<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
===========================================================================
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
SEPTEMBER 30, 1998 0-6478
FOREMOST CORPORATION OF AMERICA
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-1863522
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5600 BEECH TREE LANE
CALEDONIA, MICHIGAN 49316
(Address of Principal Executive Offices) (Zip Code)
Mailing address:
P.O. BOX 2450, GRAND RAPIDS, MICHIGAN 49501
Registrant's telephone number, including area code
(616) 942-3000
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS SEPTEMBER 30, 1998
----- ------------------
<S> <C> <C>
Common Stock, $1.00 par value, 27,232,940 shares
</TABLE>
===========================================================================
<PAGE>
FOREMOST CORPORATION OF AMERICA
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION:
Item 1. - Financial Statements:
Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997 1-2
Consolidated Statements of Income -
Nine Months Ended September 30, 1998 and 1997 3-4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1998 and 1997 5
Condensed Notes to Consolidated Financial Statements 6-8
Item 2. - Management's Discussion and Analysis 9-13
PART II. OTHER INFORMATION:
Item 5. - Other Information 14
Item 6. - Exhibits and Reports on Form 8-K 15
Signatures 16
i
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
FOREMOST CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(In thousands, except share data)
<S> <C> <C>
ASSETS:
Investments:
Fixed maturities held to maturity $ 982 $ 1,974
Securities available for sale:
Fixed maturities 363,965 376,868
Equity securities 79,506 83,677
Mortgage loans and land contracts on real estate 12,137 12,350
Investment real estate 12,340 11,920
Short-term investments 32,806 26,656
-------- --------
Total investments 501,736 513,445
Cash 1,610 2,409
Accrued investment income 6,035 6,293
Premiums receivable 79,315 71,541
Due from reinsurance companies 23,377 20,645
Other receivables 1,907 2,568
Prepaid policy acquisition costs 77,386 74,179
Prepaid reinsurance premiums 803 979
Real estate and equipment 52,749 38,341
Other assets 15,957 14,380
-------- --------
Total assets $760,875 $744,780
======== ========
LIABILITIES:
Unearned premium $262,794 $246,429
Insurance losses and loss adjustment expenses 89,065 82,722
Accounts payable and accrued expenses 33,197 33,022
Notes and other obligations payable 91,649 92,201
Income taxes 14,253 20,853
Other liabilities 14,432 14,102
-------- --------
<PAGE>
Total liabilities 505,390 489,329
======== ========
Shareholders' Equity:
Preferred stock - 10,000,000 shares authorized,
none issued - -
Common stock, $1 par - 70,000,000
and 35,000,000 shares authorized, 27,232,940
and 27,700,872 shares issued and outstanding
at September 30, 1998 and December 31, 1997,
respectively 27,233 27,701
Other shareholders' equity 228,252 227,750
-------- --------
Total shareholders' equity 255,485 255,451
-------- --------
Total liabilities and shareholders' equity $760,875 $744,780
======== ========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
-2-
<PAGE>
<TABLE>
FOREMOST CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1998 1997 1998 1997
---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income:
Property and casualty premium earned $109,673 $108,014 $326,483 $321,550
Net investment income 6,129 6,689 18,283 19,292
Realized gains 1,828 1,844 5,871 8,794
Other 503 609 1,792 1,831
-------- -------- -------- --------
Total income 118,133 117,156 352,429 351,467
-------- -------- -------- --------
Expense:
Insurance losses and loss expenses 63,064 58,229 192,467 191,628
Amortization of prepaid policy
acquisition costs 31,981 31,221 96,193 93,084
Operating 4,989 5,106 14,711 15,360
Interest 1,760 2,004 5,423 6,307
-------- -------- -------- --------
Total expense 101,794 96,560 308,794 306,379
-------- -------- -------- --------
Income before taxes 16,339 20,596 43,635 45,088
Income tax provision (4,492) (6,173) (11,113) (12,396)
-------- -------- -------- --------
Net income - continuing operations 11,847 14,423 32,522 32,692
Net income - discontinued operations - 20 - 110
-------- -------- -------- --------
Net income - before extraordinary item 11,847 14,443 32,522 32,802
Extraordinary loss on early
extinguishment of debt (net of $1,782
of federal income tax) - - (3,310) -
-------- -------- -------- --------
Consolidated net income $ 11,847 $ 14,443 $ 29,212 $ 32,802
======== ======== ======== ========
-3-
<PAGE>
Per share of common stock:
Net income - continuing operations $ 0.43 $ 0.52 $ 1.19 $ 1.17
Net income - discontinued operations - - $ - $ -
Extraordinary loss - net of tax benefit - - $ (0.12) $ -
-------- -------- -------- --------
Net income $ 0.43 $ 0.52 $ 1.07 $ 1.17
======== ======== ======== ========
Average shares outstanding 27,240 27,701 27,391 27,955
======== ======== ======== ========
Cash dividends per share $ 0.09 $ 0.09 $ 0.27 $ 0.27
======== ======== ======== ========
Per share of common stock - diluted
Net income - continuing operations $ 0.43 $ 0.51 $ 1.16 $ 1.15
Net income - discontinued operations - - $ - $ -
Extraordinary loss - net of tax benefit - - $ (0.12) $ -
-------- -------- -------- --------
Net income $ 0.43 $ 0.51 $ 1.04 $ 1.15
======== ======== ======== ========
Average shares outstanding 27,753 28,318 27,963 28,543
======== ======== ======== ========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
-4-
<PAGE>
<TABLE>
FOREMOST CORPORATION OF AMERICA
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Operating Activities:
Net cash from operating activities $ 37,640 $ 25,315
-------- --------
Investing Activities:
Purchases of securities and loans made (82,768) (100,026)
Purchases of real estate and equipment (16,586) (1,243)
Sales of securities 78,781 61,757
Maturities of securities and receipts
from repayments of loans 13,476 35,417
Sales of real estate and equipment 934 798
(Increase) decrease in short-term investments (6,150) 5,870
-------- --------
Net cash from (for) investing activities (12,313) 2,573
-------- --------
Financing Activities:
Prepayment of mortgage (30,781) -
Extraordinary loss on early
extinguishment of debt (3,310) -
Repayment of debt (7,271) (1,753)
Proceeds from borrowings 37,500 2,000
Reacquisition of common stock (12,094) (19,367)
Dividends paid (7,391) (7,570)
Exercise of stock options: Receipts 2,100 3,345
Exercise of stock options: Repurchases (4,879) (5,952)
-------- --------
Net cash for financing activities (26,126) (29,297)
-------- --------
-5-
<PAGE>
Cash increase (decrease) (799) (1,409)
Cash at beginning of year 2,409 5,141
-------- --------
Cash at end of period $ 1,610 $ 3,732
======== ========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
-6-
<PAGE>
FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The notes to the consolidated financial statements are condensed and
do not contain all information required by generally accepted
accounting principles to be included in a full set of financial
statements.
2. All information is unaudited; however, in the opinion of management,
all adjustments (consisting only of normal recurring accruals) have
been made which are necessary to present fairly the results shown.
All significant intercompany balance and transactions have been
eliminated in consolidation. Interim results are not necessarily
indicative of the results to be expected in any other period.
3. During the first quarter of 1998, Foremost Corporation of America
adopted Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income," which requires that all components of
comprehensive income and total comprehensive income be reported on one
of the following: a statement of income and comprehensive income, a
statement of comprehensive income or a statement of stockholder's
equity. Comprehensive income is comprised of net income and all
changes to stockholder's equity, except those due to investments by
owners (changes in paid in capital) and distributions to owners
(dividends). For interim reporting purposes, SFAS 130 requires
disclosure of total comprehensive income.
Comprehensive income and its components consist of the following:
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
SEPTEMBER 30,
-----------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Net Income $11,847 $14,443
Other Comprehensive Income:
Unrealized Gain (Loss) on Securities
Available for Sale, (Net of
Tax of ($3,321) and $3,295) $(6,169) $ 6,119
------- -------
Comprehensive Income $ 5,678 $20,562
======= =======
</TABLE>
-7-
<PAGE>
FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
-----------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Net Income $29,212 $32,802
Other Comprehensive Income:
Unrealized Gain (Loss) on Securities
Available for Sale, (Net of
Tax of ($4,739) and $2,891) $(8,802) $ 5,370
------- -------
Comprehensive Income $20,410 $38,172
======= =======
</TABLE>
4. Earnings per share amounts are computed based on the weighted average
number of common shares outstanding during each quarter. The
reconciliation of basic to diluted earnings per share amounts is as
follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
-----------------------------------------
NET OUTSTANDING PER SHARE
INCOME SHARES AMOUNT
------- ----------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C>
Basic EPS $11,847 27,240 $ .43
O/S Stock Options - 513 -
------- ------- -------
Diluted EPS $11,847 27,753 $ .43
======= ======= =======
</TABLE>
-8-
<PAGE>
FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997
-----------------------------------------
NET OUTSTANDING PER SHARE
INCOME SHARES AMOUNT
------- ----------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C>
Basic EPS $14,443 27,701 $ .52
O/S Stock Options - 617 -
------- ------- -------
Diluted EPS $14,443 28,318 $ .51
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
-----------------------------------------
NET OUTSTANDING PER SHARE
INCOME SHARES AMOUNT
------- ----------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C>
Basic EPS $29,212 27,391 $ 1.07
O/S Stock Options - 572 -
------- ------- -------
Diluted EPS $29,212 27,963 $ 1.04
======= ======= =======
</TABLE>
-9-
<PAGE>
FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
-----------------------------------------
NET OUTSTANDING PER SHARE
INCOME SHARES AMOUNT
------- ----------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C>
Basic EPS $32,802 27,955 $ 1.17
O/S Stock Options - 588 -
------- ------- -------
Diluted EPS $32,802 28,543 $ 1.15
======= ======= =======
</TABLE>
5. On June 29, 1998, the Company entered into an unsecured credit
agreement with a group of banks. The credit agreement replaces the
existing unsecured credit agreement and the building mortgage loan
that was paid off on May 5, 1998. The new agreement provides for a
five year revolving credit facility not to exceed $40 million and a
seven year term loan of $80 million, of which $30 million of the term
loan will amortize down over six years at $1.25 million per quarter.
Borrowing rates are based on eurodollar and negotiated rates. The
existing interest rate swap agreement on $58 million of the facility
is still in effect. As of September 30, 1998, the Company had $29.5
million available under the revolving credit facility. The Company
also renewed the $20 million uncommitted line of credit facility,
which expired on June 30, 1998, for another year. In August 1998, the
Company entered into a interest rate swap agreement with a financial
institution for $30 million of the term loan that is amortizing. This
agreement effectively fixes the interest rate at 5.705% plus credit
spread until the loan amortizes to zero on May 31, 2004. The
Company's exposure to credit risk is limited to interest movements and
is considered to be negligible.
-10-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Foremost Corporation of America's combined loss and expense ratio for
the first nine months of 1998 was 93.5% compared to 93.3% for the same
period last year, in spite of industry catastrophe losses of $8.3 billion
for the first nine months of 1998 compared with $2.6 billion for all of
1997. Operating earnings for the first nine months of 1998, are up by 8%
over the same period last year. Return on equity for the first nine months
of 1998 is an annualized 15%. These results are a reflection of the
success of the Company's catastrophe exposure management efforts.
Net income from continuing operations, before an extraordinary item,
was $1.16 per share for the first nine months compared to $1.15 per share
in 1997. Realized gains of $.13 per share in 1998 and $.20 per share in
1997 are included in the nine months results. Net income from continuing
operations was $.43 per share, including $.04 per share in realized gains
for the third quarter of 1998, compared to $.51 per share in 1997,
including $.04 per share in realized gains. All per share amounts are
stated on a diluted basis.
On May 5, 1998, the Company pre-paid the $30.8 million mortgage on its
corporate headquarters and incurred a $3.3 million after-tax prepayment
penalty to extinguish this debt. This cost is classified as an
extraordinary item in the financial statements for the second quarter of
1998 and reduced earnings by $.12 per share. The reason for prepaying the
mortgage was to eliminate the restrictive operating covenants attached to
this debt, which hindered the Company's ability to manage its capital base
and leverage ratios through stock repurchases. The cost of this prepayment
penalty will be recouped over time by the Company's present ability to
borrow funds from its line of credit at lower interest rates. The interest
savings equal approximately $.03 per share annually to the Company's
operating results.
The combined loss and expense ratio for the property and casualty
group was 91.9% for the third quarter of 1998 compared to 87.8% for the
same period last year. The increase in the combined ratio can be
attributed to higher catastrophe losses, which tripled from last year's
third quarter and resulted in an additional 4.8 points to the combined
ratio. The Property Claims Services of the Insurance Services Office, Inc.
estimates industry-wide catastrophe losses for the third quarter
approximating $3.7 billion, which is more than seven times the amount of
such losses in the third quarter of 1997.
Written premium by major product line is as follows:
-11-
<PAGE>
<TABLE>
<CAPTION>
3RD QUARTER
---------------------------
INCREASE
1998 1997 (DECREASE)
-------- -------- ----------
(In thousands)
<S> <C> <C> <C>
Mobile Home $ 97,688 $ 95,982 1.8%
RV 11,003 11,760 (6.4%)
Automobile 3,981 2,753 44.6%
Basics 2,176 1,777 22.4%
Homeowners 896 1,059 (15.4%)
Other 947 1,358 (30.3%)
-------- -------- ------
Total $116,691 $114,689 1.7%
======== ======== ======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
---------------------------
INCREASE
1998 1997 (DECREASE)
-------- -------- ----------
(In thousands)
<S> <C> <C> <C>
Mobile Home $279,980 $278,386 0.6%
RV 39,695 40,411 (1.8%)
Automobile 12,857 9,885 30.1%
Basics 6,303 5,376 17.2%
Homeowners 1,920 2,734 (29.8%)
Other 2,717 4,338 (37.4%)
-------- -------- ------
Total $343,472 $341,130 0.7%
======== ======== ======
</TABLE>
Mobile home written premium for the first nine months of 1998 was flat
on a comparable basis due to the effect of the Company's on-going
catastrophe management program of not accepting new business in Florida and
in certain portions of California. Direct response automobile premium
increased to $6 million in the first nine months of 1998 compared with $1.5
-12-
<PAGE>
million in the same period of 1997. The Company's dwelling fire
insurance, called BASICS, continues its strong growth with a 17% increase
in written premium in the first nine months.
