As filed with the Securities and Exchange Commission on May 1, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICAN ANNUITY GROUP, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 06-1356481
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
250 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 333-5300
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(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
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(Name, address, including zip code, and telephone number, including
area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
--------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities To Be Price Offering Registration
To Be Registered Registered(1) Per Share(2) Price(2) Fee(3)
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Common Stock, par 1,000,000 $23.625 $23,625,000 $6,970
value $1.00 per share Shares
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(1) This Registration Statement is filed for up to 1,000,000 shares issuable
pursuant to the American Annuity Group, Inc. 1998 Agent Stock Option Plan.
(2) Estimated solely for purposes of calculating registration fee.
(3) Registration fee has been calculated pursuant to Rule 457(h) based on the
average of the high and low prices of the Common Stock as reported on the
New York Stock Exchange on April 28, 1998 of $23.625 per share.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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>
AMERICAN ANNUITY GROUP, INC.
250 East Fifth Street
Cincinnati, Ohio 45402
(513) 333-5300
--------------------------
1998 AGENT STOCK OPTION PLAN
---------------------------
Common Stock, $1.00 par value per share, of American Annuity Group, Inc.
("AAG" or the "Company") will be issued upon the exercise of options granted to
insurance agents of the Company and its subsidiaries pursuant to its 1998 Agent
Stock Option Plan (the "Plan").
The exercise price, number of shares, and certain other terms of each
option are set forth in a separate Stock Option Agreement entered into between
the Company and the agent.
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.
---------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN SECURITIES OFFERED BY THIS PROSPECTUS OR AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF AAG SINCE THE DATE OF THIS PROSPECTUS, OR THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SINCE SUCH DATE.
---------------------------------
The date of this Prospectus is May __, 1998
<PAGE>
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 Securities and Exchange Commission (the "Commission"). The Company has filed
a Registration Statement on Form S-3 (the "Registration Statement") with the
Commission under the Securities Act of 1933 (the "Securities Act") with respect
to the 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, agreement 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, Inc., 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.
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, 1997, which has been filed by the Company with the Commission, is
hereby incorporated by reference in 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 Offering
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 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.
<PAGE>
FEATURES OF THE PLAN
WHO ADMINISTERS THE PLAN?
The Plan shall be administered by the AAG Board of Directors or a committee
appointed by the Board.
WHO IS ELIGIBLE TO RECEIVE AN OPTION?
Agents of AAG or a subsidiary will be eligible to receive options under the
Plan by annual invitation by the Administrator. For purposes of the Plan, an
"Agent" is a person who (i) is an agent, managing general agent, personal
producing agent or other person, (ii) is an independent contractor for federal
income tax purposes, (iii) sells insurance or annuities issued by a subsidiary
of the Company and (iv) receives commissions in connection with its services to
the Company.
ON WHAT BASIS ARE OPTIONS AWARDED?
With respect to each January 1 to December 31 period (a "Plan Year"), the
Company will determine a method pursuant to which the Company will grant options
to participants. The Company will announce the method by which options will be
granted, the vesting requirements for options granted and all other provisions
designated by the Administrator with respect to options to be granted during the
foregoing Plan Year.
HOW ARE OPTION PRICES DETERMINED?
The price at which each option will be granted under the Plan will be the
average of the means between the high and low sales prices of the Common Stock
for the last ten consecutive trading days of a Plan Year as reported on the New
York Stock Exchange Composite Tape.
WHEN CAN AN OPTION BE EXERCISED?
Subject to certain restrictions, options are exercisable to the extent
vested. Each option will have an expiration date at which time such options, to
the extent not previously exercised, will terminate. The schedule for the
vesting of options will be determined by the Administrator annually and will
apply to all options granted in a given Plan Year.
WHAT HAPPENS IF THERE IS A STOCK SPLIT OR STOCK DIVIDEND?
The number of shares covered by an outstanding option and the exercise
price per share are appropriately adjusted.
