-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, A9ks57grU/VdmLq4h9hFGUpKqr4aB89s6tfmjoL4WVc7J3l9QvQ6cERmD/83kvSu +ZMaoIcgp+oTXDW3VsVRGA== 0000005016-94-000005.txt : 19940302 0000005016-94-000005.hdr.sgml : 19940302 ACCESSION NUMBER: 0000005016-94-000005 CONFORMED SUBMISSION TYPE: T-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19940222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN FINANCIAL CORP CENTRAL INDEX KEY: 0000005016 STANDARD INDUSTRIAL CLASSIFICATION: 6199 IRS NUMBER: 310624874 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: T-3 SEC ACT: 39 SEC FILE NUMBER: 022-22177 FILM NUMBER: 94510933 BUSINESS ADDRESS: STREET 1: ONE E 4TH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5135792121 T-3 1 FORM T-3 FILED UNDER THE TRUST INDENTURE ACT As filed on February 22, 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-3 FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE TRUST INDENTURE ACT OF 1939 AMERICAN FINANCIAL CORPORATION One East Fourth Street Cincinnati, Ohio 45202 SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED Title of Class Amount 9-1/2% Debentures Due April 20, 2004 $750,000,000 Approximate date of proposed public offering: As soon as practical after the effective date of this application. Name and address of agent for service: James C. Kennedy, Esq. Deputy General Counsel American Financial Corporation 9th Floor, Provident Tower One East Fourth Street Cincinnati, Ohio 45202 (513) 579-2538 THE OBLIGOR HEREBY AMENDS THIS APPLICATION FOR QUALIFICATION ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVENESS UNTIL (i) THE 20TH DAY AFTER THE FILING OF A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT IT SHALL SUPERSEDE THIS AMENDMENT; OR (ii) SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 307(c) OF THE ACT, MAY DETERMINE UPON THE WRITTEN REQUEST OF THE OBLIGOR. Page 1 of Pages. Exhibit Index appears on Page 10. GENERAL (1) General Information. Furnish the following information as to the applicant: (a) Form of organization. American Financial Corpora- tion ("AFC") is a corporation. (b) State or other sovereign power under the laws of which organized. AFC is organized under the laws of Ohio. (2) Securities Act exemption applicable. State briefly the facts relied upon by the applicant as a basis for the claim that registration of indenture securities under the Securities Act of 1933 is not required. Registration of the 9-1/2% Debentures Due April 20, 2004 (the "Debentures") under the Securities Act of 1933 is not required by reason of the exemption provided by Section 3(a)(9) thereof. The facts relied upon by it as a basis for such claim follow. The Debentures will be issued only to holders of outstanding debt securities of AFC, who exchange them for the Debentures pursuant to an exchange offer (the "Exchange Offer") which AFC is making to such holders. The debt securities of AFC which are exchangeable for Debentures are (i) 9-1/2% Subordinated Deben- tures due April 22, 1999, (ii) 10% Debentures due October 20, 1999, (iii) 10% Debentures due October 20, 1999, Series A, (iv) 12% Debentures due September 3, 1999, (v) 12% Debentures due September 3, 1999, Series A, (vi) 12% Debentures due September 3, 1999, Series B, (vii) 12-1/4% Debentures due September 15, 2003, (viii) 13-1/2% Debentures due September 14, 2004, and (ix) 13- 1/2% Debentures due September 14, 2004, Series A (collectively, the "Outstanding Debentures"). The terms and conditions of the Exchange Offer are set forth in the Offering Circular and the Letter of Transmittal which are being mailed to holders of the Outstanding Debentures. Copies of such documents are filed as exhibits to this application. A maximum of $550,000,000 aggregate principal amount of Debentures is to be offered pursuant to the Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal amount of Outstanding Debentures being exchanged. No sales of securities of the same class as the Debentures have been or are to be made by AFC or by or through an underwrit- er at or about the same time as the transaction for which the exemption is claimed. -2- No consideration has been or is to be given, directly or indirectly, to any person in connection with the Exchange Offer except for (i) the cash consideration to be paid to holders of the Outstanding Debentures pursuant to the Exchange Offer, (ii) the customary payments to be made in respect of the preparation, printing and mailing of the offering materials and related documents; (iii) the customary mailing and handling expenses incurred by brokerage houses and other custodians, nominees and fiduciaries, which hold Outstanding Debentures registered in their names, in forwarding copies of the offering materials to beneficial owners and in handling or forwarding tenders for their clients; (iv) the fees and reasonable out-of-pocket expenses of approximately $75,000, which has been retained to distribute offering materials to brokerage houses and other custodians, nominees and fiduciaries, which hold Outstanding Debentures on behalf of other persons or entities; (v) the fees and reasonable out-of-pocket expenses of Securities Transfer Company, which has been retained as Exchange Agent in connection with the Exchange Offer; and (vi) the fees and reasonable out-of-pocket expenses and counsel fees of Star Bank, National Association, the intended Indenture Trustee under the Indenture to be qualified. In certain states, the Offering Circular may be transmitted by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. which will be reimbursed for its expenses in such transmission. No holder of any Outstanding Debentures has made, or will be requested to make any cash payment to AFC in connection with the Exchange Offer. AFFILIATIONS (3) Affiliates. Furnish a list or diagram of all affili- ates of the applicant and indicate the respective percentages of voting securities or other bases of control. As a result of stock ownership by AFC and its subsidiaries at December 31, 1993, the following companies may be deemed to be affiliates of AFC: Percentage of Common State of Equity Name of Company Incorporation Ownership American Annuity Group, Inc. Delaware 80% Great American Life Insurance Ohio 100(A) Company American Financial Enterprises, Inc. Connecticut 83% Great American Holding Corporation Ohio 100 -3- Percentage of Common State of Equity Name of Company Incorporation Ownership Great American Insurance Company Ohio 100 American Empire Surplus Lines Delaware 100 Insurance Company American National Fire Insurance New York 100 Company Great American Management Ohio 100 Services, Inc. Mid-Continent Casualty Company Oklahoma 100 Stonewall Insurance Company Alabama 100 Transport Insurance Company Ohio 100 The Penn Central Corporation Pennsylvania 41 General Cable Corporation Delaware 45 Chiquita Brands International, Inc. New Jersey 46 Great American Communications Florida 19(B) Company (A) Represents ownership by American Annuity Group, Inc. (B) Represents 21% of voting power. The names of certain subsidiaries of AFC are omitted as such subsidiaries in the aggregate would not constitute a significant subsidiary. MANAGEMENT AND CONTROL (4) Directors and Executive Officers. List the names and complete mailing addresses of all directors and executive offi- cers of the applicant and all persons chosen to become directors or executive officers. Indicate all offices which the applicant held or to be held by each person named. Name Address Office(s) Carl H. Lindner One East Fourth Street Chairman of the Cincinnati, Ohio 45202 Board and Chief Executive Officer Richard E. Lindner One East Fourth Street Director Cincinnati, Ohio 45202 -4- Name Address Office(s) Robert D. Lindner One East Fourth Street Vice Chairman of the Cincinnati, Ohio 45202 Board Ronald F. Walker One East Fourth Street Director, President Cincinnati, Ohio 45202 and Chief Operating Officer Carl H. Lindner One East Fourth Street President of Great III Cincinnati, Ohio 45202 American Insurance Company and Chief Operating Officer of The Penn Central Corporation S. Craig Lindner One East Fourth Street President of Cincinnati, Ohio 45202 American Annuity Group, Inc. and Senior Executive Vice President of American Money Management Corporation James E. Evans One East Fourth Street Vice President and Cincinnati, Ohio 45202 General Counsel Sandra W. Heimann One East Fourth Street Vice President Cincinnati, Ohio 45202 Robert C. Lintz One East Fourth Street Vice President Cincinnati, Ohio 45202 Thomas E. Mischell One East Fourth Street Vice President Cincinnati, Ohio 45202 Fred J. Runk One East Fourth Street Vice President and Cincinnati, Ohio 45202 Treasurer James C. Kennedy One East Fourth Street Deputy General Coun- Cincinnati, Ohio 45202 sel and Secretary (5) Principal Owners of Voting Securities. Furnish the following information as to each person owning 10 Percent or more of the voting securities of the applicant. Percentage Title of Amount of Voting Name and Complete Class Owned at Securities Mailing Address Owned 12/31/93 Owned Carl H. Lindner (A) Common 7,749,210 40.9% One East Fourth Street Stock Cincinnati, Ohio 45202 -5- Percentage Title of Amount of Voting Name and Complete Class Owned at Securities Mailing Address Owned 12/31/93 Owned Carl H. Lindner III (B) Common 2,836,625 15.0% One East Fourth Street Stock Cincinnati, Ohio 45202 S. Craig Lindner (C) Common 2,701,460 14.2% One East Fourth Street Stock Cincinnati, Ohio 45202 Keith E. Lindner (D) Common 4,065,958 21.4% One East Fourth Street Stock Cincinnati, Ohio 45202 Lindvest, an Ohio Common 1,533,767 8.1% partnership (E) Stock 3955 Montgomery Road Cincinnati, Ohio 45212 (A) Includes 678,870 shares held by his wife. (B) Includes 12,500 shares held by his wife. (C) Includes 42,179 shares held by his wife individually and as custodian of their minor children. (D) Includes 920,742 shares he holds as trustee for the benefit of certain members of his family. Also included are 12,500 shares which may be acquired through the exercise of stock options which he holds and 25,000 shares which may be ac- quired through the exercise of stock options he holds as trustee. (E) The general partners of Lindvest are Robert D. Lindner, Jr., Jeffrey S. Lindner, A. Bradford Lindner and David C. Lindn- er, all of whom are sons of Robert D. Lindner. The above table does not reflect that Robert D. Lindner also owns an option to purchase 462,500 shares of AFC Common Stock from AFC which represents approximately 2.4% of AFC's Common Stock. (6) Underwriters. Give the name and complete mailing address of (a) each person who, within three years prior to the date of filing the application, acted as an underwriter of any securities of the obligor which were outstanding on the date of filing the application, and (b) each proposed principal under- writer of the securities proposed to be offered. As to each person specified in (a), give the title of each class of securi- ties underwritten. None. -6- CAPITAL SECURITIES (7) Capitalization. (a) Furnish the following information as to each authorized class of securities of the applicant. As of February 18, 1994 Amount Title of Class Amount Authorized Outstanding Common Stock, no par 32,300,000 shares 18,971,217 value Series E Preferred 2,725,000 shares 504,711 Stock, $10.50 par value Series F Preferred 15,000,000 shares 13,753,254 Stock, $1.00 par value Series G Preferred 2,000,000 shares 364,158 Stock, $1.00 par value Series I Preferred 700,000 shares 150,212 Stock, $.01 par value 12% Debentures Unlimited $201,873,000 (including Series A, B and BV) due September 3, 1999 10% Debentures Unlimited $150,013,000 (including Series A) due October 20, 1999 12-1/4% Debentures due $500,000,000 $128,294,000 September 15, 2003 13-1/2% Debentures Unlimited $73,546,000 (including Series A) due September 14, 2004 9-1/2% Subordinated $8,115,000 $7,708,000 Debentures due April 1999 -7- (b) Give a brief outline of the voting rights of each class of voting securities referred to in paragraph (a) above. Each share of AFC's Common Stock is entitled to one vote on the election of Directors and on all matters submitted to the shareholders for their vote, consent, waiver, release or other action. Shares of Common Stock have cumulative voting rights with respect to the election of directors. Subject to certain limitations, the Board of Directors of AFC is authorized to issue the Preferred Stock in one or more series, to fix the number of shares in each series, and to determine the terms and features of the shares of each series, including the voting rights, if any. INDENTURE SECURITIES (8) Analysis of Indenture Provisions. Insert at this point the analysis of indenture provisions required under Section 305(a)(2) of the Act. The Debentures are to be issued under an indenture to be dated as of February ___, 1994 (the "Indenture") between AFC and Star Bank, National Association (the "Trustee"). A copy of the Indenture substantially in the form in which it is expected to be executed is filed as an exhibit to this application. The following is a brief analysis of certain provisions of the Indenture required under Section 305(a)(2) of the Trust Indenture Act of 1939 and is subject to the detailed provisions of the Indenture, to which reference is hereby made for a complete statement of such provisions. Wherever particular provisions of the Indenture or terms defined therein are referred to herein, such provisions or definitions are incorporated by reference as a part of the statements made, and the statements are qualified in their entirety by such reference. (A) Events of Default; Withholding of Notice Thereof to Holders of the Debentures. The following events are defined in the Indenture as "Events of Default": 1.) failure to pay principal on the Deben- tures when due for 20 days; 2.) failure to pay interest on the Debentures when due for 30 days; 3.) failure to perform any other covenants in the Indenture for 90 days after notice by the Trustee or at least 25% in the principal amount of the outstand- ing Debentures; 4.) certain events of bankruptcy, insolvency or reorganization of AFC; 5.) certain events of default in any bond, mortgage, indenture or other instrument under which AFC has issued or may in the future issue any debt in excess of $10,000,- 000 and such default has not been cured within 30 days after notice to AFC; and 6.) AFC fails to pay any debt in excess of $10,000,000 within 20 days after the maturity of such debt. -8- If any Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in outstanding principal amount of the Debentures may declare the principal of and accrued interest on all Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding Debentures. The Indenture provides that the Trustee shall, within 90 days after a default occurs and is continuing and is known to the Trustee, give to the holders notice of all such uncured defaults (the term default includes the events specified above without grace periods); provided that, except in the case of default in the payment of principal of or interest on the Deben- tures, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of the holders of the Debentures. (B) Authentication and Delivery of New Debentures; Application of Proceeds. The Indenture provides that the Trustee or Authenticat- ing Agent shall authenticate and deliver, upon the written order of AFC, Debentures in the form specified in the Indenture up to the aggregate principal amount of $750,000,000. The Indenture also provides for authentication and delivery of the Debentures in connection with their transfer, exchange or partial redemp- tion, and in connection with temporary, mutilated, destroyed, lost or stolen Debentures. The issuance of Debentures pursuant to the Exchange Offer shall result in no proceeds to AFC since such Debentures shall be issued solely in exchange for Outstanding Debentures. (C) Release or Substitution of Property Subject to Lien. Not Applicable. (D) Satisfaction and Discharge of Indenture. The Indenture provides that it shall terminate (a) upon cancellation of the Debentures outstanding under the Indenture, or (b) if AFC deposits with the Trustee money or U.S. Government Obligations sufficient to pay principal and interest on the Debentures to maturity or earlier redemption. The Indenture also provides that upon such deposit the Trustee shall execute a proper instrument acknowledging the satisfaction and discharge of the Indenture. -9- (E) Evidence as to Compliance with Conditions and Covenants. Under the Indenture, AFC is required to deliver to the Trustee, within 120 days after the close of each fiscal year of AFC, a certificate of specified officers of AFC to the effect that in the course of the performance of their duties they would normally obtain knowledge of any default by AFC in the perfor- mance or fulfillment of any covenant, agreement or condition contained in the Indenture and that they have no knowledge of any such default (or specifying each such default of which they have knowledge), and what action the Corporation is proposing to take with respect thereto. The Indenture also requires that any application, demand or request by AFC for action by the Trustee must be accompanied by an officers' certificate stating that all condi- tions precedent, if any, provided for in the Indenture relating to the proposed action have been complied with, together with an opinion of counsel to the same effect. (9) Other Obligors. Give the name and complete mailing address of any person, other than the applicant, who is an obligor upon the indenture securities. None. Contents of Application for Qualification. This application for qualification comprises - (a) Pages numbered 1 - 11, consecutively. (b) The statement of eligibility and qualification of each trustee under the indenture to be qualified. (c) The following exhibits in addition to those filed as part of the statement of eligibility and qualification of each trustee: Exhibit Description T3A Articles of Incorporation of AFC, filed as Exhibit 3 to AFC's Form 10-K for the year ended December 31, 1988 T3B Code of Regulations of AFC, filed as Exhibit 3 to AFC's Form 10-K for the year ended December 31, 1988 T3C Form of Indenture to be qualified, dated as of February , 1994 T3D Not applicable. T3E(1) Form of Offering Circular, dated February 22, 1994 for the Exchange Offer. T3E(2) Form of Letter of Transmittal for the Exchange Offer. T3F Cross reference sheet (included in Exhibit T3C). -10- SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the applicant, American Financial Corporation, a corpora- tion organized and existing under the laws of the State of Ohio, has duly caused this application to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City of Cincinnati, and State of Ohio, on the 22nd day of February, 1994. AMERICAN FINANCIAL CORPORATION By: James E. Evans Vice President and General Counsel [SEAL] Attest: By: James C. Kennedy Deputy General Counsel and Secretary (NG2-403.T-3) -11- Securities Act of 1933 File No.___________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 __________________________________________________ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE PURSUANT TO SECTION 305(b) (2) / X / __________________________________________________ STAR BANK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A National Banking Association 31-0841368 (IRS Employer Identification No.) 425 Walnut Street, Cincinnati, Ohio45202 (Address of Principal Executive Offices)(Zip Code) _________________________________________________ Nancy V. Kelly Vice President and Trust Officer Star Bank, National Association 425 Walnut Street Cincinnati, Ohio 45202 (513) 632-4390 (Name, address, and telephone number of agent for services) AMERICAN FINANCIAL CORPORATION (Exact name of obligor as specified in its charter) Ohio 31-0841368 (State of Incorporation)(IRS Employer Identification No.) One East Fourth Street, Cincinnati, OH45202 (Address of Principal Executive Offices)(Zip Code) % Debentures Due April 20, 2006 -12- (Title of the Indenture securities) 1. General Information. Furnish the following information as Trustee -- (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency, Washington, D.C. Federal Reserve Bank of Cleveland, Ohio Federal Deposit Insurance Corporation, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. The Trustee is authorized to exercise corporate trust powers. 2. Affiliations with obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the Trustee (including its parent and any affiliates). 3. Voting Securities of the trustee. Furnish the following information as to each class of voting securities of the trustee (and its parent). As of _____________ (insert date within 31 days) Col A. Col B. (Title of Class) (Amount Outstanding) 4. Trusteeships under other Indentures. If the trustee is a trustee under another Indenture under which any other securities, or certificates of interest or participation in any other securi- ties, of the obligor are outstanding, furnish the following information: (a) Title of the securities outstanding under each such other indenture. (b) A brief statement of the facts relied upon as a basis for the claim that no conflicting interest within the meaning of Section 310(b) (1) of the Act arises as a result of the trustee- ship under any such other indenture, including a statement as to how the indenture securities will rank as compared with the securities issued under such other indenture. -13- 5. Interlocking directorates and similar relationships with the obligor or underwriters. If the trustee (including its parent and any other affiliates) or any of the directors or executive officers of the trustee is a director, officer, part- ner, employee, appointee, or representative of the obligor or of any underwriter for the obligor, identify each such person having any such connection and state the nature of each such connection. 6. Voting securities of the trustee (including its parent and any affiliate) owned by the obligor or its officials. Furnish the following information as to the voting securities of the trustee (including its parent and any affiliates) owned benefi- cially by the obligor and each director, partner and executive officer of the obligor: As of _______________________ (insert date within 31 days) Col. A. Col. B. Col. C Col. D Percentage of Voting Securities Represented by Amount Owned Amount Given Name of Owner Title of Class Beneficially in Col. C 7. Voting Securities of the trustee (including its parent and any affiliates) owned by underwriters of their officials. Furnish the following information as to the voting securities of the trustee (including its parent and any affiliates) owned beneficially by each underwriter for the obligor and each direc- tor, partner, and executive officer of each such underwriter: As of ___________________(insert date within 31 days) Col. A Col. B Col. C Col. D Percentage of Voting Securities Represented by Amount Owned Amount Given Name of Owner Title of Class Beneficially in Col. C -14- 8. Securities of the obligor owned or held by the trustee (including its parent and any affiliates). Furnish the follow- ing information as to securities of the obligor owned beneficial- ly or held as collateral security for obligations default by the trustee (including its parent and any affiliates): As of ___________________(insert date within 31 days) Col. A Col. B Col. C Col. D Amount Owned Beneficially Whether the or Held Percentage Securities Are as Collateral of Class Voting or Security for Represented Nonvoting obligations in by Amount Title of Class Securities Default given in Col.C 9. Securities of underwriters owned or held by the trustee (including its parent and any affiliates). If the trustee (including its parent and any affiliates) owns beneficially or holds as collateral security for obligations in default any securities of an underwriter for the obligor, furnish the follow- ing information as to each class of securities of such underwrit- er any of which are so owned or held by the trustee: Col. A Col. B Col. C Col. D Amount Owned Beneficially Whether the or Held Percentage Title Securities Are as Collateral of Class of Issuer Voting or Security for Represented and Title Nonvoting obligations in by Amount Class Securities Default given in Col.C 10. Ownership or holdings by the trustee (including its parent and any affiliates) of voting securities of certain affiliates or -15- security holders of the obligor. If the trustee (including its parent and any affiliates) owns beneficially or holds as collat- eral security for obligations in default voting securities of a person who, to the knowledge of the trustee (1) owns 10% or more of the voting securities of the obligor or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the following information as to the voting securities of such person: As of _______________________(insert date within 31 days) Col. A Col. B Col. C Col. D Amount Owned Beneficially Whether the or Held Percentage Title Securities Are as Collateral of Class of Issuer Voting or Security for Represented and Title Nonvoting obligations in by Amount Class Securities Default given in Col.C 11. Ownership or holdings by the trustee (including its parent and any affiliates) of any securities of a person owning 50 percent or more of the voting securities of the obligor. If the trustee (including its parent and any affiliates) owns benefi- cially or holds as collateral security for obligations in default any securities of a person who, to the knowledge of the trustee, owns 50 percent or more of the voting securities of the obligor, furnish the following information as to each class of securities of such person any of which are so owned or held by the trustee (including its parent and affiliates): As of ______________________(insert date within 31 days) Col. A Col. B Col. C Col. D Amount Owned Beneficially Whether the or Held Percentage Title Securities Are as Collateral of Class of Issuer Voting or Security for Represented and Title Nonvoting obligations in by Amount Class Securities Default given in Col.C -16- 12. Indebtedness of the Obligor to the Trustee. Except as noted in the instructions, if the obligor is indebted to the trustee, furnish the following information: As of ____________________(insert date with 31 days) Col. A Col. B Col. C Amount Nature of Indebtedness Outstanding Due Date 13. Defaults by the Obligor. a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. -NONE- b) If the Trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are out- standing, or is trustee for more than one outstanding series or securities under the indenture, state whether there has been a default under any such indenture or series, identify the inden- ture or series affected, and explain the nature of any such default. As of January 17, 1994 (insert date within 31 days) -NONE- Col. A Col. B Col. C Col. D Amount Owned Beneficially Whether the or Held Percentage Title Securities Are as Collateral of Class of Issuer Voting or Security for Represented and Title Nonvoting obligations in by Amount Class Securities Default given in Col.C -17- 14. Affiliations with the Underwriters. If any underwriter is an affiliate of the trustee (including its parent and any affili- ates), described each such affiliation. 15. Foreign Trustee. Identify the order or rule pursuant to which the foreign trustee is authorized to act as sole trustee under indentures qualified or to be qualified under the Act. 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility. 