After-tax investment income contributed $.188 per share in the third
quarter of 1998 compared to $.194 per share in 1997. For the first nine
months of the year, after-tax investment income contributed $.56 per share
in 1998 and 1997.
FINANCIAL POSITION
The principle sources of cash for the first nine months of 1998 were
$86.1 million from sales and maturities of investments and $37.6 million
from operations. The Company also borrowed an additional $5.5 million from
its line of credit. The primary uses of cash were $99.4 million for the
purchases of securities, real estate and equipment, $16.9 million to
purchase treasury stock and $7.4 million to pay dividends to shareholders.
The Company had $34.4 million in cash and other liquid assets at September
30, 1998.
Total invested assets on a cost basis increased 0.4%, or $1.8 million
during the first nine months of 1998. Market values of securities
available for sale decreased $8.8 million net of tax in the first nine
months of 1998.
On June 29, 1998, the Company entered into an unsecured credit
agreement with a group of banks. The credit agreement replaces the
existing unsecured credit agreement and the building mortgage loan that was
paid off on May 5, 1998. The new agreement provides for a five year
revolving credit facility not to exceed $40 million and a seven year term
loan of $80 million, of which $30 million of the term loan will amortize
down over six years at $1.25 million per quarter. Borrowing rates are
based on eurodollar and negotiated rates, The existing interest rate swap
agreement on $58 million of the facility is still in effect. As of
September 30, 1998, the Company had $29.5 million available under the
revolving credit facility. The Company also renewed the $20 million
uncommitted line of credit facility, which expired on June 30, 1998, for
another year. In August, 1998, the Company entered into a interest rate
swap agreement with a financial institution for $30 million of the term
loan that is amortizing. This agreement effectively fixes the interest
rate at 5.705% plus credit spread until the loan amortizes to zero on May
31, 2004. The Company's exposure to credit risk is limited to interest
movements and is considered to be negligible.
The Company continued to manage its capital base and leverage ratios
by repurchasing 31,475 shares of its common stock during the third quarter
of 1998, under a previously announced repurchase plan. Since the
-13-
<PAGE>
inception of this repurchase plan in February 1994, the Company has
purchased 5,997,672 shares, adjusted for the January 1998 three-for-one
stock split.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue is the result of computer programs,
microcontrollers, and other systems being designed using two digits instead
of four to define the applicable year. The problem exists when date
sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. By nature, the insurance industry is highly dependent
upon computer systems because of significant transaction volumes and date
dependencies for many of its applications. The Company has completed a
detailed review of its computer programs to identify the systems that could
be affected by the Year 2000 problem. The Company has a detailed written
plan, which regularly is updated and monitored by technical personnel.
Plan status is regularly reviewed by management of the Company. The
Company also has hired an outside consulting firm to assist in the process
of identifying, assessing, remediating, and testing Year 2000 problems.
The procedures used by these consultants for the Year 2000 conversion
effort have been certified by Information Technology Association of America
"ITAA." The ITAA 2000 Certification Program evaluates the consultant's
processes and methods used to develop new software or convert existing
software to meet the date related needs of the next century. The Company
is in the process of evaluating the Year 2000 readiness of third parties.
Significant third parties with which the Company interfaces with regard to
the Year 2000 problem include, among others, agents, technology vendors,
financial institutions and service providers, and companies that provide
utility infrastructure (power, delivery services, telecommunications).
Unreadiness by these third parties would expose the Company to the
potential for loss and impairment of business processes and activities.
The Company is assessing these risks through bilateral efforts and is
considering the need for contingency plans intended to address perceived
risks. The Company cannot predict what effect the failure of such a third
party to address, in a timely manner, the Year 2000 problem would have on
the Company.
As of September 30, 1998, the Company has completed approximately 70%
of the Year 2000 modifications of its mainframe computer applications. The
Company has identified the non-IT systems that have Year 2000 issues and has
a plan to assess, remediate, and test, if necessary, these systems. The
Company will continue to assess the impact of the Year 2000 issue on the
remainder of its systems and applications throughout 1998 and 1999. The
Company has performed tests of its systems and applications during 1998 and
will continue to do so in 1999. The Company's goal is to have systems and
applications Year 2000 ready by the middle of 1999, allowing the remaining
time to be used for further validation and testing.
-14-
<PAGE>
The Company spent approximately $1.8 million before 1997, $3.8 million
in connection with Year 2000 issues in 1997 and expects that it will spend
approximately $4.5 million and $2.9 million in 1998 and 1999, respectively.
These costs primarily will consist of professional fees paid to third party
providers of remediation services. It is the Company's policy to expense all
costs associated with these systems changes. The Company also may invest in
new or upgraded technology which has definable value lasting beyond 2000. In
these instances, where Year 2000 compliance is merely ancillary, the
Company may capitalize and depreciate such an asset over its estimated
useful life.
Based on currently available information, management does not
presently anticipate that the costs to address the Year 2000 issues will
have a material adverse impact on the Company's financial conditions,
results of operations or liquidity. However, the extent to which the
computer operations and other systems of the Company's important third
parties are adversely affected could, in turn, affect the Company's ability
to communicate with such third parties and could materially affect the
Company's results of operations in any period or periods.
The costs of the project and the date on which the Company believes it
will complete the Year 2000 modifications are based on management's best
estimates. There can be no guarantee that these estimates will be achieved
and actual results could differ from those anticipated. Specific factors
that might cause differences include, but are not limited to, the ability
of other companies on which the Company's systems rely to modify or convert
their systems to be Year 2000 ready, the ability to locate and correct all
relevant computer codes and microprocessors, the ability of all third
parties who have business relationships with the Company to continue their
businesses without interruption, and similar uncertainties. As a result,
the Company is in the process of evaluating possible internal and external
scenarios that might have an adverse effect on the Company, as well as the
need for contingency plans to address these scenarios. We anticipate that
all necessary contingency plans will be completed during 1999.
This Year 2000 Readiness Disclosure is based upon and partially
repeats information provided by the Company's outside consultants and
others regarding the Year 2000 readiness of the Company and its customers,
suppliers, financial institutions, and other parties. Although the Company
believes this information to be accurate, it has not independently verified
such information.
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, contained in
this 10-Q report are forward-looking statements. Forward-looking
statements generally are accompanied by words such as "anticipate,"
-15-
<PAGE>
"believe," "estimate," "project," "expect" or similar statements. Such
forward-looking information involves important known and unknown risks and
uncertainties and other factors that may cause the actual results,
performance or achievements of the company to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable,
no assurance can be given that such expectations will prove correct.
Factors that could cause the company's results to differ materially from
the results discussed in such forward-looking statements include
competition from other insurance companies, the general economic
conditions, the effects of the Year 2000 issue on the Company's business,
the effects of governmental regulation and the effects of weather-related
catastrophes. All forward-looking statements are expressly qualified in
their entirety by the cautionary statements in this paragraph and current
and potential stockholders are cautioned not to place undue reliance on the
forward-looking statements made in this report.
SUBSEQUENT EVENT
On October 1, 1998, the Company commenced action against First USA
Bank and Banc One Corporation ("Defendants") in the United States District
Court for the Western District of Michigan arising out of a dispute
concerning an Insurance Services Agreement. The agreement granted the
Company the exclusive right to provide certain insurance products to
Defendants' credit card customers, and provided that Defendants would
market the Company's products to credit card customers in exchange for a
royalty fee from the Company. Defendants have not yet filed a response to
the complaint, and no discovery has taken place in the litigation.
-16-
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's Bylaws contain provisions regarding the procedure and
permissibility of shareholder proposals. Under the Bylaws no matter may be
presented for shareholder action at an annual or special meeting of
shareholders unless such matter is: (i) specified in the notice of the
meeting (or any supplement to the notice) given by or at the direction of
the Board of Directors; (ii) otherwise presented at the meeting by or at
the direction of the Board of Directors; (iii) properly presented for
action at the meeting by a shareholder in accordance with the notice
provisions set forth in the Bylaws and any other applicable requirements;
or (iv) a procedural matter presented, or accepted for presentation, by the
Chairman of the meeting in his or her sole discretion.
For a matter to be properly presented by a shareholder, the
shareholder must have given timely notice of the matter in writing to the
Secretary of the Company. To be timely, the notice must be delivered to or
mailed to and received at the principal executive offices of the Company
not less than 120 calendar days prior to the date corresponding to the date
of the Company's proxy statement or notice of meeting released to
shareholders in connection with the last preceding annual meeting of
shareholders in the case of an annual meeting (unless the Company did not
hold an annual meeting within the last year, or if the date of the upcoming
annual meeting changed by more than 30 days from the date of the last
preceding meeting, then the notice must be delivered or mailed and received
not more than seven days after the earlier of the date of the notice of the
meeting or public disclosure of the date of the meeting), and not more than
seven days after the earlier of the date of the notice of the meeting or
public disclosure of the date of the meeting in the case of a special
meeting. The notice by the shareholder must set forth: (i) a brief
description of the matter the shareholder desires to present for
shareholder action; (ii) the name and record address of the shareholder
proposing the matter for shareholder action; (iii) the class and number of
shares of capital stock of the Company that are beneficially owned by the
shareholder; and (iv) any material interest of the shareholder in the
matter proposed for shareholder action.
The shareholder proposal, together with any accompanying supporting
statement, may not in the aggregate exceed 500 words. Except to the extent
that a shareholder proposal submitted pursuant to the Bylaws is not made
available at the time of mailing, the notice of the purposes of the meeting
shall include the name and address of and the number of shares of the
voting security held by the proponent of each shareholder proposal.
A shareholder may submit matters and proposals for shareholder action
at any annual or special shareholder meeting if the matters and proposals
-17-
<PAGE>
are of general concern to, and are proper subjects for action by, the
shareholders. A submitted proposal or matter may not be presented for
shareholder action if it: (i) relates to the enforcement of a personal
claim or the redress of a personal grievance against the Company, its
management or any other person; (ii) consists of a recommendation, request
or mandate that action be taken with respect to a matter, including a
general economic, political, racial, religious, social or similar cause,
that is not significantly related to the Company's business or is not
within the Company's power to effectuate; (iii) has, at the shareholder's
request, previously been submitted in either of the last two annual
shareholder meetings and the shareholder has failed to present the
proposal, in person or by proxy, for action at the meeting; (iv) is
substantially similar to a matter or proposal presented within the
preceding five calendar years: (x) if it was submitted once during the past
five annual meetings and it received less than 3% of the total votes cast,
or (y) if it was submitted twice during the past five annual meetings and
it received less than 6% of the total votes cast at the time of its second
submission, or (z) if it was submitted three times during such period and
it received less than 10% of the votes cast at the time of its third
submission (if any of (x), (y) or (z) apply, the proposal may be omitted
for three years after the latest previous submission); or (v) consists of a
recommendation or request that the management take action with respect to a
matter relating to the conduct of the Company's ordinary business
operations.
Notwithstanding the above, if the shareholder desires to require the
Company to include the shareholder's proposal in the Company's proxy
materials, matters and proposals submitted for inclusion on the agenda
shall be governed by the rules and regulations under the Securities
Exchange Act of 1934, as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Articles of Incorporation. See Exhibit 3.1
4.2 Bylaws. See Exhibit 3.2
4.3 Specimen Stock Certificate
27 Financial Data Schedule
-18-
<PAGE>
(b) Reports on 8-K - There were no reports filed on Form 8-K for the
quarter ended September 30, 1998.
-19-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FOREMOST CORPORATION OF AMERICA
(Registrant)
Date: November 12, 1998 /S/ PAUL D. YARED
Paul D. Yared
Its: Senior Vice President, Secretary
and General Counsel
Date: November 12, 1998 /S/ KENNETH C. HAINES
Kenneth C. Haines
Its: Controller
-20-
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Articles of Incorporation. See Exhibit 3.1
4.2 Bylaws. See Exhibit 3.2
4.3 Specimen Stock Certificate
27 Financial Data Schedule
<PAGE>
EXHIBIT 3.1
C&S 500 (Rev. 6/92)
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
Name
STEPHEN C. WATERBURY
Address
WARNER NORCROSS & JUDD LLP
900 OLD KENT BUILDING, 111 LYON STREET, N.W.
City State Zip Code
GRAND RAPIDS MICHIGAN 49503 EFFECTIVE DATE:
Document will be returned to the name and address you enter above.
[ ] [ ] [ ] - [ ] [ ] [ ]
ARTICLES OF INCORPORATION
OF
FOREMOST-MICHIGAN CORPORATION
Pursuant to the Provisions of Act 284, Public Acts of 1972, as
amended, the undersigned executes the following Articles of Incorporation:
ARTICLE I
NAME
The name of the corporation is Foremost-Michigan Corporation.
<PAGE>
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State
of Michigan is 5600 Beech Tree Lane, Caledonia, Michigan 49316. The name
of its registered agent at such address is Paul D. Yared. The mailing
address is Post Office Box 2450, Grand Rapids, Michigan 49501.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Business
Corporation Act of Michigan.
ARTICLE IV
CAPITAL STOCK
The total number of shares of stock which the Corporation shall
have authority to issue is 60,000 shares of Common Stock, each with a par
value of $1.00. The following provisions shall apply to the authorized
stock of the corporation:
A. NO PREFERENCE. Except as provided by law or by the Corporation's
shareholder rights plan, as in effect from time to time, none of the shares
of the Common Stock shall be entitled to any preferences, and each share of
Common Stock shall be equal to every other share of said Common Stock in
every respect.
B. DIVIDENDS. After payment or declaration of full dividends on all
shares having a priority over the Common Stock as to dividends, and after
making all required sinking or retirement fund payments, if any, on all
classes of preferred shares and on any other stock of the Corporation
ranking as to dividends or assets prior to the Common Stock, dividends on
the shares of Common Stock may be declared and paid, but only when and as
determined by the Board of Directors.
C. RIGHTS ON LIQUIDATION. On any liquidation, dissolution, or
winding up of the affairs of the Corporation, after there shall have been
paid to or set aside for the holders of all shares having priority over the
Common Stock the full preferential amounts to which they are respectively
entitled, the holders of the Common Stock shall be entitled to receive pro
-2-
<PAGE>
rata all the remaining assets of the Corporation available for distribution
to its shareholders.
D. VOTING. At all meetings of shareholders of the Corporation, the
holders of the Common Stock shall be entitled to one vote for each share of
Common Stock held by them respectively.
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator is Paul D.
Yared, Post Office Box 2450, Grand Rapids, Michigan 49501.
