<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------- --------
AMERICAN BANKERS INSURANCE GROUP, INC.
11222 QUAIL ROOST DRIVE
MIAMI, FLORIDA 33157
(305) 253-2244
Commission File Number: 0-9633
State of Incorporation: Florida
I.R.S. Employer Identification Number: 59-1985922
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 report), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Common Stock - Par Value $1.00
20,481,776 Shares Outstanding on July 24, 1996
<PAGE> 2
Form 10-Q
Company or group of companies for which report is filed:
AMERICAN BANKERS INSURANCE GROUP, INC.
This quarterly report, filed pursuant to Rule 13A-13 of the General Rules and
Regulations under the Securities Exchange Act of 1934, consists of the
following information as specified in Form 10-Q.
Part I - Financial Information
Item 1 - Financial Statements
1. Consolidated Balance Sheets at June 30, 1996 and December 31,
1995.
2. Consolidated Statements of Income for the three months ended
June 30, 1996 and 1995.
3. Consolidated Statements of Income for the six months ended
June 30, 1996 and 1995.
3. Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1995.
4. Notes to Consolidated Financial Statements.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Part II - Other Information
Item 1 - Legal Proceedings
Item 4 - Submission of matters to a vote of security holders
Item 6 - Exhibits and Reports
a. Exhibits.
The following exhibits are included herein:
(3a) Third Amended and Restated Articles of Incorporation.
(10) Series B Cumulative Convertible Preferred Stock
Underwriting Agreement.
(11) Statement re: computation of earnings per share.
(27) Financial Data Schedule (for SEC use only).
b. Report on Form 8-K.
None
2
<PAGE> 3
Form 10-Q
SIGNATURE
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.
AMERICAN BANKERS
INSURANCE GROUP, INC.
August 12, 1996
Date /s/ Arthur W. Heggen
------------------------------------
Arthur W. Heggen
Vice President
and Treasurer
3
<PAGE> 4
PART I
FINANCIAL INFORMATION
4
<PAGE> 5
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(in thousands)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
Assets (unaudited)
- ------
<S> <C> <C>
Investments
Held-to-Maturity securities, at amortized cost $ 728,708 $ 594,277
Available-for-Sale securities, at approximate market value 818,093 793,277
Equity securities, at approximate market value 100,487 113,028
Mortgage loans on real estate 10,754 11,793
Policy loans 8,121 7,819
Short-term and other investments 203,887 168,216
---------- ---------
Total investments 1,870,050 1,688,410
Cash 16,830 23,257
Accounts receivable, net of allowance for doubtful
accounts of $5,135 in 1996 and $5,024 in 1995 122,678 130,970
Reinsurance receivable 170,905 168,128
Accrued investment income 21,959 20,943
Deferred policy acquisition costs 351,111 310,879
Prepaid reinsurance premiums 549,070 502,312
Other assets 203,896 142,835
---------- ----------
Total assets $3,306,499 $2,987,734
========== ==========
Liabilities, Common Stock and Other Stockholders' Equity
- --------------------------------------------------------
Policy liabilities $ 283,359 $ 275,250
Unearned premiums 1,284,509 1,178,867
Claim liabilities 447,283 404,745
---------- ----------
2,015,151 1,858,862
Other policyholders' funds 7,146 7,113
Notes payable 336,066 235,981
Deferred income taxes 23,251 29,549
Accrued commissions and other expenses 170,838 136,174
Other liabilities 210,492 207,058
---------- ----------
Total liabilities 2,762,944 2,474,737
---------- ----------
Commitments and Contingencies (Note 4)
Common Stock and Other Stockholders' Equity
- -------------------------------------------
Common stock of $1 par value. Authorized 35,000 shares.
Issued and outstanding: 1996-20,459 shares; 1995-20,384 shares 20,459 20,384
Additional paid-in capital 218,650 215,121
Net unrealized investment and foreign exchange (losses) gains (5,690) 7,255
Retained earnings 320,549 282,748
Less:
Treasury stock, at cost - 93 shares in 1996 and 136 shares in 1995 (1,426) (2,516)
Unamortized restricted stock (3,674) (3,620)
Collateralization of loan to Leveraged Employee
Stock Ownership Plan (5,313) (6,375)
---------- ----------
Total common stock and other stockholders' equity 543,555 512,997
Total liabilities, common stock and other ---------- ----------
stockholders' equity $3,306,499 $2,987,734
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands except per common share data)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Gross collected premiums $601,382 $583,051
======== ========
Premiums and other revenues:
Net premiums earned $346,777 $297,119
Net investment income 28,765 24,747
Realized investment gains 4,992 131
Other income 5,454 4,210
-------- --------
Total premiums and other revenues 385,988 326,207
-------- --------
Benefits and expenses:
Net benefits, claims, losses and settlement expenses 132,159 112,391
Commissions 144,939 128,857
Operating expense 69,210 58,311
Interest expense 4,425 4,232
-------- --------
Total benefits and expenses 350,733 303,791
-------- --------
Income before taxes 35,255 22,416
-------- --------
Income tax expense (benefit):
Current 12,383 3,009
Deferred (2,188) 3,359
-------- --------
10,195 6,368
-------- --------
Net Income $ 25,060 $ 16,048
======== ========
PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA
Primary:
Net Income $ 1.19 $ .77
======== ========
Weighted average number of shares outstanding 20,972 20,786
======== ========
Fully diluted:
Net Income $ 1.19 $ .77
======== ========
Weighted average number of shares outstanding 21,047 20,850
======== ========
Dividends per common share $ .20 $ .19
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands except per common share data)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Gross collected premiums $1,206,031 $1,052,157
========== ==========
Premiums and other revenues:
Net premiums earned $ 688,631 $ 581,672
Net investment income 56,204 46,538
Realized investment gains (losses) 6,021 (1,202)
Other income 10,829 8,974
---------- ----------
Total premiums and other revenues 761,685 635,982
---------- ----------
Benefits and expenses:
Net benefits, claims, losses and settlement expenses 279,517 217,749
Commissions 272,633 248,478
Operating expense 134,867 117,972
Interest expense 8,526 7,735
---------- ----------
Total benefits and expenses 695,543 591,934
---------- ----------
Income before taxes 66,142 44,048
---------- ----------
Income tax expense:
Current 19,682 10,465
Deferred 764 2,664
---------- ----------
20,446 13,129
---------- ----------
Net Income $ 45,696 $ 30,919
========== ==========
PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA
Primary:
Net Income $ 2.18 $ 1.49
========== ==========
Weighted average number of shares outstanding 20,949 20,758
========== ==========
Fully diluted:
Net Income $ 2.18 $ 1.49
========== ==========
Weighted average number of shares outstanding 21,028 20,838
========== ==========
Dividends per common share $ .39 $ .37
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 45,696 $ 30,919
Adjustments to reconcile net income to net cash provided
by operating activities:
Change in policy liabilities, unearned premiums, claim
liabilities, reinsurance receivable and prepaid reinsurance premiums 106,755 131,768
Change in other assets and other liabilities (53,155) (2,934)
Decrease (increase) in accounts receivable 8,292 (22,479)
Increase in accrued investment income (1,016) (1,806)
Increase in accrued commission and expenses 34,664 14,615
Increase (decrease) in policyholders' funds 33 (6,292)
Increase in policy loans (302) (624)
Amortization of deferred policy acquisition costs 95,398 190,957
Amortization of cost of insurance acquired 958 1,256
Policy acquisition costs deferred (135,630) (242,751)
Provision for amortization and depreciation 4,109 6,057
Provision for deferred income taxes 764 2,664
Net (gain) loss on sale of investments (6,021) 1,202
Compensation and tax effect on stock option shares 2,108 631
Net cash flow from purchases and sales of trading securities (2,794) (564)
--------- ---------
Net cash provided by operating activities 99,859 102,619
--------- ---------
INVESTING ACTIVITIES:
Purchase of investments
Held-to-maturity securities (171,972) (94,349)
Available-for-sale securities (108,026) (198,709)
Mortgage loans - (635)
Proceeds from sale of investments
Available-for-sale securities 55,875 28,797
Mortgage loans 1,045 816
Real Estate 1,412 -
Proceeds from maturities of investments
Held-to-maturity securities 38,025 58,554
Available-for-sale securities 25,563 8,425
Increase in short-term investments (36,391) (14,580)
Transactions related to capital assets
Capital expenditures (6,027) (6,403)
Sales of capital assets 326 158
--------- ---------
Net cash used in investing activities (200,170) (217,926)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of debt 138,147 85,000
Repayment of debt (37,000) (49,000)
Dividends paid to shareholders (7,867) (7,452)
Proceeds from issuance of common stock 773 350
Purchase of treasury stock (175) (893)
--------- ---------
Net cash provided by financing activities 93,878 28,005
--------- ---------
Net decrease in cash (6,433) (87,302)
Cash at beginning of period 23,257 89,536
Rate change effect on cash flow 6 215
Cash at end of period --------- ---------
$ 16,830 $ 2,449
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 9,239 $ 6,948
Income taxes $ 15,736 $ 15,713
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
AMERICAN BANKERS INSURANCE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. Financial Statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the period ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1996. These statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report Form 10-K for the year ended December 31, 1995. Certain items have
been reclassed to conform with 1996 presentation.
2. Translation of Foreign Currencies
Unrealized foreign exchange losses, totaling $11,077,000 and $12,668,000
as of June 30, 1996 and December 31, 1995 respectively, are included in
Other Stockholders' Equity under the caption "Net unrealized investment
and foreign exchange (losses) gains."
3. Reinsurance
The Company accounts for reinsurance contracts under Financial Accounting
Standards Board's Statement 113. The Company recognizes the income on
reinsurance contracts principally on a pro-rata basis over the life of the
policies covered under the reinsurance agreements. Reinsurance
Recoverables on Unpaid Losses are included as an asset in the Balance
Sheet under the caption "Reinsurance Receivables". Ceded Unearned Premiums
are included as an asset in the Balance Sheet under the caption "Prepaid
Reinsurance Premiums".
The effect of reinsurance on premiums earned is as follows for the six
months and three months ended June 30, 1996 and 1995:
(in thousands)
Six Months Ended
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
------------- --------------
<S> <C> <C>
Direct premiums $ 1,091,700 $ 887,123
Reinsurance assumed 58,881 73,670
Reinsurance ceded (461,950) (379,121)
------------- --------------
Net premiums earned $ 688,631 $ 581,672
============= ==============
</TABLE>
(in thousands)
Three Months Ended
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
------------- ----------------
<S> <C> <C>
Direct premiums $ 553,796 $ 459,146
Reinsurance assumed 39,446 38,814
Reinsurance ceded (246,465) (200,841)
------------ ----------------
Net premiums earned $ 346,777 $ 297,119
============ ================
</TABLE>
Reinsurance ceded incurred losses for the six months ended June 30, 1996
and 1995 were $154,843,000 and $133,735,000 respectively. Reinsurance
ceded incurred losses for the three months ended June 30, 1996 and 1995
were $71,924,000 and $72,331,000 respectively.
