<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998
-------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number 0-8804
THE SEIBELS BRUCE GROUP, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-0672136
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1501 Lady Street (PO Box 1), Columbia, SC 29201(2)
- ----------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 748-2000
--------------
Indicate by check mark whether the registrant (1) has 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 (or for such shorter period that the registrant was
required to file such reports), 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 registrant's classes of
common stock, as of the latest practicable date:
7,768,828 shares of Common Stock, $1 par value, at August 11, 1998.
- -------------------------------------------------------------------
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars shown in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
-------------- ------------
Investments: (Unaudited)
<S> <C> <C>
Debt securities, available-for-sale, at market (cost of $46,035
at 1998 and $41,845 at 1997) $ 46,227 $ 41,934
Equity securities, at market (cost of $906 at 1998 and 1997) 1,059 915
Cash and short-term investments 13,013 8,922
Other long-term investments 7 22
----------- -----------
Total cash and investments 60,306 51,793
Accrued investment income 697 785
Premiums and agents' balances receivable, net 11,694 5,674
Premium notes receivable 3,897 3,233
Reinsurance recoverable on paid losses and loss adjustment expense 28,692 30,244
Reinsurance recoverable on unpaid losses and loss adjustment expense 75,916 75,616
Property and equipment, net 6,089 5,462
Prepaid reinsurance premiums - ceded business 58,774 50,602
Deferred policy acquisition costs 2,884 1,580
Goodwill 20,821 2,557
Other assets 9,707 7,072
----------- -----------
Total assets $279,477 $234,618
=========== ===========
LIABILITIES
Losses and claims:
Reported and estimated losses and claims
- retained business $ 27,677 $ 30,847
- ceded business 66,991 66,262
Adjustment expenses
- retained business 7,719 8,307
- ceded business 8,925 9,354
Unearned premiums:
Property and casualty
- retained business 9,356 3,739
- ceded business 58,774 50,602
Credit life 41 41
Balances due other insurance companies 36,202 15,489
Debt 16,544 3,036
Current income taxes payable 41 41
Other liabilities and deferred items 8,278 7,156
----------- -----------
Total liabilities 240,548 194,874
----------- -----------
COMMITMENTS AND CONTINGENCIES
SPECIAL STOCK, no par value, authorized 5,000,000 shares
Issued and Outstanding 220,000 shares of Cumulative $0.62 Convertible
Redeemable Nonvoting Special Preferred Stock, Redemption value $2,200,000 2,200 2,200
Issued and outstanding 50,000 shares of Cumulative $0.625 Convertible
Redeemable Nonvoting Special Preferred Stock, Redemption value $500,000 500 0
----------- -----------
Total special stock 2,700 2,200
----------- -----------
SHAREHOLDERS' EQUITY
Common stock, $1 par value, authorized 12,500,000 shares, issued &
outstanding of 7,768,828 and 7,730,725 shares at 1998 and 1997 7,769 7,731
Additional paid-in-capital 61,712 61,665
Accumulated other comprehensive income 192 47
Accumulated deficit (33,444) (31,899)
----------- -----------
Total shareholders' equity 36,229 37,544
----------- -----------
Total liabilities and shareholders' equity $279,477 $234,618
=========== ===========
</TABLE>
<PAGE> 3
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts shown in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
----------------------- ----------------------
1998 1997 (1) 1998 1997 (1)
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Commission & service income $23,399 $20,816 $12,261 $10,774
Premiums earned 6,970 3,145 4,265 839
Net investment income 1,545 1,507 829 799
Other interest income 806 376 574 79
Realized (losses)/gains (1) 218 23 (1)
Other income 879 47 450 25
--------- --------- --------- ----------
Total revenue 33,598 26,109 18,402 12,515
--------- --------- --------- ----------
Expenses:
Losses & loss adjustment expenses 6,116 2,783 3,600 451
Policy acquisition costs 5,019 603 2,693 21
Interest expense 378 33 272 16
Other operating costs & expenses 22,373 20,879 11,588 10,932
Restructuring charge 546 0 546 0
--------- --------- --------- ----------
Total expenses 34,432 24,298 18,699 11,420
--------- --------- --------- ----------
(Loss)/income from operations, before provision for
income taxes and effect of change in accounting principle (834) 1,811 (297) 1,095
Provision for income taxes 0 33 0 20
--------- --------- --------- ----------
(Loss)/income before effect of change in accounting principle (834) 1,778 (297) 1,075
Effect of change in accounting principle (601) 0 0 0
--------- --------- --------- ----------
Net (loss)/income (1,435) 1,778 (297) 1,075
Other Comprehensive Income
Change in value of marketable securities, less reclassification adjustment of
($43) and ($45) for gains included in net income in the six months and
three months ended June 30, 1998, respectively 145 (31) 152 444
--------- --------- --------- ----------
Comprehensive net (Loss)/income $(1,290) $ 1,747 $ (145) $ 1,519
========= ========= ========= ==========
Basic earnings per share before change in accounting principle:
Net (loss)/income $ (0.11) $ 0.28 $ (0.04) $ 0.17
Weighted average shares outstanding 7,755 6,393 7,746 6,285
Diluted earnings per share before change in accounting principle:
Net (loss)/income $ (0.11) $ 0.28 $ (0.04) $ 0.17
Weighted average shares outstanding 7,755 6,393 7,746 6,285
Basic earnings per share after change in accounting principle:
Net (loss)/income $ (0.19) $ 0.28 $ (0.04) $ 0.17
Weighted average shares outstanding 7,755 6,393 7,746 6,285
Diluted earnings per share after change in accounting principle:
Net (loss)/income $ (0.19) $ 0.28 $ (0.04) $ 0.17
Weighted average shares outstanding 7,755 6,393 7,746 6,285
</TABLE>
(1) Reclassified. See Note 1 of the Notes to Consolidated Financial Statements
<PAGE> 4
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts shown in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss)/income $ (1,435) $ 1,778
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Equity in earnings of unconsolidated subsidiary (144) 0
Depreciation and amortization 637 491
Realized losses/(gains) 1 (218)