<PAGE>
HOW IS AN OPTION EXERCISED?
An option may be exercised in full or in part (subject to a minimum of
1,000 shares or the number of shares as to which the option is then exercisable,
whichever is less) by delivering written notice to the Company and payment of
the exercise price. A person exercising an option will become a shareholder of
the shares for which the option is exercised at the time the Administrator
determines that the exercise is valid, the option price has been received and a
certificate for the shares has been issued. Certificates for shares will be
issued in due course.
HOW MAY THE OPTION PRICE BE PAID?
Payment of the exercise price of an option may be made in cash (including
check), or in the sole discretion of the Administrator and subject to any
conditions set forth in the option agreement, by the tender of AAG Common Stock
or both. If payment by the tender of AAG Common Stock is made, the value of each
share tendered shall be deemed to be the closing price reported on the New York
Stock Exchange (or the principal market on which the Common Stock is traded, if
not listed on that exchange) on the last trading date prior to the date of
exercise.
WHO ELSE MAY EXERCISE AN OPTION?
Options are not transferable other than by will or by the laws of descent
and distribution upon death. In the case of death, the option may be exercised
to the same extent that the Agent could have exercised the option at the time of
death, by the individual's estate or persons entitled to the option through the
terms of a will or by the operation of the laws of descent and distribution.
WHEN DO OPTIONS TERMINATE?
All options terminate at the end of the term established at the date of
grant which may be no longer than ten years from the date of grant.
If the status of a holder of an option as an Agent of the Company or a
Subsidiary is terminated for any reason (including by reason of death or
disability), the holder (or his or her heirs in the case of death) may exercise
the option(s), solely to the extent that such person was entitled to do so at
the date of such termination, at any time or from time to time within thirty
(30) days after the date of such termination.
WHAT HAPPENS IF THE AGENT RELATIONSHIP TERMINATES?
The Agent will not be eligible to receive options for the Plan Year of
termination.
<PAGE>
WHAT HAPPENS UPON A CHANGE OF CONTROL OF GREAT AMERICAN LIFE INSURANCE COMPANY?
Upon a change of control of Great American Life Insurance Company, a
wholly-owned subsidiary of the Company, the occurrance of which will be
determined by the Board of Directors of the Company in its sole discretion, the
vesting of all outstanding options will accelerate and all such Options shall
become fully exercisable.
IS THE STATUS OF AN INDIVIDUAL HOLDING AN OPTION AFFECTED?
No. The granting of an option to an Agent does not confer any right to
continue as an Agent of AAG or its subsidiaries or interfere in any way with the
right of AAG or its subsidiaries to terminate the relationship as an Agent at
any time.
DOES A HOLDER OF AN OPTION HAVE ANY RIGHTS AS A SHAREHOLDER?
No.
WHAT TAX CONSIDERATIONS AFFECT OPTIONS?
Options granted under the Plan are non-qualified options under the Internal
Revenue Code. The grant of non-qualified stock options will not result in the
recognition of taxable income for federal income tax purposes. However, when a
non-qualified stock option is exercised, the optionee recognizes, as ordinary
income, the excess of the fair market value of the stock on the date of exercise
over the exercise price. AAG will be entitled to an income tax deduction to the
same extent and at the same time as income is recognized by the optionee.
If an optionee tenders shares of the Company that he or she already owns in
exercise of a non-qualified stock option, as permitted by the Plan, the exchange
will not result in the recognition of a capital gain or loss on the previously
owned stock. The number of option shares received in excess of the old shares
given up, in effect, are "purchased" with the untaxed appreciation on the old
stock. The tax basis for the equivalent number of new shares will be the same as
the basis of the shares tendered in the exchange. Ordinary income equal to the
fair market value of the excess new shares will be recognized. The excess shares
will have a basis equal to their fair market value, and the holding period will
commence on the day after the stock is received.