9
<PAGE> 10
4. Commitments and Contingencies
For a comprehensive description of the Company's litigation, see Item
III of the Company's 1995 Form 10-K.
Alabama Litigation:
The Company and certain of its insurance subsidiaries are presently
parties to a number of individual consumer and class action lawsuits
pending in Alabama involving premium, rate and policy coverage issues.
While a few similar suits have been filed in other jurisdictions, the
insurance and finance industries have been targeted in Alabama by
plaintiffs' lawyers who enjoy a favorable judicial climate. The Company
typically has been named as a co-defendant with one or several retailer
or finance companies who have sold the Company's product to a consumer.
A number of other insurers are also named as co-defendants in many of
the suits.
Although these Alabama lawsuits generally involve relatively small
amounts of actual or compensatory damages, they typically assert claims
requesting substantial punitive awards. The Company denies any
wrongdoing in any of these suits and believes that it has not engaged in
any conduct that would warrant an award of punitive damages. The Company
has been advised by legal counsel that it has meritorious defenses to
all claims being asserted against it.
While no one case is necessarily significant in terms of financial risk
to the Company, the judicial climate in Alabama is such that the outcome
of these cases is extremely unpredictable. Without admitting any
wrongdoing, the Company has settled a number of these suits, but there
are still a significant number of cases pending, and it is expected that
more suits alleging essentially the same causes of action are likely to
continue to be filed during 1996. The Company intends to continue to
defend itself vigorously against all such suits and believes, based on
information currently available, that any liabilities that could result
are not expected to have a material effect on the Company's financial
position.
The Company is involved with a number of cases in the ordinary course of
business relating to insurance matters, or more infrequently, certain
corporate matters. Generally, the Company's liability is limited to
specific amounts relating to insurance or policy coverage for which
provision has been made in the financial statements. Other cases involve
general corporate matters which generally do not represent significant
contingencies for the Company.
10
<PAGE> 11
5. Segment Information
Gross collected premiums, net premiums earned and income (loss) before
federal income taxes are summarized as follows:
<TABLE>
<CAPTION>
(in thousands)
Six Months Ended
June 30,
--------
1996 1995
---- ----
<S> <C> <C>
GROSS COLLECTED PREMIUMS:
Life $ 367,374 $ 313,018
Property and Casualty 838,657 739,139
------------ ----------
Total $ 1,206,031 $1,052,157
============ ==========
NET PREMIUMS EARNED:
Life $ 197,861 $ 179,487
Property and Casualty 490,770 402,185
------------ ----------
Total $ 688,631 $ 581,672
============ ==========
INCOME (LOSS) BEFORE INCOME TAXES:
Life $ 29,735 $ 24,350
Property and Casualty 43,304 36,493
Other 1,629 (9,060)
------------ ----------
74,668 51,783
Interest Expense 8,526 7,735
------------ ----------
Total Income $ 66,142 $ 44,048
============ ==========
</TABLE>
6. Accounting for Investments
The Company accounts for its investments according to the Financial
Accounting Standards Board's Statement 115 - Accounting for Certain
Investments in Debt and Equity Securities.
This Statement addresses the accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. Those investments are to be classified
in three categories and accounted for as follows:
Held-to-Maturity - Securities for which the enterprise has the positive
intent and ability to hold to maturity. These securities are carried at
amortized cost.
Trading Securities - Securities that are bought and held principally for
the purpose of selling them in the near term. These securities are
carried at market value with the unrealized holding gain or loss included
in earnings.
Available-for-Sale - Securities not classified as trading or
held-to-maturity. These securities are carried at market value with the
unrealized holding gain or loss reported as a separate component of
equity, net of the income tax effect.
11
<PAGE> 12
The detail of Cost and Statement Value for the Fixed Maturities and Equity
Securities held at June 30, 1996 is as follows:
<TABLE>
<CAPTION>
(in thousands)
Amortized Statement
Cost Value
--------- ---------
<S> <C> <C>
Fixed Maturities
- ----------------
Held-to-Maturity Securities $ 728,708 $ 728,708
Available-for-Sale Securities 820,187 818,093
Trading Securities - -
---------- ----------
Total Fixed Maturities $1,548,895 $1,546,801
========== ==========
Net unrealized loss $ (2,094)
==========
Market
Cost Value
--------- ----------
Equity Securities
- -----------------
Held-to-Maturity Securities $ - $ -
Available-for-Sale Securities 90,052 100,487
Trading Securities - -
--------- ----------
Total Equity Securities $ 90,052 $ 100,487
========= ==========
Net unrealized gain $ 10,435
</TABLE> ==========
The net unrealized gain for "Available-for-Sale Securities" decreased by
$14,539,000 (net of $7,276,000 in deferred income taxes) from December 31, 1995
to June 30, 1996. There were no unrealized gains and losses from transfers of
Held-to-Maturity Securities.
An analysis of the realized gains and losses of the Company for the six months
ended June 30, 1996 is as follows:
<TABLE>
<S> <C>
(in thousands)
Gross realized gains from sales of Available-for-Sale
Securities $ 8,417
Gross realized losses from sales of Available-for-Sale
Securities (2,189)
----------
Net realized gain from investment activity 6,228
Net realized loss from other investment activity (207)
----------
Total realized gain $ 6,021
==========
</TABLE>
The Company uses the specific identification method to determine cost for
computing the realized gains and losses. There were no transfers of securities
from Available-for-Sale to Trading for the six months ended June 30, 1996.