Net change in assets and liabilities affecting
cash flows from operating activities 1,946 3,799
---------- ----------
Net cash provided by operating activities 1,005 5,850
---------- ----------
Cash flows from investing activities:
Proceeds from investments sold or matured 15,671 1,962
Cost of investments acquired (18,610) 0
Issuance of premium notes receivable, net of collections (664) 0
Proceeds from property and equipment sold 6 0
Purchase of property and equipment (364) (124)
---------- ----------
Net cash (used in)/provided by investing activities (3,961) 1,838
---------- ----------
Cash flows from financing activities:
Net proceeds from notes payable and line of credit 10,808 0
Stock issued under stock option plans, net of repurchase 85 469
Stock issued under exercise of warrants 0 2
Issuance of capital stock 0 5,858
Dividends paid on special stock (110) 0
Cost of purchased subsidiaries, net of $5,914 cash acquired (3,736) 0
---------- ----------
Net cash provided by financing activities 7,047 6,329
---------- ----------
Net increase in cash and short term investments 4,091 14,017
Cash and short term investments, January 1 8,922 2,664
---------- ----------
Cash and short term investments, June 30 $ 13,013 $16,681
========== ==========
Supplemental cash flow information:
Cash paid for - interest $ 340 $ 23
- income taxes $ 0 $ 49
========== ==========
Noncash investing activities:
Stock issued for consulting services $ 0 $ 90
========== ==========
Acquisitions-
Cash paid $ (9,650) $ 0
Issuance of debt (2,700) 0
Preferred stock issued (500) 0
Assets acquired, at estimated fair value 22,671 0
Liabilities assumed (28,106) 0
---------- ----------
Goodwill $(18,285) $ 0
========== ==========
</TABLE>
<PAGE> 5
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
The interim financial statements are unaudited, but in the opinion of
management, reflect all adjustments necessary for fair presentation of results
for such periods. All such adjustments are of a normal recurring nature. The
results of operations for any interim period are not necessarily indicative of
results for the full year. Certain prior period amounts have been reclassified
to conform to the current period presentation. These financial statements should
be read in conjunction with the financial statements and notes thereto contained
in the Company's annual report Form 10-K for the year ended December 31, 1997.
NOTE 2. ACQUISITIONS
Effective March 31, 1998, the Company acquired America's Flood Services, Inc.
("AFS") for $2,600,000, consisting of $2,100,000 in cash and $500,000 in
Cumulative, Convertible, Redeemable, Nonvoting Special Preferred Stock. AFS
manages flood zone determinations, flood insurance, and flood compliance
tracking. AFS had revenues of $644,000 and net income of $138,000 for the first
quarter of 1998.
Effective May 1, 1998, the Company acquired Graward General Companies, Inc.
("Graward") for a tentative purchase price of $10,250,000, consisting of
$7,550,000 in cash and $2,700,000 in Subordinated Convertible Notes. The
tentative purchase price may be adjusted as a result of any adjustments
identified in accordance with the underlying purchase agreement. As of the date
of acquisition, Graward processed approximately $60,000,000 of nonstandard
automobile insurance on an annual basis and acted as a managing general agent
for another insurance company until April 30, 1998. Graward now processes this
business on the behalf of three of the Company's subsidiaries. Graward had
revenues of $7,070,000 and net losses of ($25,000) after taxes and profit
sharing for the first four months of 1998.
Had the Company owned both Graward and AFS since the beginning of 1998, the
Company's revenues and net loss for the six months ended June 30, 1998 would
have been $41,312,000 and ($1,322,000) respectively.
NOTE 3. DEBT
Effective March 31, 1998, the Company closed a $15,000,000 Credit Facility (the
"Facility") with a major lending institution for the purpose of financing its
acquisition activity and other general corporate purposes. Principal payments
are due quarterly beginning March 1999 with a final payment of all remaining
principal and accrued interest due in June 2004. Accrued interest is payable
quarterly on the outstanding balance under the Facility and is calculated, at
the Company's discretion, using a pre-determined spread over LIBOR or the prime
interest rate of the lending institution. The effective interest rate as of June
30, 1998 was 8.44%. The Facility is secured by a lien on the assets of The
Seibels Bruce Group, Inc. As of June 30, 1998, the outstanding balance under the
Facility was $13,550,000.
NOTE 4. CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1998, the Company adopted the provisions of SOP 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments," and recorded it as a cumulative effect of a change in accounting
principle of $601,000. As a result, the Company's participation in the North
Carolina Reinsurance Facility is no longer being treated as assumed reinsurance
and all amounts assumed from the Facility have been eliminated. The Facility is
now treated as an assessment organization. The effect of the change in
accounting principle was a reduction of $.08 per share on both a basic and
diluted basis. Below are the pro forma EPS for the six months ended June 30,
1998 and 1997, assuming the change in accounting principle was applied
retroactively.
<TABLE>
<CAPTION>
For the six months ended For the three months ended
June 30 June 30
---------------------------------- ----------------------------------
1998 1997 1998 1997
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net (loss)/income $ (834) $ 1,319 $ (297) $ 1,075
Earnings per common share:
Basic $ (0.11) $ 0.21 $ (0.04) $ 0.17
Diluted $ (0.11) $ 0.21 $ (0.04) $ 0.17
============== =============== ============== ===============
</TABLE>
<PAGE> 6
NOTE 5. RESTRUCTURING CHARGE
During the second quarter of 1998, the Company recorded a pre-tax restructuring
charge of $546,000 related to the consolidation of its automobile and claims
operations. The charges relate to employee severance and other termination
benefits from moving the processing of the Company's automobile insurance
business from Winston-Salem, North Carolina to Nashville, Tennessee and from the
consolidation of claims management and staff positions in the Columbia, South
Carolina office.