1. (a) A copy of the Articles of Association of The First National Bank of Cincinnati (now Star Bank, Na- tional Association) as now in effect. (b) A copy of the Amended Articles of Association dated June 14, 1991, changing the name of the association to Star Bank, National Association. 2. (a) A copy of the certificate of authority of The First National Bank of Cincinnati (now Star Bank, National Association) to commence business dated September 1, 1922. (b) A copy of a Certificate of the Comptroller of the Currency dated December 21, 1973, authorizing F N National Bank to commence the business of banking. (c) A copy of a Certificate of the Comptroller of the Currency dated December 28, 1973, approving the merger of The First National Bank of Cincinnati (now Star Bank, National Association) into F N National Bank under the title "The First National Bank of Cincinnati" effective January 2, 1974. (d) A copy of a letter dated June 8, 1988, from the Comptroller of the Currency indicating the change -18- in the name of the association to Star Bank, Na- tional Association, Cincinnati, effective July 1, 1988. -19- (e) A copy of a letter dated July 15, 1991, from the Comptroller of the Currency indicating the change in the name of the association to Star Bank, Na- tional Association, effective June 14, 1991. 3. A copy of the authorization of The First National Bank of Cincinnati (now Star Bank, National Association) to exercise corporate trust powers. 4. A copy of existing By-Laws to Star Bank, National Association, Cincinnati (now Star Bank, National Association) 5. The consent of the Trustee required by section 321 (b) of the Trust Indenture Act of 1939. 6. A copy of the latest report of condition of Star Bank, National Association, published pursuant to law or the require- ments of its supervising or examining authority. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Star Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Cincinnati and State of Ohio on the 16th day of February, 1994. STAR BANK, NATIONAL ASSOCIATION By: /s/ Stephen J. Blackstone Trust Officer -20- EXHIBIT 1 (a) STAR BANK, NATIONAL ASSOCIATION, CINCINNATI CHARTER NO. 24 ARTICLES OF ASSOCIATION FIRST: The title of this Association shall be "Star Bank, National Association, Cincinnati."* SECOND: The main office of the Association shall be in the City of Cincinnati, County of Hamilton, State of Ohio. The general business of the Association shall be conducted at its main office and its branches. THIRD: The Board of Directors of this Association shall consist of not less than five (5) nor more than twenty-five (25) shareholders, the exact number of Directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the Board of Directors for any reason, including an increase in the number thereof, may be filled by action of the Board of Directors. FOURTH: The annual meeting of the shareholders for the election of Directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office or such other place as the Board of Directors may designate, on the day of each year specified therefor by the Bylaws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the Board of Directors. FIFTH: The authorized amount of capital stock of this Association shall be 3,640,000 shares of common stock of the par value of five dollars ($5.00) each, but said capital stock may be increased or decreased from time to time, in accordance with the provisions of the laws of the United States. No holder of shares of the capital stock of any class of the Association shall have any pre-emptive or preferential right of subscription to any shares of any class of stock of the Association, whether now or hereafter authorized, or to any obligations convertible into stock of the Association issued or sold, nor any right of subscription to any thereof other than such, if any, as the Board of Directors, in its discretion, may from time to time determine and at such price as the Board of Directors may from time to time fix. -21- The Association, at any time and from time to time, may authorized and issue debt obligations, whether or not subordinated, without the approval of the shareholders. *Amended June 14, 1991, see attached. SIXTH: The Board of Directors shall appoint one of its members President of this Association, who shall be Chairman of the Board, unless the Board appoints another Director to be the Chairman. The Board of Directors shall have the power to appoint one or more Vice Presidents; and to appoint a Cashier and such other officers and employees as may be required to transact the business of this Association. The Board of Directors shall have the power to define the duties of the officers and employees of the Association; to fix the salaries to be paid to them; to dismiss them; to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all Bylaws that it may be lawful for them to make and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform. The Board of Directors, without need for approval of shareholders, shall have the power to change the location of the main office of this Association, subject to such limitations as from time to time may be provided by law; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders, but subject to the approval of the Comptroller of the Currency. SEVENTH: The corporate existence of this Association shall continue until terminated in accordance with the laws of the United States. EIGHTH: The Board of Directors of this Association, the Chairman of the Board, the President, or any three or more shareholders owning, in the aggregate, not less twenty-five percent of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten days prior to the date of such meeting to each shareholder of record at his address as shown upon the books of this Association. NINTH: Any person, his heirs, executors, or administrators, may be indemnified or reimbursed by the Association for reasonable expenses actually incurred in connection with any action, suit, or proceeding, civil or criminal, to which he or they shall be made a party by reason of his being or having been -22- a director, officer, or employee of the Association or of any firm, corporation, or organization which he served in any such capacity at the request of the Association. Provided, however, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding as to which he shall finally be adjudged to have been guilty of or liable for gross negligence, willful misconduct or criminal acts in the performance of his duties to the Association; and, provided further, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding which has been made the subject of a compromise settlement except with the approval of a court of competent jurisdiction, or the holders of record of a majority of the outstanding shares of the Association, or the Board of Directors, acting by vote of Directors not parties to the same or substantially the same action, suit, or proceeding, constituting a majority of the whole number of Directors. The foregoing right of indemnification shall not be exclusive of other rights to which such person, his heirs, executors, or administrators, may be entitled as a matter of law. The Association may, upon the affirmative vote of a majority of its Board of Directors, purchase insurance for the purpose of indemnifying its directors, officers and other employees to the extent that such indemnification is allowed in the preceding paragraph. Such insurance may, but need not, be for the benefit of all directors, officers, or employees. TENTH: These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of a greater amount of stock is required by law and in that case by the vote of the holders of such greater amount. August 18, 1988 -23- EXHIBIT 1(B) STAR BANC CORPORATION June 14, 1991 Deputy Comptroller Central District Office of the Comptroller of the Currency One Financial Place 440 S. LaSalle, Suite 2700 Chicago, Illinois 60605 Dear Deputy Comptroller: Re: Letter of Notification Star Bank, National Association, Cincinnati, Charter #24 intends to change its corporate title to Star Bank, National Association. The effective date of the change is June 14, 1991. A certified copy of the amendment to the articles of association is enclosed. The amendment conforms to the requirements of 12 USC 21 a. Sincerely, /s/ F. Kristen Koepcke FKK:bjt Enclosure -24- EXHIBIT 1 (b) MINUTES OF SPECIAL MEETING OF THE SHAREHOLDER STAR BANK, NATIONAL ASSOCIATION, CINCINNATI A Special Meeting of the shareholder of Star Bank, National Association, Cincinnati (the "Bank") was held on June 14, 1991. Mr. Oliver W. Waddell called the meeting to order and selected Mr. F. Kristen Koepke to act as Secretary. The Secretary reported that all the outstanding shares of the Bank were represented at this meeting and that the shareholder had waived notice of this special meeting. Therefore, a quorum was present. Mr. Waddell stated that the purpose of the meeting was to consider a proposed name change for the Bank as recommended by the Board of Directors. On motion duly made and carried, the following resolution was adopted: RESOLVED, That Article First of the Articles of Association of the Bank be amended in its entirely to read as follows: FIRST: The title of this Association shall be "Star Bank, National Association." There being no further business to come before the meeting, on motion duly made and carried, the meeting was adjourned. /s/ F. Kristen Koepke, Secretary Approved: /s/ Oliver W. Waddell Chairman, Star Banc Corporation, Shareholder Certified Copy /s/ Secretary -25- EXHIBIT 2 (a) COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS: NO. 24 E Pluribus Unum TREASURY DEPARTMENT Office of Comptroller of the Currency Washington, D.C., September 1, 1992 WHEREAS, the Act of Congress of the United States, entitled, "An Act to amend section 5136, Revised Statutes of the United States, relating to corporate powers of associations, so as to provide succession thereof for a period of ninety-nine years or until dissolved, and to apply said section as so amended to all national banking association", approved by the President on July 1, 1922, provided that all national banking associations organized and operating under any law of the United States on July 1, 1992 should have succession until ninety-nine years from that date, unless such association should be sooner dissolved by the act of its shareholders owning two-thirds of its stock, or unless its franchise should become forfeited by reason of violation of law, or unless it should be terminated by an Act of Congress hereinafter enacted; NOW THEREFORE, I, D. R. Crissinger Comptroller of the Currency, do hereby certify that The First National Bank of Cincinnati and State of Ohio , was organized and operating under the laws of the United States on July 1, 1922, and that its corporate existence was extended for the period of ninety-nine years from that date in accordance with and subject to the condition in the Act of Congress hereinbefore recited. (SEAL) IN TESTIMONY WHEREOF, witness my hand and seal of office this first day of September, 1922 (Signed) D. R. Crissinger Comptroller of the Currency -26- EXHIBIT 2 (b) Comptroller of the Currency TREASURY DEPARTMENT OF THE UNITED STATES Washington, D.C. Whereas, satisfactory evidence has been presented to the Comptroller of the Currency that "FN NATIONAL BANK". located in CINCINNATI, State of OHIO, has complied with all provisions of the Statutes of the United States required to be complied with before being authorized to commence the business of banking as National Banking Association; Now, therefore, I hereby certify that the above-named association is authorized to commence the business of banking as a National Banking Association. In testimony whereof, witness my signature SEAL and seal of office this 21st day of December, 1913. /S/ -27- EXHIBIT 2 (c) Comptroller of the Currency TREASURY DEPARTMENT OF THE UNITED STATES Washington, D.C. WHEREAS, satisfactory evidence has been presented to the Comptroller of the Currency that all requisite legal and corporate action has been taken, in accordance with the statutes of the United States, to merge The First National Bank of Cincinnati, Cincinnati, Ohio, into FN National Bank, Cincinnati, Ohio, under the charter of FN National Bank and under the title "The First National Bank of Cincinnati," with capital stock of $18,200,000; NOW, THEREFORE, it is hereby certified that such merger was approved November 29, 1973, and is effective as of the opening of business January 2, 1974. IN TESTIMONY WHEREOF< witness my signature and seal of office this 28th day of December, 1973 SEAL /S/ James E. Smith Comptroller of the Currency -28- EXHIBIT 2(d) _________________________________________________________________ Comptroller of the Currency Administrator of National Banks _________________________________________________________________ Central District One Financial Plaza, Suite 2700 440 South LaSalle Street Chicago, Illinois 60605 June 8, 1988 Mr. Raymond D. Beck Secretary & Counsel First National Cincinnati Corporation First National Bank Center 425 Walnut Street Cincinnati, Ohio 45201-1038 Dear Mr. Beck: The office of the Comptroller of the Currency acknowledges receipt of your letters concerning First National Cincinnati Corporation's banking subsidiarys' title changes and the appropriate amendments to each bank's articles of association. The Office has recorded the following banks' title changes effective July 1, 1988. Old Title New Title The First National Bank of Ironton Star Bank, National Association, Ironton, Ohio Tri-State Charter No. 16607 Farmers and Traders National Bank Star Bank, National Association Hillsboro, Ohio Hillsboro Charter No. 17646 The First National Bank Star Bank, National Association of Cincinnati Cincinnati Cincinnati, Ohio Charter No. 24 The First National Bank & Star Bank, National Association Trust Company Troy Troy, Ohio -29- Charter No. 9336 -30- Page 2 Mr. Raymond D. Beck (cont'd) The Second National Bank Star Bank, National of Hamilton Association Hamilton, Ohio Butler County Charter No. 17200 The Second National Bank Star Bank, National of Richmond Association Richmond, Indiana Eastern Indiana Charter No. 1988 The First National Bank of Aurora Star Bank, National Aurora, Indiana Association Charter No. 699 Aurora The Peoples National Bank Star Bank, National of Lawrenceburg Association Lawrenceburg, Indiana Southeastern Indiana Charter No. 2612 Newport National Bank Star Bank, National Newport, Kentucky Association Charter No. 4765 Campbell County The First National Bank Star Bank, National Sidney, Ohio Association Charter No. 5214 Sidney Very truly yours, David J. Rogers National Bank Examiner Analysis Division -31- EXHIBIT 2(e) _________________________________________________________________ Comptroller of the Currency Administrator of National Banks _________________________________________________________________ Central District One Financial Place 440 S. LaSalle, Suite 2700 Chicago, Illinois 60605 July 15, 1991 Mr. F. Kristen Koepcke Vice President, General Counsel and Secretary Star Banc Corporation 425 Walnut Street P.O. Box 1038 Cincinnati, Ohio 45201-1038 Dear Mr. Koepcke: The Office of the Comptroller of the Currency has received your letter concerning the title change and the appropriate amendment to the bank's articles of association. The Office has recorded that as of June 14, 1991, the title of Star Bank, National Association, Cincinnati, Charter No. 24, was changed to Star Bank, National Association. As a result of the Garn-St Germain Depository Institutions Act of 1982, this Office is no longer responsible for the approval of national bank name changes nor does it maintain official records on the use of alternate titles. The use of other titles or the retention of the rights to any previously used title is the responsibility of the bank's board of directors. Legal counsel should be consulted to determine whether or not the new title, or any previously used title, could be challenged by competing institutions under the provisions of federal or state law. Very truly yours, David J. Rogers National Bank Examiner Analysis Division -32- EXHIBIT 3 THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS: FEDERAL RESERVE BOARD Washington, D.C. October 9, 1919 Pursuant to authority vested in the Federal Reserve Board by the Act of Congress approved December 23, 1913, known as the Federal Reserve Act, as amended by the Act of September 26, 1918, the FIRST NATIONAL BANK OF CINCINNATI has been granted the right to act, when not in contravention of State or local law, as TRUSTEE, EXECUTOR, ADMINISTRATOR, REGISTRAR OF STOCKS AND BONDS, GUARDIAN OF ESTATES, ASSIGNEE, RECEIVER OR IN ANY OTHER FIDUCIARY CAPACITY IN WHICH STATE BANKS, TRUST COMPANIES OR OTHER CORPORATIONS WHICH COME INTO COMPETITION WITH NATIONAL BANKS ARE PERMITTED TO ACT UNDER THE LAWS OF THE STATE OF OHIO. The exercise of such rights shall be subject to regulations prescribed by the Federal Reserve Board. Federal Reserve Board, By W. P. G. Harding Governor. ATTEST: W. T. Chapman Secretary. STATE OF OHIO DEPARTMENT OF BANKS AND BANKING Certificate of Authority No. 17 NATIONAL BANKS I, Philip C. Berg, Superintendent of Banks, do hereby certify that the First National Bank of Cincinnati, Hamilton County, Ohio has complied with all the requirements provided by law and is authorized to transact the business of a trust company and to perform all the functions granted to such companies by the laws of this state. Given under my hand and official Seal at Columbus, Ohio, this twenty-fifth day of November, A.D. 1919 Philip C. Berg, Superintendent of Banks. -33- (SEAL) EXHIBIT 4 BY-LAWS STAR BANK, N.A., CINCINNATI ARTICLE I MEETINGS OF SHAREHOLDERS SECTION 1. ANNUAL MEETING The annual meeting of shareholders shall be held in the main banking house of the Association at 11:00 a.m. on the second Tuesday in February of each year. Notice of such meeting shall be mailed to shareholders not less than ten (10) nor more than sixty (60) days prior to the meeting date. SECTION 2. SPECIAL MEETINGS Special meetings of shareholders may be called and held at such times and upon such notice as is specified in the Articles of Association. SECTION 3. QUORUM A majority of the outstanding capital stock represented in person or by proxy shall constitute a quorum of any meeting of the shareholders, unless otherwise provided by law, but less than a quorum may adjourn any meeting, from time to time, and the meeting amy be held as adjourned without further notice. SECTION 4. INSPECTORS The Board of Directors may, and in the event of its failure so to do, the Chairman of the Board shall appoint Inspectors of Election who shall determine the presence of a quorum, the validity of proxies, and the results of all elections and all other matters voted upon by shareholders at all annual and special meetings of shareholders. SECTION 5. VOTING In deciding on questions at meetings of shareholders, except in the election of directors, each shareholder shall be entitled to one vote for each share of stock held. A majority of votes cast shall decide each matter submitted to the shareholders, except where by law a larger vote is required. In all elections of directors, each shareholder shall have the right to vote the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate such shares and give one candidate as many votes as the number of directors multiplied by -34- the number of his shares equal, or to distribute them on the same principle among as many candidates as he shall think fit. ARTICLE II SECTION 1. TERM OF OFFICE The directors of this Association shall hold office for one year and until their successors are duly elected and qualified. SECTION 2. REGULAR MEETINGS The organization meeting of the Board of Directors shall be held as soon as practical following the annual meeting of shareholders at the main banking house. Other regular meetings of the Board of Directors shall be held without notice at 11:00 a.m. on the second Tuesday of each month except February, at the main banking house, or, provided notice is given by telegram, letter, telephone or in person to every Director, at such time and place as may be designated in the notice of the meeting. When any regular meeting of the Board falls on a holiday, the meeting shall be held on the next banking business day, unless the Board shall designate some other day. SECTION 3. SPECIAL MEETINGS Special meetings of the Board of Directors may be called by the Chairman of the Board of the Association, or at the request of three or more Directors. Notice of the time, place and purposes of such meetings shall be given by telegram, letter, telephone or in person to every Director. SECTION 4. QUORUM A majority of the entire membership of the Board shall constitute a quorum at any meeting of the Board. SECTION 5. NECESSARY VOTE A majority of those Directors present and voting at any meeting of the Board of Directors shall decide each matter considered, except where otherwise required by law or the Articles or By-Laws of this Association. SECTION 6. COMPENSATION Directors, excluding full-time employees of the Bank, shall receive such reasonable compensation as may be fixed from time to time by the Board of Directors. SECTION 7. ELECTION-AGE LIMITATION No person shall be elected or reelected a Director after reaching his seventieth (70th) birthday, provided that any person who is a -35- Director on December 10, 1985, may continue to be reelected a Director until he reaches his seventy-fifth (75th) birthday. SECTION 8 RETIREMENT-AGE LIMITATION Every Director of the Bank shall retire no later than the first month next following his seventieth (70th) birthday, except for any person who was a Director on December 10, 1985, who shall retire not later that the first of the next month following his seventy-fifth (75th) birthday. SECTION 9 DIRECTORS EMERITUS The Board shall have the right from time to time to choose as Directors Emeritus persons who have had prior service as members of the Board and who may receive such compensation as shall be fixed from time to time by the Board of Directors. ARTICLE III OFFICERS SECTION 1 WHO SHALL CONSTITUTE The Officers of the Association shall be a Chairman of the Board, a President, a Secretary, and other officers such as Chairman of the Executive Committee, Vice Chairman of the Board, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, Trust Officers, Trust Investment Officers, Trust Real Estate Officers, Assistant Trust Officers, a Controller, Assistant Controller, an Auditor and Assistant Auditors, as the Board may appoint from time to time. Any person may hold two offices. The Chairman of the Board, all Vice Chairmen of the Board and the President shall at all times be members of the Board of Directors. SECTION 2 TERM OF OFFICE All officers shall be elected for and shall hold office for one year and until their successors are elected and qualified, subject to the right in the Board of Directors by a majority vote of the entire membership to discharge any officer at any time. SECTION 3 CHAIRMAN OF THE BOARD (Amended 12/13/88-see attachment) The Chairman of the Board shall be the Chief Executive Officer of the Association and shall have all duties, responsibilities and powers of the Chief Executive Officer. He shall, when present, preside at all meetings of shareholders and directors and shall be ex officio a member of all committees of the Board. He shall -36- name all members of the committees of the Board, subject to the confirmation thereof by the Board. In the event that there is a vacancy in the position of President or in the event of the absence or incapacity of the President, the Chairman may appoint, or in the event of his failure to do so, the Board of Directors or the Executive Committee thereof may designate any Vice Chairman of the Board, any Executive Vice President or any Senior Vice President of the Association temporarily to exercise the powers and perform the duties of the Chairman as Chief Executive Officer when the Chairman is absent or incapacitated. The Board of Directors shall have the power to elect a Chairman of the Executive Committee. Any such Chairman of the Executive Committee shall participate in the formation of the policies of the Association and shall have such other duties as may be assigned to him from time to time by the President or by the Board of Directors. SECTION 4 PRESIDENT (amended 12/13/88-see attachment) The President shall participate in the formation and supervision of the policies and operations of the Association and shall perform such other duties as may be assigned to him from time to time by the Board of Directors or by the Chairman of the Board. In the event that there is a vacancy in the position of the Chairman of the Board, the President shall be the Chief Executive Officer of the Association and shall have all the powers and perform all the duties of the Chairman of the Board, including the same power to name temporarily a Chief Executive Officer to serve in the absence of the President. SECTION 5 CHAIRMAN OF THE EXECUTIVE COMMITTEE The Board of Directors shall have the power to elect a Chairman of the Executive Committee. Any such Chairman of the Executive Committee shall participate in the formation of the policies of the Association and shall have such other duties as may be assigned to him from time to time by the President or by the Board of Directors. SECTION 6 VICE CHAIRMEN OF THE BOARD The Board of Directors shall have the power to elect one or more Vice Chairmen of the Board of Directors. Any such Vice Chairmen of the Board shall participate in the formation of the policies of the Association and shall have such other duties as may be assigned to him from time to time by the Chairman of the Board or by the Board of Directors. SECTION 7 OTHER OFFICERS -37- The Secretary and all other officers appointed by the Board of Directors shall have such duties as defined by law and as may from time to time be assigned to them by the Chief Executive Officer or the Board of Directors. -38- SECTION 8 RETIREMENT Every officer of the Association shall retire not later than the first of the month next following his sixty-fifth (65th) birthday. The Board of Directors may, in its discretion, set the retirement date and terms of retirement of an officer at a date later than provided above. ARTICLE IV COMMITTEES SECTION 1 EXECUTIVE COMMITTEE There shall be a standing committee of Directors in this Association to be known as the Executive Committee. This Committee shall meet at 11:00 a.m. on the first and fourth Tuesday of each month. It shall have all of the powers of the Board of Directors between meetings of the Board, except as the Board only by law is authorized to perform or exercise. All actions of the Executive Committee shall be reported to the Board of Directors. In the event that any member of the Executive Committee is unable to attend a meeting of that committee, the Chairman of the Board or the President may, at his discretion, appoint another Director to attend said meeting of the Executive Committee and for that meeting to serve as a member of the Executive Committee with full power to act in place of the absent regular member of the committee. SECTION 2 COMPENSATION COMMITTEE There shall be a standing committee of directors of this Association to be known as the Compensation Committee who shall review the compensation of all Executive Officers and those officers who participate in the Profit Sharing Pool as well as fees for directors of the Association. They will recommend