12
<PAGE> 13
AMERICAN BANKERS INSURANCE GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Gross collected premiums increased $18.3 million or 3% to $601.4 million for
the three months ended June 30, 1996, from $583.1 million for the same period
of 1995 (which included a $55.3 million nonrecurring assumption of a block of
credit business from another insurer). Excluding the assumption, gross
collected premiums increased by 14% during the second quarter of 1996 as
compared to the second quarter of 1995.
During the three months ended June 30, 1996, total premiums and other revenues
were $386.0 million, an increase of $59.8 million over total premiums and other
revenues of $326.2 million for the same period in 1995. The increase includes a
$49.7 million increase in net premiums earned resulting generally from the
premium growth experienced by the Company's existing clients. The overall
growth in invested assets generated an additional $4.0 million of investment
income for the second quarter of 1996 as compared to the same period of 1995.
The increase also includes a $4.9 million increase in realized investment gains
primarily resulting from sales from the Company's equity securities portfolio.
Both the benefits and claims ratio and the operating expenses ratio remained
flat at 38% and 18%, respectively, for the three months ended June 30, 1996,
compared to the same period of 1995. However, the commissions ratio decreased
slightly from 43% for the three months ended June 30, 1995, to 42% for the same
period of 1996.
Financial Condition
Total assets at June 30, 1996, and December 31, 1995, were $3.3 billion and
$3.0 billion, respectively. Invested assets at the same date were $1.9 billion
and $1.7 billion, respectively. Approximately $80 million of the increase in
invested assets was attributable to additional borrowing under the short-term
credit facility during June 1996.
Liabilities were $2.8 billion and $2.5 billion at June 30, 1996, and at
December 31, 1995, respectively, and were primarily comprised of insurance
liabilities of $2.0 billion.
Stockholders' Equity increased $30.6 million from $513.0 million at December
31, 1995, to $543.6 million at June 30, 1996. The contribution of net income
after dividends of $37.8 million was the primary cause for the increase. This
was offset partially by an increase in the unrealized investment losses
recorded by the Company. The increase in unrealized investment losses was a
result of the impact of the declining interest rate environment on the market
values of the Company's investment portfolio.
Liquidity and Capital Resources
On June 30, 1996, $1.9 billion of securities, short-term investments and cash
comprised 57% of the Company's total assets. The securities were principally
readily marketable and did not include any significant concentration in private
placements.
The Company does not hold significant investments in equity securities;
consequently, market changes in the equity securities markets do not
significantly affect the investment portfolio.
The Company expects to continue its policy of paying regular cash dividends;
however, future dividends are dependent on the Company's future earnings,
capital requirements and financial condition. In addition, the payment of
dividends is subject to the restrictions described in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
The $100.1 million addition to Notes Payable was mainly attributable to the use
of the Company's $250 million short-term credit facility. The proceeds were
used to provide additional surplus to certain of the Company's insurance
subsidiaries to support increased premium writings. At June 30, 1996, the
Company had $188.1 million outstanding
13
<PAGE> 14
related to this agreement.
On June 28, 1996, the Company filed a Form S-3 registration statement for
2,300,000 shares of Convertible Preferred Stock with the Securities and
Exchange Commission. The shares were subsequently sold in late July 1996 and
yielded net proceeds of approximately $112 million. Proceeds of the sale of
these shares are primarily intended to be used to reduce the Company's
outstanding debt.
Private Securities Litigation Reform Act of 1995 - Safe Harbor Cautionary
Statement
Except for the historical information contained herein, certain of the matters
discussed in this quarterly report are "forward-looking statements" as defined
in the Private Securities Litigation Reform Act of 1995, which involve certain
risks and uncertainties, including but not limited to, changes in general
economic conditions, interest rates, consumer confidence, competition,
environmental factors, and governmental regulations affecting the Company's
operations. See the Company's Annual Report Form on 10-K for the year ended
December 31, 1995, for a further discussion of these and other risks and
uncertainties applicable to the Company's business.
14
<PAGE> 15
PART II
OTHER INFORMATION
15
<PAGE> 16
Item 1 - Legal Proceedings
Commitments and Contingencies information which appears on page 10 elsewhere in
this report is incorporated by reference in this item. Additional information
regarding litigation can be found in the Company's 1995 Annual Report on Form
10-K.
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Stockholders meeting was held on May 22, 1996 at the Company's
Headquarters. Proxies for the meeting were solicited pursuant to Regulation 14
under the Securities Act of 1934. The meeting involved the election of
directors. There was no solicitation in opposition to the management's
nominees as listed in the proxy statement and all of such nominees were
elected.
16
<PAGE> 1
EXHIBIT 3A
THIRD AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AMERICAN BANKERS INSURANCE GROUP, INC.
-------------------------------------------------------------------------
American Bankers Insurance Group, Inc., a corporation organized and
existing under the laws of the State of Florida, does hereby certify pursuant
to Section 607.1007, Florida Statutes, that:
1. The name of the corporation is American Bankers Insurance
Group, Inc.
2. These Third Amended and Restated Articles of Incorporation
have been duly adopted by the Board of Directors of American Bankers Insurance
Group, Inc., without shareholder action, pursuant to a written consent to
action dated as of July 16, 1996, and include amendments to Article IV
authorizing a new class of preferred stock, referred to in these Third Amended
and Restated Articles of Incorporation as $3.125 Series B Cumulative
Convertible Preferred Stock, and setting forth the rights, preferences and
limitations of such $3.125 Series B Cumulative Convertible Preferred Stock.
