preferred Securities Guarantee Trustee under the Trust Guarantee.
If the Preferred Securities Guarantee Trustee fails to enforce the Trust
Guarantee, any record holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Preferred Securities
Guarantee Trustee's rights under the Trust Guarantee without first instituting a
legal proceeding against the Trust, the Preferred Securities Guarantee Trustee
or any other person or entity. Notwithstanding the foregoing, if the Company has
failed to make a Trust Guarantee Payment, a record holder of Preferred
Securities may directly institute a proceeding against the Company for
enforcement of the Trust Guarantee for such payment to the record holder of the
Preferred Securities of the principal of or interest on the Subordinated
Debentures on or after the respective due dates specified in the Subordinated
Debentures, and the amount of the payment will be based on the holder's pro rata
share of the amount due and owing on all of the Preferred Securities. The
Company has waived any right or remedy to require that any action be brought
first against the Trust or any other person or entity before proceeding directly
against the Company.
The Company will be required to provide annually to the Preferred
Securities Guarantee Trustee a statement as to the performance by the Company of
certain of its obligations under the Trust Guarantee and as to any default in
such performance.
INFORMATION CONCERNING THE PREFERRED SECURITIES GUARANTEE TRUSTEE
The Preferred Securities Guarantee Trustee, prior to the occurrence of a
default, undertakes to perform only such duties as are specifically set forth in
the Trust Guarantee and, after default with respect to the Trust Guarantee,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provision, the Preferred
Securities Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Guarantee at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE TRUST GUARANTEE
The Trust Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Subordinated Debentures held by the Trust to the holders of all of the
Preferred Securities or upon full payment of the amounts payable in accordance
with the Declaration upon liquidation of the Trust. The Trust Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities must restore payment of any sums paid
under such Preferred Securities or the Trust Guarantee.
STATUS OF THE TRUST GUARANTEE
The Trust Guarantee will constitute an unsecured obligation of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company except those liabilities of the Company made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by the Company in respect of any
preferred or preference stock of any affiliate of the Company and (iii) senior
to
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<PAGE> 40
the Company's Common Stock. The terms of the Preferred Securities provide that
each holder of Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Trust Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
GOVERNING LAW
The Trust Guarantee will be governed by and construed in accordance with
the law of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBENTURES AND DEBT GUARANTEE
The Old Subordinate Debentures were issued and the New Subordinated
Debentures are to be issued under the Indenture, dated as of March 11, 1997 (the
"Indenture"), among AAG Holding as issuer, AAG, as Guarantor, and The Bank of
New York, as Trustee (the "Indenture Trustee"), the form of which is filed as an
Exhibit to the Registration Statement of which this Prospectus is a part, and
the Trust Indenture Act. Certain capitalized terms used herein are defined in
the Indenture. The following description does not purport to be complete and is
subject to, and is qualified in its entirely by reference to, the Indenture.
At any time, AAG Holding will have the right to liquidate the Trust and
cause the Subordinated Debentures and Debt Guarantee to be distributed to the
holders of the Preferred Securities in liquidation of the Trust. See
"Description of the Preferred Securities-Distribution of the Subordinated
Debentures."
GENERAL
The Subordinated Debentures will be issued as unsecured subordinated debt
securities under the Indenture. The Subordinated Debentures will be limited in
aggregate principal amount to approximately $77.3 million, such amount being the
sum of the aggregate stated liquidation amount of the Preferred Securities and
the capital contributed by AAG Holding in exchange for the Common Securities.
The Subordinated Debentures are not subject to a sinking fund provision.
The entire principal amount of the Subordinated Debentures will mature and
become due and payable, together with any accrued and unpaid interest thereon
including Compounded Interest (as hereinafter defined), if any, on January 15,
2027, subject to the election of AAG Holding to shorten or extend the scheduled
maturity date of the Subordinated Debentures, which election, in the case of an
extension of the scheduled maturity date, is subject to AAG Holding satisfying
certain financial conditions. See "-Option to Change Scheduled Maturity Date."
The Subordinated Debentures will be fully and unconditionally guaranteed on a
subordinated basis as to principal, premium, if any, and interest by the
Company.
If Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, it is
presently anticipated that such Subordinated Debentures will be issued in
definitive certificated form, such Subordinated Debentures will be in
denominations of $1,000 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Principal and interest are payable,
the transfer of the Subordinated Debentures is registrable and Subordinated
Debentures is exchangeable for Subordinated Debentures of other denominations of
a like aggregate principal amount at the principal corporate trust office of the
Indenture Trustee in New York, New York; provided that payment of interest may
be made at the option of AAG Holding by check mailed to the address of the
persons entitled thereto.
The Indenture does not contain provisions that afford the holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction involving the Company or AAG Holding or other similar transaction
that may adversely affect such holders.
DEBT GUARANTEE
The Indenture provides that the Company will fully and unconditionally
guarantee the due and punctual payment of the principal and interest on the
Subordinated Debentures when and as the same shall become due and payable,
whether at maturity, upon redemption or otherwise. Since AAG is a holding
company, the right of the Company and, hence, the right of creditors of the
Company (including the
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<PAGE> 41
holders of the Subordinated Debentures) to participate in any distribution of
the assets of any subsidiaries of the Company, whether upon liquidation,
reorganization or otherwise, is subject to prior claims of creditors of its
subsidiaries, except to the extent that claims of the Company itself as a
creditor of a subsidiary may be recognized.
SUBORDINATION
The Indenture provides that the Subordinated Debentures are subordinated
and junior in right of payment to all Senior Indebtedness of AAG Holding and
that the Debt Guarantee is subordinated and junior in right of payment to all
Senior Indebtedness of the Company. No payment of principal of (including
redemption payments), premium, if any, or interest on, the Subordinated
Debentures and no payment under the Debt Guarantee may be made if any Senior
Indebtedness of AAG Holding or the Company, as the case may be, is not paid when
due, any applicable grace period with respect to such default has ended and such
default has not been cured or waived or ceased to exist, or if the maturity of
any Senior Indebtedness of AAG Holding or the Company, as the case may be, has
been accelerated because of a default. Upon any distribution of assets of AAG
Holding or the Company to creditors upon any dissolution, winding up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal of,
premium, if any, and interest due or to become due on, all Senior Indebtedness
of AAG Holding or the Company, as the case may be, (including interest after the
commencement of any bankruptcy insolvency, receivership or other proceedings at
the rate specified in the applicable Senior Indebtedness, whether or not such
interest is an allowable claim in any such proceeding) must be first paid in
full before the holders of Subordinated Debentures or the Debt Guarantee are
entitled to receive or retain any payment The rights of the holders of the
Subordinated Debentures and the Debt Guarantee will be subrogated to the rights
of the holders of Senior Indebtedness of AAG Holding or the Company, as the case
may be, to receive payments or distributions applicable to Senior Indebtedness
until the principal of (and premium, if any) and interest on the Subordinated
Debentures or the Debt Guarantee, as the case may be, (including interest after
the commencement of any bankruptcy, insolvency, receivership or other
proceedings at the rate specified in the applicable Senior Indebtedness, whether
or not such interest is an allowable claim in any such proceeding) are paid in
full. In addition, the Subordinated Debentures and the Debt Guarantee will rank
at least pari passu with all other subordinated debt securities and debt
guarantees initially issued to other trusts, partnerships or other entities
affiliated with the Company in connection with an issuance of securities similar
to the Preferred Securities.
The term "Senior Indebtedness" means (i) the principal, premium, if any,
and interest in respect of (A) indebtedness of such obligor for money borrowed
and (B) indebtedness evidenced by securities, debentures, bonds or other similar
instruments issued by such obligor; (ii) all capital lease obligations of such
obligor; (iii) all obligations of such obligor issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such obligor and
all obligations of such obligor under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(iv) all obligations of such obligor for the reimbursement on any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction; (v) all obligations of the type referred to in clauses (i) through
(iv) above of other persons for the payment of which such obligor is responsible
or liable as obligor, guarantor or otherwise, including under all support
agreements or guarantees by such obligor of debentures, notes and other
securities issued by its subsidiaries; and (vi) all obligations of the type
referred to in clauses (i) through (v) above of other persons secured by any
lien on any property or asset of such obligor (whether or not such obligation is
assumed by such obligor); except in each case for (1) any such indebtedness that
is by its terms subordinated to or pari passu with the Subordinated Debentures,
and (2) any indebtedness in respect of debt securities issued to any trust, or a
trustee of such trust, partnership or other entity affiliated with AAG Holding
or the Company that is a financing entity for such obligor (a "financing
entity") in connection with the issuance by such financing entity of securities
that are similar to the Preferred Securities. Such Senior Indebtedness shall
continue to be Senior Indebtedness and be entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by AAG Holding or the Company.
OPTIONAL REDEMPTION
The Subordinated Debentures are not redeemable prior to March 1, 2007
unless a Special Event has occurred. The Subordinated Debentures are redeemable
prior to maturity at the option of the Company on or after March 1, 2007, in
whole or in part at any time at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest, if any,
to the date of redemption, if redeemed during the twelve-month period beginning
on March 1 of the years indicated below:
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<PAGE> 42
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2007 104.44%
2008 103.99%
2009 103.55%
2010 103.11%
2011 102.66%
2012 102.22%
2013 101.77%
2014 101.33%
2015 100.89%
2016 100.43%
</TABLE>
On or after March 1, 2017, the redemption price will be 100%, plus
accrued and unpaid interest, if any, to the date of redemption.
The Subordinated Debentures are also redeemable at any time in whole
(but not in part), within 90 days of the occurrence of a Special Event, at a
redemption price equal to 100% of the principal amount of such Subordinated
Debentures.
INTEREST
Each Subordinated Debenture shall bear interest at the rate of 87/8%
per annum from the original date of issuance, or from the most recent interest
payment date to which interest has been paid or provided for, payable
semi-annually in arrears on January 15 and July 15 of each year (each, an
"Interest Payment Date"), commencing July 15, 1997, to the person in whose name
such Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
Any installment of interest not punctually paid will cease to be payable to the
holders of the Subordinated Debentures on the regular record date and may be
paid to the person in whose name the Subordinated Debentures are registered at
the close of business on a special record date to be fixed by the Indenture
Trustee for the payment of such defaulted interest, notice of which shall be
given to the holders of the Subordinated Debentures not less than 10 days prior
to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange,
interdealer quotation system or other organization on which the Subordinated
Debentures may be listed, and upon such notice as may be required by such
exchange, system or organization.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full semi-annual period for which interest is
computed, will be computed on the basis of the actual number of days elapsed in
such 180 day period. In the event that any date on which interest is payable on
the Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO CHANGE SCHEDULED MATURITY DATE
The Scheduled Maturity Date of the Subordinated Debentures is January
15, 2027. AAG Holding, however, may, extend such maturity date (January 15, 2027
or the maturity date then in effect, as the case may be, is hereinafter referred
to as the "Maturity Date") for one or more periods, but in no event later than
the earlier of (i) January 15, 2046 or (ii) the "Interest Deduction Date." The
"Interest Deduction Date" shall mean the date which is six months earlier than
the ending date of the maximum term (beginning on the date of issue of the
Subordinated Debentures and including any extensions thereof), as determined
under any federal statute applicable by its terms to the Subordinated Debentures
which is enacted at any time after the issuance of the Subordinated Debentures
(including, but not limited to, at any time after an extension of the Maturity
Date), of a debt instrument for which interest is deductible for federal income
tax purposes. In no event shall the extended Maturity Date be later than the
Interest Deduction Date even if the Maturity Date has previously been extended
to a date beyond the Interest Deduction Date. AAG Holding must exercise its
right to extend the term at least 90 days prior to the Maturity Date then in
effect and must satisfy the following conditions on the date AAG Holding
exercises such right and on the Maturity Date then in effect prior to such
proposed extension: (a) AAG Holding is not in bankruptcy or otherwise insolvent,
(b) AAG
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Holding is not in default on any Subordinated Debenture issued to the Trust or
to any trustee of the Trust in connection with an issuance of Trust Securities
by the Trust, (c) AAG Holding has made timely payments on the Subordinated
Debentures for the immediately preceding six quarters without deferrals, (d) the
Trust is not in arrears on payments of distributions on the Trust Securities,
(e) the Subordinated Debentures or Preferred Securities are rated investment
grade by any one of Standard & Poor's Corporation, Moody's Investors Service,
Inc., Fitch Investor Services, Duff & Phelps Credit Rating Company or any other
nationally recognized statistical rating organization, and (f) the final
maturity of such Subordinated Debentures is not later than the 49th anniversary
of the issuance of the Preferred Securities. Pursuant to the Declaration, the
Regular Trustees are required to give notice of AAG Holding's election to change
the Maturity Date to the holders of the Preferred Securities.
In addition, if AAG Holding exercises its right to liquidate the
Trust and distribute the Subordinated Debentures as discussed above under
"Description of the Preferred Securities-Distribution of the Subordinated
Debentures," effective upon such exercise, the Maturity Date of the Subordinated
Debentures may be changed to (i) any date elected by AAG Holding that is no
earlier than March 1, 2007 and (ii) any date elected by AAG Holding which is not
later than the earlier of (a) January 15, 2046 or (b) the "Interest Deduction
Date"; provided that on the date AAG Holding exercises such right, and on the
Maturity Date in effect prior to such proposed extension, the conditions
specified in the previous paragraph are satisfied.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
AAG Holding has the right, from time to time, to defer payment of
interest on the Subordinated Debentures for up to 10 consecutive semi-annual
periods, provided that no Extension Period may extend beyond the Maturity Date
of the Subordinated Debentures. There could be multiple Extension Periods of
varying lengths during the term of the Subordinated Debentures. At the end of
each Extension Period, if any, AAG Holding shall pay all interest then accrued
and unpaid, together with interest thereon, compounded semi-annually at the rate
specified for the Subordinated Debentures to the extent permitted by applicable
law ("Compounded Interest"). In the event AAG Holding exercises this right, then
during any Extension Period, (a) the Company and AAG Holding shall not declare
or pay any dividends on, make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to any of its
capital stock and (b) the Company and AAG Holding shall not, directly or
indirectly, and will not allow any of their subsidiaries to, make any payment of
interest, principal or premium, if any, on, or repay, repurchase or redeem, any
debt securities issued by the Company and AAG Holding that rank pari passu with
or junior to the Subordinated Debentures; provided, however, that, the
restriction in clause (a) above does not apply (i) to repurchases or
acquisitions of shares of the common stock of the Company or AAG Holding as
contemplated by any employment arrangement, benefit plan or other similar
contract with or for the benefit of employees, officers or directors entered
into in the ordinary course of business, (ii) as a result of an exchange or
conversion of any class or series of the Company's or AAG Holding's capital
stock for common stock, (iii) to the purchase of fractional interests in shares
of the Company or AAG Holding's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged or (iv) to the payment of any stock dividend by the Company or AAG
Holding payable in common stock. Prior to the termination of any such Extension
Period, AAG Holding may further defer payments of interest by extending the
interest payment period; provided, however, that such Extension Period,
including all such previous and further extensions, may not exceed 10
consecutive semi-annual periods or extend beyond the Maturity Date. Upon the
termination of any Extension Period and the payment of all amounts then due, AAG
Holding may commence a new Extension Period, subject to the terms set forth in
this section. No interest during an Extension Period, except at the end thereof,
shall be due and payable. AAG Holding has no present intention of exercising its
right to defer payments of interest by extending the interest payment period on
the Subordinated Debentures. If the Property Trustee shall be the sole holder of
the Subordinated Debentures, AAG Holding shall give the Regular Trustees and the
Property Trustee notice of its selection of such Extension Period one Business
Day prior to the earlier of (i) the date distributions on the Preferred
Securities are payable or (ii) the date the Regular Trustees are required to
give notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Preferred Securities of the record date or
the date such distribution is payable. The Regular Trustees shall give notice of
AAG Holding's selection of such Extension Period to the holders of the Preferred
Securities. If the Property Trustee shall not be the sole holder of the
Subordinated Debentures, AAG Holding shall give the holders of the Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the applicable Interest Payment Date or (ii) the
date upon which AAG Holding is required to give notice to the New York Stock
Exchange (or other applicable self-regulatory organization) or to holders of the
Subordinated Debentures of the record or payment date of such related interest
payment
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COVENANTS
The Indenture requires AAG Holding: (i) to duly and punctually pay
the principal of and interest on the Subordinated Debentures (together with any
additional amounts payable pursuant to the terms thereof) and comply with all
other terms, agreements and conditions contained therein or made in the
Indenture for the benefit of the Subordinated Debentures; (ii) to maintain an
office or agency where the Subordinated Debentures may be presented, surrendered
for payment, transferred or exchanged and where notices to AAG Holding may be
served; (iii) if AAG Holding shall act as its own paying agent for the
Subordinated Debentures, to segregate and hold in trust for the benefit of the
persons entitled thereto a sum sufficient to pay the principal of and premium or
interest, if any, so becoming due; (iv) to appoint a successor trustee whenever
necessary to avoid or fill a vacancy in the office of trustee, (v) to preserve
its corporate existence, (vi) to cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition and (vii) to pay or discharge, before the same shall
become delinquent, all taxes, assessments, government charges, and all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of AAG Holding or a Subsidiary that comprise more than
10% or more of the combined assets of AAG Holding and its Subsidiaries, other
than claims contested in good faith by AAG Holding. The Indenture also requires
AAG Holding to deliver to the Trustee, within 120 days after the end of each
fiscal year, a written statement as to whether, to the best knowledge of the
officer signing the statement, AAG Holding is in compliance with the terms of
the Indenture and, if not, the nature and status of such non-compliance.
In addition, AAG Holding has also covenanted, that for so long as the
Preferred Securities and the Common Securities remain outstanding AAG Holding
will (i) maintain 100% direct or indirect ownership of the Common Securities,
provided, however, that any permitted successor of AAG Holding under the
Indenture may succeed to AAG Holding's ownership of the Common Securities, (ii)
not voluntarily dissolve, wind-up or terminate the Trust, except in connection
with the distribution of Subordinated Debentures or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, (iii)
timely perform its duties as sponsor of the Trust, (iv) use its reasonable
efforts to cause the Trust (a) to remain a business trust classified as a
grantor trust, except in connection with a distribution of the Subordinated
Debentures to the holders of Preferred Securities in liquidation of the Trust,
the redemption of all of the Preferred Securities and Common Securities of the
Trust or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration, and (b) continue not to be treated as an association taxable as
a corporation for United States federal income tax purposes other than in
connection with a distribution of Subordinated Debentures to the holders of
Preferred Securities in liquidation of the Trust, and (v) use its reasonable
efforts to cause each holder of Preferred Securities and Common Securities to be
treated as owning an undivided beneficial interest in the Subordinated
Debentures.
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
Upon any consolidation of AAG Holding with, or merger of AAG Holding
into, any other person or any conveyance, transfer or lease of the properties
and assets of AAG Holding substantially as an entirety, the successor person
formed by such consolidation or into which AAG Holding is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, AAG Holding under the Indenture
with the same effect as AAG Holding prior to such transaction, and thereafter,
except in the case of a lease, the predecessor person shall be relieved of all
obligations and covenants under the Indenture and the Subordinated Debentures.
INDENTURE EVENTS OF DEFAULT
The occurrence of any of the following events with respect to the
Subordinated Debentures will, unless otherwise specified, constitute an "Event
of Default" with respect to the Subordinated Debentures: (a) default for thirty
(30) days in the payment of any installment of interest on the Subordinated
Debentures; (b) default in the payment of any of the principal of the
Subordinated Debentures when due, whether at maturity, upon redemption, by
declaration of acceleration or otherwise; (c) default for sixty (60) days by AAG
Holding in the observance or performance of any other covenant or agreement
contained in the Subordinated Debentures or the Indenture (other than a covenant
or agreement default which is specifically designated as having a different time
period) for the benefit of the Subordinated Debentures after written notice
thereof as provided in the Indenture; (d) (i) an event of default occurs under
any instrument (including the Indenture) under which there is at the time
outstanding, or by which there may be secured or evidenced, any indebtedness of
the Company or AAG Holding for money borrowed by the Company or AAG Holding, as
the case may be, (other than non-recourse indebtedness) which results in
acceleration or nonpayment at maturity (after giving effect to any applicable
grace period) of such indebtedness in an aggregate amount exceeding $15,000,000;
or any such indebtedness exceeding $15,000,000 shall otherwise be declared
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to be due and payable, or required to be prepaid (other than by a regularly
scheduled prepayment or exercise of an optional prepayment right), prior to the
stated maturity thereof; or any failure by the Company or AAG Holding to make
any payment under a guarantee in respect of any indebtedness, in each case in an
amount of at least $15,000,000, on the date such payment is due (or within any
grace period specified in the agreement or other instrument governing such
indebtedness); in which case the Company or AAG Holding shall immediately give
notice to the Trustee of such acceleration or non-payment, and (ii) there shall
have been a failure to cure such default or to pay or discharge such defaulted
indebtedness within ten (10) days after written notice thereof as provided in
the Indenture; (e) any final non-appealable judgment or order for the payment of
money in excess of $15,000,000 is rendered against the Company or AAG Holding,
such judgment or order is not satisfied by payment or bonded and either
enforcement proceedings have been commenced by the judgment creditor or there
has been a period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not
have been in effect; provided, however, that a judgment or order fully covered
by insurance (or a judgment or order for the payment of money covered by
insurance to the extent of all payments in excess of $15,000,000), which
coverage has not been disputed by the insurer, shall not be considered a default
or an Event of Default; or (f) certain events of bankruptcy, insolvency or
reorganization relating to the Company or AAG Holding.
In addition, an Event of Default shall include the voluntary or
involuntary dissolution or winding up of the business of the Trust or other
termination of the existence of the Trust, other than in connection with (i) the
distribution of the Subordinated Debentures to holders of the Trust Securities
in liquidation of their interests in the Trust, (ii) the redemption of all of
the outstanding Trust Securities, or (iii) certain mergers, consolidations or
amalgamations of the Trust, each as permitted by the Declaration.
If any Event of Default shall occur and be continuing, the Property
Trustee, as the holder of the Subordinated Debentures, will have the right to
declare the principal of and the interest on the Subordinated Debentures
(including any Compounded Interest and any other amounts payable under the
Indenture) to be forthwith due and payable and to enforce its other rights as a
creditor with respect to the Subordinated Debentures subject to the
subordination provisions in the Indenture. An Event of Default also constitutes
a Declaration Event of Default. If the Property Trustee fails to enforce its
rights with respect to the Subordinated Debentures held by the Trust, any record
holder of Preferred Securities may institute legal proceedings directly against
AAG Holding to enforce the Property Trustee's rights under such Subordinated
Debentures without first instituting any legal proceedings against such Property
Trustee or any other person or entity. In addition, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of AAG Holding to pay interest or principal on the Subordinated
Debentures issued to the Trust on the date such interest or principal is
otherwise payable and the Company fails to make payments under the Debt
Guarantee with respect to such amounts, then a record holder of Preferred
Securities may institute a proceeding directly against AAG Holding for
enforcement of payment to the record holder of the Preferred Securities of the
principal of or interest on the Subordinated Debentures on or after the
respective due dates specified in the Subordinated Debentures, and the amount of
the payment will be based on the holder's pro rata share of the amount due and
owing on all of the Preferred Securities. The holders of Preferred Securities in
certain circumstances have the right to direct the Property Trustee to exercise
its rights, with respect to other than principal and interest payments on the
Subordinated Debentures, as the holder of the Subordinated Debentures. See
"Description of the Preferred Securities-Declaration Events of Default" and
"Description of the Preferred Securities-Voting Rights."
MISCELLANEOUS
The Indenture will provide that the AAG Holding will pay all fees and
expenses related to (i) the sale of the Trust Securities and the Subordinated
Debentures, (ii) the organization, maintenance and dissolution of the Trust,
(iii) the retention of the Trustees and (iv) the enforcement by the Property
Trustee of the rights of the holders of the Preferred Securities.
The Indenture and the Subordinated Debentures will be governed by,
and construed in accordance with, the laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED
DEBENTURES, THE DEBT GUARANTEE AND THE TRUST GUARANTEE
As set forth in the Declaration, the sole purposes of the Trust are
to (i) issue the Trust Securities evidencing undivided beneficial interests in
the assets of the Trust, (ii) invest the proceeds from such issuance and sale in
the Subordinated Debentures and (iii) engage in only those other activities
necessary or incidental thereto.
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As long as payments of interest and other payments are made when due
on the Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because: (i) the
aggregate principal amount of Subordinated Debentures will be equal to the sum
of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and the interest and other payment dates on the Subordinated
Debentures will match the distribution rate and distribution and other payment
dates for the Trust Securities; (iii) AAG Holding shall pay all, and the Trust
shall not be obligated to pay, directly or indirectly, any, costs, expenses,
debts and obligations (other than with respect to the Trust Securities) related
to the Trust; and (iv) the Declaration provides that the Trustees shall not
cause or permit the Trust to, among other things, engage in any activity that is
not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are
available) and other payments due on the Preferred Securities (to the extent
funds therefor are available) are guaranteed by the Company as and to the extent
set forth under "Description of Trust Guarantee." If AAG Holding does not make
interest and/or principal payments on the Subordinated Debentures purchased by
the Trust and the Company does not make payments under the Debt Guarantee, the
Trust will not have sufficient funds to pay distributions on the Preferred
Securities. The Trust Guarantee will not apply to the payment of distributions
and other payments on the Preferred Securities when the Trust does not have
sufficient funds to make such distributions or other payments.
The Debt Guarantee will constitute an unsecured obligation of the
Company and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Company except those made pari passu or subordinate by
their terms, and (ii) senior to the Company's preferred and common stock
The Trust Guarantee will constitute an unsecured obligation of the
Company and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Company except those made pari passu or subordinate by
their terms, (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company and (iii) senior to the Company's common stock.
The Trust Guarantee, when taken together with the back-up
undertakings, consisting of obligations the Company as set forth in the
Declaration (including the obligation to pay expenses of the Trust), the
Indenture, the Debt Guarantee and the Subordinated Debentures issued to the
Trust, provide a full and unconditional guarantee by the Company of the
Preferred Securities. If the Preferred Securities Guarantee Trustee fails to
enforce the Trust Guarantee, any record holder of Preferred Securities may
institute a legal proceeding directly against the Company to enforce the
Preferred Securities Guarantee Trustee's rights under the Trust Guarantee
without first instituting a legal proceeding against the Trust, the Preferred
Securities Guarantee Trustee or any other person or entity. In addition, if the
Company has failed to make a Trust Guarantee Payment, a record holder of
Preferred Securities may directly institute a proceeding against the Company for
enforcement of the Trust Guarantee for such payment to the record holder of the
Preferred Securities of the principal of or interest on the Subordinated
Debentures on or after the respective due dates specified in the Subordinated
Debentures, and the amount of the payment will be based on the holder's pro rata
share of the amount due and owing on all of the Preferred Securities. The
Company has waived any right or remedy to require that any action be brought
first against the Trust or any other person or entity before proceeding directly
against the Company.
If the Property Trustee fails to enforce its rights with respect to
the Subordinated Debentures or Debt Guarantee held by the Trust, any record
holder of Preferred Securities may institute legal proceedings directly against
AAG Holding or the Company to enforce the Property Trustee's rights under such
Subordinated Debentures or Debt Guarantee, respectively, without first
instituting any legal proceedings against such Property Trustee or any other
person or entity. In addition, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of AAG Holding
to pay interest, principal or other required payments on the Subordinated
Debentures issued to the Trust on the date such interest, principal or other
required payment is otherwise payable, then a record holder of Preferred
Securities may institute a Direct Action against AAG Holding for enforcement of
such payment on the Subordinated Debentures on or after the respective due dates
specified in the Subordinated Debentures. To the extent the Company or AAG
Holding makes a payment to a record holder of Preferred Securities in connection
with proceedings by such record holder directly against the Company or AAG
Holding, the Company or AAG Holding, as the case may be, will be subrogated to
the rights of the record holder of Preferred Securities to the extent of
payments made by the Company or AAG Holding to the record holder. If another
Indenture Event of Default occurs and is continuing, the Declaration provides a
mechanism whereby the holders of the Preferred Securities, using the procedures
described in "Description of the Preferred Securities-Voting Rights," may direct
the Property Trustee to enforce its rights under the Subordinated Debentures.
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and disposition of
Preferred Securities. Unless otherwise stated, this summary deals only with
Preferred Securities held as capital assets by holders who purchased the
Preferred Securities upon original issuance ("Initial Holders"). It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, or persons that will hold the
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Code, U.S. Treasury
regulations thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis. Any such changes may be applied retroactively in a manner
that could cause the tax consequences to vary substantially from the
consequences described below, possibly adversely affecting a beneficial owner of
the Preferred Securities. In particular, legislation has been proposed that
could adversely affect AAG Holding's ability to deduct interest on the
Subordinated Debentures, which may in turn permit AAG Holding to cause a
redemption of the Preferred Securities prior to March 1, 2007. See "-Proposed
Tax Law Changes."
EXCHANGE OF PREFERRED SECURITIES
The issuance of New Preferred Securities in exchange for Old
Preferred Securities will not be a taxable event, and the federal income tax
characteristics of the New Preferred Securities (e.g., tax basis and holding
period) will be the same as those of the Old Preferred Securities surrendered in
exchange therefor.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES AND THE TRUST
In connection with the issuance of the Subordinated Debentures, Akin,
Gump, Strauss, Hauer & Feld, L.L.P. ("Tax Counsel"), tax counsel for the
Company, AAG Holding and the Trust, has rendered its opinion generally to the
effect that, although not entirely free from doubt, under current law and
assuming full compliance with the terms of the Indenture (and certain other
documents), and based upon certain facts and assumptions contained in such
opinion, the Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of AAG Holding.
In connection with the issuance of the Preferred Securities, Tax
Counsel has rendered its opinion generally to the effect that under current law
and assuming full compliance with the terms of the Declaration and other
documents, and based upon certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of
Preferred Securities generally will be considered the owner of an undivided
interest in the Subordinated Debentures. Each holder will be required to include
in its gross income its allocable share of income on the Subordinated
Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued income tax regulations applicable to all debt
instruments that, like the Subordinated Debentures, are issued on or after
August 13,1996, remote contingencies that stated interest will not be timely
paid are ignored in determining whether a debt instrument is issued with OID.
OID must be included in income by all holders as it accrues economically on a
daily basis, without regard to when it is paid in cash or whether a particular
holder generally uses the cash method of accounting. AAG Holding has concluded
that the likelihood of its exercising its option to defer payments of interest
is remote because exercising that option would prevent AAG Holding and the
Company from declaring dividends on its stock. Based upon this conclusion, and
although not entirely free from doubt, in the opinion of Tax Counsel the
Subordinated Debentures will not include OID. As a consequence, holders of the
Preferred Securities should report interest under their own methods of
accounting (e.g., cash or accrual) instead of under the daily economic accrual
rules for OID instruments.
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Under the new regulations, however, if AAG Holding exercises its
right to defer payments of interest, the Subordinated Debentures will become OID
instruments, and all holders of the Preferred Securities will be required to
accrue interest on a daily basis during any Extension Period even though AAG
Holding will not pay the interest in cash until the end of the Extension Period,
and even though a holder may use the cash method of accounting. Accordingly,
application of the OID Rules would result in acceleration of income to the
holder. A holder who disposes of the Preferred Securities during such an
Extension Period may suffer a loss because the market value of the Trust
Securities will likely fall if AAG Holding exercises its option to defer
payments of interest on the Subordinated Debentures. Furthermore, the market
value of the Preferred Securities may not reflect the accumulated distribution
that will be paid at the end of the Extension Period, and a holder who sells the
Preferred Securities during the Extension Period will not receive from AAG
Holding any cash related to the interest income the holder accrued and included
in its taxable income under the OID rules (because that cash will be paid to the
holder of record at the end of the Extension Period).
If the Subordinated Debentures become OID instruments (i.e., if AAG
Holding ever exercises its right to defer payment of interest), the Subordinated
Debentures will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of the Extension Period, all holders will
be required to continue accruing interest on the Subordinated Debentures on a
daily basis, regardless of their method of accounting.
The new regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service ("IRS"), and it is possible that
the IRS could take a position contrary to the interpretation herein.
Corporate holders of the Preferred Securities will not be entitled to
a dividends-received deduction with respect to any income recognized with
respect to the Preferred Securities.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of Preferred Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Subordinated
Debentures with "market discount" or "acquisition premium" as such phrases are
defined for United States federal income tax purposes. Such holders are advised
to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
As described under the caption "Description of the Preferred
Securities-Distribution of the Subordinated Debentures," Subordinated Debentures
may be distributed to holders in exchange for the Preferred Securities and in
liquidation of the Trust. Under current law, such a distribution would be
treated for United States federal income tax purposes as a non-taxable event to
each holder, and each holder would receive an aggregate tax basis in the
Subordinated Debentures equal to such holder's aggregate tax basis in its
Preferred Securities. A holder's holding period in the Subordinated Debentures
so received in liquidation of the Trust would include the period during which
the Preferred Securities were held by such holder. If, however, the liquidation
of the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Subordinated
Debentures, the distribution of the Subordinated Debentures to holders would be
a taxable event to each holder and a holder would recognize gain or loss as if
the holder had exchanged its Preferred Securities for the Subordinated
Debentures it received upon liquidation of the Trust.
Under certain circumstances described herein (see "Description of the
Preferred Securities-Special Event Redemption"), the Subordinated Debentures may
be redeemed for cash, with the proceeds of such redemption distributed to
holders in redemption of their Preferred Securities. Under current law, such a
redemption would constitute a taxable disposition of the redeemed Preferred
Securities for United States federal income tax purposes, and a holder would
recognize gain or loss as if it sold such redeemed Preferred Securities for
cash. See "-Sales of Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss
equal to the difference between its adjusted tax basis in the Preferred
Securities and the amount realized on the sale of such Preferred Securities.
Assuming AAG Holding does not defer interest on the Subordinated Debentures by
extending the interest payment period, a holder's adjusted tax basis in the
Preferred Securities generally will equal its initial purchase price. Subject to
the market discount rules described above and the discussion below regarding
accrued and
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unpaid interest, such gain or loss generally will be a capital gain or loss and
generally will be a long-term capital gain or loss if the Preferred Securities
have been held for more than one year.
The Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. If AAG Holding exercises its right to defer payments of
interest, a holder who disposes of Preferred Securities between record dates for
payments of distributions thereon will be required to include in income as
ordinary income, accrued and unpaid interest on the Subordinated Debentures
through the date of disposition, and to add such amount to such holder's
adjusted tax basis in such holder's pro rata share of the underlying
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all accrued but
unpaid interest) a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. Accrual basis taxpayers would be
subjected to similar treatment without regard to AAG Holding's election to
defer.
UNITED STATES ALIEN HOLDERS
Prospective purchasers of Preferred Securities that are United States
Alien Holders should consult their tax advisors with respect to the tax
consequences, U.S. federal and otherwise, of the purchase, ownership and
disposition of Preferred Securities. For purposes of this discussion, a "United
States Alien Holder" includes any corporation, individual, partnership, estate
or trust that is, as to the United States, a foreign corporation, a non-resident
alien individual, a foreign partnership, or a non-resident fiduciary of a
foreign estate or trust.
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's federal income tax, provided the
required information is provided to the Internal Revenue Service.
PROPOSED TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the
"Bill") was introduced in the 104th Congress which would have, among other
things, generally denied interest deductions for interest or OID on an
instrument issued by a corporation that has a maximum term of more than 20 years
and that is not shown as indebtedness on the consolidated balance sheet of the
issuer. The above-described provisions of the Bill were proposed to be effective
generally for instruments issued on or after December 7, 1995. If these
provisions were to apply to the Subordinated Debentures, AAG Holding would not
be able to deduct interest on the Subordinated Debentures. However, leaders of
the Senate Finance and House Ways and Means Committees opposed application of
any such provisions, if adopted, to instruments issued prior to the date of
appropriate congressional action. The 104th Congress adjourned without enacting
the Bill. On February 7, 1997, as part of its 1998 budget proposal, the
Administration made proposals similar to those of March 19, 1996, except that
the denial of interest or OID deductions would apply to instruments with maximum
terms of over 15 years. However, the proposals would be effective only for
instruments issued on or after the date of first Committee action. No such
committee action has taken place. There can be no assurance, however, that
current or future legislative or administrative proposals or final legislation
will not adversely affect the ability of AAG Holding to deduct interest on the
Subordinated Debentures or otherwise affect the tax treatment described herein.
Such a change, therefore, could give rise to a Tax Event, which would permit AAG
Holding to cause a redemption of the Preferred Securities or to dissolve the
Trust and distribute the Subordinated Debentures to the holders of Trust
Securities in liquidation of the Trust.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
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LEGAL MATTERS
The validity of the Subordinated Debentures, the Trust Guarantee and
the Debt Guarantee will be passed upon for the Company, AAG Holding and the
Trust by Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio. Certain United
States federal income taxation matters also will be passed upon for AAG Holding
and the Trust by Akin, Gump, Strauss, Hauer & Feld, L.L.P., Washington, D.C.
Attorneys in the Keating, Muething & Klekamp, P.L.L. and Akin, Gump, Strauss,
Hauer & Feld, L.L.P. law firms hold shares of Common Stock of the Company.
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Trust by Mark F. Muething, Esq. Senior
Vice President and General Counsel of the Company who beneficially owns 24,928
shares of AAG Common Stock.
EXPERTS
The consolidated financial statements of AAG appearing in AAG's
Annual Report (Form 10-K) for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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================================================================================
No dealer, salesperson or other individual has been authorized to give any
information or make any representation not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been autho-
rized by AAG, AAG Holding or the Trust. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, the Notes in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of AAG, AAG Holding or the Trust since the date hereof.
TABLE OF CONTENTS
Available Information
Incorporation of Certain Documents by Reference
Prospectus Summary
Risk Factors
Use of Proceeds
The Trust
The Company
Capitalization
Accounting Treatment
Ration of Earnings to Fixed Charges
The Exchange Offer
Description of the Preferred Securities
Description of Trust Guarantee
Description of the Subordinated Debentures and Debt
Guaranty
Effect of Obligations under the Subordinated Debentures, the
Debt Guarantee and the Trust Guarantee
United States Federal Income Taxation
Legal Matters
Experts
UNTIL __________, 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO _________, 1997 THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
AMERICAN ANNUITY GROUP
CAPITAL TRUST II
OFFER TO EXCHANGE ITS 8 7/8% CAPITAL TRUST
PREFERRED SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933
FOR ITS OUTSTANDING
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL TRUST PREFERRED
SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AMERICAN ANNUITY GROUP, INC.
PROSPECTUS
_________ , 1997
================================================================================
<PAGE> 52
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
generally and in pertinent part that a Delaware corporation may indemnify its
directors and officer against expenses, judgments, fines, and settlements
actually and reasonably incurred by them in connection with any civil suit or
action, except actions by or in the right of the corporation, or any
administrative or investigative proceeding if, in connection with the matters in
issue, they acted in good faith and in a manner they reasonably believe to be
in, or not opposed to, the best interest of the corporation, and in connection
with any criminal suit or proceeding, if in connection with the matters in
issue, they had no reasonable cause to believe their conduct was unlawful.
Section 145 further provides that, in connection with the defense or settlement
of any action by or in the right of the corporation, a Delaware corporation may
indemnify its directors and officers against expenses actually and reasonably
incurred by them if, in connection with the matters in issue, they acted in good
faith, in a manner they reasonably believed to be in, or not opposed to, the
best interests of the corporation, and without negligence or misconduct in the
performance of their duties to the corporation. Section 145 further permits a
Delaware corporation to grant its directors and officers additional rights of
indemnification through by-law provisions and otherwise.
Article VII of the Registrant's By-Laws provides for indemnification of
directors and officers similar to that provided in Section 145 of DGCL.
Reference is made to Section 102(b)(7) of the DGCL, which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit. Article Ninth of the Registrant's Certificate of
Incorporation eliminates the liability of directors to the extent permitted by
Section 102(b)(7) of the DGCL.
American Annuity Group, Inc. also maintains directors' and officers'
reimbursement and liability insurance and has entered into agreements with its
directors and officers providing for indemnification in certain events.
Ohio Revised Code, Section 1701.13(E), allows indemnification by AAG
Holding Company, Inc. ("AAG Holding") to any person made or threatened to be
made a party to any proceedings, other than a proceeding by or in the right of
AAG Holding, by reason of the fact that he is or was a director, officer,
employee or agent of AAG Holding, against expenses, including judgment and
fines, if he acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of AAG Holding and, with respect to criminal
actions, in which he had no reasonable cause to believe that his conduct was
unlawful. Similar provisions apply to actions brought by or in the right of AAG
Holding, except that no indemnification shall be made in such cases when the
person shall have been adjudged to be liable for negligence or misconduct to AAG
Holding unless deemed otherwise by the court. Indemnification is to be made by a
majority vote of a quorum of disinterested directors or the written opinion of
independent counsel or by the shareholders or by the court. AAG Holding's Code
of Regulations extends such indemnification.
The Declaration of American Annuity Group Capital Trust II (the "Trust")
provides that no Regular Trustee, affiliate of the Regular Trustee, or any
officers, directors, shareholders, members, partners, employees, representatives
or agents of any Regular Trustee, or any employee or agent of the Trust or its
affiliates (each, an "Indemnified Person") shall be liable, responsible or
accountable in damages or otherwise to the Trust or any employee or agent of the
Trust or its affiliates for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
such Declaration or by law, except
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<PAGE> 53
that an Indemnified Person shall be liable for any loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions. The Declaration also provides
that to the fullest extent permitted by applicable law, American Annuity Group,
Inc. shall indemnify and hold harmless each Indemnified Person from and against
any loss, damage or claim incurred by such Indemnified Person by reason of any
act or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
such Declaration or by law, except that an Indemnified Person shall be liable
for any loss, damage or claim incurred by reason of such Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
The Declaration further provides that, to the fullest extent permitted by
applicable law, expenses (including legal fees) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by American Annuity Group, Inc., prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified for the underlying cause of action as authorized by the Declaration.
II-2
<PAGE> 54
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
-------------- -----------------------
<S> <C>
4.1 Indenture for 8 7/8% Subordinated Debentures due January 15, 2027 by and among AAG Holding Company,
Inc., as issuer, The Bank of New York, as Indenture Trustee, and American Annuity Group, Inc., as
Guarantor
4.2 Certificate of Trust of American Annuity Group Capital Trust II
4.3 Amended and Restated Declaration of Trust of American Annuity Group Capital Trust II
4.4 Form of Preferred Securities Guarantee Agreement to be entered into by American Annuity Group, Inc.
and The Bank of New York, as Trustee
4.5 Form of 8 7/8% Subordinated Debenture (contained in Exhibit 4.1)
4.6 Form of Preferred Security (contained in Exhibit 4.3)
4.7 Form of Subordinated Debenture Guarantee by American Annuity Group, Inc. (contained in Exhibit 4.1)
4.8 Securities Purchase Agreements dated March 11, 1997 by and among American Annuity Group, Inc., AAG
Holding Company, Inc., American Annuity Group Capital Trust II and the several purchasers named
therein
4.9 Registration Rights Agreement dated March 11, 1997 by and among American Annuity Group, Inc.,
AAG Holding Company, Inc., American Annuity Group Capital Trust II and the several purchasers of
the Preferred Securities
4.10 Common Securities Guarantee Agreement
5.1 Opinion of Keating, Muething & Klekamp, P.L.L. relating to the 87/8% Subordinated Debentures due
January 15, 2027
5.2 Opinion of Mark F. Muething, Esq., Senior Vice President and General Counsel of American Annuity
Group, Inc. relating to the legality of the Preferred Securities and the Common Securities to be
issued by American Annuity Group Capital Trust II
8.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to United States Federal income tax matters
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Keating, Muething & Klekamp, P.L.L. (Contained on Exhibit 5.1)
23.3 Consent of Mark F. Muething, Esq. (contained on Exhibit 5.2)
23.4 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Contained on Exhibit 8.1)
24 Powers of Attorney (contained on the signature pages)
25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Trustee under the Subordinated Debenture Indenture
25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Property Trustee for the Amended and Restated Declaration of Trust of American
Annuity Group Capital Trust II
25.3 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Guarantee Trustee for the Preferred Securities Guarantee Agreement of American
Annuity Group Capital Trust II
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
* To be filed by amendment or incorporated by reference from other documents
filed with the Commission.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement (i)
to include any prospectus required by section 10(a)(3) of the Securities
Act, (ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
II-3
<PAGE> 55
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement., and (iii) to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's Annual Report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(d) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(e) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
II-4
<PAGE> 56
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Cincinnati, State of Ohio,
as of the 30th day of April, 1997.