ARTICLE VI
DURATION
The Corporation is to have perpetual existence.
ARTICLE VII
BOARD OF DIRECTORS; NUMBER; CLASSIFICATION;
VACANCIES; REMOVAL; NOMINATIONS
A. The number of directors constituting the entire Board shall be
not less than five nor more than 15 as fixed from time to time by vote of a
majority of the entire Board; provided, however, that the number of
directors shall not be reduced so as to shorten the term of any director at
the time in office.
B. The Board of Directors shall be divided into three classes as
nearly equal in number as possible, with the term of office of one class
expiring each year. At each annual meeting of the shareholders, the
successors of the class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting
of shareholders held in the third year following the year of their
election.
C. Any vacancies in the Board of Directors for any reason, and any
directorships resulting from any increase in the number of directors, may
be filled only by the Board of Directors, acting by a majority of the
directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which
-3-
<PAGE>
such directors shall have been chosen and until their successors shall be
elected and qualified. Subject to the foregoing, at each annual meeting of
shareholders the successors to the class of directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Notwithstanding the foregoing, if the holders
of any class or series of preferred stock are entitled to elect one or more
directors to the exclusion of other shareholders, vacancies of that class
or series may be filled only by majority vote of the directors elected by
that class or series then in office, whether or not a quorum, or by the
holders of that class or series.
D. Any director may be removed from office at any time, but only for
cause, and only if removal is approved as set forth below. Except as may be
provided otherwise by law, cause for removal shall be construed to exist
only if: (1) the director whose removal is proposed has been convicted of
a felony by a court of competent jurisdiction and such conviction is no
longer subject to direct appeal; (2) such director has been adjudicated by
a court of competent jurisdiction to be liable for negligence or misconduct
in the performance of his or her duty to the corporation in a matter of
substantial importance to the corporation and such adjudication is no
longer subject to direct appeal; (3) such director has become mentally
incompetent, whether or not so adjudicated, which mental incompetency
directly affects his or her ability as a director of the corporation; or
(4) such director's actions or failure to act are deemed by the Board of
Directors to be in derogation of the director's duties. Whether cause for
removal exists shall be determined by the affirmative vote of 80% of the
voting power of all shares of capital stock of the Corporation then
entitled to vote on the election of directors, voting together as a single
class or by the affirmative vote of a majority of the total number of
directors. Any action to remove a director pursuant to (1) or (2) above
shall be taken within one year of such conviction or adjudication. For
purposes of this paragraph, the total number of directors will not include
the director who is the subject of the removal determination, nor will such
director be entitled to vote thereon.
E. Nominations of directors of the Corporation shall be made in
accordance with the following:
1. Nominations of candidates for election for directors of the
Corporation at any meeting of shareholders called for election of
directors (an "Election Meeting") may be made by the Board of
Directors or by any shareholder entitled to vote at such Election
Meeting, as provided in (2) and (3), immediately below.
2. Nominations made by the Board of Directors shall be made at
a meeting of the Board of Directors, or by written consent of
directors in lieu of a meeting, not less than 30 days prior to the
-4-
<PAGE>
date of the Election Meeting, and such nominations shall be reflected
in the minute books of the Corporation as of the date made. At the
request of the Secretary of the Corporation, each proposed nominee
shall provide the Corporation with such information concerning himself
or herself as is required under the rules of the Securities and
Exchange Commission, to be included in the Corporation's proxy
statements soliciting proxies for his or her election as a director.
3. Any shareholder who intends to make a nomination at the
Election Meeting shall deliver a timely notice to the Secretary of the
Corporation setting forth (a) the name, age, business address, and
residence address of each nominee proposed in such notice; (b) the
principal occupation or employment of each such nominee; (c) the
number of shares of capital stock of the Corporation which are
beneficially owned by each such nominee; (d) a statement that the
nominee is willing to be nominated; and (e) such other information
concerning each such nominee as would be required under the rules of
the Securities and Exchange Commission in a proxy statement soliciting
proxies for the election of such nominees. To be timely, a
shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 120
days prior to the date of notice of the Election Meeting in the case
of an annual meeting, and not more than seven days following the date
of notice in the case of a special meeting.
4. If the chairman of the Election Meeting determines that a
nomination was not made in accordance with the foregoing procedures,
such nomination shall be void.
ARTICLE VIII
BOARD AUTHORITY
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
A. To make, alter, or repeal the Bylaws of the Corporation.
B. If authorized by these Articles, to adopt resolutions to issue
shares of preferred stock, in such amounts and series, and with such
dividend, liquidation, voting, conversion, redemption, and other rights as
shall be set forth in the resolution, and to execute, acknowledge, and file
a certificate setting forth a copy of such resolution(s) and the number of
shares of stock of such class or series as to which the resolution(s)
apply, pursuant to Michigan law. Upon filing, the certificate shall
constitute an amendment to these Articles of Incorporation.
-5-
<PAGE>
C. To authorize and cause to be executed mortgages and liens upon
the real property of the Corporation.
D. To set apart out of any of the funds of the Corporation available
for dividends a reserve or reserves for any proper purpose and to abolish
any such reserve in the manner in which it was created.
E. By a majority vote of the whole Board, to designate one or more
committees, each committee to consist of one or more directors of the
Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. The Bylaws may provide that in the
absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place
of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, or in the
Bylaws of the Corporation, shall have and may exercise all of the powers
and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Articles of Incorporation, adopting an agreement of merger or
consolidation, recommending to the shareholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the shareholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the Bylaws of the Corporation.
F. When and as authorized by the shareholders in accordance with
law, to sell, lease, or exchange all or substantially all of the property
and assets of the Corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such consideration,
which may consist in whole or in part of money or property including shares
of stock in, and/or securities of, any other corporation or corporations,
as its Board of Directors shall deem expedient or for the best interest of
the Corporation.
ARTICLE IX
ELECTION OF DIRECTORS; LOCATION OF MEETINGS, BOOKS, AND OFFICES
Elections of the directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide. If the Bylaws so provide,
the shareholders and directors shall have power to hold meetings, to keep
the books, documents and papers of the Corporation outside the State of
-6-
<PAGE>
Michigan, and to have one or more offices within or without the State of
Michigan, at such places as may be designated from time to time by the
Bylaws or by resolution of the shareholders or directors, except as
otherwise required by the laws of Michigan.
ARTICLE X
CREDITOR ARRANGEMENTS
When a compromise or arrangement or a plan of reorganization of
this Corporation is proposed between this Corporation and its creditors or
any class of them or between this Corporation and its shareholders or any
class of them, a court of equity jurisdiction within the state, on
application of this Corporation or of a creditor or shareholder thereof, or
on application of a receiver appointed for the Corporation may order a
meeting of the creditors or class of creditors or of the shareholders or
class of shareholders to be affected by the proposed compromise or
arrangement or reorganization to be summoned in such manner as the court
directs. If a majority in number representing three-fourths (3/4) in value
of the creditors or class of creditors, or of the shareholders or class of
shareholders to be affected by the proposed compromise or arrangement or
reorganization, agree to a compromise or arrangement or a reorganization of
this Corporation as a consequence of the compromise or arrangement, the
compromise or arrangement and the reorganization, if sanctioned by the
court to which the application has been made, shall be binding on all the
creditors or class of creditors, or on all the shareholders or class of
shareholders and also on this Corporation.
ARTICLE XI
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in these Articles of Incorporation in the
manner now or hereafter prescribed by the statutes of Michigan, and all
rights and powers conferred on directors and shareholders prescribed herein
are subject to this reservation; PROVIDED, HOWEVER, that this Article XI,
as well as the following provisions of these Articles of Incorporation, may
not be amended, altered, changed, or repealed, nor may any provision
inconsistent with the following provisions be adopted, without the approval
of at least 80% of the total voting power of all shares of stock entitled
to vote, voting together as a single class at an annual or special meeting
of shareholders: (i) Article VII - Board of Directors; Number;
Classification; Vacancies; Removal; Nominations; (ii) Article XII -
Amendment of Bylaws; and (iii) Article XIII - Special Shareholder Meetings,
-7-
<PAGE>
unless such repeal, alteration, or amendment of any inconsistent provision
or provisions is declared advisable by the Board of Directors by the
affirmative vote of at least 75% of the entire Board of Directors,
notwithstanding the fact that a lesser percentage may be specified by the
Michigan Business Corporation Act.
ARTICLE XII
AMENDMENT OF BYLAWS
The Bylaws of the Corporation may be repealed, altered, amended,
or rescinded at any time by the Board of Directors without shareholder
approval. The Bylaws of the Corporation may not be amended by the
shareholders of the Corporation except upon the affirmative vote of at
least 80% of the total voting power of all shares of stock entitled to vote
in the election of directors, voting together as a single class at an
annual or special meeting of shareholders.
ARTICLE XIII
SPECIAL SHAREHOLDER MEETINGS
Special shareholder meetings may be called by the Board of
Directors or a committee of the Board authorized to call special
shareholder meetings. The shareholders of the Corporation shall not have
the power or ability to call a special shareholder meeting, except as
provided in the Bylaws or under the Michigan Business Corporation Act, and
subject to the rights of the holders of preferred stock, if any.
ARTICLE XIV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify directors and officers of the
corporation as of right, and shall advance expenses, to the fullest extent
now or hereafter permitted by law in connection with any actual or
threatened civil, criminal, administrative, or investigative action, suit,
or proceeding (whether brought by or in the name of the Corporation, a
subsidiary, or otherwise) arising out of their service to the Corporation,
a subsidiary, or to another organization at the request of the Corporation
or a subsidiary. The Corporation may indemnify persons who are not
directors or officers of the Corporation to the extent authorized by Bylaw,
resolution of the Board of Directors, or contractual agreement authorized
by the Board of Directors. The Corporation may purchase and maintain
-8-
<PAGE>
insurance to protect itself and any such director, officer, or other person
against any liability asserted against him or her and incurred by him or
her in respect of such service whether or not the Corporation would have
the power to indemnify him or her against such liability by law or under
the provisions of this Article. The provisions of this Article shall be
deemed contractual and shall apply to actions, suits, or proceedings,
whether arising from acts or omissions occurring before or after the
adoption of this Article, and to directors, officers, and other persons who
have ceased to render such service, and shall inure to the benefit of the
heirs, executors, and administrators of the directors, officers, and other
persons referred to in this Article.
ARTICLE XV
LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages for any action
taken or any failure to take any action as a director, except that a
director's liability is not limited for:
A. the amount of a financial benefit received by a director to which
he or she is not entitled;
B. intentional infliction of harm on the Corporation or its
shareholders;
C. a violation of Section 551(1) of the Michigan Business
Corporation Act; or
D. intentional criminal act.
If the Michigan Business Corporation Act is amended to further
eliminate or limit the liability of a director, then a director of the
Corporation (in addition to the circumstances in which a director is not
personally liable as set forth in the preceding paragraph) shall, to the
fullest extent permitted by the Michigan Business Corporation Act, as so
amended, not be liable to the Corporation or its shareholders. No
amendment to or modification or repeal of this Article shall increase the
liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment,
modification or repeal.
This Article applies only to acts or omissions and to breaches of
fiduciary duty occurring after this Article became effective.
-9-
<PAGE>
ARTICLE XVI
DENIAL OF PREEMPTIVE RIGHTS
The holders of the Common Stock shall have no preemptive rights
to subscribe for any shares of any class of stock or securities of any kind
of the Corporation whether now or hereafter authorized.
The undersigned incorporator, for the purpose of forming a
corporation pursuant to the Michigan Business Corporation Act, has executed
these Articles of Incorporation this ___ day of April 1998.
________________________________________
Paul D. Yared, Incorporator
-10-
<PAGE>
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
Name Tashia L. Rivard
Address Warner Norcross & Judd LLP
900 Old Kent Building
111 Lyon Street, N.W.
City Grand Rapids, MI 49503-2489 EFFECTIVE DATE:
DOCUMENT WILL BE RETURNED THE NAME AND ADDRESS INDICATED ABOVE
CERTIFICATE OF MERGER
OF
FOREMOST CORPORATION OF AMERICA
INTO
FOREMOST-MICHIGAN CORPORATION
PURSUANT TO THE PROVISIONS OF ACT 284, PUBLIC ACTS OF 1972
(PROFIT CORPORATIONS), THE UNDERSIGNED CORPORATIONS EXECUTE THE FOLLOWING
CERTIFICATE:
This Certificate of Merger is filed pursuant to Section 712 of
the Michigan Business Corporation Act, as amended (the "Michigan Business
Corporation Act"). This Certificate of Merger pertains to the Agreement
and Plan of Merger dated as of June 30, 1998 (the "Plan of Merger"),
between Foremost Corporation of America, a Delaware corporation
("Foremost"), and Foremost-Michigan Corporation, a Michigan corporation
("Foremost-Michigan"), a copy of which is attached to this Certificate of
Merger.
1. The Plan of Merger is as follows:
(a) The name of each constituent corporation and its
identification number is:
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
<TABLE>
<CAPTION>
NAME CORPORATION IDENTIFICATION NUMBER
---- ---------------------------------
<S> <C> <C>
Foremost Corporation of America 627-165
Foremost-Michigan Corporation 530-850
</TABLE>
(b) The name of the surviving corporation is Foremost-Michigan
Corporation and its identification number is 530-850.
(c) For each constituent corporation, state:
<TABLE>
<CAPTION>
NAME OF CORPORATION DESIGNATION AND NUMBER OF CLASS OR SERIES OF SHARES CLASS OR SERIES ENTITLED
OUTSTANDING SHARES IN ENTITLED TO VOTE TO VOTE AS A CLASS
EACH CLASS OR SERIES
<S> <C> <C> <C>
Foremost Corporation Common Stock Common Stock None
of America $1.00 par value
27,243,940 shares
Foremost-Michigan Common Stock Common Stock None
Corporation $1.00 par value
100 shares
</TABLE>
The number of outstanding shares of the Common Stock of Foremost is subject
to change before the effective time of the merger due to the issuance of
additional shares of Common Stock upon the exercise of employee stock
options and the grant or sale of shares to, or for the account of,
directors and employees pursuant to other benefit plans, and the issuance
of additional shares if and as authorized by the board of directors of
Foremost.