These amendments do not require shareholder action.
3. There are no discrepancies between the provisions of the
Corporation's Second Amended and Restated Articles of Incorporation as
heretofore amended and the provisions of these Third Amended and Restated
Articles of Incorporation other than the inclusion of the foregoing amendments
and the omission of matters of historical interest.
ARTICLE I - NAME
The name of the Corporation is American Bankers Insurance Group, Inc.
ARTICLE II - DURATION
The Corporation shall exist perpetually until dissolved according to law.
ARTICLE III - PURPOSE
The Corporation shall be authorized to exercise and enjoy all powers, rights,
and privileges granted by the laws of the State of Florida to corporations
<PAGE> 2
organized thereunder, and all the powers conferred by all acts hereafter
amendatory of or supplemental to the laws of the State of Florida.
ARTICLE IV - STATED CAPITAL
The Corporation shall be authorized to issue two classes of shares of stock to
be designated, respectively, "Common Stock" and "Preferred Stock"; the total
number of shares which the Corporation shall have authority to issue is
38,500,000; the total number of shares of Common Stock shall be 35,000,000 and
each such share shall have a par value of One Dollar ($1.00); and the total
number of shares of Preferred Stock shall be 3,500,000 and each share shall be
without par value.
Each outstanding share of Common Stock, regardless of class, shall be entitled
to one (1) vote on each matter submitted to a vote at a meeting of
shareholders. Shares of Common Stock may be issued for such consideration,
having a value not less than the par value of the shares issued therefor, as is
determined from time to time by the Board of Directors, to be paid, in whole or
in part, in cash or other property, tangible or intangible, or in labor or then
services actually performed for the Corporation. Shares of Common Stock may
not be issued until the full amount of the consideration therefor has been
paid. Thereafter, such shares shall be deemed to be paid and non-assessable.
The shares of Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is expressly vested with authority to fix by
resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations and restrictions thereof, including, without limitation the voting
powers, if any, the dividend rate, conversion rights, redemption price, or
liquidation preference, of any series of shares of Preferred Stock, and to fix
the number of shares constituting any such series, and to increase or decrease
the number of shares of any such series (but not below the number of shares
thereof then outstanding). In case the number of shares of any such series
shall be so decreased, the shares constituting such decrease shall resume the
status which they had prior to the adoption of the resolution or resolutions
originally fixing the number of shares of such series."
<PAGE> 3
SERIES A PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Preferred Stock." The shares
constituting such series shall be without par value. The number of shares
constituting such series shall be 350,000.
Section 2. Dividends and Distribution.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
last day of March, June, September, and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Participating Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $3.125 or
(b) subject to the provisions for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $1.00 per share, of the
Corporation, (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Participating Preferred Stock. In the event the Corporation shall at any time
after February 24, 1988 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during
<PAGE> 4
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $3.125 per share on the Series A
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Participating Preferred Stock, unless (i) the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or (ii) the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders of
shares of Series A Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Participating
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the shareholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided by the Third Amended and Restated
Articles of Incorporation of the Corporation, or by law, the holders of shares
of
<PAGE> 5
Series A Participating Preferred Stock and the holders of shares of Common
Stock (and any other capital stock of the Corporation at the time entitled
thereto) shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(C) Except as set forth herein, holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on a Series A Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Series A Participating
Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating Preferred
Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Participating Preferred Stock, except
in accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon
<PAGE> 6
such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Re-acquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding-Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Participating
Preferred Stock shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
paragraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii)
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Participating Preferred Stock and Common Stock,
respectively, holders of Series A Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
one (1) with respect to such Series A Participating Preferred Stock and Common
Stock, on a per share basis, respectively.
<PAGE> 7
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment
<PAGE> 8
of dividends and the distribution of assets, unless the terms of any such
series shall provide otherwise.
Section 10. Amendment. The Third Amended and Restated Articles of
Incorporation of the Corporation, any further amendments thereto, and any
certificate amendatory thereof or supplemental thereto shall not be amended or
further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Participating Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of such percentage of the outstanding shares of Series A Participating
Preferred Stock, voting separately as a class, as may be required under (i) the
Florida General Corporation Act or (ii) the Third Amended and Restated Articles
of Incorporation of the Corporation, whichever requires a greater percentage.
Section 11. Fractional Shares. Series A Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.
$3.125 SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
Section I: Designation of Series and Number of Shares to be Initially
Issuable Therein. This series of Preferred Stock shall be designated "$3.125
Series B Cumulative Convertible Preferred Stock" (hereinafter called the
"Convertible Preferred Stock"), no par value, of which 2,300,000 shares shall
be initially issuable.
Section II: Rank. All shares of Convertible Preferred Stock shall
rank prior, both as to payment of dividends and as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, to all Junior Stock.
Section III. Dividends. The holders of Convertible Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds at the time legally available therefor, dividends at the
rate of $3.125 per annum per share, and no more, which shall be fully
cumulative, shall accrue without interest from the date of initial issuance of
such shares of Convertible Preferred Stock (on a daily basis whether or not
such amounts would be available at that time for distribution to holders of
shares of Convertible Preferred Stock) and shall be payable in cash quarterly
in arrears on February 1, May 1, August 1 and November 1 of each year
commencing November 1, 1996 (with respect to the period from such date of
initial issuance to November 1, 1996) (except that if any such date is not a
Business Day, then such dividend shall be payable on the next Business Day) to
holders of record as they appear upon the stock transfer books of the
Corporation on such record dates,
<PAGE> 9
not more than sixty days nor less than ten days preceding the payment dates for
such dividends, as are fixed by the Board of Directors (or, to the extent
permitted by applicable law, a duly authorized committee thereof). In no event
shall any such dividend record date be fixed less than (a) six Business Days
prior to any date fixed for the redemption of the Convertible Preferred Stock
or (b) with respect to the dividend payment date occurring on August 1, 2000
less than ten Business Days prior to any date fixed for such redemption.