AMERICAN ANNUITY GROUP, INC.
By: /s/ Carl H. Lindner
-------------------------------
Carl H. Lindner
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. The persons whose names are marked an
asterisk (*) below hereby designate Mark F. Muething or William J. Maney to sign
all amendments, including post effective amendments to this Registration
Statement as well as any related Registration Statement, or amendment thereto,
filed pursuant to Rule 462(b) promulgated under the Securities Act of 1933.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Carl H. Lindner Chairman of the Board of Directors (Principal April 30, 1997
- ---------------------------------------- Executive Officer)
Carl H. Lindner
/s/ Carl H. Lindner Director April 30, 1997
- ----------------------------------------
S. Craig Lindner
/s/ Robert A. Adams Director April 30, 1997
- ----------------------------------------
Robert A. Adams
/s/ A. Leon Fergenson Director April 30, 1997
- ----------------------------------------
A. Leon Fergenson
/s/ Ronald G. Joseph Director April 30, 1997
- ----------------------------------------
Ronald G. Joseph
/s/ John T. Lawrence III Director April 30, 1997
- ----------------------------------------
John T. Lawrence III
</TABLE>
II-5
<PAGE> 57
<TABLE>
<S> <C> <C>
/s/ William R. Martin Director April 30, 1997
- ----------------------------------------
William R. Martin
/s/ Ronald F. Walker Director April 30, 1997
- ----------------------------------------
Ronald F. Walker
/s/ William J. Maney Senior Vice President, Treasurer and Chief April 30, 1997
- ---------------------------------------- Financial Officer (Principal Financial Officer and
William J. Maney Principal Accounting Officer)
</TABLE>
II-6
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Cincinnati, State of Ohio,
as of the 30th day of April, 1997.
AAG HOLDING COMPANY, INC.
By: /s/ Carl H. Lindner
-------------------------------
Carl H. Lindner
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. The persons whose names are marked an
asterisk (*) below hereby designate Mark F. Muething or William J. Maney to sign
all amendments, including post effective amendments to this Registration
Statement as well as any related Registration Statement, or amendment thereto,
filed pursuant to Rule 462(b) promulgated under the Securities Act of 1933.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Carl H. Lindner Chairman of the Board of Directors (Principal April 30, 1997
- ---------------------------------------- Executive Officer)
Carl H. Lindner
/s/ Carl H. Lindner Director April 30, 1997
- ----------------------------------------
S. Craig Lindner
/s/ Robert A. Adams Director April 30, 1997
- ----------------------------------------
Robert A. Adams
/s/ William J. Maney Senior Vice President, Chief Financial Officer April 30, 1997
- ---------------------------------------- and Treasurer (Principal Financial Officer and
William J. Maney Principal Accounting Officer)
</TABLE>
II-7
<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, American
Annuity Group Capital Trust II has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Cincinnati, State of Ohio, as of the 30th day of April, 1997.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person below whose signature is
preceded by an (*) hereby constitutes and appoints Mark F. Muething or William
J. Maney, or each of them, his true and lawful attorney and agent, to do any and
all acts and instruments for him and in his name in the capacity indicated
below, which said attorneys and agents, or either of them, may deem necessary or
advisable to enable American Annuity Group Capital Trust II to comply with the
Securities Act of 1933, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign amendments (including post effective amendments).
AMERICAN ANNUITY GROUP CAPITAL TRUST II
By: /s/ Mark F. Muething
--------------------------------------
*Mark F. Muething, as Trustee
By: /s/ Christopher P. Miliano
--------------------------------------
*Christopher P. Miliano, as Trustee
II-8
<PAGE> 1
Exhibit 4.1
AAG HOLDING COMPANY, INC.
Issuer
AMERICAN ANNUITY GROUP, INC.
Guarantor
AND
THE BANK OF NEW YORK
Trustee
INDENTURE
Dated as of March 11, 1997
$77,320,000
8 7/8% Subordinated Debentures Due January 15, 2027
<PAGE> 2
-i-
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1...............................................................................2
Definitions and Other Provisions of General Application.................................2
SECTION 1.01 Definitions.......................................................2
SECTION 1.02 Compliance Certificates and Opinions..............................8
SECTION 1.03 Form of Documents Delivered to Trustee............................9
SECTION 1.04 Acts of Holders; Record Dates.....................................9
SECTION 1.05 Notices, Etc. to Trustee and the Company.........................10
SECTION 1.06 Notice to Holders; Waiver........................................10
SECTION 1.07 Conflict with Trust Indenture Act................................11
SECTION 1.08 Effect of Headings and Table of Contents.........................11
SECTION 1.09 Separability Clause..............................................11
SECTION 1.10 Benefits of Indenture............................................11
SECTION 1.11 Governing Law....................................................11
SECTION 1.12 Legal Holidays...................................................12
SECTION 1.13 Acknowledgment of Rights.........................................12
ARTICLE 2..............................................................................12
Security Forms.........................................................................12
SECTION 2.01 Forms Generally..................................................12
SECTION 2.02 Form of Face of Security.........................................13
SECTION 2.03 Form of Reverse of Security......................................16
SECTION 2.04 Form of Trustee's Certificate of Authentication..................18
SECTION 2.05 Transfer Restriction on Debentures..............................19
SECTION 2.07 Assumption by Guarantor..........................................21
ARTICLE 3..............................................................................21
The Securities.........................................................................21
SECTION 3.01 Title and Terms..................................................21
SECTION 3.02 Denominations....................................................24
SECTION 3.03 Execution, Authentication, Delivery and Dating...................24
SECTION 3.04 Temporary Securities.............................................25
SECTION 3.05 Registration; Registration of Transfer and Exchange..............25
SECTION 3.06 Mutilated, Destroyed, Lost and Stolen Securities................26
SECTION 3.07 Payment of Interest; Interest Rights Preserved...................27
SECTION 3.08 Persons Deemed Owners............................................28
SECTION 3.09 Cancellation.....................................................28
SECTION 3.10 Computation of Interest..........................................29
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<S> <C> <C>
SECTION 3.11 CUSIP Numbers....................................................29
SECTION 3.12 Global Securities................................................29
ARTICLE 4..............................................................................34
Satisfaction and Discharge; Defeasance.................................................34
SECTION 4.01 Satisfaction and Discharge of Indenture..........................34
SECTION 4.02 Defeasance and Discharge........................................34
SECTION 4.03 Covenant Defeasance..............................................35
SECTION 4.04 Conditions to Defeasance or Covenant Defeasance..................35
SECTION 4.05 Application of Trust Money.......................................37
SECTION 4.06 Indemnity for U.S. Government Obligations........................37
ARTICLE 5..............................................................................37
Remedies
.............................................................................37
SECTION 5.01 Events of Default................................................37
SECTION 5.02 Acceleration of Maturity; Rescission and Annulment...............39
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee..39
SECTION 5.04 Trustee May File Proofs of Claim.................................40
SECTION 5.05 Trustee May Enforce Claims Without Possession of Securities......40
SECTION 5.06 Application of Money Collected...................................40
SECTION 5.07 Limitation on Suits..............................................41
SECTION 5.08 Unconditional Right of Holders to Receive Principal and Interest.42
SECTION 5.09 Restoration of Rights and Remedies...............................42
SECTION 5.10 Rights and Remedies Cumulative...................................42
SECTION 5.11 Delay or Omission Not Waiver.....................................42
SECTION 5.12 Control by Holders...............................................42
SECTION 5.13 Waiver of Past Defaults..........................................43
SECTION 5.14 Undertaking for Costs............................................43
SECTION 5.15 Waiver of Stay or Extension Laws.................................43
SECTION 5.16 Preferred Security Holders Rights................................44
ARTICLE 6..............................................................................44
The Trustee............................................................................44
SECTION 6.01 Certain Duties and Responsibilities..............................44
SECTION 6.02 Notice of Defaults...............................................44
SECTION 6.03 Certain Rights of Trustee........................................45
SECTION 6.04 Not Responsible for Recitals or Issuance of Securities...........46
SECTION 6.05 May Hold Securities..............................................46
SECTION 6.06 Money Held in Trust..............................................46
SECTION 6.07 Compensation; Reimbursement; and Indemnity.......................46
</TABLE>
<PAGE> 4
- iii -
<TABLE>
<S> <C> <C>
SECTION 6.08 Disqualification; Conflicting Interests..........................47
SECTION 6.09 Corporate Trustee Required; Eligibility..........................47
SECTION 6.10 Resignation and Removal; Appointment of Successor................47
SECTION 6.11 Acceptance of Appointment by Successor...........................49
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business......49
SECTION 6.13 Preferential Collection of Claims Against Company................49
ARTICLE 7..............................................................................50
Holders' Lists and Reports by Trustee and Company......................................50
SECTION 7.01 Company to Furnish Trustee Names and Addresses of Holders........50
SECTION 7.02 Preservation of Information; Communications to Holders...........50
SECTION 7.03 Reports by Trustee...............................................50
SECTION 7.04 Reports by Company...............................................51
ARTICLE 8..............................................................................51
Consolidation, Merger, Conveyance, Transfer or Lease...................................51
ARTICLE 9..............................................................................51
Supplemental Indentures................................................................51
SECTION 9.01 Supplemental Indentures Without Consent of Holders...............51
SECTION 9.02 Supplemental Indentures with Consent of Holders..................52
SECTION 9.03 Execution of Supplemental Indentures.............................53
SECTION 9.04 Effect of Supplemental Indentures................................53
SECTION 9.05 Conformity with Trust Indenture Act..............................53
SECTION 9.06 Reference in Securities to Supplemental Indentures...............53
ARTICLE 10.............................................................................54
Covenants; Representations and Warranties..............................................54
SECTION 10.01 Payment of Principal and Interest...............................54
SECTION 10.02 Maintenance of Office or Agency.................................54
SECTION 10.03 Money for Security Payments to Be Held in Trust.................54
SECTION 10.04 Statement by Officers as to Default.............................55
SECTION 10.05 Existence.......................................................55
SECTION 10.06 Maintenance of Properties.......................................56
SECTION 10.07 Payment of Taxes and Other Claims...............................56
SECTION 10.08 Additional Covenants............................................56
SECTION 10.09 Waiver of Certain Covenants.....................................57
ARTICLE 11.............................................................................57
</TABLE>
<PAGE> 5
- iv -
<TABLE>
<S> <C>
Subordination of Securities.............................................................57
SECTION 11.01 Securities Subordinate to Senior Indebtedness....................57
SECTION 11.02 Default on Senior Indebtedness...................................57
SECTION 11.03 Liquidation; Dissolution; Bankruptcy.............................58
SECTION 11.04 Subrogation......................................................59
SECTION 11.05 Trustee to Effectuate Subordination..............................60
SECTION 11.06 Notice by the Company and the Guarantor..........................61
SECTION 11.07 Rights of the Trustee; Holders of Senior Indebtedness............61
SECTION 11.08 Subordination May Not be Impaired................................62
ARTICLE 12..............................................................................62
Redemption of Securities................................................................62
SECTION 12.01 Optional Redemption; Conditions to Optional Redemption...........62
SECTION 12.02 Applicability of Article.........................................63
SECTION 12.03 Election to Redeem; Notice to Trustee............................63
SECTION 12.04 Selection by Trustee of Securities to Be Redeemed................64
SECTION 12.05 Notice of Redemption.............................................64
SECTION 12.06 Deposit of Redemption Price......................................65
SECTION 12.07 Securities Payable on Redemption Date............................65
SECTION 12.08 Securities Redeemed in Part......................................65
</TABLE>
<PAGE> 6
INDENTURE, dated as of March 11, 1997, among AAG Holding Company, Inc.,
an Ohio corporation, 250 East Fifth Street, Cincinnati, Ohio 45202 (the
"Company"), American Annuity Group, Inc., a Delaware corporation (the
"Guarantor") and The Bank of New York, a New York banking corporation (the
"Trustee"). Unless otherwise defined herein, all capitalized items used herein
shall have the meanings ascribed to them in the Amended and Restated Declaration
of Trust among the Company as Sponsor, Mark F. Muething and Christopher P.
Miliano, as Regular Trustees, the Trustee, as Property Trustee and The Bank of
New York (Delaware) as Delaware Trustee, dated as of March 11, 1997 (the
"Declaration"), as in effect on the date hereof, and which is incorporated
herein by reference.
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of its 8 7/8% Subordinated Debentures due January 15, 2027 (the
"Debentures") and its 8 7/8% New Subordinated Debentures due January 15, 2027
(the "New Debentures" and with the Debentures, the "Debt Securities") to be
issued in exchange for the Debentures;
WHEREAS, for its lawful corporate purposes, the Guarantor has duly
authorized the execution and delivery of this Indenture and deems it appropriate
to issue its guarantee of the Debt Securities on the terms herein provided (the
"Guarantee" and, together with the Debt Securities, the "Securities");
WHEREAS, American Annuity Group Capital Trust II (the "Trust") intends
to sell $75,000,000 aggregate liquidation amount of its 8 7/8% Capital Trust
Preferred Securities (the "Preferred Securities") representing undivided
beneficial interests in the assets of the Trust and proposes to invest the
proceeds from such offering in addition to the proceeds of the sale of
$2,320,000 aggregate liquidation amount of the Common Securities (as defined),
in $77,320,000 aggregate principal amount of the Securities;
WHEREAS, to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered, the Company and the Guarantor
have duly authorized the execution of this Indenture;
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company and the Guarantor, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holder thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
<PAGE> 7
- 2 -
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(5) a reference to any Person shall include its successors and
assigns;
(6) a reference to any agreement or instrument shall mean such
agreement or instrument as supplemented, modified, amended or amended and
restated and in effect from time to time;
(7) a reference to any statute, law, rule or regulation, shall include
any amendments thereto applicable to the relevant Person, and any successor
statute, law, rule or regulation; and
(8) a reference to any particular rating category shall be deemed to
include any corresponding successor category, or any corresponding rating
category issued by a successor or subsequent rating agency.
"Act," when used with respect to any Holder, has the meaning specified
in Section 1.04.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
<PAGE> 8
- 3 -
"Board of Directors" means the board of directors of the Company or the
Guarantor or any duly authorized committee of either of such boards as the
context requires.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or the Guarantor, as the case
may be, to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed or a day on which the Corporate Trust
Office of the Trustee, or the principal corporate trust office of the Property
Trustee, under the Trust Agreement, is closed for business.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Securities" means the common securities issued by the Trust.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
The City of New York, at which at any particular time its corporate trust
business shall be administered and which at the date of this Indenture is 101
Barclay Street, Floor 21 West, New York, New York 10286.
"Covenant Defeasance" has the meaning specified in Section 4.03.
"Debt Securities" means the Debt Securities authenticated and delivered
under this Indenture.
"Declaration" has the meaning specified in the first paragraph of this
Indenture.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Defeasance" has the meaning specified in Section 4.02.
<PAGE> 9
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"Depositary" means, with respect to Securities issuable in whole or in
part in the form of one or more Global Securities, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such
Securities.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor legislation.
"Expense Agreement" means the Expense Agreement contemplated by
Section 6.07.
"Extension Period" has the meaning specified in Section 3.01.
"Global Security" means a Security that evidences all or part of the
Securities and is authenticated and delivered to, and registered in the name of,
the Depositary for such Securities or a nominee thereof.
"Guarantee" means the agreement of the Guarantor, in the form set forth
in Section 2.06 hereof, to be endorsed on the Debt Securities authenticated and
delivered under this Indenture.
"Guarantor" has the meaning specified in the first paragraph of this
Indenture.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as the term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Institutional Trustee" has the meaning set forth in the Declaration.
"Interest Deduction Date" has the meaning specified in Section 3.01.
"Interest Payment Date," when used with respect to any installment of
interest on a Security, means the date specified in such Security as the fixed
date on which an installment of interest with respect to the Securities is due
and payable.
"Investment Company Event" means that the Trust shall have received an
Opinion of Counsel from independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act"), to the effect that,
as a result of the occurrence of a change in law
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or regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is a more than an insubstantial risk that the
Trust is or will be considered an "investment company" which is required to be
registered under the Investment Company Act, which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the Preferred
Securities.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 10.04 shall be the
principal executive, financial or accounting officer of the Company. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company (and who may be an employee of the Company), and who
shall be reasonably acceptable to the Trustee. An opinion of counsel may rely on
certificates as to matters of fact.
" Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities authenticated and delivered under this
Indenture, except: (i) Securities canceled by the Trustee or delivered to the
Trustee for cancellation; (ii) Securities for whose payment or redemption money
in the necessary amount has been deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holder of
such Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and (iii) Securities which
have been paid pursuant to Section 3.06, or in exchange for or in lieu of which
other Securities have been
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authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the Recitals to
this instrument.
"Private Placement Legend" is defined in Section 3.13 of this
Indenture.
"Property Trustee" has the meaning set forth in the Declaration.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the Business Day next preceding such Interest Payment Date or if the
Securities are no longer in the form prescribed by Section 3.12, the date
selected by the Company which shall be more than one Business Day but less than
60 Business Days prior to the relevant Interest Payment Date.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
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"Restricted Global Security" means any Global Security or Securities
evidencing Securities that are to be traded pursuant to Rule 144A.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) of the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities" means any Debt Securities with a Guarantee endorsed
thereon.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Senior Indebtedness" means, with respect to the Company or Guarantor,
(i) the principal, premium, if any, and interest in respect of (A) indebtedness
of such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise; and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except in each case
for (1) any such indebtedness that is by its terms subordinated to or pari passu
with the Securities and (2) any indebtedness in respect of debt securities,
issued to any trust, or a trustee of such trust, partnership or other entity
affiliated with the Company or the Guarantor that is a financing entity for such
obligor (a "financing entity") in connection with the issuance by such financing
entity of securities that are similar to the Preferred Securities. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
"Special Event" means Investment Company Event or Tax Event.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the date on which the principal, together with any accrued and unpaid interest,
of such Security or such installment of interest is due and payable (whether the
initial such date or, if pursuant to Section 3.01 the Company elects to extend
the Stated Maturity, such later date as is chosen by the Company pursuant to
Section 3.01).
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"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel
from independent counsel experienced in such matters to the effect that, as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days after the date thereof, subject
to United States Federal income tax with respect to interest accrued or received
on the Securities, (ii) the Trust is, or will be within 90 days after the date
thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable to the Trust on the
Securities is not, or within 90 days of the date thereof, will not be
deductible, in whole or in part, by the Company for United States Federal income
tax purposes.
"Trust" means the statutory business trust known as American Annuity
Group Capital Trust II declared and established pursuant to the Delaware
Business Trust Act by the Declaration.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"U.S. Government Obligations" has the meaning specified in Section
4.04.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.02 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion
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of Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirement set forth in this Indenture.
SECTION 1.03 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04 ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee at the address specified in Section 1.05 and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
<PAGE> 15
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execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 7.01)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 1.05 NOTICES, ETC. TO TRUSTEE AND THE COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Trustee Administration; or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 1.06 NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class
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postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07 CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the provision of the Trust Indenture Act shall control.
If any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be.
SECTION 1.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.09 SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.10 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness, the holders of Preferred
Securities (to the extent provided herein) and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.11 GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
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TO CONFLICTS OF LAWS PRINCIPLES THEREOF. THIS INDENTURE IS SUBJECT TO THE
PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED, THAT ARE REQUIRED TO
BE PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY
SUCH PROVISIONS.
SECTION 1.12 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal of the Securities need not be made on such date, but may be made on
the next succeeding Business Day (except that, if such Business Day is in the
next succeeding calendar year, such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be, shall be the immediately preceding Business
Day) with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.
SECTION 1.13 ACKNOWLEDGMENT OF RIGHTS.
The Company acknowledges that, with respect to any Securities held by
the Trust or a trustee of such Trust, if the Property Trustee of such Trust
fails to enforce its rights under this Indenture as the holder of Securities
held as the assets of the Trust any holder of Preferred Securities may institute
legal proceedings directly against the Company to enforce such Property
Trustee's rights under this Indenture without first instituting any legal
proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest, principal or other required payment on the Securities on the date such
interest, principal or other required payment is otherwise payable, the Company
acknowledges that a holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal, interest
or other required payment on the Securities having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder on
or after the respective due date specified in the Securities.
ARTICLE 2
SECURITY FORMS
SECTION 2.01 FORMS GENERALLY.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, provided, that the New
Debentures shall not contain the legend provided in Section 2.05.
If the Securities are distributed to the holders of Preferred
Securities and Common Securities, the record holder (including any Depositary)
of any Preferred Securities or Common Securities shall
<PAGE> 18
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be issued Securities in definitive, fully registered form without interest
coupons, substantially in the form provided in this Article, with the legends in
substantially the form of the legends existing on the security representing the
Preferred Securities or Common Securities to be exchanged (with such changes
thereto as the officers executing such Securities determine to be necessary or
appropriate, as evidenced by their execution of the Securities) and such other
legends as may be applicable thereto (including any legend required by Section
3.13 hereof), duly executed by the Company and authenticated by the Trustee or
Authenticating Agent as provided herein, which Securities, if to be held in
global form by any Depositary, may be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of a nominee of the Depositary.
The Securities shall have appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these or other methods, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 2.02 FORM OF FACE OF SECURITY.
AAG HOLDING COMPANY, INC.
8 7/8% Subordinated Debenture, Due January 15, 2027
$77,320,000
No.______
CUSIP No. _________
AAG HOLDING COMPANY, INC., a corporation duly organized and existing
under the laws of the State of Ohio (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to
______________________________, or registered assigns, the principal sum of
________ DOLLARS ($_____) on January 15, 2027, provided that the Company may
extend the maturity date subject to certain conditions specified in Section
3.01 of the Indenture, which extended maturity date shall in no case be later
than January 15, 2046, and to pay interest on said principal sum from March 11,
1997 or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on January
15 and July 15 of each year, commencing July 15, 1997, at the rate of 8 7/8%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and (without duplication and to the extent that payment
of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum. The
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amount of interest payable for any period will be computed on the basis of
twelve 30-day months and a 360-day year. The amount of interest payable for any
period shorter than a full semi-annual period for which interest is computed,
will be computed on the basis of actual number of days elapsed based on 30-day
months in such 180-day period. In the event that any date on which interest is
payable on this Security is not a Business Day, then a payment of the interest
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 is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date the payment was originally
payable. A "Business Day" shall mean any day other than a Saturday or Sunday or
a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Trustee, or the principal corporate trust office
of the Property Trustee under the Trust Agreement, is closed for business. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities, as
defined in the Indenture) is registered at the close of business on the Regular
Record Date for such interest installment, which shall be the close of business
on the Business Day next preceding such Interest Payment Date. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease to
be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
The Company shall have the right at any time during the term of this
Security, from time to time, to defer payment of interest on such Security for
up to 10 consecutive semi-annual periods (an "Extension Period"), provided that
no Extension Period may extend past the Maturity of this Security. There may be
multiple Extension Periods of varying lengths during the term of this Security.
At the end of each Extension Period, if any, the Company shall pay all interest
then accrued and unpaid, together with interest thereon, compounded
semi-annually at the rate specified on this Security to the extent permitted by
applicable law; provided, that during any such Extension Period, (a) the Company
and the Guarantor shall not declare or pay any dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of their capital stock (other than (i)
repurchases or acquisitions of shares of the Common Stock of the Company or the
Guarantor as contemplated by any employment arrangement, benefit plan or other
similar contract with or for the benefit of employees, officers or directors
entered into in the ordinary course of business, (ii) as a result of an exchange
or conversion of any class or series of the Company's or the Guarantor's capital
stock for the Company's or the Guarantor's Common Stock, as the case may be,
(iii) the purchase of fractional interests in shares of the Company's or the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such Company or Guarantor capital stock or the security being converted or
exchanged, as the
<PAGE> 20
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case may be or (iv) the payment of any stock dividend by the Company or the
Guarantor payable in the Company's or the Guarantor's Common Stock, as the case
may be) or (b) the Company and the Guarantor shall not, directly or indirectly,
and shall not allow any of their Subsidiaries to, make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company or the Guarantor that rank pari passu with or
junior to this Security. Prior to the termination of any such Extension Period,
the Company may further defer payments of interest by extending the interest
payment period; provided that such Extension Period together with all such
previous and further extensions thereof shall not exceed 10 consecutive
semi-annual periods or extend beyond the Maturity of this Security. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest then due, the Company may select a new Extension Period, subject
to the above requirements. No interest shall be due and payable during an
Extension Period, except at the end thereof. The Company shall give the Trustee
notice of its selection of an Extension Period at least one Business Day prior
to the earlier of (i) the Interest Payment Date or (ii) the date the Trust is
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Preferred Securities of the
record date or the date such distributions are payable, but in any event not
less than one Business Day prior to such record date.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Paying Agent maintained for that purpose in the
United States, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company, payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto at such
address as shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated in writing prior to the Regular Record Date by the Person entitled
thereto as specified in the Security Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of the Indenture summarized
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place. Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, AAG Holding Company, Inc. has caused this
instrument to be duly executed under its corporate seal.
<PAGE> 21
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[SEAL]
AAG HOLDING COMPANY, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
Attest:
- -------------------------------------
SECTION 2.03 FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of Securities of AAG
Holding Company, Inc. (herein called the "Company"), designated as its 8 7/8%
Subordinated Debentures, due January 15, 2027 (herein called the "Securities"),
limited in aggregate principal amount to $77,320,000 issued under an Indenture,
dated as of March 11, 1997 (herein called the "Indenture"), among the Company,
American Annuity Group, Inc., a Delaware corporation, as Guarantor (the
"Guarantor") and The Bank of New York, as Trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Trustee, the Company, the Guarantor and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
All terms used in this Security which are defined in the Indenture or
in the Declaration attached as Annex A thereto shall have the meanings assigned
to them in the Indenture or the Declaration, as the case may be.
At any time on or after March 1, 2007, the Company shall have the
right, subject to the terms and conditions of Article 12 of the Indenture, to
redeem this Security at the option of the Company, in whole or in part, at the
Redemption Price (expressed as a percentage of the principal amount of such
securities) set forth below, plus accrued but unpaid interest to the Redemption
Date, if redeemed during the twelve-month period beginning on March 1st of the
years indicated:
Year Percentage
2007 104.44%
2008 103.99%
2009 103.55%
2010 103.11%
2011 102.66%
<PAGE> 22
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2012 102.22%
2013 101.77%
2014 101.33%
2015 100.89%
2016 100.44%
On or after March 1, 2017, the Redemption Price will be 100%, plus
accrued and unpaid interest, if any, to the Redemption Date.
If a Special Event as defined in the Indenture shall occur and be
continuing, the Company shall have the right, subject to the terms and
conditions of Article 12 of the Indenture, to redeem this Security at the option
of the Company, without premium or penalty, in whole but not in part, at a
Redemption Price equal to 100% of the principal amount thereof plus accrued but
unpaid interest to the Redemption Date. Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days notice, at
the Redemption Price. If the Securities are only partially redeemed by the
Company, the Securities will be redeemed by lot or such other manner as the
Trustee shall deem appropriate and fair in its discretion and that may provide
for the selection of a portion or portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of any Security. If a partial
redemption of the Preferred Securities resulting from a partial redemption of
the Securities would result in the delisting of the Preferred Securities, the
Company may only redeem the Securities in whole. In the event of redemption of
this Security in part only, a new Security or Securities for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof. If an Event of Default with respect to the Securities shall
occur and be continuing, the principal of the Securities may be declared due and
payable in the manner, with the effect and subject to the conditions provided in
the Indenture. The Indenture contains provisions for satisfaction and discharge
at any time of the entire indebtedness of this Security upon compliance by the
Company with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of Holders of not less than a majority in principal
amount of the Outstanding Securities affected by such modification, to modify
the Indenture in a manner affecting the rights of the Holders of the Securities;
provided that no such modification may, without the consent of the Holder of
each Outstanding Security affected thereby, (i) except to the extent permitted
and subject to the conditions set forth in the Indenture with respect to the
extension of the Maturity of this Security, change the Maturity of, the
principal of, or any installment of interest on, the Security, or reduce the
principal amount hereof or the rate of interest thereon, or change the place of
payment where, or the coin or currency in which, this Security or interest
hereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Maturity hereof (or, in the case of redemption,
on or after the Redemption Date), or modify the provisions of the Indenture with
respect to the subordination of the Securities in a manner adverse to the
Holders, (ii) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of the Indenture or certain defaults
hereunder and their consequences) provided for in the Indenture, or (iii) modify
any of the provisions of Section 5.13,
<PAGE> 23
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Section 9.02 or Section 10.09 of the Indenture, except to increase any such
percentage or to provide that certain other provisions of the Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, that, so long as any of the Preferred
Securities remains outstanding, no such amendment shall be made that adversely
affects the holders of the Preferred Securities, and no termination of the
Indenture shall occur, and no waiver of any Event of Default or compliance with
any covenant under this Indenture shall be effective, without the prior consent
of the holders of at least a majority of the aggregate liquidation preference of
the outstanding Preferred Securities unless and until the principal of and any
premium on the Securities and all accrued and unpaid interest thereon have been
paid in full.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
SECTION 2.04 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: ____________
<PAGE> 24
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THE BANK OF NEW YORK, as Trustee
By:______________________________
Authorized Signatory
SECTION 2.05 TRANSFER RESTRICTION ON DEBENTURES.
Each Debenture shall contain the following legend relating to transfers
of such Debentures:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT (ii) RULE 144 OR
RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED THAT, IF
REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY
IN FORM AND SUBSTANCE IS FURNISHED TO THE COMPANY THAT AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE
HOLDER OF SUCH SECURITY ARE SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 11,
1997, A COMPLETE AND CORRECT COPY OF THE FORM OF WHICH WILL BE
FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
SECTION 2.06 UNCONDITIONAL GUARANTEES.
(FORM OF GUARANTEE)
FOR VALUE RECEIVED, the Guarantor hereby unconditionally guarantees to
the holder of the Debt Security upon which this Guarantee is endorsed the due
and punctual payment of the principal or interest on said Debt Security, when
and as the same shall become due and payable, whether at maturity, upon
redemption or otherwise, according to the terms thereof and of the Indenture
referred to therein.
The Guarantor agrees to determine, at least one Business Day prior to
the date upon which a payment of principal of or interest on said Debt Security
is due and payable, whether the Company
<PAGE> 25
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has available the funds to make such payment as the same shall become due and
payable. In case of the failure of the Company punctually to pay any such
principal, premium, if any, or interest, the Guarantor hereby agrees to cause
any such payment to be made punctually when and as the same shall become due and
payable, whether at maturity, upon redemption, or otherwise, and as if such
payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Debt Security or said Indenture, the
absence of any action to enforce the same, any waiver or consent by the Holder
of said Debt Security with respect to any provisions thereof, the recovery of
any judgment against the Company or any action to enforce the same, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to said Debt Security or indebtedness
evidenced thereby, and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the obligations
contained in said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of said
Debt Security against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
the Guarantor shall not, without the consent of the holders of all of the Debt
Securities then outstanding, be entitled to enforce or to receive any payments
arising out of or based upon such right of subrogation until the principal of
and premium, if any, and interest on all Debt Securities shall have been paid in
full or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if following
any payment of principal or interest by the Company on the Debt Securities to
the holders of the Debt Securities it is determined by a final decision of a
court of competent jurisdiction that such payment shall be avoided by a trustee
in bankruptcy (including any debtor-in-possession) as a preference under 11
U.S.C. Section 547 and such payment is paid by such holder to such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
This Guarantee shall not be valid or become obligatory for any purpose
with respect to a Debt Security until the certificate of authentication on such
Security shall have been signed by the Trustee (or the Authentication Agent).
This Guarantee shall be governed by the laws of the State of New York
without regard to conflicts of laws principles thereof.
<PAGE> 26
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IN WITNESS WHEREOF, American Annuity Group, Inc. has caused this
Guarantee to be signed in its corporate name by the facsimile signature of two
of its officers thereunto duly authorized and has caused a facsimile of its
corporate seal to be affixed hereunto or imprinted or otherwise reproduced
hereon.
[SEAL]
AMERICAN ANNUITY GROUP, INC.
By:______________________________
Name:____________________________
Title:___________________________
Attest: _______________________________
SECTION 2.07 ASSUMPTION BY GUARANTOR.
(1) The Guarantor may, without the consent of the Holders, assume all
of the rights and obligations of the Company hereunder with respect to the Debt
Securities if, after giving effect to such assumption, no Event of Default shall
have occurred and be continuing. Upon such an assumption, the Guarantor shall
execute a supplemental indenture evidencing its assumption of all such rights
and obligations of the Company and the Company shall be released from its
liabilities hereunder and under such Debt Securities as obligor.
(2) The Guarantor shall assume all of the rights and obligations of
the Company hereunder with respect to the Debt Securities if, upon a default by
the Company in the due and punctual payment of the principal or interest on
such Debt Securities, the Guarantor is prevented by any court order or judicial
proceeding from fulfilling its obligations under Section 2.05 with respect to
such Debt Securities. Such assumption shall result in the Debt Securities
becoming the direct obligations of the Guarantor and shall be effected without
the consent of the holders of the Debt Securities. Upon such an assumption, the
Guarantor shall execute a supplemental indenture evidencing its assumption of
all such rights and obligations of the Company, and the Company shall be
released from its liabilities hereunder and under the Debt Securities as
obligor.
ARTICLE 3
THE SECURITIES
SECTION 3.01 TITLE AND TERMS.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to $77,320,000 except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Section 3.04, 3.05,
3.06, 9.06 or 12.08.
<PAGE> 27
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The Securities shall be known and designated as the " 8 7/8%
Subordinated Debentures, Due January 15, 2027" of the Company. Their initial
Stated Maturity shall be January 15, 2027. Not less than ninety (90) days prior
to the initial Stated Maturity, the Company may, in its sole discretion, extend
the Stated Maturity for one or more periods, but in no event later than the
earlier of (i) January 15, 2046 or (ii) the Interest Deduction Date. The
"Interest Deduction Date" shall mean the date which is six months earlier than
the ending date of the maximum term (beginning on the date of issue of the Debt
Securities and including any extensions thereof), as determined under any
Federal statute applicable by its terms to the Debt Securities which is enacted
at any time after the issuance of the Debt Securities (including, but not
limited to, at any time after an extension of the Stated Maturity), of a debt
instrument for which interest is deductible for Federal income tax purposes. In
no event shall the extended Stated Maturity be later than the Interest Deduction
Date even if the Stated Maturity has previously been extended to a date beyond
the Interest Deduction Date; provided that all of the following conditions are
satisfied at the time the Company elects to extend the stated maturity: (i) the
Company is not in bankruptcy or otherwise insolvent, (ii) the Company is not in
default in the payment of any interest or principal on any Security issued to
the Trust or to any Trustee of the Trust in connection with an issuance of
Preferred Securities or Common Securities by the Trust, (iii) the Company has
made timely payments on the Securities for the immediately preceding three
semi-annual periods without deferrals, (iv) the Trust is not in arrears on
payments of distributions on the Preferred Securities or Common Securities of
the Trust, (v) the Securities or Preferred Securities are rated investment grade
by any one of Standard & Poors Corporation, Moody's Investors Service, Inc.,
Fitch Investor Services, Duff & Phelps Credit Rating Company or any other
nationally recognized statistical rating organization, and (vi) the extended
Stated Maturity is no later than the 49th anniversary of the issuance of the
Preferred Securities.
In addition, if the Company exercises its right to liquidate the Trust
and distribute the Securities effective upon such exercise, the Maturity of the
Securities may be changed to (i) any date elected by the Company that is no
earlier than January 15, 2007 and (ii) any date elected by the Company which is
not later than the earlier of (a) January 15, 2046 or (b) the Interest Deduction
Date; provided that on the date the Company exercises such right, and on the
Maturity in effect prior to such proposed extension, the conditions specified in
the previous paragraph are satisfied.
The Securities shall bear interest at the rate of 8 7/8% per annum,
from March 11, 1997 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, payable
semi-annually (subject to deferral as set forth herein), in arrears, on January
15 and July 15 of each year, commencing July 15, 1997 until the principal
thereof is paid or made available for payment. Interest will compound
semi-annually and will compound at the rate of 8 7/8% per annum on any interest
installment in arrears for more than one semi-annual period or during an
extension of an interest payment period as set forth below in this Section 3.01.
In the event that any date on which interest is payable on the Securities is not
a Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (except that, if such
Business Day is in the next succeeding calendar year, such Interest Payment Date
shall be the immediately preceding Business Day) (and without any interest or
other payment in respect of any such delay).
<PAGE> 28
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The Company shall have the right at any time during the term of the
Securities, from time to time, to defer payment of interest on such Security for
up to 10 consecutive semi-annual periods (an "Extension Period"), provided that
no Extension Period may extend past the Maturity of the Security. There may be
multiple Extension Periods of varying lengths during the term of the Securities.
At the end of each Extension Period, if any, the Company shall pay all interest
then accrued and unpaid, together with interest thereon, compounded
semi-annually at the rate specified on this Security to the extent permitted by
applicable law; provided, that during any such Extension Period, (a) the Company
and the Guarantor shall not declare or pay any dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of their capital stock (other than (i)
repurchases or acquisitions of shares of the Common Stock of the Company or the
Guarantor as contemplated by any employment arrangement, benefit plan or other
similar contract with or for the benefit of employees, officers or directors
entered into in the ordinary course of business, (ii) as a result of an exchange
or conversion of any class or series of the Company's or the Guarantor's capital
stock for the Company's or the Guarantor's Common Stock, as the case may be,
(iii) the purchase of fractional interests in shares of the Company's or the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such Company or Guarantor capital stock or the security being converted or
exchanged, as the case may be or (iv) the payment of any stock dividend by the
Company or the Guarantor payable in the Company's or the Guarantor's Common
Stock, as the case may be) and (b) the Company and the Guarantor shall not,
directly or indirectly, and shall not allow any of their Subsidiaries to, make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Company or the Guarantor that rank
pari passu with or junior to this Security. Prior to the termination of any such
Extension Period, the Company may further defer payments of interest by
extending the interest payment period; provided, however, that such Extension
Period together with all such previous and further extensions thereof shall not
exceed 10 consecutive semi-annual periods or extend beyond the Maturity of this
Security. Upon the termination of any such Extension Period and upon the payment
of all accrued and unpaid interest then due, the Company may commence a new
Extension Period, subject to the above requirements. No interest shall be due
and payable during an Extension Period, except at the end thereof. If the
Property Trustee or the Trust is the sole holder of the Securities, the Company
shall give the Regular Trustees and the Property Trustee notice of its selection
of such Extension Period at least one Business Day prior to the earlier of (i)
the date distributions on the Preferred Securities are payable or (ii) the date
the Trust is required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Preferred
Securities of the record date or the date such distribution is payable. If the
Property Trustee or the Trust is not the sole holder of the Securities, the
Company shall give the holders of the Securities notice of its selection of such
Extension Period ten Business Days prior to the earlier of (i) the applicable
Interest Payment Date or (ii) the date the Trust is required to give notice to
the New York Stock Exchange (or other applicable self-regulatory organization)
or to holders of the Preferred Securities on the record date.
The Trustee shall promptly give notice of the Company's selection of
such Extension Period to the holders of the Preferred Securities.
<PAGE> 29
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The principal of and interest on the Securities shall be payable at the
office or agency of the Paying Agent in the United States maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated in
writing prior to the Regular Record Date by the Person entitled thereto as
specified in the Security Register.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article 11.
The Securities shall be redeemable as provided in Article 12.
SECTION 3.02 DENOMINATIONS.
The Securities shall be issuable only in registered form, without
coupons, and only in denominations of $1,000 and any integral multiple thereof.
SECTION 3.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company and the
Guarantor by their respective Chairman of the Board, its Vice Chairman of the
Board, its President or one of the respective Vice Presidents, under their
corporate seals reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company or the Guarantor shall
bind the Company or the Guarantor, as the case may be, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company and
the Guarantor to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and make available for
delivery such Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
<PAGE> 30
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No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 3.04 TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company and the
Guarantor may execute, and upon Company Order the Trustee shall authenticate and
make available for delivery, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 10.02, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 3.05 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.02 for such
purpose, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Securities of any authorized denominations and of a like
aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange,
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the Company and the Guarantor shall execute, and the Trustee shall authenticate
and make available for delivery, the Securities which the Holder making the
exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company and the Guarantor,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.04, 9.06 or 12.08 not involving any transfer.
If the Securities are to be redeemed in part, the Company shall not be
required (A) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of any such Securities selected for
redemption under Section 12.03 and ending at the close of business on the day of
such mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
So long as the Securities are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Securities to be traded
on the PORTAL Market shall be represented by the Restricted Global Security
registered in the name of the Depositary or the nominee of the Depositary. The
transfer and exchange of beneficial interests in any Global Security, which does
not involve the issuance of a definitive Security or the transfer of interests
to another Global Security, shall be effected through the Depositary (but not
the Trustee or the Custodian) in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor. Neither the Trustee nor the Custodian (in such respective capacities)
will have any responsibility for the transfer and exchange of beneficial
interests in such Global Security that does not involve the issuance of a
definitive Security or the transfer of interests to another Global Security.
SECTION 3.06 MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
and the Guarantor shall execute and the Trustee shall authenticate and deliver
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
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If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and make
available for delivery, in lieu of any such destroyed, lost or stolen Security,
a new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of
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Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and, if so listed, upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.08 PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee shall treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.07) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 3.09 CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired
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in any manner whatsoever, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order, provided, however,
that the Trustee may, but shall not be required to, destroy such canceled
Securities.
SECTION 3.10 COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months. The amount of interest payable for any period
shorter than a full semi-annual period for which interest is computed, will be
computed on the basis of actual number of days elapsed based on 30-day months in
such 180 day period. In the event that any date on which interest is payable on
the Securities is not a Business Day, then payment of the interest payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of such delay), except that, if
such Business Day is in the next succeeding calendar year, then 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.
SECTION 3.11 CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company shall promptly notify
the Trustee of any change in the CUSIP numbers.
SECTION 3.12 GLOBAL SECURITIES.
If the Securities are distributed to holders of Preferred Securities in
liquidation of such holder's interests in the Trust, such Securities will
initially be issued as a Global Security. If the Company shall establish that
the Securities are to be issued in the form of one or more Global Securities,
then the Company shall execute and the Trustee shall, in accordance with Section
3.03 and the Company Order, authenticate and make available for delivery one or
more Global Securities that (i) shall represent and shall be denominated in an
amount equal to the aggregate principal amount of all of the Securities to be
issued in the form of Global Securities and not yet canceled, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or the nominee of such Depositary, and (iii) shall be delivered by the Trustee
to such Depositary or pursuant to such Depositary's instructions. Global
Securities shall bear a legend substantially to the following effect:
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This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Global Security is exchangeable for Securities
registered in the name of a Person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary) may be registered except in such limited
circumstances. Every Security delivered upon registration of transfer of, or in
exchange for, or in lieu of, this Global Security shall be a Global Security
subject to the foregoing, except in the limited circumstances described above.
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is to be made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein. Notwithstanding the provisions of
Section 3.05, unless and until it is exchanged in whole or in part for
Securities in definitive registered form, a Global Security representing all or
a part of the Securities may not be transferred in the manner provided in
Section 3.05 except as a whole by the Depositary to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
If at any time the Depositary for any Securities represented by one or
more Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Securities or if at any time the Depositary for
such Securities shall no longer be eligible under this Section 3.12, the Company
shall appoint a successor Depositary with respect to such Securities. If a
successor Depositary for such Securities is not appointed by the Company within
90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company's election that such Securities be represented by one
or more Global Securities shall no longer be effective and the Company shall
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive Securities, will authenticate and make available for
delivery Securities in definitive registered form, in denominations of $1,000
and integral multiples thereof, in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such
Securities in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that
the Securities issued in the form of one or more Global Securities shall no
longer be represented by a Global Security or Securities. In such event the
Company shall execute, and the Trustee, upon receipt of a Company Order or an
Officers' Certificate for the authentication and delivery of definitive
Securities, shall authenticate and make available for delivery, Securities in
definitive registered form, in denominations of $1,000 and integral multiples
thereof, in an aggregate principal amount equal to the principal amount of the
Global Security or Securities representing such Securities, in exchange for such
Global Security or Securities.