specific compensation arrangements to the Board of Directors for their confirmation. SECTION 3 COMMITTEE ON AUDIT There shall be a standing committee of Directors of this Association to be known as the Committee on Audit, none of whose members shall be active officers of the Association. This Committee shall make or cause to be made a suitable examination of the affairs of the Association and the Trust Department at least once during each period of twelve months. The results of such examination shall be reported in writing to the Board at the next regular meeting thereafter stating whether the Association and/or Trust Department is in a sound solvent condition, whether adequate internal audit controls and procedures are being maintained and make such recommendations as it deems advisable. -39- -40- SECTION 4 TRUST COMMITTEE There shall be a standing committee of Directors of this Association to be known as the Trust Committee. The Trust Committee shall determine policies of the Department and review actions of the Trust Investment Committee. All actions of the Trust Committee shall be reported to the Board of Directors. SECTION 5 TRUST INVESTMENT COMMITTEE There shall be a standing committee of this Association to be known as the Trust Investment Committee composed of officers of the Association. The Trust Investment Committee or such officers as may be duly designated by the Trust Investment Committee, shall pass upon the acceptance of all trusts, the closing out or relinquishment of all trusts and the making, retention, or disposition of all investments of trust funds in conformity with policies established by the Trust Committee. Actions of the Trust Investment Committee shall be reported to the Trust Committee. SECTION 6 PENSION COMMITTEE There shall be a standing committee of directors or officers of this Association to be known as the Pension Committee, who shall have the powers and duties as set forth in the Association's Employees' Pension Plan. A report of the condition of the pension fund shall be submitted annually to the Board of Directors. SECTION 7 OTHER COMMITTEES The Chairman may appoint, from time to time, other committees for such purposes and with such powers as he or the Board may direct. ARTICLE V SEAL SECTION 1 IMPRESSION The following is an impression of the seal of this Association. -41- August 25, 1988 -42- RESOLVED, That Section 3 of Article III of the By-Laws of the Bank shall be amended to read: SECTION 3 CHAIRMAN OF THE BOARD The Chairman of the Board shall have general executive powers and duties and shall perform such other duties as amy be assigned from time to time by the Board of Directors. In addition, unless the Board of Directors shall have designated the President to be the Chief Executive Officer, the Chairman of the Board shall be the Chief Executive Officer and shall have all the powers and duties of the Chief Executive Officer. He shall, when present, preside at all meetings of shareholders and directors and shall be ex officio a member of all committees of the Board. He shall name all members of the committees of the Board, subject to the confirmation thereof by the Board. If he is Chief Executive Officer, in the event that there is a vacancy in the position of President or in the event of the absence or incapacity of the President, the Chairman may appoint, or in the event of his failure to do so, the Board of Directors or the Executive Committee thereof may designate, any Vice Chairman of the Board, any Executive Vice President or any Senior Vice President of the Association temporarily to exercise the powers and perform the duties of the Chairman as Chief Executive Officer when the Chairman is absent or incapacitated. If the President has been designated Chief Executive Officer by the Board of Directors, in the event that there is a vacancy in the position of the President or in the event of the absence or incapacity of the President, the Chairman shall be the Chief Executive Officer of the Association and shall have all the powers and perform all the duties of the President, including the powers to name temporarily a Chief Executive Officer to serve in the absence of the Chairman. FURTHER RESOLVED, That Section 4 of Article III of the By-Laws of the bank shall be amended to read: SECTION 4 PRESIDENT The President shall have general executive powers and duties and shall perform such other duties as may be assigned from time to time by the Board of Directors. In addition, if designated by the Board of Directors, the President shall be the Chief Executive Officer and shall have all the powers and duties of the Chief Executive Officer, including the same power to name temporarily a Chief Executive Officer to serve in the absence of the President if there is a vacancy in the position of the Chairman or in the event of the absence or incapacity of the Chairman. -43- If the Chairman has been designated Chief Executive Officer by the Board of Directors, in the event that there is a vacancy in the position of the Chairman of the Board or in the event of the absence or incapacity of the Chairman of the Board, the President shall be the Chief Executive Officer of the Association and shall have all the powers and perform all the duties of the Chairman of the Board, including the same power to name temporarily a Chief Executive Officer to serve in the absence of the President. -44- EXHIBIT 5 THE CONSENT OF THE TRUSTEE REQUIRED BY 321 (b) OF THE ACT Star Bank, National Association, the Trustee executing the statement of eligibility and qualification to which this Exhibit is attached does hereby consent that reports of examinations of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor in accordance with the provisions of 321 (b) of the Trust Indenture Act of 1939. STAR BANK, NATIONAL ASSOCIATION February 16, 1994 BY: /s/ Date Stephen J. Blackstone Trust Officer -45- Exhibit 6 STAR BANK, N.A. STATEMENTS OF CONDITION (dollars in thousands) DECEMBER 1993 ________ ASSETS: Cash and Due from Banks . . . . . . $ 36l,285 Interest Bearing Deposits . . . . . - Federal Funds Sold and Securities Purchased Under Agreements to Resell . . . . 172,675 Investment Securities . . . . . . . 1,407,615 Loans: Commercial Loans . . . . . . . 1,650,258 Real Estate Loans . . . . . . 1,689,865 Retail Loans . . . . . . . . . 1,256,833 Total Loans . . . . . . . . . 4,596,956 Less: Unearned Interest . . . 40,941 4,556,015 Allowance for Loan Losses 69,714 Net Loans . . . . . . . . . . 4,486,301 Premises and Equipment . . . . 69,072 Acceptances - Customers' Liability 3,026 Other Assets . . . . . . . . . 129,944 Total Assets . . . . . . . . . 6,629,918 LIABILITIES: Deposits: Non-Interest Bearing Deposits . . . 1,099,722 Interest Bearing Deposits: Savings and NOW . . . . . . . . . 1,443,775 MMDA . . . . . . . . . . . . . . 610,553 Time Deposits $100,00 and Over . 326,674 All Other Time Deposits . . . . . 1,551,426 Total Deposits . . . . . . . . . 5,032,150 Short Term Borrowings . . . . . . . 965,673 Long Term Debt . . . . . . . . . . 11,790 Acceptances Outstanding . . . . . . 3,026 Other Liabilities . . . . . . . . . 59,541 Total Liabilities . . . . . . . 6,072,180 SHAREHOLDER'S EQUITY: Common Stock . . . . . . . . . . . . . . 18,200 Surplus . . . . . . . . . . . . . . . . 167,889 Retained Earnings . . . . . . . . . . . 371,649 Total Shareholder's Equity . . . . 557,738 Total Liabilities and Shareholder's Equity . . . . . 6,629,918 -46- EX-4 2 INDENTURE INDENTURE dated as of February , 1994 between AMERICAN FINANCIAL CORPORATION, an Ohio corporation ("Corporation"), and STAR BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States ("Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Corporation's 9- 1/2% Debentures due April 20, 2004 ("Securities"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions "Affiliate" means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Corporation. "Board of Directors" means the Board of Directors of the Corporation or any authorized committee of the Board. "Corporation" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Debt" or "Indebtedness" means any indebtedness for borrowed money or evidenced by a note, debenture or a similar instrument (including a purchase money obligation) given in connection with the acquisition of any property or assets, including securities, or any guarantee of such indebtedness. "Default" means any event which is, or after notice or lapse of time or both would be, an Event of Default. "Holder" or "Securityholder" means the person in whose name a security is registered on the Registrar's books. 1 "Indenture" means the Indenture as amended or supplemented from time to time. "Lien" means any mortgage, pledge, security interest or lien. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer, the Secretary or the Controller of the Corporation. "Officers' Certificate" means a certificate signed by two Officers or by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant Controller of the Corporation. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Corporation. "Principal" of a Security means the amount stated as principal on the face of the Security plus, when appropriate, the premium on the Security. "SEC" means the Securities and Exchange Commission. "Securities" means the Corporation's 9-1/2% Debentures due April 20, 2004, as amended or supplemented from time to time that are issued under the Indenture. "Subsidiary" means a corporation of which the Corporation, the Corporation and one or more Subsidiaries, or one or more Subsidiaries at the time own a majority of that corporation's outstanding stock having voting power under ordinary circumstances to elect a majority of that corporation's board of directors. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77 aaa et seq.) as in effect on the date of this Indenture. "Trustee" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Trust Officer" means any officer or assistant officer of the Trustee authorized by the Trustee to administer its corporate trust matters. Section 1.02. Other Definitions Term Defined in Section "Bankruptcy Law" 6.01 "Custodian" 6.01 "Event of Default" 6.01 "Legal Holiday" 10.08 "Paying Agent" 2.03 "Registrar" 2.03 "U.S. Government Obligations" 8.01 Section 1.03. Incorporation by Reference of Trust Indenture Act Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this 2 Indenture. The following TIA Terms used in this Indenture have the following meanings: "Commission" means the SEC. "Indenture securities" means the Securities. "Indenture securityholder" means a Holder or a Securityholder. "Indenture to be qualified" means this Indenture. "Indenture trustee" or "institutional trustee" means the Trustee. "Obligor on the indenture securities" means the Corporation. All other terms used in the Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them. Section 1.04. Rules of Construction Unless the context otherwise requires: (1) the terms and provisions of the Securities described in the form of security, attached as Exhibit A, shall be binding upon the Holders and the Corporation as if such terms and provisions were contained in this Indenture; (2) a term has the meaning assigned to it; (3) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (4) "or" is not exclusive; and (5) words in the singular include the plural, and in the plural include the singular. ARTICLE 2 THE SECURITIES Section 2.01. Form and Dating The Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is incorporated in and made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. The Corporation shall approve the form of the Securities and any notation, legend or endorsement on them. Each Security shall be dated the date of its authentication. 3 Section 2.02. Execution and Authentication Two Officers shall sign the Securities for the Corporation by facsimile signature. The Corporation's seal shall be reproduced on the Securities. Temporary securities may be manually signed by two Officers of the Corporation and manually imprinted with the Corporation's seal. If an Officer who signed a Security no longer holds that office at the time the Trustee authenticates and delivers the Security, it shall be valid nevertheless. A Security shall not be valid until authenticated by the manual signature of the Trustee or an Authenticating Agent which may be appointed by the Corporation in its sole discretion. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee or Authenticating Agent shall authenticate and deliver from time to time the Securities for original issue up to the aggregate principal amount of $750,000,000 upon a written order of the Corporation signed by two Officers or by an Officer and an Assistant Treasurer of the Corporation. Such written order shall specify the amount of Securities to be authenticated and the date on which the original issue of the Securities shall be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed $750,000,000 except as provided in Sections 2.07 and 2.08. By executing this Indenture, the Corporation appoints Securities Transfer Company, an Ohio limited partnership, as Authenticating Agent under this Indenture. Section 2.03. Registrar and Paying Agent The Corporation shall designate a Registrar who shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar") and a paying agent who shall maintain an office or agency where Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Corporation may have one or more co-Registrars and one or more Paying Agents. The term Paying Agent includes all Paying Agents. If the Paying Agent is not the Trustee, the Paying Agent shall promptly notify the Trustee of the failure of the Corporation to make any payments required by this Indenture. The corporation shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-Registrar not a party to this Indenture. Each such agreement shall implement the provisions of this Indenture that relate to such agent. The Corporation shall notify the Trustee of the name and address of any such agent. If the Corporation fails to maintain a Registrar or Paying agent, the Trustee shall act as such. The Corporation initially appoints Securities Transfer Company, an Ohio limited partnership, Cincinnati, Ohio, as Registrar and Paying Agent. Section 2.04. Paying Agent to Hold Money in Trust Each Paying Agent shall hold in trust for the benefit of Securityhold- ers or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Securities, and shall notify 4 the Trustee of any default by the Corporation in making any such payment. If the Corporation or a Subsidiary acts as Paying Agent, it shall segregate such money and hold it as a separate trust fund. The Corporation at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon doing so, the Paying Agent shall have no further liability for such money. Section 2.05. Securityholder Lists The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Corporation shall furnish or cause to be furnished to the Trustee on or before the tenth day preceding each semiannual interest payment date as of the fifteenth day preceding such interest payment date, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. Section 2.06. Transfer and Exchange When a Security is presented to the Registrar or a co-Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements for such transactions are met. When Securities are presented to the Registrar or a co-Registrar with a request to exchange them for an equal principal amount of Securities, the Registrar shall make the exchange as requested if the same requirements are met. To permit transfers and exchanges, the Corporation shall execute and the Trustee shall authenticate and deliver Securities at the Registrar's request upon surrender of presented Securities to the Trustee. Any exchange or transfer shall be without charge, except that the Corporation may require payment of a sum sufficient to cover any tax or other govern- mental charge that may be imposed in connection with any transfer. The Registrar need not transfer or exchange any Securities for a period of 15 days before a selection of Securities to be redeemed and the mailing of notice of redemption. Section 2.07. Replacement Securities If the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Corporation shall issue and the Trustee shall authenticate and deliver a replacement Security if the Trustee's requirements are met. Such Holder shall furnish an indemnity bond suffi- cient in the judgment of the Corporation and the Trustee to protect the Corporation, the Trustee, any Paying Agent, the Registrar or any co-Regist- rar from any loss which any of them may suffer if a Security is replaced. The Corporation may charge such Holder for its expenses in replacing a Security. Section 2.08. Outstanding Securities Securities outstanding at any time are all Securities authenticated and delivered by the Trustee or Authenticating Agent except for those cancelled by them and those described in this Section as not outstanding. Except for the purposes of Section 10.06 hereof, securities outstanding include those held by the Corporation or its Affiliates. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding. 5 If the Paying Agent holds on a redemption date or maturity date money sufficient to pay Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. Such Securities carry no rightsexcept the right to receive payment. Section 2.09. Cancellation The Corporation at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment. The Trustee and no one else shall cancel and destroy any Securi- ties surrendered for transfer, exchange, payment or cancellation. The Corporation may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. Section 2.10. Temporary Securities Until definitive Securities are ready for delivery, the Corporation may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Corporation considers appropri- ate for temporary Securities. Without unreasonable delay, the Corporation shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities. Section 2.11. Defaulted Interest If the Corporation defaults in a payment of interest on the Securi- ties, it shall pay the defaulted interest, plus (to the fullest extent permitted by applicable law) any interest payable on the defaulted inter- est, compounded semi-annually, to the persons who are Securityholders on a subsequent special record date, and such term, as used in this Section 2.11 with respect to the payment of any defaulted interest, shall mean the fifteenth day next preceding the date fixed by the Corporation for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before the record date, the Corporation shall mail to each securityholder a notice that states the record date, the payment date and the amount of defaulted interest to be paid. ARTICLE 3 COVENANTS Section 3.01. Payment of Principal and Interest on Securities The Corporation shall pay the principal of, premium, if any, and interest on the securities by depositing with the Trustee and/or Paying Agent the funds required therefor, in immediately available funds, one full business day prior to the date due as provided in the Securities and the Indenture. The Corporation shall pay interest on overdue principal at 9-1/2%; it shall pay interest on overdue installments of interest at the same rate, compounded semi-annually, to the extent lawful. Section 3.02. Maintenance of Property The Corporation will at all times cause all buildings, plants, machinery, equipment or other tangible personal property operated by it or 6 any Subsidiary to be maintained and kept in such condition, repair and working order as in the judgment of the Corporation is necessary in the interest of the business of the Corporation as a whole. Nothing contained in this section 3.02 shall prevent or restrict the sale, abandonment or other disposition of any building, plant, machinery, equipment or other tangible personal property. Section 3.03. Insurance The Corporation will, and will cause each Subsidiary to, insure its properties (to the extent properties of such character are customarily insured) with responsible insurers and in an adequate amount, against loss or damage by fire and other risks against which insurance is usually carried by companies similarly situated as in the judgment of the Corpora- tion is necessary in the interest of the business of the Corporation as a whole. Section 3.04. Compliance Certificate The Corporation shall deliver to the Trustee within 120 days after the end of each fiscal year of the Corporation an Officers' Certificate stating whether or not to the best of their knowledge the signers know of any default by the Corporation in performing its covenants or obligations under this Indenture. The signers must be officers of the Corporation who would, in the normal performance of their duties, obtain knowledge of the Corpora- tion's failure to perform its covenants or obligations or of any default under this Indenture. If they do know of such a default, the certificate shall describe the default and what action the Corporation is proposing to take with respect thereto. The certificate shall comply with Section 10.05. The first certificate shall be delivered to the Trustee by April 30, 1995. In addition, the Corporation shall notify the Trustee of an Event of Default within seven days of such Event of Default. Section 3.O5. SEC Reports The Corporation shall file with the Trustee, within 15 days after it files them with the SEC, copies of the annual reports and of the informa- tion, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Corporation is required to file with the SEC pursuant to Section 13(a) or 15(d) of the securities Exchange Act of 1934. The Corporation also shall comply with the other provisions of TIA Section 314(a). Section 3.06. No Lien Created This Indenture and the Securities do not create a Lien, charge or encumbrance on any property of the Corporation or any Subsidiary. 7 Section 3.07. Corporate Existence Subject to the provisions of Article 5 hereof, the Corporation will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. ARTICLE 4 REDEMPTION Section 4.01. Optional Redemption On or after April 20, 1999, the Corporation may redeem any or all of the Securities at any time or some of them from time to time at the following prices (expressed as percentages of principal amount), plus accrued interest to the redemption date. If redeemed on or after April 20 of: Year Percentage Year Percentage 1999 104.75% 2001 101.75% 2000 103.25% 2002 and thereafter 100.00% Section 4.02. Selection of Securities to be Redeemed If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed by lot, at its discretion. The Trustee may select for redemption portions of the principal of Securities that have a denomination larger than $1,000. Securities and portions of them it selects shall be in amounts of $1,000 or a multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 4.03. Notice of Redemption At least 30 days but not more than 60 days before a redemption date, the Corporation shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. At least 15 days prior to the mailing of such a notice to each Holder of Securities to be redeemed, the Corporation shall deliver to the Trustee notice of the redemption date and principal amount of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall include: (l) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; and (5) that interest on Securities called for redemption ceases to accrue on and after the redemption date. At the Corporation's request, the Trustee shall give the notice of redemption in the Corporation's name and at the Corporation's expense. 8 Section 4.04. Deposit of Redemption Price Prior to the redemption date, the Corporation shall deposit with the Paying Agent, in immediately available funds, money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date. Section 4.05. Effect of Notice of Redemption Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the applicable redemption price. Upon surrender to the Paying Agent, such Securities shall be paid at such redemption price, plus accrued interest to the redemption date; provided, however, that if the redemption date is also an interest payment date, interest accrued on the Securities shall be paid by check as provided in paragraph 2 of the Security to Holders of record on the regular record date for such interest payment date. Section 4.06. Securities Redeemed in Part Upon surrender of a Security that is redeemed in part only, the Trustee or the Authenticating Agent shall authenticate, at the expense of the Corporation, for the Holder a new Security equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE 5 SUCCESSOR CORPORATION The Corporation shall not consolidate with or merge into, or transfer all or substantially all of its assets to, another corporation unless (i) the resulting, surviving or transferee corporation is organized and existing under the laws of the United States or a state thereof or the District of Columbia and assumes by supplemental indenture all the obliga- tions of the Corporation under the Securities and this Indenture, (ii) immediately after giving effect to such transaction no Event of Default and no circumstances which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and, (iii) the Corporation shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture comply with this Indenture, and thereafter all such obligations of the Corporation shall terminate. ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default An "Event of Default" occurs if: (1) the Corporation defaults in the payment of interest on any Security when the same becomes due and payable and the default continues for a period of 30 days; (2) the Corporation defaults in the payment of the principal of any Security when the same becomes due and payable at maturity, upon redemption 9 (including payment of any premium pursuant to Section 4.01 of the Inden- ture) or otherwise, and the default continues for a period of 20 days; (3) the Corporation fails to comply with any of its other agreements in the Securities or this Indenture and the default continues after the Trustee or the Holders of at least 25% in outstanding principal amount of the Securities notify the Corporation of the default and the Corporation does not cure the default within 90 days. The notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." (4) the Corporation pursuant to or within the meaning of any Bank- ruptcy Law: (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a Custodian of it or for any substantial part of its property, (d) makes a general assignment for the benefit of its creditors, or (e) fails generally to pay its debts as they become due, or (5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Corporation in an involuntary case, (b) appoints a Custodian of the Corporation or for any substan- tial part of its property, or (c) orders the liquidation of the Corporation, and the order or decree remains unstayed and in effect for 90 days; or (6) there has occurred an event of default, as defined in any bond, mortgage, indenture or other instrument under which the Corporation has issued or may in the future issue any Debt in excess of $10,000,000, and such an event of default may result in such Debt becoming due prior to its stated maturity and has not been cured within 30 days after proper notice to the Corporation of such event of default by the holders of 25% of the outstanding principal amount of such Debt or by the trustee of such Debt; or (7) the Corporation fails to pay within 20 days after the stated maturity of any Debt in excess of $10,000,000, whether presently issued or issued in the future. The foregoing notwithstanding, it shall not be an "Event of Default" if there occurs an event of default, as defined in any bond, mortgage, indenture or other instrument under which the Corporation has incurred or may in the future incur any obligation provided that such obligation is nonrecourse to the Corporation. The terms "Bankruptcy Law" means Title 11, United States Code or any similar Federal or State law for the relief of debtors. The term "Custodi- an" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Section 6.02. Acceleration 10 If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in outstanding principal amount of the Securities by notice to the Corporation may declare the principal of and accrued interest on all the Securities to be due and payable immediately. Upon a declaration such principal and interest shall be due and payable immediate- ly. The Holders of a majority in principal amount of the securities by notice to the Trustee may rescind an acceleration and its consequences if (i) all existing Events of Default have been cured or waived (other than non-payment of the principal or interest of the Securities which have become due solely by such declaration of acceleration), and (ii) if the rescission would not conflict with any judgment or decree. Section 6.03. Other Remedies If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 6.04. Waiver of Past Defaults Subject to Sections 6.02 and 9.02 the Holders of a majority in principal amount of the outstanding Securities by notice to the Trustee may waive an existing Default or Event of Default and its consequences. When a Default or Event of Default is waived, it is cured and stops continuing. Section 6.05. Control by Majority The Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceed- ing for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with applicable law or this Indenture, that is unduly prejudicial to the rights of other Securityholders, or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in outstanding principal amount of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfacto- ry to the Trustee against any loss, liability or expense; and 11 (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over any other Securityholder. Section 6.07. Rights of Holders to Receive Payment Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of principal and interest on the Security, on or after the respective due dates expressed in the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. Section 6.08. Collection Suit by Trustee If a default in payment of principal of the Securities occurs and is continuing, or if a default in payment of interest on the Securities as specified in Section 6.01(1) occurs and is continuing, the Trustee may recover judgment, in its own name and as trustee of an express trust, against the Corporation for the whole amount of principal and interest remaining unpaid. Section 6.09. Trustee May File Proofs of Claim The Trustee may file such proofs of claim and other papers or docu- ments as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Corporation, its creditors or its property. Section 6.10. Priorities If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.07; Second: to Securityholders for amounts due and unpaid on the Secu- rities for principal and interest and interest on overdue interest, said principal and interest to be paid ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and Third: to the Corporation, the unpaid amount of such money. The Trustee may fix a record date and payment date for any such payment to Securityholders. Section 6.11. Undertaking for Costs In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, includ- ing reasonable attorneys' fees, against any party litigant in the suit, 12 having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in outstanding principal amount of the Securities. Section 6.12. Rights and Remedies Cumulative Except as provided in Section 6.06, no right or remedy herein con- ferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.13. Delay or Omission Not Waiver No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Subject to Section 6.06, every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights and powers and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (l) The Trustee need perform only those duties that are specifi- cally set forth in this Indenture and no others. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, upon certifi- cates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (l) This paragraph does not limit the effect of paragraph (b) of this Section. 13 (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to Paragraphs (a), (b) and (c) of this Sec- tion. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee, in its capacity as Trustee or Paying Agent, shall not be liable to pay interest on any money received by it except as otherwise agreed with the Corporation. Section 7.02. Rights of Trustee (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. Section 7.03. Trustee's Disclaimer The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Corporation's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 7.04. Individual Rights of Trustee. etc. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Corporation with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. Section 7.05. Notice of Defaults 14 If a Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it becomes known to the Trustee. Except in the case of a default in payment of the principal of or interest on any Security, the Trustee may withhold the notice if and so long as the Board of Directors of the Trustee, Executive Committee thereof, or a trust committee of directors and/or responsible officers of the Trustee, in good faith determines that withholding the notice is in the interest of the Securityholders. The Trustee shall not be deemed to have actual knowledge of an event or circumstance for purposes of this Indenture unless it shall have received written notice thereof from the Corporation or a Securityholder. Section 7.06. Reports by Trustee to Holders Within 60 days after each May 15 beginning with May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. Section 7.07. Compensation and Indemnity The Corporation shall pay to the Trustee from time to time reasonable compensation for its services. The Corporation shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses may include the reasonable compensation and expenses of the Trustee's agents and attorneys. The Corporation shall indemnify the Trustee against any loss or liability incurred by it. The Trustee shall notify the Corporation promptly of any claim for which it may seek indemnity. The Corporation need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Corporation's payment obligations in this section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal of, or premium, if any, or interest on particular Securities. Section 7.08. Replacement of Trustee The Trustee may resign by so notifying the Corporation. The Holders of a majority in principal amount of the outstanding Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee with the Corporation's consent. The Corporation may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. 15 If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, and the Holders have not approved a successor Trustee, the Corporation shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Corporation. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, power and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Corporation or the Holders of a majority in outstanding principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after notice, fails to comply with Section 7.10, any Securityholder who has been a Holder for at least six months may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts with or into, or transfers all or substantially all of its corporate trust assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualifications This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a) (1). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b) (1). For purposes of complying with TIA Section 310(b) (1), the Trustee states that it is Trustee under the indentures relating to the 10% Debentures due April 20, 1999, 10% Series A Debentures due October 20, 1999, 10% Series B Debentures due October 20, 1999, 12% Debentures due September 3, 1999, 12% Series A Debentures due September 3, 1999, 12% Series B Debentures due September 3, 1999, 13-1/2% Debentures due September 14, 2004, 13-1/2% Debentures Series A due September 14, 2004 and 12-1/4% Debentures due September 15, 2003, which are presently in effect and excluded from the operation of TIA Section 310(b) (1). Section 7.11. Preferential Collection of Claims Against Corporation The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. 16 ARTICLE 8 DISCHARGE OF INDENTURE Section 8.01. Termination of Corporation's Obligations The Corporation may terminate all of its obligations under the Securities and this Indenture if: (1) all Securities previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid) have been delivered to the Trustee for cancellation, or (2) the Corporation deposits with the Trustee money or U.S. Government Obligations sufficient to pay all remaining installments of principal and interest when due as provided in Paragraph 11 of the Securities. However, the Corporation's obligations in Paragraph 10 of the Securities and in Section 2.03, 2.04, 2.05, 2.06, 2.07, 6.07 and 7.07 of this Indenture shall survive until the Securities are no longer outstanding. Thereafter the Corporation's obligations in such Paragraph 10 and in such Sections 6.07 and 7.07 shall survive. Before or after such a deposit the Corporation may make arrangements satisfactory to the Trustee for the redemption of securities at a future date in accordance with Article 4. After a deposit pursuant to the second paragraph of this Section, the Trustee shall acknowledge in writing the discharge of the Corporation's obligations under the Securities and this Indenture except for those surviving obligations specified above. An installment of interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date money sufficient to pay the installment. In order to have money available on payment dates to pay principal or interest on the Securities, U.S. Government Obligations shall be payable as to principal or interest on or before such payment dates in such amounts as will provide the necessary money. U.S. Government Obligations deposited with the Trustee shall be obligations which are not callable at the issuer's option. "U.S. Government Obligations" means: (1) direct obligations of the United States for the payment of which its full faith and credit is pledged; or (2) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States. Section 8.02. Application of Trust Money The Trustee shall hold in trust money deposited with it pursuant to Section 8.01. It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Securities. 17 Section 8.03. Repayment to Corporation The Trustee and the Paying Agent shall promptly pay to the Corporation any excess money or deliver securities held by them at any time. The Trustee and the Paying Agent shall pay to the Corporation any money held by them for the payment of principal or interest that remains unclaimed for two years unless some other disposition of such unclaimed money is required by applicable law. Section 8.04. Reinstatement If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 8.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Corporation's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 8.01; provided, however, that if the Corporation has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Corporation shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.01. Without Consent of Holders The Corporation and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Article 5; or (3) to make any change that does not adversely affect the rights of any Securityholder. The Trustee may waive compliance by the Corporation with any provision of this Indenture or the Securities without notice to or consent of any Securityholder if it is presented with an Opinion of Counsel, which Opinion of Counsel shall be satisfactory to the Trustee, to the effect that the waiver does not adversely affect the rights of any Securityholder. Section 9.02. With Consent of Holders The Corporation and the Trustee may amend or supplement this Indenture or the securities without notice to any Securityholder but with the written consent of the Holders of a majority in principal amount of the outstanding Securities. The Holders of a majority in principal amount of the outstanding Securities may waive compliance by the Corporation in a particular instance with any provision of this Indenture or the Securities without notice to any Securityholder. However, without the consent of each Securityholder affected, an amendment, supplement or waiver, including a 18 waiver pursuant to Section 6.04 or rescission pursuant to Section 6.02, may not: (1) reduce the amount of Securities whose Holders must consent to an amendment, supplement or waiver; (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the fixed maturity of any Security; (4) make any Security payable in money other than that stated in the Security; or (5) waive a default in the payment of the principal of or interest on any Security. Section 9.03. Compliance With Trust Indenture Act Every amendment to or supplement of this Indenture or the Securities shall comply with the Trust Indenture Act of 1939 as then in effect and shall be authorized by a resolution of the Corporation's Board of Directors and agreed to by the Trustee. Section 9.04. Revocation and Effect of Consents A consent to an amendment, supplement or waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security. The Trustee must receive the notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver shall become effective on receipt by the Trustee of written consents from the Holders of the requisite percentage in principal amount of the outstanding securities. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in Clauses (1), (2), (3), (4) or (5) of Section 9.02. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 9.05. Notation on or Exchange of Securities If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on Security about the changed terms and return it to the Holder. Alternatively, if the Corporation or the Trustee so determine, the Corporation in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Section 9.06. Trustee to Sign Amendments. etc. 19 The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article if it is presented with an Opinion of Counsel, which Opinion of Counsel shall be satisfactory to the Trustee, to the effect that the amendment, supplement or waiver does not adversely affect the rights of the Trustee. The Corporation may not sign an amendment or supplement until the Board of Directors approves it. ARTICLE 10 MISCELLANEOUS Section 10.01. Trust Indenture Act Controls If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. Section 10.02. Notices Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by first-class mail addressed as follows: If to the Corporation: American Financial Corporation One East Fourth Street Cincinnati, Ohio 45202 Attention: Secretary If to the Trustee: Star Bank, National Association 425 Walnut Street Cincinnati, Ohio 45202 Attention: Corporate Trust Services Department The Corporation or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to him at his address as it appears on the registration books of the Registrar, or to such address as a Securityholder has supplied to the Trustee within two years preceding the date of such notice or to such Securityholders for whom names and addresses have been supplied to the Trustee pursuant to TIA Section 312. Such notice shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. Section 10.03. Communication by Holders With Other Holders Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Corporation, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). 20 Section 10.04. Certificate and Opinion of Counsel as to Conditions Prece- dent Upon any request or application by the Corporation to the Trustee to take any action under this Indenture, the Corporation shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Each Officers' Certificate and Opinion of Counsel shall be in writing. The legal counsel who renders it may be an employee of or counsel to the Corporation. The legal counsel shall be acceptable to the Trustee. Section 10.05. Statements Required in Certificate or Opinion of Counsel Each Officers' Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 10.06. When Treasury Securities Disregarded In determining whether the Holders of the required principal amount of Securities have concurred in any direction, or consent, or waiver, Securities owned by the Corporation or by any Affiliate shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. Section 10.07. Rules by Trustee, Paying Agent, Registrar The Trustee may make reasonable rules for the administration of this Indenture. Such rules may cover matters relating to action by or a meeting of Securityholders. The Paying Agent or Registrar may make reasonable rules for its functions. 21 Section 10.08. Legal Holidays A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or a day on which banking institutions are not required to be open in Cincinnati, Ohio. If a date for a payment of principal, premium, if any, or interest is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 10.09. Governing Law This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of Ohio. Section 10.10. No Adverse Interpretation of Other Agreements This Indenture may not be used to interpret another indenture, loan or debt agreement of the Corporation or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 10.11. No Recourse Against Others All liability described in Paragraph 16 of the Securities of any director, officer, employee or stockholder, as such, of the Corporation is waived and released. Section 10.12. Successors All agreements of the Corporation in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successors. Section 10.13. Duplicate Originals The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 22 SIGNATURES DATED: AMERICAN FINANCIAL CORPORATION As of February , 1994 By: Fred J. Runk Vice President & Treasurer ATTEST: James C. Kennedy, Secretary DATED: STAR BANK, NATIONAL ASSOCIATION As of February , 1994 By: Title: 23 EXHIBIT A Registered Registered No.______ $__________________ CUSIP _________ AMERICAN FINANCIAL CORPORATION 9-1/2% Debentures Due April 20, 2004 American Financial Corporation, a corporation duly organized and existing under the laws of the State of Ohio (herein referred to as the "Company"), for value received, hereby promises to pay to or registered assigns, the principal sum of DOLLARS on April 20, 2004 and to pay interest on said principal sum at the rate per annum specified above in semiannual payments on April 20 and October 20, commencing October 20, 1994 to holders of record on the preceding April 1 and October 1, respectively. Reference is hereby made to the further provisions of this Security as set forth on the following pages hereof. This Security shall not be valid unless the certificate of authentication hereof has been executed by the Trustee or an Authenticating Agent appointed by the Company. In Witness Whereof, American Financial Corporation has caused this instrument to be signed by its President by a facsimile of his signature and has caused a facsimile of its corporate seal to be imprinted hereon, attested by its Secretary by facsimile signature. Dated: ___________________, 1994 AMERICAN FINANCIAL CORPORATION BY:___________________________ Ronald F. Walker,President BY: James C. Kennedy, Secretary CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. BY: _____________________________________________ Authorized Signer 24 AMERICAN FINANCIAL CORPORATION 9-1/2% Debentures Due April 20, 2004 1. Interest American Financial Corporation ("Company"), an Ohio corporation, promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually on April 20 and October 20 of each year, commencing October 20, 1994. Interest on the Security will initially accrue from April 20, 1994 and thereafter from the most recent date to which interest has been paid. Interest on the Security shall be computed on the basis of a 365 or 366 day year, as appropriate, except that semiannual interest payments will be one-half of the annual interest. 2. Method of Payment The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered holders of Securities at the close of business on April 1 or October 1 next preceding the interest payment date even though Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by check payable in such money. It may mail an interest check to a holder's registered address. 3. Authenticating Agent, Paying Agent and Registrar Initially, Securities Transfer Company, One East Fourth Street, Cincinnati, Ohio 45202, will act as Authenticating Agent, Paying Agent and Registrar. The Company may change any Authenticating Agent, Paying Agent, Registrar or co-Registrar without notice. The Company or any of its Subsidiaries may act as Authenticating Agent, Paying Agent, Registrar or co-Registrar. 4. Indenture The Company issued the Securities under an Indenture dated as of February , 1994 (the "Indenture"), between the Company and Star Bank, National Association ("Trustee"). The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-bbb) as in effect on the date of the Indenture. The Securities are subject to all terms of the Indenture, and Securityholders are referred to the Indenture and the Act for a statement of them. The Securities are general unsecured obligations of the Company limited to an aggregate principal amount of $750,000,000 which may be issued pursuant to the Indenture. Securityholders may inspect the Indenture at the principal executive office of the Company. The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture. Such requests shall be directed to the Company at One East Fourth Street, Cincinnati, Ohio 45202. Attention: Treasurer. 25 5. Optional Redemption On or after April 20, 1999, the Company may redeem any or all of the Securities at any time or some of them from time to time at the prices (expressed as a percentage of principal amount) set forth below if redeemed during the period beginning on April 20 of the years indicated below plus accrued interest to the redemption date: Year Percentage 1999 104.75% 2000 103.25% 2001 101.75% 2002 and thereafter 100.00% 6. Notice of Optional Redemption Notice of optional redemption will be mailed at least 30 days but not more than 60 days before the optional redemption date to each holder of Securities to be redeemed at his registered address. Securities in a denomination larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. On the optional redemption date, interest will cease to accrue on Securities or portions of Securities called for redemption. If less than all the Securities are to be redeemed, the Trustee shall select by lot the Securities to be redeemed. 7. Maturity The Company will redeem all Securities outstanding on April 20, 2004 at a redemption price of 100% of principal amount, plus accrued interest to the redemption date. 8. Denominations, Transfer, Exchange The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Registrar may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Securities for a period of 15 days before a selection of securities to be redeemed and the mailing of the notice of redemption. 9. Persons Deemed Owners The registered holder of a Security may be treated as its owner for all purposes. 26 10. Unclaimed Money If money for the payment of principal, premium or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company unless some other disposition of such unclaimed money is required by applicable law. After that, holders entitled to the money must look to the Company for payment unless an unclaimed property law designates another person. 11. Discharge Prior to Maturity If the Company at any time deposits with the Trustee money or U.S. Government Obligations sufficient to pay principal and interest on the Securities to redemption or maturity, the Company will be discharged from the Indenture and the Securities, and holders must look only to the deposited money and securities for payment. U.S. Government Obligations are securities backed by the full faith and credit of the United States. 12. Amendment, Supplement and Waivers Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the consent of the holders of a majority in principal amount of the outstanding Securities, and any past default or compliance with any provision may be waived with the consent of the holders of a majority in outstanding principal amount of the Securities. Without the consent of any Securityholder, the Company and the Trustee may amend or supplement the Indenture to cure any ambiguity, defect or inconsistency or to make any change that does not adversely affect the rights of any Securityholder. 13. Covenants The Company will at all times cause all buildings, plants, machinery, equipment or other tangible personal property operated by it or any subsidiary to be maintained and kept in such condition, repair and working order as in the judgment of the Company is necessary in the interest of the business of the Company as a whole, but nothing shall prevent or restrict the sale, abandonment or other dispositions of any building, plant, machin- ery, equipment or other tangible personal property. The Indenture does not restrict the amount of indebtedness the Company may incur or the amount it may pay as dividends or other distributions on the Company's common or preferred stock. 14. Successor Company When a successor corporation assumes all the obligations of its predecessor under the Securities and the Indenture, the predecessor corporation will be released from those obligations. 15. Defaults and Remedies An Event of Default is failure to pay interest on the Securities when due for a period of 30 days; failure to pay principal when the same becomes due for a period of 20 days; failure by the Company for 60 days after notice to it by the Trustee or the holders of at least 25% in principal amount of the Securities to comply with any of its other agreements in the Indenture or the Securities; the acceleration of, or the occurrence of circumstances (which have not been cured within 20 days) permitting the 27 acceleration of, other Debt, as defined in the Indenture, of the Company in excess of $10,000,000; failure by the Company to pay any Debt in excess of $10,000,000 within 20 days of its stated maturity; certain judgments remaining undischarged for 60 days; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and immediately payable. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnification satisfactory to it. Subject to certain limitations, holders of a majority in outstanding principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal, premium or interest) if it determines that withholding notice is in the Securityholders' interest. The Company must furnish an annual compliance certificate to the Trustee. 16. No Recourse Against Others A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Security. 