Subject to the next paragraph of this Section III, dividends on account of
arrears for any past dividend period may be declared and paid at any time,
without reference to any regular dividend payment date. The amount of dividends
payable per share of Convertible Preferred Stock for each quarterly dividend
period shall be computed by dividing the annual dividend amount by four. The
amount of dividends payable for the initial dividend period and any period
shorter than a full quarterly period shall be computed on the basis of a
360-day year of twelve 30-day months. No interest shall be payable in respect
of any dividend payment on the Convertible Preferred Stock which may be in
arrears.
No dividends or other distributions, other than dividends payable
solely in shares of Junior Stock, shall be declared, paid or set apart for
payment on shares of Junior Dividend Stock, unless and until all accrued and
unpaid dividends on the Convertible Preferred Stock for all dividend payment
periods ending on or before the payment date of such dividends or other
distributions on Junior Dividend Stock shall have been paid or declared and set
apart for payment.
No payment on account of the purchase, redemption, retirement or other
acquisition of shares of Junior Dividend Stock or Junior Liquidation Stock
shall be made unless and until all accrued and unpaid dividends on the
Convertible Preferred Stock for all dividend payment periods ending on or
before such payment for such Junior Dividend Stock or Junior Liquidation Stock
shall have been paid or declared and set apart for payment; provided, however,
that the restrictions set forth in this sentence shall not apply to the
purchase, redemption, retirement, or other acquisition of Junior Dividend Stock
or Junior Liquidation Stock either (A) pursuant to any employee or director
incentive or benefit plan or arrangement (including any employment, severance
or consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted or (B) in exchange solely for
Junior Stock.
No full dividends shall be declared, paid or set apart for payment on
shares of Parity Dividend Stock for any period unless full cumulative dividends
have been, or contemporaneously are, paid or declared and set apart for such
payment on the Convertible Preferred Stock for all dividend payment periods
ending on or before the payment date of such dividends on Parity Dividend
Stock. No dividends shall be paid on Parity Dividend Stock except on dates on
which dividends are paid on the Convertible Preferred Stock. All dividends
paid
<PAGE> 10
or declared and set apart for payment on the Convertible Preferred Stock and
the Parity Dividend Stock shall be paid or declared and set apart for payment
pro rata so that the amount of dividends paid or declared and set apart for
payment per share on the Convertible Preferred Stock and the Parity Dividend
Stock on any date shall in all cases bear to each other the same ratio that
accrued and unpaid dividends to the date of payment on the Convertible
Preferred Stock and the Parity Dividend Stock bear to each other.
No payment on account of the purchase, redemption, retirement or other
acquisition of shares of Junior Stock, Parity Dividend Stock or Parity
Liquidation Stock shall be made, and, other than dividends to the extent
permitted by the preceding paragraph, no distributions shall be declared, paid
or set apart for payment on shares of Parity Dividend Stock or Parity
Liquidation Stock, unless and until all accrued and unpaid dividends on the
Convertible Preferred Stock for all dividend payment periods ending on or
before such payment for, or the payment date of such distributions on, such
Parity Dividend Stock or Parity Liquidation Stock shall have been paid or
declared and set apart for payment; provided, however, that the restrictions
set forth in this sentence shall not apply to the purchase, redemption,
retirement, or other acquisition of Parity Dividend Stock or Parity Liquidation
Stock either (A) pursuant to any employee or director incentive or benefit plan
or arrangement (including any employment, severance or consulting agreement) of
the Corporation or any subsidiary of the Corporation hereafter adopted or (B)
in exchange solely for Junior Stock.
Any reference to "distribution" contained in this Section III shall
not be deemed, except as expressly stated, to include any distribution made in
connection with any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
Section IV. Liquidation Preference. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of shares of Convertible Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution to
shareholders an amount equal to the dividends accrued and unpaid on such shares
on the date of final distribution to such holders, whether or not declared,
without interest, plus a sum equal to $50 per share, and no more, before any
payment shall be made or any assets distributed to the holders of shares of
Junior Liquidation Stock; provided, however, that such rights shall accrue to
the holders of shares of Convertible Preferred Stock only with respect to
assets (if any) remaining after the Corporation's payment obligations with
respect to the liquidation preferences of the shares of any class or series of
the Corporation's capital stock hereafter issued ranking prior to the
Convertible Preferred Stock as to distributions of assets upon such
liquidation, dissolution or winding up ("Senior Liquidation Stock") are fully
met. The entire assets of the Corporation available for distribution to
shareholders after the liquidation preferences of the shares of Senior
Liquidation Stock are fully met shall be distributed ratably
<PAGE> 11
among the holders of the Convertible Preferred Stock and any Parity Liquidation
Stock in proportion to the respective preferential amounts to which each is
entitled (but only to the extent of such preferential amounts). After payment
in full of the liquidation preferences of the share of the Convertible
Preferred Stock, the holders of such shares shall not be entitled to any
further participation in any distribution of assets by the Corporation. The
voluntary sale, lease, exchange or transfer of all or substantially all of the
Company's property or assets to, or its consolidation or merger with one or
more corporations shall not be deemed to be considered a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation.