2. (a) The manner and basis of converting shares are as follows:
The terms and conditions of the merger are fully set forth in the Plan of
Merger attached as APPENDIX A, which is incorporated into and made a part
of this Certificate of Merger. The manner and basis of converting each
share of Foremost Common Stock into shares of Foremost-Michigan Common
Stock are described in Article IV of the Plan of Merger. Under those
provisions, each issued and outstanding share of Foremost Common Stock will
-2-
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
be converted into one validly issued, fully paid, and nonassessable share
of Foremost-Michigan Common Stock.
(b) The amendments to the Articles of the surviving corporation
to be effected by the merger are as follows:
ARTICLE I
NAME
The name of the corporation is Foremost Corporation of
America.
ARTICLE IV
CAPITAL STOCK
The total number of shares of stock which the Corporation
shall have authority to issue is 70,000,000 shares of Common
Stock, each with a par value of $1.00, and 10,000,000 shares of
Preferred Stock, without par value. Preferred Shares may be
issued in series, each series being composed of such number of
shares and having such dividend, liquidation, voting, conversion,
redemption and other rights, if any, as the Board of Directors
may determine from time to time by resolution.
The following provisions shall apply to the authorized stock
of the corporation:
A. PROVISIONS APPLICABLE TO COMMON STOCK.
1. NO PREFERENCE. Except as provided by law or by the
Corporation's shareholder rights plan, as in effect from time to
time, none of the shares of the Common Stock shall be entitled to
any preferences, and each share of Common Stock shall be equal to
every other share of said Common Stock in every respect.
2. DIVIDENDS. After payment or declaration of full
dividends on all shares having a priority over the Common Stock
as to dividends, and after making all required sinking or
retirement fund payments, if any, on all classes of preferred
shares and on any other stock of the Corporation ranking as to
dividends or assets prior to the Common Stock, dividends on the
-3-
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
shares of Common Stock may be declared and paid, but only when
and as determined by the Board of Directors.
3. RIGHTS ON LIQUIDATION. On any liquidation,
dissolution, or winding up of the affairs of the Corporation,
after there shall have been paid to or set aside for the holders
of all shares having priority over the Common Stock the full
preferential amounts to which they are respectively entitled, the
holders of the Common Stock shall be entitled to receive pro rata
all the remaining assets of the Corporation available for
distribution to its shareholders.
4. VOTING. At all meetings of shareholders of the
Corporation, the holders of the Common Stock shall be entitled to
one vote for each share of Common Stock held by them
respectively.
B. PROVISIONS APPLICABLE TO PREFERRED STOCK.
1. ISSUANCE IN SERIES. The authorized shares of Preferred
Stock may be issued from time to time in one or more series, each
of such series to have such designations, powers, preferences,
and relative, participating, optional, or other rights, and such
qualifications, limitations, or restrictions, as may be stated in
a resolution or resolutions providing for the issue of such
series adopted by the Board of Directors. Authority is hereby
expressly granted to the Board of Directors, subject to the
provision of this Article, to authorize the issuance of any
authorized and unissued shares of Preferred Stock (whether or not
previously designated as shares of a particular series, and
including shares of any series issued and thereafter acquired by
the corporation) as shares of one or more series of Preferred
Stock, and with respect to each series to determine and designate
by resolution or resolutions providing for the issuance of such
series:
(a) The number of shares to constitute the series and
the title thereof;
(b) Whether the holders shall be entitled to
cumulative or noncumulative dividends, and, with respect to
shares entitled to cumulative dividends, the date or dates
from which such dividends shall be cumulative, the rate of
the annual dividends thereon (which may be fixed or variable
-4-
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
and may be made dependent upon facts ascertainable outside
of the Articles of Incorporation), the dates of payment
thereof, and any other terms and conditions relating to such
dividends;
(c) Whether the shares of such series shall be
redeemable, and, if redeemable, whether redeemable for cash,
property, or rights, including securities of any other
corporation, and whether redeemable at the option of the
holder or the Corporation or upon the happening of a
specified event, the limitations and restrictions with
respect to such redemption, the time or times when, the
price or prices or rate or rates at which, the adjustments
with which, and the manner in which such shares shall be
redeemable, including the manner of selecting shares of such
series for redemption if less than all shares are to be
redeemed, and the terms and amount of a sinking fund, if
any, provided for the purchase or redemption of such shares;
(d) Whether the shares of such series shall be
participating or nonparticipating, and, with respect to
participating shares, the date or dates from which the
dividends shall be participating, the rate of the dividends
thereon (which may be fixed or variable and may be made
dependent upon facts ascertainable outside of the Articles
of Incorporation), the dates of payment thereof, and any
other terms and conditions relating to such additional
dividends;
(e) The amount per share payable to holders upon any
voluntary or involuntary liquidation, dissolution, or
winding up of the affairs of the Corporation;
(f) The conversion or exchange rights, if any, of such
series, including, without limitation, the price or prices,
rate or rates, and provisions for the adjustment thereof
(including provisions for protection against the dilution or
impairment of such rights), and all other terms and
conditions upon which shares constituting such series may be
converted into, or exchanged for, shares of any other class
or classes or series;
(g) The voting rights per share, if any, of each such
series, provided that in no event shall any shares of any
series be entitled to more than one vote per share; and
-5-
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
(h) All other rights, privileges, terms, and
conditions that are permitted by law and are not
inconsistent with this Article.
All shares of Preferred Stock shall rank equally and be
identical in all respects except as to the matters specified in
this Article or any amendment thereto, or the matters permitted
to be fixed by the Board of Directors, and all shares of any one
series thereof shall be identical in every particular except as
to the date, if any, from which dividends on such shares shall
accumulate.
2. DIVIDENDS. The holders of shares of each series of
Preferred Stock shall be entitled to receive, when, as, and if
declared by the Board of Directors, dividends at, but not
exceeding, the dividend rate fixed for such series by the Board
of Directors pursuant to the provisions of this Article.
3. LIQUIDATION PREFERENCE. Upon the liquidation,
dissolution, or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the holders of each series of
Preferred Stock shall be entitled to receive in full out of the
assets of the Corporation available for distribution to
shareholders (including its capital) before any amount shall be
paid to, or distributed among, the holders of Common Stock, an
amount or amounts fixed by the Board of Directors pursuant to the
provisions of this Article. If the assets of the Corporation
legally available for payment or distribution to holders of the
Preferred Stock upon the voluntary or involuntary liquidation,
dissolution, or winding up of the affairs of the Corporation are
insufficient to permit the payment of the full preferential
amount to which all outstanding shares of the Preferred Stock are
entitled, then such assets shall be distributed ratably upon
outstanding shares of the Preferred Stock in proportion to the
full preferential amount to which each such share shall be
entitled. After payment to holders of the Preferred Stock of the
full preferential amount, holders of the Preferred Stock as such
shall have no right or claim to any of the remaining assets of
the corporation. The merger or consolidation of the Corporation
into or with any other corporation, or the merger of any other
corporation into the Corporation, or the sale, lease, or
conveyance of all or substantially all of the property or
business of the Corporation, shall not be deemed to be a
dissolution, liquidation, or winding up for purposes of this
Section 3.
-6-
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
(c) The Plan of Merger will be furnished by the surviving
corporation, on request and without costs, to any shareholder of
any constituent profit corporation.
3. This merger is permitted by the laws of the state of Delaware,
the jurisdiction under which Foremost is organized, and the Plan of Merger
was adopted and approved by such corporation pursuant to and in accordance
with the laws of that jurisdiction.
4. The merger shall be effective on June 30, 1998.
5. The Plan of Merger was approved by the Board of Directors of
Foremost-Michigan, the surviving Michigan corporation, without approval of
the shareholders, in accordance with Section 703(a) of the Michigan
Business Corporation Act.
FOREMOST-MICHIGAN CORPORATION
Dated: June ____, 1998 By _____________________________________
Richard L. Antonini
Its Chairman, President, and Chief
Executive Officer
-7-
<PAGE>
CERTIFICATE OF MERGER
- CONTINUED -
Name of Organization Remitting Fees:
WARNER NORCROSS & JUDD LLP
900 Old Kent Building
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503-2489
(616) 752-2000
Certificate Prepared By:
Tashia L. Rivard
WARNER NORCROSS & JUDD LLP
900 Old Kent Building
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503-2489
(616) 752-2171
-8-
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF
FOREMOST CORPORATION OF AMERICA
(A DELAWARE CORPORATION)
AND
FOREMOST CORPORATION-MICHIGAN
(A MICHIGAN CORPORATION)
THIS AGREEMENT AND PLAN OF MERGER (the "PLAN OF MERGER") is made
and entered into by and between FOREMOST CORPORATION OF AMERICA ("FOREMOST"
or the "DELAWARE CORPORATION"), a Delaware corporation, and its wholly
owned subsidiary, FOREMOST CORPORATION-MICHIGAN ("FOREMOST-MICHIGAN" or the
"MICHIGAN CORPORATION"), a Michigan corporation.
The total number of shares of stock which the Michigan
Corporation has or will have authority to issue consists or shall consist
of 70,000,000 shares of Common Stock, par value $1.00 per share, of which
100 shares are issued and outstanding and held by the Delaware Corporation
as of the date hereof and 10,000,000 shares of Preferred Stock, without par
value, of which no shares are outstanding. Each outstanding share of
Common Stock of the Michigan Corporation is entitled to one vote on any
matter submitted to the vote of the shareholders of the Michigan
Corporation.
The total number of shares of stock which the Delaware
Corporation has authority to issue consists of 35,000,000 shares of Common
Stock, par value $1.00 per share, of which 27,243,940 shares are issued and
outstanding at the date hereof. Each outstanding share of Common Stock of
the Delaware Corporation is entitled to one vote on any matter submitted to
the vote of the stockholders. Additional shares of capital stock of the
Delaware Corporation may be issued, and outstanding shares may be retired
before the effective date of the Merger if authorized by action of the
Board of Directors or upon the exercise of previously issued stock options.
The Delaware Corporation does not have authorized preferred stock.
The Board of Directors of Foremost and Foremost-Michigan deem it
in the best interests of said corporations and the stockholders of Foremost
to merge Foremost into Foremost-Michigan pursuant to the provisions of the
Michigan Business Corporation Act and Delaware General Corporation Law upon
the terms and conditions set forth in this Plan of Merger.
<PAGE>
IN CONSIDERATION of the foregoing and of the agreements,
covenants and provisions contained in this Plan of Merger, the Michigan
Corporation and the Delaware Corporation hereby agree as follows:
ARTICLE I - GENERAL
Foremost and Foremost-Michigan (the "CONSTITUENT CORPORATIONS")
shall be merged into a single corporation, in accordance with the provision
of the laws of the state of Michigan and the state of Delaware by merging
Foremost into Foremost-Michigan, which shall survive the Merger and
thereafter be named "Foremost Corporation of America."
ARTICLE II - THE TRANSACTION
When the Merger shall become effective, all in accordance with,
and as provided in, the provisions of this Plan of Merger and the
applicable provisions of the laws of the state of Michigan and the state of
Delaware (such time being hereinafter referred to as the "EFFECTIVE DATE OF
THE MERGER"):
1. The Constituent Corporation shall be a single corporation which
shall be Foremost-Michigan (the "SURVIVING CORPORATION"), and the separate
existence of Foremost shall cease.
2. The Surviving Corporation shall thereupon and thereafter have all
rights, privileges, immunities and powers and be subject to all the duties
and liabilities of a corporation under Michigan law and shall have and
possess all the rights, privileges, immunities and franchises, public or
private, of each of the Constituent Corporations.
3. All property, real, personal and mixed, all debts due on whatever
account, including subscriptions to shares, all rights of actions and all
other assets or interests of any description of or belonging to or due to
each of the Constituent Corporations shall be deemed to be transferred and
vested in the Surviving Corporation without further act or deed; and the
title to any real estate, or any interest therein, vested in either of the
Constituent Corporations shall not revert or be in any way impaired because
of such Merger.
4. The Surviving Corporation shall be responsible and liable for all
of the liabilities and obligations of each of the Constituent Corporations
and all debts, liabilities and duties of the Constituent Corporations shall
attach to the Surviving Corporation and may be enforced against it to the
same extent as if said debts, liabilities and duties had been incurred
and/or contracted by it; a claim existing or action or proceeding pending
-2-
<PAGE>
by or against either of the Constituent Corporations may be prosecuted as
if such Merger had not taken place or the Surviving Corporation may be
substituted in the place of such Constituent Corporation; and the rights of
creditors and any lien upon the property of the Constituent Corporations
shall not be impaired by such Merger.
5. All corporate acts, policies, agreements, arrangements, approvals
and authorizations of the Delaware Corporation, its stockholders, Board of
Directors and committees thereof, officers and agents, which were valid and
effective immediately before the effective date of the Merger shall be
taken for all purposes as the acts, plans, policies, agreements,
arrangements, approvals and authorizations of the Surviving Corporation and
shall be as effective and binding thereon as the same were with respect to
the Delaware Corporation.
6. The employees and agents of Foremost on the effective date of the
Merger shall become the employees and agents of the Surviving Corporation
and continue to be entitled to the same rights and benefits which they
enjoyed as employees and agents of Foremost.
7. The Bylaws of Foremost-Michigan as existing and constituted on
the effective date of the Merger shall be and constitute the Bylaws of the
Surviving Corporation until the same are altered or amended.
8. The directors of Foremost on the effective date of the Merger
shall be and constitute the directors of the Surviving Corporation for the
same terms to which they were elected as directors of Foremost until their
successors are elected in accordance with law and the provisions of the
Articles of Incorporation and Bylaws of the Surviving Corporation.
9. The officers of Foremost in office on the effective date of the
Merger shall be and constitute the officers of the Surviving Corporation
until their successors are elected or they are removed from office by the
Board of Directors of the Surviving Corporation, in accordance with law and
the provisions of the Bylaws of the Surviving Corporation.
10. The stock plans of Foremost, existing on the effective date of
the Merger, including the Nonqualified Stock Option Plan of 1998, the
Nonqualified Stock Option Plan of 1995, the Restricted Stock Plan, the
Directors' Restricted Stock Plan, the Long-Term Incentive Plan and the
Executive Stock Purchase Plan shall be assumed according to their terms by
the Surviving Corporation, and all such stock plans shall constitute stock
plans of the Surviving Corporation.
-3-
<PAGE>
ARTICLE III - ARTICLES OF INCORPORATION
On the effective date of Merger, the Articles of Incorporation of
Foremost-Michigan shall be amended as set forth in the Certificate of
Merger filed with the Michigan Corporation, Securities and Land Development
Bureau. From and after the effective date of the Merger, such Articles of
Incorporation, as amended, shall be and constitute the Articles of
Incorporation, as amended, of the Surviving Corporation until the same are
altered or amended.