17. Trustee Dealings with the Company Star Bank, National Association, the Trustee under the Indenture, or any Trustee may act as Trustee in connection with issues of indebtedness issued by the Company and, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates (as defined in the Indenture), and may otherwise deal with the company or its affiliates, as if it were not Trustee. 18. Authentication This Security shall not be valid until authenticated by the manual signature of the Trustee or an Authenticating Agent. 19. Abbreviations Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act). 28 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Insert Assignee's Social Security or Tax-ID. No.) (Print or type Assignee's name, address and zip code) and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: Your Signature: (Sign exactly as your name appears on the other side of this Security) (NG2-405.IND) 29 Draft of 2/17/94 AMERICAN FINANCIAL CORPORATION AND STAR BANK, NATIONAL ASSOCIATION Trustee INDENTURE $750,000,000 PRINCIPAL AMOUNT 9-1/2% Debentures Due April 20, 2004 Dated as of February , 1994 CROSS-REFERENCE TABLE TIA Indenture Section Section 310(a) (1) 7.10 (a) (2) 7.10 (a) (3) N.A. (a) (4) N.A. (b) 7.08; 7.10; 10.02 (c) N.A. 311(a) 7.11 (b) 7.11 (c) N.A. 312(a) 2.05 (b) 10.03 (c) 10.03 313(a) 7.06 (b)(1) N.A. (b)(2) 7.06 (c) 10.02 (d) 7.06 314(a) 4.02; 10.02 (b) N.A. (c)(1) 10.04 (c)(2) 10.04 (c)(3) N.A. (d) N.A. (e) 10.05 (f) 3.04 315(a) 7.01(b) (b) 7.05; 10.02 (c) 7.01(a) (d) 7.01(c) (e) 6.11 316(a) (last sentence) 2.09 (a)(1)(A) 6.05 (a)(1)(B) 6.04 (a)(2) N.A. (b) 6.07 CROSS-REFERENCE TABLE (continued) 317(a)(1) 6.08 (a)(2) 6.09 (b) 2.04 318(a) 10.01 N.A. = not applicable TABLE OF CONTENTS ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . 1 Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . 2 Section 1.03. Incorporation by Reference of Trust Indenture Act . 2 Section 1.04. Rules of Construction . . . . . . . . . . . . . . . 3 ARTICLE 2 THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . 3 Section 2.02. Execution and Authentication . . . . . . . . . . . 4 Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . 4 Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . 4 Section 2.05. Securityholder Lists . . . . . . . . . . . . . . . 5 Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . 5 Section 2.07. Replacement Securities . . . . . . . . . . . . . . 5 Section 2.08. Outstanding Securities . . . . . . . . . . . . . . 5 Section 2.09. Cancellation . . . . . . . . . . . . . . . . . . . 6 Section 2.10. Temporary Securities . . . . . . . . . . . . . . . 6 Section 2.11. Defaulted Interest . . . . . . . . . . . . . . . . 6 ARTICLE 3 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 3.01. Payment of Principal and Interest on Securities . . 6 Section 3.02. Maintenance of Property . . . . . . . . . . . . . . 6 Section 3.03. Insurance . . . . . . . . . . . . . . . . . . . . . 7 Section 3.04. Compliance Certificate . . . . . . . . . . . . . . 7 Section 3.O5. SEC Reports . . . . . . . . . . . . . . . . . . . . 7 Section 3.06. No Lien Created . . . . . . . . . . . . . . . . . . 7 Section 3.07. Corporate Existence . . . . . . . . . . . . . . . . 8 ARTICLE 4 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 4.01. Optional Redemption . . . . . . . . . . . . . . . . 8 Section 4.02. Selection of Securities to be Redeemed . . . . . . 8 Section 4.03. Notice of Redemption . . . . . . . . . . . . . . . 8 Section 4.04. Deposit of Redemption Price . . . . . . . . . . . . 9 Section 4.05. Effect of Notice of Redemption . . . . . . . . . . 9 Section 4.06. Securities Redeemed in Part . . . . . . . . . . . . 9 ARTICLE 5 SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . 9 ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . 9 Section 6.01. Events of Default . . . . . . . . . . . . . . . . . 9 Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . 10 Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . 11 Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . 11 Section 6.05. Control by Majority . . . . . . . . . . . . . . . . 11 Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . 11 Section 6.07. Rights of Holders to Receive Payment . . . . . . . 12 Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . 12 Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . 12 Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 12 Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . 12 Section 6.12. Rights and Remedies Cumulative . . . . . . . . . . 13 Section 6.13. Delay or Omission Not Waiver . . . . . . . . . . . 13 ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . 13 Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . 14 Section 7.03. Trustee's Disclaimer . . . . . . . . . . . . . . . 14 Section 7.04. Individual Rights of Trustee. etc. . . . . . . . . 14 Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . 14 Section 7.06. Reports by Trustee to Holders . . . . . . . . . . . 15 Section 7.07. Compensation and Indemnity . . . . . . . . . . . . 15 Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . 15 Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . 16 Section 7.10. Eligibility; Disqualifications . . . . . . . . . . 16 Section 7.11. Preferential Collection of Claims Against Corporation . . . . . . . . . . . . . . . . . . . 16 ARTICLE 8 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . 17 Section 8.01. Termination of Corporation's Obligations . . . . . 17 Section 8.02. Application of Trust Money . . . . . . . . . . . . 17 Section 8.03. Repayment to Corporation . . . . . . . . . . . . . 18 Section 8.04. Reinstatement . . . . . . . . . . . . . . . . . . . 18 ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . 18 Section 9.01. Without Consent of Holders . . . . . . . . . . . . 18 Section 9.02. With Consent of Holders . . . . . . . . . . . . . . 18 Section 9.03. Compliance With Trust Indenture Act . . . . . . . . 19 Section 9.04. Revocation and Effect of Consents . . . . . . . . . 19 Section 9.05. Notation on or Exchange of Securities . . . . . . . 19 Section 9.06. Trustee to Sign Amendments. etc. . . . . . . . . . 19 ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 20 Section 10.01. Trust Indenture Act Controls . . . . . . . . . . . 20 Section 10.02. Notices . . . . . . . . . . . . . . . . . . . . . 20 Section 10.03. Communication by Holders With Other Holders . . . 20 Section 10.04. Certificate and Opinion of Counsel as to Condi- tions Precedent . . . . . . . . . . . . . . . . . . . . . . . 21 Section 10.05. Statements Required in Certificate or Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 10.06. When Treasury Securities Disregarded . . . . . . . 21 Section 10.07. Rules by Trustee, Paying Agent, Registrar . . . . 21 Section 10.08. Legal Holidays . . . . . . . . . . . . . . . . . . 22 Section 10.09. Governing Law . . . . . . . . . . . . . . . . . . 22 Section 10.10. No Adverse Interpretation of Other Agreements . . 22 Section 10.11. No Recourse Against Others . . . . . . . . . . . . 22 Section 10.12. Successors . . . . . . . . . . . . . . . . . . . . 22 Section 10.13. Duplicate Originals . . . . . . . . . . . . . . . 22 EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 iii EX-19 3 OFFERING CIRCULAR OFFERING CIRCULAR AMERICAN FINANCIAL CORPORATION OFFER TO EXCHANGE 9-1/2% Debentures due April 20, 2004 For Its Publicly Traded Debentures Listed Below American Financial Corporation ("AFC") hereby offers to issue, upon the terms and conditions set forth in this Offering Circular, $1,000 principal amount of its 9-1/2% Debentures due April 20, 2004 (the "New Debentures") and cash representing a premium and accrued interest as set forth below in exchange for each $1,000 principal amount of the following debentures (collectively, the "Old Debentures").
IF YOU TENDER: YOU WILL RECEIVE: $1,000 Principal Amount of any of New Accrued the following Old Debentures: Debentures Plus Premium Plus Interest 9-1/2% Subordinated Debentures due April 22, 1999 $1,000 $20.00 Cash $ -0- 10% Debentures due October 20, 1999 $1,000 $20.00 Cash $ -0- 10% Debentures due October 20, 1999, Series A $1,000 $20.00 Cash $ -0- 12% Debentures due September 3, 1999 $1,000 $20.00 Cash $15.65 Cash 12% Debentures due September 3, 1999, Series A $1,000 $20.00 Cash $15.65 Cash 12% Debentures due September 3, 1999, Series B $1,000 $20.00 Cash $15.65 Cash 12-1/4% Debentures due September 15, 2003 $1,000 $57.50 Cash $11.98 Cash 13-1/2% Debentures due September 14, 2004 $1,000 $20.00 Cash $13.57 Cash 13-1/2% Debentures due September 14, 2004, Series A $1,000 $20.00 Cash $13.57 Cash
The above consideration is based on redemption prices plus accrued interest plus 2% ($20 cash per $1,000 principal amount) of Old Debentures. The 12- 1/4% Debentures due 2003 are redeemable at 103.75% of principal amount. Interest on the New Debentures accrues from April 20, 1994 and will be paid on April 20 and October 20 of each year. All regular semi-annual interest payments due in March and April 1994 will be paid on the Old Debentures, including those tendered and accepted for exchange. Other than those payments and the cash payment for "accrued interest" included in the Exchange Offer, no further interest will be paid on Old Debentures tendered. New Debentures will be redeemable at AFC's option, at any time after April 20, 1999, at prices declining each April 20 from 104.75% of principal amount in 1999 to 100% in 2002 and thereafter. See "Comparison of Securities" for the optional and mandatory redemption features of the Old Debentures. Following the Expiration Date, AFC will redeem as many of the Old Debentures outstanding as it believes its resources will reasonably allow. All of the other issues of Old Debentures are redeemable at principal amount. Particular issues and amounts of Old Debentures selected for redemption will depend, among other factors, on the results of this Exchange Offer as well as on the interest rates, sinking fund requirements, final maturity and redemption premiums, if any, of the Old Debentures. AFC will accept all Old Debentures validly tendered. New Debentures will be issued in $1,000 denominations and multiples thereof. Cash at the rate of 100% of principal amount will be paid in lieu of issuing fractional New Debentures. Under the terms of this Exchange Offer, approximately $550 million of the New Debentures could be issued. AFC intends to apply for listing of the New Debentures on the Pacific and Cincinnati Stock Exchanges. On February 18, 1994, the closing prices on the Pacific Stock Exchange per $1,000 principal amount of the Old Debentures were: 10% Debentures - $1,002.50; 10% Series A Debentures - $1,020.00; 12% Debentures - $1,021.25; 12% Series A Debentures - $1,020.00; 12-1/4% Debentures - $1,040.00; and 13-1/2% Debentures - $1,030.00. Closing prices were unavailable or not meaningful for the 9-1/2% Subordinated Debentures, 12% Series B Debentures and 13-1/2% Series A Debentures. The Exchange Offer is being made by AFC directly. No commissions or fees will be paid for soliciting or securing acceptances of this Exchange Offer. THIS OFFER WILL EXPIRE ON MARCH 25, 1994 AT 5:00 P.M. EASTERN TIME, UNLESS EXTENDED BY AFC WITH RESPECT TO ANY ISSUE OF OLD DEBENTURES. ____________________ The date of this Offering Circular is February 22, 1994. TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . 1 THE EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . 2 COMPARISON OF SECURITIES . . . . . . . . . . . . . . . . . . 6 PRICE RANGE OF OLD DEBENTURES . . . . . . . . . . . . . . . . 7 PURPOSES AND EFFECTS OF THE EXCHANGE OFFER . . . . . . . . . 9 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . 13 CERTAIN FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . 13 DESCRIPTION OF NEW DEBENTURES . . . . . . . . . . . . . . . . 16 DESCRIPTION OF OLD DEBENTURES . . . . . . . . . . . . . . . . 19 Description of 9-1/2% Subordinated Debentures . . . . . 20 Description of 10% Debentures . . . . . . . . . . . . . 22 Description of 10% Debentures, Series A . . . . . . . . 25 Description of 12% Debentures . . . . . . . . . . . . . 25 Description of 12% Debentures, Series A . . . . . . . . 28 Description of 12% Debentures, Series B . . . . . . . . 28 Description of 12-1/4% Debentures . . . . . . . . . . . 29 Description of 13-1/2% Debentures . . . . . . . . . . . 32 Description of 13-1/2% Debentures, Series A . . . . . . 34 ____________________________ No person is authorized to give any information or to make any representations other than contained herein and any such additional information or representations must not be relied upon as having been authorized. This Offering Circular does not constitute an offer in any state in which such offer is not authorized or to any person to whom it is unlawful to make such offer. Neither the delivery of this Offering Circular nor any issuance of securities hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of AFC since the date hereof. ____________________________ PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS, THE EXCHANGE OFFER AND THE NEW DEBENTURES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITIES. ____________________________ AFC's Annual Report on Form 10-K for the year ended December 31, 1992 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993 which have been filed with the Securities and Exchange Commission and all other filings made with the Commission by AFC under the Securities Exchange Act of 1934 during the pendency of the Exchange Offer are incorporated herein by reference. Copies of these reports will be furnished on request made to the Treasurer, American Financial Corporation, One East Fourth Street, Cincinnati, Ohio 45202. Questions, requests for assistance or additional copies of this Offering Circular and the accompanying Letter of Transmittal should be directed to Securities Transfer Company at One East Fourth Street, Cincinnati, Ohio, 45202, (513) 579-2414 or (800) 368-3417. INTRODUCTION American Financial Corporation ("AFC") is a holding company operating through wholly-owned and majority-owned subsidiaries and other companies in which it holds significant minority ownership interests. These companies operate in a variety of financial businesses, including property and casualty insurance, annuities, and portfolio investing. In nonfinancial areas, these companies have substantial operations in the food products industry, television and radio broadcasting and industrial manufacturing. AFC was incorporated as an Ohio corporation in 1955. Its address is One East Fourth Street, Cincinnati, Ohio 45202 and its phone number is (513) 579-2121. Over the years, AFC has made exchange offers in which cash, debentures and preferred stock have been issued in exchange for various other issues of AFC securities. AFC may in the future make optional redemptions or make exchange or tender offers designed to extend maturities, reduce effective costs, or reduce amounts of debt or preferred stock outstanding. AFC is making no recommendations as to whether or not holders of Old Debentures should accept the Exchange Offer. AFC has not received or asked for any opinion as to the fairness of the Offer to holders of Old Debentures. Holders of the Old Debentures should review the entire Offering Circular in considering whether to accept this Exchange Offer. Holders should also read the accompanying Letter of Transmittal which forms a part of the Exchange Offer with regard to further conditions and details of the Exchange Offer. Recent Developments AFC's pretax earnings from continuing operations for the first nine months of 1993 were $177.4 million compared to $7.8 million for the same period in 1992. Major factors contributing to the increase in earnings included $80 million of gains from the sales of shares of Spelling Entertainment Group Inc. and The Penn Central Corporation, and improved earnings from Penn Central and Chiquita Brands International, Inc. While fourth quarter results are not yet available, AFC anticipates that it will report substantial earnings for that period. On February 10, 1994, Penn Central announced that it is considering a proposal from AFC that Penn Central purchase the personal lines insurance businesses owned by AFC's wholly-owned subsidiary, Great American Insurance Company ("GAI") for $380 million in cash. These businesses reported net earned premiums of $342 million in 1993 and $322 million in 1992, representing approximately 25% of the net premiums earned by all of GAI's insurance operations for both of those years. GAI has estimated that the statutory combined ratio for the businesses was 99.0% in 1993 and 99.1% in 1992. The purchase would include the transfer of an investment portfolio of investment grade securities with a market value of approximately $450 million. GAI has estimated the net book value of the businesses that would be transferred would be approximately $200 million. The Penn Central board has appointed a special committee of its outside directors which is empowered to review all aspects of the proposal. Completion of a transaction would be subject to certain conditions, including approval by the special committee, receipt by Penn Central of a appropriate fairness opinion from an investment banking firm and any required regulatory approvals. This process could result in the transaction being changed with respect to the nature of the transaction, price and form of consideration paid. If the proposed transaction is consummated, it is possible that AFC could have substantially increased resources to invest or reduce outstanding debt. A Penn Central shareholder has filed purported derivative action against AFC and the Penn Central board of directors in state court in Cincinnati, Ohio. The action alleges that the proposal from AFC, if consummated, would constitute a waste of Penn Central's assets and seeks to enjoin the transaction or damages if it is consummated. AFC believes that the lawsuit is without merit. THE EXCHANGE OFFER Exchange Offer Terms AFC is offering to issue: (i) $1,000 principal amount of New Debentures plus $20.00 in cash in exchange for each $1,000 principal amount tendered of its 9-1/2% Subordinated Debentures due April 22, 1999; (ii) $1,000 principal amount of New Debentures plus $20.00 in cash in exchange for each $1,000 principal amount tendered of its 10% Debentures due October 20, 1999 and 10% Debentures due October 20, 1999, Series A; (iii) $1,000 principal amount of New Debentures plus $35.65 in cash in exchange for each $1,000 principal amount tendered of its 12% Debentures due September 3, 1999, 12% Debentures due September 3, 1999, Series A and 12% Debentures due September 3, 1999, Series B; (iv) $1,000 principal amount of New Debentures plus $69.48 in cash in exchange for each $1,000 principal amount tendered of its 12-1/4% Debentures due September 15, 2003; (v) $1,000 principal amount of New Debentures plus $33.57 in cash in exchange for each $1,000 principal amount tendered of its 13-1/2% Debentures due September 14, 2004 and 13-1/2% Debentures due September 14, 2004, Series A. The New Debentures will accrue interest from April 20, 1994, with such interest payable in equal semi-annual installments on April 20 and October 20. All regular semi-annual interest 2 payments due in March and April 1994 will be paid on the Old Debentures, including those tendered and accepted for exchange. The New Debentures will be issued in denominations of $1,000 and multiples thereof. Cash, at the rate of 100% of principal amount, will be paid in lieu of issuing fractional New Debentures. AFC reserves the right to aggregate all Old Debentures exchanged by each holder thereof for the purpose of calculating denominations to be issued. AFC will accept for exchange all of the Old Debentures properly tendered prior to the Expiration Date and not withdrawn in accordance with the procedures described under "Withdrawal Rights." The Exchange Offer is not conditioned upon any minimum principal amount of Old Debentures being tendered. Expiration Date The Exchange Offer will expire on March 25, 1994, at 5:00 p.m., Eastern Time, unless extended by AFC as to any or all of the issues of Old Debentures (the "Expiration Date"). Notice of any extension will be publicly announced. Method of Tendering Holders of Old Debentures may exchange their securities by depositing or mailing a completed and signed Letter of Trans- mittal together with the certificates being tendered to the Exchange Agent so as to be received on or prior to the Expiration Date. Facsimile copies of the Letter of Transmittal will be accepted. The Exchange Agent for the Exchange Offer is: Securities Transfer Company One East Fourth Street Cincinnati, Ohio 45202 (800) 368-3417 or (513) 579-2414 (513) 621-1583 FAX Hand deliveries may be made to the 12th Floor at the same address. Letters of Transmittal, certificates representing the Old Debentures, and other required documents, if any, may also be sent or delivered to AFC at One East Fourth Street, Cincinnati, Ohio 45202. Additionally, Old Debentures will be deemed to have been offered to AFC for exchange if the Exchange Agent shall (a) have received prior to the Expiration Date from a commercial bank or trust company having an office, branch or agency in the United States, or a member firm of a national securities exchange or a member of the National Association of Securities Dealers, Inc. ("Eligible Institution"), a properly completed Letter of Transmittal, letter, or fax giving the name of the tendering holder, the amount of securities tendered, the names in which the securities being tendered are registered, and stating that the tender is being made thereby and guaranteeing delivery of the tendered securities (in which case, subject to subsequent 3 compliance with clause (b) below, the securities, to which the Letter of Transmittal, letter, fax or telegram relates shall be deemed properly tendered as of the date of receipt of the Letter of Transmittal, letter, fax or telegram); and (b) thereafter in fact have received the tendered certificates and a Letter of Transmittal within seven days after the Expiration Date. The method of delivery of the Letter of Transmittal, debenture certificates and other required documents, if any, to the Exchange Agent is at the election and risk of the debentureholder. No signature guarantee is required if (a) the Letter of Transmittal is signed by the registered holder of the Old Debentures and New Debentures are to be issued directly to such registered holder or (b) the certificates are tendered for the account of an Eligible Institution. A debentureholder may tender less than the entire principal amount of Old Debentures represented by the certificates covered by a Letter of Transmittal by appropriately marking such Letter of Transmittal, in which case a certificate representing the principal amount of Old Debentures not tendered will be returned to the tendering debentureholder. All questions as to the validity, form, eligibility (includ- ing time of receipt) and acceptance of any Old Debenture tendered will be determined by AFC, which determination shall be final and binding. AFC reserves the absolute right to reject any and all tenders of Old Debentures not in proper form or the acceptance of which would, in the opinion of AFC's counsel, be unlawful, or to waive any defect or irregularity in the tender of the Old Debentures. AFC's interpretation of the terms and conditions of the Exchange Offer (including the Letter of Transmittal and the Instructions thereto) will be final. Neither AFC nor the Exchange Agent shall be under any duty to give notification of any defects or irregularities in tenders or shall incur any liability for failure to give such information. Withdrawal Rights Persons tendering their Old Debentures in response to the Exchange Offer may withdraw the securities so tendered at any time prior to the close of business on March 25, 1994, or may withdraw such securities after April 20, 1994, unless accepted by AFC prior to the latter date, so long as AFC or the Exchange Agent receives notice of withdrawal before such acceptance. Any notice of withdrawal must specify the name of the person having deposited the debenture certificate to be withdrawn, the principal amount to be withdrawn and the name of the registered holder and certificate numbers of any Old Debentures to be withdrawn. All questions as to the validity of withdrawals, including the time of receipt of notices of withdrawal, will be determined by AFC. 4 Acceptance of Tendered Old Debentures; Delivery of New Debentures Acceptance of tendered Old Debentures will occur upon AFC giving oral or written notice thereof to the Exchange Agent. Payments will be made to tendering debentureholders as soon as practicable after their Old Debentures are accepted. Certificates representing any principal amount of Old Debentures not exchanged for New Debentures will be returned as soon as practicable after the Expiration Date. Conditions of Exchange Offer; Amendments Notwithstanding any other provisions of the Exchange Offer, or any extension of the Exchange Offer, AFC shall not be required to issue New Debentures in respect of any tendered Old Debentures and may terminate or amend the Exchange Offer (by oral or written notice to the Exchange Agent) if any of the following occur: (a) there shall be instituted or threatened any action or proceeding before or by any court or governmental agency, or by any person, challenging the Exchange Offer or otherwise directly or indirectly relating to the Exchange Offer or seeking damages or other relief or order which, in the opinion of AFC, would adversely affect its business or the business of its subsidiaries or the Exchange Offer; or (b) the indenture pursuant to which the New Debentures are to be issued has not been qualified under the Trust Indenture Act of 1939 prior to the expiration of the Exchange Offer. The foregoing conditions are for the sole benefit of AFC and may be waived by AFC, in whole or in part, in its sole discretion. Any determination made by AFC concerning the events described immediately above will be final and binding on all parties. AFC expressly reserves the right to amend the terms of the Exchange Offer in any manner, including changing the terms or expiration date with respect to some of the issues of Old Debentures and not others, so long as such change is not disadvantageous to tendering debentureholders. Any such amendment will be followed as promptly as practicable by public announcement thereof. Market for New Debentures There are no New Debentures presently outstanding. AFC intends to apply for listing of the New Debentures on the Pacific and Cincinnati Stock Exchanges. Whether or not such listings are obtained, AFC expects that the New Debentures will trade in the over-the-counter market. Market values of New Debentures may be expected to fluctuate depending on conditions prevailing from time to time in the bond markets and the financial condition of AFC. 5 COMPARISON OF SECURITIES The following information sets forth the principal differences between the New Debentures and the Old Debentures. Each issue of Old Debentures is currently listed on the Pacific and Cincinnati Stock Exchanges and securities dealers may extend margin credit on them. AFC intends to apply for listing of the New Debentures on these Exchanges; such listing may make the New Debentures eligible for the extension of margin credit by securities dealers. For a more complete description of the New Debentures and the Old Debentures, see "Description of New Debentures" and "Description of Old Debentures."