Section V. Redemption at Option of the Corporation. The Convertible
Preferred Stock may not be redeemed by the Corporation prior to August 7, 2000.
On and after such date, the Convertible Preferred Stock may be redeemed by the
Corporation, at its option on any date set by the Board of Directors, in whole
or in part at any time, subject to the limitations, if any, imposed by the
Florida Business Corporation Act, for an amount in cash equal to the Redemption
Price.
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall designate by lot, or in such
other manner as the Board of Directors may determine to be fair, the shares to
be redeemed, or shall effect such redemption pro rata. Notwithstanding the
foregoing, the Corporation shall not redeem less than all of the Convertible
Preferred Stock at any time outstanding until all dividends accrued and in
arrears upon all Convertible Preferred Stock then outstanding shall have been
paid in full for all past dividend periods.
Not more than ninety nor less than thirty days prior to the date fixed
for redemption by the Board of Directors, notice thereof by first class mail,
postage prepaid, shall be given to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, addressed to such holders at their
last addresses as shown upon the stock transfer books of the Corporation. Each
such notice of redemption shall specify the date fixed for redemption, the
Redemption Price, the place or places of payment, that payment will be made
upon presentation and surrender of the shares of Convertible Preferred Stock,
that on and after the date fixed for redemption dividends will cease to accrue
on such shares, the then-effective conversation price pursuant to Section VI,
and that the right of holders to convert shares of Convertible Preferred Stock
shall terminate at 5:00 p.m. New York City time on the Business Day prior to
the date fixed for redemption and if such conversion right is not exercised
prior to such time, such conversion right will be lost (unless the Corporation
defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of shares of
<PAGE> 12
Convertible Preferred Stock receives such notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Convertible Preferred Stock. On or after
the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption shall surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price. If less than
all the shares evidenced by any such surrendered certificate are redeemed, a
new certificate shall be issued evidencing the unredeemed shares.
No fractional shares of Convertible Preferred Stock shall be issued
upon redemption of less than all Convertible Preferred Stock. If more than one
certificate evidencing shares of Convertible Preferred Stock shall be held at
one time by the same holder, the number of full shares issuable upon redemption
of less than all of such shares of Convertible Preferred Stock shall be
computed on the basis of the aggregate number of shares of Convertible
Preferred Stock so held. Instead of any fractional share of Convertible
Preferred Stock that would otherwise be issuable to a holder upon redemption of
less than all shares of Convertible Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional share in an amount equal to the
same fraction of the fair value per share of Convertible Preferred Stock (as
determined in good faith by the Board of Directors or in any manner prescribed
by the Board of Directors) at the close of business on the date fixed for
redemption.
Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Convertible Preferred Stock, then, notwithstanding that the certificates
evidencing any shares so called for redemption shall not have been surrendered,
dividends with respect to the shares so called shall cease to accrue on and
after the date fixed for redemption, such shares shall no longer be deemed
outstanding, the holders thereof shall cease to be shareholders of the
Corporation and all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall
terminate. If funds legally available for such purpose are not sufficient for
redemption of the shares of Convertible Preferred Stock which were to be
redeemed, then the certificates evidencing such shares shall be deemed not to
be surrendered, such shares shall remain outstanding, and the right of holders
of shares of Convertible Preferred Stock thereafter shall continue to be only
those of a holder of shares of the Convertible Preferred Stock.
Upon an optional redemption by the Corporation, if at any time the
Corporation does not pay amounts sufficient to redeem all Convertible Preferred
<PAGE> 13
Stock, then such funds which are paid shall be applied to redeem such shares of
Convertible Preferred Stock as the Corporation may designate by lot or in such
other manner as the Board of Directors may determine to be fair, or such
redemption shall be effected pro rata.
The shares of Convertible Preferred Stock shall not be subject to the
operation of any mandatory purchase, retirement or sinking fund.
Section VI. Conversion Privilege.
(a) Right of Conversion. Each share of Convertible Preferred Stock
shall be convertible at the option of the holder thereof, at any time prior to
the 5:00 p.m. New York City time on the Business Day prior to the date fixed
for redemption of such share as herein provided, into fully paid and
nonassessable shares of Common Stock, at the rate of that number of shares of
Common Stock for each full share of Convertible Preferred Stock that is equal
to $50 divided by the conversion price applicable per share of Common Stock, or
into such additional or other securities, cash or property and at such other
rates as required in accordance with the provisions of this Section VI. For
purposes of this resolution, the "conversion price" applicable per share of
Common Stock shall initially be equal to $50.065 and shall be adjusted from
time to time in accordance with the provisions of this Section VI.
(b) Conversion Procedures. Any holder of shares of Convertible
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates evidencing such shares of Convertible
Preferred Stock at the office of the transfer agent for the Convertible
Preferred Stock, which certificate or certificates, if the Corporation shall so
require, shall be duly endorsed to the Corporation or in blank, or accompanied
by proper instruments of transfer to the Corporation or in blank, accompanied
by irrevocable written notice to the Corporation that the holder elects so to
convert such shares of Convertible Preferred Stock and specifying the name or
names (with address or addresses) in which a certificate or certificates
evidencing shares of Common Stock are to be issued.