NOTE 6. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted FASB Statement No. 130,
"Reporting Comprehensive Income." Statement No. 130 requires reporting of
comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net income.
NOTE 7. SUBSEQUENT EVENTS
On July 1, 1998, The Innovative Company, a wholly-owned subsidiary of the
Company, was merged into The Seibels Bruce Group, Inc. The Board of Directors of
the Company approved the Plan of Merger ("the Plan") on February 10, 1998. The
Plan did not require approval of the shareholders of either company. The capital
stock of The Innovative Company was cancelled and no cash, securities or other
consideration of any kind was issued or paid for the shares.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table indicates the more significant financial comparisons with
the applicable prior periods (dollars shown in thousands, except per share
amounts):
<TABLE>
<CAPTION>
June 30, December 31,
FINANCIAL CONDITION 1998 1997
---- ----
<S> <C> <C>
Total cash and investments $ 60,306 $ 51,793
Total assets 279,477 234,618
Total liabilities 240,548 194,874
Special Stock 2,700 2,200
Shareholders' equity 36,229 37,544
Per share 4.66 4.86
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
RESULTS OF OPERATIONS June 30 Second Quarter
----------------------- -----------------------
1998 1997(1) 1998 1997(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Commission & service income $23,399 $20,816 $12,261 $10,774
Premiums earned 6,970 3,145 4,265 839
Net investment income 1,545 1,507 829 799
Other interest income 806 376 574 79
Realized gains on investments (1) 218 23 (1)
Other income 879 47 450 25
----------- ----------- ----------- -----------
Total revenue 33,598 26,109 18,402 12,515
----------- ----------- ----------- -----------
(Loss)/income from operations, before provision for
income taxes and effect of change in accounting principle (834) 1,811 (297) 1,095
Provision for income taxes 0 33 0 20
----------- ----------- ----------- -----------
(Loss)/income before effect of change in accounting principle (834) 1,778 (297) 1,075
Effect of change in accounting principle (601) 0 0 0
----------- ----------- ----------- -----------
Net (loss)/income (1,435) 1,778 (297) 1,075
Weighted average shares outstanding 7,755 6,393 7,746 6,285
</TABLE>
(1) Reclassified. See Note 1 of the Notes to Consolidated Financial Statements
OVERVIEW
(Dollars shown in thousands)
Total revenues for the six-month period increased 28.7% over the same period
last year. This increase is primarily due to increased premium volume and fee
income contributed by recent acquisitions. Net loss of $834 for the six months
ending June 30, 1998, provision for income taxes and before change in accounting
principle represents a $2,645 decrease over the corresponding period in 1997.
The net loss is due mainly to slower revenue recognition of the risk-based
revenue as compared to the fee-based revenue and a $546 restructuring charge.
<PAGE> 8
RESULTS OF OPERATIONS
(Dollars shown in thousands)
Six Months Ended June 30, 1998 and 1997
Commission & Service Income
Commission and service income increased $2,583 or 12.4%, to $23,399 for the six
months ended June 30, 1998 from $20,816 for the six months ended June 30, 1997.
Flood fee income increased for the first six months of 1998 by $1,457 due to an
increase in the number of policies serviced and winter storm related claims
activity. The acquisition of Premium Budget Plan ("PBP"), a policy finance
company the Company purchased in the fourth quarter of 1997, America's Flood
Service, Inc. ("AFS") and Graward General Companies ("Graward") also contributed
to increased commission and service income. These three companies, PBP, AFS and
Graward, added $2,000, $610 and $864 respectively. The increase in commission
and service income from flood business, PBP, AFS and Graward was offset by
decreased activity in the SC Facility premium-based fees and a decrease in fees
generated by the former managing general agency relationship in the Company's
commercial lines business unit, which ceased to operate on a fee income basis
after February 1, 1998.
Premiums Earned
Net premiums earned increased $3,825 or 121.6%, to $6,970 for the six months
ended June 30, 1998 from $3,145 for the six months ended June 30, 1997. In 1997
$2,787 was related to assumed business that the Company no longer records as
earned premiums in 1998 per NOTE 4. The commercial business unit, which began to
retain risk in February 1998 contributed $782 or 11.2% of the total earned
premium. The new South Carolina automobile business unit, which began
underwriting during the fourth quarter of 1997, contributed $1,370 or 19.7% of
the total earned premium. The Innovative Company ("Innovative"), which was
acquired during the fourth quarter of 1997, contributed $4,275 or 61.3% of the
earned premiums. Business written through Graward, which was acquired on May 1,
1998, generated $250 or 3.6% of the earned premium. The remaining 4.2% came from
runoff operations and a low value dwelling program the Company writes.
Net Investment and Interest Income
Net investment and other interest income increased $468 or 24.9%, to $2,351 for
the six months ended June 30, 1998 from $1,883 for the six months ended June 30,
1997. This increase is due to the acquisition of Innovative, PBP, AFS and
Graward.
Realized (Loss)/Gain on Investments
Realized loss on investments was $1 for the six months ended June 30, 1998
compared to a gain of $218 for the six months ended June 30, 1997.
Other Income
Other income was $879 and $47 for the six months ended June 30, 1998 and 1997,
respectively. The increase is due to revenues produced by PBP.
Losses and Loss Adjustment Expenses
Losses and loss adjustment expenses increased $3,333 or 119.8%, to $6,116 for
the six months ended June 30, 1998 from $2,783 for the six months ended June
30, 1997. In 1997, $2,091 was related to assumed business that the Company no
longer records as losses per NOTE 4. This increase corresponds to the increased
activity in all risk operations over the same period last year. During 1997, the
Company served as a general agent in its commercial insurance operation, thus
the Company had no losses related to that business. Also in 1997, the Company
had minimal auto insurance on which it retained risk. These facts should be
considered when trying to compare 1998 and 1997 loss and loss adjustment expense
information.