Holders of options should consult their own tax advisors to determine the
income tax consequences to the individual of holding and exercising any options
granted under the Plan and of selling the stock so acquired, as well as to
determine the effect on the individual of any state or local taxes.
The Plan is not qualified under Section 401(a) of the Internal Revenue Code
and is not subject to any provisions of the Employee Retirement Income Security
Act of 1974.
<PAGE>
ARE THERE ANY CONSIDERATIONS REGARDING THE RESALE OF SHARES ISSUED?
Shares of Common Stock acquired pursuant to the Plan may be sold publicly.
However, shares owned by persons who may be deemed to be "affiliates" of AAG as
defined in the Rules of the Securities and Exchange Commission under the
Securities Act may not be re-offered or resold except pursuant to a separate
prospectus covering such shares, pursuant to Rule 144 of such Rules, or pursuant
to another exemption from registration under the Securities Act.
OTHER CONSIDERATIONS.
The Plan will continue in effect until all options granted under the Plan
expire, provided that no option will be granted after February 19, 2008. The
Board of Directors of AAG may at any time, amend, suspend or terminate the Plan
in any respect except that no such action shall alter or impair any option
granted under the Plan without the consent of the holder thereof.
USE OF PROCEEDS
The Company will use any proceeds from the exercise of options for general
corporate purposes.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Mark F. Muething, Esq., Senior Vice President and General Counsel of
the Company. Mr. Muething beneficially owns 48,704 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, 1997, 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.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the offering
described in this Registration Statement:
*Securities and Exchange Commission registration fee ....... $ 6,970
Legal fees and expenses .................................... 3,000
Accounting fees and expenses .............................. 2,000
Printing and engraving expenses............................. --
Blue Sky fees and expenses.................................. 2,000
Miscellaneous .............................................. 6,030
TOTAL ................................................ $20,000
=======
- ----------------
*Actual; other expenses are estimated
ITEM 15. 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 officers 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.
<PAGE>
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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
5 Opinion of Counsel
10 1998 Agent Stock Option Plan
23.1 Consent of Counsel (contained on Exhibit 5)
23.2 Consent of Ernst & Young, LLP
24 Power of Attorney (contained on the signature page)
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
Registration Statement:
1. to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
2. 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 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.
<PAGE>
3. 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.
(b) The undersigned Registrant hereby undertakes 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 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.
(c) 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 of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement 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, 1998.
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 with
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.
Signature Capacity Date
--------- -------- ----
* /s/Carl H. Lindner
- --------------------------- Chairman of the Board of
Carl H. Lindner Directors (Principal April 30, 1998
Executive Officer)
* /s/S. Craig Lindner
- --------------------------- Director April 30, 1998
S. Craig Lindner
* /s/Robert A. Adams
- --------------------------- Director April 30, 1998
Robert A. Adams
* /s/A. Leon Fergenson
- --------------------------- Director April 30, 1998
A. Leon Fergenson
<PAGE>
* /s/Ronald G. Joseph
- --------------------------- Director April 30, 1998
Ronald G. Joseph
* /s/John T. Lawrence III
- --------------------------- Director April 30, 1998
John T. Lawrence III
* /s/William R. Martin
- --------------------------- Director April 30, 1998
William R. Martin
* /s/William J. Maney
- --------------------------- Senior Vice President, April 30, 1998
William J. Maney Treasurer and Chief
Financial Officer
(Principal Financial
Officer and Principal
Accounting Officer)
EXHIBIT 5
AMERICAN ANNUITY GROUP, INC.
250 EAST FIFTH STREET
CINCINNATI, OHIO 45202
April 30, 1998
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Gentlemen:
I serve as General Counsel to American Annuity Group, Inc., a Delaware
corporation (the "Company"), and have served as the Company's counsel in
connection with the preparation of a Registration Statement on Form S-8 filed by
the Company with the Securities and Exchange Commission which relates to the
offer and sale of up to One Million (1,000,000) shares of Common Stock, $1.00
par value, of the Company pursuant to the 1998 Agent Stock Option Plan (the
"Plan").