ARTICLE IV - CONVERSION OF SHARES
The manner and basis of converting the shares of each of the
Constituent Corporations into shares of the Surviving Corporation are as
follows:
1. On the effective date of the Merger, each of the 100 issued and
outstanding shares of Common Stock of Foremost-Michigan, par value $1.00
per share, all owned by Foremost, shall thereupon, and without the
surrender of stock certificates or any other action, be canceled.
2. On the effective date of the Merger, each of the issued and
outstanding shares of Common Stock of the Delaware Corporation, par value
$1.00 per share, shall thereupon, and without the surrender of stock
certificates or any other action, be converted into one fully paid and
nonassessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation. Each holder of shares of Common Stock of the
Delaware Corporation outstanding immediately before the effective date of
the Merger shall, upon such conversion, hold one share of Common Stock of
the Surviving Corporation for each such share of Common Stock of the
Delaware Corporation held.
3. On the effective date of the Merger, each owner of an outstanding
certificate or certificates evidencing shares of Common Stock of the
Delaware Corporation, par value $1.00 per share, may, but shall not be
required to (except as set forth below), surrender such certificate or
certificates to the Surviving Corporation and, upon such surrender, to
receive in exchange therefor a certificate or certificates evidencing the
number of shares of Common Stock of the Surviving Corporation, par value
$1.00 per share, represented by the surrendered certificate. Until so
surrendered, each outstanding certificate which, before the effective date
of the Merger, evidenced shares of Common Stock of the Delaware Corporation
shall be deemed, for all corporate purposes, to evidence the ownership of
the number of full shares of Common Stock of the Surviving Corporation into
which the shares of the Common Stock represented by such certificates shall
have been converted as aforesaid.
-4-
<PAGE>
ARTICLE V - ASSETS AND LIABILITIES
Upon the effective date of the Merger, (1) the respective assets
of the Delaware Corporation and the Michigan Corporation shall be taken up
or continued on the books of the Surviving Corporation in the amounts at
which such assets shall have been carried on their respective books
immediately before the effective date of the Merger, except as provided in
this Plan of Merger with respect to the cancellation of the shares of the
Michigan Corporation outstanding before the effective date of the Merger;
(2) the respective liabilities and reserves of the Delaware Corporation and
the Michigan Corporation (excluding Common Stock, other paid-in capital and
retained earnings) shall be taken up or continued on the books of the
Surviving Corporation in the amounts at which such liabilities and reserves
shall have been carried on their respective books immediately before the
effective date of the Merger; and (3) the Common Stock, other paid-in
capital and retained earnings of the Delaware Corporation shall be taken up
on the books of the Surviving Corporation as Common Stock, other paid-in
capital and retained earnings, respectively, in the amount at which the
same shall be carried on the books of the Delaware Corporation immediately
before the effective date of the Merger.
ARTICLE VI - FURTHER ACTIONS
The Delaware Corporation shall, from time to time, as and when
requested by the Surviving Corporation or its successors or assigns,
execute and deliver or cause to be executed and delivered such deeds,
instruments, assignments or assurances as the Surviving Corporation may
deem necessary or desirable to vest in and confirm to the Surviving
Corporation title to and possession of any property or rights of the
Delaware Corporation acquired or to be acquired by reason of or as a result
of the Merger, or otherwise to carry out the purposes of this Plan of
Merger, and any person who, immediately before the Merger became effective,
was an officer or director of the Delaware Corporation is hereby fully
authorized in the name of the Delaware Corporation to execute any and all
such deeds, instruments, assignments or assurances, or to take any and all
such action.
ARTICLE VII - CONDITIONS PRECEDENT TO MERGER
All obligations of the parties under this Plan of Merger are
subject to the fulfillment (or waiver in writing by a fully authorized
officer of the party entitled to the benefit of the applicable condition)
of each of the following conditions:
1. The holders of a majority of the shares of Common Stock of the
Delaware Corporation must have voted for adoption of the Plan of Merger;
-5-
<PAGE>
2. Neither the Delaware Corporation nor the Michigan Corporation
shall be subject to any order, decree or injunction of a court or agency
enjoining or prohibiting the Merger; and
3. The Delaware Corporation and the Michigan Corporation shall have
received any and all such approvals, consents, authorizations and licenses
of all regulatory and other governmental authorities having jurisdiction as
may be required to permit the performance by the Delaware Corporation and
the Michigan Corporation of their respective obligations under this Plan of
Merger and the consummation of the Merger.
ARTICLE VIII - STOCKHOLDER APPROVAL
This Plan of Merger shall be submitted to the stockholders of the
Delaware Corporation as provided by Section 253(a) of the Delaware General
Corporation Law as the same is now in effect and shall take effect, and be
deemed and be taken to be the Plan of Merger of said corporations, upon the
(1) adoption thereof, by the stockholders of the Delaware Corporation in
accordance with the requirements of the laws of the state of Delaware; and
(2) the filing and recording of such documents, and the doing of such acts
and things, as shall be required to accomplish the Merger under the
provisions of the applicable statutes of the states of Michigan and
Delaware.
Anything in this Plan of Merger to the contrary notwithstanding,
this Plan of Merger may, subject to the laws of the states of Michigan and
Delaware, be amended, abandoned or postponed by either of the Constituent
Corporations by appropriate action by their respective Boards of Directors
at any time before the effective date of the Merger for any reason deemed
appropriate by said Boards.
ARTICLE IX - SERVICE OF PROCESS
The Surviving Corporation agrees that it may be served with
process in the state of Delaware in any proceeding for enforcement of any
obligation of the Delaware Corporation, as well as for enforcement of any
obligation of the Surviving Corporation arising from the Merger provided
for in this Plan of Merger, including any suit or other proceeding to
enforce the right (if any) of any stockholder as determined in appraisal
proceedings pursuant to Section 262 of the Delaware General Corporation
Law, and irrevocably appoints the Secretary of State of the state of
Delaware as its agent to accept service of any such process. A copy of any
such process shall be mailed by such Secretary of State to Paul D. Yared,
Foremost Corporation of America, Post Office Box 2450, Grand Rapids,
Michigan 49501.
-6-
<PAGE>
ARTICLE X - ABANDONMENT OF MERGER
This Plan of Merger may be terminated and the Merger abandoned at
any time before the effective date of the Merger (notwithstanding that
adoption of this Plan of Merger by the stockholders of the Delaware
Corporation previously may have been obtained) by mutual consent of the
Boards of Directors of the Delaware Corporation and the Michigan
Corporation.
IN WITNESS WHEREOF, each of the Constituent Corporations,
pursuant to authority duly given by resolution adopted by its Board of
Directors, has caused this Plan of Merger to be executed in its name by its
President and Chief Executive Officer and its corporate seal to be affixed
and attested by its Secretary on this _____ day of June, 1998.
FOREMOST CORPORATION OF AMERICA
(a Delaware corporation)
By __________________________________________
Richard L. Antonini
Its President and Chief Executive Officer
ATTEST:
____________________________
Paul D. Yared
Its Secretary
FOREMOST CORPORATION-MICHIGAN
(a Michigan corporation)
By __________________________________________
Richard L. Antonini
Its President and Chief Executive Officer
ATTEST:
____________________________
Paul D. Yared
Its Secretary
-7-
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
FOREMOST CORPORATION OF AMERICA
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE AND REGISTERED AGENT. The registered
office of the Corporation shall be 5600 Beech Tree Lane, Caledonia,
Michigan 49316. The name of its registered agent at such address is Paul
D. Yared.
SECTION 2. OTHER OFFICES. The Corporation may also have offices
at such places, both within and without the state of Michigan, as the Board
of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. TIMES AND PLACES OF MEETINGS. All meetings of the
shareholders shall be held, except as otherwise provided by statute or
these Bylaws, at such time and place as may be fixed from time to time by
the Board of Directors. Meetings of shareholders may be held within or
without the state of Michigan.
SECTION 2. ANNUAL MEETINGS. Annual meetings of the shareholders
shall be held at a time and place so designated by a majority vote of the
Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting.
SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting, specifying the date, time, and location of the meeting, shall be
given personally or by mail at least ten (10) and not more than sixty (60)
days before the date of the meeting to each shareholder entitled to vote
thereat who shall have furnished a written address to the Secretary of the
Corporation for such purpose. Notice of any meeting need not be given to
any shareholder who signs a waiver of notice before or after the meeting.
Attendance of a shareholder at a meeting shall constitute a waiver of
notice, except when the shareholder attends a meeting for the express
<PAGE>
purpose of objecting, at the beginning of the meeting, to the holding of
the meeting or the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 4. BUSINESS CONDUCTED AT ANNUAL MEETINGS. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at
an annual meeting of the shareholders except in accordance with the
procedures hereinafter set forth in this Section; provided, however, that
nothing in this Section shall be deemed to preclude discussion by any
shareholder of any business properly brought before the annual meeting in
accordance with said procedures.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (i) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (iii)
otherwise properly brought before the meeting by a shareholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a shareholder, the shareholder must
comply with all applicable requirements of Securities and Exchange
Commission Rule 14a-8 ("Rule 14a-8") promulgated under the Securities
Exchange Act of 1934, as amended from time to time. Any adjournment(s) or
postponement(s) of the original meeting whereby the meeting will reconvene
within thirty (30) days from the original date shall be deemed for purposes
of notice to be a continuation of the original meeting and no business may
be brought before any such reconvened meeting unless timely notice of such
business was given to the Secretary of the Corporation for the meeting as
originally scheduled.
A shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and record address of the shareholder proposing such
business, (iii) the class and/or series and number of shares of the
Corporation that are beneficially owned by the shareholder, (iv) any
material interest of the shareholder in such business, and (v) any other
information as may be required by Rule 14a-8.
SECTION 5. SHAREHOLDER LIST. The officer or agent who has charge
of the stock ledger or stock transfer books of the Corporation shall make
and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting, arranged by class or series in alphabetical order,
showing the address of and the number of shares registered in the name of
each shareholder. Such list shall be produced at the meeting and be open
-2-
<PAGE>
to the examination of any shareholder, for any purpose germane to the
meeting, during the whole time of the meeting.
SECTION 6. SPECIAL MEETINGS OF SHAREHOLDERS. A special meeting of
shareholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Articles of Incorporation, may be called by the Chairman
of the Board or President and shall be called by the President or Secretary
at the request in writing of a majority of the whole Board of Directors, or
at the request in writing of shareholders owning at least eighty percent
(80%) of the entire capital stock of the Corporation issued and outstanding
and entitled to vote. Such request shall state the purpose or purposes of
the proposed meeting.
SECTION 7. NOTICE OF SPECIAL MEETINGS. Written notice of a
special meeting of shareholders, stating the date, time, place, and object
thereof, shall be given personally or by mail to each shareholder entitled
to vote thereat who shall have furnished a written address to the Secretary
of the Corporation for such purpose, not less than ten (10) nor more than
sixty (60) days before the date fixed for the meeting. Business transacted
at any special meeting shall be limited to the purpose or purposes stated
in the notice.
SECTION 8. QUORUM. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided
by statute or by the Articles of Incorporation. The shareholders present
in person or by proxy at such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. Whether or not a quorum is present, the meeting may be
adjourned by a vote of the shares present. No notice of the date, time,
and place of adjourned meetings need be given, provided that the time and
place to which the meeting is adjourned is announced at the meeting and at
the adjourned meeting only business is transacted as might have been
transacted at the original meeting. Except when the holders of a class or
series of shares are entitled to vote separately on an item of business,
shares of all classes and series entitled to vote shall be combined as a
single class and series for the purpose of determining a quorum. When the
holders of a class or series of shares are entitled to vote separately on
an item of business, shares of that class or series entitled to cast a
majority of the votes of that class or series at a meeting constitute a
quorum of that class or series at that meeting, unless a greater or lesser
quorum is provided by statute or the Articles of Incorporation.
SECTION 9. VOTE REQUIRED. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting
power present in person or represented by proxy shall decide any question
-3-
<PAGE>
other than the election of directors brought before such meeting, or the
amendment of the Articles of Incorporation or these Bylaws, unless the
question is one upon which by express provision of statute or of the
Articles of Incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Election of directors shall be by ballot, and directors shall be elected by
a plurality of the shares present in person or represented by proxy and
entitled to vote on the election of directors.
SECTION 10. VOTING RIGHTS. Except as otherwise provided by the
Articles of Incorporation or the resolution or resolutions of the Board of
Directors creating any class or series of stock, each shareholder shall at
every meeting of shareholders be entitled to one (1) vote in person or by
proxy for each share of the capital stock having voting power held by such
shareholder. A proxy shall be valid only with respect to the particular
meeting, or any adjournment or adjournments thereof, to which it
specifically pertains. No proxy shall be voted or acted upon after eleven
(11) months from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A shareholder may
revoke any proxy which is not irrevocable by attending the meeting and
voting in person or by filing an instrument in writing revoking the proxy
or another duly executed proxy bearing a later date with the Secretary of
the Corporation.
SECTION 11. CHAIRMAN AND SECRETARY OF THE MEETINGS. Meetings of
the shareholders shall be presided over by the Chairman of the Board or
such executive officer of the Corporation that he may designate, or in his
absence, by the President, or in his absence, by such officer as has been
designated by the Board of Directors, or if none of the foregoing officers
is present, by a chairman to be chosen at the meeting. The Secretary of
the Corporation, or in his absence, such officer as has been designated by
the Board of Directors, or if none of the foregoing officers is present,
such person as is chosen at the meeting by the person presiding thereat,
shall act as Secretary of the meeting.
SECTION 12. CONDUCT OF MEETINGS. Meetings of shareholders
generally shall follow accepted rules of parliamentary procedure, subject
to the following:
(i) The chairman of the meeting shall have absolute
authority over matters of procedure, and there shall be no appeal
from the ruling of the chairman. If, in his absolute discretion,
the chairman deems it advisable to dispense with the rules of
parliamentary procedure as to any one (1) meeting of shareholders
or part thereof, he shall so state and shall clearly state the
-4-
<PAGE>
rules under which the meeting or appropriate part thereof shall
be conducted.
(ii) If disorder should arise which prevents the
continuation of the legitimate business of the meeting, the
chairman may quit the chair and announce the adjournment of the
meeting. Upon his so doing, the meeting is immediately
adjourned.