<PAGE> 9
Policy Acquisition Costs
With the Company's re-entry into the risk market, the Company has begun to defer
policy acquisition costs. During the six months ended June 30, 1998, $5,019 of
policy acquisition costs were expensed and $1,304 were deferred while during the
same period in 1997, $603 were expensed and none were deferred.
Interest Expense
Interest expense was $378 and $33 for the six months ended June 30, 1998 and
1997, respectively. The increase is due to the Company's acquisitions of
Innovative, AFS and Graward in the December 1997, March 1998 and May 1998
respectively and the debt associated with those acquisitions.
Other Operating Costs and Expenses
Other operating costs and expenses increased $1,494, or 7.2%, to $22,373 for the
six months ended June 30, 1998 from $20,879 for the six months ended June 30,
1997. Salaries and fringes for the Company included in other operating costs and
expenses including the acquisitions were $6,777 and $5,847 for the six months
ended June 30, 1998 and 1997, respectively. Agent commissions included in other
operating costs and expenses were $5,558 and $9,237 for the six months ended
June 30, 1998 and 1997, respectively. The reduction in agents' commissions is
due to the fact that agents' commissions are now also included in policy
acquisition costs.
LIQUIDITY AND CAPITAL RESOURCES
(Dollars shown in thousands)
Liquidity relates to the Company's ability to produce sufficient cash to fulfill
contractual obligations, primarily to policyholders. Sources of liquidity
include service fee income, premium collections, investment income and sales or
maturities of investments.
Net cash, provided by operating activities, totaled $1,005. Net Change in Assets
and Liabilities provided $1,946 of cash from operating activities. Individual
sources of cash flows from operating activities included changes of $5,617 in
unearned premiums on retained business and $20,713 in balances due other
insurance companies, which are related to the Company's continued re-entry into
the retained risk business. Individual uses of cash include a $6,020 increase in
Premiums and Agents' Balances Receivable, a $2,635 increase in other assets, and
a $3,758 reduction in reported and estimated losses and claims and loss
adjustment expense on retained business. The first two uses are primarily the
result of the acquisition of Graward. The $3,758 reduction in reported and
estimated losses and claims and loss adjustment expense on retained business is
primarily the result of the settlement of claims from runoff business.
Investing activities used cash in the amount of $3,961 as a portion of the
Company's cash was re-deployed into the investment portfolio. Cash flows from
financing activities were related to the purchase of Graward in the second
quarter.
Total assets as of June 30, 1998 were $279,477 or an increase of 19.1% over the
total as of December 31, 1997. The two major components of the increase were
cash and investments and goodwill.
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to various lawsuits generally
arising in the normal course of their insurance and ancillary businesses.
<PAGE> 10
ITEM 2. CHANGES IN SECURITIES
On March 31, 1998, the Company issued 50,000 shares, with a value of $500,000,
of $0.625 cumulative, convertible, redeemable, nonvoting special preferred stock
("$0.625 Special Stock") to the former owners of America's Flood Service, Inc.
("AFS") as partial consideration in conjunction with the acquisition of AFS. The
$0.625 Special Stock pays quarterly dividends at an annual rate of $0.625 per
share. On or after August 15, 2000, but prior to August 15, 2002, the Company
may redeem, in whole or in part, the $0.625 Special Stock at a price of $15.00
per share and the holders of the $0.625 Special Stock have the right to convert
each share of $0.625 Special Stock into 1.25 shares of common stock, par value
$1.00, of the Company. On August 15, 2002, the Company must redeem any remaining
shares of $0.625 Special Stock at a rate of $10.00 per share.
On March 31, 1998, the Company issued a warrant to ING (U.S.) Capital
Corporation to purchase up to 57,971 shares of Common Stock of the Company with
an exercise price of $7.81 per share, exercisable until September 30, 2004.
In conjunction with the acquisition of Graward, on May 1, 1998, the Company
issued Convertible Subordinated Promissory Notes to a former shareholder of
Graward in the aggregate amount of $2,700,000 (the "Notes"). The entire
principal amount of the Notes, together with all accrued but unpaid interest
thereon, will become due and payable on December 31, 2004 provided, however,
that if certain outstanding debt is paid in full and upon 60 days prior written
notice, the Notes will become due and payable six months after such debt is paid
in full provided, however, that in no event will the Notes become payable
earlier than April 1, 2003. At the election of the creditor, the Notes may be
converted into 300,000 shares of Common Stock of the Company on the maturity
date provided, however, that notice has been given of such election at any time
on or after the 45th day prior to the maturity date of the Notes up to but not
including the 15th day prior to the maturity date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
3.1 Articles of Incorporation of the Registrant, as
amended, incorporated herein by reference to the
Annual Report, Exhibit (3)(1)-1, for the year ended
December 31, 1989. Articles of Amendments dated June
18, 1994, June 13, 1995 and June 14, 1996,
incorporated herein by reference to the Annual Report,
Exhibit 3.1, for the year ended December 31, 1996.
Articles of Amendments dated April 10, 1997 and
November 26, 1997, incorporated herein by reference to
the Annual Report, Exhibit 3.1, for the year ended
December 31, 1997. Articles of Correction dated May
13, 1997, incorporated herein by reference to the
Annual Report, Exhibit 3.1, for the year ended
December 31, 1997. Articles of Amendments dated March
30, 1998.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE SEIBELS BRUCE GROUP, INC.
-----------------------------
(Registrant)
Date: August 14, 1998 /s/ JOHN A. WEITZEL
-------------------------- --------------------
John A. Weitzel
President and Director
Date: August 14, 1998 /s/ R. THOMAS SAVAGE JR.