In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
such documents as I have deemed necessary or appropriate as a basis for the
opinions set forth below including (i) the Registration Statement, (ii) the
Certificate of Incorporation and By-Laws of the Company, each as amended to the
date hereof, and (iii) resolutions of the Board of Directors of the Company
relating to the approval of the Plan, the issuance of shares of Common Stock
pursuant to the Plan and the filing of the Registration Statement.
Based upon and subject to the foregoing, I am of the opinion that, when (i)
the Registration Statement has become effective under the Securities Act of 1933
and (ii) the shares of Common Stock have been issued as contemplated by the
Plan, such shares of Common Stock will constitute duly issued, fully paid and
non-assessable shares of Common Stock of the Company.
I hereby consent to the reference to me under the heading "Legal Matters"
in the Prospectus and the filing of this opinion as Exhibit 5 to the
Registration Statement.
/s/ Mark F. Muething
-----------------------------
Mark F. Muething
Senior Vice President,
General Counsel and Secretary
AMERICAN ANNUITY GROUP, INC.
1998 AGENT STOCK OPTION PLAN
Section 1. Purpose. The purpose of the Plan is to provide a means for
Agents of insurance companies owned by the Company to acquire a proprietary
interest in the Company, thereby strengthening the Company's ability to attract
and retain Agents.
Section 2. Definitions. Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth
below:
(a) "Administrator" means the Board or a committee thereof as appointed by
the Board.
(b) "Agent" means any person who (i) is an agent, managing general agent,
personal producing agent or other person, (ii) is an independent
contractor, (iii) sells insurance or annuities issued by a Subsidiary
of the Company and (iv) receives Commissions in connection therewith.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
(e) "Commissions" means all commissions, overrides and other amounts
earned by an Agent during a given Plan Year in connection with the
sale of life insurance and annuities issued by the Company.
Notwithstanding the foregoing, the Administrator for any Plan Year may
further stipulate or limit the definition of the term "Commissions"
for that Plan Year.
(f) "Common Stock" shall mean the Common Stock, par value One Dollar
($1.00) per share, of the Company, and any other stock or securities
resulting from the adjustment thereof or substitution therefor as
described in Section 13 of this Plan.
(g) "Company" shall mean American Annuity Group, Inc., a Delaware
corporation and its Subsidiaries.
(h) "Fair Market Value" with respect to the Common Stock as of any date
shall mean (i) in the event the Common Stock is listed on a national
securities exchange, the closing price as reported for composite
transactions on that date, or, if no sales occurred on that date, then
the closing price on the next preceding date on which such sales of
Common Stock occurred; (ii) in the event the Common Stock is not
listed on a national securities exchange, the mean between the high
<PAGE>
bid and low asked prices reported for shares of Common Stock traded
over-the-counter on that date, or, if no bid and asked prices were
reported on that date, then the mean between the high bid and low
asked prices on the next preceding date on which such prices were
reported; or (iii) in the event there are no over-the-counter prices
for the Common Stock and it is not listed on a national securities
exchange, the fair market value as determined by the Administrator in
its discretion.
(i) "GALIC" shall mean Great American Life Insurance Company and its
successors.
(j) "Option" shall mean an option granted pursuant to this Plan.
(k) "Option Price" shall mean the price at which Common Stock may be
purchased under an Option, as provided in Section 7(d) of this Plan.
(l) "Optionee" shall mean a Participant granted an Option under the Plan.
(m) "Participant" means an Agent who is selected to participate by the
Administrator and participates in the Plan for a designated Plan Year.
(n) "Plan" shall mean the American Annuity Group, Inc. 1998 Agent Stock
Option Plan.
(o) "Plan Year" means the calendar year, January 1 through December 31.
The initial Plan Year shall commence on January 1, 1998 and terminate
on December 31, 1998.