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If specified by the Company with respect to Securities represented by a
Global Security, the Depositary for such Global Security may surrender such
Global Security in exchange in whole or in part for Securities in definitive
registered form on such terms as are acceptable to the Company and such
Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, without service charge, (i) to the
Person specified by such Depositary, a new Security or Securities, of any
authorized denominations as requested by such Person, in an aggregate principal
amount equal to and in exchange for such Person's beneficial interest in the
Global Security; and (ii) to such Depositary a new Global Security in a
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Securities
authenticated and delivered pursuant to clause (i) above. Upon the exchange of a
Global Security for Securities in definitive registered form in authorized
denominations, such Global Security shall be canceled by the Trustee or an agent
of the Company or the Trustee. Securities in definitive registered form issued
in exchange for a Global Security pursuant to this Section 3.12 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or an agent of the Company
or the Trustee. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 3.13(1)), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
Interests of beneficial owners in Global Security may be transferred or
exchanged for definitive Securities and definitive Securities may be transferred
or exchange for Global Securities in accordance with rules of the Depositary and
the provisions of Section 3.14.
Any Security in global form may be endorsed with or have incorporated
in the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Indenture as may be required by the Custodian, the
Depositary or by the National Association of Securities Dealers, Inc. in order
for the Securities to be tradeable on the PORTAL Market or as may be required
for the Securities to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange upon which the Securities may be listed or traded or to conform with
any usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Securities are subject.
SECTION 3.13 RESTRICTIVE LEGEND.
(1) Each Global Security and definitive Security that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") on the face thereof until two years after the later of the date of
original issue and the last date on which the Company or any Affiliate
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of the Company was the owner of such Preferred Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date"), unless otherwise agreed by
the Company and the Holder thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT (ii) RULE 144 OR
RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED THAT, IF
REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY
IN FORM AND SUBSTANCE IS FURNISHED TO THE COMPANY THAT AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE
HOLDER OF SUCH SECURITY ARE SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 11,
1997, A COMPLETE AND CORRECT COPY OF THE FORM OF WHICH WILL BE
FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
Any Security (or security issued in exchange or substitution therefor)
as to which such restrictions on transfer shall have expired in accordance with
their terms may, upon satisfaction of the requirements of Section 3.13(2), and
surrender of such Security for exchange to the Security registrar in accordance
with the provisions of this Section 3.13(1), be exchanged for a new Security or
Securities, of like tenor and aggregate principal amount, which shall not bear
the restrictive legend required by this Section 3.13(1).
(2) Upon any sale or transfer of any Restricted Security (including
any interest in a Global Security) (i) that is effected pursuant to an
effective registration statement under the Securities Act or (ii) in connection
with which the Trustee receives certificates and other information (including
an opinion of counsel, if requested) reasonably acceptable to the Company and
the Trustee to the effect that such security will no longer be subject to the
resale restrictions under federal and state securities laws, then (A) in the
case of a Restricted Security in definitive form, the Security Registrar or
co-Registrar shall permit the holder thereof to exchange such Restricted
Security for a Security that does not bear the legend set forth in Section
3.13(1), and shall rescind any such restrictions on transfer and (B) in the
case of Restricted Securities represented by a Global Security, such Security
shall no longer be subject to the restrictions contained in the legend set
forth in Section 3.13(1) (but still subject to the other provisions hereof). In
addition, any Security (or Security issued in exchange or substitution
therefor) as to which the restrictions on transfer
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described in the legend set forth in Section 3.13(1) have expired by their
terms, may, upon surrender thereof (in accordance with the terms of this
Indenture) together with such certifications and other information (including an
Opinion of Counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and the Trustee and in a form acceptable to the Company, to the
effect that the transfer of such Restricted Security has been made in compliance
with Rule 144 or any successor provision thereto) acceptable to the Company and
the Trustee as either of them may reasonably require, be exchanged for a new
Security or Securities of like tenor and aggregate principal amount, which shall
not bear the restrictive legends set forth in Section 3.13(1).
SECTION 3.14 SPECIAL TRANSFER PROVISIONS.
At any time at the request of the beneficial holder of an interest in a
Security in global form, such beneficial holder shall be entitled to obtain a
definitive Security upon written request to the Trustee in accordance with the
standing instructions and procedures existing between the Depositary and the
Trustee for the issuance thereof. Upon receipt of any such request, the Trustee
will cause the aggregate principal amount of the Security in global form to be
reduced and, following such reduction, the Company will execute and the Trustee
will authenticate and deliver to such beneficial holder (or its nominee) a
Security or Securities in the appropriate aggregate principal amount in the name
of such beneficial holder (or its nominee) and bearing such restrictive legends
as may be required by this Indenture.
Any transfer of a beneficial interest in a Security in global form
which cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a definitive Security or
Securities registered in the name of the transferee (or its nominee) on the
books maintained by the Trustee. With respect to any such transfer, the Trustee
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Trustee, the aggregate principal amount of the
Security in global form to be reduced and, following such reduction, the Company
will execute and the Trustee will authenticate and deliver to the transferee (or
such transferee's nominee, as the case may be), a Security or Securities in the
appropriate aggregate principal amount in the name of such transferee (or its
nominee) and bearing such restrictive legends as may be required by this
Indenture. In connection with any such transfer, the Trustee may request such
representations and agreements relating to the restrictions on transfer of such
Security or Securities from such transferee (or such transferee's nominee) as
the Trustee may reasonably require.
If a holder of a definitive Security wishes at any time to exchange its
Security for a beneficial interest in any Global Security (or vice versa), or to
transfer its definitive Security to a person who wishes to take delivery thereof
in the form of a beneficial interest in a Global Security (or vice versa), such
Securities and beneficial interests may be exchanged or transferred for one
another only in accordance with such procedures as are substantially consistent
with the provisions of the two preceding paragraphs (including the certification
requirements intended to ensure that such exchanges or transfers comply with
Rule 144 or Rule 144A, as the case may be) and as may be from time to time
adopted by the Company and the Trustee.
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Any beneficial interest in one of the Global Securities that is
transferred to a person who takes delivery in the form of an interest in the
other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to beneficial interests in such other Global Security for
as long as it remains such an interest.
ARTICLE 4
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.01 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on written demand of and at the
expense of the Company, shall execute instruments supplied by the Company
acknowledging satisfaction and discharge of this Indenture, when (1) either (A)
All Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.03) have been delivered to the Trustee for
cancellation; or (B) all such Securities not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, or (ii) will become
due and payable at their Stated Maturity within one year, or (iii) if redeemable
at the option of the Company, are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company and
the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be; (2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and (3) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with. Notwithstanding the
satisfaction and discharge of this Indenture, the obligations of the Company to
the Trustee under Section 6.07 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations
of the Trustee under Section 4.02 and the last paragraph of Section 10.03 shall
survive.
SECTION 4.02 DEFEASANCE AND DISCHARGE.
The following provisions shall apply to the Securities unless
specifically otherwise provided in a Board Resolution, Officers' Certificate or
indenture supplemental hereto provided pursuant to Section 3.01. In addition to
discharge of this Indenture pursuant to Sections 4.01 and 4.03, in the
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case of any Securities with respect to which the exact amount described in
subparagraph (a) of Section 4.04 can be determined at the time of making the
deposit referred to in such subparagraph (a), the Company shall be deemed to
have paid and discharged the entire indebtedness on all the Securities as
provided in this Section on and after the date the conditions set forth in
Section 4.04 are satisfied, and the provisions of this Indenture with respect to
the Securities shall no longer be in effect (except as to (i) rights of
registration of transfer and exchange of Securities, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive, solely from the trust fund described in
subparagraph (a) of Section 4.04, payments of principal thereof and interest, if
any, thereon upon the original stated due dates therefor (but not upon
acceleration), (iv) the rights, obligations, duties and immunities of the
Trustee hereunder, (v) this Section 4.02 and (vi) the rights of the Holders of
Securities as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them) (hereinafter called
"Defeasance"), and the Trustee at the cost and expense of the Company, shall
execute proper instruments acknowledging the same.
SECTION 4.03 COVENANT DEFEASANCE.
In the case of any Securities with respect to which the exact amount
described in subparagraph (a) of Section 4.04 can be determined at the time of
making the deposit referred to in such subparagraph (a), (i) the Company shall
be released from its obligations under any covenants specified in or pursuant to
this Indenture (except as to (i) rights of registration of transfer and exchange
of Securities, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) rights of Holders of Securities to receive, from the
Company pursuant to Section 10.01, payments of principal thereof and interest,
if any, thereon upon the original stated due dates therefor (but not upon
acceleration), (iv) the rights, obligations, duties and immunities of the
Trustee hereunder and (v) the rights of the Holders of Securities as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them), and (ii) the occurrence of any event specified
in Section 5.01(3) (with respect to any of the covenants specified in or
pursuant to this Indenture) shall be deemed not to be or result in an Event of
Default, in each case with respect to the Outstanding Securities as provided in
this Section on and after the date the conditions set forth in Section 4.04 are
satisfied (hereinafter called "Covenant Defeasance"), and the Trustee, at the
cost and expense of the Company, shall execute proper instruments acknowledging
the same. For this purpose, such Covenant Defeasance means that the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant (to the extent so
specified in the case of Section 5.01(4)), whether directly or indirectly by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document, but the remainder of this Indenture and the Securities shall be
unaffected thereby.
SECTION 4.04 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
4.02 or 4.03 to the Outstanding Securities:
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(a) with reference to Section 4.02 or 4.03, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as funds in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of Securities (i) cash in an amount, or (ii) direct
obligations of the United States of America, backed by its full faith and credit
("U.S. Government Obligations"), maturing as to principal and interest, if any,
at such times and in such amounts as will insure the availability of cash, (iii)
obligations of a Person controlled or supervised by and acting as any agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation of the United
States of America, or (iv) a combination thereof, in each case sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge the principal of and interest, if any, on all Securities on each
date that such principal or interest, if any, is due and payable;
(b) in the case of Defeasance under Section 4.02, the Company has
delivered to the Trustee an Opinion of Counsel based on the fact that (x) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (y), since the date hereof, there has been a change in the
applicable United States Federal income tax law, in either case to the effect
that, and such opinion shall confirm that, the Holders of the Securities of such
series will not recognize income, gain or loss for Federal income tax purposes
as a result of such deposit, Defeasance and discharge and will be subject to
Federal income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit, Defeasance and discharge had
not occurred;
(c) in the case of Covenant Defeasance under Section 4.03, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that, and such
opinion shall confirm that, the Holders of the Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and Covenant Defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times, as would have been the case
if such deposit and Covenant Defeasance had not occurred;
(d) such Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under, any agreement or instrument to
which the Company is a party or by which it is bound; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision have been complied with.
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SECTION 4.05 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 10.03, all
money and U.S. Government Obligations deposited with the Trustee pursuant to
Section 4.01 shall be held in trust and such money and all money from such U.S.
Government Obligations shall be applied by it, in accordance with the provisions
of the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and
interest for whose payment such money and U.S. Government Obligations has been
deposited with the Trustee.
SECTION 4.06 INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 4.04 or the principal or interest received in
respect of such obligations other than any such tax, fee or other charge that by
law is for the account of the Holders of Outstanding Securities.
ARTICLE 5
REMEDIES
SECTION 5.01 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article 11 or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) failure for 30 days to pay any installment of interest on the
Securities when due (subject to the deferral of any due date in the case of an
Extension Period); or
(2) failure to pay any principal on the Securities when due whether at
Stated Maturity, following notice of redemption, by declaration of acceleration
or otherwise; or
(3) failure to observe or perform in any material respect any other
covenant or agreement herein (other than a covenant or agreement default which
is specifically designated as having a different time period) for 60 days after
written notice to the Company from the Trustee; or
(4) (i) default under any instrument (including this Indenture) under
which there is at the time outstanding, or by which there may be secured or
evidenced, any indebtedness of the Company for money borrowed by the Company
(other than non-recourse indebtedness) which results in the acceleration or
nonpayment at maturity (after giving effect to any applicable grace period) of
such indebtedness in an aggregate amount exceeding $15,000,000; or any such
indebtedness exceeding $15,000,000 shall otherwise be declared to be due and
payable, or required to be prepaid (other than
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by a regularly scheduled prepayment or exercise of an optional prepayment
right), prior to the stated maturity thereof; or any failure by the Company to
make any payment under a guarantee in respect of any indebtedness, in each case
in an amount of at least $15,000,000, on the date such payment is due (or within
any grace period specified in the agreement or other instrument governing such
indebtedness); in which case the Company shall immediately give notice to the
Trustee of such acceleration or non-payment, and (ii) there shall have been a
failure to cure such default or to pay or discharge such defaulted indebtedness
within ten days after written notice thereof as provided in the Indenture; or
(5) the voluntary or involuntary dissolution or winding up of the
Trust or other termination of the existence of the Trust, other than in
connection with (i) the distribution of the Securities to holders of the
Preferred Securities and Common Securities in liquidation of their interests in
the Trust, (ii) the redemption of all outstanding Preferred Securities and
Common Securities, or (iii) certain mergers, consolidations or amalgamations of
the Trust, each as permitted by the Declaration; or
(6) any final non-appealable judgment or order for the payment of
money in excess of $15,000,000 is rendered against the Company, such judgment
or order is not satisfied by payment or bonded and either enforcement
proceedings shall have been commenced by the judgment creditor or there has
been a period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not have
been in effect; provided, however, that a judgment or order fully covered by
insurance (or a judgment or order for the payment of money covered by insurance
to the extent of all payments in excess of $15,000,000), which coverage has not
been disputed by the insurer, shall not be considered a default or an Event of
Default; or
(7) entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Guarantor or the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of substantially all of the
property of the Company, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 90 consecutive
days; or
(8) (A) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or (B) the consent by the Company or to the
entry of a decree or order for relief in respect of itself in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company, or (C) the filing by the
Company of a petition or answer or consent seeking
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reorganization or relief under any applicable Federal or State law, or (D) the
consent by the Company to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of all or substantially
all of the property of the Company, or (E) the making by the Company of an
assignment for the benefit of creditors.
SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee, as the holder of the Securities, shall have the right to
declare the principal of and the interest on all the Securities and any other
amounts payable hereunder to be due and payable immediately, provided, however,
that if upon an Event of Default, the Trustee fails to declare the payment of
all amounts on the Securities to be immediately due and payable, any record
holder of Preferred Securities then outstanding shall have such right, by a
notice in writing to the Company (and to the Trustee if given by Holders or the
holders of Preferred Securities) and upon any such declaration such principal
and all accrued interest shall become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if (1) the Company has paid or deposited with the Trustee a sum
sufficient to pay (A) all overdue interest on all Securities, (B) the principal
of (and premium, if any, on) any Securities which have become due otherwise than
by such declaration of acceleration and interest thereon at the rate borne by
the Securities, (C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities, and (D) all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel; (2)
all Events of Default, other than the non-payment of the principal of Securities
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of any Security at
the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest, and,
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to the extent that payment thereof shall be legally enforceable, interest on any
overdue principal and on any overdue interest, at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.04 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company (or any other obligor upon the Securities),
its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have claims of the Holders
and the Trustee allowed in any such proceeding. In particular, the Trustee shall
be authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.07. No provision of this Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.05 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06 APPLICATION OF MONEY COLLECTED.
Subject to Article 11, any money collected by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the
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distribution of such money on account of principal upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.07;
SECOND: To the payment of the amounts then due and unpaid for principal
of and interest on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal and interest, respectively; and
THIRD: To the Company if any balance shall remain.
SECTION 5.07 LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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SECTION 5.08 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 3.07) interest on
such Security on the Stated Maturity (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
SECTION 5.09 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.06, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 5.12 CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture; and
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(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 5.13 WAIVER OF PAST DEFAULTS.
Subject to Sections 9.02 and 10.09 hereof, the Holders of not less than
a majority in principal amount of the Outstanding Securities may on behalf of
the Holders of all the Securities waive any past default hereunder and its
consequences, except a default:
(1) in the payment of the principal of or interest on any Security
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected; provided, however, that such waiver or
modification to such waiver shall not be effective until the holders of a
majority in liquidation preference of Preferred Securities shall have consented
to such waiver or modification to such waiver; provided further, that if the
consent of the Holder of each of the Outstanding Securities is required, such
waiver shall not be effective until each Holder of the Preferred Securities
shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist, effective as
of the date specified in such waiver (and effective retroactively to the date of
default, if so specified) and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 5.14 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs, including legal fees and expenses, of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided, that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company or the Trustee or in any suit for the enforcement of the right to
receive the principal of and interest on any Security.
SECTION 5.15 WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully
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do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 5.16 PREFERRED SECURITY HOLDERS RIGHTS.
If an Event of Default constituting the failure to pay interest or
principal on the Securities on the date such interest or principal is otherwise
payable has occurred and is continuing, then a holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to such holder
directly of the principal of or interest on the Securities having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities or
such holder on or after the respective due date specified in the Securities.
ARTICLE 6
THE TRUSTEE
SECTION 6.01 CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act and no implied covenants or obligations shall be read
into this Indenture against the Trustee. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.02 NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder as
and to the extent provided by the Trust Indenture Act; provided, however, that
except in the case of a default in the payment of the principal of or interest
on any Security, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of Securities; provided, further, that in the case of any default of the
character specified in Section 5.01(3), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default. For purposes of this Section,
the Trustee shall not be deemed to have knowledge of a default unless the
Trustee has actual knowledge of such default or has received written notice of
such default in the manner contemplated by Section 1.05.
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SECTION 6.03 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
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SECTION 6.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 6.05 MAY HOLD SECURITIES.
The Trustee, any Paying Agent, any Security Registrar, or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, or such other agent. Money held
by the Trustee in trust hereunder shall not be invested by the Trustee pending
distribution thereof to the holders of the Securities.
SECTION 6.06 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 6.07 COMPENSATION; REIMBURSEMENT; AND INDEMNITY.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all loss, damage, claim, liability or
expense, including taxes (other than taxes based on the income of the Trustee)
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust or the trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
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The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any, on) or interest
on particular Securities.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.01(7) or Section 5.01(8), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
SECTION 6.08 DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.09 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 and has its Corporate Trust
Office in New York, New York. If such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company. If an instrument
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of acceptance by a successor Trustee shall not have been delivered to the
Trustee within 30 days after the giving of such notice of removal, the Trustee
being removed may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(d) If at any time:
1) the Trustee shall fail to comply with Section 6.08 after
written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
2) the Trustee shall cease to be eligible under Section 6.09
and shall fail to resign after written request therefor by the Company or by
any such Holder, or
3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
If an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 1.06. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
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SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; provided that, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than January 15 and July 15 in each year,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders to the extent the Company has knowledge thereof as of a
date not more than 15 days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 supplied to the
Trustee by the Depository at the Trustee's request, and the names and addresses
of Holders received by the Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided in Section 7.01 upon
receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 7.03 REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each May 15 following the date of this Indenture deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
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(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 7.04 REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 shall
be filed with the Trustee within 15 days after the same is so required to be
filed with the Commission. Delivery of such reports, information and documents
to the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety, the successor Person
formed by such consolidation or into which the Company is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Guarantor, when
authorized by appropriate Board Resolutions, and the Trustee, at any time and
from time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Securities; or
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(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
or
(3) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, provided that such action pursuant to this clause (3) shall not
adversely affect the interests of the Holders of the Securities or, so long as
any of the Preferred Securities shall remain outstanding, the holders of the
Preferred Securities; or
(4) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
SECTION 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company, the Guarantor and the Trustee, the Company and the Guarantor,
when authorized by appropriate Board Resolutions, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1) except to the extent permitted and subject to the conditions set
forth in Section 3.01 with respect to the extension of the Stated Maturity of
the Securities, change the Stated Maturity of, the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the rate of interest thereon, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or modify the provisions of this Indenture with respect to
the subordination of the Securities in a manner adverse to the Holders,
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or
Section 10.09, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
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provided, that, so long as any of the Preferred Securities remains outstanding,
no such amendment shall be made that adversely affects the holders of the
Preferred Securities, and no termination of this Indenture shall occur, and no
waiver of any Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate liquidation preference of the outstanding
Preferred Securities unless and until the principal of and any premium on the
Securities and all accrued and unpaid interest thereon have been paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.01) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 9.06 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
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ARTICLE 10
COVENANTS; REPRESENTATIONS AND WARRANTIES
SECTION 10.01 PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and interest
on the Securities in accordance with the terms of the Securities and this
Indenture and comply with all other terms, agreements and conditions contained
herein.
SECTION 10.02 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange, where Securities
may be surrendered for conversion and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in the United States) where the Securities may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the United States for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 10.03 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or at the option of the Company on or before each due date of the principal
of or interest on any of the Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act. In such case the Company shall not invest the
amount so segregated and held in trust pending the distribution thereof.
Whenever the Company shall have one or more Paying Agents, it will, on
or prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action
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or failure so to act; provided, however, that any such deposit on a due date
shall be initiated prior to 1:00 p.m. (New York time) in same-day funds.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
SECTION 10.04 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the
material terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 10.05 EXISTENCE.
Subject to Article 8, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders and, while
any Preferred Securities are outstanding, the holders of the Preferred
Securities.
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SECTION 10.06 MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 10.07 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary that
comprise more than 10% of the assets of the Company and its Subsidiaries taken
as a whole; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 10.08 ADDITIONAL COVENANTS.
The Company also covenants that so long as the Preferred Securities and
Common Securities remain outstanding (i) to maintain 100% direct or indirect
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Company hereunder may succeed to the Company's
ownership of such Common Securities, (ii) not to voluntarily dissolve, wind-up
or terminate the Trust, except in connection with a distribution of the
Securities or certain mergers, consolidations or amalgamations, (iii) to timely
perform its duties as sponsor of the Trust, (iv) to use its reasonable efforts
to cause the Trust (A) to remain a business trust classified as a grantor trust
except in connection with the distribution of the Securities to the holders of
the Preferred Securities in liquidation of the Trust, the redemption of all
Preferred Securities and Common Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (B)
to continue not to be treated as an association taxable as a corporation for
United States Federal income tax purposes, (v) to use its reasonable efforts to
cause each holder of Preferred Securities and Common Securities to be treated as
owning an undivided beneficial interest in the Securities and (vi) to appoint a
successor trustee whenever necessary to avoid or fill a vacancy in the office of
Trustee.
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SECTION 10.09 WAIVER OF CERTAIN COVENANTS.
Except as otherwise specified as contemplated by Section 3.01 for
Securities, the Company may, with respect to the Securities, omit in any
particular instance to comply with any term, provision or condition set forth in
any covenant provided pursuant to Section 9.01(2) for the benefit of the Holders
if before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE 11
SUBORDINATION OF SECURITIES
SECTION 11.01 SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to Article 4), the
payment of the principal of and interest on each and all of the Securities are
hereby expressly made subordinate and subject in right of payment to the prior
payment in full in cash of all Senior Indebtedness. The payment by the Guarantor
of any obligation due under the Guarantee shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor, whether
outstanding at the date of this Indenture or thereafter incurred.
This Article 11 shall constitute a continuing offer to all persons who
become holders of, or continue to hold, Senior Indebtedness, and such provisions
are made for the benefit of the holders of Senior Indebtedness and such holders
are made obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
SECTION 11.02 DEFAULT ON SENIOR INDEBTEDNESS.
In the event and during the continuation of any default by the Company
or the Guarantor in the payment of principal, premium, interest or any other
payment due on any Senior Indebtedness (and any applicable grace period with
respect to such default has ended and such default has not been cured or waived)
or in the event that the maturity of any Senior Indebtedness of the Company or
the Guarantor, as the case may be, has been accelerated because of a default,
then, in either case, no payment shall be made by the Company with respect to
the principal (including redemption payments) of, or interest on, the
Securities, including payment with respect to any obligation due under the
Guarantee.
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In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by the
preceding paragraph of this Section 11.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee within 90 days of such payment
of the amounts then due and owing on the Senior Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid to the holders of
Senior Indebtedness.
SECTION 11.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment by the Company or the Guarantor, or distribution of
assets of the Company or the Guarantor of any kind or character, whether in
cash, property or securities, to creditors upon any dissolution or winding-up or
liquidation or reorganization of the Company or the Guarantor, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all principal of, and premium, if any, and interest due or to become due upon
all Senior Indebtedness of the Company or the Guarantor, as the case may be,
(including interest after the commencement of any bankruptcy, insolvency,
receivership or other proceedings at the rate specified in the applicable Senior
Indebtedness whether or not such interest is an allowable claim in any such
proceeding) shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made on account of the
principal or interest on the Securities; and upon any such dissolution or
winding-up or liquidation or reorganization any payment by the Company or the
Guarantor, or distribution of substantially all of the assets of the Company or
the Guarantor of any kind or character, whether in cash, property or securities,
to which the Holders of the Securities or the Trustee would be entitled, except
for the provisions of this Article 11, shall be paid by the Company or the
Guarantor, as the case may be, or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness of the
Company or the Guarantor, as the case may be, (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company or the Guarantor, as the case may be) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full of the Company or the
Guarantor, as the case may be, (including interest after the commencement of any
bankruptcy, insolvency, receivership or other proceedings at the rate specified
in the applicable Senior Indebtedness whether or not such interest is an
allowable claim in any such proceeding) or to provide for such payment in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before any payment or
distribution is made to the Holders of Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or the Guarantor of any kind or character,
whether in cash, property or securities,
<PAGE> 64
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prohibited by the foregoing, shall be received by the Trustee or the Holders of
the Securities before all Senior Indebtedness of the Company or the Guarantor is
paid in full, of the Company or the Guarantor, as the case may be, (including
interest after the commencement of any bankruptcy, insolvency, receivership or
other proceedings at the rate specified in the applicable Senior Indebtedness
whether or not such interest is an allowable claim in any such proceeding) or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company or the Guarantor, for application to the payment of all Senior
Indebtedness of the Company or the Guarantor, as the case may be, remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Any holder of Senior Indebtedness may file any proof of claim or
similar instrument on behalf of the Trustee and the Holders if such instrument
has not been filed by the date which is 30 days prior to the date specified for
filing thereof.
For purposes of this Article 11, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company or the
Guarantor as reorganized or readjusted, or securities of the Company or the
Guarantor or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article 11 with respect to the Securities to the payment of all
Senior Indebtedness of the Company or the Guarantor, as the case may be, that
may at the time be outstanding, provided, however, that (i) the Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of the Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company or the
Guarantor with, or the merger of the Company or the Guarantor into, another
corporation or the liquidation or dissolution of the Company or the Guarantor
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article 8 hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 11.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article 8 hereof.
Nothing in Section 11.02 or in this Section 11.03 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.07.
SECTION 11.04 SUBROGATION.
Subject to the payment in full of all Senior Indebtedness of the
Company or the Guarantor, the rights of the Holders of the Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company or the
Guarantor, as the case may be, applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Securities shall be paid
in full; and, for the purposes of such
<PAGE> 65
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subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article 11, and no payment over pursuant to the provisions of this Article 11,
to or for the benefit of the holders of Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as between (i) the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the Holders of the
Securities, or (ii) the Guarantor, its creditors other than the holders of
Senior Indebtedness of the Guarantor, and the holders of the Securities, and the
Holders of the Securities, be deemed to be a payment by the Company or the
Guarantor, as the case may be, to or on account of the Senior Indebtedness. It
is understood that the provisions of this Article 11 are and are intended solely
for the purposes of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Indebtedness on the
other hand.
Nothing contained in this Article 11 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between (i) the Company,
its creditors other than the holders of Senior Indebtedness of the Company, and
the Holders of the Securities, or (ii) the Guarantor, its creditors other than
holders of Senior Indebtedness of the Guarantor, and the holders of the
Securities, the obligation of the Company or the Guarantor, as the case may be,
which is absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of the Securities
and creditors of the Company or the Guarantor, as the case may be, other than
the holders of the Senior Indebtedness or the Guarantor, as the case may be, nor
shall anything herein or therein prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
11 of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company or the Guarantor, as the case may be, received upon
the exercise of any such remedy.
Upon any payment or distribution of assets of the Company or the
Guarantor referred to in this Article 11, the Trustee, subject to the provisions
of Section 6.01, and the Holders of the Securities, shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
such dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, delivered to
the Trustee or to the Holders of the Securities, for the purposes of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company or the
Guarantor, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 11.
SECTION 11.05 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by acceptance thereof authorizes and directs
the Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article 11 and
appoints the Trustee such Holder's attorney-in-fact for any and all such
purposes.
<PAGE> 66
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SECTION 11.06 NOTICE BY THE COMPANY AND THE GUARANTOR.
The Company or the Guarantor shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the Company or the
Guarantor that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Securities pursuant to the provisions of this Article
11. Notwithstanding the provisions of this Article 11 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Securities pursuant to the provisions of this
Article 11, unless and until a Responsible Officer of the Trustee shall have
received written notice thereof at the Corporate Trust Office of the Trustee
from the Company or the Guarantor or a holder or holders of Senior Indebtedness
or from any trustee therefor; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Section 6.01, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 11.06 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days prior
to such date.
The Trustee, subject to the provisions of Section 6.01, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness of the Company or the Guarantor, as the case may be, or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article 11, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article 11, and if
such evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 11.07 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 11 in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article 11 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.07.
With respect to the holders of Senior Indebtedness of the Company or
the Guarantor, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are
<PAGE> 67
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specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 6.01, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to holders of Securities,
the Company, the Guarantor or any other Person money or assets to which any
holder of Senior Indebtedness shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.08 SUBORDINATION MAY NOT BE IMPAIRED.
No right of any present or future holder of any Senior Indebtedness of
the Company or the Guarantor to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or the Guarantor, as the case may be, or by any act or
failure to act, in good faith, by any such holder, or by any noncompliance by
the Company or the Guarantor, as the case may be, with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company or the Guarantor may, at any
time and from time to time, without the consent of or notice to the Trustee or
the Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination provided
in this Article or the obligations hereunder of the Holders of the Securities to
the holders of Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company or the Guarantor, as the case may be,
and any other Person.
ARTICLE 12
REDEMPTION OF SECURITIES
SECTION 12.01 OPTIONAL REDEMPTION; CONDITIONS TO OPTIONAL REDEMPTION.
At any time on or after March 1, 2007, the Company shall have the
right, subject to the terms and conditions of Article 12 of the Indenture, to
redeem this Security at the option of the Company, in whole or in part, at the
Redemption Price (expressed as a percentage of the principal amount of such
securities) set forth below, plus accrued but unpaid interest to the Redemption
Date, if redeemed during the twelve-month period beginning on March 1st of the
years indicated:
<PAGE> 68
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Year Percentage
2007 104.44%
2008 103.99%
2009 103.55%
2010 103.11%
2011 102.66%
2012 102.22%
2013 101.77%
2014 101.33%
2015 100.89%
2016 100.44%
On or after March 1, 2017, the Redemption Price will be 100%, plus
accrued and unpaid interest, if any, to the Redemption Date.
If a Special Event shall occur and be continuing, the Company shall
have the right, subject to receipt by the Trustee of the applicable Opinion of
Counsel and to the last paragraph of this Section 12.01 to redeem, upon not less
than 30 nor more than 60 days notice, the Securities in whole, but not in part,
for cash within 90 days following the occurrence of such Special Event at a
Redemption Price equal to 100% of the principal amount of Securities then
outstanding plus accrued but unpaid interest to the Redemption Date within 90
days following such Special Event.
For so long as the Trust is the Holder of all Securities Outstanding,
the proceeds of any redemption described in this Section 12.01 shall be used by
the Trust to redeem Preferred Securities in accordance with their terms. The
Company shall not redeem the Securities in part unless all accrued and unpaid
interest has been paid in full on all Securities Outstanding for all semi-annual
interest periods terminating on or prior to the Redemption Date.
SECTION 12.02 APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company, as permitted
by Section 12.01, shall be made in accordance with such provision and this
Article.
SECTION 12.03 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Securities pursuant to Section
12.01 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 45 days and no more than 60
days prior to the Redemption Date fixed by the Company, notify the Trustee of
such Redemption Date and of the principal amount of Securities to be redeemed
and provide a copy of the notice of redemption given to Holders of Securities to
be redeemed pursuant to Section 12.04.
<PAGE> 69
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SECTION 12.04 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected by lot, at its discretion, on a pro rata basis (or
such other method of selection as the Trustee may customarily employ) not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 12.05 NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest thereon
will cease to accrue on and after said date, and
(4) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
<PAGE> 70
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Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 12.06 DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.03) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date; provided, however, that any such deposit
on a Redemption Date shall be initiated prior to 1:00 p.m. (New York time) in
same-day funds.
SECTION 12.07 SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security.
SECTION 12.08 SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at a place of payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
AAG HOLDING COMPANY, INC.
By: /s/ Mark F. Muething
------------------------------------
Mark F. Muething
Senior Vice President
AMERICAN ANNUITY GROUP, INC.
By: /s/ Mark F. Muething
------------------------------------
Mark F. Muething
Senior Vice President,
General Counsel and Secretary
THE BANK OF NEW YORK, as Trustee
By: /s/ Mary Jane Morrissey
-----------------------------------
Name: MARY JANE MORRISSEY
---------------------------------
Title: VICE PRESIDENT
--------------------------------
<PAGE> 1
Exhibit 4.2
CERTIFICATE OF TRUST
OF
AMERICAN ANNUITY GROUP CAPITAL TRUST II
This Certificate of Trust is being executed as of March 3, 1997 for the
purpose of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 DEL. C. Section 3801 ET SEQ, (the "Act").
The undersigned hereby certifies as follows:
1) NAME. The name of the business trust is "American Annuity Group
Capital Trust II" (the "Trust").
2) DELAWARE TRUSTEE. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711.
3) EFFECTIVE. This Certificate of Trust which may be executed in
counterparts, shall be effective immediately upon filing in the Office of the
Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year
first above written.
THE BANK OF NEW YORK (Delaware),
as Delaware Trustee
By: /s/ Mary Jane Morrissey
---------------------------------
Name: MARY JANE MORRISSEY
Title: AUTHORIZED SIGNATORY
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Mary Jane Morrissey
---------------------------------
Name: MARY JANE MORRISSEY
Title: VICE PRESIDENT
/s/ Christopher P. Miliano
---------------------------------
CHRISTOPHER P. MILIANO, as Regular Trustee
/s/ Mark F. Muething
---------------------------------
MARK F. MUETHING, as Regular Trustee
<PAGE> 1
Exhibit 4.3
======================================
AMENDED AND RESTATED DECLARATION OF TRUST
AMERICAN ANNUITY GROUP CAPITAL TRUST II
Dated as of March 11, 1997
======================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 INTERPRETATION AND DEFINITIONS.............................................1
Section 1.1 Interpretation and Definitions.......................................1
ARTICLE 2 TRUST INDENTURE ACT........................................................8
Section 2.1 Trust Indenture Act; Application.....................................8
Section 2.2 Lists of Holders of Securities.......................................9
Section 2.3 Reports by the Property Trustee......................................9
Section 2.4 Periodic Reports to the Property Trustee............................10
Section 2.5 Evidence of Compliance with Conditions Precedent....................10
Section 2.6 Events of Default; Waiver...........................................10
Section 2.7 Event of Default; Notice............................................12
ARTICLE 3 ORGANIZATION..............................................................12
Section 3.1 Name and Organization...............................................12
Section 3.2 Office..............................................................13
Section 3.3 Purpose.............................................................13
Section 3.4 Authority...........................................................13
Section 3.5 Title to Property of the Trust......................................14
Section 3.6 Powers and Duties of the Regular Trustees...........................14
Section 3.7 Prohibition of Actions by the Trust and the Trustees................17
Section 3.8 Powers and Duties of the Property Trustee...........................18
Section 3.9 Certain Duties and Responsibilities of the Property Trustee.........20
Section 3.10 Certain Rights of Property Trustee..................................22
Section 3.11 Delaware Trustee....................................................24
Section 3.12 [Intentionally omitted].............................................25
Section 3.13 Not Responsible for Recitals or Issuance of Securities..............25
Section 3.14 Duration of Trust...................................................25
Section 3.15 Mergers.............................................................25
Section 3.16 Property Trustee May File Proofs of Claim...........................27
ARTICLE 4 SPONSOR...................................................................28
Section 4.1 Responsibilities of the Sponsor.....................................28
Section 4.2 Compensation, Indemnification and Expenses of the Trustees..........28
Section 4.3 Sponsor's Purchase of Common Securities.............................29
Section 4.4 Covenants of the Common Securities Holder...........................29
ARTICLE 5 TRUSTEES..................................................................29
Section 5.1 Number of Trustees..................................................29
Section 5.2 Delaware Trustee....................................................30
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 5.3 Property Trustee; Eligibility.......................................30
Section 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally...31
Section 5.5 Initial Trustees....................................................31
Section 5.6 Appointment, Removal and Resignation of Trustees....................31
Section 5.7 Vacancies among Trustees............................................33
Section 5.8 Effect of Vacancies.................................................33
Section 5.9 Meetings............................................................33
Section 5.10 Delegation of Power.................................................34
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.........34
ARTICLE 6 DISTRIBUTIONS.............................................................35
Section 6.1 Distributions.......................................................35
ARTICLE 7 SECURITIES................................................................35
Section 7.1 General Provisions Regarding Securities.............................35
Section 7.2 Transfer of Securities..............................................37
Section 7.3 Mutilated, Destroyed, Lost or Stolen Certificates...................38
Section 7.4 Global Securities...................................................39
Section 7.5 Restrictive Legend..................................................41
Section 7.6 Special Transfer Provisions.........................................43
Section 7.7 Deemed Security Holders.............................................43
Section 7.8 Notices to Clearing Agency..........................................44
Section 7.9 Appointment of Successor Clearing Agency............................44
Section 7.10 Definitive Preferred Security Certificates..........................44
ARTICLE 8 DISSOLUTION AND TERMINATION OF TRUST......................................45
Section 8.1 Dissolution and Termination of Trust................................45
ARTICLE 9 LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS .......................................................46
Section 9.1 Liability...........................................................46
Section 9.2 Exculpation.........................................................46
Section 9.3 Fiduciary Duty......................................................47
Section 9.4 Indemnification.....................................................48
Section 9.5 Outside Businesses..................................................50
ARTICLE 10 ACCOUNTING................................................................51
Section 10.1 Fiscal Year.........................................................51
Section 10.2 Certain Accounting Matters..........................................51
Section 10.3 Banking.............................................................52
Section 10.4 Withholding.........................................................52
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 11 AMENDMENTS AND MEETINGS...................................................52
Section 11.1 Amendments..........................................................52
Section 11.2 Meetings of the Holders of Securities; Action by Written Consent....54
ARTICLE 12 REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE......................................................56
Section 12.1 Representations and Warranties of the Property Trustee..............56
Section 12.2 Representations and Warranties of the Delaware Trustee..............57
ARTICLE 13 MISCELLANEOUS.............................................................57
Section 13.1 Notices.............................................................57
Section 13.2 Governing Law.......................................................58
Section 13.3 Intention of the Parties............................................59
Section 13.4 Headings............................................................59
Section 13.5 Successors and Assigns..............................................59
Section 13.6 Partial Enforceability..............................................59
Section 13.7 Counterparts........................................................59
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED DECLARATION OF TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated as
of March 11, 1997 between AAG Holding Company, Inc., an Ohio corporation, as
Sponsor, and Christopher P. Miliano and Mark F. Muething as the initial Regular
Trustees, The Bank of New York as the initial Property Trustee and The Bank of
New York (Delaware) as the initial Delaware Trustee, not in their individual
capacities but solely as Trustees, and the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration.
WHEREAS, the Trustees and the Sponsor established American Annuity
Group Capital Trust II (the "Trust"), a Delaware trust under the Business Trust
Act (as defined herein) pursuant to a Certificate of Trust filed with the
Secretary of State of the State of Delaware on March 4, 1997 (the "Certificate
of Trust") and a Declaration of Trust dated as of March 4, 1997, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures (as defined herein) of the Debenture Issuer; and
WHEREAS, the sole purpose of the Trust shall be to issue and sell
certain securities representing undivided beneficial interests in the assets of
the Trust, to invest the proceeds from such sales in the Debentures issued by
the Debenture Issuer (as those terms are hereinafter defined) and to engage in
only those activities necessary or incidental thereto.
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a trust under the Business Trust Act, the Trustees hereby
declare that all assets contributed to the Trust be held in trust for the
benefit of the holders, from time to time, of the securities representing
undivided beneficial interests in the assets of the Trust issued hereunder,
subject to the provisions of this Declaration.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
Section 1.1 Interpretation and Definitions.
-------------------------------
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
<PAGE> 6
(d) all references in this Declaration to Articles and Sections are to
Articles and Sections of this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"AAG" means American Annuity Group, Inc., a Delaware corporation.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a corporation means the Chairman of the Board,
a Vice Chairman of the Board, the Chief Executive Officer, a President, a vice
president, the principal financial officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company; Authorized
Officer of the Trust shall mean any Regular Trustee.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in Wilmington, Delaware are authorized or
required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date on which the Preferred Securities are
sold pursuant to the terms of the Securities Purchase Agreement.
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<PAGE> 7
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement of AAG in
respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee
or any Affiliate thereof; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 101 Barclay Street, Floor 21W, New
York, New York 10286, Attention: Corporate Trust Trustee Administration;
telecopy no. (212) 815-5915.
"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debenture Guarantor" means American Annuity Group, Inc. in its
capacity as guarantor of the Debentures under the Indenture.
"Debenture Issuer" means AAG Holding Company, Inc. in its capacity as
issuer of the Debentures under the Indenture.
"Debenture Trustee" means The Bank of New York, in its capacity as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means the debentures to be issued by the Debenture Issuer
under the Indenture to be held by the Property Trustee.
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<PAGE> 8
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures. Such Event of Default shall also constitute a Declaration
Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
9.4(b).
"Fiscal Year" has the meaning set forth in Section 10.1.
"Global Security" has the meaning set forth in Section 7.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act; provided, however, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Declaration, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Preferred
Securities remain in the form of one or more Global Certificates, the term
"Holder" shall mean the holder of the Global Certificate acting at the direction
of the Preferred Security Beneficial Owners.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of March 11, 1997, among the
Debenture Issuer, the Debenture Guarantor and the Debenture Trustee, and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Investment Company" means an investment company as defined in the
Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
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<PAGE> 9
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the terms
of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.
"New Preferred Security" has the meaning specified in Section 7.1.
"New Preferred Security Certificate" has the meaning specified in
Section 7.1.
"Officers' Certificate" means, with respect to any Person (other than
Regular Trustees who are natural persons), a certificate signed by two
Authorized Officers of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with;
provided, that the term "Officers' Certificate" when used with reference to
Regular Trustees who are natural persons shall mean a certificate signed by two
of the Regular Trustees which otherwise satisfies the foregoing requirements.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated
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<PAGE> 10
association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Securities Guarantee" means any guarantee of between AAG as
guarantor and The Bank of New York in respect of the Preferred Securities.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Purchasers" means the several purchasers named on the signature pages
of the Securities Purchase Agreement.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A under the Securities Act.
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the date hereof among American Annuity Group, Inc., the Sponsor, the Trust
and the Purchasers for the benefit of themselves and the Holders, as such
agreement may be amended.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
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<PAGE> 11
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including any
vice-president, any assistant vice-president, any assistant secretary, the
treasurer, any assistant treasurer or other officer of the Corporate Trust
Office of the Property Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Restricted Global Security" means any Global Security or Securities
evidencing Securities that are to be traded pursuant to Rule 144A.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Preferred Securities Guarantee.
"Securities Purchase Agreement" means the several Securities Purchase
Agreements dated the date hereof between American Annuity Group, Inc., the
Trust, the Sponsor and the Purchasers.
"Sponsor" means AAG Holding Company, Inc., an Ohio corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.6(b).
"Successor Entity" has the meaning specified in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning specified in Section
5.6(b).
