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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
October 21, 1996
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(Date of earliest event reported)
AMERICAN FINANCIAL GROUP, INC.
State or Other Jurisdiction of Incorporation: Ohio
Commission File No. 1-11453
IRS Employer Identification No. 31-1422526
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 579-2121
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AMERICAN FINANCIAL GROUP, INC.
FORM 8-K
Item 5.Other Events.
Attached as Exhibit 1 hereto is Annex I (the "Annex") to the
Declaration of Trust originally executed by the registrant as sponsor of the
American Financial Capital Trust I (the "Trust") and the trustees named
therein on September 13, 1996, as it may be amended from time to time. The
Annex describes the final designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and
the Common Securities to be issued by the Trust on October 22, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
October 21, 1996
AMERICAN FINANCIAL GROUP, INC.
By: James C. Kennedy
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James C. Kennedy
Secretary
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Exhibit 1
ANNEX I
TERMS OF
9-1/8% TRUST ORIGINATED PREFERRED SECURITIES
9-1/8% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of October 22, 1996 (as further 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 or, if not
defined in the Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) PREFERRED SECURITIES. Four Million (4,000,000) Preferred
Securities of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of up to One Hundred Million Dollars
($100,000,000)(subject to increase up to a maximum of Four Million Six
Hundred Thousand (4,600,000) Preferred Securities with an aggegate
liquidation amount with respect to the assets of the Trust of up to One
Hundred Fifteen Million Dollars ($115,000,000) in the event that the over-
allotment option provided for in the Underwriting Agreement dated October 17,
1996 among the Company, the Trust and the representatives of the several
underwriters named therein is exercised) and a liquidation amount with
respect to the assets of the Trust of $25 per Preferred Security, are hereby
designated for the purposes of identification only as "9-1/8% Trust
Originated Preferred Securities ('TOPrS')" (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.
(b) COMMON SECURITIES. One Hundred Twenty Three Thousand Seven Hundred
Twenty (123,720) Common Securities of the Trust with an aggregate liquidation
amount with respect to the assets of the Trust
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of up to Three Million Ninety Three Thousand Dollars ($3,093,000) (subject
to increase up to a maximum of One Hundred Forty Two Thousand Two Hundred
Eighty (142,280) Common Securities with an aggegate liquidation amount with
respect to the assets of the Trust of up to Three Million Five Hundred Fifty
Seven Thousand Dollars ($3,557,000) in the event that the over-allotment
option provided for in the Underwriting Agreement dated October 17, 1996
among the Company, the Trust and the representatives of the several
underwriters named therein is exercised) and a liquidation amount with
respect to the assets of the Trust of $25 per Common Security are hereby
designated for the purposes of identification only as " 9-1/8% Trust
Originated Common Securities" (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.
(a) Distributions payable on each Security will be fixed at a rate
per annum of 9 1/8% (the "Coupon Rate") of the stated liquidation amount of
$25 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 quarter will bear interest thereon from and including the last
day of such quarter at the Coupon Rate compounded quarterly (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 quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed on the basis
of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will
accrue from October 22, 1996, and will be payable quarterly in arrears, on
January 15, April 15, July 15 and October 15 of each year, commencing on
January 15, 1997, except as otherwise described below.
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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 20
consecutive quarters (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, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly 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
20 consecutive quarters 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.
(c) 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. While the Preferred Securities remain in global form, the
relevant record dates shall be one Business Day prior to the relevant payment
dates which payment dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities - Book-Entry Issuance - The Depositary Trust Company"
in the Prospectus dated October 17, 1996 (the "Prospectus") included in the
Registration Statement on Form S-3 of the Sponsor and the Trust. The
relevant record dates for the Common Securities shall be the same record
dates as for the Preferred Securities. If the Preferred Securities shall not
continue to remain 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
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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. 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.
(d) 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.
3. Liquidation Distribution Upon Dissolution.
(a) 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 $25 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
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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(e) hereof.
(b) 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.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (such redemption being either at the
option of the Debenture Issuer on or after October 22, 2001 or at the option
of the Debenture Issuer in connection with the occurrence of a Special Event
as described below), 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 $25 per Security plus an amount equal to
accrued and unpaid Distributions thereon at the date of the redemption,
payable in cash (the "Redemption Price"). Holders will be given not less
than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the Preferred Securities to be redeemed will be redeemed as
described in Section 4(f) below.
(c) 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 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
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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.
"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.
(d) 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 quarterly Distribution periods terminating on or before
the date of redemption.
(e) 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
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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 aggregated 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 aggregated
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.
(f) Redemption or Distribution Procedures.
(i) 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
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calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(f)(i), 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 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.
(ii) 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.
(iii) 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
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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 in respect of any Securities is
improperly withheld or refused and not paid either by the Property Trustee or
by the Sponsor 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 the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.
(iv) 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.
(v) 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.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
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(b) 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 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 it 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
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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.
(a) Except as provided under Section 6(b), (c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
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(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) 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 an 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 of any trust or power conferred upon
the Property Trustee under the Declaration, including the right to direct 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
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 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
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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.
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.
(a) In addition to any requirements under Section 12.1 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
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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.
(b) 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(b) 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.
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<PAGE>
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 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.
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.
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<PAGE>
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.
-18-
<PAGE>
EXHIBIT A-1
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described in the
Declaration and no transfer of this Preferred Security (other than a transfer
of this Preferred 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 limited circumstances.
Unless this Preferred Security Certificate is presented by an authorized
representative of the Depositary to the Trust or its agent for registration
of transfer, exchange or payment, and any Preferred Security Certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred
Securities
-P- 1 - - 4,000,000 -
CUSIP NO. 026077 20 6
Certificate Evidencing Preferred Securities
of
AMERICAN FINANCIAL CAPITAL TRUST I
9-1/8% Trust Originated Preferred Securities ("TOPrS")
(liquidation amount $25 per Preferred Security)
AMERICAN FINANCIAL CAPITAL TRUST I, 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
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<PAGE>
4,000,000 preferred securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the 9-1/8% Trust Originated
Preferred Securities_ (liquidation amount $25 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 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 October 22, 1996, 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 22nd day of
October, 1996.
AMERICAN FINANCIAL CAPITAL TRUST
I
By:
Name: James E. Evans
Title: Regular Trustee
By:
Name: Thomas E. Mischell
Title: Regular Trustee
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<PAGE>
ASSIGNMENT
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 irrevocable 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:-----------------------
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<PAGE>
EXHIBIT A-2
Certificate Number Number of Common Securities
-C-1- -123,720-
Certificate Evidencing Common Securities
of
AMERICAN FINANCIAL CAPITAL TRUST I
9-1/8% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
American Financial Capital Trust I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that American Financial Group, Inc. (the "Holder") is the
registered owner of common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated
the 9-1/8% Trust Originated Common Securities (liquidation amount $25
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 Amended and
Restated Declaration of Trust of the Trust dated as of October 22,
1996, 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.
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<PAGE>
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.
IN WITNESS WHEREOF, the Trust has executed this certificate
this 22nd day of October, 1996.
AMERICAN FINANCIAL CAPITAL TRUST I
By:
---------------------------
Name: James E. Evans
Title: Regular Trustee
By:
---------------------------
Name: Thomas E. Mischell
Title: Regular Trustee
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<PAGE>
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 Guaranteed:
---------------------------------
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