(p) "Stock Option Agreement" shall mean the written agreement between an
Optionee and the Company evidencing the grant of an Option and setting
forth the terms and conditions of the grant.
(q) "Subsidiary" shall mean any corporation which qualifies as a
subsidiary corporation of the Company within the meaning of Section
424 of the Code.
Section 3. Administration of the Plan. The Plan shall be administered by
the Administrator. With respect to each Plan Year, the Company may determine a
method pursuant to which the Company will grant Options to Participants. Prior
to each Plan Year, the Company shall announce the method by which Options will
be granted, the vesting requirements for Options granted and all other
provisions designated by the Administrator with respect to Options to be granted
during the foregoing Plan Year.
Section 4. Eligibility. Agents will be eligible to receive Options under
the Plan by annual invitation by the Administrator. To be eligible, an Agent
must have the status of an independent contractor for purposes of federal income
taxes.
<PAGE>
Section 5. Shares Subject to the Plan.
(a) Aggregate Number of Shares Available. Subject to the adjustments
provided for in Section 13 of this Plan, the aggregate number of
shares of Common Stock for which Options may be granted under the Plan
shall be One Million (1,000,000) shares. Shares delivered by the
Company pursuant to exercises of Options may be authorized but
unissued shares of Common Stock, issued shares of Common Stock which
have been reacquired by the Company, or a combination thereof, as the
Board or the Administrator shall from time to time determine.
(b) Effect of Expiration of Options.If any outstanding Option under the
Plan for any reason expires or is terminated without having been
exercised in full, the shares of Common Stock subject to but not
issued under such Option shall again be available for the granting of
Options under the Plan.
(c) Effect of Exercises. If all or any portion of an Option is exercised,
the shares with respect to which such Option is exercised shall not
thereafter be available for the granting of other Options under the
Plan.
Section 6. Stock Option Agreements. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Company and the
Optionee, containing such terms and conditions, not inconsistent with the Plan,
as shall be determined by the Administrator.
Section 7. Terms and Conditions of Options. Each Option granted under the
Plan shall comply with and be subject to the terms and conditions provided
below, as well as such other terms and conditions as may be determined pursuant
to Section 3 or by the Administrator. The related Stock Option Agreement will
specify the following terms of the Option:
(a) Number of Shares. The number of shares of Common Stock to which an
Option relates shall be determined by the Administrator pursuant to
the method prescribed for the relevant Plan Year and shall be
specified in the related Stock Option Agreement.
(b) Date of Grant; Exercise Period. The date of grant of any Option shall
be the date on which the Administrator shall award the Option (or the
earlier date, if applicable, that the Administrator specifically
approves such grant) if an immediate grant of such Option is
contemplated, or the date contemplated as the date of grant if the
Administrator imposes a condition on the granting of such Option.
Options granted under the Plan shall be for such periods as may be
determined by the Administrator and set forth in the related Stock
Option Agreements, subject to the provisions of Section 9 hereof.
(c) Vesting of Options. The schedule for the vesting of Options shall be
determined by the Administrator annually and will apply to all Options
granted in the foregoing Plan Year.
<PAGE>
(d) Option Price. The price at which each Option will be granted under the
Plan shall be the average of the means between the high and low sales
prices of the Common Stock for the last ten consecutive trading days
of a Plan Year as reported on the New York Stock Exchange Composite
Tape (or the principal market on which the Common Stock is traded, if
the Common Stock is not listed on that exchange at any time during
such ten day period).