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<PAGE> 12
"Successor Security" has the meaning specified in Section 3.15(b)(i)b.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in Liquidation Amount" means, except as provided in the terms of
the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding
Securities, voting together as a single class, or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities, voting separately as a class, who are the record owners of 10% or
more of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Transfer Restricted Security" has the meaning specified in Section 7.1
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trustees' Authorization Certificate" means a written certificate
signed by two of the Regular Trustees for the purpose of establishing the terms
and form of the Preferred Securities and the Common Securities as determined by
the Regular Trustees.
ARTICLE 2
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.
---------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
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<PAGE> 13
(c) If and to the extent that any provision of this
Declaration conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the Trust's classification as a grantor
trust for United States Federal income tax purposes and shall not
affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 2.2 Lists of Holders of Securities.
-------------------------------
(a) Unless the Property Trustee acts as Registrar, each of the Sponsor
and the Regular Trustees on behalf of the Trust shall provide the Property
Trustee with a list, in such form as the Property Trustee may reasonably
require, of the names and addresses of the Holders of the Securities ("List of
Holders"), (i) within one Business Day after January 15 and July 15 of each year
and current as of such date, and (ii) at any other time, within 30 days of
receipt by the Trust of a written request from the Property Trustee for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee; provided that neither the Sponsor nor the Regular
Trustees on behalf of the Trust shall be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Property Trustee by the Sponsor and the Regular
Trustees on behalf of the Trust. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity), provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
Section 2.3 Reports by the Property Trustee.
--------------------------------
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the Property
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
Section 2.4 Periodic Reports to the Property Trustee.
-----------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 (if any) of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture
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<PAGE> 14
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act. Delivery of such reports, information and documents to the
Trustee is for information purposes only and the Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Sponsor's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 2.5 Evidence of Compliance with Conditions Precedent.
-------------------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
Section 2.6 Events of Default; Waiver.
--------------------------
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in liquidation
amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration and the Preferred Securities, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon. Any
waiver by the Holders of the Preferred Securities of a Declaration Event of
Default with respect to the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such
Declaration Event of Default with respect to the Common
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<PAGE> 15
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default in respect of the Common Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration
shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived
under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion
in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and the consequences thereof until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the Holders of the Preferred Securities and only
the Holders of the Preferred Securities will have the right to direct the
Property Trustee in accordance with the terms of the Securities. The foregoing
provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Event of Default with respect to the Preferred
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such
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Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture
Act.
Section 2.7 Event of Default; Notice.
-------------------------
(a) The Property Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Property Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.01(1) and 5.01(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall
have received written notice or of which a
Responsible Officer of the Property Trustee charged
with the administration of this Declaration shall
have actual knowledge.
ARTICLE 3
ORGANIZATION
Section 3.1 Name and Organization.
----------------------
The Trust hereby continued is named "American Annuity Group Capital
Trust II" as such name may be modified from time to time by the Regular Trustees
following written notice to the Holders of Securities. The Trust's activities
may be conducted under the name of the Trust or any other name deemed advisable
by the Regular Trustees.
Section 3.2 Office.
-------
The address of the principal office of the Trust is c/o American
Annuity Group, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202. On ten
Business Days written notice to the Holders of Securities, the Regular Trustees
may designate another principal office.
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Section 3.3 Purpose.
--------
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the gross proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust.
The Trust will be classified as a grantor trust for United States
federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, deductions and credits of the Trust as if the Trust did not exist. By
the acceptance of this Trust, none of the Trustees, the Sponsor, the Holders of
the Preferred Securities or Common Securities or the Preferred Securities
Beneficial Owners will take any position for United States federal income tax
purposes which is contrary to the classification of the Trust as a grantor
trust.
Section 3.4 Authority.
----------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6(b)(i), provided, that the registration statement
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by a majority of the Regular Trustees; and
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(c) A Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
Section 3.5 Title to Property of the Trust.
-------------------------------
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
Section 3.6 Powers and Duties of the Regular Trustees.
------------------------------------------
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities:
(a) to establish the terms and form of the Preferred Securities and the
Common Securities in the manner specified in Section 7.1 and issue and sell the
Preferred Securities and the Common Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than two series
of Preferred Securities and no more than one series of Common Securities, and,
provided further, that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to (i) a
simultaneous issuance of both Transfer Restricted Securities and Common
Securities on the Closing Date and (ii) an issuance of New Preferred Securities
as contemplated by Section 7.1(a);
(b) in connection with the issue and sale of the Preferred Securities,
at the direction of the Sponsor, to:
(i) execute and file with the Commission one or more
registration statements on applicable forms,
including any amendments thereto, pertaining to the
Preferred Securities, the Preferred Securities
Guarantee and the Debentures;
(ii) determine the states in which to take appropriate
action to qualify or register for sale all or part of
the Preferred Securities and to do any and all acts,
and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be
executed and filed by the Trust as they shall deem
necessary or advisable in order to comply with the
applicable laws of such States;
(iii) execute and file an application, prepared by the
Sponsor and AAG, to the New York Stock Exchange, Inc.
or any other national stock exchange or the
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Nasdaq Stock Market's National Market System for
listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor and AAG, relating to
the registration of the Preferred Securities under
Section 12(b) of the Exchange Act;
(v) negotiate the terms of the Securities Purchase
Agreement and to execute, deliver and perform the
Securities Purchase Agreement and any other related
agreements providing for the sale of the Preferred
Securities to the Purchasers; and
(vi) negotiate the terms of the Registration Rights
Agreement and to execute, deliver and perform the
Registration Rights Agreement;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of certain events (as may be specified in the terms of the
Securities) arising from a change in law or a change in legal interpretation or
other circumstances specified in the terms of the Securities provided that the
Regular Trustees shall consult with the Sponsor and the Property Trustee before
taking or refraining from taking any action in relation to any such event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holder of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct only those
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services that the Regular Trustees have authority to conduct directly, and to
pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any
of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Debenture Issuer of its election (i) to defer
payments of interest on the Debentures by extending the interest payment period
under the Debentures as authorized by the Indenture, or (ii) to extend the
maturity date of the Debentures if so authorized by the Indenture, provided that
any such extension of the maturity date will not adversely affect the federal
income tax status of the Trust;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with applicable law, that the
Regular Trustees determine in their discretion to be necessary or desirable in
carrying out the purposes and functions of the Trust as set out in Section 3.3
or the activities of the Trust as set out in this Section 3.6, including, but
not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under
the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax
purposes.
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(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall have no power to, and
shall not, take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
Section 3.7 Prohibition of Actions by the Trust and the Trustees.
-----------------------------------------------------
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders
of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than the Debentures (and any interest
or proceeds received thereon);
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets;
(vi) possess any power or otherwise act in such a way as to vary
the terms of the Securities in any way whatsoever (except to
the extent expressly authorized in this Declaration or by the
terms of the Securities);
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<PAGE> 22
(vii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than
the Securities; or
(viii) other than as provided in this Declaration or by the terms of
the Securities, (A) direct the time, method and place of
exercising any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise any
right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable, or (D) consent
to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an
insubstantial risk that the Trust will be deemed an Investment
Company required to be registered under the Investment Company
Act, or the Trust will not be classified as a grantor trust
for United States federal income tax purposes; or
(ix) take any action inconsistent with the status of the Trust as a
grantor trust for United States federal income tax purposes.
Section 3.8 Powers and Duties of the Property Trustee.
------------------------------------------
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and
under the exclusive control of the Property Trustee on behalf
of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by
the Property Trustee, deposit such funds into the Property
Trustee Account and make payments to the Holders of the
Preferred Securities and Holders of the Common Securities from
the Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held uninvested
until disbursed in accordance with this Declaration. The
Property Trustee Account shall be an account that is
maintained with a banking
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institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the
Preferred Securities by a "nationally recognized statistical
rating organization", as that term is defined for purposes of
Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as so directed and as
shall be necessary or appropriate to effect the distribution
of the Debentures to Holders of Securities upon the occurrence
of certain special events (as may be defined in the terms of
the Securities) arising from a change in law or a change in
legal interpretation or other specified circumstances pursuant
to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default of which a Responsible Officer of
the Property Trustee has actual knowledge or the Property Trustee's duties and
obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) Subject to such limitations as are necessary to insure compliance
with Section 3.3, the Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Property Trustee occurs and is continuing, the Property Trustee shall, for
the benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such
Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with
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respect to all Securities and any such Paying Agent shall comply with Section
317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the
Property Trustee at any time and a successor Paying Agent or additional Paying
Agents may be appointed at any time by the Property Trustee. In the event the
Preferred Securities do not remain in the form of one or more Global
Certificates, the Property Trustee will act as Paying Agent and may designate an
additional or substitute Paying Agent at any time.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall have no power to, and
shall not, take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
Section 3.9 Certain Duties and Responsibilities of the Property Trustee.
------------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) of which a Responsible Officer of
the Property Trustee has actual knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
a. the duties and obligations of the Property Trustee
shall be determined solely by the express provisions
of this Declaration and the Property Trustee shall
not be liable except for the performance of such
duties and obligations as are specifically set forth
in this Declaration, and no implied covenants or
obligations shall be read into this Declaration
against the Property Trustee; and
b. in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may
conclusively rely, as to the truth of the statements
and the
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correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the
Property Trustee and conforming to the requirements
of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof
are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under
a duty to examine the same to determine whether or
not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than
a Majority in Liquidation Amount of the Securities relating to
the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured
to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such
risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such
property in a similar manner as the Property Trustee deals
with similar property for its own account, subject to the
protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in
writing with the Sponsor. Money held by the Property Trustee
need not be segregated from other funds held by it except in
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relation to the Property Trustee Account maintained by the
Property Trustee pursuant to Section 3.8(c)(i) and except to
the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of
the Regular Trustees or the Sponsor.
Section 3.10 Certain Rights of Property Trustee.
-----------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall
be fully protected in acting or refraining from
acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate
(or, with respect to the establishment of the terms
and form of the Securities by the Regular Trustees,
by a Trustees' Authorization Certificate);
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a
matter be proved or established before taking,
suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon
an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor
or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument
(including any financing or continuation statement or
any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its
choice or other experts and the advice or opinion of
such counsel and experts with respect to legal
matters or advice within the scope of such experts'
area of expertise shall be full and complete
authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good
faith and in accordance with such
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advice or opinion, such counsel may be counsel to the
Sponsor or any of its Affiliates, and may include any
of its employees. The Property Trustee shall have the
right at any time to seek instructions concerning the
administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any
Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the
costs, expenses (including attorneys' fees and
expenses and the expenses of the Property Trustee's
agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such
request or direction, including such reasonable
advances as may be requested by the Property Trustee;
provided that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default,
of its obligation to exercise the rights and powers
vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the
Property Trustee, in its discretion, may make such
further inquiry or investigation into such facts or
matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder
either directly or by or through agents, custodians,
nominees or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with
due care by it hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders
of the Securities, and the signature of the Property
Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third
party shall be required to inquire as to the
authority of the Property Trustee to so act or as to
its compliance with any of the terms and provisions
of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or
its agent's taking such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder,
the Property Trustee (i) may
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request instructions from the Holders of the
Securities which instructions may only be given by
the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to
direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such
instructions are received, and (iii) shall be
protected in conclusively relying on or acting in or
accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under
any obligation to take any action that is
discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any
action taken, suffered or omitted to be taken by it
in good faith and reasonably believed by it to be
authorized or within the discretion, rights or powers
conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
Section 3.11 Delaware Trustee.
-----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
Section 3.12 [Intentionally omitted]
Section 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities or the Debentures or the Indenture.
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Section 3.14 Duration of Trust.
------------------
The Trust, unless terminated pursuant to the provisions of Article 8
hereof, shall have existence for the forty-nine (49) year maximum term of the
Preferred Securities plus the applicable escheat period.
Section 3.15 Mergers.
--------
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that:
(i) if the Trust is not the survivor, such successor entity
(the "Successor Entity") either:
a. expressly assumes all of the obligations of
the Trust under the Securities; or
b. substitutes for the Securities other
securities having substantially the same
terms as the Securities (the "Successor
Securities") so long as the Successor
Securities rank the same as the Securities
rank with respect to Distributions and
payments upon liquidation, redemption and
otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee
Successor Entity that possesses the same powers and
duties as the Property Trustee as the holder of the
Debentures;
(iii) the Preferred Securities or any Successor Securities
are listed, or any Successor Securities will be
listed upon notification of issuance, on any national
securities exchange or with any other organization on
which the Preferred Securities are then listed or
quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities
(including any Successor Securities with respect to
the Preferred Securities) to be downgraded by any
nationally recognized statistical rating organization
then rating the Preferred Securities at the request
of the Sponsor;
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(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities) in
any material respect (other than with respect to any
dilution of such Holders' interests in the Successor
Entity);
(vi) such Successor Entity has a purpose identical to that
of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of
qualified independent counsel to the Trust
experienced in such matters to the effect that:
a. such merger, consolidation, amalgamation or
replacement does not adversely affect the
rights, preferences and privileges of the
Holders of the Securities (including any
Successor Securities) in any material
respect (other than with respect to any
dilution of such Holders' interests in the
Successor Entity's);
b. following such merger, consolidation,
amalgamation or replacement, neither the
Trust nor the Successor Entity will be
required to register as an Investment
Company; and
c. following such merger, consolidation,
amalgamation or replacement, the Trust (or
the Successor Entity) will continue to be
classified as a grantor trust for United
States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at
least to the extent provided by the Securities
Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes and each Holder of the
Securities not to be treated as owning an undivided interest in the Debentures.
Section 3.16 Property Trustee May File Proofs of Claim.
------------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other
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obligor or their creditors, the Property Trustee (irrespective of whether any
Distributions on the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Property Trustee shall have made any demand on the Trust for the payment of any
past due Distributions) shall be entitled and empowered, to the fullest extent
permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Securities (or, if the Securities are
original issue discount Securities, such portion of the liquidation amount as
may be specified in the terms of such Securities) and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Property Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, and its counsel) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
ARTICLE 4
SPONSOR
Section 4.1 Responsibilities of the Sponsor.
--------------------------------
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission one or more
registration statements on the applicable forms, including any amendments
thereto, pertaining to the Preferred Securities, the Preferred Securities
Guarantee and the Debentures;
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(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) to prepare any filing by the Trust of an application to the New
York Stock Exchange, Inc. or any other national stock exchange or the Nasdaq
National Market for listing, if such filing is determined to be necessary or
desirable by the Sponsor;
(d) to prepare any filing by the Trust with the Commission of a
registration statement on Form 8-A, including any amendments thereto, if such
filing is determined to be necessary or desirable by the Sponsor;
(e) to negotiate the terms of the Securities Purchase Agreement and to
execute, deliver and perform the Securities Purchase Agreement and any other
related agreements providing for the sale of the Preferred Securities to the
Purchasers; and
(f) to negotiate the terms of the Registration Rights Agreement and to
execute, deliver and perform the Registration Rights Agreement.
Section 4.2 Compensation, Indemnification and Expenses of the Trustees.
-----------------------------------------------------------
The Sponsor, in its capacity as Debenture Issuer, agrees:
(a) to pay to the Trustees from time to time such compensation as the
AAG and the Trustees shall from time to time agree in writing for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon their request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Indenture (including the compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith; and
(c) to indemnify the Property Trustee and the Delaware Trustee and
their authorized agents for, and to hold each of them harmless against any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based upon, measured by or determined by the income of any Trustee) incurred
without negligence or bad faith on the part of the Property Trustee, the
Delaware Trustee or their respective authorized agents, as the case may be,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs
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and expenses of defending any of them against any claim or liability in
connection with the exercise or performance of any of their respective powers or
duties hereunder; the provisions of this Section 4.2 shall survive the
resignation or removal of the Delaware Trustee or the Property Trustee or the
termination of this Declaration.
Section 4.3 Sponsor's Purchase of Common Securities.
----------------------------------------
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
Section 4.4 Covenants of the Common Securities Holder.
------------------------------------------
For so long as the Preferred Securities remain outstanding, the Sponsor
will covenant (i) to maintain directly or indirectly 100% ownership of the
Common Securities, (ii) to cause the Trust to remain a statutory business trust
and not to voluntarily dissolve, wind up, liquidate or be terminated, except as
permitted by this Declaration, (iii) to use its commercially reasonable efforts
to ensure that the Trust will not be an investment company for purposes of the
Investment Company Act, and (iv) to take no action inconsistent with the status
of the Trust as a grantor trust for United States federal income tax purposes.
ARTICLE 5
TRUSTEES
Section 5.1 Number of Trustees.
-------------------
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities or by written consent in lieu of such meeting.
provided that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least three (3); and provided further that
(1) the Delaware Trustee, in the case of a natural person, shall be a person who
is a resident of the State of Delaware or that, if not a natural person, is an
entity which has its principal place of business in the State of Delaware; (2)
at least one Regular Trustee is an employee or officer of, or is affiliated with
the Sponsor; and (3) one Trustee shall be the Property Trustee for so long as
this Declaration is required to qualify as an indenture
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under the Trust Indenture Act, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements.
Section 5.2 Delaware Trustee.
-----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
Section 5.3 Property Trustee; Eligibility.
------------------------------
(a) There shall at all times be one Trustee which shall act as Property
Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State
or Territory thereof or of the District of Columbia,
or a corporation or other Person permitted by the
Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually,
pursuant to law or to the requirements of the
supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the
combined capital and surplus of such corporation
shall be deemed to be its combined capital and
surplus as set forth in its most recent report of
condition so published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and
to the extent Rule 3a-7 requires a trustee having
certain qualifications to hold title to the "eligible
assets" (as defined in Rule 3a-7) of the Trust, the
Property Trustee shall possess those qualifications.
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(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
Obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
Section 5.4 Qualifications of Regular Trustees and Delaware Trustee
----------------------------------------------------------
Generally.
----------
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
Section 5.5 Initial Trustees.
-----------------
The initial Regular Trustees shall be:
Christopher P. Miliano and Mark F. Muething, the
business address of both of whom is 250 East Fifth
Street, Cincinnati, Ohio 45202
Section 5.6 Appointment, Removal and Resignation of Trustees.
-------------------------------------------------
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in Liquidation Amount of the
Common Securities voting as a class at a meeting of
the Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3(a) (a "Successor
Property Trustee") has been appointed and has accepted such
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appointment by written instrument executed by such Successor Property Trustee
and delivered to the Regular Trustees and the Sponsor. The Trustee that acts as
Delaware Trustee shall not be removed in accordance with Section 5.6(a) until a
successor Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such Successor
Delaware Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
a. until a Successor Property Trustee has been
appointed and has accepted such appointment
by instrument executed by such Successor
Property Trustee and delivered to the Trust,
the Sponsor and the resigning Property
Trustee; or
b. until the assets of the Trust have been
completely liquidated and the proceeds
thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted
such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee, as
the case may be, shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation or removal, the resigning or removed Property
Trustee or Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware
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Trustee, as applicable. Such court may thereupon, after prescribing such notice,
if any, as it may deem proper, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
Section 5.7 Vacancies among Trustees.
-------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
Section 5.8 Effect of Vacancies.
--------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
Section 5.9 Meetings.
---------
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
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Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
Section 5.10 Delegation of Power.
--------------------
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his, her or
its power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
(b) The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
------------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE 6
DISTRIBUTIONS
Section 6.1 Distributions.
--------------
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Preferred Securities and the Common Securities in
accordance with the preferences set forth in Annex I provided for in Section
7.1(a) and their respective terms. If and to the extent that the Debenture
Issuer makes a payment of interest (including Compounded Interest (as defined in
the Indenture) and Additional Interest (as defined in the Indenture)), premium
and/or principal on the Debentures held by the Property Trustee (the amount of
any such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
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ARTICLE 7
SECURITIES
Section 7.1 General Provisions Regarding Securities.
----------------------------------------
(a) The Regular Trustees shall on behalf of the Trust issue a class of
preferred securities representing undivided beneficial ownership interests in
the assets of the Trust (the "Transfer Restricted Securities"), a class of
preferred securities to be only issued in exchange for the Transfer Restricted
Securities (the "New Preferred Securities," and together with the Transfer
Restricted Securities, the "Preferred Securities"), and one class of common
securities representing undivided beneficial ownership interests in the assets
of the Trust (the "Common Securities").
(i) Preferred Securities. The Preferred Securities of the Trust
have an aggregate liquidation amount with respect to the
assets of the Trust of $75,000,000 and a liquidation amount
with respect to the assets of the Trust of $1,000 per
Preferred Security. The New Preferred Security Certificates
and the Transfer Restricted Preferred Certificates evidencing
the Preferred Securities shall be substantially in the form of
Annex I to the Declaration provided, that the New Preferred
Security Certificate shall not contain any of the provisions
following the Property Trustee's authentication, with such
changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Preferred
Securities are listed.
(ii) Common Securities. The Common Securities of the Trust have an
aggregate liquidation amount with respect to the assets of the
Trust of $2,319,600 and a liquidation amount with respect to
the assets of the Trust of $1,000 per Common Security. The
Common Security Certificates evidencing the Common Securities
shall be substantially in the form of Annex I to the
Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage,
custom or practice.
(b) Payment of Distributions on, and the Redemption Price payable upon
redemption of, the Preferred Securities and the Common Securities, as
applicable, shall be made pro rata based on the liquidation amount of such
Preferred Securities and Common Securities; provided, however, that if on any
date on which such amounts are payable an Indenture Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or the Redemption
Price of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all of the outstanding Preferred Securities for all distribution periods
terminating on or prior thereto, or in the case of amounts payable on redemption
the full amount of the Redemption Price for all of the outstanding Preferred
Securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee
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shall first be applied to the payment in full in cash of all Distributions on,
or amounts payable on redemption of; the Preferred Securities then due and
payable.
(c) The Trust shall issue no securities or other interests in the
assets of the Trust other than the Preferred Securities and the Common
Securities.
(d) Preferred Securities Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual or facsimile
signature of any present or any future Regular Trustee. In case a Regular
Trustee of the Trust who shall have signed any of the Certificates shall cease
to be such Regular Trustee before the Certificates so signed shall be delivered
by the Trust, such Certificates nevertheless may be delivered as though the
person who signed such Certificates had not ceased to be such Regular Trustee;
and any Certificate may be signed on behalf of the Trust by such persons who, at
the actual date of execution of such Certificate, shall be the Regular Trustees
of the Trust, although at the date of the execution and delivery of this
Declaration any such person was not such a Regular Trustee. Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof; and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation of any stock exchange on which Securities may be
listed, or to conform to usage.
A Preferred Securities Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the Property
Trustee. Such signature shall be conclusive evidence that the Certificate has
been authenticated under this Declaration.
Under a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Preferred Securities Certificates for
original issue. The aggregate number of Preferred Securities outstanding at any
time shall not exceed the liquidation amount set forth in Section 7.1(a)(i).
The Property Trustee may appoint an authenticating agent acceptable to
the Trustee to authenticate Preferred Securities Certificates. An authenticating
agent may authenticate Preferred Securities Certificates whenever the Property
Trustee may do so. Each reference in this Declaration to authentication by the
Property Trustee includes authentication by such agent. An authenticating agent
has the same rights as the Property Trustee to deal with the Sponsor or an
Affiliate of the Sponsor.
(e) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(f) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
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(g) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Guarantee,
the Indenture and the Debentures.
Section 7.2 Transfer of Securities.
-----------------------
(a) The Trust shall cause to be kept at the Corporate Trust Office of
the Property Trustee a register (the register maintained in such office being
herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Trust shall provide for the
registration of Preferred Securities and of transfers of Preferred Securities.
The Property Trustee is hereby appointed "Security Registrar" for the purpose of
registering Preferred Securities and transfers of Preferred Securities as herein
provided.
(b) Upon surrender for registration of transfer of any Security at an
office or agency of the Trust designated for such purpose, the Trust shall
execute, and the Property Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount.
(c) At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Trust shall
execute, and the Property Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Trust or the Property
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Trust and the Security Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of transfer or
exchange of Securities, but the Trust may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities.
(f) If the Securities are to be redeemed in part, the Trust shall not
be required (A) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of any such Securities selected for
redemption and ending at the close of business on the day of such mailing, or
(B) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
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Section 7.3 Mutilated, Destroyed, Lost or Stolen Certificates.
--------------------------------------------------
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them, the Sponsor and the
Trust harmless, then, in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, any Regular Trustee on behalf of the
Trust shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 7.3 Regular Trustees may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 7.4 Global Securities.
------------------
If the Trust shall establish that the Preferred Securities are to be
issued in the form of one or more Global Securities (each, a "Global Security"),
then a Regular Trustee on behalf of the Trust shall execute and the Property
Trustee shall authenticate and deliver one or more Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
liquidation amount of all of the Preferred Securities to be issued in the form
of Global Securities and not yet canceled, (ii) shall be registered in the name
of the Depositary for such Global Security or Preferred Securities or the
nominee of such Depositary, and (iii) shall be delivered by the Property Trustee
to such Depositary or pursuant to such Depositary's instructions. Global
Securities shall bear a legend substantially to the following effect:
"This Preferred Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. Notwithstanding the provisions of Section 7.2,
unless and until it is exchanged in whole or in part for Preferred Securities in
definitive registered form, a Global Security representing all or a part of the
Preferred Securities may not be transferred in the manner provided in Section
7.2 except as a whole by the Depositary to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. Every Preferred Security delivered
upon registration or transfer of; or in exchange for, or in lieu of; this Global
Security shall be a Global Security subject to the foregoing, except in the
limited circumstances described above. Unless this certificate is presented by
an authorized representative of DTC to the Trust or its agent
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<PAGE> 43
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is to be made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof; Cede & Co., has an
interest herein."
Definitive Preferred Securities issued in exchange for all or a part of
a Global Security pursuant to this Section 7.4 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Property Trustee. Upon execution and authentication, the Property Trustee shall
deliver such definitive Preferred Securities to the persons in whose names such
definitive Preferred Securities are so registered.
At such time as all interests in Global Securities have been redeemed,
repurchased or canceled, such Global Securities shall be, upon receipt thereof;
canceled by the Property Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in Global Securities is exchanged
for definitive Preferred Securities, redeemed, canceled or transferred to a
transferee who receives definitive Preferred Securities therefor or any
definitive Preferred Security is exchanged or transferred for part of Global
Securities, the principal amount of such Global Securities shall, in accordance
with the standing procedures and instructions existing between the Depositary
and the Custodian, be reduced or increased, as the case may be, and an
endorsement shall be made on such Global Securities by the Property Trustee or
the Custodian, at the direction of the Property Trustee, to reflect such
reduction or increase.
The Trust and the Property Trustee may for all purposes, including the
making of payments due on the Preferred Securities, deal with the Depositary as
the authorized representative of the Holders for the purposes of exercising the
rights of Holders hereunder. The rights of the owner of any beneficial interest
in a Global Security shall be limited to those established by law and agreements
between such owners and depository participants provided, that no such agreement
shall give any rights to any person against the Trust or the Property Trustee
without the written consent of the parties so affected. Multiple requests and
directions from and votes of the Depositary as holder of Preferred Securities in
global form with respect to any particular matter shall not be deemed
inconsistent to the extent they do not represent an amount of Preferred
Securities in excess of those held in the name of the Depositary or its nominee.
If at any time the Depositary for any Preferred Securities represented
by one or more Global Securities notifies the Trust that it is unwilling or
unable to continue as Depositary for such Preferred Securities or if at any time
the Depositary for such Preferred Securities shall no longer be eligible under
this Section 7.4, the Trust shall appoint a successor Depositary with respect to
such Preferred Securities. If a successor Depositary for such Preferred
Securities is not appointed by the
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<PAGE> 44
Trust within 90 days after the Trust receives such notice or becomes aware of
such ineligibility, the Trust's election that such Preferred Securities be
represented by one or more Global Securities shall no longer be effective and
Regular Trustee on behalf of the Trust shall execute, and the Property Trustee
will authenticate and deliver Preferred Securities in definitive registered
form, in any authorized denominations, in an aggregate liquidation amount equal
to the principal amount of the Global Security or Preferred Securities
representing such Preferred Securities in exchange for such Global Security or
Preferred Securities.
The Trust may at any time and in its sole discretion determine that the
Preferred Securities issued in the form of one or more Global Securities shall
no longer be represented by a Global Security or Preferred Securities. In such
event a Regular Trustee on behalf of the Trust shall execute, and the Property
Trustee, shall authenticate and deliver, Preferred Securities in definitive
registered form, in any authorized denominations, in an aggregate liquidation
amount equal to the principal amount of the Global Security or Preferred
Securities representing such Preferred Securities, in exchange for such Global
Security or Preferred Securities.
Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in Section 7.5), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
Interests of beneficial owners in Global Security may be transferred or
exchanged for definitive Preferred Securities and definitive Preferred
Securities may be transferred or exchange for Global Securities in accordance
with rules of the Depositary and the provisions of Section 7.6.
Any Preferred Security in global form may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Declaration as may be required by the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Preferred Securities to be tradeable on the PORTAL Market
or as may be required for the Preferred Securities to be tradeable on any other
market developed for trading of securities pursuant to Rule 144A or required to
comply with any applicable law or any regulation thereunder or with the rules
and regulations of any securities exchange upon which the Preferred Securities
may be listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Preferred Securities are subject.
Section 7.5 Restrictive Legend.
-------------------
Each Global Security and definitive Preferred Security that constitutes
a Restricted Security shall bear the following legend (the "Private Placement
Legend") on the face thereof until two years after the later of the date of
original issue and the last date on which the Sponsor or any affiliate of
40
<PAGE> 45
the Sponsor was the owner of such Preferred Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date"), unless otherwise agreed by
the Trust and the Holder thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR
RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED THAT, IF
REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY
IN FORM AND SUBSTANCE IS FURNISHED TO THE COMPANY THAT AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE
HOLDER OF SUCH SECURITY ARE SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 11,
1997, A COMPLETE AND CORRECT COPY OF THE FORM OF WHICH WILL BE
FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
Any Preferred Security (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms may, upon satisfaction of the requirements of this
Section 7.5 and surrender of such Preferred Security for exchange to the
Preferred Security registrar in accordance with the provisions of this Section
7.5, be exchanged for a new Preferred Security or Preferred Securities, of like
tenor and aggregate liquidation amount, which shall not bear the restrictive
legend required by this Section 7.5.
Upon any sale or transfer of any Restricted Security (including any
interest in a Global Security) (i) that is effected pursuant to an effective
registration statement under the Securities Act or (ii) in connection with which
the Property Trustee receives certificates and other information (including an
opinion of counsel, if requested) reasonably acceptable to the Company and the
Property Trustee to the effect that such security will no longer be subject to
the resale restrictions under federal and state securities laws, then (A) in the
case of a Restricted Security in definitive form, the Preferred Security
registrar or co-registrar shall permit the holder thereof to exchange such
Restricted Security for a security that does not bear the legend set forth in
this Section 7.5, and shall rescind any such restrictions on transfer and (B) in
the case of Restricted Securities represented by a Global Security, such
Preferred Security shall no longer be subject to the restrictions contained
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in the legend set forth in this Section 7.5 (but still subject to the other
provisions hereof). In addition, any Preferred Security (or security issued in
exchange or substitution therefor) as to which the restrictions on transfer
described in the legend set forth in this Section 7.5 have expired by their
terms, may, upon surrender thereof (in accordance with the terms of this
Indenture) together with such certifications and other information (including an
opinion of counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and the Property Trustee and in a form acceptable to the Company, to
the effect that the transfer of such Restricted Security has been made in
compliance with Rule 144 or such successor provision) acceptable to the Company
and the Property Trustee as either of them may reasonably require, be exchanged
for a new Preferred Security or Preferred Securities of like tenor and aggregate
liquidation amount, which shall not bear the restrictive legends set forth in
this Section 7.5.
Section 7.6 Special Transfer Provisions.
----------------------------
(a) At any time at the request of the beneficial holder of a Preferred
Security in global form, such beneficial holder shall be entitled to obtain a
definitive Preferred Security upon written request to the Property Trustee in
accordance with the standing instructions and procedures existing between the
Depositary and the Property Trustee for the issuance thereof. Any transfer of a
beneficial interest in a Preferred Security in global form which cannot be
effected through book-entry settlement must be effected by the delivery to the
transferee (or its nominee) of a definitive Preferred Security or Securities
registered in the name of the transferee (or its nominee) on the books
maintained by the Security Registrar. With respect to any such transfer, the
Property Trustee will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Property Trustee, the
aggregate liquidation amount of the Global Security to be reduced and, following
such reduction, the Property Trustee will cause Definitive Preferred Securities
in the appropriate aggregate liquidation amount in the name of such transferee
(or its nominee) and bearing such restrictive legends as may be required by this
Declaration to be delivered. In connection with any such transfer, the Property
Trustee may request such representations and agreements relating to the
restrictions on transfer of such Preferred Securities from such transferee (or
such transferee's nominee) as the Property Trustee may reasonably require.
(b) So long as the Preferred Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Preferred Security to a QIB in accordance with Rule 144A, unless
otherwise requested by the transferor, and upon receipt of the definitive
Preferred Security being so transferred and such documentation as the Property
Trustee may request, the Property Trustee shall make an endorsement on the
Restricted Global Security to reflect an increase in the aggregate liquidation
amount of the Restricted Global Security, and the Property Trustee shall cancel
such definitive Preferred Security and cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Property
Trustees, the aggregate liquidation amount of Preferred Securities represented
by the Restricted Global Security to be increased accordingly.
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Section 7.7 Deemed Security Holders.
------------------------
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
Section 7.8 Notices to Clearing Agency.
---------------------------
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 7.10, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
Section 7.9 Appointment of Successor Clearing Agency.
-----------------------------------------
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Regular Trustees may,
in their sole discretion, appoint a successor Clearing Agency with respect to
such Preferred Securities.
Section 7.10 Definitive Preferred Security Certificates.
-------------------------------------------
If:
(a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 7.9; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Preferred Securities, then:
(i) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the
Trust with respect to such Preferred Securities; and
(ii) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause
Definitive Preferred Security Certificates to be
delivered to the Preferred
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<PAGE> 48
Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the
Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may
conclusively rely on, and shall be protected in
relying on, said instructions of the Clearing Agency.
The Definitive Preferred Security Certificates shall
be printed, lithographed or engraved or may be
produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by
their execution thereof, and may have such letters,
numbers or other marks of identification or
designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be
required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST
Section 8.1 Dissolution and Termination of Trust.
-------------------------------------
(a) The Trust shall dissolve upon the earlier of:
(i) the bankruptcy of the Sponsor or AAG;
(ii) the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor or AAG; the
consent of the Holders of at least a Majority in
Liquidation Amount of the Securities voting together
as a single class to the filing of a certificate of
cancellation with respect to the Trust or the
revocation of the charter of the Sponsor or AAG and
the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the
Sponsor, AAG or the Trust;
(iv) the time when all of the Securities shall have been
called for redemption and the amounts necessary for
redemption thereof shall have been paid to the
Holders in accordance with the terms of the
Securities;
(v) if the Sponsor elects to dissolve the Trust and, upon
satisfaction of the liabilities of creditors of the
Trust as provided by applicable law, provided all of
the Debentures shall have been distributed to the
Holders of the Preferred Securities in liquidation of
the Trust;
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(vi) the time when all of the Regular Trustees and the
Sponsor shall have consented to termination of the
Trust provided such action is taken before the
issuance of any Securities; or
(vii) the expiration of the term of the Trust as set forth
in Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a) and upon completion of the winding up of the Trust, the
Trustees shall file a certificate of cancellation with the Secretary of State of
the State of Delaware terminating the Trust (which certificate can be signed by
any of the Trustees on behalf of the Trust).
(c) The provisions of Section 3.9, Section 4.2 and Article 9 shall
survive the termination of the Trust.
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 9.1 Liability.
----------
(a) Except as expressly set forth in this Declaration and the terms of
the Securities, the Sponsor:
(i) shall not be personally liable for the return of any
portion of the capital contributions (or any return
thereon) of the Holders of the Securities which shall
be made solely from assets of the Trust; and
(ii) shall not be required to pay to the Trust or to any
Holder of Securities any deficit upon dissolution of
the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
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Section 9.2 Exculpation.
------------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
Section 9.3 Fiduciary Duty.
---------------
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
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the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled
to consider such interests and factors as it desires,
including its own interests, and shall have no duty
or obligation to give any consideration to any
interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any
other or different standard imposed by this
Declaration or by applicable law.
Section 9.4 Indemnification.
----------------
(a)(i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Trust to procure a judgment
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in its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of this Section
9.4(a) (unless ordered by a court) shall be made by the Debenture Issuer only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 9.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 9.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Preferred Security Holders.
(v) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 9.4(a) shall not be
deemed exclusive of any other rights to
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which those seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors of the
Debenture Issuer or Preferred Security Holders of the Trust or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section 9.4(a)
shall be deemed to be provided by a contract between the Debenture Issuer and
each Company Indemnified Person who serves in such capacity at any time while
this Section 9.4(a) is in effect. Any repeal or modification of this Section
9.4(a) shall not affect any rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 9.4(a).
(vii) For purposes of this Section 9.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(viii) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. The obligation to indemnify as set forth in
this Section 9.4(a) shall survive the satisfaction and discharge of this
Declaration.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 9.4(b) shall
survive the satisfaction and discharge of this Declaration.
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Section 9.5 Outside Businesses.
-------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the activities of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the activities of the Trust, shall not be deemed
wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee or
the Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE 10
ACCOUNTING
Section 10.1 Fiscal Year.
------------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
Section 10.2 Certain Accounting Matters.
---------------------------
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles. The
Trust shall use the accrual method of accounting for United States federal
income tax purposes. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities and to the Property Trustee, within 90 days
after the end of each Fiscal Year of the Trust, annual financial statements of
the Trust, including a balance sheet of the Trust as of the end of such Fiscal
Year, and the related statements of income or loss.
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(c) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal Year of
the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
Section 10.3 Banking.
--------
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; provided, however, that the Property Trustee
shall designate the signatories for the Property Trustee Account.
Section 10.4 Withholding.
------------
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE 11
AMENDMENTS AND MEETINGS
Section 11.1 Amendments.
-----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Regular Trustees (or, if there
are more than two Regular Trustees, a majority of the Regular Trustees) and:
(i) by the Property Trustee if the amendment affects the
rights, powers, duties, obligations or immunities of
the Property Trustee; and (ii) by the Delaware
Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware
Trustee;
(b) no amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an
Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including
the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property
Trustee shall have first received:
a. an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of
this Declaration (including the terms of the
Securities); and
b. an opinion of counsel (who may be counsel to
the Sponsor or the Trust) that such
amendment is permitted by, and conforms to,
the terms of this Declaration (including the
terms of the Securities); and
(iii) to the extent the result of such amendment would be
to:
a. cause the Trust to be classified other than
a grantor trust for United States federal
income tax purposes;
b. reduce or otherwise adversely affect the
powers of the Property Trustee in
contravention of the Trust Indenture Act; or
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c. cause the Trust to be deemed to be an
Investment Company required to be registered
under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain
outstanding, any amendment that would (i) adversely affect the powers,
preferences or special rights of the Securities, whether by way of amendment to
the Declaration or otherwise or (ii) the dissolution, winding-up or termination
of the Trust other than pursuant to the terms of the Declaration, then the
holders of the Securities voting together as a single class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a Majority in Liquidation Amount
of the Securities affected thereby; provided that, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Preferred
Securities or the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in Liquidation
Amount of such class of Securities.;
(d) Section 7.2 and this Section 11.1 shall not be amended without the
consent of all of the Holders of the Securities;
(e) Article 4 shall not be amended without the consent of the Holders
of a Majority in Liquidation Amount of the Common Securities;
(f) the rights of the Holders of the Common Securities under Article 5
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities; and
(g) notwithstanding Section 11.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent
with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5
by any legislative body, court, government agency or
regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or
privileges of the Holders; and
53
<PAGE> 58
(v) to modify, eliminate and add to any provision of this
Declaration, provided such modification, elimination
or addition would not adversely affect the rights,
privileges or preferences of any Holder of the
Securities.
(h) The issuance of a Trustees' Authorization Certificate by the
Regular Trustees for purposes of establishing the terms and form of the
Securities as contemplated by Section 7.1 shall not be deemed an amendment of
this Declaration subject to the provisions of this Section 11.1.
Section 11.2 Meetings of the Holders of Securities; Action by Written
---------------------------------------------------------
Consent.
-------
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 10% in
Liquidation Amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat
at least 7 days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are
listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a
meeting if a consent in writing setting forth the
action so taken is signed by the Holders of
Securities owning not less than the minimum amount of
Securities in liquidation amount that would be
necessary to authorize or take such action at a
meeting at which all Holders of Securities having a
right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled
to vote who have not consented in writing. The
Regular Trustees may specify that any written ballot
submitted to the Security Holders for the purpose of
taking any action
54
<PAGE> 59
without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder
of Securities is entitled to participate, including
waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the
Holder of Securities executing such proxy. Except as
otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the
Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or
the listing rules of any stock exchange on which the
Preferred Securities are then listed for trading,
otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions
relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice,
action by consent without a meeting, the
establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
55
<PAGE> 60
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 12.1 Representations and Warranties of the Property Trustee.
-------------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 5.3(a);
(c) the execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the articles
of association or incorporation, as the case may be, or the by-laws (or other
similar organizational documents) of the Property Trustee; and
(e) no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration.
Section 12.2 Representations and Warranties of the Delaware Trustee.
-------------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
56
<PAGE> 61
(a) the Delaware Trustee satisfies the requirements set forth in
Section 5.2 and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;
(b) the Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and this Declaration. This Declaration under
Delaware law constitutes a legal, valid and binding obligation of the Delaware
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other similar
laws affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law); and
(c) no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Notices.
--------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Property Trustee, the Delaware Trustee and the Holders of
the Securities):
250 East Fifth Street
Cincinnati, Ohio 45202
Attention: Mark F. Muething
(b) if given to the Delaware Trustee, at such mailing address as
Delaware Trustee may give notice of to the Regular Trustees, the Property
Trustee and the Holders of the Securities).
57
<PAGE> 62
(c) if given to the Property Trustee, at its Corporate Trust Office (or
such other address as the Property Trustee may give notice of to the Regular
Trustees, the Delaware Trustee and the Holders of the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Property Trustee, the Delaware
Trustee and the Trust):
250 East Fifth Street
Cincinnati, Ohio 45202
Attention: Mark F. Muething
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
Section 13.2 Governing Law.
--------------
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws of the State of Delaware or any other
jurisdiction that would call for the application of the law of any jurisdiction
other than the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees or this Declaration any provision of the
laws (statutory or common) of the State of Delaware pertaining to trusts that
relate to or regulate, in a manner inconsistent with the terms hereof (a) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (b) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (c) the necessity
for obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (d) fees or other sums
payable to the trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, (f) restrictions
or limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner of
holding or investing trust assets or (g) the establishment of fiduciary or other
standards of responsibility or limitations on the acts or powers of trustees
that are inconsistent with the limitations or liabilities or authorities and
powers of the Trustees as set forth or referenced in this Declaration. Section
3540 of Title 12 of the Delaware Code shall not apply to the Trust.
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<PAGE> 63
Section 13.3 Intention of the Parties.
-------------------------
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted in a manner consistent with such
classification.
Section 13.4 Headings.
---------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
Section 13.5 Successors and Assigns.
-----------------------
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
Section 13.6 Partial Enforceability.
-----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section 13.7 Counterparts.
-------------
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
[The remainder of this page is intentionally left blank]
59
<PAGE> 64
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
AAG HOLDING COMPANY, INC.,
as Sponsor and Debenture Issuer
BY: /s/ Mark F. Muething
-----------------------------------
Name: Mark F. Muething
Title: Senior Vice President
THE BANK OF NEW YORK,
as Property Trustee
BY: /s/ Mary Jane Morrissey
-----------------------------------
Name: Mary Jane Morrissey
Title: Vice President
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
BY: /s/ Mary Jane Morrissey
-----------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
/s/ Mark F. Muething
---------------------------------------
Mark F. Muething, as Regular Trustee
/s/ Christopher P. Miliano
---------------------------------------
Christopher P. Miliano, as Regular Trustee
60
<PAGE> 65
ANNEX I
TERMS OF
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
8 7/8% CAPITAL TRUST COMMON SECURITIES
Pursuant to Article 7 of the Declaration of Trust dated as of March 11,
1997 (as amended from time to time, the "Declaration"), the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities and the Common Securities are set forth below (each
capitalized term used but not defined herein having the meaning set forth in the
Declaration):
1. Designation and Number.
-----------------------
1.1 PREFERRED SECURITIES. Seventy Five Thousand (75,000) Capital Trust
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of up to Seventy Five Million and 00/100
Dollars ($75,000,000) (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in the
form of Exhibit A-1 hereto, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Preferred Securities are listed.