-------------------------- ------------------------
R. Thomas Savage Jr.
Chief Financial Officer
Date: August 14, 1998 /s/ ELIZABETH R. MONTS
-------------------------- -----------------------
Elizabeth R. Monts
Controller (Principal Accounting
Officer)
<PAGE> 1
EXHIBIT 3.1
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
------------------------
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
THE SEIBELS BRUCE GROUP, INC.
------------------------
TO THE SECRETARY OF STATE OF SOUTH CAROLINA:
The undersigned corporation, amending its Articles of Incorporation
submits for filing these Articles of Amendment setting forth the following as
required under Section 33-6-102 of the Code of Laws of South Carolina Annotated:
(1) The name of the corporation is The Seibels Bruce
Group, Inc. (the "Corporation").
(2) The text of the amendment (the "Amendment") is to add the following
provisions to Section 4 of the Articles of Incorporation of the Corporation:
SUBPART 1
DESIGNATION AND RANK
1.1 Designation. A single series of Special Stock designated
"$0.625 Cumulative Convertible Redeemable Nonvoting Special Preferred Stock"
(hereinafter called the "$0.625 Convertible Stock") is hereby authorized. The
number of authorized shares constituting the $0.625 Convertible Stock is 50,000.
Shares of the $0.625 Convertible Stock shall be issued at a stated value of
$10.00 per share (the "Stated Value").
1.2 Rank. With respect to the payment of the dividends and
other distributions with respect to the capital stock of the Corporation,
including the distribution of the assets of the Corporation upon liquidation,
dissolution or winding up, the $0.625 Convertible Stock shall not be junior to
any other series or class of stock of the Corporation.
SUBPART 2
DIVIDEND RIGHTS
2.1 Dividend Rate. From the date of original issuance,
dividends shall accrue on each share of $0.625 Convertible Stock at an annual
rate equal to $0.625 per share. The annual rate at which such dividends shall
accrue is hereinafter referred to as the "Dividend Rate."
2.2 Accrual and Payment. Dividends on each share of $0.625
Convertible Stock shall be cumulative and except as otherwise provided herein,
dividends on the $0.625 Convertible Stock shall be payable, when and as declared
by the Board of Directors or a committee thereof, on March 31, June 30,
September 30 and December 31 (or, if such day is not a Business Day (as
hereinafter defined), on the next Business Day thereafter) of each year,
commencing on June 30, 1998 (each such date being hereinafter referred to as a
"Dividend Payment Date"), to holders of record as they appear on the books of
the Corporation on such record date, not preceding the date upon which the
resolution fixing the record date is adopted and not exceeding 60 days preceding
the relevant Dividend Payment Date, as may be determined by the Board of
Directors or a duly authorized committee thereof. If declared, dividends shall
be paid in cash on each Dividend Payment Date with respect to the quarterly
period ending on such Dividend Payment Date. To the extent not declared and
paid, dividends shall accumulate. The amount of dividends payable for the
initial dividend period or any period shorter or longer than a full dividend
period shall be
<PAGE> 2
calculated on the basis of a 360-day year of twelve 30-day months. Accrued
dividends not paid on a Dividend Payment Date may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to holders of
record on such record date, not preceding the date upon which the resolution
fixing the record date is adopted and not exceeding 60 days preceding the
payment date thereof, as may be fixed by the Board of Directors or a duly
authorized committee thereof. "Business Day" shall mean any day excluding
Saturday, Sunday and any day on which the Fedwire funds transfer system of the
Federal Reserve Banks is not available for the transfer of funds.
2.3 Dividends or Distributions to Junior Stock. So
long as any shares of $0.625 Convertible Stock are outstanding, no dividend or
distribution shall be declared or paid or set aside for payment on the common
stock of the Corporation or on any other stock of the Corporation ranking junior
to the $0.625 Convertible Stock as to dividends, unless, full cumulative
dividends on all outstanding shares of the $0.625 Convertible Stock shall have
been declared and paid through and including the most recent Dividend Payment
Date.
SUBPART 3
LIQUIDATION RIGHTS
3.1 Preferences of $0.625 Convertible Stock on
Winding-Up of the Corporation. In the event of any voluntary or involuntary
liquidation, dissolution, winding up of affairs of the Corporation or other
similar event, before any distribution is made upon any class of stock of the
Corporation ranking junior to the $0.625 Convertible Stock, the holders of
shares of $0.625 Convertible Stock shall be entitled to be paid, out of the
assets of the Corporation available for distribution to its shareholders, an
amount per share equal to the Stated Value, plus an amount equal to all accrued
and unpaid dividends (such amounts, together, the "Liquidation Value"). Neither
the consolidation nor merger of the Corporation with or into any other
corporation or corporations, nor the sale or lease of all or substantially all
of the assets of the Corporation, shall itself be deemed to be a liquidation,
dissolution or winding-up of the affairs of the Corporation within the meaning
of any of the provisions of this Subpart 3.
3.2 Pro Rata Distribution. If, upon distribution of the
Corporation's assets in liquidation, dissolution, winding-up or other similar
event, the net assets of the Corporation to be distributed among the holders of
shares of $0.625 Convertible Stock and any other class or series of stock of the
Corporation ranking on a parity with the $0.625 Convertible Stock as to
distributions upon liquidation are insufficient to permit payment in full to
such holders of the preferential amount to which they are entitled, then the
entire net assets of the Corporation shall be distributed among the holders of
shares of $0.625 Convertible Stock and such other class or series of stock
ratably in proportion to the full amounts to which they would otherwise be
respectively entitled and such distributions may be made in cash or in property
taken at its fair value (as determined in good faith by the Board of Directors),
or both, at the election of the Board of Directors.