Section 8. Method of Exercise; Payment of Option Price
(a) Method of Exercise. An Option may be exercised as to any or all full
shares of Common Stock as to which the Option has become exercisable
in accordance with the terms of the related Stock Option Agreement and
the provisions of this Plan by delivering to the Company written
notice of such exercise in the manner hereinafter specified in Section
18, provided, however, that an Option may not be exercised at any one
time as to less than one thousand (1,000) shares (or such number of
shares as to which the Option is then exercisable if such number of
shares is less than one thousand (1,000) shares). Such written notice
shall specify the number of shares of Common Stock with respect to
which the Option is being exercised and shall be accompanied by
payment in full of the Option Price for such shares. The date of
exercise of an Option or portion thereof shall be the date of receipt
by the Company of such written notice as determined in accordance with
the provisions of Section 18 of the Plan provided, however, that for
purposes of an issuance of shares upon exercise, the date of issuance
shall be as soon as practicable after exercise but shall be no earlier
than a date which is at least ten (10) business days after receipt of
notice of exercise. Until shares are actually issued, those shares
shall not be deemed outstanding for any purpose.
(b) Payment of Option Price. Payment for shares purchased upon exercise of
an Option may be made
(i) in cash (including a check, bank draft or money order), or
(ii) with the approval of the Administrator, by delivering to the
Company shares of Common Stock already owned by the Optionee
("Previously Held Shares") having a Fair Market Value (determined
as of the day preceding the date on which the Option is
exercised) equal to the Option Price of the shares of Common
Stock as to which the Option is being exercised, or
(iii)with the approval of the Administrator, by a combination of the
methods described in (i) and (ii) above.
Section 9. Termination of Agency If the Optionee's status as an Agent of
the Company or a Subsidiary is terminated for any reason (including by reason of
death or disability), the Optionee (or his or her heirs in the case of death)
may exercise the Option, solely to the extent that such Optionee was entitled to
do so at the date of such termination, at any time or from time to time within
<PAGE>
thirty (30) days after the date of such termination. In addition, the Agent will
not be eligible to receive Options for the Plan Year of termination.
Section 10. Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the Administrator
in its discretion may modify, extend or renew outstanding Options granted under
the Plan, or accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options hereunder in
substitution therefor. Notwithstanding the foregoing, however, no modification
(other than adjustments as provided by Section 13 hereof) of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option theretofore granted to such Optionee.
Section 11. Change of Control. Upon a Change of Control of GALIC, the
occurrence of which shall be determined by the Board in its sole discretion, the
vesting of all outstanding Options shall accelerate and all such Options shall
become fully exercisable. For purposes of the Plan, a "Change of Control" shall
occur when American Financial Group, Inc. ("AFG") and its affiliates
collectively cease to beneficially own at least 25% of the outstanding common
stock of GALIC entitled generally to vote for the election of directors.
Section 12. Withholding Taxes. The Company shall be entitled to require, as
a condition to its delivery of shares of Common Stock upon the exercise of an
Option, that the Optionee pay to the Company an amount sufficient to satisfy all
present or estimated future federal, state and local withholding tax
requirements related thereto.
Subject to the further provisions of this Section 12 and to the approval of
the Administrator, an Optionee may elect to satisfy applicable withholding tax
liabilities by (i) having the Company withhold from the shares of Common Stock
otherwise issuable to the Optionee upon his exercise of an Option that number of
shares of Common Stock having a Fair Market Value on the day preceding the date
of such exercise sufficient to satisfy the amount of such tax liabilities or
(ii) delivering to the Company that number of previously held shares having a
Fair Market Value on the day preceding the date of such exercise sufficient to
satisfy the amount of such tax liabilities. Any such election will be
irrevocable and must be made prior to the date the Option exercise becomes
taxable.
Section 13. Adjustments Upon Changes in Capitalization. The total number
and character of shares available for Options under the Plan, the number and
character of shares subject to outstanding Options and the Option Price shall be
appropriately adjusted by the Administrator in the event of any change in the
number or character of outstanding shares of Common Stock resulting from a stock
dividend, subdivision or combination of shares or reclassification. In the event
of a merger or consolidation of the Company or a tender offer for shares of
Common Stock, the Administrator may make such adjustments with respect to
Options under the Plan and take such other actions as it deems necessary or
appropriate to reflect, or in anticipation of, such merger, consolidation or
tender offer, including, without limitation, the substitution of new Options,
the issuance of substitute options to acquire shares of the successor entity,
<PAGE>
the termination or adjustment of outstanding Options, the acceleration of
Options, or the removal of limitations or restrictions on outstanding Options.