1.2 COMMON SECURITIES. Two Thousand Three Hundred Twenty (2,320)
Capital Trust Common Securities of the Trust with an aggregate liquidation
amount with respect to the assets of the Trust of up to Two Million Three
Hundred Twenty Thousand Dollars ($2,320,000)(the "Common Securities"). The
Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 hereto, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.
2. Distributions.
--------------
2.1 Distributions payable on each Security will be fixed at a rate per
annum of 8 7/8% (the "Coupon Rate") of the stated liquidation amount of $1,000
per Security, such rate being the rate of interest payable on the Debentures to
be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon from and including the last day of
such semi-annual period at the Coupon Rate compounded semi-annually (to the
extent permitted by applicable law). The term "Distributions" as used herein
includes such cash distributions and any such interest payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Property Trustee and to the extent the
Property Trustee has funds available therefor. The amount of Distributions
payable for any period will be computed for any full semi-annual Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full semi-annual Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed based on 30-day months per 180-day semi-annual
period, but not to exceed 180 days.
<PAGE> 66
- 2 -
2.2 Distributions on the Securities will be cumulative, will accrue
from March __, 1997, and will be payable semi-annually, in arrears, on January
15 and July 15 of each year, commencing on July 15, 1997, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures, from time to time, by extending the
interest payment period at any time from time to time for a period not exceeding
10 consecutive semi-annual periods (each an "Extension Period"), during which
Extension Period no interest shall be due and payable on the Debentures,
PROVIDED THAT no Extension Period shall last beyond the date of maturity of the
Debentures. There may be multiple Extension Periods of varying lengths during
the term of the Debentures. As a consequence of such deferral, Distributions
will also be deferred. Despite such deferral, semi-annual Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded semi-annually during any such Extension
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further extend such Extension Period, PROVIDED THAT such Extension
Period together with all such previous and further extensions thereof may not
exceed 10 consecutive semi-annual periods and may not extend beyond the date of
maturity of the Debentures. Payments of deferred Distributions will be payable
to Holders of record of the Securities as they appear on the books and records
of the Trust on the record date for Distributions due at the end of such
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
2.3 Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. If the Preferred Securities are in global form, the relevant
record date shall be one Business Day prior to the relevant payment dates which
payment dates correspond to the interest payment dates on the Debenture. If the
Preferred Securities are not in global form, the relevant record dates for the
Preferred Securities shall conform to the rules of any securities exchange on
which the Preferred Securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least one Business Day but less than
60 Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Debentures. The relevant record
dates for the Common Securities shall be the same record dates as for the
Preferred Securities. Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, will cease to be
payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
2.4 If there is any money or other property held by or for the Trust
that is not accounted for hereunder, such property shall be distributed Pro Rata
(as defined herein) among the Holders of the Securities.
<PAGE> 67
- 3 -
3. Liquidation Distribution Upon Dissolution.
------------------------------------------
3.1 In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust, the Holders of the
Securities on the date of the liquidation, dissolution, winding-up or
termination, as the case may be, will be entitled to receive solely out of the
assets of the Trust available for distribution to Holders of Securities, after
paying or making reasonable provision to pay all claims and obligations of the
Trust in accordance with Section 3808(e) of the Business Trust Act, an amount
equal to the aggregate of the stated liquidation amount of $1,000 per Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
liquidation, dissolution, winding-up or termination, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities in accordance with
Section 4.4 hereof.
3.2 If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
----------------------------
4.1 Upon the repayment of the Debentures in whole or in part, upon
redemption at the option of the Debenture Issuer on or after March 1, 2007 (but
not upon the occurrence of a Special Event as set forth in Section 4.3), the
proceeds from such repayment or redemption shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at the price listed
below (which price is expressed as a percentage of the liquidation amount of the
Preferred Security) plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the "Redemption Price"):
<TABLE>
<CAPTION>
If Redeemed during the
twelve months beginning on March 1, Percentage
----------------------------------- ----------
<S> <C>
2007 104.44%
2008 103.99%
2009 103.55%
2010 103.11%
2011 102.66%
2012 102.22%
2013 101.77%
2014 101.33%
2015 100.89%
2016 100.44%
</TABLE>
<PAGE> 68
- 4 -
On or after March 1, 2017, the Redemption Price will be 100%, plus
accrued and unpaid interest, if any, to the Redemption Date.
If fewer than all the outstanding Securities are to be redeemed, the
Common Securities will be redeemed Pro Rata and the Preferred Securities to be
redeemed will be redeemed as described in Section 4.5 below.
The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all semi-annual Distribution periods terminating on or before the date of
redemption.
Holders will be given not less than 30 nor more than 60 days' notice of
such redemption.
4.2 Upon the repayment of the Debentures at maturity, the proceeds from
such repayment or redemption shall be simultaneously applied to redeem
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at a Redemption Price
of $1,000 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption. Holders will be given not less than 30
nor more than 60 days' notice of such redemption.
4.3 If, at any time, a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing, the
Debenture Issuer shall have the right, upon not less than 30 nor more than 60
days' notice, to redeem the Debentures in whole (but not in part) for cash
within 90 days following the occurrence of such Special Event, and, following
such redemption, all Securities shall be redeemed by the Trust at a Redemption
Price of $1,000 per Security plus an amount equal to accrued and unpaid
Distributions thereon at the date of the redemption. The Common Securities will
be redeemed Pro Rata with the Preferred Securities, except that if an Event of
Default has occurred and is continuing, the Preferred Securities will have
priority over the Common Securities with respect to payment of the Redemption
Price.
"Tax Event" means that the Regular Trustees shall have received an
opinion of an independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
(b) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof, subject to United
States Federal income tax with respect to interest accrued or received on the
Debentures, (ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges or (iii) interest payable to the Trust on the Debentures is
not, or within 90 days of the date thereof, will not be deductible, in whole or
in part, by the Company for United States Federal income tax purposes.
<PAGE> 69
- 5 -
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in practice under the
Investment Company Act to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than insubstantial risk
that the Trust is or will be considered an "investment company" which is
required to be registered under the Investment Company Act, which Change in 1940
Act Law becomes effective on or after the date of original issuance of the
Preferred Securities.
4.4 If the Sponsor makes the election referred to in Section 8.1(a)(v)
of the Declaration, the Regular Trustees shall dissolve the Trust and, after
paying or making reasonable provision to pay all claims and obligations of the
Trust in accordance with Section 3808(e) of the Business Trust Act, cause
Debentures, held by the Property Trustee, having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on and having the same record date for payment,
as the Securities, to be distributed to the Holders of the Securities in
liquidation of such Holders' interests in the Trust. On and from the date fixed
by the Regular Trustees for any distribution of Debentures and dissolution of
the Trust: (i) the Securities will no longer be deemed to be outstanding, and
(ii) the Depositary or its nominee (or any successor Depositary or its nominee)
will receive one or more global certificate or certificates representing the
Debentures to be delivered upon such distribution, and having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities. Any certificates
representing Securities, except for certificates representing Preferred
Securities held by the Depositary or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue. If the Debentures are distributed to Holders
of the Securities, pursuant to the terms of the Indenture, the Debenture Issuer
will use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities were listed
immediately prior to the distribution of the Debentures.
4.5 Redemption or Distribution Procedures.
(a) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4.5(a), a Redemption/Distribution Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each Redemption/Distribution Notice
<PAGE> 70
- 6 -
shall be addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(b) If fewer than all the outstanding Securities are to be
redeemed, the Securities to be redeemed shall be redeemed from each Holder of
Preferred Securities by lot or by such other means as the Property Trustee shall
deem fair or appropriate, it being understood that, in respect of Preferred
Securities registered in the name of and held of records by the Depositary or
its nominee (or any successor Clearing Agency or its nominee), the distribution
of the proceeds of such redemption will be made to each Clearing Agency
Participant (or Person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(c) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A)
while the Preferred Securities are in global form, with respect to the Preferred
Securities, by 1:00 p.m., New York City time, on the redemption date, provided
that the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Debentures,
the Property Trustee will deposit irrevocably with the Depositary or its nominee
(or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities, and (B) with respect to
Preferred Securities issued in definitive form and Common Securities, provided
that the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Debentures,
the Property Trustee will pay the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, then immediately prior to
the close of business on the date of such deposit, Distributions will cease to
accrue on the Securities so called for redemption and all rights of Holders of
such Securities so called for redemption will cease, except the right of the
Holders of such Securities to receive the Redemption Price, but without interest
on such Redemption Price. Neither the Regular Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Securities
that have been so called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date fixed for redemption. If the Debenture Issuer
fails to repay the Debentures on maturity or if payment of the Redemption Price
in respect of any Securities is improperly withheld or refused and not paid
either by the Property Trustee or by American Annuity Group, Inc. as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue at the then applicable rate from the original redemption
date to the actual date of payment, in which case
<PAGE> 71
- 7 -
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(d) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, the Depositary or its nominee (or any successor Clearing Agency or
its nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holder thereof, and (B)
in respect of the Common Securities to the Holder thereof.
(e) Subject to the foregoing and applicable law (including,
without limitation, United States Federal securities laws), the Sponsor or any
of its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Voting Rights - Preferred Securities.
-------------------------------------
5.1 Except as provided under Sections 5.2 and 7 hereof and as otherwise
required by law or provided under the Declaration, the Holders of the Preferred
Securities will have no voting rights.
5.2 Subject to the requirements set forth in this paragraph, the
Holders of a Majority in Liquidation Amount of the Preferred Securities, voting
separately as a class, may direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as Holder of
the Debentures, to (i) exercise the remedies available under the Indenture with
respect to the Debentures, (ii) waive any past default and its consequences that
is waivable under the Indenture, or (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be due and payable,
or consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent would be required; PROVIDED THAT where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Property Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. The Property Trustee shall
notify all Holders of the Preferred Securities of any notice of default received
from the Debenture Trustee with respect to the Debentures. Other than with
respect to directing the time, method and place of conducting a proceeding for
any remedy available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall not take any action in accordance with
the directions of the Holders of the Preferred Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States Federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Property Trustee fails to enforce its rights with respect to the Debentures held
by the Trust, any Holder of Preferred Securities may institute legal proceedings
<PAGE> 72
- 8 -
directly against the Debenture Issuer to enforce the Property Trustee's rights
under the Debentures without first instituting any legal proceedings against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if an Event of Default under the Declaration has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay
interest, principal or other required payment on the Debentures issued to the
Trust on the date such interest or principal is otherwise payable, then a Holder
of Preferred Securities may directly institute a proceeding against the
Debenture Issuer for enforcement of payment to the Holder of the Preferred
Securities of the principal, interest or other required payment on the
Debentures on or after the respective due dates specified in the Debentures, and
the amount of the payment will be based on the Holder's pro rata share of the
amount due and owing on all of the Preferred Securities.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Preferred Securities. Each such notice will include
a statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
----------------------------------
6.1 Except as provided under Section 6.2, 6.3 and 7 hereof and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
6.2 The Holders of the Common Securities are entitled, in accordance
with Article 5 of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
6.3 Subject to Section 2.6 of the Declaration and only after the Event
of Default with respect to the Preferred Securities has been cured, waived or
otherwise eliminated and subject to the requirements set forth in this
paragraph, the Holders of a Majority in Liquidation Amount of the Common
Securities, voting separately as a class, may direct the time, method and place
of conducting any proceeding for any remedy available to the Property Trustee,
or direct the exercise
<PAGE> 73
- 9 -
of any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as Holder of the Debentures,
to (i) exercise the remedies available under the Indenture with respect to the
Debentures, (ii) waive any past default and its consequences that is waivable
under the Indenture, or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable,
or consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent would be required; PROVIDED THAT, where a consent
or action under the Indenture would require the consent or act of a Super
Majority of the Holders of the Debentures affected thereby, the Property Trustee
may only give such consent or take such action at the written direction of the
Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. The Property Trustee shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Common Securities. The Property Trustee shall notify all Holders of the
Common Securities of any notice of default received from the Debenture Trustee
with respect to the Debentures. Other than with respect to directing the time,
method and place of conducting a proceeding for any remedy available to the
Property Trustee or the Debenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Common Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States Federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee of
the Trust fails to enforce its rights with respect to the Debentures held as
assets of the Trust, any Holder of Common Securities may institute legal
proceedings directly against the Debenture Issuer to enforce such Property
Trustee's rights under the Debentures without first instituting any legal
proceedings against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default under the Declaration has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest, principal or other required payment on the
Debentures on the date such interest or principal is otherwise payable, a Holder
of Common Securities may directly institute a proceeding against the Debenture
Issuer for enforcement of payment to the Holder of the Common Securities of the
principal, interest or other required payment on the Debentures on or after the
respective due dates specified in the Debentures, and the amount of the payment
will be based on the Holder's pro rata share of the amount due and owing on all
of the Common Securities.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
<PAGE> 74
- 10 -
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
----------------------------------------
7.1 In addition to any requirements under Section 11.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration of otherwise, or (ii) the
dissolution, winding up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
voting together as a single class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in Liquidation Amount of the Securities affected thereby,
voting together as a single class; PROVIDED, HOWEVER, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a Majority in
Liquidation Amount of such class of Securities. Notwithstanding the foregoing,
no amendment or modification may be made to the Declaration if such amendment or
modification would (i) cause the Trust to be classified as other than a grantor
trust for United States Federal income tax purposes, (ii) reduce or otherwise
adversely affect the powers of the Property Trustee or (iii) cause the Trust to
be deemed an "investment company" which is required to be registered under the
Investment Company Act.
7.2 In the event the consent of the Property Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in Liquidation Amount of the Securities voting together as a single class;
PROVIDED, HOWEVER, that where a consent under the Indenture would require the
consent of a Super Majority of the Holders of the Debentures, the Property
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; PROVIDED, FURTHER, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this Section 7.2 unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States Federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
8. Pro Rata.
---------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation
<PAGE> 75
- 11 -
amount of the Securities held by the relevant Holder in relation to the
aggregate liquidation amount of all Securities outstanding unless, in relation
to a payment, an Event of Default under the Declaration has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities pro rata according to the
aggregate liquidation amount of Preferred Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Preferred Securities, to each Holder of Common Securities pro rata according
to the aggregate liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9. Ranking.
--------
The Preferred Securities rank PARI PASSU and payment thereon shall be
made Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Property Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.
10 Listing.
--------
Provided that the Preferred Securities satisfy all applicable listing
requirements, the Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
11. Acceptance of Securities Guarantee and Indenture.
-------------------------------------------------
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
---------------------
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
--------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
<PAGE> 76
EXHIBIT A-1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE
SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
SUCH ACT (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION
FROM REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED THAT, IF
REQUESTED BY THE TRUST, AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM
AND SUBSTANCE IS FURNISHED TO THE TRUST THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS
SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER OF SUCH SECURITY ARE
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN, A SECURITIES PURCHASE
AGREEMENT DATED AS OF MARCH ___, 1997, A COMPLETE AND CORRECT COPY OF THE FORM
OF WHICH WILL BE FURNISHED BY THE TRUST TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE.
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
- P-1 - - _________ -
CUSIP NO. ___________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
AMERICAN ANNUITY GROUP CAPITAL TRUST II
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)
AMERICAN ANNUITY GROUP CAPITAL TRUST II, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that Cede & Co. (the "Holder") is the registered owner of _______ preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 8 7/8% Capital Trust Preferred Securities
(liquidation amount $1,000 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
- i -
<PAGE> 77
Preferred Securities represented hereby shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of March __, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The
Holder of this Certificate is entitled to the benefits of the Preferred
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Preferred Securities Guarantee and the Indenture to
a Holder of this Certificate without charge upon written request to the Sponsor
at its principal place of business.
Upon receipt of this certificate, the Holder of this Certificate is
bound by the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States Federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of
March, 1997.
AMERICAN ANNUITY GROUP CAPITAL TRUST II
By:
----------------------------
Name: Mark F. Muething
Title: Regular Trustee
By:
----------------------------
Name: Christopher P. Miliano
Title: Regular Trustee
This is one of the Preferred Securities referred to in the Declaration.
THE BANK OF NEW YORK, as Trustee
Dated:_________________ By:
----------------------------
Authorized Signatory
- ii -
<PAGE> 78
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act for him or her.
Date:_____________
Signature:
-------------------------------
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature Guarantee:
-------------------------
- iii -
<PAGE> 79
EXHIBIT A-2
Certificate Number Number of Common Securities
-C-1- -2,320-
Certificate Evidencing Common Securities
of
AMERICAN ANNUITY GROUP CAPITAL TRUST II
8 7/8% Capital Trust Common Securities
(liquidation amount $1,000 per Common Security)
American Annuity Group Capital Trust II, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that AAG Holding Company, Inc. (the "Holder") is the
registered owner of Two Thousand Three Hundred Twenty (2,320) common
securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 8 7/8% Capital Trust Common
Securities (liquidation amount $1,000 per Common Security) (the "Common
Securities"). The Common Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities
represented hereby shall in all respects be subject to the provisions
of the Declaration of Trust of the Trust dated as of March __, 1997, as
the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set
forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The
Holder of this Certificate is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Common Securities Guarantee and
the Indenture to a Holder of this Certificate without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder of this
Certificate is bound by the Declaration and is entitled to the benefits
thereunder.
By acceptance, the Holder agrees to treat, for United States
Federal income tax purposes, the Debentures as indebtedness and the
Common Securities as evidence of indirect beneficial ownership in the
Debentures.
- i -
<PAGE> 80
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of March, 1997.
AMERICAN ANNUITY GROUP CAPITAL
TRUST II
By:
-------------------------------
Name: Mark F. Muething
Title: Regular Trustee
By:
-------------------------------
Name: Christopher P. Miliano
Title: Regular Trustee
- ii -
<PAGE> 81
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________ agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ____________
Signature: _________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee:
-----------------------
- iii -
<PAGE> 1
Exhibit 4.4
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
AMERICAN ANNUITY GROUP CAPITAL TRUST II
Dated as of May __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1
INTERPRETATION AND DEFINITIONS.................................................1
SECTION 1.1 INTERPRETATION AND DEFINITIONS......................1
ARTICLE 2
TRUST INDENTURE ACT............................................................5
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.................................5
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES...................................5
SECTION 2.3 REPORTS BY PREFERRED GUARANTEE TRUSTEE...........................6
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE..................6
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.................6
SECTION 2.6 GUARANTEE EVENT OF DEFAULT; WAIVER...............................6
SECTION 2.7 GUARANTEE EVENT OF DEFAULT; NOTICE...............................6
SECTION 2.8 CONFLICTING INTERESTS............................................7
SECTION 2.9 DISCLOSURE OF INFORMATION........................................7
SECTION 2.10 PREFERRED GUARANTEE TRUSTEE MAY FILE PROOFS OF CLAIM.............7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE....................................................7
SECTION 3.1 POWERS AND DUTIES OF PREFERRED GUARANTEE TRUSTEE.................7
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE....................9
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE...........11
ARTICLE 4
PREFERRED GUARANTEE TRUSTEE...................................................11
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY........................11
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEE.........................................................12
ARTICLE 5
GUARANTEE.....................................................................13
SECTION 5.1 GUARANTEE.......................................................13
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.....................................13
SECTION 5.3 OBLIGATIONS NOT AFFECTED........................................14
SECTION 5.4 RIGHTS OF HOLDERS...............................................15
SECTION 5.5 GUARANTEE OF PAYMENT............................................15
SECTION 5.6 SUBROGATION.....................................................15
SECTION 5.7 INDEPENDENT OBLIGATIONS.........................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION.....................................16
SECTION 6.1 LIMITATION OF TRANSACTIONS......................................16
SECTION 6.2 RANKING.........................................................16
ARTICLE 7
TERMINATION...................................................................17
SECTION 7.1 TERMINATION.....................................................17
ARTICLE 8
INDEMNIFICATION...............................................................17
SECTION 8.1 EXCULPATION.....................................................17
SECTION 8.2 INDEMNIFICATION.................................................18
ARTICLE 9
MISCELLANEOUS.................................................................18
SECTION 9.1 SUCCESSORS AND ASSIGNS..........................................18
SECTION 9.2 AMENDMENTS......................................................18
SECTION 9.3 NOTICES.........................................................18
SECTION 9.4 BENEFIT.........................................................19
SECTION 9.5 GOVERNING LAW...................................................19
</TABLE>
ii
<PAGE> 4
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
<S> <C>
310(a)...................................................................4.1(a)
310(b)...................................................................4.1(c)
310(c).............................................................Inapplicable
311(a)...................................................................2.2(b)
311(b)...................................................................2.2(b)
311(c).............................................................Inapplicable
312(a)...................................................................2.2(a)
312(b)...................................................................2.2(b)
312(c)......................................................................2.9
313(a)......................................................................2.3
313(b)......................................................................2.3
313(c)......................................................................2.3
313(d)......................................................................2.3
314(a)......................................................................2.4
314(b).............................................................Inapplicable
314(c)......................................................................2.5
314(d).............................................................Inapplicable
314(e)......................................................................2.5
314(f).............................................................Inapplicable
315(a)...........................................................3.1(d); 3.2(a)
315(b)...................................................................2.7(a)
315(c)...................................................................3.1(c)
315(d)...................................................................3.1(d)
316(a)..............................................................2.6; 5.4(a)
317(a)................................................................2.10; 5.4
318(a)...................................................................2.1(b)
<FN>
- -------------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not have any bearing upon the interpretation of any of
its terms or provisions.
</TABLE>
iii
<PAGE> 5
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the
"Guarantee"), dated as of May __, 1997, is executed and delivered by American
Annuity Group, Inc., a Delaware corporation (the "Guarantor"), and The Bank of
New York, a New York banking corporation, as trustee (the "Preferred Guarantee
Trustee"), for the benefit of the Holders (as defined herein) of the New
Preferred Securities (as defined herein) of American Annuity Group Capital Trust
II, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to the Declaration (as defined herein), the
Issuer is issuing on the date hereof 75,000 preferred securities (liquidation
amount $1,000 per preferred security) which have been registered under the
Securities Act of 1933 (the "Securities Act") and which are designated the
8 7/8% Capital Trust Preferred Securities (the "New Preferred Securities") in
exchange for an issue of preferred securities which are identical in all
material respects to the New Preferred Securities except that such issue of
preferred securities was not registered under the Securities Act (the "Old
Preferred Securities," and with the New Preferred Securities, the "Preferred
Securities");
WHEREAS, by a Preferred Securities Guarantee Agreement dated
as of March 11, 1997 (the "Old Guarantee Agreement") and as an incentive for the
Holders to acquire the Old Preferred Securities, the Guarantor irrevocably and
unconditionally agreed, to the extent set forth in such Old Guarantee Agreement,
to pay to Holders of the Old Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments as set forth in such Old
Guarantee Agreement;
WHEREAS, by a certain Registration Rights Agreement dated as
of March 11, 1997 among the Issuer, AAG Holding, the Guarantor and the
purchasers named therein, the Issuer, AAG Holding and the Guarantor agreed that
if they filed a registration statement to exchange the Old Preferred Securities
for New Preferred Securities, then the Issuer, AAG Holding and the Guarantor
would simultaneously exchange the Old Guarantee Agreement for the Guarantee for
the benefit of the holders of the Preferred Securities; and
NOW, THEREFORE, in consideration of the exchange by each
Holder of Old Preferred Securities for New Preferred Securities, which exchange
the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes
and delivers this Guarantee for the benefit of the Holders.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
-------------------------------
In this Guarantee, unless the context otherwise requires:
<PAGE> 6
(a) capitalized terms used in this Guarantee but not defined
in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee" are
to this Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Guarantee to Articles and Sections
are to Articles and Sections of this Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee, unless otherwise defined
in this Guarantee or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice
versa.
"AAG Holding" means AAG Holding Company, Inc., an Ohio
corporation.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Guarantee is located at 1010
Barclay Street, Floor 21 West, New York, New York 10286, Attention: Corporate
Trust Trustee Administration; telecopy no. (212) 815-5915.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the series of subordinated deferrable
interest debentures to be issued by AAG Holding designated the 8 7/8%
Subordinated Debentures due January 15, 2027 held by the Property Trustee (as
defined in the Declaration) of the Issuer.
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<PAGE> 7
"Declaration" means the Declaration of Trust, dated as of
March __, 1997, as amended, modified or supplemented from time to time, among
the trustees of the Issuer named therein, the AAG Holding, as sponsor, and the
Holders from time to time of undivided beneficial interests in the assets of the
Issuer.
"Guarantee Event of Default" means a default by the Guarantor
on any of its payment or other obligations under this Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration or the redemption of all the
Preferred Securities upon maturity or redemption of the Debentures as provided
in the Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid Distributions on the Preferred Securities to the date
of payment, to the extent the Issuer shall have funds available therefor, and
(b) the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution"). If an Event of Default (as defined in the Declaration) has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments under
this Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor; and provided
further, that in determining whether the Holders of the requisite liquidation
amount of Preferred Securities have voted on any matter provided for in this
Guarantee, then for the purpose of such determination only (and not for any
other purpose hereunder), if the Preferred Securities remain in the form of one
or more Global Certificates (as defined in the Declaration), the term "Holders"
shall mean the holder of the Global Certificate acting at the direction of the
Preferred Security Beneficial Owners (as defined in the Declaration).
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of March 11, 1997,
among AAG Holding, the Guarantor, as guarantor, and The Bank of New York, as
trustee, and any indenture
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<PAGE> 8
supplemental thereto pursuant to which the Debentures are to be issued to the
Property Trustee (as defined in the Declaration) of the Issuer.
"Majority in Liquidation Amount of the Preferred Securities"
means, except as provided in the terms of the Preferred Securities or by the
Trust Indenture Act, Holder(s) of outstanding Preferred Securities, voting
separately as a class, who are the record holders of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Preferred Securities. In determining whether the Holders of the requisite amount
of Preferred Securities have voted, Preferred Securities which are owned by the
Guarantor or any Affiliate of the Guarantor or any other obligor on the
Preferred Securities shall be disregarded for the purpose of any such
determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Bank of New York,
until a Successor Preferred Guarantee Trusteeo has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee and thereafter
means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee,
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<PAGE> 9
any officer within the Corporate Trust Office of the Preferred Guarantee
Trustee. including any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Preferred Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
---------------------------------
(a) This Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee and shall, to the
extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders"), (i) within one Business Day after January 15 and
July 15 of each year and current as of such date, and (ii) at any other time,
within 30 days of receipt by the Guarantor of a written request from the
Preferred Guarantee Trustee for a List of Holders as of a date no more than 14
days before such List of Holders is given to the Preferred Guarantee Trustee;
provided, that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The
Preferred Guarantee Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to
it, provided that it may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
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<PAGE> 10
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by Preferred Guarantee Trustee.
--------------------------------------
Within 60 days after May 15 of each year (commencing with the
year of the first anniversary of the issuance of the Preferred Securities), the
Preferred Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.
-----------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) of
the Trust Indenture Act and the compliance certificate required by Section 314
of the Trust Indenture Act in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Guarantee that relate to any of the matters set forth in Section 314(c)
of the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Guarantee Event of Default; Waiver.
----------------------------------
The Holders of a Majority in Liquidation Amount of the
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Guarantee Event of Default and its
consequences. Upon such waiver, any such Guarantee Event of Default shall cease
to exist, and any Guarantee Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Guarantee, but no such waiver
shall extend to any subsequent or other default or Guarantee Event of Default or
impair any right consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice.
----------------------------------
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of a Guarantee Event of Default, transmit by mail, first
class postage prepaid, to the Holders of the Preferred Securities, notices of
all Guarantee Events of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided, that the Preferred Guarantee Trustee shall be
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<PAGE> 11
protected in withholding such notice if and so long as a Responsible Officer of
the Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Guarantee Event of Default unless the Preferred Guarantee
Trustee shall have received written notice thereof or a Responsible Officer of
the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests.
----------------------
The Declaration shall be deemed to be specifically described
in this Guarantee for the purposes of clause (i) of the first provision
contained in Section 310(b) of the Trust Indenture Act.
SECTION 2.9 Disclosure of Information.
--------------------------
The disclosure of information as to the names and addresses of
the Holders of the Preferred Securities in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any law
hereafter enacted which does not specifically refer to Section 312 of the Trust
Indenture Act, nor shall the Preferred Guarantee Trustee be held accountable by
reason of mailing any material pursuant to a request made under Section 312(b)
of the Trust Indenture Act.
SECTION 2.10 Preferred Guarantee Trustee May File Proofs of Claim.
----------------------------------------------------
Upon the occurrence of a Guarantee Event of Default, the
Preferred Guarantee Trustee is hereby authorized to (a) recover judgment, in its
own name and as trustee of an express trust, against the Guarantor for the whole
amount of any Guarantee Payments remaining unpaid and (b) file such proof of
claim and other papers or documents as may be necessary or advisable in order to
have its claims and those of the Holders of the Preferred Securities allowed in
any judicial proceedings relative to the Guarantor, its creditors or its
property.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Preferred Guarantee Trustee.
------------------------------------------------
(a) The Guarantee shall be held by the Preferred Guarantee
Trustee on behalf of the Issuer for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder of Preferred
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<PAGE> 12
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee in and
to this Guarantee shall automatically vest in any Successor Preferred Guarantee
Trustee, and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and is
continuing, the Preferred Guarantee Trustee shall enforce this Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of
any Guarantee Event of Default of all Guarantee Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee, and no implied covenants shall be read into this
Guarantee against the Preferred Guarantee Trustee. In case a Guarantee Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
and is actually known to a Responsible Officer of the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Guarantee Event of Default
and after the curing or waiving of all such Guarantee Events of Default
that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee, and the
Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and
obligations as are specifically set forth in this
Guarantee. and no implied covenants or obligations
shall be read into this Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and
conforming to the requirements of this Guarantee; but
in the case of any such certificates or opinions that
by any provision hereof are specifically required to
be furnished to the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall be under a duty to
examine
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<PAGE> 13
the same to determine whether or not they conform to
the requirements of this Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Preferred Guarantee Trustee unless it shall be
proved that the Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
not less than a Majority in Liquidation Amount of the
Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this
Guarantee; and
(iv) no provision of this Guarantee shall require the
Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Preferred Guarantee Trustee shall
have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it under
the terms of this Guarantee or indemnity, reasonably
satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee.
---------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Guarantee, the
Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or
omitting any action hereunder, the Preferred Guarantee Trustee
(unless other evidence is herein specifically prescribed) may,
in the
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<PAGE> 14
absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or
any rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court
of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the
Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee,
against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's
agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided, that nothing contained
in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of a
Guarantee Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians
or attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
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<PAGE> 15
(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee
Trustee or its agents alone shall be sufficient and effective
to perform any such action. No third party shall be required
to inquire as to the authority of the Preferred Guarantee
Trustee to so act or as to its compliance with any of the
terms and provisions of this Guarantee, both of which shall be
conclusively evidenced by the Preferred Guarantee Trustee's or
its agent's taking such action.
(x) Whenever in the administration of this Guarantee the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a
Majority in Liquidation Amount of the Preferred Securities,
(ii) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting
in accordance with such instructions.
(b) No provision of this Guarantee shall be deemed to impose
any duty or obligation on the Preferred Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of
-------------------------------------------
Guarantee.
----------
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Guarantee.
ARTICLE 4
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.
-----------------------------------------
(a) There shall be at all times be a Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
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(ii) be a corporation organized and doing business
under the laws of the United States of America or any
State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at
least annually, pursuant to law or to the
requirements of the supervising or examining
authority referred to above, then, for the purposes
of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred
-------------------------------------------------
Guarantee Trustee.
------------------
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall
hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
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(d) If no Successor Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or
resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guarantee Trustee all amounts owing for
fees and reimbursement of expenses which have accrued to the date of such
termination, removal or resignation.
(g) The Guarantor shall promptly notify the Holders of the
resignation, removal or appointment of a Preferred Guarantee Trustee.
ARTICLE 5
GUARANTEE
SECTION 5.1 Guarantee.
----------
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
---------------------------
The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands. Notwithstanding anything to the contrary herein, the Guarantor, if and
to the extent that it assumes the obligations of AAG Holding under the
Indenture, retains all of its rights under the Indenture to (i) extend the
interest payment period on the Debentures and the Guarantor shall not be
obligated hereunder to make any Guarantee Payments during any Extended Interest
Payment Period (as defined in the Indenture) with respect to the Distributions
13
<PAGE> 18
(as defined in the Declaration) on the Preferred Securities, and (ii) change the
maturity date of the Debentures to the extent permitted by the Indenture.
SECTION 5.3 Obligations Not Affected.
-------------------------
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall be absolute and unconditional and shall
remain in full force and effect until the entire liquidation amount of all
outstanding Preferred Securities shall have been paid and such obligation shall
in no way be affected or impaired by reason of the happening from time to time
of any event, including without limitation, the following, whether or not with
notice to, or the consent of the Guarantor:
(a) The release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express
or implied agreement, covenant, term or condition relating to
the Preferred Securities to be performed or observed by the
Issuer;
(b) The extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for
the performance of any other obligation under, arising out of,
or in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, Redemption
Price, Liquidation Distribution or other sum payable that
results from the extension of any interest payment period on
the Debentures or any change to the maturity date of the
Debentures permitted by the Indenture);
(c) Any failure, omission, delay or lack of diligence on the
part of the Property Trustee or the Holders to enforce, assert
or exercise any right, privilege, power or remedy conferred on
the Property Trustee or the Holders pursuant to the terms of
the Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets
of the Issuer;
(e) Any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) The settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) Any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section
14
<PAGE> 19
5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Preferred Guarantee
Trustee or the Holders to give notice to, or obtain consent of the Guarantor or
any other Person with respect to the happening of any of the foregoing.
No setoff, counterclaim, reduction or diminution of any
obligation, or any defense of any kind or nature that the Guarantor has or may
have against any Holder shall be available hereunder to the Guarantor against
such Holder to reduce the payments to it under this Guarantee.
SECTION 5.4 Rights of Holders.
------------------
(a) The Holders of a Majority in Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Guarantee or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce this
Guarantee, then any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce the Preferred Guarantee
Trustee's rights under this Guarantee without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
person or entity. Notwithstanding the foregoing, if the Guarantor has failed to
make a Guarantee Payment, a Holder of Preferred Securities may directly
institute a proceeding against the Guarantor for enforcement of the Guarantee
for such payment to the Holder of the Preferred Securities of the principal of
or interest on the Debentures on or after the respective due dates specified in
the Debentures, and the amount of the payment will be based on the Holder's pro
rata share of the amount due and owing on all of the Preferred Securities. The
Guarantor hereby waives any right or remedy to require, that any action on this
Guarantee be brought first against the Issuer or any other person or entity
before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment.
---------------------
This Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation.
------------
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases
15
<PAGE> 20
as a result of payment under this Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Preferred Guarantee Trustee for the benefit of the Holders.
SECTION 5.7 Independent Obligations.
------------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
---------------------------
So long as any Preferred Securities remain outstanding, if
there shall have occurred a Guarantee Event of Default or an event of default
under the Declaration, then (a) the Guarantor shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock,
(b) the Guarantor shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Guarantor which rank pari passu with or junior to the
Debentures and (c) the Guarantor shall not make any guarantee payments with
respect to the foregoing (other than pursuant to this Guarantee); provided,
however, the Guarantor may declare and pay a stock dividend where the dividend
stock is the same stock as that on which the dividend is being paid.
SECTION 6.2 Ranking.
--------
This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank: (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, except those liabilities of the Guarantor
made pari passu or subordinate by their terms, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
If an Event of Default has occurred and is continuing under
the Declaration, the rights of the holders of the Common Securities to receive
any payments under the Common
16
<PAGE> 21
Securities Guarantee Agreement shall be subordinated to the rights of the
Holders of Preferred Securities to receive Guarantee Payments hereunder.
ARTICLE 7
TERMINATION
SECTION 7.1 Termination.
------------
This Guarantee shall terminate upon (i) full payment of the
Redemption Price of all Preferred Securities, (ii) upon the distribution of the
Debentures to the Holders of all of the Preferred Securities or (iii) upon full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities or under this Guarantee.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1 Exculpation.
------------
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
17
<PAGE> 22
SECTION 8.2 Indemnification.
----------------
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Guarantee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
-----------------------
All guarantees and agreements contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
SECTION 9.2 Amendments.
-----------
Except with respect to any changes that do not adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee may only be amended with the prior approval of the
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities. The provisions of Section 11.2 of the Declaration with respect to
meetings of, and action by written consent of the Holders of the Securities
apply to the giving of such approval.
SECTION 9.3 Notices.
--------
All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below
(or such other address as the Preferred Guarantee Trustee may
give notice of to the Guarantor and the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
18
<PAGE> 23
(b) If given to the Guarantor, at the Guarantor's mailing
addresses set forth below (or such other address as the
Guarantor may give notice of to the Preferred Guarantee
Trustee and the Holders of the Preferred Securities):
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attn: General Counsel
Telecopy No. (513) 357-3397
(c) If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by: first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
--------
This Guarantee is solely for the benefit of the Holders of the
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
--------------
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
19
<PAGE> 24
IN WITNESS WHEREOF, this Guarantee is executed as of the day and year
first above written.
AMERICAN ANNUITY GROUP, INC.,
as Guarantor
By:
-----------------------------------------
Mark F. Muething
Senior Vice President, General Counsel and
Secretary
THE BANK OF NEW YORK,
as Preferred Guarantee Trustee
By:
-----------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
(Signature Page to the Preferred Securities Guarantee Agreement)
20
<PAGE> 1
Exhibit 4.8
AMERICAN ANNUITY GROUP CAPITAL TRUST II
SECURITIES PURCHASE AGREEMENT
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
1. PURCHASE AND SALE OF PREFERRED SECURITIES................................................................1
1.1 ISSUANCE OF PREFERRED SECURITIES................................................................1
1.2 SALE AND PURCHASE OF PREFERRED SECURITIES.......................................................1
2. CLOSING OF SALE OF PREFERRED SECURITIES..................................................................1
3. CONDITIONS TO CLOSING....................................................................................2
3.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER ON THE CLOSING DATE........................2
3.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON THE CLOSING DATE............................4
4. REPRESENTATIONS AND WARRANTIES OF AAG....................................................................5
4.1 ORGANIZATION AND QUALIFICATION OF AAG; AUTHORITY................................................5
4.2 ORGANIZATION AND AUTHORITY OF THE TRUST.........................................................6
4.3 SUBSIDIARIES....................................................................................6
4.4 LICENSES; REINSURANCE...........................................................................6
4.5 CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.........................................7
4.6 VALIDITY AND BINDING EFFECT.....................................................................7
4.7 CAPITALIZATION..................................................................................7
4.8 LITIGATION; DEFAULTS............................................................................7
4.9 COMMON SECURITIES...............................................................................8
4.10 THE DECLARATION.................................................................................8
4.11 GUARANTEE AGREEMENTS............................................................................8
4.12 DEBT GUARANTEE..................................................................................8
4.13 PREFERRED SECURITIES............................................................................9
4.14 THE INDENTURE...................................................................................9
4.15 THE SUBORDINATED DEBENTURES.....................................................................9
4.16 THE REGULAR TRUSTEE.............................................................................9
4.17 PRIVATE OFFERINGS...............................................................................9
4.18 INVESTMENT COMPANY ACT.........................................................................10
4.19 PUBLIC UTILITY HOLDING COMPANY ACT.............................................................10
4.20 DISCLOSURE.....................................................................................10
4.21 FOREIGN ASSETS CONTROL REGULATION, ETC.........................................................11
4.22 FEDERAL RESERVE REGULATIONS AND OTHER MATTERS..................................................11
4.23 USE OF PROCEEDS................................................................................11
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER..............................................11
6. RESTRICTIONS ON TRANSFER................................................................................12
6.1 RESTRICTIVE LEGEND.............................................................................12
6.2 NOTICE OF THE TRANSFER; OPINIONS OF COUNSEL....................................................12
7. DEFINITIONS.............................................................................................13
8. MISCELLANEOUS...........................................................................................16
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
8.1 INDEMNIFICATION; EXPENSES, ETC.................................................................16
8.2 PAYMENT OF CLOSING FEES........................................................................18
8.3 BROKERS........................................................................................18
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES: SEVERABILITY.......................................18
8.5 AMENDMENT AND WAIVER...........................................................................19
8.6 NOTICES ETC....................................................................................19
8.7 SUCCESSORS AND ASSIGNS.........................................................................19
8.8 DESCRIPTIVE HEADINGS...........................................................................19
8.9 SATISFACTION REQUIREMENT.......................................................................19
8.10 GOVERNING LAW..................................................................................20
8.11 SERVICE OF PROCESS.............................................................................20
8.12 COUNTERPARTS...................................................................................20
8.13 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................................20
8.14 WAIVER OF JURY TRIAL...........................................................................20
</TABLE>
<PAGE> 4
AMERICAN ANNUITY GROUP CAPITAL TRUST II
Securities Purchase Agreement (the "Agreement") dated as of March 11,
1997 among American Annuity Group Capital Trust II, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), American Annuity
Group, Inc., a Delaware corporation ("AAG"), AAG Holding Company, Inc. an Ohio
corporation ("AAG Holding," and with the Trust and AAG, the "Issuers") and the
purchaser listed on the signature page hereto (the "Purchaser"). Unless
otherwise defined, capitalized terms used in this Agreement are defined in
Section 7 or, if not defined in Section 7 are defined in the Declaration;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to
a Schedule or an Exhibit attached to this Agreement; references to a "section"
or a "subdivision" are, unless otherwise specified, to a section or a
subdivision of this Agreement. The Issuers, in consideration of the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
agree with the Purchaser as follows:
1. Purchase and Sale of Preferred Securities.
-----------------------------------------
1.1 ISSUANCE OF PREFERRED SECURITIES. The Trust has
authorized the issuance and sale of up to $75,000,000 aggregate principal
amount at issuance of its 8 7/8% Capital Trust Preferred Securities (the
"Preferred Securities") to be issued pursuant to and in accordance with the
terms of the Declaration. Each Preferred Security will be issued in the
principal amount of $1,000 and integral multiples of $1,000 and will otherwise
be substantially in the form of Preferred Securities set out in the
Declaration, with such changes thereto, if any, as may be approved by the
Purchasers and the Trust.
1.2 SALE AND PURCHASE OF PREFERRED SECURITIES. At the Closing
provided for in Section 2, the Trust will issue and sell to the Purchaser and,
subject to the terms and conditions of this Agreement and the Declaration, the
Purchaser will purchase from the Trust, the aggregate principal amount of
Preferred Securities specified opposite the Purchaser's name on the signature
page hereto at the purchase price set forth on such Purchaser's signature page
hereto payable in cash by wire transfer of immediately available funds.
Contemporaneously with entering into this Agreement, the Issuers are entering
into separate securities purchase agreements (the "Other Securities Purchase
Agreements") with each of the Purchasers other than the Purchaser (the "Other
Purchasers"), providing for the sale to each of the Other Purchasers, at such
Closing, of the aggregate principal amount of Preferred Securities specified
for such Other Purchaser on, and at the purchase price set forth on, the
signature pages to the Other Securities Purchase Agreements.
2. CLOSING OF SALE OF PREFERRED SECURITIES. The purchase and delivery
of the Preferred Securities to be purchased by the Purchasers shall take place
at the offices of Goodwin, Procter & Hoar, LLP, at a closing (the "Closing") on
March 11, 1997 or at such other place or on such other date as the Purchasers,
the Company, AAG Holding and the Trust may agree upon (such date on which the
Closing shall have actually occurred, the "Closing Date"). At the Closing, the
Trust will deliver or cause to be delivered to the Purchaser the Preferred
Securities to be purchased by it against payment of the purchase price
therefor. The Preferred Securities to be purchased hereunder shall be in the
form provided in the Declaration. If at the Closing the Trust shall fail to
tender to the Purchaser any of the Preferred Securities to be purchased by it
as provided in this Section 2, or any
<PAGE> 5
- 2 -
of the conditions specified in Section 3 shall not have been satisfied or
waived by the Purchaser, the Purchaser shall, at its election, be relieved of
all further obligations under this Agreement, without thereby waiving any other
rights it may have by reason of such failure or such non-fulfillment.