SECURITY AMOUNT INTEREST PAYMENTS MANDATORY OPTIONAL OUTSTANDING REDEMPTION REDEMPTION NEW DEBENTURES New issue. None 9-1/2% interest - T h e N e w T h e N e w outstanding. A ($95.00 per Debentures mature Debentures will maximum of $750 $1,000 principal on April 20, be redeemable at million principal amount) payable 2004. AFC's option a m o u n t i s semi-annually on beginning in authorized to be April 20 and 1999 at prices issued. October 20, declining each commencing April 20 from October 20, 1994. 104.75% of principal amount in 1999 to 100% in 2002 and thereafter, plus accrued interest to the date of redemption. 9-1/2% SUBORDINATED Approximately 9-1/2% interest - These Debentures These Debentures DEBENTURES $7.7 million ($95.00 per will be retired are redeemable principal amount. $1,000 principal at face at a rate at AFC's option amount) payable of 5% of original at any time at in semi-annual principal amount face value plus installments on on each April 22 accrued interest April 22 and through 1998, to the date of October 22. with remaining redemption. Debentures maturing on April 22, 1999. 6 10% DEBENTURES Approximately 10% interest These Debentures These Debentures 10% DEBENTURES, SERIES A $150.0 million ($100.00 per will be retired are redeemable principal amount. $1,000 principal at face at a rate at AFC's option amount) payable of 4% of original at any time at in semi-annual principal amount face value, plus installments on on each October accrued interest April 20 and 20 through 1998, to the date of October 20. with remaining redemption. Debentures maturing on October 20, 1999. 12% DEBENTURES Approximately 12% interest These Debentures These Debentures 12% DEBENTURES, SERIES A $189.1 million ($120.00 per will be retired are redeemable 12% DEBENTURES, SERIES B principal amount. $1,000 principal at face at a rate at AFC's option amount) payable of 2% of original at any time at in semi-annual principal amount face value plus installments on on each September accrued interest March 3 and 3 through 1998, to the date of September 3. with remaining redemption. Debentures maturing on September 3, 1999. 12-1/4% DEBENTURES Approximately 12-1/4% interest These Debentures These Debentures $128.3 million ($122.50 per will be retired are redeemable principal amount. $1,000 principal at face at a rate at AFC's option amount) payable of 5% of original at any time at in semi-annual principal amount prices declining installments on on each September from 103.75% of March 15 and 15 in 1998 principal amount September 15. through 2002, during 1994 to with remaining 100% in 1997 and Debentures thereafter, plus maturing on accrued interest September 15, to the date of 2003. redemption. 13-1/2% DEBENTURES Approximately 13-1/2% interest These Debentures These Debentures 13-1/2% DEBENTURES, $73.5 million ($135.00 per will be retired are redeemable SERIES A principal amount. $1,000 principal at face at a rate at AFC's option amount) payable of 3% of original at any time at in semi-annual principal amount face value, plus installments on on each September accrued interest March 14 and 14 in 1995 to the date of September 14. through 2003, redemption. with remaining Debentures maturing on September 14, 2004.
7 PRICE RANGE OF OLD DEBENTURES The Old Debentures are listed on the Pacific and Cincinnati Stock Exchanges. The following table shows the high and low prices per $1,000 principal amount for the Old Debentures for the periods indicated. The prices indicated for the Old Debentures were obtained from the Pacific Stock Exchange. High and low prices for the First Quarter of 1994 are through February 18.
1994 1991 1992 1993 (thru 2/18) High Low High Low High Low High Low 10% Debentures First Quarter . . $ 719$ 580$ 990$ 820 $ 963$ 870 $1,019 $ 990 Second Quarter . . 810 694 918 869 975 893 Third Quarter . . 780 741 894 865 1,010 965 Fourth Quarter . . 853 753 893 843 1,010 970 10% Series A Debentures First Quarter . . $ 750$ 613$ 950$ 850$ 960$ 905 $1,020 $ 985 Second Quarter . . 820 695 911 880 970 903 Third Quarter . . 783 745 1,000 870 1,000 960 Fourth Quarter . . 815 740 945 893 990 970 12% Debentures First Quarter . . $ 848$ 723 $1,038$ 920 $1,010$ 933 $1,029 $1,016 Second Quarter . . 940 800 1,005 970 1,013 940 Third Quarter . . 880 845 990 959 1,024 1,000 Fourth Quarter . . 945 850 968 916 1,030 998 12% Series A Debentures First Quarter . . $ 850$ 700 $1,005$ 918 $1,010$ 940 $1,021 $1,011 Second Quarter . . 900 835 1,000 950 1,010 970 Third Quarter . . 900 848 990 960 1,040 996 Fourth Quarter . . 938 846 974 916 1,050 1,005 12-1/4% Debentures First Quarter . . $ 820$ 665 $1,010$ 810 $1,010$ 950 $1,050 $1,036 Second Quarter . . 868 800 1,010 948 1,000 943 Third Quarter . . 940 835 978 940 1,005 968 Fourth Quarter . . 985 853 965 913 1,058 1,005 13-1/2% Debentures First Quarter . . $ 880$ 680 $1,051$ 970 $1,050$1,010 $1,050 $1,025 Second Quarter . . 945 873 1,035 996 1,040 1,000 Third Quarter . . 1,050 850 1,060 1,003 1,078 1,028 Fourth Quarter . . 1,020 955 1,035 1,000 1,075 1,028 8 Due to the limited number of holders and/or trades of the 9-1/2% Subordinated Debentures, 12% Series B Debentures and the 13-1/2% Series A Debentures, meaningful closing prices are not available.
9 On February 18, 1994, the closing prices on the Pacific Stock Exchange for $1,000 principal amount of the following issues of Old Debentures, the number of record holders and the principal amount outstanding were as follows:
Closing Number of Principal Amount Price Record Holders Outstanding 9-1/2% Subordinated Debentures due April 22, 1999 . $ * 1,454 $ 7,708,000 10% Debentures due October 20, 1999 . . . 1,002.50 4,327 145,900,000 10% Debentures due October 20, 1999, Series A . . . 1,020.00 447 4,113,000 12% Debentures due September 3, 1999 . . 1,021.25 1,629 89,658,000 12% Debentures due September 3, 1999, Series A . . 1,020.00 2,115 40,555,000 12% Debentures due September 3, 1999, Series B . . * 25 58,885,000 12-1/4% Debentures due September 15, 2003 1,040.00 2,962 128,294,000 13-1/2% Debentures due September 14, 2004 1,030.00 1,120 25,566,000 13-1/2% Debentures due September 14, 2004, Series A * 38 47,980,000 * Meaningful closing prices not available.
10 PURPOSES AND EFFECTS OF THE EXCHANGE OFFER AFC believes that it will benefit from this Exchange Offer primarily in that the interest rate on the New Debentures will be less than on the Old Debentures. Additionally, overall maturity payment requirements will be extended. The exchange, therefore, will strengthen AFC's capital structure and enable it to utilize the cash savings for other corporate purposes. AFC intends to use the Old Debentures acquired in the Exchange Offer to satisfy remaining sinking fund requirements and reduce the amount due at maturity. AFC reserves the right to credit the acquired Old Debentures for later redemption requirements as opposed to earlier requirements. Old Debentures may be called for redemption, in whole or in part, while the Exchange Offer is pending or after the Expiration Date. Following the Expiration Date, AFC will redeem as many of the Old Debentures outstanding as it believes its resources will reasonably allow. As of February 18, 1994, AFC had available approximately $300 million in unused lines of credit and available cash for this purpose. Particular issues and amounts of Old Debentures selected for redemption will depend, among other factors, on the results of this Exchange Offer as well as on the interest rates, sinking fund requirements, final maturity and redemption premiums, if any, of the Old Debentures. A reduction in the size of the float (the principal amount publicly held by other than officers, directors and certain other affiliates, and available for trading) effected by the Exchange Offer may result in a decrease in trading activity and liquidity of Old Debentures and may affect market prices. AFC does not believe there is a reliable way of predicting how these and all other relevant factors may affect the prices at which non-tendering holders of Old Debentures would subsequently be able to sell their securities. As of January 31, 1994, AFC's officers and directors beneficially owned approximately $20.2 million principal amount of Old Debentures which may be exchanged for New Debentures. In addition, certain benefit plans of AFC and its subsidiaries beneficially own an aggregate of approximately $40.6 million principal amount of Old Debentures. AFC has been informed that most of such debentures will likely be tendered in the Exchange Offer. Approximately $8.0 million principal amount of a private issue of AFC debentures which are held by an AFC subsidiary will also be exchanged for New Debentures. The table below shows (in thousands) total sinking fund and other principal payments on all debt of AFC (parent only) for 1994 and in subsequent periods on an historical basis and on a pro forma basis (a) assuming 50% of each issue of the Old Debentures are exchanged pursuant hereto ("50% Acceptance") and (b) assuming all of the Old Debentures are tendered ("100% Acceptance"). The 11 scheduled payments shown below assume that debentures purchased are applied to the earliest scheduled retirements.
Pro Forma December 31, 1993 50% 100% Historical Acceptance Acceptance 1994 . $ 12,080 $ 3,231 $ 3,231 1995 . 10,883 261 261 1996 . 11,843 261 261 1997 . 17,818 5,493 5,493 1998 . 19,223 261 261 1999-2002 343,605 184,928 11,469 2003-2006 154,279 375,296 548,755 Total $569,731 $569,731 $569,731
Actual cash outlays will be less than indicated in the above table to the extent that AFC can satisfy scheduled retirements and sinking fund requirements by acquiring its debt at discounts from redemption values. The net annual charge to pretax income for interest expense will decline by approximately $7.5 million based on 50% Acceptance and approximately $14.9 million based on 100% Acceptance. Source of Funds AFC is organized as a holding company with almost all of its operations being conducted by subsidiaries. The parent corporation, however, has continuing expenditures for administrative expenses and corporate services and, most importantly, for the payment of principal and interest on borrowings and dividends on outstanding preferred and common stock. At January 31, 1994, the parent corporation had investments in marketable securities which had a market value of $318 million. Funds to meet the parent company expenditures have been provided from a variety of sources within the holding company, from subsidiaries and directly from outside sources, as detailed in the following table (in millions): 12
Cash Provided from: 1992 1991 1990 Operations: Tax allocation payments from $128.7 $107.6 $ 53.5 subsidiaries..................... Dividends from 67.0 64.1 47.3 subsidiaries.............................. ......... Interest and dividends from 9.0 5.6 3.2 others............................... Receipts on notes and lease .9 2.6 8.4 receivables......................... Federal income tax 18.3 - 17.6 refund.................................... ..... From 223.9 179.9 130.0 operations................................ .................. Other transactions: Sale of 139.0 - - subsidiary................................ ................... Sale of assets to non- 25.6 8.7 4.3 affiliates................................ .... Sale of assets to 3.2 - 10.7 affiliates................................ .......... Sales of Preferred 15.0 19.4 - Stock..................................... ...... Additional .8 .9 1.1 borrowings................................ .............. 6.8 13.2 12.2 Other..................................... .............................. Total cash 414.3 222.1 158.3 provided.................................. ............ Cash utilized for: Operations: Interest 67.7 67.8 68.9 payments.................................. ................. Dividend 29.0 32.2 36.4 payments.................................. ............... 13 Federal income tax 22.2 17.5 - payments.................................. .. Other holding company 36.8 42.6 39.7 costs.................................... For 155.7 160.1 145.0 operations................................ ................... Other transactions: Net advances to (from) 225.5 14.8 (82.6) subsidiaries............................. Purchases of affiliate securities and other 42.7 1.8 58.7 investments............................... ......................... Principal payments on 17.5 5.5 7.8 debt...................................... .. Repurchases of Preferred 10.5 6.8 7.4 Stock.................................. .6 .6 9.6 Other..................................... .............................. Total cash 452.5 189.6 145.9 utilized.................................. .............. Net increase (decrease) in cash and short- (38.2) 32.5 12.4 term investments Cash and short-term investments at 47.0 14.5 2.1 beginning of period.... Cash and short-term investments at end $ 8.8 $ 47.0 $ 14.5 of period............
AFC has revolving credit agreements with several banks under which it may borrow up to $300 million until December 31, 1996. Any amount outstanding at that date is to be repaid in installments over the following four years. Proceeds may be used for expansion, operating capital, debt repayments or other purposes. Borrowings under AFC's revolving credit lines are made by a wholly-owned subsidiary, Great American Holding Corporation ("GAHC") and are advanced to AFC. These lines are guaranteed by AFC and are secured by 50% of the stock of its largest insurance subsidiary, Great American Insurance Company. Such borrowings are included in "advances from subsidiaries" in the above table. Repayments under the revolving credit lines are likewise included in "advances to subsidiaries". At February 18, 1994, AFC had no borrowings outstanding under these agreements. Interest payments on these lines amounted to $12.0 million in 1992, $17.5 million in 1991 and $18.3 million in 1990 and are included in "advances to subsidiaries". 14 AFC and certain subsidiaries have agreements among themselves under which they may borrow from each other from time to time for short-term working capital needs. These loans are made at current market rates. Management believes AFC has sufficient resources to meet its liquidity requirements through operations in the short-term and long-term future. If funds generated from operations, including dividends from subsidiaries, are insufficient to meet fixed charges in any period, AFC would be required to meet such charges through bank borrowings, sales of securities or other assets, or similar transactions. Over 90% of dividends (including non-cash dividends) actually received from subsidiaries in 1993, 1992 and 1991 were from AFC's insurance subsidiaries. Payments of dividends by AFC's insurance subsidiaries are subject to various laws and regulations which limit the amount of dividends that can be paid without regulatory approval. Under tax allocation agreements with AFC, each 80%-owned U.S. subsidiary computes its tax provision as if filing a separate return based on its book taxable income computed in accordance with generally accepted accounting principles. The resulting provision (or credit) is currently payable to (or receivable from) AFC. 15 CAPITALIZATION The following table sets forth the capitalization of AFC (parent only) at December 31, 1993, except as noted, and as adjusted for 50% Acceptance and 100% Acceptance (dollars in millions):
As Adjusted For 50% 100% Historical Acceptance Acceptance . . . . . . . . . . . . . . . . . Long-term debt: New Debentures offered hereby $ -- $ 274 $ 549 Other long-term debt of parent 549 286 23 Total long-term debt . . . 549 560 572 Mandatory redeemable preferred stock at redemption value . . . . . . . . 9 9 9 Capital Subject to Put Option (September 30, 1993) 30 30 . . . . . . . . . . . . . . . . . . . 30 Total redeemable capital . 39 39 39 Permanent shareholders' equity (September 30, 1993): Other preferred stock (redemption value - $279) 169 169 169 Common stock, without par value 1 1 1 Retained earnings . . . . . . . 191 191 191 Net unrealized gain on marketable securities, net of deferred income taxes . . . . 166 166 . . . . . . . . . . . . . . . . . . . 166 Total permanent shareholders' equity 527 527 527 Total capitalization . . . . . . . . $1,115 $1,126 $1,138
CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion of the principal federal income tax consequences of the Exchange Offer that may be expected to result to AFC and to the exchanging debentureholders. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), the income tax regulations promulgated by the Treasury Department, administrative rulings and pronouncements of the Internal Revenue Service (the "Service"), and judicial decisions, all as of the date of this Offering Circular. All of the foregoing are subject to change and any such change may be applied retroactively. In particular, holders of securities should 16 be aware that certain relevant amendments to the Code have been subject to only preliminary interpretations by the Service, and to no interpretation by the courts. This discussion assumes that the Old Debentures surrendered in the exchange are a capital asset in the hands of the exchanging debentureholders. This discussion does not purport to address all of the federal income tax consequences that may be applicable to particular categories of debentureholders, including but not limited to (i) those that received their debentures as employees, (ii) AFC's employee benefit plans, (iii) dealers in securities, (iv) banks, (v) insurance companies, (vi) tax-exempt persons, and (vii) non-United States persons. This discussion also does not address any tax consequences under the laws of any state, locality, or foreign jurisdiction. AFC does not intend to seek a ruling from the Service with respect to the federal income tax consequences of the Exchange Offer, and it is possible that the Service may take positions contrary to those set forth herein and such contrary positions may prevail in the event of a court challenge. DEBENTUREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO ANY FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX CONSIDERATIONS RELEVANT TO THEM. Certain Federal Income Tax Consequences to AFC AFC should recognize no gain or loss for federal income tax purposes on the exchange of its Old Debentures for its New Debentures. AFC should be entitled to a deduction, in the taxable year of the exchange, in an amount equal to any excess of the issue price (as determined under section 1273(b)(3) of the Code) of the New Debentures (plus any cash paid by AFC for the Old Debentures) over the adjusted issue price of the Old Debentures surrendered in exchange therefor. The adjusted issue price of an Old Debenture is the issue price of such Old Debenture as increased by the accrued original issue discount thereon. To the extent that original issue discount accrues on the New Debentures in any taxable year, AFC intends to deduct such accrued amounts in such taxable year as interest expense. However, AFC does not anticipate that the New Debentures will have original issue discount. Certain Federal Income Tax Consequences to Exchanging Debentureholders Tax Consequences of the Exchange Because the exchange of Old Debentures for New Debentures should qualify as a "recapitalization" under section 368(a)(1)(E) of the Code, gain or loss should not be recognized by the exchanging debentureholders except as stated herein. Subject to the rules set forth below relating to accrued original issue discount, an exchanging debentureholder's gain (but not loss) on the exchange will be recognized (and therefore will be reportable as income) to the extent of any cash premium or other property (including an excess principal amount, as described below) received from AFC in addition to New Debentures (the "gain recognition rule"). For purposes of the preceding sentence, "gain" is the 17 excess, if any, of (i) cash premium and the issue price of the New Debentures received over (ii) the exchanging debentureholder's tax basis in the Old Debentures surrendered therefor. If the holder of any Old Debenture has accrued market discount on such debenture within the meanings of sections 1276(b) and 1278(a) of the Code, recognized gain on the exchange of that debenture will be treated as ordinary income (rather than capital gain) to the extent of such accrued market discount. Accrued market discount on the Old Debentures should not increase the amount of gain otherwise recognized by the exchanging debentureholders; rather, the ordinary income taint of accrued market discount in excess of gain otherwise recognized should carry over to the New Debentures received in the exchange. However, because the Code states that the rules described in the preceding sentence are to be set forth in regulations that have not yet been issued, the current application of such rules is not free from doubt. For purposes of the gain recognition rule, "other property" includes the fair market value of the excess, if any, of the principal amount of securities received in the exchange over the principal amount of securities surrendered therefor. Because the face amount of New Debentures received in the exchange will not exceed the face amount of the Old Debentures surrendered therefor, exchanging debentureholders should not recognize gain under this excess principal amount rule if the statutory phrase "principal amount" is synonymous with "face amount." However, the Service has indicated in at least one private letter ruling (which does not have precedential value) that the phrase "principal amount" means the face amount of a debenture as reduced by the unamortized original issue discount on that debenture. If the Service were to take this position and prevail, a debentureholder's gain on the exchange generally would be recognized in an amount equal to the sum of (i) cash premium received and (ii) the fair market value of the excess, if any, of the principal amount (less any unamortized original issue discount thereon) of the New Debentures received over the principal amount (less any unamoritized original issue discount thereon) of the Old Debentures surrendered by that debentureholder. Debentureholders should consult with their own tax advisers on the issue of whether "principal amount" is synonymous with "face amount" for this purpose. Subject to the rules set forth below relating to accrued original issue discount, an exchanging debentureholder's tax basis in New Debentures received in the exchange is an amount equal to such debentureholder's tax basis in the Old Debentures surrendered therefor, decreased by any cash premium and the fair market value of other property received, and increased by any gain recognized by such debentureholder on the exchange (the "general tax basis rule"). The exchanging debentureholder is entitled to a fair market value tax basis in any such other property received. Special rules apply with respect to accrued original issue discount on the Old Debentures. First, an exchanging debentureholder will recognize ordinary income to the extent that New Debentures and cash received in the exchange are attributable 18 to original issue discount that accrued during the exchanging debentureholder's holding period and that was not previously included in such debentureholder's taxable income. Second, the exchanging debentureholder is entitled to a fair market value tax basis in a New Debenture received in the exchange to the extent that such New Debenture is attributable to accrued original issue discount that is or has been included in such debentureholder's taxable income. Third, the gain recognition rule and the general tax basis rule as described above are to be applied without regard to any amounts received that are attributable to accrued original issue discount, and without regard to any tax basis attributable to such accrued original issue discount. Original Issue Discount A New Debenture received in the exchange will have original issue discount if and to the extent that the stated redemption price at maturity (as defined in section 1273(a)(2) of the Code) of the New Debenture exceeds the issue price of such New Debentures (as determined under section 1273(b)(3) of the Code). Such original issue discount is includible in the holder's income (as interest income) on an economic accrual basis over the term of the debenture. The original issue discount on a New Debenture will be deemed to be zero if such discount does not exceed the product of (i) .25 percent of the stated redemption price at maturity of such New Debenture, multiplied by (ii) the number of complete years to maturity of such New Debenture. As stated above, AFC does not anticipate that the New Debentures will have original issue discount. Any unamortized original issue discount on Old Debentures that are surrendered in the exchange should be extinguished. Federal Income Tax Withholding In order to avoid federal income tax withholding on payments made on the New Debentures, holders must furnish the information required by Form W-9 or W-8, or similar form. In general, federal income tax will be withheld (at 31%, currently) unless the debentureholder (i) is a corporation or comes within certain other exempt categories or (ii) provides a taxpayer identification number and certifies that he has not been notified by Internal Revenue Service that he is subject to such withholding. DESCRIPTION OF NEW DEBENTURES General The New Debentures will be unsecured obligations of AFC and issued under an Indenture between AFC and Star Bank, National Association as Trustee. The following statements are brief summaries of certain provisions of the Indenture and do not purport to be complete. The Indenture has been filed with the Securities and Exchange Commission and references to the Indenture are qualified in their entirety by express reference to the Indenture. 19 The Indenture provides for the issuance of up to $750 million principal amount of New Debentures of which up to approximately $550 million could be issued pursuant to the Exchange Offer. Additional New Debentures may be issued in future exchange offers or in other transactions. The New Debentures are issuable as registered debentures without coupons in denominations of $1,000 and any multiple thereof. The New Debentures are exchangeable and transferable at the office of the transfer agent which the Company has designated as Securities Transfer Company, One East Fourth Street, Cincinnati, Ohio 45202. No service charge will be made for the transfer or exchange of New Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.03 and 2.06 of the Indenture; further references to Sections are references to the Indenture.) Principal, Maturity and Interest The New Debentures bear interest at the rate of 9-1/2% per annum which is payable semi-annually on April 20 and October 20 each year to holders of record on the April 1 and October 1 next preceding the interest payment date. Interest on the New Debentures will accrue from April 20, 1994. They will mature on April 20, 2004. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on April 20 and October 20 will be made at the office of the Paying Agent in Cincinnati, Ohio, upon surrender of the New Debentures. (Section 3.01) Optional Redemption The New Debentures will be redeemable after April 20, 1999 at the option of AFC, as a whole or in part, on not less than 30 nor more than 60 days' written notice, at the following prices, expressed in percentage of the principal amount, together with interest accrued to the date fixed for redemption. If redeemed on or after April 20 of:
Redemption Redemption Year Price Year Price 1999 . . . . 104.75% 2001 101.75% 2000 . . . . 103.25% 2002 and thereafter . . . . . . . 100.00%
Redemptions will be made in $1,000 denominations with the Trustee determining the particular New Debentures to be redeemed by lot at its discretion. (Sections 4.01, 4.02 and 4.03) No Sinking Fund The Indenture contains no sinking fund provisions. 20 No Financial Covenants The Indenture contains no provisions which restrict the issuance of additional securities, the incurring of additional debt, the declaration of dividends or the retirement of equity securities. The Indenture does not require the maintenance of any particular ratios or the creation or maintenance of reserves, nor does it contain any other financial covenants. Modification and Satisfaction of Indentures The Indenture may be amended or supplemented by AFC and the Trustee with the consent of the holders of not less than a majority in principal amount of the New Debentures then outstanding; but no modification of the terms of payment of principal or interest on the New Debentures and no modification impairing or reducing the percentage required for modification will be effective against any holder without his consent. (Section 9.02) The Indenture may be satisfied and discharged upon cancel- lation of all the New Debentures or, under certain conditions, upon deposit with the Trustee of funds or securities sufficient therefor. (Section 8.01) Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of Default Under the Indenture, the Trustee or the holders of 25% of the New Debentures may declare an acceleration if an Event of Default occurs and is continuing, even if the bankruptcy of AFC does not result in or was not the cause of the Event of Default. Under the terms of the Indenture, should an acceleration be declared as a result of the occurrence and continuation of an Event of Default absent bankruptcy, the claim of a holder of New Debentures is for the full principal amount of the holder's New Debentures. (Section 6.02) The amount that a holder would be able to recover from AFC, under a bankruptcy or an event of default, may, however, be limited by applicable law to the issue price (the market value at the time of issuance) of the New Debentures plus the portion of any original issue discount which has been amortized. Events of Default The following events are defined in the Indenture as "Events of Default": failure to pay principal or premium when due for 20 days; failure to pay interest when due for 30 days; failure to perform any other covenants in the Indenture for 90 days after notice; certain events of bankruptcy, insolvency or reorganization of AFC; the occurrence of an event of default in any other instrument under which AFC has or may issue debt which has not been 21 cured within 30 days after notice of such default; or failure to pay any funded debt in excess of $10,000,000 now existing or existing after the date of the Indenture within 20 days after stated maturity. Upon the happening and during the continuance of any Event of Default, the Trustee or the holders of at least 25% in principal amount of the outstanding New Debentures may declare the principal and accrued interest of all New Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding New Debentures. (Article 6) The Indenture provides that if a default occurs and is continuing and is actually known to the Trustee, the Trustee shall, within 90 days thereafter, give to the holders notice of all uncured defaults known to it (the term default to include the events specified above without grace periods); provided that, except in the case of default in payment of principal of or interest in respect of the New Debentures, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the holders. (Section 7.05) AFC must furnish to the Trustee within 120 days after the end of each fiscal year, a certificate of certain officers of AFC as to whether such persons have knowledge of any default under the Indenture. (Section 3.04) The holders of a majority in aggregate principal amount of outstanding New Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, except that the Trustee shall not be so required to act unless reasonable indemnity shall be offered against the costs, expenses and liabilities of such act, or except as otherwise provided in the Indenture. (Sections 6.05 and 7.01) Trustee The Trustee serves as trustee under indentures relating to other debt of AFC and certain of its subsidiaries and affiliates and has loans outstanding to certain subsidiaries and affiliates of AFC. The Trustee has no other material relationship with AFC. Authenticating Agent, Paying Agent, Registrar Securities Transfer Company, an Ohio limited partnership, Cincinnati, Ohio, has been designated by AFC as the Authenticating Agent, Paying Agent, and Registrar for the New Debentures. AFC may change the Authenticating Agent, Paying Agent and Registrar without prior notice. AFC is the general partner of Securities Transfer Company and subsidiaries and affiliates of AFC are limited partners. AFC or any of its subsidiaries or affiliates may act in such capacities. 22 DESCRIPTION OF OLD DEBENTURES Introduction The following statements are brief summaries of certain provisions of the indentures governing the various issues of Old Debentures and do not purport to be complete. The indentures are on file with the Securities and Exchange Commission and references to the indentures are qualified in their entirety by express reference to such indentures. Parenthetical references are to provisions of the particular indenture. Star Bank, National Association (the "Trustee") serves as trustee under the indentures relating to the Old Debentures and other debt of AFC and certain of its subsidiaries and affiliates. The Trustee also has loans outstanding to certain subsidiaries and affiliates of AFC. The Trustee has no other material relationship with AFC. Securities Transfer Company, Cincinnati, Ohio, has been designated by AFC as the Paying Agent and Registrar for all issues of Old Debentures. AFC may change the Paying Agent and Registrar without notice. AFC or any of its subsidiaries or affiliates may act in such capacities. DESCRIPTION OF 9-1/2% SUBORDINATED DEBENTURES General The 9-1/2% Subordinated Debentures due April 22, 1999 (the "9-1/2% Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of up to $16,459,000 principal amount of which approximately $7.8 million were outstanding on December 31, 1993. The 9-1/2% Debentures were issuable as registered debentures without coupons in denominations of $10 and any multiple thereof. The 9-1/2% Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 9-1/2% Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.01, 2.03, 2.05 and 5.03 of the Indenture). Payment of Principal and Interest The 9-1/2% Debentures bear interest at the rate of 9-1/2% per annum which is payable semi-annually on April 22 and October 22 each year to holders of record on the April 1 and October 1 next preceding the interest payment date. They will mature on April 22, 1999. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on April 22 and October 22) will be made at the office of the Trustee, upon surrender of the 9-1/2% Debentures. 23 Optional Redemption The 9-1/2% Debentures are redeemable at the option of AFC, as a whole or in part, on not less than 30 nor more than 60 days' written notice, at 100% of the principal amount together with interest accrued to the date fixed for redemption. The 9-1/2% Debentures are redeemable on similar notice through operation of a Sinking Fund, as referred to below, at the principal amount thereof together with accrued interest to the redemption date. Redemptions will be made with the Trustee determining the particular 9-1/2% Debentures to be redeemed by lot at its discretion. (Article Four) Sinking Fund AFC is obligated to retire, at 100% of the principal amount thereof, plus accrued interest, on April 22 in each of the years through 1998, inclusive, 5% of the original principal amount of 9-1/2% Debentures issued under the Indenture, subject to credits at AFC's option for the principal amount of 9-1/2% Debentures purchased or redeemed otherwise than through the operation of the Sinking Fund provisions and not previously credited. Operation of the mandatory sinking fund is intended to have the effect of retiring 70% of the outstanding 9-1/2% Debentures prior to maturity. In addition, AFC at its option may retire on April 22 in each of the years through 1998, inclusive at the same price, up to an additional 5% of the 9-1/2% Debentures issued; such optional right of redemption to be noncumulative. (Section 4.03) Subordination The 9-1/2% Debentures are subordinated as to principal and interest to all Senior Indebtedness (as defined in the Indenture). No Financial Covenants The Indenture contains no financial covenants. Modification and Satisfaction of Indentures The Indenture may be amended or supplemented by AFC and the Trustee with the consent of the holders of not less than a majority in principal amount of the 9-1/2% Debentures then outstanding; but no modification of the terms of payment of principal or interest on the 9-1/2% Debentures (including the Sinking Fund) and no modification impairing or reducing the percentage required for modification will be effective against any holder without his consent. (Section 9.02). The Indenture may be satisfied and discharged upon cancellation of all the 9- 1/2% Debentures or, under certain conditions, upon deposit with the Trustee of funds or securities sufficient therefor. (Sections 2.09 and 8.01) 24 Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of Default Under the Indenture the Trustee or the holders of 25% of the 9-1/2% Debentures may declare an acceleration if an Event of Default occurs and is continuing, even if the bankruptcy of AFC does not result in or was not the cause of the Event of Default. Under the terms of the Indenture, should an acceleration be declared as a result of the occurrence and continuation of an Event of Default absent bankruptcy, the claim of a holder of 9- 1/2% Debentures is for the full principal amount of his Debenture. (Section 6.02). The amount that a holder would be able to recover from AFC, under a bankruptcy or an event of default, may, however, be limited by applicable law to the issue price (the market value at the time of issuance) of the Debenture plusthe portionofanyoriginal issuediscountwhichhas beenamortized. Events of Default The following events are defined in the Indenture as "Events of Default": failure to pay principal or premium when due for 30 days; failure to pay interest when due for 30 days; failure to perform any other covenants in the Indenture for 90 days after notice; or certain events of bankruptcy, insolvency or reorganization of AFC. Upon the happening and during the continuance of any Event of Default, the Trustee or the holders of at least 25% in principal amount of the outstanding 9-1/2% Debentures may declare the principal and accrued interest of all 9-1/2% Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding 9-1/2% Debentures. (Article Seven) The Indenture provides that the Trustee shall, within 60 days after the occurrence of a default, give to the holders notice of all uncured defaults known to it (the term default to include the events specified above without grace periods); provided that, except in the case of default in payment of principal of or interest in respect of the 9-1/2% Debentures, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the holders. (Section 7.07) AFC must furnish to the Trustee within 120 days after the end of each fiscal year, a certificate of certain officers of AFC as to whether such persons have knowledge of any default under the Indenture. (Section 5.10) The holders of a majority in aggregate principal amount of outstanding 9-1/2% Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, except that the Trustee shall not be so required to act unless reasonable indemnity shall be offered against the costs, expenses and liabilities of such act, or 25 except as otherwise provided in the Indenture. (Sections 7.06 and 8.02) DESCRIPTION OF 10% DEBENTURES General The 10% Debentures due October 20, 1999 (the "10% Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of an unlimited principal amount of which approximately $146 million were outstanding on December 31, 1993. The 10% Debentures were issuable as registered debentures without coupons in denominations of $500 and any multiple thereof. The 10% Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 10% Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.03, 2.06 and 4.02). Payment of Principal and Interest The 10% Debentures bear interest at the rate of 10% per annum which is payable semi-annually on April 20 and October 20 each year to holders of record on the April 1 and October 1 next preceding the interest payment date. They will mature on October 20, 1999. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on April 20 and October 20) will be made at the office of the Trustee, upon surrender of the 10% Debentures. Optional Redemption The 10% Debentures are redeemable at the option of AFC, as a whole or in part, on not less than 30 nor more than 60 days' written notice, at 100% of the principal amount, together with interest accrued to the date fixed for redemption. The 10% Debentures are redeemable on similar notice through operation of a Sinking Fund, as referred to below, at the principal amount thereof together with accrued interest to the redemption date. Redemptions will be made in $500 denominations with the Trustee determining the particular 10% Debentures to be redeemed by lot at its discretion. (Article Three) Sinking Fund AFC is obligated to retire, at 100% of the principal amount thereof, plus accrued interest, on October 20 in each of the years through 1998, inclusive, 4% of the original principal amount of 10% Debentures issued under the Indenture, subject to credits at AFC's option for the principal amount of 10% Debentures purchased or redeemed otherwise than through the operation of the Sinking Fund provisions and not previously credited. Operation of the mandatory sinking fund is intended to 26 have the effect of retiring 40% of the outstanding 10% Debentures prior to maturity. In addition, AFC at its option may retire on October 20 in each of the years through 1998, inclusive at the same price, up to an additional 4% of the 10% Debentures issued; such optional right of redemption to be cumulative. (Article Three) No Financial Covenants The Indenture contains no financial covenants. Modification and Satisfaction of Indentures The Indenture may be amended or supplemented by AFC and the Trustee with the consent of the holders of not less than 66-2/3% in principal amount of the 10% Debentures then outstanding; but no modification of the terms of payment of principal or interest on the 10% Debentures (including the Sinking Fund) and no modification impairing or reducing the percentage required for modification will be effective against any holder without his consent. (Section 9.02). The Indenture may be satisfied and discharged upon cancellation of all the 10% Debentures or, under certain conditions, upon deposit with the Trustee of funds or securities sufficient therefor. (Sections 10.02 and 12.01) Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of Default Under the Indenture the Trustee or the holders of 25% of the 10% Debentures may declare an acceleration if an Event of Default occurs and is continuing, even if the bankruptcy of AFC does not result in or was not the cause of the Event of Default. Under the terms of the Indenture, should an acceleration be declared as a result of the occurrence and continuation of an Event of Default absent bankruptcy, the claim of a holder of 10% Debentures is for the full principal amount of his Debenture. The amount that a holder would be able to recover from AFC, under a bankruptcy or an event of default, may, however, be limited by applicable law to the issue price (the market value at the time of issuance) of the Debenture plus the portion of any original issue discount which has been amortized. Events of Default The following events are defined in the Indenture as "Events of Default": failure to pay principal or premium when due for 30 days; failure to pay interest when due for 30 days; failure to perform any other covenants in the Indenture for 30 days after notice; certain events of bankruptcy, insolvency or reorganization of AFC; or the occurrence of an event of default in any other instrument under which AFC has or may issue debt which has not been cured within 30 days after notice of such default. Upon the happening and during the continuance of any Event of Default, the Trustee or the holders of at least 25% in 27 principal amount of the outstanding 10% Debentures may declare the principal and accrued interest of all 10% Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding 10% Debentures. (Article Six) The Indenture provides that the Trustee shall, within 60 days after the occurrence of a default, give to the holders notice of all uncured defaults known to it (the term default to include the events specified above without grace periods); provided that, except in the case of default in payment of principal of or interest in respect of the 10% Debentures, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the holders. (Section 6.07) AFC must furnish to the Trustee within 120 days after the end of each fiscal year, a certificate of certain officers of AFC as to whether such persons have knowledge of any default under the Indenture. (Section 4.09) The holders of a majority in aggregate principal amount of outstanding 10% Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, except that the Trustee shall not be so required to act unless reasonable indemnity shall be offered against the costs, expenses and liabilities of such act, or except as otherwise provided in the Indenture. (Sections 6.06 and 7.02) DESCRIPTION OF 10% DEBENTURES, SERIES A General The 10% Debentures due October 20, 1999, Series A (the "10% Series A Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of an unlimited principal amount of which approximately $4 million were outstanding on December 31, 1993. The 10% Series A Debentures were issuable as registered debentures without coupons in denominations of $500 and any multiple thereof. The 10% Series A Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 10% Series A Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.03, 2.06 and 4.02 of the Indenture). Payment of Principal and Interest The 10% Series A Debentures bear interest at the rate of 10% per annum which is payable semi-annually on April 20 and October 20 each year to holders of record on the April 30 and October 1 next preceding the interest payment date. The 10% Series A 28 Debentures are not convertible. They will mature on October 20, 1999. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on April 20 and October 20) will be made at the office of the Trustee, upon surrender of the 10% Series A Debentures. The Indenture provisions of the 10% Series A Debentures are similar to those of the 10% Debentures. DESCRIPTION OF 12% DEBENTURES General The 12% Debentures due September 3, 1999 (the "12% Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of an unlimited principal amount of which approximately $90 million were outstanding on December 31, 1993. The 12% Debentures were issuable as registered debentures without coupons in denominations of $1,000 and any multiple thereof. The 12% Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 12% Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.06 and 4.02 of the Indenture). Payment of Principal and Interest The 12% Debentures bear interest at the rate of 12% per annum which is payable semi-annually on March 3 and September 3 each year to holders of record on the February 15 and August 15 next preceding the interest payment date. They will mature on September 3, 1999. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on March 3 and September 3) will be made at the office of the Trustee, upon surrender of the 12% Debentures. (Sections 2.03 and 4.02) Optional Redemption The 12% Debentures are redeemable at the option of AFC, as a whole or in part, on not less than 30 nor more than 60 days' written notice, at 100% of the principal amount together with interest accrued to the date fixed for redemption. The 12% Debentures are redeemable on similar notice through operation of a Sinking Fund, as referred to below, at the principal amount thereof together with accrued interest to the redemption date. Redemptions will be made in $1,000 denominations with the Trustee determining the particular 12% Debentures to be redeemed by lot at its discretion. (Article Three) 29 Sinking Fund AFC is obligated to retire, at 100% of the principal amount thereof, plus accrued interest, on September 3 in each of the years through 1998, inclusive, 2% of the original principal amount of 12% Debentures issued under the Indenture, subject to credits at AFC's option for the principal amount of 12% Debentures purchased or redeemed otherwise than through the operation of the Sinking Fund provisions and not previously credited. Operation of the mandatory Sinking Fund is intended to have the effect of retiring 18% of the outstanding 12% Debentures prior to maturity. (Section 3.03) No Financial Covenants The Indenture contains no financial covenants. Modification and Satisfaction of Indentures The Indenture may be amended or supplemented by AFC and the Trustee with the consent of the holders of not less than 66-2/3% in principal amount of the 12% Debentures then outstanding; but no modification of the terms of payment of principal or interest on the 12% Debentures (including the Sinking Fund) and no modification impairing or reducing the percentage required for modification will be effective against any holder without his consent. The Indenture may be satisfied and discharged upon cancellation of all the 12% Debentures or, under certain conditions, upon deposit with the Trustee of funds or securities sufficient therefor. (Sections 6.04, 10.02 and 12.01) Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of Default Under the Indenture the Trustee or the holders of 25% of the 12% Debentures may declare an acceleration if an Event of Default occurs and is continuing, even if the bankruptcy of AFC does not result in or was not the cause of the Event of Default. Under the terms of the Indenture, should an acceleration be declared as a result of the occurrence and continuation of an Event of Default absent bankruptcy, the claim of a holder of 12% Debentures is for the full principal amount of his Debenture. (Article Six) The amount that a holder would be able to recover from AFC, under a bankruptcy or an event of default, may, however, be limited by applicable law to the issue price (the market value at the time of issuance) of the 12% Debenture plus the portion of any original issue discount which has been amortized. Events of Default The following events are defined in the Indenture as "Events of Default": failure to pay principal or premium when due for 30 days; failure to pay interest when due for 30 days; failure to 30 perform any other covenants in the Indenture for 90 days after notice; certain events of bankruptcy, insolvency or reorganization of AFC; or the occurrence of an event of default in any other instrument under which AFC has or may issue debt which has not been cured within 20 days after notice of such default. Upon the happening and during the continuance of any Event of Default, the Trustee or the holders of at least 25% in principal amount of the outstanding 12% Debentures may declare the principal and accrued interest of all 12% Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding 12% Debentures. (Article Six) The Indenture provides that the Trustee shall, within 60 days after the occurrence of a default, give to the holders notice of all uncured defaults known to it (the term default to include the events specified above without grace periods); provided that, except in the case of default in payment of principal of or interest in respect of the 12% Debentures, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the holders. (Section 6.07) AFC must furnish to the Trustee within 120 days after the end of each fiscal year, a certificate of certain officers of AFC as to whether such persons have knowledge of any default under the Indenture. (Section 4.09) The holders of a majority in aggregate principal amount of outstanding 12% Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, except that the Trustee shall not be so required to act unless reasonable indemnity shall be offered against the costs, expenses and liabilities of such act, or except as otherwise provided in the Indenture. (Sections 6.06 and 7.02) DESCRIPTION OF 12% DEBENTURES, SERIES A General The 12% Debentures due September 3, 1999, Series A (the "12% Series A Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of an unlimited principal amount of which approximately $41 million were outstanding on December 31, 1993. The 12% Series A Debentures were issuable as registered debentures without coupons in denominations of $1,000 and any multiple thereof. The 12% Series A Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 12% Series A Debentures, but AFC may 31 require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.06 and 4.02 of the Indenture). Payment of Principal and Interest The 12% Series A Debentures bear interest at the rate of 12% per annum which is payable semi-annually on March 3 and September 3 each year to holders of record on the February 15 and August 15 next preceding the interest payment date. They will mature on September 3, 1999. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on March 3 and September 3) will be made at the office of the Trustee, upon surrender of the 12% Series A Debentures. (Sections 2.02 and 4.02) The Indenture provisions of the 12% Series A Debentures are similar to those of the 12% Debentures. DESCRIPTION OF 12% DEBENTURES, SERIES B General The 12% Debentures due September 3, 1999, Series B (the "12% Series B Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of an unlimited principal amount of which approximately $59 million were outstanding on December 31, 1993. The 12% Series B Debentures were issuable as registered debentures without coupons in denominations of $1,000 and any multiple thereof. The 12% Series B Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 12% Series B Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.06 and 4.02 of the Indenture). Payment of Principal and Interest The 12% Series B Debentures bear interest at the rate of 12% per annum which is payable semi-annually on March 3 and September 3 each year to holders of record on the February 15 and August 15 next preceding the interest payment date. They will mature on September 3, 1999. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on March 3 and September 3) will be made at the office of the Trustee, upon surrender of the 12% Series B Debentures. (Sections 2.02 and 4.02) The Indenture provisions of the 12% Series B Debentures are similar to those of the 12% Debentures and 12% Debentures, Series A. 32 DESCRIPTION OF 12-1/4% DEBENTURES General The 12-1/4% Debentures due September 15, 2003 (the "12-1/4% Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of up to $500 million principal amount of which approximately $128 million were outstanding on December 31, 1993. The 12-1/4% Debentures were issuable as registered debentures without coupons in denominations of $1,000 and any multiple thereof. The 12-1/4% Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 12-1/4% Debentures, but AFC may require payment of sums sufficient to cover any tax or other governmental charge. (Sections 2.03 and 2.06 of the Indenture). Payment of Principal and Interest The 12-1/4% Debentures bear interest at the rate of 12-1/4% per annum which is payable semi-annually on March 15 and September 15 each year to holders of record on the March 1 and September 1 next preceding the interest payment date. They will mature on September 15, 2003. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on March 15 and September 15) will be made at the office of the Paying Agent in Cincinnati, Ohio, upon surrender of the 12-1/4% Debentures. (Section 3.01) Optional Redemption The Debentures are redeemable at the option of AFC, as a whole or in part, on not less than 30 nor more than 60 days' written notice, at the following prices, expressed in percentage of the principal amount, together with interest accrued to the date fixed for redemption. If redeemed during: Redemption Year Price 1994 . . . . . 103.75% 1995 . . . . . 102.50% 1996 . . . . . 101.25% 1997 and thereafter 100.00% The 12-1/4% Debentures are redeemable on similar notice through operation of a Sinking Fund, as referred to below, at the principal amount thereof together with accrued interest to the redemption date. Redemptions will be made in $1,000 denominations with the Trustee determining the particular 12-1/4% Debentures to be redeemed by lot at its discretion. (Sections 4.01, 4.02 and 4.03) Sinking Fund 33 AFC will be obligated to retire, at 100% of the principal amount thereof, plus accrued interest, on September 15 in each of the years 1998 through 2002, inclusive, 5% of the original principal amount of 12-1/4% Debentures issued under the Indenture, subject to credits at AFC's option for the principal amount of 12-1/4% Debentures purchased or redeemed otherwise than through the operation of the Sinking Fund provisions and not previously credited. Operation of the mandatory Sinking Fund is intended to have the effect of retiring 25% of the outstanding 12-1/4% Debentures prior to maturity. (Section 4.07) No Financial Covenants The Indenture contains no financial covenants. Modification and Satisfaction of Indentures The Indenture may be amended or supplemented by AFC and the Trustee with the consent of the holders of not less than a majority in principal amount of the 12-1/4% Debentures then outstanding; but no modification of the terms of payment of principal or interest on the 12-1/4% Debentures (including the Sinking Fund) and no modification impairing or reducing the percentage required for modification will be effective against any holder without his consent. (Section 9.02). The Indenture may be satisfied and discharged upon cancellation of all the 12- 1/4% Debentures or, under certain conditions, upon deposit with the Trustee of funds or securities sufficient therefor. (Sections 2.09 and 8.01) Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of Default Under the Indenture the Trustee or the holders of 25% of the 12-1/4% Debentures may declare an acceleration if an Event of Default occurs and is continuing, even if the bankruptcy of AFC does not result in or was not the cause of the Event of Default. Under the terms of the Indenture, should an acceleration be declared as a result of the occurrence and continuation of an Event of Default absent bankruptcy, the claim of a holder of 12- 1/4% Debentures is for the full principal amount of his Debenture. (Section 6.02) The amount that a holder would be able to recover from AFC, under a bankruptcy or an event of default, may, however, be limited by applicable law to the issue price (the market value at the time of issuance) of the Debenture plus the portion of any original issue discount which has been amortized. Events of Default The following events are defined in the Indenture as "Events of Default": failure to pay principal or premium when due for 20 days; failure to pay interest when due for 30 days; failure to perform any other covenants in the Indenture for 90 days after 34 notice; certain events of bankruptcy, insolvency or reorganization of AFC; the occurrence of an event of default in any other instrument under which AFC has or may issue debt which has not been cured within 30 days after notice of such default; or failure to pay any funded debt in excess of $10,000,000 now existing or existing after the date of the Indenture within 20 days after stated maturity. Upon the happening and during the continuance of any Event of Default, the Trustee or the holders of at least 25% in principal amount of the outstanding 12-1/4% Debentures may declare the principal and accrued interest of all 12-1/4% Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding 12-1/4% Debentures. (Article Six) The Indenture provides that the Trustee shall, within 90 days after the occurrence of a default, give to the holders notice of all uncured defaults known to it (the term default to include the events specified above without grace periods); provided that, except in the case of default in payment of principal of or interest in respect of the 12-1/4% Debentures, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the holders. (Section 7.05) AFC must furnish to the Trustee within 120 days after the end of each fiscal year, a certificate of certain officers of AFC as to whether such persons have knowledge of any default under the Indenture. (Section 3.04) The holders of a majority in aggregate principal amount of outstanding 12-1/4% Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, except that the Trustee shall not be so required to act unless reasonable indemnity shall be offered against the costs, expenses and liabilities of such act, or except as otherwise provided in the Indenture. (Sections 6.05 and 7.01) DESCRIPTION OF 13-1/2% DEBENTURES General The 13-1/2% Debentures due September 14, 2004 (the "13-1/2% Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of up to $150 million principal amount of which approximately $26 million were outstanding on December 31, 1993. The 13-1/2% Debentures were issuable as registered debentures without coupons in denominations of $500 and any multiple thereof. The 13-1/2% Debentures are exchangeable and transferable at the office of the Trustee. No service charge is made for the transfer or exchange of 13-1/2% Debentures, but AFC may require payment of sums 35 sufficient to cover any tax or other governmental charge. (Sections 2.03 and 2.06). Payment of Principal and Interest The 13-1/2% Debentures bear interest at the rate of 13-1/2% per annum which is payable semi-annually on March 14 and September 14 each year to holders of record on the March 1 and September 1 next preceding the interest payment date. They will mature on September 14, 2004. Payments of principal and premium, if any, and interest payable on redemption (other than interest payable on March 14 and September 14) will be made at the office of the Paying Agent in Cincinnati, Ohio, upon surrender of the 13-1/2% Debentures. (Section 3.01) Optional Redemption The 13-1/2% Debentures are redeemable at the option of AFC, as a whole or in part, on not less than 30 nor more than 60 days' written notice, at 100% of the principal amount, together with interest accrued to the date fixed for redemption. The 13-1/2% Debentures are redeemable on similar notice through operation of a Sinking Fund, as referred to below, at the principal amount thereof together with accrued interest to the redemption date. Redemptions will be made in $1,000 denominations with the Trustee determining the particular 13-1/2% Debentures to be redeemed by lot at its discretion. (Sections 4.01, 4.02 and 4.03) Sinking Fund AFC will be obligated to retire, at 100% of the principal amount thereof, plus accrued interest, on September 14 in each of the years 1995 through 2003, inclusive, 3% of the original principal amount of 13-1/2% Debentures issued under the Indenture, subject to credits at AFC's option for the principal amount of 13-1/2% Debentures purchased or redeemed otherwise than through the operation of the Sinking Fund provisions and not previously credited. Operation of the mandatory Sinking Fund is intended to have the effect of retiring 27% of the outstanding 13-1/2% Debentures prior to maturity. (Section 4.07) No Financial Covenants The Indenture contains no financial covenants. Modification and Satisfaction of Indentures The Indenture may be amended or supplemented by AFC and the Trustee with the consent of the holders of not less than a majority in principal amount of the 13-1/2% Debentures then outstanding; but no modification of the terms of payment of principal or interest on the 13-1/2% Debentures (including the Sinking Fund) and no modification impairing or reducing the 36 percentage required for modification will be effective against any holder without his consent. (Section 9.02). The Indenture may be satisfied and discharged upon cancellation of all the 13- 1/2% Debentures or, under certain conditions, upon deposit with the Trustee of funds or securities sufficient therefor. (Sections 2.09 and 8.01) Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of Default Under the Indenture the Trustee or the holders of 25% of the 13-1/2% Debentures may declare an acceleration if an Event of Default occurs and is continuing, even if the bankruptcy of AFC does not result in or was not the cause of the Event of Default. Under the terms of the Indenture, should an acceleration be declared as a result of the occurrence and continuation of an Event of Default absent bankruptcy, the claim of a holder of 13- 1/2% Debentures is for the full principal amount of his Debenture. (Section 6.02) The amount that a holder would be able to recover from AFC, under a bankruptcy or an event of default, may, however, be limited by applicable law to the issue price (the market value at the time of issuance) of the 13-1/2% Debenture plus the portion of any original issue discount which has been amortized. Events of Default The following events are defined in the Indenture as "Events of Default": failure to pay principal or premium when due for 20 days; failure to pay interest when due for 30 days; failure to perform any other covenants in the Indenture for 90 days after notice; certain events of bankruptcy, insolvency or reorganization of AFC; the occurrence of an event of default in any other instrument under which AFC has or may issue debt which has not been cured within 30 days after notice of such default; or failure to pay any funded debt now existing or existing after the date of the Indenture within 20 days after stated maturity. Upon the happening and during the continuance of any Event of Default, the Trustee or the holders of at least 25% in principal amount of the outstanding 13-1/2% Debentures may declare the principal and accrued interest of all 13-1/2% Debentures due and payable. The Indenture provides that such declaration and its consequences may, in certain events, be annulled by the holders of a majority in principal amount of the outstanding 13-1/2% Debentures. (Article Six) The Indenture provides that the Trustee shall, within 90 days after the occurrence of a default, give to the holders notice of all uncured defaults known to it (the term default to include the events specified above without grace periods); provided that, except in the case of default in payment of principal of or interest in respect of the 13-1/2% Debentures, the Trustee shall be protected in withholding such notice if it 37 in good faith determines that the withholding of such notice is in the interest of the holders. (Section 7.05) AFC must furnish to the Trustee within 120 days after the end of each fiscal year, a certificate of certain officers of AFC as to whether such persons have knowledge of any default under the Indenture. (Section 3.04) The holders of a majority in aggregate principal amount of outstanding 13-1/2% Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, except that the Trustee shall not be so required to act unless reasonable indemnity shall be offered against the costs, expenses and liabilities of such act, or except as otherwise provided in the Indenture. (Sections 6.05 and 7.01) DESCRIPTION OF 13-1/2% DEBENTURES, SERIES A General The 13-1/2% Debentures due September 14, 2004, Series A (the "13-1/2% Series A Debentures") are unsecured obligations of AFC and were issued under an Indenture which provides for the issuance of an unlimited principal amount of which approximately $48 million were outstanding on December 31, 1993. The 13-1/2% Series A Debentures were issuable as registered debentures without coupons in denominations of $500 and any multiple thereof. The Indenture provisions of the 13-1/2% Series A Debentures are similar to those of the 13-1/2% Debentures. 38 (NG2-400.#14) EX-20 4 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO EXCHANGE SECURITIES FOR AMERICAN FINANCIAL CORPORATION 9-1/2% Debentures due April 20,, 2004 Tendered pursuant to the Exchange Offer dated February 22, 1994 which will expire at 5:00 P.M., Cincinnati time, on March 25, 1994 unless extended by American Financial Corporation _________________________________________________________________ _________________________________________________________________ This Letter of Transmittal may be used to transmit American Financial Corporation securities tendered pursuant to the Exchange Offer dated February 22, 1994 (the "Offer"), receipt of which is acknowledged. This Letter of Transmittal and your securities may be sent or delivered to Securities Transfer Company (the "Exchange Agent"): By Mail: Securities Transfer Company P.O. Box 1906 Cincinnati, Ohio 45273-9142 By Hand or Overnight Delivery: Securities Transfer Company One East Fourth Street, Suite 1201 Cincinnati, Ohio 45202 513) 579-2414 -or- (800) 368-3417 PLEASE FILL IN ALL APPLICABLE BLANKS, FOLLOW ALL INSTRUCTIONS CAREFULLY AND SIGN THIS LETTER OF TRANSMITTAL IN THE SPACE PROVIDED BELOW I. DESCRIPTION OF SECURITIES TENDERED The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the securities listed in the table to the right and does hereby tender such securities pursuant to the terms and conditions of the Offer. The undersigned certifies that American Financial Corporation will acquire good and unencumbered title to such securities upon acceptance. Please sign and date below. All registered holders should sign EXACTLY as their names appear on the certificates. Signature(s): ____________________________________________ ____________________________________________ (All registered holders must sign in the appropriate capacity) Date: ____________________________________________ Daytime Telephone Number (Include Area Code): ( ) Certificate Number, Amount Total Amount Enclosed If your securities have been lost, stolen or destroyed please see instruction number 7 on the reverse side of this Letter of Transmittal. Sections II and III are to be filled in ONLY if issuance or delivery is to be to a name or address other than as shown above. II. SPECIAL ISSUANCE INSTRUCTIONS Social Security or Tax Identification Number:____________________ Name:____________________________________________________________ Address:_________________________________________________________ _________________________________________________________________ (City) (State) (Zip) III. SPECIAL MAILING INSTRUCTIONS Name: ___________________________________________________________ Address:_________________________________________________________ _________________________________________________________________ (City) (State) (Zip) Signature Guarantee If you are requesting Special Issuance or Special Mailing Instructions your signature must be guaranteed in the space at the right by a member of a Securities Transfer Association recognized Medallion Signature Guarantee Program. Please ask your bank or broker for the name of an institution authorized to guarantee signatures. (Affix Medallion Guarantee Stamp Below) IMPORTANT: See reverse side for Instructions INSTRUCTIONS 1. CERTIFICATES SHOULD BE INCLUDED with this Letter of Transmittal. A photocopy or facsimile of a Letter of Transmittal may also be used to tender securities. 2. SIGN AND DATE THE LETTER OF TRANSMITTAL. If the certificates are owned of record by two or more persons, all such owners should sign this Letter of Transmittal. If a holder has securities registered differently on separate certificates, separate Letters of Transmittal should be submitted for each different registration of certificates. 3. Certificates tendered by executors, administrators, trustees, guardians, corporations and the like should be accompanied by proper evidence of authority of the person who executes the Letter of Transmittal. The adequacy of such evidence must be established to the satisfaction of Securities Transfer Company. 4. THE DEBENTURE CERTIFICATES AND ANY CHECKS WILL BE ISSUED AND MAILED TO THE REGISTERED HOLDER unless instructions to the contrary are contained in the boxes identified as II and III on the reverse side hereof and signatures are guaranteed. 5. COMPLETE AND SIGN THE FORM W-9/W-8 BELOW. FAILURE TO COMPLETE THIS SECTION MAY RESULT IN BACKUP WITHHOLDING OF 31% ON ANY PAYMENTS MADE TO YOU. SUBSTITUTE FORM W-9 (U.S. Citizens & Residents) If you are a citizen of the U.S. or a foreign person residing in the U.S., please complete this section. Failure to do so will result in a withholding of taxes. Social Security Number:__________________________________________ Employer Identification Number: _________________________________ Certification: Under penalties of perjury, I certify that the information provided on this form is true, correct, and complete and that I have not been notified by the IRS that I am subject to back-up withholding per the Internal Revenue Code. Signature:_____________________________ Date:____________________ SUBSTITUTE FORM W-8 (Nonresident Aliens) If you are neither a citizen nor resident of the U. S., please complete this section. Failure to do so will result in a withholding of taxes remittable to the U.S. Government. Country of Tax Residency:________________________________________ Country of Citizenship:__________________________________________ Certification: Under penalties of perjury, I certify that, to the best of my knowledge and belief,, I qualify as a foreign person or entity exempt from back-up withholding and/or information reporting. Signature:_____________________________ Date:____________________ 6. This Letter of Transmittal and certificates should be delivered as indicated on the front side. The method you use to deliver this Letter of Transmittal and certificates is at your option and risk. A self-addressed envelope has been enclosed for your convenience. If delivery is by mail, you may want to use insured registered mail with return receipt requested. However, Post Office regulations prohibit use of the enclosed mailing permit envelope for such registered mail. You should use a plain envelope for that purpose. 7. Any securityholder whose certificates have been lost, stolen or destroyed should complete the Lost Certificate Affidavit below and sign and date Section I on the front side: LOST CERTIFICATE AFFIDAVIT (If known, please enter certificate information) The undersigned hereby certifies that the undersigned is the rightful owner of the securities listed at the right and that the certificates representing such securities have been lost,, stolen or destroyed. The undersigned agrees to indemnify American Financial Corporation and its successors against any future claims incurred by it due to the loss of these certificates. Please sign and date below. All registered holders should sign EXACTLY as their names appear on the certificates. Signature(s):____________________________________________________ ____________________________________________________ (All registered holders must sign in the appropriate capacity) Date: ____________________________________________________ Daytime Telephone Number (Include Area Code): ( ) Certificate Number Amount Total GUARANTEE OF DELIVERY (To be completed only if certificates are not tendered herewith.) The undersigned guarantees to deliver the securities tendered by this Letter of Transmittal not later than seven days after receipt of this Letter of Transmittal by the Exchange Agent. (Affix Medallion Guarantee Stamp Below) Name of Firm ____________________________________________________ Contact Person___________________________________________________ Telephone Number_________________________________________________ Address__________________________________________________________ THIS LETTER OF TRANSMITTAL, TOGETHER WITH YOUR CERTIFICATE(S) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE ng2-420.lt -----END PRIVACY-ENHANCED MESSAGE-----