Section 14. Nontransferability. No Option granted under the Plan shall be
transferable by an Optionee otherwise than by will or by the laws of descent and
distribution, and an Option may be exercised, during the lifetime of the
Optionee, only by the Optionee.
Section 15. No Right to Continued Status as an Agent. Nothing in this Plan
or in any Option granted hereunder shall confer upon an Optionee any right to
continue as an Agent of the Company or a Subsidiary nor interfere or affect in
any way the right of the Company or a Subsidiary to terminate an Optionee's
agency at any time for any reason.
Section 16. Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock subject to an Option
until the date of issuance to him of a stock certificate or certificates for
such shares. Upon exercise, the date of issuance shall be as soon as practicable
but shall be no earlier than a date which is at least ten (10) business days
after receipt of notice of issuance. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 13 hereof.
Section 17. Compliance with Law and Other Conditions. The obligation of the
Company to issue or deliver shares of Common Stock upon the exercise of Options
shall be subject to all applicable laws, regulations, rules and approvals of
applicable governmental and regulatory authorities. Notwithstanding any other
provisions of this Plan or any Stock Option Agreements, the Company shall not be
required to issue or deliver any certificate or certificates for shares of
Common Stock purchased upon the exercise of an Option prior to the fulfillment
of the following conditions:
(i) The listing, or approval for listing upon notice of issuance, of
such shares on any securities exchange on which the Common Stock
is then listed;
(ii) The registration or other qualification of such shares under any
state or federal securities law or regulation which the
Administrator shall, in its absolute discretion upon the advice
of counsel, deem necessary or advisable; and
(iii)The obtaining of any other consent, approval, permit or other
clearance from any state or federal governmental or regulatory
agency which the Administrator shall, in its absolute discretion
upon the advice of counsel, determine to be necessary or
advisable.
Section 18. Notices. Whenever any notice is required or permitted to be
given under the Plan or any Stock Option Agreement, such notice must be in
writing and personally delivered or sent by courier or by mail. Any such notice
shall be deemed effectively given or delivered upon personal delivery or
twenty-four (24) hours after delivery to a courier service which guarantees
overnight delivery or five (5) days after deposit with the U.S. Post Office, by
<PAGE>
registered or certified mail, return receipt requested, postage prepaid,
addressed to the person who is to receive such notice at the address which such
person has theretofore specified by written notice delivered in accordance
herewith. The Company or an Optionee may change, at any time and from time to
time, by written notice to the other, the address which it or he had theretofore
specified for receiving notices. Until changed in accordance herewith, the
Company and each Optionee shall specify as its or his address for receiving
notices the address set forth in the Stock Option Agreement pertaining to the
shares of Common Stock to which such notice relates.
Section 19. Amendment, Suspension or Termination of the Plan. The Plan may
be wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Administrator or the Board.
Further, no such amendment, suspension or termination, other than
adjustments for changes in capitalization as provided in Section 13 hereof,
shall adversely affect or impair any outstanding Option without the written
consent of the Optionee affected thereby.
Section 20. Effective Date; Duration. The Plan shall become effective upon
the date of its adoption by the Board. Unless earlier terminated by the Board or
the Administrator pursuant to the provisions of the Plan, the Plan shall
terminate on the tenth anniversary of its effective date as hereinbefore
specified. No Options shall be granted under the Plan after such termination
date.
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-3 No. 333-______) and related Prospectus of
American Annuity Group, Inc. for the registration of 1,000,000 shares of its
common stock and to the incorporation by reference therein of our report dated
March 2, 1998, 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, 1997, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Cincinnati, Ohio
April 30, 1998