(iii) The chairman may ask or require that anyone not a bona
fide shareholder or proxy leave the meeting.
(iv) A resolution or motion shall be considered for vote
only if proposed by a shareholder or a duly authorized proxy in
accordance with these Bylaws and seconded by an individual who is
a shareholder or a duly authorized proxy other than the
individual who proposed the resolution or motion.
SECTION 13. INSPECTORS OF ELECTION. The Board of Directors or, if
they shall not have so acted, the chairman of the meeting, may appoint, at
or prior to any meeting of shareholders, two (2) persons (who may be
employees of the Corporation other than directors or candidates for the
office of director) to serve as inspectors of election. Such inspectors
shall first take and subscribe an oath or affirmation faithfully to execute
the duties of inspector at such meeting with strict impartiality and
according to the best of their ability. The inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes or ballots, hear and determine
challenges and questions arising in connection with the right to vote,
count and tabulate votes or ballots, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all
shareholders.
SECTION 14. NO WRITTEN CONSENT OF SHAREHOLDERS IN LIEU OF MEETING.
Any action required or permitted to be taken by the shareholders must be
effected at a duly called annual or special meeting of the holders of
capital stock of the Corporation and may not be effected by any consent in
writing by the shareholders.
SECTION 15. FIXING OF RECORD DATE BY BOARD OF DIRECTORS. For the
purpose of determining the shareholders entitled to notice of or to vote at
any meeting of shareholders, or any adjournment thereof, or to express
consent to or dissent from any corporate action in writing without a
meeting, or for the purpose of determining shareholders entitled to receive
payments of any dividend or the distribution or allotment of any rights or
evidences of interests arising out of any change, conversion, or exchange
-5-
<PAGE>
of capital stock, or for the purpose of any other action, the Board of
Directors may fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than sixty (60)
days or less than ten (10) days before the date of any such meeting, nor
more than sixty (60) days prior to any other action. Only shareholders of
record on a record date shall be entitled to notice of and to vote at such
meeting or to receive payment of any dividend or the distribution or
allotment of any rights or evidences of interests arising out of any
change, conversion, or exchange of capital stock.
SECTION 16. REGISTERED SHAREHOLDERS. The Corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person,
whether or not the Corporation shall have express or other notice thereof,
except as otherwise provided by the laws of the state of Michigan.
SECTION 17. SHAREHOLDER PROPOSALS. Except as otherwise provided by
statute, the Corporation's Articles of Incorporation, or these bylaws:
(i) No matter may be presented for shareholder action at an
annual or special meeting of shareholders unless such matter is: (A)
specified in the notice of the meeting (or any supplement to the
notice) given by or at the direction of the Board of Directors; (B)
otherwise presented at the meeting by or at the direction of the Board
of Directors; (C) properly presented for action at the meeting by a
shareholder in accordance with the notice provisions set forth in this
Section and any other applicable requirements; or (D) a procedural
matter presented, or accepted for presentation, by the Chairman of the
meeting in his or her sole discretion.
(ii) For a matter to be properly presented by a shareholder, the
shareholder must have given timely notice of the matter in writing to
the Secretary of the Corporation. To be timely, the notice must be
delivered to or mailed to and received at the principal executive
offices of the Corporation not less than 120 calendar days prior to
the date corresponding to the date of the Corporation's proxy
statement or notice of meeting released to shareholders in connection
with the last preceding annual meeting of shareholders in the case of
an annual meeting (unless the Corporation did not hold an annual
meeting within the last year, or if the date of the upcoming annual
meeting changed by more than 30 days from the date of the last
preceding meeting, then the notice must be delivered or mailed and
received not more than seven days after the earlier of the date of the
notice of the meeting or public disclosure of the date of the
meeting), and not more than seven days after the earlier of the date
-6-
<PAGE>
of the notice of the meeting or public disclosure of the date of the
meeting in the case of a special meeting. The notice by the
shareholder must set forth: (A) a brief description of the matter the
shareholder desires to present for shareholder action; (B) the name
and record address of the shareholder proposing the matter for
shareholder action; (C) the class and number of shares of capital
stock of the Corporation that are beneficially owned by the
shareholder; and (D) any material interest of the shareholder in the
matter proposed for shareholder action.
(iii) The shareholder proposal, together with any accompanying
supporting statement, shall not in the aggregate exceed 500 words.
Except to the extent that a shareholder proposal submitted pursuant to
this Section is not made available at the time of mailing, the notice
of the purposes of the meeting shall include the name and address of
and the number of shares of the voting security held by the proponent
of each shareholder proposal.
(iv) A shareholder may submit matters and proposals for
shareholder action at any annual or special shareholder meeting if the
matters and proposals are of general concern to, and are proper
subjects for action by, the shareholders. A submitted proposal or
matter may not be presented for shareholder action if it: (A) relates
to the enforcement of a personal claim or the redress of a personal
grievance against the Corporation, its management, or any other
person; (B) consists of a recommendation, request, or mandate that
action be taken with respect to a matter, including a general
economic, political, racial, religious, social, or similar cause, that
is not significantly related to the Corporation's business or is not
within the Corporation's power to effectuate; (C) has, at the
shareholder's request, previously been submitted in either of the last
two annual shareholder meetings and the shareholder has failed to
present the proposal, in person or by proxy, for action at the
meeting; (D) is substantially similar to a matter or proposal
presented within the preceding five calendar years: (x) if it was
submitted once during the past five annual meetings and it received
less than 3% of the total votes cast, or (y) if it was submitted twice
during the past five annual meetings and it received less than 6% of
the total votes cast at the time of its second submission, or (z) if
it was submitted three times during such period and it received less
than 10% of the votes cast at the time of its third submission (if any
of (x), (y) or (z) apply, the proposal may not be presented for three
years after the latest previous submission); or (E) consists of a
recommendation or request that the management take action with respect
to a matter relating to the conduct of the Corporation's ordinary
business operations.
-7-
<PAGE>
(v) Notwithstanding the above, if the Corporation is subject to
the solicitation rules and regulations of the Securities Exchange Act
of 1934, as amended, and the shareholder desires to require the
Corporation to include the shareholder's proposal in the Corporation's
proxy materials, matters and proposals submitted for inclusion in the
Corporation's proxy materials shall be governed by those rules and
regulations.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER OF DIRECTORS. The number of the directors of
the Corporation shall be fixed as provided in the Corporation's Articles of
Incorporation.
SECTION 2. POWERS. The business of the Corporation shall be
managed by its Board of Directors, which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation or by these Bylaws directed or
required to be exercised or done by the shareholders.
SECTION 3. COMPENSATION OF DIRECTORS. Each director who is not a
salaried officer of the Corporation may receive as compensation for his
services in that capacity such sums and such benefits as shall from time to
time be determined by the Board of Directors, plus traveling expenses and
other expenses necessary for attendance at regular or special meetings of
the Board of Directors and committees of the Board. Members of special or
standing committees may be allowed like compensation for attending
committee meetings. Nothing herein shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 4. PLACES OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Michigan.
SECTION 5. FIRST MEETING OF NEWLY ELECTED BOARD. The first
meeting of each Board of Directors having a newly elected class of
directors shall be held following the annual meeting of shareholders, and
no notice of such meeting shall be necessary to the newly elected directors
in order to legally constitute the meeting, provided a quorum shall be
present. In the event such meeting is not held immediately following the
annual meeting of shareholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
-8-
<PAGE>
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as
shall from time to time be determined by the Board.
SECTION 7. SPECIAL MEETINGS. Subject to the provisions of Section
12 of this Article, special meetings of the Board of Directors may be
called by the Chairman, Chief Executive Officer, or President; special
meetings may be called in like manner and on like notice on the written
request of a majority of the Board of Directors.
SECTION 8. PURPOSE NEED NOT BE STATED. Neither the business to be
transacted at nor the purpose of any regular or special meeting of the
Board of Directors need be specified in the notice of such meeting.
SECTION 9. QUORUM. At all meetings of the Board a majority of the
directors shall constitute a quorum for the transaction of business, and
the acts of a majority of the directors present at any meeting at which
there is a quorum shall be acts of the Board of Directors except as may be
otherwise specifically provided by statute or by the Articles of
Incorporation. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
SECTION 10. ACTION WITHOUT A MEETING. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if, before or after the
action, all members of the Board or of such committee, as the case may be,
consent thereto in writing and such written consent is filed with the
minutes or proceedings of the Board or committee.
SECTION 11. MEETING BY TELEPHONE OR SIMILAR EQUIPMENT. The Board
of Directors or any committee designated by the Board of Directors may
participate in a meeting of such Board or committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear one another, and participation in a
meeting pursuant to this section shall constitute presence in person at
such meeting.
SECTION 12. WRITTEN NOTICE. Notices to directors shall be in
writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notice to
directors also may be given by telegram or telecopy. Notwithstanding the
foregoing, notice shall also be given by telegram or telecopy if the date
of the meeting to which such notice relates is within three (3) days of the
date that such notice is given.
-9-
<PAGE>
SECTION 13. WAIVER OF NOTICE. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting has not been lawfully
called or convened.
SECTION 14. INTERESTED DIRECTORS.
(i) No contract or transaction between the Corporation and
one or more of its directors and officers, or between the
Corporation and any other corporation, partnership, association,
or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in
the meeting of the Board or committee thereof which authorizes
the contract or transaction, or solely because his or their votes
are counted for such purpose, if:
(A) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the Board of Directors or the committee, and
the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested
directors be less than a quorum;
(B) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the shareholders entitled to vote thereon,
and the contract or transaction is specifically approved in
good faith by the vote of the shareholders; or
(C) The contract or transaction is fair as to the
Corporation as of the time it is authorized, approved, or
ratified by the Board of Directors, a committee thereof, or
the shareholders.
(ii) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or
transaction.
-10-
<PAGE>
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may
appoint an Executive Committee whose membership shall consist of the
Chairman and/or President and such number of other directors as a majority
of the entire Board of Directors may deem advisable from time to time to
serve during the pleasure of the Board. One of the members of the
committee shall be designated the chairman thereof by the Board of
Directors. The Board of Directors also may appoint directors to serve as
alternates for members of the committee in the absence or disability of
regular members. The Executive Committee shall have and may exercise the
powers and authority of the Board in the management of the affairs of the
Corporation, except the power to change the membership or to fill vacancies
in the Board or the Committee, the power to amend, add to, rescind, or
repeal the Bylaws of the Corporation and any other powers that, under
Michigan law, may not be delegated to it by the Board of Directors. The
Board shall have the power at any time to change the membership of the
Executive Committee (subject to the requirement that the Chairman and/or
the President of the Corporation be a member thereof) and to fill vacancies
in it. The Executive Committee may make rules for the conduct of its
business and may appoint such committees and assistants as it shall from
time to time deem necessary. A majority of the members of the committee
shall constitute a quorum.
SECTION 2. AUDIT COMMITTEE. The Audit Committee shall cause a
suitable examination of the financial records and operations of the
Corporation and its subsidiaries to be made by the Corporation. The Audit
Committee also shall recommend to the Board of Directors the employment of
independent certified public accountants to examine the financial
statements of the Corporation and its subsidiaries and report to the Board
of Directors at least once each calendar year.
SECTION 3. COMMITTEE ON EXECUTIVE MANAGEMENT AND COMPENSATION. The
Committee on Executive Management and Compensation shall make
recommendations to the Board of Directors regarding management incentives,
employee retirement plans and salaries of executive officers. The
Committee on Executive Management and Compensation also shall review
employee benefit programs for the Corporation.
SECTION 4. NOMINATING COMMITTEE. The Nominating Committee, if
there be one, shall develop and recommend to the Board of Directors
criteria for the selection of candidates for director, to seek out and
receive suggestions concerning possible candidates, to review and evaluate
the qualifications of possible candidates, and to recommend to the Board of
Directors candidates for vacancies occurring from time to time and for the
-11-
<PAGE>
slate of directors to be proposed on behalf of the Board of Directors at
the annual meeting of shareholders. The Nominating Committee will consider
nominees recommended by the shareholders, as properly submitted to the
Secretary of the Corporation.
SECTION 5. INVESTMENT COMMITTEE. The Investment Committee shall
review the Corporation's investment policy and certain capital structure
issues and shall review management's implementation of the investment
policy.
SECTION 6. OTHER COMMITTEES. The Board of Directors may designate
such other committees as it may deem appropriate, and such committees shall
exercise the authority delegated to them. Unless the Board shall otherwise
provide, a majority of any such Committee may determine its action and fix
the time and place of its meetings. The Board shall have power at any time
to change the members of any such Committee, to fill vacancies, and to
discharge any such Committee.
SECTION 7. COMMITTEE MEETINGS. Each committee provided for above
shall meet as often as its business may require and may fix a day and time
at intervals for regular meetings, notice of which shall not be required.
Whenever the day fixed for a meeting shall fall on a holiday, the meeting
shall be held on the business day following or on such other day as the
committee may determine. Special meetings of the committees may be called
by the chairman of the committee or any two (2) members other than the
chairman, and notice thereof may be given to the members by telephone,
telegram, telecopy, or letter. A majority of its members shall constitute
a quorum for the transaction of the business of any of the committees. A
record of the proceedings of each committee shall be kept and presented to
the Board of Directors.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a Chairman of the Board of
Directors, a President, one or more Vice Presidents, a Secretary and a
Treasurer. One or several of the officers may be designated "Executive
Vice President" or "Senior Vice President" by the Board of Directors. The
Board of Directors also may choose such additional officers as it shall
deem advisable and in the best interests of the Corporation. Any two or
more offices may be held by the same person.
SECTION 2. ELECTION OF OFFICERS. The Board of Directors at its
first meeting after each annual meeting of the shareholders shall choose a
-12-
<PAGE>
Chairman of the Board of Directors, a President, one or more Vice
Presidents, a Secretary and a Treasurer; other officers, or successors to
these, may be elected at any time, at the discretion of the Board.
SECTION 3. COMPENSATION OF OFFICERS. The salaries of all officers
of the Corporation shall be fixed by the Board of Directors or a committee
thereof.
SECTION 4. TERM OF OFFICE. The officers of the Corporation shall
hold office until the next annual meeting and until their successors are
chosen and qualify. Any officer elected or appointed by the Board of
Directors may be removed at any time by the affirmative vote of a majority
of the whole Board of Directors. Any vacancy occurring in any office of
the Corporation shall be filled by the Board of Directors.