3.3 Priority. All of the preferential amounts to be paid to
the holders of the $0.625 Convertible Stock and the holders of any other class
or series of stock of the Corporation ranking on a parity with the $0.625
Convertible Stock as to distributions upon liquidation shall be paid or set
apart for payment before the payment or setting apart for payment of any amount
for, or the distribution of any assets of the Corporation to, the holders of the
common stock of the Corporation and any other class or series of stock of the
Corporation which is junior to the $0.625 Convertible Stock as to distributions
upon liquidation.
SUBPART 4
VOTING RIGHTS
4.1 General. The holders of shares of $0.625 Convertible
Stock shall have no voting rights except as required by law. The holders of
$0.625 Convertible Stock shall be entitled to notice of any meeting of the
stockholders of the Corporation.
SUBPART 5
REDEMPTION
<PAGE> 3
5.1 Optional Redemption by the Corporation. Issued and
outstanding shares of the $0.625 Convertible Stock shall be redeemable, at the
option of the Corporation, as a whole or in part, at any time on or after August
15, 2000 up to but not including August 15, 2002, at a redemption price per
share (the "Redemption Price") equal to $15.00 per share, plus any accrued and
unpaid dividends through the Redemption Date (as hereinafter defined). On the
Redemption Date, the Corporation shall pay to each holder of $0.625 Convertible
Stock an amount in cash equal to the aggregate Redemption Price for such
holder's shares, by wire transfer of immediately available funds to such account
as is designated by such holder.
5.2 Mandatory Redemption by the Corporation. All of
the issued and outstanding shares of $0.625 Convertible Stock shall be redeemed
by the Corporation on August 15, 2002 at a Redemption Price per share equal to
$10.00 per share, plus any accrued and unpaid dividends through the Redemption
Date. On the Redemption Date, the Corporation shall pay to each holder of $0.625
Convertible Stock an amount in cash equal to the aggregate Redemption Price for
such holder's shares, by wire transfer of immediately available federal funds to
such account as is designated by such holder.
5.3 Notice to Holders. The Corporation shall give notice of
any redemption under this Subpart 5 at least 30 days prior to the date the
Corporation is required to or proposes to redeem all or any portion, as
applicable, of the outstanding shares of $0.625 Convertible Stock (the
"Redemption Date"), by registered mail (return receipt requested), postage
prepaid, to each of the holders of record of the $0.625 Convertible Stock;
provided, however, that in the case of a mandatory redemption under Subpart 5.2
hereof, the failure of the Corporation to give notice as required by this
Subpart 5.3 shall not alter or affect the rights of the holders of the $0.625
Convertible Stock to have their shares of $0.625 Convertible Stock redeemed by
the Corporation in accordance with the terms of this Subpart 5. Such notice
shall be addressed to each such holder at the address as it appears on the stock
transfer books of the Corporation and shall specify the Redemption Date. Notice
having been mailed as aforesaid, from and after the close of business on the
Redemption Date (unless default shall be made by the Corporation in payment of
the Redemption Price), dividends on the shares of $0.625 Convertible Stock shall
cease to accrue, and said shares shall no longer be deemed to be outstanding,
and all rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the Redemption Price provided for
herein) shall cease. Upon surrender in accordance with said notice of the
certificates representing the shares so redeemed (properly endorsed or assigned
for transfer, if required by the Board of Directors of the Corporation and the
notice of redemption so states), such shares shall be redeemed by the
Corporation at the Redemption Price provided for herein. Any shares of $0.625
Convertible Stock which shall at any time have been redeemed shall, upon such
redemption, be retired and the Corporation shall take all such steps as are
necessary to cause such shares thereafter to have the status of authorized but
unissued shares of Special Stock of the Company, without designation as to
series, until such shares are once again designated as shares of a particular
series of Special Stock of the Company.
SUBPART 6
CONVERSION RIGHTS
6.1 Conversion. Holders of shares of $0.625 Convertible
Stock shall have the right to convert all or a portion of such shares (including
fractions of such shares) into shares of common stock, par value $1.00 per
share, of the Corporation (the "Common Stock"), as follows:
(a) Subject to and upon compliance with the provisions of this
Subpart 6, a holder of shares of $0.625 Convertible Stock shall have
the right, at such holder's option, at any time on or after August
15, 2000 up to but not including August 15, 2002, to convert any of
such shares (or fractions thereof) into the number of fully paid and
nonassessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing
the Stated Value of the shares to be converted by the Conversion
Price (as hereinafter defined) and by surrender of such shares, such
surrender to be made in the manner provided in paragraph (b) of this
Subpart 6; provided, however, that the right to convert shares called
for redemption pursuant to Subpart 5.1 hereof shall terminate at the
close of business on (i) the date fixed for such redemption, or (ii)
if the Corporation shall so elect and state in the notice of
redemption, the date (which date shall be the date fixed for
redemption or an earlier date not less than 30 days after the date of
mailing of the redemption notice) on which the Corporation
irrevocably deposits with a designated bank or trust company as
paying agent, money sufficient to pay, on the redemption date, the
redemption price, unless the Corporation shall default in making
payment of the amount payable upon such redemption. Subject to the
following provisions of this Subpart 6(a), any share of $0.625
Convertible Stock may be
<PAGE> 4
converted, at the option of its holder, in part into Common Stock
under the procedures set forth above. If a part of a share of $0.625
Convertible Stock is converted, then the Corporation will convert
such share into the appropriate number of shares of Common Stock
(subject to paragraph (c) of this Subpart 6) and issue a fractional
share of $0.625 Convertible Stock evidencing the remaining interest
of such holder. "Conversion Price" shall mean the conversion price
per share of Common Stock into which the $0.625 Convertible Stock is
convertible, as such Conversion Price may be adjusted pursuant to
this Subpart 6. The initial Conversion Price will be $8.00.