3. Conditions to Closing.
---------------------
3.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER ON
THE CLOSING DATE. The Purchaser's obligation to purchase and pay for the
Preferred Securities to be sold to it at the Closing is subject to the
fulfillment to its satisfaction, prior to or at the Closing, of the following
conditions; provided that any or all of the following conditions may be waived,
in whole or in part, by the Purchaser with respect to this Agreement in its
sole and absolute discretion.
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Issuers contained in this Agreement and in the other
Transaction Documents and those otherwise made in writing by or on behalf of the
Issuers in connection with transactions contemplated to be consummated at the
Closing by this Agreement and in the other Transaction Documents shall be
complete and correct when made and at the time of the Closing, after giving
effect to the sale of the Preferred Securities and the other transactions
contemplated to be consummated at the Closing by this Agreement and the other
Transaction Documents.
(b) PERFORMANCE. The Issuers shall have performed and
complied in all material respects with all agreements and conditions contained
in this Agreement and the other Transaction Documents required to be performed
or complied with prior to or at the Closing and at the time of the Closing,
after giving effect to the sale of the Preferred Securities and the other
transactions contemplated to be consummated at the Closing by this Agreement and
the other Transaction Documents, no Default or Event of Default shall have
occurred and be continuing.
(c) COMPLIANCE CERTIFICATE. The Issuers shall have
delivered to the Purchaser an Officers' Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections 3.1(a) and 3.1(b)
have been fulfilled.
(d) OPINIONS OF COUNSEL. The Purchaser shall have received
from Keating, Muething and Klekamp, counsel for AAG and AAG Holding and Morris,
Nichols, Arsht & Tunnel, counsel for the Trust, favorable opinions addressed to
the Purchaser, dated the Closing Date and satisfactory in substance and form to
the Purchaser and Purchaser's Special Counsel.
(e) TAX OPINION. The Purchaser shall have received from
Akin, Gump, Strauss, Hauer & Feld, L.L.P., tax counsel for the Issuers, a
favorable tax opinion addressed to the Purchaser, dated the Closing Date and
satisfactory in substance and form to the Purchaser and Purchaser's Special
Counsel.
(f) LEGAL INVESTMENT. On the Closing Date, the Purchaser's
purchase of the Preferred Securities shall be permitted by the laws and
regulations of the jurisdiction to which the Purchaser is subject (including,
without limitation, Section 5 of the Securities Act or Regulation
<PAGE> 6
- 3 -
G, T, U, or X of the Board of Governors of the Federal Reserve System), and
credit controls or similar restraints applicable to the Purchaser shall not
subject the Purchaser to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, and shall
not be enjoined (temporarily or permanently) under, prohibited by or contrary
to any injunction, order or decree applicable to the Purchaser.
(g) COMPLIANCE WITH SECURITIES LAWS. The offering,
issuance and sale of the Preferred Securities under this Agreement shall have
complied with all applicable requirements of federal securities laws and the
Purchaser shall have received evidence, if any, of such compliance in form and
substance satisfactory to the Purchaser.
(h) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings contemplated by this Agreement, including', without limitation, the
matters set forth in the Transaction Documents and all of the other documents
and instruments incident thereto, shall be satisfactory to the Purchaser and the
Purchasers' Special Counsel, and the Purchaser and the Purchasers' Special
Counsel shall have received all such counterpart originals or certified or other
copies of such documents as the Purchaser or the Purchasers' Special Counsel may
reasonably request.
(i) COMPLETION OF OTHER TRANSACTIONS. Simultaneously with
or prior to the issuance and sale to the Purchasers of the Preferred Securities
to be purchased by the Purchasers at the Closing each of the other Transaction
Documents and any other agreements and documents contemplated thereby and in
connection therewith shall have been executed and delivered by all respective
parties thereto and shall be in full force and effect.
(j) RELATED MATTERS. The Charter Documents of the Issuers
and their material Subsidiaries shall not have been modified or amended since
the date hereof.
(k) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any legislation have been introduced and favorably reported
for passage to either House of Congress by any committee of either such House to
which such legislation has been referred for consideration, nor shall any
decision of any court of competent jurisdiction within the United States have
been rendered which, in the Purchaser's reasonable judgment, is likely to
materially and adversely affect the business, property, operations, condition
(financial or otherwise) or prospects of AAG or the Trust or materially and
adversely affect any of the Preferred Securities or any part thereof as an
investment. There shall be no action, suit, investigation or proceeding pending
or threatened, against or affecting the Purchaser, any of its properties or
rights, or any of its Affiliates, associates, officers or directors, before any
court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the other Transaction Documents,
or (ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
<PAGE> 7
- 4 -
transactions, and, to the Purchaser's knowledge, there shall be no valid basis
for any such action, proceeding or investigation.
(l) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
The Issuers shall have duly applied for and obtained all approvals, orders,
licenses, consents and other authorizations (collectively, the "Approvals") from
each federal, state and local government and governmental agency, department or
body, or pursuant to any agreement to which such Issuer or its Subsidiaries is a
party or to which any of them or any of their assets is subject, which may be
required in connection with this Agreement, the other Transaction Documents or
any other agreements and documents contemplated thereby and in connection
therewith.
(m) SECRETARY'S CERTIFICATE. The Purchaser shall have
received certificates, dated the Closing Date of the Regular Trustees of the
Trust and the Secretaries of AAG and AAG Holding, certifying (i) as true,
complete and correct their respective Charter Documents and resolutions relating
to the transactions contemplated hereby attached thereto, (ii) as to the absence
of proceedings or other action for dissolution, liquidation or reorganization of
any of the Issuers, as the case may be, (iii) as to the incumbency and specimen
signatures of officers, in the case of AAG and AAG Holding, and Regular
Trustees, in the case of the Trust, who shall have executed the Transaction
Documents and other documents in connection with the transactions contemplated
hereby, (iv) as to the effect that the Transaction Documents are in the form
approved in the resolutions referred to in clause (i) above, and (v) covering
such other matters, and with such other attachments thereto, as Purchasers'
Special Counsel may reasonably request at least one Business Day before the
Closing Date, which certificates and attachments thereto shall be satisfactory
in form and substance to such Purchaser.
3.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON THE
CLOSING DATE. The Trust's obligation to issue the Preferred Securities at the
Closing is subject to the fulfillment to its satisfaction, prior to or at the
Closing, of the following conditions; provided that any or all of the following
conditions may be waived, in whole or in part, by the Trust with respect to
this Agreement in its sole and absolute discretion:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Purchaser contained in this Agreement and in the other
Transaction Documents and those otherwise made in writing by or on behalf of the
Purchaser in connection with transactions contemplated to be consummated at the
Closing by this Agreement and in the other Transaction Documents shall be
correct in all material respects when made and at the time of the Closing, after
giving effect to the sale of the Preferred Securities and the other transactions
contemplated to be consummated at the Closing by this Agreement and the other
Transaction Documents, except that any representations and warranties that
relate to a particular date or period shall be true in all material respects as
of such date or period.
(b) PERFORMANCE. The Purchaser shall have performed and
complied in all material respects with all agreements and conditions contained
in this Agreement and the other Transaction Documents required to be performed
or complied with prior to or at the Closing.
<PAGE> 8
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(c) COMPLIANCE WITH SECURITIES LAWS. The offering,
issuance and sale of the Preferred Securities under this Agreement shall have
complied with all applicable requirements of federal securities laws and the
Trust shall have received evidence, if any, of such compliance in form and
substance satisfactory to the Trust.
(d) SALE OF OTHER PREFERRED SECURITIES. Concurrently with
the Closing, the Trust shall have issued and sold to each of the Other
Purchasers, and each such Other Purchaser shall have purchased from the Trust,
the Preferred Securities to be issued and sold to each such Other Purchaser at
the Closing as specified in the applicable signature page of each of the Other
Securities Purchase Agreements.
(e) COMPLETION OF OTHER TRANSACTIONS. Simultaneously with
or prior to the issuance and sale by the Trust of the Preferred Securities to be
purchased by the Purchasers at the Closing each of the other Transaction
Documents and any other agreements and documents contemplated thereby and in
connection therewith shall have been executed and delivered by all respective
parties thereto and shall be in full force and effect.
(f) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any legislation have been introduced and favorably reported
for passage to either House of Congress by any committee of either such House to
which such legislation has been referred for consideration, nor shall any
decision of any court of competent jurisdiction within the United States have
been rendered which, in the reasonable opinion of AAG, is likely to materially
and adversely affect the business, property, operations, condition (financial or
otherwise) or prospects of AAG or the Trust or materially and adversely affect
any of the Preferred Securities or any part thereof as an investment. There
shall be no action, suit, investigation or proceeding pending or threatened,
against or affecting the Trust, any of its properties or rights, or any of its
Affiliates, associates, officers or directors, before any court, arbitrator or
administrative or governmental body which (i) seeks to restrain, enjoin, prevent
the consummation of or otherwise affect the transactions contemplated by this
Agreement and the other Transaction Documents, or (ii) questions the validity or
legality of any such transactions or seeks to recover damages or to obtain other
relief in connection with any such transactions, and, to the Trust's knowledge,
there shall be no valid basis for any such action, proceeding or investigation.
4. REPRESENTATIONS AND WARRANTIES OF AAG. In order to induce the
Purchaser to purchase the Preferred Securities, the Issuers represent and
warrant that:
4.1 ORGANIZATION AND QUALIFICATION OF AAG; AUTHORITY. Each of
AAG and AAG Holding is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own and lease its properties and carry on its
business as presently conducted, is duly qualified, registered or licensed as a
foreign corporation to do business and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the character of its
present operations makes such qualification, registration or licensing
necessary, except where the failure so to qualify or be in good
<PAGE> 9
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standing would not have a material adverse effect on the condition (financial
or otherwise), assets, business or results of operations (a "Material Adverse
Effect") of AAG and its Subsidiaries taken as a whole. Each of AAG and AAG
Holding has heretofore delivered to Purchasers' Special Counsel complete and
correct copies of its Charter Documents, each as amended to date and as
presently in effect.
4.2 ORGANIZATION AND AUTHORITY OF THE TRUST. The Trust has
been duly created and is validly existing in good standing as a business trust
under the Delaware Act with the power and authority to own property and to
conduct its business as presently contemplated and to enter into and perform
its obligations under this Agreement, the Preferred Securities, the Common
Securities, the Declaration and the other Transaction Documents to which it is
a party; the Trust is not a party to or otherwise bound by any material
agreement other than those documents.
4.3 SUBSIDIARIES. AAG's material Subsidiaries are set forth
on Schedule 4.3 hereto. Each of such Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and authority to
own and lease its properties, and carry on its business as presently conducted,
is duly qualified, registered or licensed as a foreign corporation to do
business and is in good standing in each jurisdiction in which the ownership or
leasing of its properties or the character of its present operations make such
qualification, registration or licensing necessary, except where the failure so
to qualify or be in good standing would not have a Material Adverse Effect on
AAG and its Subsidiaries taken as a whole. Except as disclosed on Schedule 4.3,
AAG owns, directly or indirectly, all of the outstanding shares of Capital
Stock of each of the Subsidiaries free of any Lien, restriction (other than
restrictions generally applicable to securities under federal, provincial or
state securities laws) or encumbrance, and said shares have been duly issued
and are validly outstanding.
4.4 LICENSES; REINSURANCE. Each of AAG and its Subsidiaries
hold all material licenses, franchises, permits, consents, registrations,
certificates and other approvals (individually, a "License" and collectively,
"Licenses") required for the conduct of its business as now being conducted,
and is operating in compliance therewith, except where the failure to hold any
such License or to operate in compliance therewith would not have a Material
Adverse Effect on AAG and its Subsidiaries, taken as a whole. Each of AAG and
its Subsidiaries is in substantial compliance with all laws, regulations,
orders and decrees applicable to it, except in each case where the failure so
to comply would not have a Material Adverse Effect on AAG and its Subsidiaries,
taken as a whole, or a material adverse effect on the ability of either AAG or
the Trust to perform on a timely basis any obligation that it has or will have
under any Transaction Document to which it is a party.
All reinsurance treaties and arrangements to which any
Subsidiary of AAG is a party are in full force and effect and no such
Subsidiary is in violation of or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition contained
therein; no such Subsidiary has received any notice from any of the other
parties to such treaties, contracts or agreements that such other party intends
not to perform such treaty and, to the best knowledge of AAG, AAG has no reason
to believe that any of the other parties to such treaties or arrangements
<PAGE> 10
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will be unable to perform such treaty or arrangement except to the extent
adequately and properly reserved for in the Financial Statements of AAG.
4.5 CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.
The execution, delivery and performance by each of the Issuers of the
Transaction Documents and all other instruments or agreements to be executed in
connection herewith or therewith and the issuance and sale to the Purchasers of
the Preferred Securities are within each of the Issuers' powers, having been
duly authorized by all necessary action on the part of each such Issuer; do not
require any License, authorization, approval, qualification or formal exemption
from, or other action by or in respect of, or filing of a declaration or
registration with, any court, Governmental Authority, agency or official or
other Person (except such as have been obtained or as may be required under the
Securities Act or state securities or Blue Sky laws); do not contravene or
constitute a default under or violation of (i) any provision of applicable law
or regulation of any Governmental Authority, (ii) the Charter Documents of each
such Issuer, (iii) any agreement (or require the consent of any Person under
any agreement that has not been obtained) to which any Issuer, or any of its
Subsidiaries, is a party, or (iv) any judgment, injunction, order, decree or
other instrument binding upon the any Issuer, or any of its Subsidiaries, or
any of their respective properties, except where such contravention, default or
violation would not have a Material Adverse Effect on such Issuer and its
Subsidiaries taken as a whole; and do not and will not result in the creation
or imposition of any Lien on any asset of any Issuer, or any of its
Subsidiaries.
4.6 VALIDITY AND BINDING EFFECT. Each of the Transaction
Documents has been duly executed and delivered by each Issuer and is a valid
and binding agreement of each Issuer, enforceable against such entity, in
accordance with their respective terms, except for (a) the effect upon the
Transaction Documents of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting the rights of creditors generally
and (b) limitations imposed by a court of competent jurisdiction under general
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions of the Transaction Documents and upon the
availability of injunctive relief or other equitable remedies.
4.7 CAPITALIZATION. As of the Closing Date, except as set
forth on Schedule 4.7 hereto, (i) there are no outstanding subscriptions,
options, warrants, rights, convertible or exchangeable securities or other
agreements or commitments of any character obligating any Issuer, or any of its
Subsidiaries, to issue any securities; and (ii) there are no voting trusts or
other agreements or understandings to which the Trust, AAG or its material
Subsidiaries is a party with respect to the voting of the Capital Stock of the
Trust, AAG or its material Subsidiaries and (iii) except as contemplated by the
Registration Rights Agreement, none of the Trust, AAG nor any of their
Subsidiaries, has entered into any agreement to register its equity or debt
securities under the Securities Act.
4.8 LITIGATION; DEFAULTS. Except as disclosed on Schedule 4.8
hereto, there is no action, suit, proceeding or investigation pending or, to
the knowledge of AAG or the Trust, threatened against or affecting any of the
Issuers, or any of their Subsidiaries, or any of their respective properties,
before or by any court or arbitrator or any governmental body, agency or
<PAGE> 11
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official which (individually or in the aggregate) could (i) have a Material
Adverse Effect on such Issuer and its Subsidiaries, taken as a whole, or (ii)
impair the ability of any Issuer to perform fully on a timely basis any of its
respective obligations under the Transaction Documents to which such Issuer is
a party. No Issuer nor any of its Subsidiaries is in violation of, or in
default under (and there does not exist any event or condition which, after
notice or lapse of time or both, would constitute such a default under), any
term of its Charter Documents. No Issuer, nor any of their Subsidiaries, is in
violation of, or in default under (and there does not exist any event or
condition which, after notice or lapse of time or both, would constitute a
default under), any term of any agreement, instrument, judgment, decree, order,
statute, injunction, governmental regulation, rule or ordinance applicable to
such Issuer, or any of its Subsidiaries, or to which such Issuer, or any of its
Subsidiaries, is bound, or of its respective properties, except in each case to
the extent that such violations or defaults, individually or in the aggregate,
could not reasonably (a) affect the validity of any Transaction Document, (b)
have a Material Adverse Effect on such Issuer and its Subsidiaries, taken as a
whole, or (c) impair the ability of such Issuer to perform fully on a timely
basis any obligation which such Issuer has or will have under any Transaction
Document to which any Issuer is a party.
4.9 COMMON SECURITIES. The Common Securities have been duly
authorized by the Declaration and, when issued and delivered by the Trust to
AAG Holding against payment therefor, will be validly issued and will represent
undivided beneficial interests in the assets of the Trust; the issuance of the
Common Securities is not subject to preemptive or other similar rights; and on
the Closing Date all of the issued and outstanding Common Securities of the
Trust will be directly owned by AAG Holding free and clear of any security
interest, mortgage, pledge, Lien, encumbrance, claim or equitable right.
4.10 THE DECLARATION. The Declaration has been duly
authorized by AAG Holding and, on the Closing Date, will have been duly
executed and delivered by AAG Holding and the Trustees, and assuming due
authorization, execution and delivery of the Declaration by the Property
Trustee and the Delaware Trustee, the Declaration will, on the Closing Date, be
a valid and binding obligation of AAG Holding and the Regular Trustees,
enforceable against AAG Holding and the Regular Trustees in accordance with its
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity) (the "Bankruptcy Exceptions").
4.11 GUARANTEE AGREEMENTS. Each of the Guarantee Agreements
has been duly authorized by AAG and, when validly executed and delivered by AAG
and, in the case of the Preferred Securities Guarantee Agreement, assuming due
authorization, execution and delivery of the Preferred Securities Guarantee by
the Guarantee Trustee, will constitute a valid and binding obligation of AAG,
enforceable against AAG in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
4.12 DEBT GUARANTEE. The Debt Guarantee has been duly
authorized by AAG and, on the Closing Date, will have been validly executed and
delivered by AAG and will constitute a
<PAGE> 12
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valid and binding obligation of AAG, enforceable against AAG in accordance with
its terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
4.13 PREFERRED SECURITIES. The Preferred Securities have been
duly authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and non-assessable
undivided beneficial interests in the assets of the Trust and the issuance of
the Preferred Securities is not subject to preemptive or other similar rights.
4.14 THE INDENTURE. The Indenture has been duly authorized
and executed by AAG and AAG Holding and, on the Closing Date, will constitute a
valid and binding agreement of AAG Holding and AAG, enforceable against each of
AAG Holding and AAG in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
4.15 THE SUBORDINATED DEBENTURES. The Subordinated Debentures
have been duly authorized by AAG Holding and, at the Closing Time, will have
been duly executed by AAG Holding and, when authenticated in the manner
provided for in the Indenture and delivered against payment therefor, will
constitute valid and binding obligations of AAG Holding, enforceable against
AAG Holding in accordance with their terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and will be in
the form contemplated by, and entitled to the benefits of, the Indenture.
4.16 THE REGULAR TRUSTEE. Each of the Regular Trustees of the
Trust is an employee of AAG and has been duly authorized by AAG to execute and
deliver the Declaration.
4.17 PRIVATE OFFERINGS. No form of general solicitation or
general advertising including, but not limited to, advertisements, articles,
notices or other communications, published in any newspaper, magazine or
similar medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising was used by any Issuer, or any of its Subsidiaries, or the
representatives, or, to the knowledge of the Issuers, any other Person acting
on behalf of any Issuer, or any of their Subsidiaries, in connection with the
offering of the Preferred Securities being purchased under this Agreement or
under any other Transaction Document. None of the Issuers nor any Person acting
on behalf of any Issuer has directly or indirectly offered the Preferred
Securities, or any part thereof or any other similar securities or the
securities being purchased under any other Transaction Document, for sale to,
or sold or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with any Person or Persons other
than the Purchasers and other investors who the Trust reasonably believed had
such knowledge and experience in financial and business matters that they were
capable of evaluating the merits and risks of purchasing the Preferred
Securities. The Issuers further represent to the Purchaser that, assuming the
accuracy of the representations of the Purchaser as set forth in Section 5
hereof, none of the Issuers nor any Person acting on behalf of any Issuer has
taken or will take any action which would subject the issue and sale of the
Preferred Securities to the provisions of Section 5 of the Securities Act,
except as contemplated by the Registration Rights Agreement. The Trust has not
sold the Preferred Securities to anyone other than the Purchasers designated in
this Agreement and the Other Securities Purchase Agreements. No
<PAGE> 13
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securities of the same class or series as the Preferred Securities have been
issued and sold by the Trust prior to the date hereof. Each Preferred Security
Certificate shall bear substantially the same legend provided in Section 6.1
hereof as applicable, for at least so long as such restrictions apply.
4.18 INVESTMENT COMPANY ACT. No Issuer is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act"). nor is any Issuer deemed to be an "investment company" for
purposes of Section 12(d)(1) of the 1940 Act.
4.19 PUBLIC UTILITY HOLDING COMPANY ACT. No Issuer is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
4.20 Disclosure.
----------
(a) As of the date hereof, there is no untrue statement of
material fact in the Disclosure Document and no omission of a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which such statements were made.
(b) There is no material fact known to any Issuer which such
Issuer has not disclosed to the Purchaser or Purchasers' Special Counsel in
writing which has, or insofar as such Issuer can reasonably foresee, could
reasonably be expected to have a Material Adverse Effect on such Issuer and its
Subsidiaries, taken as a whole, or a material adverse effect on the ability of
such Issuer to perform its obligations under any of the Transaction Documents
or in respect of the Preferred Securities or any document contemplated hereby
or thereby.
(c) As of the date of this Agreement, each report AAG has
filed with the Commission with respect to events occurring, or periods ending,
on or after September, 1996 (the "SEC Filings") complies in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended, and as of the date thereof, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make statements therein not misleading.
(d) The SEC Filings, taken as a whole, do not as of the date
of this Agreement contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
statements therein not misleading. There is no material fact known to AAG which
AAG has not disclosed in the SEC Filings which has or insofar as AAG can
reasonably foresee, could reasonably be expected to have a Material Adverse
Effect on AAG or a Material Adverse Effect on the ability of AAG to perform its
obligations under any of the Transaction Documents to which it is a party or in
respect of the Preferred Securities or any document contemplated hereby or
thereby.
4.21 FOREIGN ASSETS CONTROL REGULATION, ETC. Neither the issue
and sale of the Preferred Securities by the Trust nor its use of the proceeds
thereof as contemplated by this
<PAGE> 14
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Agreement will violate the Foreign Assets Control Regulations, the Transaction
Control Regulations, the Cuban Assets Control Regulations, the Foreign Funds
Control Regulations, the Iranian Assets Control Regulations, the Nicaraguan
Trade Control Regulations, the South Africa Transactions Control Regulations,
the Libyan Sanctions Regulations, the Soviet Gold Code Regulations, the
Panamanian Transactions Regulations, the Haitian Transactions Regulations, or
the Iraqi Sanctions Regulations of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) or Executive Orders 12722 and 12724
(transactions with Iraq).
4.22 FEDERAL RESERVE REGULATIONS AND OTHER MATTERS. None of
the Issuers nor any of their respective Subsidiaries will, directly or
indirectly, use any of the proceeds from the sale of the Preferred Securities
for the purpose, whether immediate, incidental or ultimate, of buying any
"margin stock", or of maintaining, reducing or retiring any indebtedness
originally incurred to purchase any stock that is currently a "margin stock",
or for any other purpose which might constitute the transactions contemplated
hereby a "purpose credit", in each case within the meaning of Regulation G or U
of the Board of Governors of the Federal Reserve System (12 C.F.R, 207 and 221,
as amended, respectively), or otherwise take or permit to be taken any action
which would involve a violation of such Regulation G or Regulation U or of
Regulations T or X of the Board of Governors of the Federal Reserve System (12
C.F.R. 220) and 224, as amended, respectively) or any other regulation of such
Board. No indebtedness that may be maintained, reduced or retired with the
proceeds from the sale of the Preferred Securities was incurred for the purpose
of purchasing or carrying any "margin stock" and none of the Issuers nor any of
their respective Subsidiaries own any such "margin stock" or have any present
intention of acquiring, directly or indirectly any such "margin stock".
4.23 USE OF PROCEEDS. AAG and AAG Holdings will use the
proceeds it receives pursuant to the issuance of Debentures for general
corporate purposes.
4.24 RATINGS OF SECURITIES. The Issuers will use their best
efforts to obtain ratings for the Preferred Securities from Standard and Poors'
Ratings Group, a division of McGraw-Hill, and Moody's Investors Service, Inc. as
soon as practicable after the date hereof.
5. Representations, Warranties and Covenants of the Purchaser.
----------------------------------------------------------
(a) The Purchaser represents that (i) it is an accredited
investor as defined in Regulation D under the Securities Act, or (ii) by reason
of its business and financial experience, and the business and financial
experience of those Persons, if any, retained by it to advise it with respect
to its investment in the Preferred Securities, such Purchaser together with
such advisers have such knowledge, sophistication and experience in business
and financial matters as to be capable of evaluating the merits and risk of the
prospective investment, and that it is purchasing the Preferred Securities for
its own account or for one or more separate accounts maintained by it or for
the account of one or more institutional investors on whose behalf the
Purchaser has authority to make this representation for investment and not with
a view to the distribution thereof or with any present intention of
distributing or selling any of the Preferred Securities except in compliance
with the Securities Act and except to one or more such institutional investors,
provided that the disposition
<PAGE> 15
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of the Purchaser's or such investor's property shall at all times be within its
control. The Purchaser understands and agrees that the Preferred Securities
have not been registered under the Securities Act and may be resold (which
resale is not now contemplated) only if registered pursuant to the provisions
thereunder or if an exemption from registration is available.
(b) The Purchaser represents that it has full power and
authority and has taken all action necessary to authorize it to enter into and
perform its obligations under this Agreement and all other documents or
instruments contemplated hereby. This Agreement is the legal, valid and binding
obligation of each Purchaser, and is enforceable in accordance with its terms.
6. Restrictions on Transfer.
------------------------
6.1 RESTRICTIVE LEGEND. Except as otherwise permitted by this
Section 6, each certificate for Preferred Securities issued pursuant to this
Agreement shall be stamped or otherwise imprinted with a legend substantially
in the form provided in the Declaration.
The Trust shall maintain a copy of this Agreement and any amendments
thereto on file in its principal office, and will make such copy available
during normal business hours for inspection to any party thereto or will
provide such copy to the Purchaser upon its request.
Whenever the legend requirement imposed by this Section 6.1 shall
terminate the respective holders of Preferred Securities for which such legend
requirements have terminated shall promptly receive from the Trust, at the
Trust's expense, certificates for Preferred Securities without such legend.
6.2 NOTICE OF THE TRANSFER; OPINIONS OF COUNSEL. The holder
of each Preferred Security Certificate bearing the restrictive legend as
provided in Section 6.1 above ("Restricted Security"), agrees upon reasonable
request by the Trust to such transferring holder, to provide to the Trust (a)
written notice describing the manner or circumstances of any transfer of any
Restricted Security and/or (b) an opinion of counsel (including in-house
counsel), in form and substance reasonably satisfactory to the Trust, to the
effect that the transfer of such Restricted Security may be effected without
registration of such Restricted Security under the Securities Act. If the
holder of the Restricted Security delivers to the Trust an opinion of counsel
(including in-house counsel or regular counsel to such Purchaser or its
investment adviser) in form and substance reasonably satisfactory to the Trust
that subsequent transfers of such Restricted Security will not require
registration under the Securities Act, the Trust will promptly after such
transfer deliver new certificates for such Restricted Security which do not
bear the legend set forth in Section 6.1 above The restrictions imposed by this
Section 6 upon the transferability of any particular Restricted Security shall
cease and terminate when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 promulgated under the Securities Act. The Trust shall
promptly provide the holder of any Restricted Security as to which such
restrictions shall have terminated with a new security of the same type but not
bearing the restrictive legend set forth in Section 6.1 and not containing any
other reference to the restrictions imposed by this Section 6. Notwithstanding
any of the foregoing, no opinion of
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counsel will be required to be rendered pursuant to this Section 6.2 with
respect to the transfer of any Securities on which the restrictive legend has
been removed in accordance with this Section 6.2. As used in this Section 6.2,
the term "transfer" encompasses any sale, transfer or other disposition of any
Securities referred to herein.
7. DEFINITIONS. As used herein the following terms have the following
respective meanings:
"AFFILIATE," except as otherwise defined in this Agreement,
means with respect to any Person, any Person directly or indirectly controlling
or controlled by or under common control with such Person PROVIDED that, for
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"AGREEMENT" means this Agreement, as amended, modified or
supplemented from time to time, together with any exhibits, schedules or other
attachments thereto.
"BUSINESS DAY" has the meaning ascribed thereto in the
Indenture.
"CAPITAL STOCK" of any Person means any and all shares,
interests, rights to purchase, participations, warrants, options or other
equivalents (however designated) of corporate stock or equity participations of
such Person, including, but not limited to, beneficial interests in or
securities of a trust.
"CHARTER DOCUMENTS" means, in the case of the Trust,
Certificate of Trust, the Declaration, and, in the case of AAG or any of its
Subsidiaries, the Certificate of Incorporation or By-laws (or the equivalent).
"CLOSING" has the meaning ascribed thereto in Section 2
hereof.
"CLOSING DATE" has the meaning ascribed thereto in Section 2
hereof.
"CODE" means the Internal Revenue Code of 1986, and the rules
and regulations thereunder, as amended from time to time.
"COMMISSION" means the United States Securities and Exchange
Commission or any other Federal agency at the time administering the Securities
Act.
"DEBT GUARANTEE" means the guarantee of the Subordinated
Debentures by AAG.
"DECLARATION" means the Amended and Restated Declaration of
Trust for the Trust dated as of March 11, 1997.
<PAGE> 17
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"DELAWARE ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to
time, or any successor legislation.
"DEFAULT" and"EVENT OF DEFAULT" have the meanings specified in
the Indenture.
"DISCLOSURE DOCUMENT" shall mean the Prospectus dated
November 4, 1996 relating to the offering of Trust Originated Preferred
Securities by American Annuity Group Capital Trust I, as updated on the date
hereof with respect to the terms of the Preferred Securities, all documents
incorporated by reference into such Prospectus, all documents filed by AAG with
the Securities and Exchange Commission since November 4, 1996 and the
Transaction Documents, taken as a whole.
"GAAP" means generally accepted accounting principles and
practices set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession that are applicable to the circumstances
as of the date of determination, applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means any governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign.
"GUARANTEE AGREEMENTS" means the Preferred Securities
Guarantee Agreement and the Common Securities Guarantee Agreement, each of
which is dated as of the date hereof, pursuant to which AAG has guaranteed the
obligations of the Trust under the Preferred Securities and the Common
Securities to the extent set forth in such Guarantee Agreements, as such
agreements are amended or supplemented from time to time..
"INDEMNIFIED PARTY" or "INDEMNIFIED PARTIES" has the meaning
ascribed thereto in Section 8.1(a) hereof.
"INDENTURE" means the Indenture, providing for the issuance
of 8 7/8% Subordinated Debentures due January 15, 2027 by AAG Holding, dated as
of March 11, 1997 among AAG Holding Company, Inc., an Ohio corporation and a
wholly-owned subsidiary of AAG ("AAG Holding"), AAG and The Bank of New York,
as amended, modified or supplemented from time to time, together with any
exhibits, schedules or other attachments thereto.
"IRS" means the Internal Revenue Service or any successor
agency.
"LICENSE" or "LICENSES" has the meaning ascribed thereto in
Section 4.4 hereof.
"LIEN" means, with respect to any Person, any mortgage, lien
(statutory or otherwise), charge, pledge, hypothecation, conditional sales
agreement, adverse claim, title retention agreement
<PAGE> 18
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or other security interest, encumbrance or other title defect in or on, or any
interest or title of any vendor, lessor, lender or other secured party to or of
such Person under any conditional sale, trust receipt or other title retention
agreement with respect to, any Property or asset of such Person and any
financing lease having substantially the same effect.
"LOSSES" has the meaning ascribed thereto in Section 8.1(a)
hereof.
"MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in
Section 4.1 hereof.
"OFFICERS' CERTIFICATE" means a certificate executed on behalf
of the Trust by (a) the Chairman of the Board of Directors (if an officer) or
the President or one of the Vice Presidents of the Trust and (b) the Treasurer
or one of the Assistant Treasurers or the Secretary or one of the Assistant
Secretaries of the Trust.
"OTHER PURCHASERS" has the meaning ascribed thereto in Section
1.2 hereof.
"OTHER SECURITIES PURCHASE AGREEMENTS" has the meaning
ascribed thereto in Section 1.2 hereof.
"PERSON" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint
stock company, trust, unincorporated organization, or government or any agency
or political subdivision thereof.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"PURCHASER" except as defined elsewhere in this Agreement, has
the meaning ascribed thereto in the introduction hereof.
"PURCHASERS" except as defined elsewhere in this Agreement,
shall mean the Purchaser and the Other Purchasers.
"PURCHASERS' SPECIAL COUNSEL" means Goodwin Proctor & Hoar,
LLP, a partnership including professional corporations, acting as special
counsel to certain of the Purchasers in connection with the transactions
contemplated hereunder.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement of even date herewith by and among the Trust, AAG, AAG Holding
Company, Inc. and the Purchasers.
"REGULAR TRUSTEES" means Christopher P. Miliano and Mark F.
Muething.
"RELEASE" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping into the Environment.
<PAGE> 19
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"RESTRICTED SECURITY" has the meaning ascribed thereto in
Section 6.2 hereof.
"RULE 144" means Rule 144 as promulgated by the Commission
under the Securities Act, and any successor rule or regulation thereto.
"RULE 144A" means Rule 144A as promulgated by the Commission
under the Securities Act, and any successor rule or regulation thereto.
"SECURITIES ACT" means the Securities Act of 1933, and the
rules and regulations of the Commission promulgated thereunder, as amended.
"SUBORDINATED DEBENTURES" means the 8 7/8% Subordinated
Debentures due January 15, 2027 to be issued under the Indenture.
"SUBSIDIARY" means with respect to any Person, any
corporation, association, partnership, joint venture or other business entity of
which AAG and/or any Subsidiary of AAG, directly or indirectly, either (a) in
respect of a corporation, owns or controls more than 50% of the outstanding
Capital Stock having ordinary voting power to elect a majority of the board of
directors or similar managing body, irrespective of whether or not a class or
classes shall or might have voting power by reason of the happening of any
contingency, or (b) in respect of an association, partnership, joint venture or
other business entity exercises sufficient control over and/or has a
sufficiently large interest in, such association partnership, joint venture or
other business entity that the operations thereof are, in accordance with GAAP,
consolidated with those of AAG or any Subsidiary.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement,
the Other Securities Purchase Agreements, the Indenture, the Guarantee
Agreements, the Registration Rights Agreement, the Declaration and any and all
agreements certificates, instruments and other documents contemplated thereby or
executed and delivered in connection therewith.
"TRUSTEES" has the meaning ascribed thereto in the
Declaration.
"VOTING STOCK" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to vote for the election of directors, managers or
trustees of any Persons (irrespective of whether or not at the time, stock of
any class or classes will have, or might have, voting power by the reason of the
happening of any contingency).
8. Miscellaneous.
-------------
8.1 Indemnification; Expenses, Etc.
------------------------------
(a) In addition to any and all obligations of the
Trust and AAG to indemnify the Purchaser hereunder or under the Indenture or the
other Transaction Documents, the
<PAGE> 20
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Trust and AAG agree, without limitation as to time, to indemnify and hold
harmless the Purchaser, its Affiliates, and the employees, officers, directors,
and agents of the Purchaser and its Affiliates (individually, an "Indemnified
Party" and, collectively the "Indemnified Parties") from and against any and
all losses, claims, damages, liabilities, costs (including the costs of
preparation and attorneys' fees) and expenses (including expenses of
investigation) (collectively, "Losses") incurred or suffered by an Indemnified
Party (i) in connection with or arising out of any breach of any warranty, or
the inaccuracy of any representation as the case may be, made by AAG or the
Trust, or the failure of AAG or the Trust to fulfill any agreement or covenant
contained in this Agreement or (ii) in connection with any proceeding against
the Trust, AAG or any Indemnified Party brought by any third party arising out
of or in connection with this Agreement or the other Transaction Documents or
the transactions contemplated hereby or thereby or any action taken in
connection herewith or therewith (or any other document or instrument executed
herewith or pursuant hereto or thereto) whether or the transactions
contemplated by this Agreement are consummated and whether or not any
Indemnified Party is a formal party to any proceeding; PROVIDED, HOWEVER, that
neither the Trust nor AAG shall be liable for any losses resulting from action
on the part of any Indemnified Party which is finally determined in such
proceeding to be wrongful or which is an act of gross negligence, recklessness,
or willful misconduct by such Indemnified Party. The Trust and AAG agree
promptly to reimburse any Indemnified Party for all such Losses as they are
incurred or suffered by such Indemnified Party.
Except as otherwise provided herein, the Trust and AAG agree (for the
benefit of each Purchaser) to pay, and to hold each Purchaser harmless from and
against, all costs and expenses (including, without limitation, attorneys fees,
expenses and disbursements), if any, in connection with the enforcement against
the Trust or AAG, as the case may be, of this Agreement or any other
Transaction Document or any other agreement or instrument furnished pursuant
hereto or thereto or in connection herewith or therewith in any action in which
the Purchaser attempting to enforce any of the foregoing shall prevail or in
any action in which the Purchaser shall in good faith assert any provision of
any of the foregoing as a defense.
(b) If any Indemnified Party is entitled to
indemnification hereunder, such Indemnified Party shall give prompt notice to
the Trust and AAG of any claim or of the commencement of any proceeding against
the Trust, AAG or any Indemnified Party brought by any third party with respect
to which such Indemnified Party seeks indemnification pursuant hereto; PROVIDED,
HOWEVER, that the failure so to notify the Trust and AAG shall not relieve
either the Trust or AAG from any obligation or liability except to the extent
the Trust or AAG is prejudiced by such failure. The Trust and AAG shall have the
right, exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such claim or
proceeding, to assume, at the expense of the Trust or AAG, the defense of any
such claim or proceeding with counsel reasonably satisfactory to such
Indemnified Party. The Indemnified Party or Parties will not be subject to any
liability for any settlement made without its or their consent (but such consent
will not be unreasonably withheld). Neither the Trust nor AAG shall consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by claimant or plaintiff to such
Indemnified Party or Parties
<PAGE> 21
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of a release, in form and substance satisfactory to the Indemnified Party or
Parties, from all liability in respect of such claim, litigation or proceeding.
(c) In addition to any other obligations of AAG to
indemnify the Purchasers herein or pursuant to any of the Transaction Documents
or any other agreements or documents executed and delivered in connection
therewith, AAG will pay, and will save the Purchaser and each other holder of
any of the Preferred Securities harmless from liability for the payment of all
expenses arising in connection with such transactions, including, without
limitation: (a) all document production and duplication charges and the
reasonable fees, charges and expenses of Purchasers' Special Counsel (whether
arising before or after the Closing Date), incurred in connection with the
transactions contemplated hereby and any subsequent proposed modification of or
proposed consent under, this Agreement, whether or not such proposed
modification shall be effected or proposed consent granted; (b) the costs of
obtaining a private placement number from Standard & Poor's Corporation for the
certificates for the Preferred Securities; (c) the costs and expenses, including
attorneys' fees, incurred by any Purchaser in enforcing any rights under this
Agreement or in responding to any subpoena or other legal process issues in
connection with this Agreement or the transactions contemplated hereby or
thereby or by reason of such Purchaser's having acquired any of the Preferred
Securities, including without limitation costs and expenses incurred by such
Purchaser in any bankruptcy case; (d) the cost of delivering to such Purchaser's
principal office, insured to its satisfaction, the Securities delivered to such
Purchaser hereunder; and (e) the reasonable out-of-pocket expenses incurred by
such Purchaser in connection with such transactions and any such amendments or
waivers.
8.2 PAYMENT OF CLOSING FEES. AAG agrees to pay the reasonable
fees, expenses and disbursements of the Purchasers' Special Counsel reflected in
statements rendered by such counsel.
8.3 BROKERS. The Trust and AAG agree that they will pay all
commissions due to Libra Investments, Inc. in connection with the sale of
Preferred Securities hereunder and they further agree to indemnify and hold
harmless the Purchaser from and against all other claims, demands and
liabilities for broker's, finder's, placement agent's or other similar fees or
commissions payable in connection with the transactions contemplated by this
Agreement.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES: SEVERABILITY.
All representations and warranties contained in this Agreement or the
Transaction Documents or made in writing by or on behalf of the Trust or AAG in
connection with the transactions contemplated by this Agreement or the
Transaction Documents shall survive, for the duration of any statutes of
limitation applicable thereto, the execution and delivery of this Agreement,
any investigation at any time made by any Purchaser or on such Purchaser's
behalf, the purchase of the Preferred Securities by the Purchasers under this
Agreement and the Other Securities Purchase Agreements and any disposition of
or payment on the Preferred Securities. All statements contained in any
certificate or other instrument delivered to the Purchasers by or on behalf of
the Trust or AAG pursuant to this Agreement or the Transaction Documents shall
be deemed representations and warranties of the Trust or AAG, as the case may
be, under this Agreement. Any provision of this Agreement that is prohibited or
<PAGE> 22
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
8.5 AMENDMENT AND WAIVER. This Agreement may be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may be given, provided that the same are in writing and
signed by the Purchaser, the Trust and AAG.
8.6 NOTICES ETC. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be delivered, or mailed by registered or certified mail,
return receipt requested, or by a nationally recognized overnight courier,
postage prepaid, addressed, (a) if to the Purchaser, at such address as the
Purchaser shall have furnished to the Trust in writing, or (b) if to any other
holder of any Preferred Security, at such address as such other holder shall
have furnished to the Trust in writing, or, until any such other holder so
furnishes to the Trust an address, then to and at the address of the last
holder of such Security who has furnished an address to the Trust, or (c) if to
the Trust, at 250 East Fifth Street, Cincinnati, Ohio, 45202, to the attention
of the Regular Trustees, or at such other address, or to the attention of such
other officer, as the Trust shall have furnished to the Purchaser and each such
other holder in writing, or if to AAG, at 250 East Fifth Street, Cincinnati,
Ohio 45202, to the attention of the General Counsel, or at such other address,
or to the attention of such other office, as AAG shall have furnished to the
Purchaser and each other such holder in writing. This Agreement and the other
Transaction Documents and all documents delivered in connection herewith or
therewith embody the entire agreement and understanding among the Purchaser,
the Trust and AAG and supersede all prior agreements and understandings
relating to the subject matter hereof.
8.7 SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of
the parties hereto are referred to, such reference shall be deemed to include
the successors and assigns of such party'; and all covenants, promises and
agreements by or on behalf of the respective parties which are contained in
this Agreement shall bind and inure to the benefit of the successors and
assigns of all other parties. The terms and provisions of this Agreement, the
Indenture and the other Transaction Documents shall inure to the benefit of and
shall be binding upon any assignee or transferee of the Purchaser, and in the
event of such transfer or assignment, the rights and privileges herein
conferred upon the Purchaser shall automatically extend to and be vested in,
and become an obligation of, such transferee or assignee, all subject to the
terms and conditions hereof. In connection therewith, such transferee or
assignee may disclose all documents and information which such transferee or
assignee now or hereafter may have relating to the Preferred Securities, this
Agreement, the Transaction Documents, the Trust, any other Persons referred to
herein or any of the business of any of the foregoing entities.
8.8 DESCRIPTIVE HEADINGS. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
8.9 SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to the
<PAGE> 23
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Purchaser or to the holders of a specified portion of the Preferred Securities,
the determination of such satisfaction shall be made by the Purchaser or such
holders, as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
8.10 GOVERNING LAW. THIS AGREEMENT AND THE PREFERRED
SECURITIES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAW.