SECTION 5. CHAIRMAN OF THE BOARD. There shall be elected a
Chairman of the Board, who shall be chosen from among the directors. The
Chairman of the Board shall preside at all meetings of the Board of
Directors and shareholder meetings, and shall have such other duties and
powers as may be imposed or given by the Board of Directors.
SECTION 6. PRESIDENT. The President shall, subject to the
direction of the Board of Directors, see that all orders and resolutions of
the Board of Directors are carried into effect, and shall perform all other
duties necessary or appropriate to his office, subject, however, to his
right and the right of the directors to delegate any specific powers to any
other officer or officers of the Corporation. In the absence of the
Chairman of the Board or his designee or if no Chairman is elected, the
President shall preside at all meetings of the shareholders and at all
meetings of the Board of Directors. The President shall be an ex officio
voting member of all standing committees designated by the Board of
Directors except the Audit Committee.
SECTION 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer,
in addition to any other duties, shall have final authority, subject to the
control of the Board of Directors, over the general policy and business of
the Corporation and shall have the general control and management of the
business and affairs of the Corporation. The Chief Executive Officer shall
perform other duties as may be prescribed from time to time by the Board of
Directors or these Bylaws.
SECTION 8. VICE PRESIDENTS. The Vice President or Vice Presidents
shall perform such duties and have such powers as the Chief Executive
Officer or the Board of Directors may from time to time prescribe. The
Board of Directors may at its discretion designate one or more of the Vice
Presidents as Executive Vice Presidents or Senior Vice Presidents. Any Vice
President so designated shall have such duties and responsibilities as the
Board shall prescribe.
-13-
<PAGE>
SECTION 9. SECRETARY. The Secretary shall attend all meetings of
the shareholders, and of the Board of Directors and of the Executive
Committee, and shall preserve in the books of the Corporation true minutes
of the proceedings of all such meetings. He shall safely keep in his
custody the seal of the Corporation, if any, and shall have authority to
affix the same to all instruments where its use is required or appropriate.
He shall give all notices required or appropriate pursuant to statute,
Bylaws, or resolution. He shall perform such other duties as may be
delegated to him by the Board of Directors or by the Executive Committee.
SECTION 10. TREASURER. The Treasurer shall have custody of all
corporate funds and securities and shall keep in books belonging to the
Corporation full and accurate accounts of all receipts and disbursements;
he shall deposit all moneys, securities, and other valuable effects in the
name of the Corporation in depositories as may be designated for that
purpose by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors at the regular meetings of the Board, and whenever
requested by them, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he shall deliver to the Chief Executive Officer of the
Corporation, and shall keep in force, a bond in form, amount, and with a
surety or sureties satisfactory to the Board of Directors, conditioned for
faithful performance of the duties of his office, and for restoration to
the Corporation in case of his death, resignation, retirement, or removal
from office, of all books, papers, vouchers, money, and property of
whatever kind in his possession or under his control belonging to the
Corporation.
SECTION 11. ASSISTANT SECRETARY AND ASSISTANT TREASURER. There may
be elected an Assistant Secretary and Assistant Treasurer who shall, in the
absence, disability, or nonfeasance of the Secretary or Treasurer, perform
the duties and exercise the powers of such persons respectively.
SECTION 12. OTHER OFFICERS. All other officers, as may from time
to time be appointed by the Board of Directors, shall perform such duties
and exercise such authority as the Board of Directors shall prescribe.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION IN ACTION BY THIRD PARTY. The
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative, or
-14-
<PAGE>
investigative and whether formal or informal (other than an action by or in
the right of the Corporation) by reason of the fact that the person is or
was a director or officer of the Corporation, or, is or was serving at the
request of the Corporation as a director, officer, employee, agent, or
trustee of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not for profit,
against expenses (including attorneys' fees), judgments, penalties, fines,
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit, or proceeding if the person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the Corporation or its
shareholders, and with respect to a criminal action or proceeding, the
person had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner that the person reasonably believed
to be in or not opposed to the best interests of the Corporation or its
shareholders, and with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
SECTION 2. INDEMNIFICATION IN ACTION BY OR IN RIGHT OF THE
CORPORATION. The Corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director or officer of the Corporation, or, is or was serving at the
request of the Corporation as a director, officer, employee, agent, or
trustee of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not for profit,
against expenses including attorneys' fees and amounts paid in settlement
actually and reasonably incurred by the person in connection with the
action or suit, if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the Corporation or its shareholders. Indemnification shall not be made for
a claim, issue, or matter in which the person shall have been found liable
to the Corporation except to the extent authorized by statute.
SECTION 3. EXPENSES.
(i) To the extent that a person has been successful on the
merits or otherwise in defense of an action, suit, or proceeding
referred to in Section 1 or 2 of this Article, or in defense of a
claim, issue, or matter in the action, suit, or proceeding, the
Corporation shall indemnify that person against actual and
reasonable expenses, including attorneys' fees incurred by him or
-15-
<PAGE>
her in connection with the action, suit, or proceeding and an
action, suit, or proceeding brought to enforce the mandatory
indemnification provided in this Section.
(ii) The Corporation shall indemnify a director for the
expenses and liabilities described in this Section 3(ii) without
a determination that the director has met the standard of conduct
set forth in sections 1 and 2, but no indemnification may be made
unless ordered by a court if (A) the director received a
financial benefit to which he or she was not entitled, (B)
intentionally inflicted harm on the Corporation or its
shareholders, (C) violated Section 551 of the Michigan Business
Corporation Act, or (D) intentionally committed a criminal act.
In connection with an action or suit by or in the right of the
Corporation as described in Section 2, indemnification under this
Section 3(ii) may be for expenses, including attorney's fees,
actually and reasonably incurred. In connection with an action,
suit, or proceeding other than an action, suit, or proceeding by
or in the right of the Corporation, as described in Section 1,
indemnification under this Section 3(ii) may be for expenses,
including attorneys' fees, actually and reasonably incurred, and
for judgments, penalties, fines, and amounts paid in settlement
actually and reasonably incurred.
SECTION 4. AUTHORIZATION OF INDEMNIFICATION.
(i) An indemnification under Section 1 or 2 of this
Article, unless ordered by a court, shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee, or agent is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in
Section 1 or 2 of this Article and upon an evaluation of the
reasonableness of expenses and amounts paid in settlement. This
determination and evaluation shall be made in any of the
following ways:
(A) By a majority vote of a quorum of the Board of
Directors consisting of directors who are not parties or
threatened to be made parties to the action, suit, or
proceeding.
(B) If a quorum cannot be obtained under Subsection
(A) above, by majority vote of a committee duly designated
by the Board and consisting solely of two or more directors
not at the time parties or threatened to be made parties to
the action, suit, or proceeding.
-16-
<PAGE>
(C) By independent legal counsel in a written opinion,
which counsel shall be selected in one of the following
ways:
(1) By the Board or its committee in the manner
prescribed in Subsection (A) or (B) above.
(2) If a quorum of the Board cannot be obtained
under Subsection (A) above and a committee cannot be
designated under Subsection (B) above, by the Board.
(D) By all independent directors who are not parties
or threatened to be made parties to the action, suit, or
proceeding.
(E) By the shareholders, but shares held by directors,
officers, employees, or agents who are parties or threatened
to be made parties to the action, suit, or proceeding may
not be voted.
(ii) In the designation of a committee under Subsection
(i)(B) or in the selection of independent legal counsel under
Subsection (i)(C)(2), all directors may participate.
(iii) If a person is entitled to indemnification under
Section 1 or 2 for a portion of expenses, including reasonable
attorneys' fees, judgments, penalties, fines, and amounts paid in
settlement, but not for the total amount, the corporation may
indemnify the person for the portion of the expenses, judgments,
penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.
(iv) An authorization of payment of indemnification shall be
made in any of the following ways:
(A) by the board in one of the following ways:
(1) If there are two or more directors who are
not parties or threatened to be made parties to the
action, suit, or proceeding, by a majority vote of all
directors who are not parties or threatened to be made
parties, a majority of whom shall constitute a quorum
for this purpose.
(2) By a majority of the members of a committee
of two or more directors who are not parties or
threatened to be made parties to the action, suit, or
proceeding.
-17-
<PAGE>
(3) If the Corporation has one or more
independent directors who are not parties or threatened
to be made parties to the action, suit, or proceeding,
by a majority vote of all independent directors who are
not parties or are threatened to be made parties, a
majority of whom shall constitute a quorum for this
purpose.
(4) If there are no independent directors and
less than two directors who are not parties or
threatened to be made parties to the action, suit, or
proceeding, by the vote necessary for action by the
board in accordance with Section 523 of the Michigan
Business Corporation Act, in which authorization all
directors may participate.
(B) By the shareholders, but shares held by directors,
officers, employees, or agents who are parties or threatened
to be made parties to the action, suit, or proceeding may
not be voted on the authorization.
SECTION 5. ADVANCES. The Corporation may pay or reimburse the
reasonable expenses incurred by a director, officer, employee, or agent who
is a party or threatened to be made a party to an action, suit, or
proceeding before final disposition of the proceeding if both of the
following apply:
(i) The person furnishes the Corporation a written
affirmation of the person's good faith belief that he or she has
met the applicable standard of conduct set forth in Sections 1
and 2 of this Article.
(ii) The person furnishes the Corporation a written
undertaking, executed personally or on the person's behalf, to
repay the advance if it is ultimately determined that the person
did not meet the standard of conduct.
The undertaking required by Subsection (ii) above must be an unlimited
general obligation of the person but need not be secured and may be
accepted without reference to the financial ability of the person to make
repayment. Determinations and evaluations under this Section shall be made
in the manner specified in Section 4(i) of this Article. Authorizations of
payment shall be made in the manner provided in Section 4(iv).
SECTION 6. OTHER INDEMNIFICATION AGREEMENTS. The indemnification
or advancement of expenses provided by this Article is not exclusive of any
other rights to which a person seeking indemnification or advancement of
-18-
<PAGE>
expenses may be entitled under any Bylaw, agreement, vote of shareholders
or directors, or otherwise. The indemnification provided in Sections 1 to
6 of this Article continues as to a person who ceases to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of the person.
SECTION 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against the person and incurred
by the person in any such capacity or arising out of the person's status as
such whether or not the corporation would have power to indemnify the
person against the liability under Sections 1 to 6 of this Article.
Insurance on behalf of a director may be purchased from an insurer owned by
the Corporation, but insurance purchased from that insurer may insure a
director against monetary liability to the Corporation or its shareholders
only to the extent to which the Corporation could indemnify the director
under Section 3(ii).
SECTION 8. CONSTITUENT CORPORATION. For the purposes of this
Article, references to the Corporation include all constituent corporations
absorbed in a consolidation or merger and the resulting or surviving
corporation, so that a person who is or was a director or officer of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, partner, trustee, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise shall stand in the same position under the provisions of
this Article with respect to the resulting or surviving corporation as he
or she would if he or she had served the resulting or surviving corporation
in the same capacity.
SECTION 9. PARTIAL INDEMNIFICATION. If a person is entitled to
indemnification under Section 1 or 2 of this Article for a portion of
expenses, including attorneys' fees, judgments, penalties, fines, and
amounts paid in settlement, but not for the total amount thereof, the
Corporation may indemnify the person for the portion of the expenses,
judgments, penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.
SECTION 10. SAVINGS CLAUSE. If this Article or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction,
the Corporation shall nevertheless indemnify each director, executive
officer, or other person whose indemnification is authorized by the Board
of Directors as to expenses, including attorneys' fees, judgments, fines,
and amounts paid in settlement with respect to any action, suit, or
-19-
<PAGE>
proceeding, whether civil, criminal, administrative, or investigative,
including a grand jury proceeding and an action by the Corporation, to the
full extent permitted by any applicable portion of this Article that shall
not have been invalidated or by any other applicable law.
SECTION 11. DEFINITIONS. For the purposes of this Article, "other
enterprises" shall include employee benefit plans; "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and "serving at the request of the Corporation" shall include any
service as a director, officer, partner, trustee, employee, or agent of the
Corporation, which imposes duties on, or involves services by the director,
officer, employee, or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be considered to have
acted in a manner "not opposed to the best interest of the Corporation or
its shareholders" as referred to in Sections 1 and 2 of this Article.
SECTION 12. CONSTRUCTION. It is the intent of this Article to
grant to the directors and executive officers of the Corporation (and such
other persons as the Board of Directors may designate) the broadest
indemnification permitted under the laws of the state of Michigan, as the
same may be amended from time to time, and this Article shall be liberally
construed to give effect to such intent. The Corporation further intends,
acknowledges, and agrees that all of the Corporation's directors and
executive officers have undertaken and will undertake the performance of
their duties and obligations in reliance upon the indemnification provided
for in this Article, and accordingly, such rights of indemnification may
not be retroactively reduced or abolished as to any such director or
executive officer with the written consent of such person.
ARTICLE VII
SUBSIDIARIES
SECTION 1. SUBSIDIARIES. The Board of Directors, the Chief
Executive Officer, or any executive officer designated by the Board of
Directors may vote the shares of stock owned by the Corporation in any
subsidiary, whether wholly or partly owned by the Corporation, in such
manner as they may deem in the best interests of the Corporation,
including, without limitation, for the election of directors of any
subsidiary corporation, or for any amendments to the charter or Bylaws of
any such subsidiary corporation, or for the liquidation, merger, or sale of
assets of any such subsidiary corporation. The Board of Directors, the
Chief Executive Officer, or any executive officer designated by the Board
of Directors may cause to be elected to the Board of Directors of any such
-20-
<PAGE>
subsidiary corporation such persons as they shall designate, any of whom
may, but need not, be directors, executive officers, or other employees or
agents of the Corporation. The Board of Directors, the Chief Executive
Officer, or any executive officer designated by the Board of Directors may
instruct the directors of any such subsidiary corporation as to the manner
in which they are to vote upon any issue properly coming before them as the
directors of such subsidiary corporation, and such directors shall have no
liability to the Corporation as the result of any action taken in
accordance with such instructions.
SECTION 2. SUBSIDIARY OFFICERS NOT EXECUTIVE OFFICERS. The
officers of any subsidiary corporation shall not, by virtue of holding such
title and position, be deemed to be executive officers of the Corporation,
nor shall any such officer of a subsidiary corporation, unless he shall
also be a director or executive officer of the Corporation, be entitled to
have access to any files, records, or other information relating or
pertaining to the Corporation, its business and finances, or to attend or
receive the minutes of any meetings of the Board of Directors or any
committee of the Corporation, except as and to the extent expressly
authorized and permitted by the Board of Directors or the Chief Executive
Officer.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the Corporation shall
be entitled to have a certificate in the name of the Corporation, signed by
the Chairman of the Board or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him
in the Corporation.