(b) In order to exercise the conversion right, the holder
of each share of $0.625 Convertible Stock (or fraction thereof) to be
converted shall surrender the certificate representing such share,
duly endorsed or assigned to the Corporation or in blank, at the
office of the transfer agent of the Corporation as may be designated
by the Corporation's Board of Directors (the "Transfer Agent"),
accompanied by written notice to the Corporation that the holder
thereof elects to convert its $0.625 Convertible Stock or a specified
portion thereof. Unless the shares issuable on conversion are to be
issued in the same name as the name in which such share of $0.625
Convertible Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid or are not
required to be paid).
Holders of shares of $0.625 Convertible Stock at the close of
business on a dividend payment record date shall be entitled to
receive the dividend payable on such shares on the corresponding
Dividend Payment Date (except that holders of shares called for
redemption on a Redemption Date falling between the close of business
on such dividend payment record date and the opening of business on
the corresponding Dividend Payment Date shall, in lieu of receiving
such dividend on the Dividend Payment Date fixed therefor, receive
such dividend payment together with all other accrued and unpaid
dividends on the date fixed for redemption, unless such holder
converts such shares called for redemption pursuant to the provisions
of this Subpart 6) notwithstanding the conversion thereof following
such dividend payment record date and prior to such Dividend Payment
Date. However, shares of $0.625 Convertible Stock surrendered for
conversion during the period between the close of business on any
dividend payment record date and the opening of business on the
corresponding Dividend Payment Date (except shares called for
redemption on a Redemption Date during such period) must be
accompanied by payment of an amount equal to the dividend payment
with respect to such shares of $0.625 Convertible Stock presented for
conversion on such Dividend Payment Date. A holder of shares of
$0.625 Convertible Stock on a dividend payment record date who (or
whose transferee) tenders any such shares for conversion into shares
of Common Stock on the corresponding Dividend Payment Date will
receive the dividend payable by the Corporation on such shares of
$0.625 Convertible Stock on such date and the converting holder need
not include payment in the amount of such dividend upon surrender of
shares of $0.625 Convertible Stock for conversion on the Dividend
Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears,
on converted shares or for dividends on the shares of Common Stock
issued upon such conversion.
As promptly as practicable after the surrender of certificates
for shares of $0.625 Convertible Stock as aforesaid, the Corporation
shall issue and shall deliver at such office to such holder, or on
such holder's written order, a certificate or certificates for the
number of shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this Subpart 6, and any
fractional interest in respect of a share of Common Stock arising
upon such conversion shall be settled as provided in paragraph (c) of
this Subpart 6.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for shares of $0.625 Convertible Stock shall have been
surrendered and such notice received by the Corporation as aforesaid,
and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such person
or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date upon which such shares
shall have been surrendered and such notice
<PAGE> 5
received by the Corporation. All shares of Common Stock delivered
upon conversion of the $0.625 Convertible Stock will upon delivery be
duly and validly issued and fully paid and nonassessable.
(c) In connection with the conversion of any shares of $0.625
Convertible Stock, fractions of such shares may be converted;
however, no fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of the $0.625
Convertible Stock. Instead of any fractional interest in a share of
Common Stock which would otherwise be deliverable upon the conversion
of a share of $0.625 Convertible Stock (or fraction thereof), the
Corporation shall pay to the holder of such share an amount in cash
(computed to the nearest cent) equal to the Closing Price (as
hereinafter defined) of Common Stock on the trading date immediately
preceding the date of conversion multiplied by the fraction of a
share of Common Stock represented by such fractional interest. If
more than one share (or fraction thereof) shall be surrendered for
conversion at one time by the same holder, the number of full shares
of Common Stock issuable upon conversion thereof shall be computed on
the basis of the aggregate number of shares of $0.625 Convertible
Stock so surrendered. "Closing Price" of the Common Stock on any day
shall mean the reported last sales price, regular way, for the Common
Stock or, in case no sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, for the Common
Stock in either case as reported on the principal national securities
exchange on which the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities
exchange, on The Nasdaq Stock Market (the "Nasdaq System") or, if the
Common Stock is not quoted on the Nasdaq System, the average of the
closing bid and asked prices for the Common Stock on such day in the
over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System.
(d) The Conversion Price shall be adjusted from time to time
as follows:
(i) In case the Corporation shall, after the date
of original issuance of the $0.625 Convertible Stock, (A) pay
an extraordinary dividend or make an extraordinary
distribution on its Common Stock in shares of its Common
Stock, (B) subdivide or split its outstanding Common Stock
into a greater number of shares, (C) combine its outstanding
Common Stock into a smaller number of shares or (D) issue any
shares of capital stock by reclassification of its Common
Stock, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the holder of any share of
$0.625 Convertible Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common
Stock of the Corporation which such holder would have owned or
have been entitled to receive after the occurrence of any of
the events described above had such shares been surrendered
for conversion immediately prior to the occurrence of such
event or the record date therefor, whichever is earlier. An
adjustment made pursuant to this subparagraph (i) shall become
effective immediately after the close of business on the
record date for determination of stockholders entitled to
receive such extraordinary dividend or extraordinary
distribution in the case of an extraordinary dividend or
extraordinary distribution (except as provided in paragraph
(h) below) and shall become effective immediately after the
close of business on the effective date in the case of a
subdivision, split, combination or reclassification.
(ii) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this subparagraph (v) are
not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations
under this Subpart 6 shall be made to the nearest cent (with
$.005 being rounded upward) or to the nearest 1/100th of a
share (with .005 of a share being rounded upward), as the case
may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this
paragraph (d), as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivision of
shares, distribution of rights or warrants to purchase stock
or securities, or a distribution of other assets or any other
transaction which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended, hereafter made by the Corporation to
its stockholders shall not be taxable for such stockholders.