8.11 SERVICE OF PROCESS. AAG and the Trust hereby consent to
service of process by registered mail at the address to which notices are to be
given. AAG and the Trust agree that their consent to service of process by mail
is made for the express benefit of the Purchaser.
8.12 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
8.13 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Agreement may not be used to interpret another agreement, indenture, loan or
debt agreement of AAG or the Trust. Any such agreement, indenture, loan or debt
agreement may not be used to interpret this Agreement.
8.14 WAIVER OF JURY TRIAL. AAG, THE TRUST AND THE PURCHASER
HEREBY WAIVE TRIAL BY JURY IN ANY LITIGATION, SUIT OR PROCEEDING, IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE
PREFERRED SECURITIES, ANY OTHER TRANSACTION DOCUMENTS, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, THE PREFERRED SECURITIES OR ANY
OTHER TRANSACTION DOCUMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT THEREOF, PROVIDED, HOWEVER, THAT WITH RESPECT TO ANY
COMPULSORY COUNTERCLAIM (I.E., A CLAIM BY THE TRUST AGAINST ANY OF THE
PURCHASERS WHICH IF NOT BROUGHT IN SUCH ACTION WOULD RESULT IN THE ANY ISSUER
BEING FOREVER BARRED FROM BRINGING SUCH CLAIM) SUCH ISSUER SHALL HAVE THE RIGHT
TO RAISE SUCH COMPULSORY COUNTERCLAIM IN ANY SUCH LITIGATION.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 24
SECURITIES PURCHASE AGREEMENT
(8 7/8% CAPITAL TRUST PREFERRED SECURITIES)
If this Agreement is satisfactory, please so indicate by signing the
applicable attached signature page of this Agreement whereupon this Agreement
will become binding among the parties hereto in accordance with its terms.
AMERICAN ANNUITY GROUP, INC.
BY: /s/ Mark F. Muething
------------------------------------
Mark F. Muething
Senior Vice President, General Counsel and
Secretary
AMERICAN ANNUITY GROUP CAPITAL
TRUST II
BY: /s/ Mark F. Muething
------------------------------------
Mark F. Muething
Regular Trustee
AAG HOLDING COMPANY, INC.
BY: /s/ Mark F. Muething
------------------------------------
Mark F. Muething
Senior Vice President
[SIGNATURE PAGES OF PURCHASERS FOLLOW]
<PAGE> 1
Exhibit 4.9
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
AMERICAN ANNUITY GROUP CAPITAL TRUST II
AMERICAN ANNUITY GROUP, INC.,
AAG HOLDING COMPANY, INC.
AND
EACH OF THE PURCHASERS REFERRED TO HEREIN
- -----------------------------------------------------------------------------
Dated as of March 11, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. DEFINITIONS..............................................................................................1
2. EXCHANGE OFFER..................................................................................4
3. SHELF REGISTRATION.......................................................................................6
4. LIQUIDATED DAMAGES.......................................................................................7
5. TRUST INDENTURE ACT QUALIFICATION; RATING................................................................8
6. REGISTRATION PROCEDURES..................................................................................8
7. REGISTRATION EXPENSES...................................................................................13
8. INDEMNIFICATION AND CONTRIBUTION........................................................................13
(A) INDEMNIFICATION BY THE REGISTRANTS.............................................................13
(B) INDEMNIFICATION BY HOLDERS OF PREFERRED SECURITIES.............................................14
(C) CONDUCT OF INDEMNIFICATION PROCEEDINGS.........................................................14
(D) CONTRIBUTION...................................................................................15
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.............................................................16
10. RULE 144 AND RULE 144A..................................................................................16
11. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS...........................................................16
12. MISCELLANEOUS...........................................................................................17
(A) OTHER REGISTRATION RIGHTS......................................................................17
(B) AMENDMENTS AND WAIVERS.........................................................................17
(C) NOTICES. .....................................................................................17
(D) SUCCESSORS AND ASSIGNS.........................................................................17
(E) COUNTERPARTS...................................................................................18
(F) HEADINGS.......................................................................................18
(G) GOVERNING LAW..................................................................................18
(H) SEVERABILITY...................................................................................18
(I) ENTIRE AGREEMENT...............................................................................18
(J) ATTORNEYS' FEES................................................................................18
</TABLE>
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of March 11, 1997 by and among American Annuity Group Capital
Trust II, a Delaware statutory business trust (the "Trust"), American Annuity
Group, Inc., a Delaware corporation (the "Company"), AAG Holding Company, Inc.,
an Ohio corporation ("AAG Holding," and with the Trust and the Company, the
"Registrants"), and each of the purchasers executing a signature page hereto
(herein referred to collectively as the "Purchasers" and individually as a
"Purchaser").
This Agreement is made pursuant to certain Securities Purchase
Agreements dated as of March 11, 1997 by and among the Trust, the Company, AAG
Holding and each of the Purchasers (collectively, the "Purchase Agreement"). The
Purchase Agreement provides for the sale by the Trust to the Purchasers of
$75,000,000 aggregate principal amount of the Trust's 8 7/8% Preferred
Securities, liquidation amount $1,000 per security, designated the 8 7/8%
Capital Trust Preferred Securities (the "Preferred Securities"). AAG Holding
will own all of the beneficial ownership interests represented by the common
securities (the "Common Securities") of the Trust. The Preferred Securities and
the Common Securities will be guaranteed (with respect to the Preferred
Securities, the "Preferred Securities Guarantee," with respect to the Common
Securities, the "Common Securities Guarantee," and collectively, the
"Guarantees") by the Company, to the extent provided for in the Transaction
Documents. Concurrently with the issuance of the Preferred Securities, the
Guarantees and the Common Securities, the Trust will invest the proceeds of each
issuance in AAG Holding's 8 7/8% Subordinated Debentures due January 15, 2027
(the "Debentures"), which will be guaranteed by the Company (the "Debt
Guarantee," and with the Debentures, Preferred Securities, the Common Securities
and the Guarantees, the "Securities"). In order to induce the Purchasers to
enter into the Purchase Agreement, the Registrants have agreed to provide the
registration rights set forth in this Agreement for the benefit of the Holders,
(as hereinafter defined) from time to time, of Registrable Securities (as
hereinafter defined). The execution of this Agreement is a condition to the
closing of the transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions.
-----------
Capitalized terms used herein without definition shall have the
respective meanings given such terms as set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Advice: See Section 6.
------
BUSINESS DAY: Any day other than a day on which banks are authorized or
required to be closed in the State of New York.
Commission: The Securities and Exchange Commission.
----------
<PAGE> 4
- 2 -
CONSUMMATE: With respect to an Exchange Offer, the delivery by the
Registrants of the Exchange Securities in the same aggregate principal amount as
the aggregate principal amount of Registrable Securities tendered by Holders
pursuant to an Exchange Offer.
DECLARATION: The Amended and Restated Declaration of Trust dated as of
March 11, 1997, among The Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee and the other trustees named therein
pursuant to which the Preferred Securities are being issued.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
EXCHANGE OFFER: The registration by the Registrants under the
Securities Act of the Exchange Securities pursuant to a Registration Statement
pursuant to which the Registrants will offer the Holders of all outstanding
Registrable Securities the opportunity to exchange all such outstanding
Registrable Securities held by such holders for Exchange Securities in an
aggregate liquidation amount equal to the aggregate liquidation amount of the
Exchange Securities tendered in such Exchange Offer by such Holders.
EXCHANGE SECURITIES: The Securities to be issued in the Exchange Offer
that are identical to the Registrable Securities in all material respects except
that they have been registered pursuant to an effective Registration Statement
under the Securities Act.
GUARANTEE AGREEMENT: The Preferred Securities Guarantee Agreement dated
as of March 11, 1997 between the Company and The Bank of New York, as Guarantee
Trustee, pursuant to which the Preferred Securities Guarantee is being issued,
as amended or supplemented from time to time.
HOLDER or HOLDERS: Any holder of Preferred Securities prior to the
Consummation of an Exchange Offer or prior to effectiveness of a Shelf
Registration.
HOLDERS' COUNSEL: Goodwin, Proctor & Hoar, LLP, special counsel to the
Purchasers, or any successor counsel selected by Holders of a majority of the
liquidation principal amount of Preferred Securities, it being understood and
agreed that for the purposes of this Agreement, only one law firm may be
considered Holders' Counsel.
INDENTURE: The Indenture of even date herewith pursuant to which the
Debentures are being issued, as amended, modified or supplemented from time to
time, together with any exhibits, schedules or other attachments thereto.
INSPECTORS: See Section 6(m).
ISSUE DATE: The date on which the Securities are sold to the Purchasers
pursuant to the Purchase Agreement.
<PAGE> 5
- 3 -
OBJECTION NOTICE: See Section 6(a).
OBJECTING PARTY: See Section 6(a).
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.
RECORDS: See Section 6(m).
REGISTRABLE SECURITIES: Each Security, until such time as (i) a
Registration Statement covering such Registrable Securities has been declared
effective and such Registrable Securities have been disposed of pursuant to such
effective Registration Statement or (ii) such Registrable Securities are
transferred to any person other than a Purchaser pursuant to Rule 144 (or any
similar provision in force) under the Securities Act, whichever of (i) or (ii)
occurs earlier or (iii) such Registrable Securities have been exchanged pursuant
to the Exchange Offer.
REGISTRATION EXPENSES: See Section 7.
REGISTRATION STATEMENT: Any registration statement that covers any of
the Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statements,
including post-effective amendments, all exhibits, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
RULE 144A: See Section 10(a).
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
SELLING HOLDERS: See Section 6(a).
SHELF NOTICE: See Section 2(b).
SHELF REGISTRATION: See Section 3.
<PAGE> 6
- 4 -
TARGET EFFECTIVE DATE: In the case of an Exchange Offer, 180 days after
the date hereof; in the case of a Shelf Registration, the later of 120 days
after the delivery of the Shelf Notice or 180 days after the date hereof.
TARGET EFFECTIVE PERIOD: See Section 3.
TARGET FILING DATE: In the case of an Exchange Offer, 120 days after
the date hereof; in the case of a Shelf Registration, the later of 60 days after
the date of delivery of the Shelf Notice or 120 days after the date hereof.
TRANSACTION DOCUMENTS: Collectively, this Agreement, the Purchase
Agreement, the Indenture, the Guarantee Agreement, the Common Securities
Guarantee Agreement, the Declaration and any and all agreements certificates,
instruments and other documents contemplated thereby or executed and delivered
in connection therewith.
TRUST INDENTURE ACT: The Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended, or any successor statute, as in effect from
time to time.
2. Exchange Offer.
--------------
(a) The Registrants shall (i) cause to be filed with the
Commission as soon as practicable after the date hereof, but in no event later
than the Target Filing Date, a Registration Statement with respect to the
Exchange Offer and (ii) use their best efforts to cause such Registration
Statement to be declared effective as soon as practicable after the Target
Filing Date or such earlier filing date, but in no event later than the Target
Effective Date. The Exchange Offer will be registered under the Securities Act
on the appropriate form and duly registered or qualified under applicable state
securities or blue sky laws and will comply with all applicable tender offer
rules and regulations under the Exchange Act and state securities or blue sky
laws. Each of the Purchasers represents that any Exchange Securities received by
it will be acquired in the ordinary course of its business and that, at the time
the Exchange Offer is Consummated, such Purchaser will have no arrangement or
understanding with any Person or the intent to enter into any such arrangement
or understanding to participate in the distribution of the Exchange Securities.
The Registrants further agree to supplement or amend the Registration Statement
filed in respect of the Exchange Offer to the extent required by applicable law,
rules or regulations or by the instructions applicable to the registration form
used by the Registrants for such Registration Statement. The Registrants shall
keep the Registration Statement relating to the Exchange Offer continuously
effective for a period of not less than the minimum period required under
applicable federal and state securities laws; provided, however, that (i) the
Exchange Offer shall remain open and (ii) the Registration Statement relating to
the Exchange Offer shall remain continuously effective for a period of at least
20 consecutive Business Days. Upon acceptance of all tendered Registrable
Securities pursuant to an Exchange Offer and issuance of Exchange Securities in
exchange therefor pursuant to an Exchange Offer in accordance with this Section
2, the provisions of this Agreement shall continue to apply; provided that the
Registrants (i) may omit to comply with such of the procedures set forth in
Section 6 as are required to be complied with only in connection with a Shelf
<PAGE> 7
- 5 -
Registration or as may be appropriate under the circumstances without adversely
affecting the interests of the Holders of Registrable Securities under this
Agreement, taken as a whole, and (ii) shall have no further obligation to
register Registrable Securities pursuant to this Section 2 or Section 3 of this
Agreement.
(b) If, prior to the Consummation of the Exchange Offer, (i)
the Registrants reasonably determine, or Holders of at least 25% of the
aggregate liquidation amount of Preferred Securities reasonably determine, in
good faith that (A) the Exchange Securities would not, upon receipt, be
tradeable by each such Holder without restriction under the Securities Act and
the Exchange Act and without material restrictions under applicable blue sky or
state securities laws, (B) the interests of the Holders under this Agreement,
taken as a whole, would be materially adversely affected by the Consummation of
the Exchange Offer, (C) after conferring with counsel, the Commission is
unlikely to permit the Consummation of the Exchange Offer or (D) after
conferring with counsel, a Tax Event (as defined below) has occurred after the
date of original issuance of the Securities or there is more than an
insubstantial risk that a Tax Event will occur prior to the time that the
Exchange Offer is Consummated, or (ii) the Holders of at least 25% of the
aggregate liquidation amount of Preferred Securities request that the
Registrants abstain from Consummating the Exchange Offer based upon a written
opinion of counsel to the effect that any of (A) the participation of such
Holders in the Exchange Offer is not legally permitted or (B) a court decision
or administrative action may be reasonably expected to have a material adverse
effect on such Holders in the event such Holders participated in the Exchange
Offer, then the Registrants shall promptly deliver to the Holders notice thereof
(the "Shelf Notice") and as soon as practicable shall file a Shelf Registration
pursuant to Section 3. The parties hereto agree that, following the delivery of
a Shelf Notice, the Registrants shall have no further obligation under this
Section 2 and, upon the Consummation of the Exchange Offer, the Registrants
shall have no obligation under Section 3 hereof. The Registrants will pay all
Registration Expenses incurred in connection with the Exchange Offer, whether or
not it becomes effective or is Consummated.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel
from independent counsel experienced in such matters to the effect that, as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days after the date thereof, subject
to United States Federal income tax with respect to interest accrued or received
on the Securities, (ii) the Trust is, or will be within 90 days after the date
thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable to the Trust on the
Preferred Securities or Common Securities is not, or within 90 days of the date
thereof, will not be deductible, in whole or in part, by the Company for United
States Federal income tax purposes.
<PAGE> 8
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3. Shelf Registration.
------------------
(a) If the Registrants are required to deliver a Shelf Notice
as contemplated by Section 2(b), then the Registrants shall prepare and file
with the Commission as soon as practicable but not later than the Target Filing
Date, a "shelf" Registration Statement on the appropriate form for an offering
to be made on a continuous basis pursuant to Rule 415 under the Securities Act
covering all of the Registrable Securities (the "Shelf Registration"); provided
that if the Registrants have not yet filed a Registration Statement for an
Exchange Offer, the Registrants shall file the Shelf Registration on or before
the Target Filing Date unless the Shelf Notice is delivered within the 15 day
period prior to the Target Filing Date, in which case the Registrants shall have
15 days from the date of delivery to file the Shelf Registration. The
Registrants will use their best efforts to have the Shelf Registration declared
effective on or before the Target Effective Date and to keep such Shelf
Registration continuously effective for a period (the "Target Effective Period")
of at least 24 months following the Target Effective Date or the date on which
such Shelf Registration is declared effective, if later (or such shorter period
which will terminate when all Registrable Securities covered by such Shelf
Registration have been sold or withdrawn, but not prior to the expiration of the
applicable period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable). The Registrants further agree, if necessary, to
supplement or amend the Shelf Registration, as required by the registration form
used by the Registrants for such Shelf Registration or by the instructions
applicable to such registration form or by the Securities Act or as reasonably
requested (which request shall result in the filing of a supplement or
amendment) by any Holder of Registrable Securities to which such Shelf
Registration relates, and the Registrants agree to furnish to the Holders,
Holder's Counsel and any managing underwriter copies of any such supplement or
amendment prior to its being used and/or filed with the Commission.
(b) Any of the Registrants may require each Holder of
Preferred Securities to which such Shelf Registration relates to furnish to such
Registrant such information concerning the Holder and the distribution of the
Preferred Securities as such Registrant may from time to time reasonably
request. Prior to the filing of the initial Shelf Registration and, if requested
by any of the Registrants, the filing of any amendments or supplements thereto,
each Holder of Preferred Securities to which such Shelf Registration relates or
its counsel or agent or representative shall deliver to the Company written
confirmation that neither the Shelf Registration, nor the Prospectus contained
therein, contains any untrue statement of a material fact relating to such
Holder nor omits to state a material fact with respect to such Holder necessary
to make the statements therein not misleading.
(c) Each Holder of Preferred Securities hereby acknowledges
that any notification received by or from any of the Registrants regarding a
proposal of such Registrant to register any of its securities under the
Securities Act, including the filing of the Shelf Registration, may constitute
"material, nonpublic information" under the federal securities laws.
<PAGE> 9
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4. Liquidated Damages.
------------------
If neither the Exchange Offer nor the Shelf Registration is filed on or
before the Target Filing Date, the Company will pay liquidated damages to each
Holder (in its capacity as such and not in its capacity as an independent holder
of its pro rata share of Debentures) in an amount equal to $.05 per $1,000
outstanding liquidation amount of the Preferred Securities per week beginning on
the Target Filing Date. If the Exchange Offer has been filed but is not
Consummated on or before the Target Effective Date, the Company will pay
liquidated damages to each Holder (in its capacity as such and not in its
capacity as an independent holder of its pro rata share of Debentures) in an
amount equal to $.05 per $1,000 outstanding liquidation amount of Preferred
Securities per week beginning on the Target Effective Date. If the Shelf
Registration is filed but has not become effective on or before the Target
Effective Date, the Company shall pay liquidated damages to each Holder (in its
capacity as such and not in its capacity as an independent holder of its pro
rata share of Debentures) in an amount equal to $.05 per $1,000 outstanding
liquidation amount of the Preferred Securities per week beginning on the Target
Effective Date. The weekly liquidated damages associated with a late filing, a
late declaration of effectiveness or a late Consummation shall increase by an
amount equal to $.05 per $1,000 outstanding liquidation amount of the Preferred
Securities 90 days after the Target Filing Date or the Target Effective Date, as
the case may be, and shall thereafter increase by an amount equal to $.05 per
$1,000 outstanding liquidation amount at the end of each subsequent 90 day
period for so long as the Exchange Offer or the Shelf Registration is not filed,
declared effective or Consummated, as the case may be. If a stop order is
imposed or if for any other reason the effectiveness of the Shelf Registration
is suspended for a period in excess of ten consecutive days during the Target
Effective Period, then the Company shall pay liquidated damages to each Holder
(in its capacity as such and not in its capacity as an independent holder of its
pro rata share of Debentures) in an amount equal to $.05 per $1,000 outstanding
liquidation amount of Preferred Securities per week beginning on the day that is
ten consecutive days after the imposition of such stop order or other suspension
of effectiveness. The weekly liquidated damages associated with a suspension of
the effectiveness of the Shelf Registration shall increase by an amount equal to
$.05 per $1,000 outstanding liquidation amount of the Preferred Securities 90
days after the stop order was imposed or the Shelf Registration was otherwise
suspended, and shall thereafter increase by an amount equal to $.05 per $1,000
liquidation amount at the end of each subsequent 90 day period for so long as
the effectiveness remains suspended. Liquidated damages shall be deemed to
commence accruing on the day in which the event triggering such liquidated
damages occurs.
The Company shall pay the liquidated damages due with respect to the
Registrable Securities by depositing with the paying agent under the
Declaration, in trust, for the benefit of the Holders of Preferred Securities
which are entitled to such liquidated damages in accordance with this Section 4,
on or prior to any date that semi-annual distributions are due pursuant to the
terms of the Preferred Securities ("Distribution Date"), in Federal or other
immediately available funds, sums sufficient to pay the liquidated damages then
due. Liquidated damages not previously paid, if any, shall be payable on each
such Distribution Date, and the liquidated damages shall be paid to the record
holders of such Preferred Securities (as of the record date with respect to each
applicable Distribution Date) entitled to receive such liquidated damages. The
Registrants shall notify the
<PAGE> 10
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Trustee immediately after the occurrence of each and every event which, pursuant
to this Section 4, results in any liquidated damages being payable with respect
to the Registrable Securities.
The liquidated damages to be paid to Holders pursuant to this Section 4
shall cease to accrue, (i) with respect to the liquidated damages for failure to
file on or prior to the Target Filing Date, on the day the Exchange Offer or
Shelf Registration is filed, (ii) with respect to the liquidated damages for
failure to Consummate the Exchange Offer or to have the Shelf Registration
declared effective, on or prior to the Target Effective Date, on the day after
the Exchange Offer is Consummated or the Shelf Registration is declared
effective, as the case may be, or (iii) with respect to the liquidated damages
for the suspension of effectiveness, on the day after the reinstatement of
effectiveness of the Shelf Registration.
5. Trust Indenture Act Qualification; Rating.
-----------------------------------------
(a) At or prior to the effectiveness of the Exchange Offer or the Shelf
Registration, the Registrants will qualify the Indenture and the Declaration
under the Trust Indenture Act.
(b) At or prior to the effectiveness of the Exchange Offer or the Shelf
Registration, the Registrants agree to use their best efforts to obtain ratings
for the Preferred Securities from Standard & Poor's Ratings Group, a division of
McGraw-Hill, and Moody's Investors' Service, Inc.
6. Registration Procedures.
-----------------------
In connection with the registration obligations of the Registrants
pursuant to the terms and conditions of this Agreement, the Registrants shall
comply with the following:
(a) Prior to filing a Registration Statement or Prospectus or
any amendments or supplements thereto, excluding for purposes of this Section
6(a) documents incorporated by reference after the initial filing of the
Registration Statement, the Registrants will furnish to the Holders of Preferred
Securities covered by such Registration Statement (the "Selling Holders"),
Holders' Counsel and the underwriters, if any, draft copies of all such
documents proposed to be filed at least five Business Days prior thereto, which
documents will be subject to the review of such Holders' Counsel and the
underwriters, if any, and the Registrants will not, unless required by law, file
any Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which Selling Holders of at least a majority of the
aggregate liquidation amount of the Preferred Securities (the "Objecting Party")
shall reasonably object, pursuant to notice given to the Registrants prior to
the filing of such amendment or supplement (the "Objection Notice") and no later
than five Business Days after receipt of the documents to which the Objection
Notice relates. The Objection Notice shall set forth the objections and the
specific areas in the draft documents where such objections arise. The
Registrants shall have five Business Days after receipt of the Objection Notice
to correct such deficiencies to the reasonable satisfaction of the Objecting
Party and will notify each Selling Holder of any stop order issued or threatened
by the Commission in connection therewith and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
<PAGE> 11
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(b) The Registrants shall promptly prepare and file with the
Commission such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration Statement effective for
the period required pursuant to Section 2 or Section 3, as the case may be,
cause the Prospectus to be supplemented by any required Prospectus supplement
and, as so supplemented to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities covered by such
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Selling Holders set forth in such
Registration Statement or supplement to the Prospectus; provided, however, that
notwithstanding anything contained in Section 6 to the contrary, any of the
Registrants may suspend the effectiveness of a Registration Statement required
hereunder for a reasonable period of time, not to exceed 15 days (a "Suspension
Period"), without incurring liquidated damages, if such Registrant (i) has been
advised by legal counsel that maintenance of such Registration Statement would
require the disclosure of a material transaction or other factor that the
Company determines reasonably and in good faith would have a material adverse
effect on the Company, (ii) no more than two Suspension Periods occur in any
period of 12 consecutive months and (iii) the aggregate duration of all
Suspension Periods in any period of 12 consecutive months does not exceed 20
days; provided, further, that the Target Effective Period for such Registration
Statement shall be extended by the total number of days of all Suspension
Periods.
(c) The Registrants shall promptly furnish to any Selling
Holder and the underwriters, if any, without charge, such number of conformed
copies of such Registration Statement and any post-effective amendment thereto
and such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto, and any documents
incorporated by reference therein, as such Selling Holder or underwriter may
request in order to facilitate the disposition of the Preferred Securities being
sold by such Selling Holder (it being understood that the Registrants consent to
the use of the Prospectus and any amendment or supplement thereto by each
Selling Holder and the underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto).
(d) The Registrants, on or prior to the date on which the
Registration Statement is declared effective, will use their best efforts to
register or qualify the Registrable Securities under such other securities or
"blue sky" laws of such jurisdictions as any Selling Holder, Holders' Counsel or
underwriter requests in writing and do any and all other acts and things which
may be necessary to enable such Selling Holder to consummate the disposition in
such jurisdictions of such Registrable Securities owned by such Selling Holder;
use their best efforts to keep each such registration or qualification (or
exemption therefrom) effective during the period which Registration Statement is
required to be kept effective; and use their best efforts to do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided, that no Registrant will be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process in
any such jurisdiction where it is not then so subject.
<PAGE> 12
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(e) The Registrants shall use their best efforts to cause the
Registrable Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Registrants to enable
the Selling Holders to consummate the disposition of Preferred Securities.
(f) The Registrants shall promptly notify each Selling Holder,
Holders' Counsel and any underwriter and (if requested by any such Person)
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement or the initiation or threatening
of any proceedings for that purpose, (iii) of the issuance by any state
securities commission or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the Registrable
Securities under state securities or "blue sky" laws or the initiation of any
proceedings for that purpose, and (iv) of the happening of any event which makes
any statement made in a Registration Statement or related Prospectus untrue or
which requires the making of any changes in such Registration Statement,
Prospectus or documents so that they will not contain any untrue statement or a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; and, as promptly as
practicable thereafter, use their best efforts to prepare and file with the
Commission and furnish a supplement or amendment to such Prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) The Company shall make generally available to the Selling
Holders as soon as practicable, but not later than 45 days (or 90 days, in the
case of a period that is also the Company's fiscal year) after the close of the
period covered thereby, an earnings statement satisfying the provisions of the
last paragraph of Section 11(a) of the Securities Act and Rule 158 promulgated
under Securities Act covering a 12-month period.
(h) The Registrants, or any of them, shall promptly use their
best efforts to prevent the issuance of any order suspending the effectiveness
of a Registration Statement of which the Registrants, or any of them, have
knowledge, and if one is issued, use their best efforts to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement at the
earliest possible moment.
(i) The Registrants, or any of them, shall, if requested by
the managing underwriter or underwriters, if any, Holders' Counsel, or any
Selling Holder, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters, Holders' Counsel or such Selling Holder reasonably requests, to be
included therein, including, without limitation, with respect to the liquidation
amount of Preferred Securities being sold by such Selling Holder to such
underwriter or underwriters, the purchase price
<PAGE> 13
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being paid therefor by such underwriter or underwriters and with respect to any
other terms of the underwritten offering of the Preferred Securities to be sold
in such offering, and promptly make all required filings of such Prospectus
supplement or post-effective amendment.
(j) The Registrants shall, as promptly as practicable after
filing with the Commission of any document which is incorporated by reference
into a Registration Statement (in the form in which it was incorporated),
deliver a copy of each such document to each of the Selling Holders and to
Holders' Counsel.
(k) The Registrants shall cooperate with the Selling Holders
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (which shall not bear any restrictive
legends unless required under applicable law and shall be in a form eligible for
deposit with Depository Trust Company) representing securities sold under such
Registration Statement, and enable such securities to be in such denominations
and registered in such names as the managing underwriter or underwriters, if
any, or such Selling Holders may request and keep available and make available
to the Registrants' transfer agent(s) prior to the effectiveness of such
Registration Statement to the Trustee a supply of such certificates.
(l) The Registrants shall, if applicable, enter into such
customary agreements (including an underwriting agreement in customary form) and
take such other actions as the Selling Holders of at least a majority of the
aggregate liquidation amount of the Preferred Securities being sold or the
underwriters retained by Selling Holders participating in an underwritten public
offering, if any, may request in order to expedite or facilitate the disposition
of such Preferred Securities;
(m) The Registrants shall promptly make available for
inspection by any Selling Holder, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent or representative retained by any such Selling Holder
or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Registrants
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Registrants'
officers, directors, trustees and employees to supply all information requested
by any such Inspector in connection with such Registration Statement; provided
that, unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement or the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Registrants shall not be required to provide any
information under this paragraph (1) if any of the Registrants believes, after
consultation with its counsel and counsel for the Holders, that to do so would
cause such Registrant to forfeit an attorney-client privilege that was
applicable to such information or (2) if either (i) any of the Registrants has
requested and been granted from the Commission confidential treatment of such
information contained in any filing with the Commission or documents provided
supplementally or otherwise or (ii) any of the Registrants reasonably determines
in good faith that such Records are confidential and disclosure thereof would
cause a material detriment to the Registrants and so notifies the Inspectors in
writing unless, prior to furnishing any such information with respect to (i) or
(ii), such Holder requesting such information agrees to enter into a
confidentiality agreement in customary form and subject to
<PAGE> 14
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customary exceptions; and provided, further that each Holder agrees that it
will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Registrants and allow the Registrants
at their expense, to undertake appropriate action and to prevent disclosure of
the Records deemed confidential.
(n) If reasonably requested by Selling Holders of at least a
majority of the aggregate liquidation amount of the Registrable Securities, to
cause the Registrable Securities included in such Registration Statement to be
(i) listed on each securities exchange, if any, on which similar securities
issued by AAG are then listed, if the Registrable Securities so qualify, or (ii)
authorized to be quoted on the National Association of Securities Dealers, Inc.
Automated Quotation or the National Market System of The Nasdaq Stock Market,
if, in either case, the Registrable Securities so qualify.
(o) The Trust shall provide a CUSIP number for all Preferred
Securities not later than the Effective Date of such Registration Statement.
(p) The Registrants shall cooperate with each Selling Holder
and each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.
(q) The Registrants shall, during the period when the
Prospectus is required to be delivered under the Securities Act, promptly file
all documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
Each Selling Holder, upon receipt of any notice from any of the
Registrants of the happening of any event of the kind described in subsection
(f) of this Section 6, shall immediately discontinue disposition of the
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by subsection (f) of this
Section 6 or until it is advised in writing (the "Advice") by the Registrants
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Registrants, such Selling Holder will, or
will request the managing underwriter or underwriters, if any, to, deliver to
the Registrants (at the Registrants' expense) all copies, other than permanent
file copies then in such Selling Holder's possession, of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice. If
any of the Registrants shall give any such notice, the time periods for which a
Registration Statement is required to be kept effective pursuant to Sections 2
and 3 hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each Selling Holder shall have received (i) the copies of the supplemented or
amended Prospectus contemplated by Section 6(f) or (ii) the Advice.
If any Registration Statement refers to any Selling Holder by name or
otherwise as the holder of any securities of any of the Registrants, then such
Selling Holder shall have the right to require (i) the insertion therein of
language, in form and substance satisfactory to such Selling Holder, to
<PAGE> 15
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the effect that the holding by such Selling Holder of such securities is not to
be construed as a recommendation by such Selling Holder of the investment
quality of the Registrants' securities covered thereby and that such holding
does not imply that such Selling Holder will assist in meeting any future
financial requirements of the Registrants, or (ii) in the event that such
reference to such Selling Holder by name or otherwise is not required by the
Securities Act or any similar Federal or state "blue sky" statute and the rules
and regulations thereunder then in force, the deletion of the reference to such
Selling Holder.
7. Registration Expenses
---------------------
All reasonable expenses incident to the Registrants' performance of or
compliance with this Agreement, including without limitation, all Commission and
securities exchange or National Association of Securities Dealers, Inc.
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), rating
agency fees, printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of the
Registrants' officers and employees performing legal or accounting duties), the
fees and expenses incurred in connection with the listing of the securities to
be registered, if any, and reasonable fees and disbursements of counsel for the
Registrants and their independent certified public accountants (including the
expenses of any special audit or "cold comfort" letters required by or incident
to such performance), Securities Act liability insurance (if the Registrants
elect to obtain such insurance), the fees and expenses of any special experts
retained by the Registrants in connection with such registration, reasonable
fees and expenses of other Persons retained by the Registrants, incurred in
connection with each registration hereunder (but not including any underwriting
fees, discounts or commissions attributable to the sale of Registrable
Securities, all of which shall be paid by the Holders) (all such expenses being
herein called "Registration Expenses"), will be borne by the Registrants whether
or not the Exchange Offer or the Shelf Registration, as the case may be, becomes
effective.
8. Indemnification and Contribution.
--------------------------------
(a) INDEMNIFICATION BY THE REGISTRANTS. The Registrants agree
to indemnify and hold harmless, to the full extent permitted by law, each Holder
of Preferred Securities, its officers, directors and each Person who controls
such Holder (within the meaning of the Securities Act), and any agent or
investment adviser thereof against all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and costs of investigation)
arising out of or based upon any untrue or alleged untrue statement of material
fact contained in any Registration Statement, any amendment or supplement
thereto, any Prospectus or preliminary Prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same arise out of or are based upon any such untrue statement or omission based
upon information with respect to such Holder furnished in writing to any of the
Registrants by or on behalf of such Holder expressly for use therein. In
connection with an underwritten offering, the Registrants will indemnify the
underwriters thereof, their officers and directors and each Person who controls
such underwriters (within the meaning of
<PAGE> 16
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the Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders of Preferred Securities except with respect to
information provided by the underwriter specifically for inclusion therein.
(b) INDEMNIFICATION BY HOLDERS OF PREFERRED SECURITIES. In
connection with any Registration Statement in which a Holder of Preferred
Securities is participating, each such Holder will furnish to the Registrants in
writing such information with respect to the name and address of such Holder and
such other information as may be reasonably required for use in connection with
any such Registration Statement or Prospectus and agrees to indemnify, to the
full extent permitted by law, the Registrants, their directors, officers,
employees, agents and trustees and each Person who controls any of the
Registrants (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue statement of
a material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue or alleged untrue statement is
contained in or such omission or alleged omission relates to any information
with respect to such Holder so furnished in writing or the accuracy of which was
confirmed in writing by such Holder specifically for inclusion in any Prospectus
or Registration Statement; provided, however, that such Holder shall not be
liable in any such case to the extent that prior to the filing of any such
Registration Statement or Prospectus or amendment thereof or supplement thereto,
such Holder has furnished in writing to the Registrants information expressly
for use in such Registration Statement or Prospectus or any amendment thereof or
supplement thereto which corrected or made not misleading information previously
furnished to the Registrants. In no event shall the liability of any selling
Holder of Preferred Securities hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Preferred
Securities giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder agrees to give prompt written notice to
the indemnifying party after the receipt by such Person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such Person will claim indemnification or
contribution pursuant to this Agreement and, unless in the judgment of counsel
of such indemnified party a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld). No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. If the indemnifying party is not entitled to, or elects not to,
assume the defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel with respect to such claim, unless in the
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such
<PAGE> 17
- 15 -
additional counsel or counsels. For the purposes of this Section 8(c), the term
"conflict of interest" shall mean that there are one or more legal defenses
available to the indemnified party that are different from or additional to
those available to the indemnifying party or such other indemnified parties, as
applicable, which different or additional defenses make joint representation
inappropriate.
(d) CONTRIBUTION. If the indemnification from the indemnifying
party provided for in this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party or parties, on the one
hand, and the indemnified party or parties, on the other hand, in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or parties and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 8(c), any reasonable legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Preferred Securities of such Selling Holder were
offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue statement or
omission No Person guilty of fraudulent misrepresentation (within the meaning of
Section 1(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 8, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 8(a) and 8(b) without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided for in
this Section 8(d).
<PAGE> 18
- 16 -
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
-------------------------------------------
No Holder may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell its Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
10. Rule 144 and Rule 144A.
----------------------
(a) RULE 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
(or, if the Company is not required to file such reports, it will, upon the
request of any Holder, make publicly available other information so long as
necessary to permit sales under Rule 144 under the Securities Act), and it will
take such further action as any Holder may request, all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such requirements;
PROVIDED, HOWEVER, that nothing in this Section 10(a) shall require the Company
to file reports under the Securities Act or the Exchange Act, to register any of
its securities under the Exchange Act, or to make publicly available any
information concerning the Company at any time when it is not required by law or
by any agreement by which it is bound to do any of the foregoing.
(b) Upon the request of any Holder, the Registrants shall
deliver to such holder within 10 days following receipt by the Registrants of
such request, the information required by Section (d)(4) of Rule 144A under the
Securities Act, as such rule may be amended from time to time or any similar
rule or regulation hereafter adopted by the Commission ("Rule 144A"), and will
take such further action as any Holder may request, all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitations or the exemptions
provided by Rule 144A. All information shall be "reasonably current" as defined
in Rule 144A.
11. Transfer or Assignment of Registration Rights.
---------------------------------------------
The rights to cause the Registrants to register Registrable Securities
granted pursuant to this Agreement may be transferred or assigned by any Holder
to a transferee or assignee; provided, however, that the transferee or assignee
of such rights assumes the obligations of such transferor or assignor, as the
case may be, under this Agreement and that such transferee or assignee executes
and delivers a copy of this Agreement to the Registrants.
<PAGE> 19
- 17 -
12. Miscellaneous.
-------------
(a) OTHER REGISTRATION RIGHTS. The Registrants may grant
registration rights that would permit any Person the right to piggy-back or may
itself exercise its right to piggy-back, on any Shelf Registration, provided
that if the managing underwriter or underwriters, if any, of such offering
delivers an opinion to the Holders that the total amount of securities which
they and the holders of such new piggy-back rights intend to include in any
Shelf Registration is so large as to materially and adversely affect the success
of such offering (including the price at which such securities can be sold),
then only the amount, number or kind of securities to be offered for the account
of holders of such new piggy-back rights (other than the Registrants) will be
reduced to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount, number or kind recommended by the
managing underwriter prior to any reduction in the amount of Registrable
Securities to be included; and provided further that if such offering is not
underwritten, then such piggy-back rights shall only be exercised with the
consent of the Holders of at least a majority of the aggregate principal amount
of the Registrable Securities being offered under such Shelf Registration.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Registrants have obtained the written consent of
Holders of at least a majority of the aggregate principal amount of the
Registrable Securities then outstanding which are affected by such amendment,
modification, waiver or departure.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telex or telecopier, registered or
certified mail (return receipt requested), postage prepaid or courier to the
parties at the following addresses (or at such other address for any party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof). Notices sent by mail shall be
effective\e two (2) days after mailing; notices sent by telex shall be effective
when answered back, notices sent by telecopier shall be effective when receipt
is acknowledged, and notices sent by courier guaranteeing next day deli very
shall be effective on the next business day after timely delivery to the
courier:
(i) if to a Holder at the most current address given
by such Holder to the Company in writing;
(ii) if to any of the Registrants, at its address set
forth in the Purchase Agreement with copies as set forth in the
Purchase Agreement.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the and be binding upon the successors and assigns of each of the
Registrants and each of the Holders.
<PAGE> 20
- 18 -
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio without regard to
principles of conflicts of law.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchasers shall be enforceable to the fullest extent permitted by law.
(i) ENTIRE AGREEMENT. This Agreement, together with the other
transaction documents, is intended by the parties as a final expression of their
agreement and is intended to be the complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Indenture and the Purchase Agreement (including the
exhibits to each) supersede all prior agreements and understandings between the
parties with respect to such subject matter.
(j) ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement or where any provision hereof is validly
asserted as a defense the successful party shall, to the extent permitted by
applicable law, be entitled to recover reasonable attorneys' fees in addition to
any other available remedy, provided that the Registrants shall not be required
to pay for more than one firm of attorneys to represent all the Holders.
[Remainder of page intentionally left blank]
<PAGE> 21
- 19 -
REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN ANNUITY GROUP, INC.
BY: /s/ Mark F. Muething
------------------------------------
Name: Mark F. Muething
Title: Senior Vice President, General
Counsel and Secretary
AMERICAN ANNUITY GROUP CAPITAL
TRUST II
BY: /s/ Mark F. Muething
------------------------------------
Name: Mark F. Muething
Title: Regular Trustee
AAG HOLDING COMPANY, INC.
BY: /s/ Mark F. Muething
------------------------------------
Name: Mark F. Muething
Title: Senior Vice President
[SIGNATURE PAGES OF HOLDERS FOLLOW]
<PAGE> 1
Exhibit 4.10
========================================================
COMMON SECURITIES GUARANTEE AGREEMENT
American Annuity Group Capital Trust II
Dated as of March 11, 1997
========================================================
<PAGE> 2
COMMON SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Common Securities Guarantee"), dated as
of March 11, 1997, is executed and delivered by American Annuity Group, Inc., a
Delaware corporation (the "Guarantor"), for the benefit of the Holders (as
defined herein) from time to time of the Common Securities (as defined herein)
of American Annuity Group Capital Trust II, a Delaware business trust (the
"Issuer").
WHEREAS, pursuant to a Declaration of Trust (the
"Declaration"), dated as of March 11, 1997, among the Trustees of the Issuer
named therein, AAG Holding Company, Inc., an Ohio corporation ("Sponsor") and a
wholly-owned subsidiary of the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer may issue on and after the date hereof Two Thousand Three Twenty capital
trust common securities, having an aggregate stated liquidation amount of
$2,320,000 (the "Common Securities");
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Preferred Securities Guarantee") for the benefit of
the holders of the Preferred Securities (as defined herein), except that if an
Event of Default (as defined in the Indenture), has occurred and is continuing,
the rights of Holders of the Common Securities to receive Guarantee Payments
under this Common Securities Guarantee are subordinated to the rights of holders
of Preferred Securities to receive Guarantee Payments under the Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Common Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions Interpretation
--------------------------
In this Common Securities Guarantee, unless the
context otherwise requires:
(a) Capitalized terms used in this Common Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date
of execution of this
<PAGE> 3
-2-
Common Securities Guarantee have the same meaning when used in
this Common Securities Guarantee unless otherwise defined in
this Common Securities Guarantee;
(c) a term defined anywhere in this Common Securities
Guarantee has the same meaning throughout;
(d) all references to "the Common Securities
Guarantee" or "this Common Securities Guarantee" are to this
Common Securities Guarantees modified, supplemented or amended
from time to time;
(e) all references in this Common Securities
Guarantee to Articles and Sections are to Articles and
Sections of this Common Securities Guarantee unless otherwise
specified; and
(f) a reference to the singular includes the plural
and vice versa.
"Guarantee Payments" shall mean the following
payments or distributions, without duplication, with respect to the Common
Securities, to the extent not paid or made by the Issuer: (i) any accrued and
unpaid Distributions which are required to be paid on such Common Securities to
the extent the Issuer shall have funds available therefor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the Issuer has funds available therefor,
with respect to any Common Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Common Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Common Securities to the date of payment, to the extent the
Issuer has funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution"). If an Event of Default (as defined
in the Indenture), has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under this Common Securities
Guarantee are subordinated to the rights of holders of Preferred Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the
books and records of the Issuer, of any Common Securities.
"Preferred Securities" mean the securities
representing preferred undivided beneficial interests in the assets of the
Issuer.
<PAGE> 4
-3-
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee
---------
The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 2.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of
this Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.3 Obligations Not Affected
------------------------
The obligations, covenants, agreements and duties of
the Guarantor under this Common Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of
any express or implied agreement, covenant, term or condition
relating to the Common Securities to be performed or observed
by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption
Price, Liquidation Distribution or any other sums payable
under the terms of the Common Securities or the extension of
time for the performance of any other obligation under,
arising out of, or in connection with, the Common Securities
(other than an extension of time for payment of Distributions,
Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest
payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence
on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders
pursuant to the terms of the Common Securities, or any action
on the part of the Issuer granting indulgence or extension of
any kind;
<PAGE> 5
-4-
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Issuer or
any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in,
the Common Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense
of a guarantor, it being the intent of this Section 2.3 that
the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4 Rights of Holders
-----------------
The Guarantor expressly acknowledges that any Holder
of Common Securities may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Common Securities Guarantee, without
first instituting a legal proceeding against the Issuer or any other Person.