SECTION 2. FACSIMILE SIGNATURE. Where a certificate is signed (i)
by a transfer agent or an assistant transfer agent, or (ii) by a transfer
clerk acting on behalf of the Corporation and a registrar, the signature of
any such Chairman, President, Vice President, Treasurer, Assistant
Treasurer, Secretary, or Assistant Secretary may be a facsimile. In case
any officer, transfer agent, or registrar who has signed, or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
-21-
<PAGE>
certificates theretofore issued by the Corporation alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may
be made against the Corporation with respect to the certificate alleged to
have been lost or destroyed.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, it shall be the duty of the Corporation to issue a
new certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
ARTICLE IX
MICHIGAN FAIR PRICE ACT
The Corporation shall be governed by Chapter 7A (Section 775
through Section 784) of the Michigan Business Corporation Act; provided,
however, that business combinations with existing beneficial owners of more
than 10% of the outstanding shares of Common Stock of the Delaware
corporate affiliate of this corporation, Foremost Corporation of America,
as of February 23, 1998, or with an affiliate of such existing beneficial
owners, shall not be subject to the provisions of the Michigan Fair Price
Act.
ARTICLE X
MICHIGAN CONTROL SHARE ACT
SECTION 1. GOVERNANCE BY ACT. The Corporation shall be governed
by Chapter 7B (Section 790 through Section 799) of the Michigan Business
Corporation Act; provided, however, that existing beneficial owners of more
than ten percent (10%) of the outstanding shares of Common Stock of the
Delaware corporate affiliate of this corporation, Foremost Corporation of
America, as of February 23, 1998, shall not be subject to the voting
rights, redemption, and other provisions of the Michigan Control Share
Acquisition Act.
SECTION 2. POWER TO REDEEM IF NO ACQUIRING PERSON STATEMENT IS
FILED. Control shares acquired in a control share acquisition, with
-22-
<PAGE>
respect to which no acquiring person statement has been filed with the
Corporation, may, at any time during the period ending sixty (60) days
after the last acquisition of control shares or the power to direct the
exercise of voting power of control shares by the acquiring person, be
redeemed by the Corporation at the fair value of the shares.
SECTION 3. POWER TO REDEEM AFTER SHAREHOLDER VOTE. After an
acquiring person statement has been filed and after the meeting which the
voting rights of the control shares acquired in a control share acquisition
are submitted to the shareholders, the shares are subject to redemption by
the Corporation at the fair value of the shares unless the shares are
accorded full voting rights by the shareholders pursuant to Section 798 of
the Michigan Business Corporation Act.
SECTION 4. PROCEDURE FOR REDEMPTION. A redemption of shares by
the Corporation pursuant to Section 1 or 2 of this Article shall be made
upon election to redeem by the Board of Directors. Written notice of the
election shall be sent to the acquiring person within seven (7) days after
the election is made. The determination of the Board of Directors as to
fair value shall be conclusive. Payment shall be made for the control
shares subject to redemption within thirty (30) days after the election to
redeem is made at a date and place selected by the Board of Directors. The
Board of Directors may adopt additional procedures to accomplish a
redemption.
SECTION 5. INTERPRETATION OF THIS ARTICLE. This Article is
adopted pursuant to Section 799 of the Michigan Business Corporation Act,
and the terms used in this Section shall have the meanings of the terms in
Section 799.
ARTICLE XI
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors or the Executive Committee
thereof. Dividends may be paid in cash, in property, or in shares of
capital stock, subject to the provisions of the Articles of Incorporation.
SECTION 2. RESERVES. Before payment of any dividends, there may
be set aside out of any funds of the Corporation available for dividends
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of
the Corporation, or for such other purpose as the directors shall think
-23-
<PAGE>
conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
SECTION 3. CHECKS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall
be the calendar year, unless otherwise fixed by the Board of Directors.
SECTION 5. SEAL. The corporate seal shall have inscribed thereon
the name of the Corporation, and the words "Corporate Seal, Michigan." The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 6. WRITTEN WAIVER OF NOTICE. Whenever any notice is
required to be given under the provisions of the statutes or of the
Articles of Incorporation or of these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended, or repealed, in whole or in
part, or new Bylaws may be adopted, by the Board of Directors; provided,
however, that notice of such alteration, amendment, repeal, or adoption of
new Bylaws be contained in the notice of such meeting of the Board of
Directors. Except as otherwise required by statute, the Articles of
Incorporation, or these Bylaws, these Bylaws may be altered, amended, or
repealed, in whole or in part, or new Bylaws may be adopted, by the
Shareholders upon the affirmative vote of at least eighty percent (80%) of
the total voting power of all shares of stock entitled to vote, voting
together as a single class.
-24-
<PAGE>
FOREMOST CORPORATION OF AMERICA
(A MICHIGAN CORPORATION)
BYLAWS
TABLE OF CONTENTS
PAGE
ARTICLE I - OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Registered Office and Registered Agent. . . . . . . . . .1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . .1
Section 1. Times and Places of Meetings. . . . . . . . . . . . . . .1
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . .1
Section 3. Notice of Annual Meeting. . . . . . . . . . . . . . . . .1
Section 4. Business Conducted at Annual Meetings . . . . . . . . . .2
Section 5. Shareholder List. . . . . . . . . . . . . . . . . . . . .2
Section 6. Special Meetings of Shareholders. . . . . . . . . . . . .3
Section 7. Notice of Special Meetings. . . . . . . . . . . . . . . .3
Section 8. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 9. Vote Required . . . . . . . . . . . . . . . . . . . . . .3
Section 10. Voting Rights . . . . . . . . . . . . . . . . . . . . . .4
Section 11. Chairman and Secretary of the Meetings. . . . . . . . . .4
Section 12. Conduct of Meetings . . . . . . . . . . . . . . . . . . .4
Section 13. Inspectors of Election. . . . . . . . . . . . . . . . . .5
Section 14. No Written Consent of Shareholders in Lieu of
Meeting . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 15. Fixing of Record Date by Board of Directors . . . . . . .5
Section 16. Registered Shareholders . . . . . . . . . . . . . . . . .5
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 1. Number of Directors . . . . . . . . . . . . . . . . . . .5
Section 2. Powers. . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 3. Compensation of Directors . . . . . . . . . . . . . . . .6
Section 4. Places of Meetings. . . . . . . . . . . . . . . . . . . .6
Section 5. First Meeting of Newly Elected Board. . . . . . . . . . .6
Section 6. Regular Meetings. . . . . . . . . . . . . . . . . . . . .6
Section 7. Special Meetings. . . . . . . . . . . . . . . . . . . . .6
Section 8. Purpose Need Not Be Stated. . . . . . . . . . . . . . . .6
Section 9. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 10. Action Without a Meeting. . . . . . . . . . . . . . . . .7
Section 11. Meeting by Telephone or Similar Equipment . . . . . . . .7
Section 12. Written Notice. . . . . . . . . . . . . . . . . . . . . .7
Section 13. Waiver of Notice. . . . . . . . . . . . . . . . . . . . .7
Section 14. Interested Directors. . . . . . . . . . . . . . . . . . .7
-i-
<PAGE>
ARTICLE IV - COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . .8
Section 1. Executive Committee . . . . . . . . . . . . . . . . . . .8
Section 2. Audit Committee . . . . . . . . . . . . . . . . . . . . .8
Section 3. Committee on Executive Management and Compensation. . . .9
Section 4. Nominating Committee. . . . . . . . . . . . . . . . . . .9
Section 5. Investment Committee. . . . . . . . . . . . . . . . . . .9
Section 6. Other Committees. . . . . . . . . . . . . . . . . . . . .9
Section 7. Committee Meetings. . . . . . . . . . . . . . . . . . . .9
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 1. Officers. . . . . . . . . . . . . . . . . . . . . . . . .9
Section 2. Election of Officers. . . . . . . . . . . . . . . . . . 10
Section 3. Compensation of Officers. . . . . . . . . . . . . . . . 10
Section 4. Term of Office. . . . . . . . . . . . . . . . . . . . . 10
Section 5. Chairman of the Board . . . . . . . . . . . . . . . . . 10
Section 6. President . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. Chief Executive Officer . . . . . . . . . . . . . . . . 10
Section 8. Vice Presidents . . . . . . . . . . . . . . . . . . . . 10
Section 9. Secretary . . . . . . . . . . . . . . . . . . . . . . . 11
Section 10. Treasurer . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11. Assistant Secretary and Assistant Treasurer . . . . . . 11
Section 12. Other Officers. . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Indemnification in Action by Third Party. . . . . . . . 11
Section 2. Indemnification in Action by or in Right of the
Corporation . . . . . . . . . . . . . . . . . . . . . . 12
Section 3. Expenses. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Authorization of Indemnification. . . . . . . . . . . . 13
Section 5. Advances. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6. Other Indemnification Agreements. . . . . . . . . . . . 15
Section 7. Insurance . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8. Constituent Corporation . . . . . . . . . . . . . . . . 15
Section 9. Partial Indemnification . . . . . . . . . . . . . . . . 16
Section 10. Savings Clause. . . . . . . . . . . . . . . . . . . . . 16
Section 11. Definitions . . . . . . . . . . . . . . . . . . . . . . 16
Section 12. Construction. . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII - SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 17
Section 2. Subsidiary Officers Not Executive Officers. . . . . . . 17
ARTICLE VIII - CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . . . 17
Section 1. Form. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2. Facsimile Signature . . . . . . . . . . . . . . . . . . 17
Section 3. Lost Certificates . . . . . . . . . . . . . . . . . . . 18
Section 4. Transfers of Stock. . . . . . . . . . . . . . . . . . . 18
-ii-
<PAGE>
ARTICLE IX - MICHIGAN FAIR PRICE ACT . . . . . . . . . . . . . . . . . . 18
ARTICLE X - MICHIGAN CONTROL SHARE ACT . . . . . . . . . . . . . . . . . 18
Section 1. Governance by Act . . . . . . . . . . . . . . . . . . . 18
Section 2. Power to Redeem if No Acquiring Person Statement
Is Filed. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3. Power to Redeem After Shareholder Vote. . . . . . . . . 19
Section 4. Procedure for Redemption. . . . . . . . . . . . . . . . 19
Section 5. Interpretation of This Article. . . . . . . . . . . . . 19
ARTICLE XI - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . 19
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2. Reserves. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3. Checks. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 20
Section 5. Seal. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6. Written Waiver of Notice. . . . . . . . . . . . . . . . 20
ARTICLE XII - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 20
-iii-
<PAGE>
EXHIBIT 4.3
NUMBER SHARES
**FC ** ** **
INCORPORATED UNDER THE LAWS COMMON STOCK
OF THE STATE OF MICHIGAN
FOREMOST CORPORATION OF AMERICA
THIS CERTIFICATE IS TRANSFERABLE IN THE CITY OF NEW YORK
CUSIP 345469 10 0
THIS CERTIFIES THAT IS THE OWNER OF
FULL PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $1 PER SHARE, OF
Foremost Corporation of America, transferable upon the books of the
Corporation by the holder hereof in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed. This Certificate is not
valid unless countersigned by and registered by the Transfer Agent and
Registrar.
[CERTIFICATE OF STOCK WATERMARK]
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/Paul D. Yared /s/Richard L. Antonini
SENIOR VICE PRESIDENT, SECRETARY AND CHAIRMAN OF THE BOARD, PRESIDENT AND
GENERAL COUNSEL CHIEF EXECUTIVE OFFICER
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws and regulations:
TEN COM _____ as tenants in common UNIF GIFT MIN ACT-____Custodian____
TEN ENT _____ as tenants by the entireties (Cust) (Minor)
JT TEN _____ as joint tenants with the right under Uniform Gifts to Minors
of survivorship and not as Act __________________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
__________________________________ shares of the capital stock represented by
the within Certificate, and do hereby irrevocably constitute and appoint
___________________________________________ Attorney to transfer the said
stock on the books of the within-named Corporation with full power of
substitution in the premises.
Dated ___________________________
_________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
The Corporation will furnish to a shareholder upon request and without charge
a full statement of the designation, relative rights, preferences, and
<PAGE>
limitations of the shares of each class of capital stock of the Corporation
authorized to be issued, as well as the designation, relative rights,
preferences, and limitations of each series so far as the same may have been
prescribed and the authority of the board to designate and prescribe the
relative rights, preferences, and limitations of other series.
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Foremost Corporation of
America (the "Company") and First Chicago Trust Company of New York (the
"Rights Agent"), dated as of December 14, 1989, as amended (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal office of the stock transfer
administration office of the Rights Agent. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of the certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent holder, may become null and
void.
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS OF FOREMOST CORPORATION OF AMERICA FOR THE
PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 363,965
<DEBT-CARRYING-VALUE> 982
<DEBT-MARKET-VALUE> 1,017
<EQUITIES> 79,506
<MORTGAGE> 12,137
<REAL-ESTATE> 12,340
<TOTAL-INVEST> 501,736
<CASH> 1,610
<RECOVER-REINSURE> 23,377
<DEFERRED-ACQUISITION> 77,386
<TOTAL-ASSETS> 760,875
<POLICY-LOSSES> 89,065
<UNEARNED-PREMIUMS> 262,794
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 91,649
0
0
<COMMON> 27,233
<OTHER-SE> 228,074
<TOTAL-LIABILITY-AND-EQUITY> 760,875
326,483
<INVESTMENT-INCOME> 18,283
<INVESTMENT-GAINS> 5,871
<OTHER-INCOME> 1,792
<BENEFITS> 192,467
<UNDERWRITING-AMORTIZATION> 96,193
<UNDERWRITING-OTHER> 20,134
<INCOME-PRETAX> 43,635
<INCOME-TAX> (11,113)
<INCOME-CONTINUING> 32,522
<DISCONTINUED> 0
<EXTRAORDINARY> (3,310)
<CHANGES> 0
<NET-INCOME> 29,212
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.04
<RESERVE-OPEN> 82,722
<PROVISION-CURRENT> 194,747
<PROVISION-PRIOR> (2,281)
<PAYMENTS-CURRENT> 149,242
<PAYMENTS-PRIOR> 36,952
<RESERVE-CLOSE> 89,065
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