(e) In case the Corporation shall be a party to any
transaction (including without limitation a merger, consolidation,
sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock and excluding any transaction as
to which paragraph (d)(i) of this Subpart 6 applies) (each
<PAGE> 6
of the foregoing being referred to as a "Transaction"), in each case
as a result of which shares of Common Stock shall be converted into
the right to receive stock, securities or other property (including
cash or any combination thereof), then the $0.625 Convertible Stock
will thereafter no longer be subject to conversion into Common Stock
pursuant to Subpart 6, but instead shall be convertible into the kind
and amount of shares of stock and other securities and property
receivable (including cash) upon the consummation of such Transaction
by a holder of that number of shares or fraction thereof of Common
Stock into which one share of $0.625 Convertible Stock was
convertible immediately prior to such Transaction. If at any time, as
a result of an adjustment made pursuant to this Subpart 6, the $0.625
Convertible Stock shall become subject to conversion into any
securities other than shares of Common Stock, thereafter the number
of such other securities so issuable upon conversion of the shares of
$0.625 Convertible Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the shares of $0.625 Convertible Stock
contained in this Subpart 6. The provisions of this paragraph (e)
shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or
any other distribution) on the Common Stock that would cause
an adjustment to the Conversion Price of the $0.625
Convertible Stock pursuant to the terms of any of the
paragraphs above (including such an adjustment that would
occur but for the terms of the first sentence of subparagraph
(d)(ii) above);
(ii) there shall be any reclassification or change
of the Common Stock (other than an event to which paragraph
(d)(i) of this Subpart 6 applies) or any consolidation, merger
or statutory share exchange to which the Corporation is a
party and for which approval of any stockholders of the
Corporation is required, or the sale or transfer of all or
substantially all of the assets of the Corporation; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, the Corporation shall cause to be mailed to the holders
of shares of the $0.625 Convertible Stock at their addresses
as shown on the stock records of the Corporation, as promptly
as possible, but at least 30 days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which
a record is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend,
distribution or rights or warrants are to be determined or (B)
the date on which such reclassification, change,
consolidation, merger, statutory share exchange, sale,
transfer, dissolution, liquidation or winding up is expected
to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, change, consolidation, merger, statutory
share exchange, sale, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein
shall not affect the legality or validity of the proceedings
described in this Subpart 6.
(g) In any case in which paragraph (d) of this Subpart 6
provides that an adjustment shall become effective immediately after
a record date for an event and the date fixed for conversion pursuant
to Subpart 6 occurs after such record date but before the occurrence
of such event, the Corporation may defer until the actual occurrence
of such event (i) issuing to the holder of any share of $0.625
Convertible Stock surrendered for conversion the additional shares of
Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment
and (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to paragraph (c) of this Subpart 6.
(h) For purposes of this Subpart 6, the number of shares of
Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the
Corporation or any corporation controlled by the Corporation.
(i) Notwithstanding any other provision herein to the
contrary, the issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of dividends or interest payable
on
<PAGE> 7
securities of the Corporation and the investment of additional
optional amounts in shares of Common Stock under any such plan shall
not be deemed to constitute an issuance of Common Stock. There shall
be no adjustment of the Conversion Price in case of the issuance of
any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this
Subpart 6. If any action or transaction would require adjustment of
the Conversion Price pursuant to more than one paragraph of this
Subpart 6, only one adjustment shall be made and such adjustment
shall be the amount of adjustment which has the highest absolute
value.
(j) In case the Corporation shall take any action affecting
the Common Stock, other than action described in this Subpart 6,
which in the opinion of the Board of Directors would materially
adversely affect the conversion rights of the holders of the shares
of $0.625 Convertible Stock, the Conversion Price for the $0.625
Convertible Stock may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
(k) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock or
its issued shares of Common Stock held in its treasury, or both, for
the purpose of effecting conversion of the $0.625 Convertible Stock,
the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of $0.625 Convertible Stock not
theretofore converted. For purposes of this paragraph (l), the number
of shares of Common Stock which shall be deliverable upon the
conversion of all outstanding shares of $0.625 Convertible Stock
shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares
of Common Stock deliverable upon conversion of the $0.625 Convertible
Stock, the Corporation will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Conversion
Price.
The Corporation will endeavor to make the shares of Common
Stock required to be delivered upon conversion of the $0.625
Convertible Stock eligible for trading upon the Nasdaq System or upon
any national securities exchange upon which the Common Stock shall
then be traded, prior to such delivery.
(l) The Corporation shall not take any action which results in
adjustment of the number of shares of Common Stock issuable upon
conversion of a share of $0.625 Convertible Stock if the total number
of shares of Common Stock issuable after such action upon conversion
of the $0.625 Convertible Stock then outstanding, together with the
total number of shares of Common Stock then outstanding, would exceed
the total number of shares of Common Stock then authorized under the
Corporation's Articles of Incorporation. Subject to the foregoing,
the Corporation shall take all such actions as it may deem reasonable
under the circumstances to provide for the issuance of such number of
shares of Common Stock as would be necessary to allow for the
conversion from time to time, and taking into account adjustments as
herein provided, of outstanding shares of the $0.625 Convertible
Stock in accordance with the terms and provisions of the
Corporation's Articles of Incorporation.
SUBPART 7
MISCELLANEOUS
The headings of the various Subparts hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
(3) This Amendment was adopted by the Board of Directors on
March 25, 1998.
(4) This Amendment was duly adopted by the Board of Directors in
accordance with Section 33-6-102 of the Code of Laws of South Carolina.
<PAGE> 8
DULY EXECUTED, delivered and certified, under seal, by duly
authorized officers of the Corporation on March 30, 1998.
THE SEIBELS BRUCE GROUP, INC.
By: /s/ ERNST N. CSISZAR
-----------------------------------------
Name: Ernst N. Csiszar
Title: President and Chief Executive Officer
(Corporate Seal)
Attest:
/s/ PRISCILLA C. BROOKS
- -------------------------------
Secretary
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