SECTION 2.5 Guarantee of Payment
--------------------
This Common Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION 2.6 Subrogation
-----------
The Guarantor shall be subrogated to all (if any)
rights of the Holders of Common Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Common Securities
Guarantee; provided, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any
rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Common Securities Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Common Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
<PAGE> 6
-5-
SECTION 2.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Common Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions
--------------------------
So long as any Common Securities remain outstanding,
if (i) the Guarantor shall be in default with respect to its Guarantee Payments
or other obligations hereunder, or (ii) there shall have occurred any Event of
Default under the Indenture then (a) the Guarantor shall not declare or pay any
dividend on, or make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock,
(b) the Guarantor shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Guarantor which rank pari passu with or junior to the
Debentures and (c) the Guarantor shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Preferred Securities
Guarantee Agreement); PROVIDED, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the
dividend is being paid.
SECTION 3.2 Ranking
-------
This Common Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination
-----------
This Common Securities Guarantee shall terminate upon
full payment of the Redemption Price of all Common Securities, upon the
distribution of the Debentures to the Holders of all of the Common Securities or
upon full payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Common Securities
Guarantee will continue to be effective or will be reinstated, as the case
<PAGE> 7
-6-
may be, if at any time any Holder of Common Securities must restore payment of
any sums paid under the Common Securities or under this Common Securities
Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this
Common Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Common Securities then outstanding.
SECTION 5.2 Amendments
----------
Except with respect to any changes which do not
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Common Securities Guarantee may only be amended with the
prior approval of the Holders of at least a majority in liquidation amount of
all the outstanding Common Securities. The provisions of Section 11.2 of the
Declaration with respect to meetings of Holders of the Securities apply to the
giving of such approval.
SECTION 5.3 Notices
-------
All notices provided for in this Common Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) if given to the Issuer, in care of the Regular
Trustee at the Issuer's mailing address set forth below (or
such other address as the Issuer may give notice of to the
Holders of the Common Securities):
American Annuity Group Capital Trust II
c/o American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attention: Mark F. Muething
(b) if given to the Guarantor, at the Guarantor's
mailing address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Common
Securities):
<PAGE> 8
-7-
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attention: Mark F. Muething, Senior Vice
President and General Counsel
(c) if given to any Holder of Common Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.4 Benefit
-------
This Common Securities Guarantee is solely for the
benefit of the Holders of the Common Securities and is not separately
transferable from the Common Securities.
SECTION 5.5 Governing Law
-------------
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS COMMON SECURITIES GUARANTEE is executed as of
the day and year first above written.
AMERICAN ANNUITY GROUP, INC.
By: /s/ Mark F. Muething
-------------------------------
Name: Mark F. Muething
Title: Senior Vice President, Secretary
& General Counsel
<PAGE> 1
Exhibit 5.1
[Keating, Muething & Klekamp, P.L.L. Letterhead]
FACSIMILE (513) 579-6457
April 30, 1997
Direct Dial: (513) 579-6517
E-Mail: [email protected]
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
AAG Holding Company, Inc.
c/o American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
American Annuity Group Capital Trust II
c/o American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Re: Registration Statement on Form S-4
----------------------------------
Gentlemen:
We have acted as counsel to American Annuity Group, Inc., a Delaware
corporation (the "Company"), AAG Holding Company, Inc., an Ohio corporation
("Holding") and American Annuity Group Capital Trust II, a Delaware business
trust (the "Trust") in connection with the preparation of a Registration
Statement on Form S-4 filed with the Securities and Exchange Commission today.
The Registration Statement relates to (i) the proposed issuance by the Trust of
up to $75,000,000 aggregate liquidation amount of the Trust's 8 7/8% Capital
Trust Preferred Securities (the "New Preferred Securities") registered under the
Securities Act of 1933 (the "Securities Act") in exchange for up to $75,000,000
aggregate liquidation amount of the Trust's outstanding 8 7/8% Capital Trust
Preferred Securities (the "Old Preferred Securities"); (ii) the proposed
issuance by Holding to the Trust of $77,320,000 aggregate principal amount of
the Holding's 8 7/8% Subordinated Debentures (the "New Subordinated Debentures")
registered under the Securities Act in exchange for up to $77,320,000 aggregate
principal of the Company's outstanding 8 7/8% Subordinated Debentures (the "Old
Subordinated Debentures"); and (iii) the proposed issuance of the Company's
guarantee (the "New Guarantee"), which guarantees the payment of distributions
and payments on liquidation or redemption of the New Preferred Securities,
registered under the Securities Act in exchange for the
<PAGE> 2
American Annuity Group, Inc
AAG Holding Company, Inc.
American Annuity Group Capital Trust II
Page 2
April 30, 1997
guarantee (the "Old Guarantee") which guarantees the payment of distributions
and payments on liquidation or redemption of the Old Preferred Securities.
The New Preferred Securities are issuable under the Amended and
Restated Trust Agreement dated as of March 11, 1997 (the "Trust Agreement")
among Holding, as sponsor, The Bank of New York (Delaware), as Delaware Trustee,
The Bank of New York, as Property Trustee, and the initial Regular Trustees
named therein. The New Subordinated Debentures are issuable under an Indenture
dated as of March 11, 1997 (the "Indenture") between Holding, as Issuer, the
Company, as Guarantor, and The Bank of New York, as Indenture Trustee. The New
Guarantee is issuable under the Preferred Securities Guarantee Agreement to be
entered into between the Company and The Bank of New York, as Guarantee Trustee
(the "Guarantee Agreement").
We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our opinions
set forth below. In rendering our opinions, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals
and the conformity to authentic originals of all documents submitted to us as
copies. We have also assumed the legal capacity for all purposes relevant hereto
of all natural persons and, with respect to all parties to agreements or
instruments relevant hereto other than the Company, Holding and the Trust, that
such parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company, Holding and the Trust and of
public officials. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Trust Agreement, the Indenture
and the Guarantee Agreement, as applicable.
Based on the foregoing, we are of the opinion that:
1. The New Subordinated Debentures have been duly authorized by all
requisite corporate action and, when executed and authenticated as specified in
the Indenture and delivered against surrender and cancellation of a like amount
of Old Subordinated Debentures in the manner described in the Registration
Statement, the New Subordinated Debentures will constitute valid and binding
obligations of Holding and the Company, entitled to the benefits provided in the
Indenture and enforceable in accordance with their terms.
2. The New Guarantee has been duly authorized by all requisite
corporate action and, when executed as specified in the Guarantee Agreement and
when delivered against surrender and cancellation of the Old Guarantee in the
manner described in the Registration Statement, the New
<PAGE> 3
American Annuity Group, Inc
AAG Holding Company, Inc.
American Annuity Group Capital Trust II
Page 3
April 28, 1997
Guarantee will constitute the valid and binding obligation of the Company,
enforceable in accordance with its terms.
The opinions set forth above are subject to the following
qualifications and exceptions:
(i) the legality, validity and enforceability of any rights and
remedies provided in the Indenture, the New Subordinated
Debentures or the New Guarantee are subject to exceptions
provided by bankruptcy, insolvency, reorganization,
receivership, moratorium, assignment for the benefit of
creditors' laws or similar laws now or hereafter in effect
affecting the validity, legality and binding effect and
enforceability of creditors' rights generally, including,
without limitation, statutory or other laws regarding
fraudulent transfers and conveyances or preferential
transfers;
(ii) specific performance, injunctive relief or other traditional
equitable remedies may not be available as they are subject to
the discretion of the court before which any proceeding with
respect thereto may be brought;
(iii) rights to indemnification may be limited by federal or state
securities laws: accordingly, we express no opinion as to the
enforceability of any indemnity provisions contained in the
Indenture, the New Subordinated Debentures or the New
Guarantee;
(iv) we express no opinion as to the enforceability of any
provisions in the Indenture, New Subordinated Debentures or
the New Guarantee providing for the recovering of attorneys'
fees or other costs of collection; and,
(v) we express no opinion with respect to any provision for
submission to jurisdiction or related waivers of defenses to
such jurisdiction contained in the Indenture, the New
Subordinated Debentures or the New Guarantee.
Our opinions expressed above are limited to the laws of the State of
Ohio and the federal laws of the United States of America.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. These opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent.
<PAGE> 4
American Annuity Group, Inc
AAG Holding Company, Inc.
American Annuity Group Capital Trust II
Page 4
April 28, 1997
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Matters" in the Prospectus, without admitting that we are "experts" under
the Securities Act of the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration Statement, including
this exhibit thereto.
Yours truly,
KEATING, MUETHING & KLEKAMP, P.L.L.
By: /s/ Paul V. Muething
---------------------------------
Paul V. Muething
<PAGE> 1
Exhibit 5.2
AMERICAN ANNUITY GROUP, INC.
250 EAST FIFTH STREET
CINCINNATI, OHIO 45202
April 30, 1997
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
AAG Holding Company, Inc.
c/o American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
American Annuity Group Capital Trust II
c/o American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
I serve as Senior Vice President, General Counsel and Secretary of
American Annuity Group, Inc. (the "Company"). This opinion as to Delaware law
concerns certain matters relating to the creation of the American Annuity Group
Capital Trust II (the "Trust") and the proposed issuance of New Preferred
Securities to beneficial owners pursuant to and as described in Registration
Statement (and the Prospectus forming a part thereof) on Form S-4 filed with the
Securities and Exchange Commission (the "Commission") today (the "Registration
Statement"). Capitalized terms used herein and not otherwise herein defined are
used as defined in the Prospectus.
In rendering this opinion, I have examined and relied upon copies of
the following documents: the Certificate of Trust of the Trust as filed in the
Office of the Secretary of State of the State of Delaware (the "State Office")
on March 4, 1997 (the "Certificate of Trust"); a Declaration of Trust of the
Trust dated as of March 4, 1997 (the "Original Governing Instrument"); the
Amended and Restated Declaration of Trust of the Trust dated as of March 11,
1997 (the "Governing Instrument"); the Indenture dated as of March 11, 1997
among AAG Holding Company, Inc., as Issuer ("Holding"), the Company, as
Guarantor, and The Bank of New York, as Trustee; the Preferred Securities
Guarantee Agreement to be entered into between the Company and The Bank of New
York, as Trustee, relating to the New Preferred Securities; the Registration
Rights Agreement dated March 11, 1997 among the Company, the Trust, Holding and
the several
<PAGE> 2
- 2 -
purchasers (the "Registration Rights Agreement"); the Registration Statement;
and a certificate of good standing of the Trust obtained as of a recent date
from the State Office.
In such examinations, I have assumed the genuineness of all signatures,
the conformity to original documents of all documents submitted to me as drafts
or copies or forms of documents to be executed and the legal capacity of natural
persons to complete the execution of documents. I have further assumed for
purposes of this opinion: (i) the due formation or organization, valid existence
and good standing of each entity (other than the Trust) that is a party to any
of the documents reviewed by me under the laws of the jurisdiction of its
respective formation or organization; (ii) the due authorization, execution and
delivery by, or on behalf of, each of the parties thereto of the
above-referenced documents (including, without limitation, the due
authorization, execution and delivery of the Governing Instrument and the
Registration Rights Agreement prior to the first issuance of New Preferred
Securities); (iii) that no event has occurred, or prior to the issuance of the
New Preferred Securities will occur, that would cause a dissolution or
liquidation of the Trust under the Original Governing Instrument or the
Governing Instrument, as applicable; (iv) that the activities of the Trust have
been and will be conducted in accordance with the Original Governing Instrument
or the Governing Instrument, as applicable, and the Delaware Business Trust Act,
12 Del. C. Sections 3801 et seq. (the "Delaware Act"); (v) that each person that
will acquire New Preferred Securities in the Exchange Offer will validly tender
Transfer Restricted Securities (as defined in the Governing Instrument) in
exchange therefor, that such Transfer Restricted Securities will be duly
accepted, and that each such person will duly receive New Preferred Security
Certificates (as defined in the Governing Instrument) in consideration thereof,
all in accordance with the terms and conditions of the Governing Instrument, the
Registration Statement and the Registration Rights Agreement, and that the New
Preferred Securities are otherwise issued and sold in accordance with the terms,
conditions, requirements and procedures set forth in the Governing Instrument,
the Registration Statement and the Registration Rights Agreement; and (vi) that
the documents examined by me are in full force and effect, express the entire
understanding of the parties thereto with respect to the subject matter thereof
and have not been modified, supplemented or otherwise amended, except as herein
referenced.
Further, I express no opinion with respect to, and assume no
responsibility for the contents of, the Registration Statement or any other
offering material relating to the New Preferred Securities. No opinion is
expressed herein with respect to the requirements of, or compliance with,
federal or state securities or blue sky laws. As to any fact material to my
opinion, other than those assumed, I have relied without independent
investigation on the above-referenced documents and on the accuracy, as of the
date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is my opinion that:
1. The Trust is a duly created and validly existing business trust in
good standing under the laws of the State of Delaware.
<PAGE> 3
- 3 -
2. The New Preferred Securities, upon issuance pursuant to the Exchange
Offer, will constitute validly issued and, subject to the qualifications set
forth in paragraph 3 below, fully paid and nonassessable beneficial interests in
the assets of the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each holder of New Preferred Securities of the Trust, in such capacity, will be
entitled to the same limitation of personal liability as that extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; provided, however, I express no
opinion with respect to the liability of any such holder who is, was or may
become a named Trustee of the Trust. Notwithstanding the foregoing, I note that
pursuant to Section 10.4 of the Governing Instrument, the Trust may withhold
amounts otherwise distributable to a holder and pay over such amounts to the
applicable jurisdictions in accordance with federal, state and local law and any
amount withheld will be deemed to have been distributed to such holder and that,
pursuant to the Governing Instrument, holders of New Preferred Securities may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. These opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without my prior written consent.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Matters" in the Prospectus, without admitting that I am an "expert" under
the Securities Act of the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration Statement, including
this exhibit thereto.
Very truly yours,
/s/ Mark F. Muething
----------------------------------
Mark F. Muething
<PAGE> 1
Exhibit 8.1
[AKIN, GUMP, STRAUS, HAUER & FELD, L.L.P. LETTERHEAD]
April 30, 1997
American Annuity Group, Inc.
One East Fourth Street
Cincinnati, OH 45202
AAG Holding Company, Inc.
One East Fourth Street
Cincinnati, OH 45202
American Annuity Group Capital Trust II
c/c AAG Holding Company, Inc.
One East Fourth Street
Cincinnati, OH 45202
Re: American Annuity Group, Inc./AAG Holding
Company, Inc./American Annuity Group Capital
Trust II -- Offer to Exchange Up To $75,000,000
Aggregate Liquidation Amount of 8 7/8% Capital
Trust Preferred Securities Registered under the
Securities Act of 1933 for Outstanding 8 /78%
Capital Trust Preferred Securities
-----------------------------------------------
Gentlemen:
We have acted as tax counsel for American Annuity Group, Inc. ("AAG"), AAG
Holding Company, Inc. ("AAG Holding"), and American Annuity Group Capital
Trust II (the "Trust") in connection with the Trust's offer to exchange up to
$75,000,000 aggregate liquidation amount of its 8 7/8% Capital Trust Preferred
Securities, which have been registered under the Securities Act of 1933
(the "New Preferred Securities"), for the Trust's outstanding 8 7/8% Capital
Trust Preferred Securities (the "Old Preferred Securities" and, with the New
Preferred Securities, the "Preferred Securities"). In connection therewith, we
have participated in the preparation of the discussion set forth under the
caption "United States Federal Income Taxation" (the "Tax Discussion") in the
Prospectus (the "Prospectus") that is part of the
<PAGE> 2
American Annuity Group, Inc.
AAG Holding Company, Inc.
American Annuity Group Capital Trust II
April 30, 1997
Page 2
Registration Statement on Form S-4 filed by AAG, AAG Holding, and the Trust
with the Securities and Exchange Commission on April 30, 1997 (the
"Registration Statement"). Except as otherwise indicated, the terms utilized
herein have the same meaning as in the Registration Statement.
Our opinion is conditioned on the accuracy of the federal statements made in
the Registration Statement and the various documents filed in connection
therewith (together, the "Registration Documents"), and on timely and full
compliance with the terms if the Transaction Documents by all relevant
parties to such documents. In particular, and without limiting the scope of the
preceding sentence, we have assumed for purposes of our opinion that the
Trustees will conduct the affairs of the Trust in accordance with the Amended
and Restated Declaration of the Trust (the "Declaration"). In rendering
our opinion, we also have relied upon the representations made on behalf of
AAG, AAG Holding, and the Trust in letters to us dated April 30, 1197
(the "Representation Letters").
Our opinion is based on the Internal Revenue Code of 1986, as amended, U.S.
Treasury regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as of the date hereof and all of which are
subject to change, possibly on a retroactive basis. In this regard, revenue
provisions contained in President Clinton's fiscal year 1998 budget proposal
as submitted to Congress on February 6, 1997, would deny interest deductions
on the Old Subordinated Debentures and the New Subordinated Debentures
(together, the "Subordinated Debentures") if such revenue provisions were
enacted and made applicable retroactively to such Debentures. However, these
revenue provisions are proposed to be effective generally for instruments
issued on or after the date of first committee action, which has not yet
occurred. Nonetheless, there can be no assurance that current or future
legislative proposals, final legislation, adverse judicial decisions, or
official pronouncements will not affect the ability of AAG Holding to deduct
interest on the Debentures.
Subject to the assumptions, qualifications, and conditions set forth herein
and in the Tax Discussion section of the Prospectus, and in reliance on the
Representation Letters, it is our opinion that:
1. Although not entirely free from doubt, under current law and assuming
full compliance with the letters of the Indenture and the other Registration
Documents, the Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of AAG Holding.
2. Under current law and assuming full compliance with the terms of the
Declaration and the other Registration Documents, the Trust will be classified
for United States
<PAGE> 3
American Annuity Group, Inc.
AAG Holding Company, Inc.
American Annuity Group Capital Trust II
April 30, 1997
Page 3
federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal tax purposes,
each holder of Preferred Securities generally will be considered the owner of
an undivided interest in the Subordinated Debentures.
3. Although not entirely free from doubt, under current law and assuming
full compliance with the terms of the Registration Documents and based on AAG
Holding's representation that the likelihood of its exercising its option to
defer payments of interest is remote, the Subordinated Debentures will not
include original issue discount ("OID") unless and until an election to defer
the payment of interest is actually made.
We have reviewed the balance of the discussion set forth in the Prospectus
under the heading "United States Federal Income Taxation," and have concluded,
subject to the qualifications set forth herein, that such discussion accurately
summarizes the specific tax matters addressed therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the headings "United
States Federal Income Taxation" and "Legal Matters" in the Prospectus. In
providing this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Commission promulgated
thereunder. This option is expressed as of the date hereof and we disclaim any
undertaking to advise you of any subsequent changes to the facts stated or
assumed herein or any subsequent changes in applicable law.
Very truly yours,
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 No. 333- ) and related Prospectus of American
Annuity Group, Inc. for the registration of $75,000,000 of Capital Trust
Preferred Securities of American Annuity Group Capital Trust II and to the
incorporation by reference therein of our report dated February 28, 1997, with
respect to the consolidated financial statements and schedules of American
Annuity Group, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Cincinnati, Ohio
April 30, 1997
<PAGE> 1
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
AAG HOLDING COMPANY, INC.
(Exact name of obligor as specified in its charter)
Ohio 31-1475936
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
250 East Fifth Street
Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip code)
----------------------
8 7/8% Subordinated Debentures due January 15, 2027
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 24th day of April, 1997.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
--------------------------
Name: Walter N. Gitlin
Title: Vice President
<PAGE> 4
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . $ 4,404,522
Interest-bearing balances .......................... 732,833
Securities:
Held-to-maturity securities ........................ 789,964
Available-for-sale securities ...................... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold ................................. 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income.................28,728,602
LESS: Allowance for loan and
lease losses..............584,525
LESS: Allocated transfer risk
reserve................... 429
Loans and leases, net of unearned
income, allowance, and reserve ................... 28,143,648
Assets held in trading accounts ...................... 1,004,242
Premises and fixed assets (including
capitalized leases) ................................ 605,668
Other real estate owned .............................. 41,238
Investments in unconsolidated subsidiaries
and associated companies ........................... 205,031
Customers' liability to this bank on
acceptances outstanding ............................ 949,154
Intangible assets .................................... 490,524
Other assets ......................................... 1,305,839
------------
Total assets ......................................... $ 44,043,010
============
LIABILITIES
Deposits:
In domestic offices ................................ $ 20,441,318
Noninterest-bearing.......8,158,472
Interest-bearing.........12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................... 11,710,903
Noninterest-bearing..........46,182
Interest-bearing.........11,664,721
Federal funds purchased in domestic
offices of the bank:
Federal funds purchased ............................ 1,565,288
Demand notes issued to the U.S. ......................
Treasury ........................................... 293,186
Trading liabilities .................................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................................... 2,103,443
With original maturity of more than
one year ......................................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............................. 951,116
Subordinated notes and debentures .................... 1,020,400
Other liabilities .................................... 1,522,884
------------
Total liabilities .................................... 40,456,160
------------
EQUITY CAPITAL
Common stock ......................................... 942,284
Surplus .............................................. 525,666
Undivided profits and capital
reserves ........................................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ......................................... (2,073)
Cumulative foreign currency transla-
tion adjustments ................................... (8,403)
------------
Total equity capital ................................. 3,586,850
------------
Total liabilities and equity capital ................. $ 44,043,010
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot }
Thomas A. Renyi } Directors
Alan R. Griffith }
<PAGE> 1
Exhibit 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
AMERICAN ANNUITY GROUP CAPITAL TRUST II
(Exact name of obligor as specified in its charter)
Delaware 31-6554645
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
250 East Fifth Street
Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip code)
----------------------
8 7/8% Capital Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 24th day of April, 1997.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
---------------------------
Name: Walter N. Gitlin
Title: Vice President
<PAGE> 4
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................. $ 4,404,522
Interest-bearing balances .......................... 732,833
Securities:
Held-to-maturity securities ........................ 789,964
Available-for-sale securities ...................... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold ................................. 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income.................28,728,602
LESS: Allowance for loan and
lease losses..............584,525
LESS: Allocated transfer risk
reserve.......................429
Loans and leases, net of unearned
income, allowance, and reserve ................... 28,143,648
Assets held in trading accounts ...................... 1,004,242
Premises and fixed assets (including
capitalized leases) ................................ 605,668
Other real estate owned .............................. 41,238
Investments in unconsolidated subsidiaries
and associated companies ........................... 205,031
Customers' liability to this bank on
acceptances outstanding ............................ 949,154
Intangible assets .................................... 490,524
Other assets ......................................... 1,305,839
------------
Total assets ......................................... $ 44,043,010
============
LIABILITIES
Deposits:
In domestic offices ................................ $ 20,441,318
Noninterest-bearing.......8,158,472
Interest-bearing.........12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................... 11,710,903
Noninterest-bearing..........46,182
Interest-bearing.........11,664,721
Federal funds purchased in domestic
offices of the bank:
Federal funds purchased ............................ 1,565,288
Demand notes issued to the U.S. ......................
Treasury ........................................... 293,186
Trading liabilities .................................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................................... 2,103,443
With original maturity of more than
one year ......................................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............................. 951,116
Subordinated notes and debentures .................... 1,020,400
Other liabilities .................................... 1,522,884
------------
Total liabilities .................................... 40,456,160
------------
EQUITY CAPITAL
Common stock ......................................... 942,284
Surplus .............................................. 525,666
Undivided profits and capital
reserves ........................................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ......................................... (2,073)
Cumulative foreign currency transla-
tion adjustments ................................... (8,403)
Total equity capital ................................. 3,586,850
------------
Total liabilities and equity capital ................. $ 44,043,010
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot }
Thomas A. Renyi } Directors
Alan R. Griffith }
<PAGE> 1
Exhibit 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
AAG HOLDING COMPANY, INC.
(Exact name of obligor as specified in its charter)
Ohio 31-1475936
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
250 East Fifth Street
Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip code)
----------------------
Guarantee of 8 7/8% Capital Trust Preferred Securities of
American Annuity Group Capital Trust II
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 24th day of April, 1997.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
---------------------------
Name: Walter N. Gitlin
Title: Vice President
<PAGE> 4
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................................. $ 4,404,522
Interest-bearing balances .......................... 732,833
Securities:
Held-to-maturity securities ........................ 789,964
Available-for-sale securities ...................... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold ................................. 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income.................28,728,602
LESS: Allowance for loan and
lease losses..............584,525
LESS: Allocated transfer risk
reserve.......................429
Loans and leases, net of unearned
income, allowance, and reserve ................... 28,143,648
Assets held in trading accounts ...................... 1,004,242
Premises and fixed assets (including
capitalized leases) ................................ 605,668
Other real estate owned .............................. 41,238
Investments in unconsolidated subsidiaries
and associated companies ........................... 205,031
Customers' liability to this bank on
acceptances outstanding ............................ 949,154
Intangible assets .................................... 490,524
Other assets ......................................... 1,305,839
------------
Total assets ......................................... $ 44,043,010
============
LIABILITIES
Deposits:
In domestic offices ................................ $ 20,441,318
Noninterest-bearing.......8,158,472
Interest-bearing.........12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................... 11,710,903
Noninterest-bearing..........46,182
Interest-bearing.........11,664,721
Federal funds purchased in domestic
offices of the bank:
Federal funds purchased ............................ 1,565,288
Demand notes issued to the U.S. ......................
Treasury ........................................... 293,186
Trading liabilities .................................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................................... 2,103,443
With original maturity of more than
one year ......................................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............................. 951,116
Subordinated notes and debentures .................... 1,020,400
Other liabilities .................................... 1,522,884
------------
Total liabilities .................................... 40,456,160
------------
EQUITY CAPITAL
Common stock ......................................... 942,284
Surplus .............................................. 525,666
Undivided profits and capital
reserves ........................................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ......................................... (2,073)
Cumulative foreign currency transla-
tion adjustments ................................... (8,403)
Total equity capital ................................. 3,586,850
------------
Total liabilities and equity capital ................. $ 44,043,010
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot }
Thomas A. Renyi } Directors
Alan R. Griffith }
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
AMERICAN ANNUITY GROUP CAPITAL TRUST II
OFFER TO EXCHANGE ITS
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)
PURSUANT TO THE PROSPECTUS
DATED ________________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., EASTERN DAYLIGHT TIME, ON _____________, 1997,
UNLESS THE OFFER IS EXTENDED.
AMERICAN ANNUITY GROUP, INC. WILL SERVE AS THE EXCHANGE AGENT FOR THE
EXCHANGE OFFER
By Registered or Certified Mail
or Hand or Overnight Delivery:
American Annuity Group, Inc.
250 East Fifth Street
10th Floor, Chiquita Center
Cincinnati, Ohio 45202
Attn: Mark F. Muething, Esq.
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(513) 333-5515
FACSIMILE TRANSMISSIONS:
(513) 357-3397
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS AET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same
meaning given them in the Prospectus (as defined below).
- 1 -
<PAGE> 2
Holders of Old Preferred Securities whose certificates (the
"Certificates") for such Old Preferred Securities are not immediately available
or who cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus)
must tender their Old Preferred Securities according to the guaranteed delivery
procedures set forth in "The Exchange Offer--Procedures for Tendering Old
Preferred Securities" in the Prospectus.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD PREFERRED SECURITIES TENDERED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRINCIPAL AMOUNT OF OLD
OLD PREFERRED PREFERRED SECURITIES
PLEASE PRINT NAME AND SECURITIES TENDERED TENDERED (IF PRINCIPAL
ADDRESS OF REGISTERED CERTIFICATE (ATTACH ADDITIONAL LIST AMOUNT OF OLD PREFERRED
HOLDER (PLEASE FILL IF BLANK) NUMBER(S) IF NECESSARY) SECURITIES LESS THAN ALL)*
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT TENDERED:
- -----------------------------------------------------------------------------------------------------------------------
- -------------
* All Old Preferred Securities held shall be deemed tendered unless a lesser number is specified in this column.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- 2 -
<PAGE> 3
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD PREFERRED SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name of Registered Holder(s)
Window Tick Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which Guaranteed Delivery
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD PREFERRED
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
- 3 -
<PAGE> 4
Ladies and Gentlemen:
The undersigned hereby tenders to American Annuity Group Capital Trust
II, a Delaware statutory business trust (the "Trust"), AAG Holding Company,
Inc.., an Ohio corporation, as Sponsor (the "AAG Holding") and American Annuity
Group, Inc., a Delaware corporation (the "Company"), the above described
aggregate liquidation amount of the Trust's 8 7/8% Capital Trust Preferred
Securities due January 15, 2027 (the "Old Preferred Securities") in exchange for
a like aggregate liquidation amount of the Trust's 8 7/8% Capital Trust
Preferred Securities due January 15, 2027 (the "New Preferred Securities") which
have been registered under the Securities Act of 1933 (the "Securities Act"),
upon the terms and subject to the conditions set forth in the Prospectus dated
___________ 1997 (as the same may be amended or supplemented from time to time,
the "Prospectus"), receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Preferred Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Preferred
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Company as its agent and attorney-in-fact (in such
capacity, the Company is herein referred to as the "Exchange Agent") (with full
knowledge that the Exchange Agent is also acting as agent of AAG Holding and the
Trust in connection with the Exchange Offer) with respect to the tendered Old
Preferred Securities, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), subject only
to the right of withdrawal described in the Prospectus, to (i) deliver
Certificates for Old Preferred Securities to the Company, AAG Holding or the
Trust together with all accompanying evidences of transfer and authenticity to,
or upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Preferred Securities to be issued in exchange
for such Old Preferred Securities, (ii) present Certificates for such Old
Preferred Securities for transfer, and to transfer the Old Preferred Securities
on the books of the Trust, and (iii) receive for the account of the Trust all
benefits and otherwise exercise all rights of beneficial ownership of such Old
Preferred Securities, all in accordance with the terms and conditions of the
Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
PREFERRED SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD PREFERRED SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY, AAG HOLDING OR THE TRUST
TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER
OF THE OLD PREFERRED SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY
WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED
HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
- 4 -
<PAGE> 5
The name(s) and address(es) of the registered holder(s) of the Old
Preferred Securities tendered hereby should be printed above, if they are not
already set forth above, as they appear on the Certificates representing such
Old Preferred Securities. The Certificate number(s) and the Old Preferred
Securities that the undersigned wishes to tender should be indicated in the
appropriate boxes above.
If any tendered Old Preferred Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more Old
Preferred Securities than are tendered or accepted for exchange, Certificates
for such nonexchanged or nontendered Old Preferred Securities will be returned,
without expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Preferred Securities
pursuant to any one of the procedures described in "The Exchange
Offer--Procedures for Tendering Old Preferred Securities" in the Prospectus and
in the instruction, will, upon the Company's, AAG Holding's and the Trust's
acceptance for exchange of such tendered Old Preferred Securities, constitute a
binding agreement among the undersigned, the Company, AAG Holding and the Trust
upon the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company and the Trust may not be required to accept for exchange
any of the Old Preferred Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Preferred
Securities be issued in the name(s) of the undersigned. If applicable,
substitute Certificates representing Old Preferred Securities not exchanged or
not accepted for exchange will be issued to the undersigned. Similarly, unless
otherwise indicated under "Special Delivery Instructions," please deliver New
Preferred Securities to the undersigned at the address shown below the
undersigned's signature.
BY TENDERING OLD PREFERRED SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE COMPANY, AAG HOLDING OR THE TRUST, (II)
ANY NEW PREFERRED SECURITIES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING
ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW PREFERRED SECURITIES TO BE
RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A
BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE
IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW
PREFERRED SECURITIES. BY TENDERING OLD PREFERRED SECURITIES PURSUANT TO THE
EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD
PREFERRED SECURITIES WHICH IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT
WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF
CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES,
THAT (A) SUCH OLD PREFERRED SECURITIES HELD BY THE BROKER-DEALER ARE HELD ONLY
AS A NOMINEE, OR (B) SUCH OLD PREFERRED SECURITIES WERE ACQUIRED BY SUCH
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS AMENDED OR
SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT
IN CONNECTION WITH ANY RESALE OF SUCH NEW PREFERRED SECURITIES (PROVIDED THAT,
BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT
BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE
SECURITIES ACT).
- 5 -
<PAGE> 6
THE COMPANY AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE PROVISIONS
OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS
DEFINED BELOW) IN CONNECTION WITH RESALES OF NEW PREFERRED SECURITIES RECEIVED
IN EXCHANGE FOR OLD PREFERRED SECURITIES, WHERE SUCH OLD PREFERRED SECURITIES
WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD
ENDING 180 DAYS AFTER THE REGISTRATION STATEMENT OF WHICH THE PROSPECTUS
CONSTITUTES A PART IS DECLARED EFFECTIVE. IN THAT REGARD, EACH BROKER-DEALER WHO
ACQUIRED OLD PREFERRED SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY
TENDERING SUCH OLD PREFERRED SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY, AAG HOLDING
OR THE TRUST OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH
MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS
UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR
INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS
SPECIFIED IN THE PREFERRED SECURITIES REGISTRATION RIGHTS AGREEMENT, SUCH
PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF NEW PREFERRED SECURITIES
PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY AND THE TRUST HAVE AMENDED OR
SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS
FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING
BROKER-DEALER OR THE COMPANY, AAG HOLDING OR THE TRUST HAS GIVEN NOTICE THAT THE
SALE OF THE NEW PREFERRED SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
Each New Preferred Security will pay cumulative Distributions from
March 11, 1997. Holders of the Old Preferred Securities whose Old Preferred
Securities are accepted for exchange will not receive accumulated Distributions
on such Old Preferred Securities and will be deemed to have waived the right to
receive any Distributions on such Old Preferred Securities accumulated, from and
after March 11, 1997.
All authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
- 6 -
<PAGE> 7
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) exactly as names(s) appear(s) on
Certificate(s) for the Old Preferred Securities hereby tendered or on a security
position listing, or by any person(s) authorized to become the registered
holder(s) by endorsements and documents transmitted herewith (including such
opinions of counsel, certifications and other information as may be required by
the Trust or the Trustee for the Old Preferred Securities to comply with the
restrictions on transfer applicable to the Old Preferred Securities). If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instruction 5.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Date: , 1997
Name(s)
(PLEASE PRINT)
Capacity (full title)
Address
(INCLUDE ZIP CODE)
Area Code and Telephone Number
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
(AUTHORIZED SIGNATURE)
Date: , 1997
Name of Firm
Capacity (full title)
Address
(INCLUDE ZIP CODE)
- 7 -
<PAGE> 8
Area Code and Telephone Number
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Preferred Securities are to be issued in the
name of someone other than the registered holder of the Old Preferred Securities
whose name(s) appear(s) above.
Issue New Preferred Securities to:
Name(s)
Address
(INCLUDE ZIP CODE)
Area Code and Telephone Number
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER(S))
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if New Preferred Securities are to be sent to someone other
than the registered holder of the Old Preferred Securities whose name(s)
appear(s) above, or such registered holder(s) at an address other than that
shown above.
Mail New Preferred Securities to:
Name(s)
Address
(INCLUDE ZIP CODE)
Area Code and Telephone Number
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER(S))
- 8 -
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed if
Certificates are to be forwarded herewith. Certificates, as well as this Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at its address set
forth herein on or prior to the Expiration Date.
Holders who wish to tender their Old Preferred Securities and (i) whose
Old Preferred Securities are not immediately available or (ii) who cannot
deliver their Old Preferred Securities, this Letter of Transmittal and all other
required documents to the Exchange Agent on or prior to the Expiration Date, may
tender their Old Preferred Securities by properly completing and duly executing
a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering Old Preferred
Securities" in the Prospectus. Pursuant to such procedures: (i) such tender must
be made by or through an Eligible Institution (as defined below); (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Company, AAG Holding and the
Trust must be received by the Exchange Agent on or prior to the Expiration Date;
and (iii) the Certificates representing all tendered Old Preferred Securities,
in proper form for transfer, together with a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent within five New York Stock Exchange, Inc.
trading days after the date of execution of such Notice of Guaranteed Delivery,
all as provided in "The Exchange Offer--Procedures for Tendering Old Preferred
Securities" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Old Preferred Securities to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of Guaranteed
Delivery on or prior to the Expiration Date. As used herein and in the
Prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
None of the Company, AAG Holding nor the Trust will accept any
alternative, conditional or contingent tenders. Each tendering holder, by
execution of a Letter of Transmittal (or facsimile thereof), waives any right to
receive any notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
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<PAGE> 10
(i) this Letter of Transmittal is signed by the
registered holder of Old Preferred Securities
tendered herewith, unless such holder(s) has
completed either the box entitled "Special Issuance
Instructions" or the box entitled "Special Delivery
Instructions" above, or
(ii) such Old Preferred Securities are tendered for the
account of a firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Preferred Securities" is inadequate, the Certificate
number(s) and/or the principal amount of Old Preferred Securities and any other
required information should be listed on a separate signed schedule which is
attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. If less than all the Old
Preferred Securities evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Old Preferred Securities which are to be
tendered in the box entitled "Principal Amount of Old Preferred Securities
Tendered (if less than all)." In such case, new Certificate(s) for the remainder
of the Old Preferred Securities that were evidenced by your old Certificate(s)
will only be sent to the holder of the Old Preferred Security, promptly after
the Expiration Date. All Old Preferred Securities represented by Certificates
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
Except as otherwise provided herein, tenders of Old Preferred
Securities may be withdrawn at any time on or prior to the Expiration Date. In
order for a withdrawal to be effective on or prior to that time, a written,
telegraphic, telex or facsimile transmission of such notice of withdrawal must
be timely received by the Exchange Agent at one of its addresses set forth above
or in the Prospectus on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Preferred
Securities to be withdrawn, the aggregate principal amount of Old Preferred
Securities to be withdrawn, and (if Certificates for Old Preferred Securities
have been tendered) the name of the registered holder of the Old Preferred
Securities as set forth on the Certificate for the Old Preferred Securities, if
different from that of the person who tendered such Old Preferred Securities. If
Certificates for the Old Preferred Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
Certificates for the Old Preferred Securities, the tendering holder must submit
the serial numbers shown on the particular Certificates for the Old Preferred
Securities to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Preferred
Securities tendered for the account of an Eligible Institution. Withdrawals of
tenders of Old Preferred Securities may not be rescinded Old Preferred
Securities properly withdrawn will not be deemed validly tendered for purposes
of the Exchange Offer, but may be retendered at any subsequent time on or prior
to the Expiration Date by following any of the procedures described in the
Prospectus under "The Exchange Offer--Procedures for Tendering Old Preferred
Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company, AAG
Holding and the Trust, in their sole discretion, whose determination shall be
final and binding on all parties. The Company, AAG Holding, the Trust, any
affiliates or assigns of the Company, the Trust, AAG Holding, or the
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<PAGE> 11
Company in its capacity as Exchange Agent, or any other person shall not be
under any duty to give any notification of any irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification. Any
Old Preferred Securities which have been tendered but which are withdrawn will
be returned to the holder thereof without cost to such holder promptly after
withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the Old
Preferred Securities tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Old Preferred Securities tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any tendered Old Preferred Securities are registered in different
name(s) on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal (or facsimiles thereof) as there
are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company and the Trust, in their sole discretion, of
such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of
the Old Preferred Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless New Preferred
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Preferred Securities listed, the Certificates
must be endorsed or accompanied by appropriate bond powers, signed exactly as
the name or names of the registered owner(s) appear(s) on the Certificates, and
also must be accompanied by such opinions of counsel, certifications and other
information as the Company, AAG Holding the Trust or the Trustee for the Old
Preferred Securities may require in accordance with the restrictions on transfer
applicable to the Old Preferred Securities. Signatures on such Certificates or
bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Preferred
Securities are to be issued in the name of a person other than the signer of
this Letter of Transmittal, or if New Preferred Securities are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Certificates for Old Preferred Securities not exchanged
will be returned by mail. See Instruction 4.
7. IRREGULARITIES. The Company, AAG Holding and the Trust will
determine, in their sole discretion, all questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tender of Old Preferred Securities, which determination shall be final and
binding on all parties. The Company, AAG Holding and the Trust reserve the
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<PAGE> 12
absolute right to reject any and all tenders determined by either of them not to
be in proper form or the acceptance of which, or exchange for, may, in the view
of counsel to the Company, AAG Holding and the Trust, be unlawful. The Company,
AAG Holding and the Trust also reserve the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer set forth in the
Prospectus under "The Exchange Offer--Certain Conditions to the Exchange Offer"
or any conditions or irregularity in any tender of Old Preferred Securities of
any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders. The Company's and the Trust's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of Old Preferred Securities will be deemed to have been validly made
until all irregularities with respect to such tender have been cured or waived.
The Company, AAG Holding, the Trust, any affiliates or assigns of the Company,
the Trust, AAG Holding, or the Company in its capacity as Exchange Agent, or any
other person shall not be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Preferred Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
10. SECURITY TRANSFER TAXES. Holders who tender their Old Preferred
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If; however, New Preferred Securities are to be delivered
to, or are to be issued in the name of; any person other than the registered
holder of the Old Preferred Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Preferred Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF)
AND ALL OTHER REQUIRED DOCUMENTS MAST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
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<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8 7/8% CAPITAL TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
AMERICAN ANNUITY GROUP CAPITAL TRUST II
FULLY AND UNCONDITIONALLY GUARANTEED
BY AMERICAN ANNUITY GROUP, INC.
This Notice of Guaranteed Delivery, or one substantially
equivalent to this form, must be used to accept the Exchange Offer (as defined
below) if (i) certificates for the 8 7/8% Capital Trust Preferred Securities due
January 15, 2027 (the "Old Preferred Securities") of American Annuity Group
Capital Trust II, a Delaware statutory business trust (the "Trust") are not
immediately available or (ii) Old Preferred Securities, the Letter of
Transmittal and all other required documents cannot be delivered to American
Annuity Group, Inc. (the "Exchange Agent") on or prior to the Expiration Date
(as defined in the Prospectus referred to below). This Notice of Guaranteed
Delivery may be delivered by hand, overnight courier or mail, or transmitted by
facsimile transmission, to the Exchange Agent. See "The Exchange
Offer--Procedures for Tendering Old Preferred Securities" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS
AMERICAN ANNUITY GROUP, INC.
By Registered or Certified Mail
or Hand or Overnight Delivery:
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attn: _______________________
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(513) ___-____
FACSIMILE TRANSMISSIONS:
(513) ___-____
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED
DELIVERY VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
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<PAGE> 2
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO
BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to American Annuity Group
Capital Trust II, a Delaware statutory business trust (the "Trust"), upon the
terms and subject to the conditions set forth in the Prospectus dated
__________________, 1997 (as the same may be amended or supplemented from time
to time, the "Prospectus"), and the related Letter of Transmittal (which
together constitute the "Exchange Offer"), receipt of which is hereby
acknowledged, the aggregate principal amount of Old Preferred Securities set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering Old
Preferred Securities."
Aggregate Principal Name(s) of Registered Holder(s):
Amount Tendered:
Certificate No(s). Address(es):
(if available): Area Code and Telephone Number(s):
If Old Preferred Securities will be tendered by book-entry transfer, provide the
following information:
Signature(s): __________________________________________________________________
DTC Account Number:_____________________________________________________________
Date: __________________________________________________________________________
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED
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<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, as an "eligible
guarantor institution," including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities broker, municipal securities
dealer, government securities broker, government securities dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association recognized program (each of the
foregoing being referred to as an "Eligible Institution"), hereby guarantees to
deliver to the Exchange Agent, at one of its addresses set forth above, the Old
Preferred Securities tendered hereby in proper form for transfer, pursuant to
the procedures for one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereto) and any other required documents within five
business days after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the
Letter(s) of Transmittal and the Old Preferred Securities tendered hereby to the
Exchange Agent within the time period set forth above and that failure to do so
could result in a financial loss to the undersigned.
Name of Firm ___________________________________________________________________
(Authorized Signature) ________________________________________________________
(Title)
Address ________________________________________________________________________
________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _________________________________________________
Date: __________________________________________________________________________
NOTE: DO NOT SEND OLD PREFERRED SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD PREFERRED SECURITIES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND THE REQUIRED DOCUMENTS.
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