No payments or adjustments in respect of dividends on shares of Convertible
Preferred Stock surrendered for conversion or on account of any dividend on
the Common Stock issued upon conversion shall be made upon the conversion of
any shares of Convertible Preferred Stock; provided, however, that:
(i) if a dividend record date fixed for the Convertible Preferred
Stock as established herein results in a holder who undertakes
conversion being eligible to receive on any dividend payment date both
a dividend on the Convertible Preferred Stock and a dividend on the
Common Stock issued
<PAGE> 14
upon conversion thereof, then such holder shall be entitled to receive
only the higher of such dividend amounts; and
(ii) if the Corporation shall, by dividend or otherwise, declare
or make a distribution on its Common Stock referred to in Section
VI(c)(iv) or VI(c)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section VI(c)(iv)),
the holder of each share of Convertible Preferred Stock, upon the
conversion thereof subsequent to the close of business on the date
fixed for the determination of shareholders entitled to receive such
distribution and prior to the effectiveness of the conversion price
adjustment in respect of such distribution, shall also be entitled to
receive for each share of Common Stock into which such share of
Convertible Preferred Stock is converted, the portion of the shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share
of Common Stock; provided, however, that at the election of the
Corporation (whose election shall be evidenced by a resolution of the
Board of Directors) with respect to all holders so converting, the
Corporation may, in lieu of distributing to such holder any portion of
such distribution not consisting of cash or securities of the
Corporation, pay such holder an amount in cash equal to the fair market
value thereof (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution
of the Board of Directors). If any conversion of a share of
Convertible Preferred Stock described in the immediately preceding
sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of the share of Convertible
Preferred Stock so converted is entitled to receive in accordance with
the immediately preceding sentence, the Corporation may elect (such
election to be evidenced by a resolution of the Board of Directors) to
distribute to such holder a due bill for the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such holder is so entitled, provided that such
due bill (i) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock
is then traded and (ii) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash or assets no later than the date of payment or
delivery thereof to holders of shares of Common Stock receiving such
distribution.
The Corporation shall, as soon as practicable after such deposit of
certificates evidencing shares of Convertible Preferred Stock accompanied by
the written notice and compliance with any other conditions herein contained,
deliver at such office of such transfer agent to the person for whose account
such shares of Convertible Preferred Stock were so surrendered, or to the
nominee or nominees of such person, certificates evidencing the number of full
<PAGE> 15
shares of Common Stock to which such person shall be entitled as aforesaid,
together with a cash adjustment in respect of any fraction of a share of Common
Stock as hereinafter provided. Such conversion shall be deemed to have been
made as of the date of such surrender of the shares of Convertible Preferred
Stock to be converted, and the person or persons entitled to receive the Common
Stock deliverable upon conversion of such Convertible Preferred Stock shall be
treated for all purposes as the record holder or holders of such Common Stock
on such date.
(c) Adjustment of Conversion Price. The conversion price at which a
share of Convertible Preferred Stock is convertible into Common Stock shall be
subject to adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall
pay or make a dividend or other distribution on any other class or
series of capital stock of the Corporation which dividend or
distribution includes Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such conversion
price by: A/(A + B), where:
A = the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination; and
B = the total number of shares of Common Stock constituting
such dividend or other distribution,
such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination.
For purposes of this subparagraph (i), the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Corporation. The Corporation shall not pay any
dividend or make any distribution on shares of Common Stock held in
the treasury of the Corporation.
(ii) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or
shall otherwise issue to all holders of its Common Stock, rights or
warrants entitling the holders thereof to subscribe for or purchase
shares of Common Stock at a price per share less than the Current
Market Price Per Share of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of business on
the day
<PAGE> 16
following the date fixed for such determination shall be reduced by multiplying
such conversion price by: (A + B)/(A + C), where:
A = the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination,
B = the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would
purchase at such Current Market Price Per Share, and
C = the number of shares of Common Stock so offered for
subscription or purchase,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination.
In case any rights or warrants referred to in this subparagraph (ii) in respect
of which an adjustment shall have been made shall expire unexercised within 45
days after the shares shall have been distributed or issued by the Corporation
the conversion price shall be readjusted at the time of such expiration to the
conversion price that would have been in effect if no adjustment had been made
on account of the distribution or issuance of such expired rights or warrants.
For the purposes of this Section VI(c)(ii), if both (A) a Distribution Date (as
defined in Section 3(a) of the Rights Agreement) and (B) an event set forth in
Section 11(a)(ii) or 13(a) of the Rights Agreement shall have occurred, then
the later to occur of such events shall be deemed to constitute an issuance of
rights to purchase shares of the related common stock.
(iii) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as
the case may be, to become effective immediately after the opening of business
on the day following the day upon which such subdivision or combination becomes
effective.
<PAGE> 17
(iv) In case the Corporation shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares of any
class or series of capital stock, cash or assets (including securities, but
excluding any rights or warrants referred to in subparagraph (ii) of this
Section VI(c), any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in subparagraph (i) of this Section
VI(c)), the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect immediately
prior to the effectiveness of the conversion price reduction contemplated by
this subparagraph (iv) by: (A - B)/A, where:
A = the Current Market Price Per Share of the Common Stock
on the date fixed for the payment of such distribution (the
"Reference Date"), and
B = the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidence of indebtedness,
shares of capital stock, cash and assets so distributed
applicable to one share of Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the Reference Date, provided, however, that for purposes
of this subparagraph (iv), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution of
the evidences of indebtedness, cash, assets or shares of capital stock other
than such shares of Common Stock or rights or warrants (making any further
conversion price reduction required by this subparagraph (iv)) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (making any further conversion price reduction required
by subparagraph (i) or (ii) of this Section VI(c), except (A) the Reference
Date of such dividend or distribution as defined in this subparagraph (iv)
shall be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution", "the date fixed for
the determination of shareholders entitled to receive such rights or warrants"
and "the date fixed for such determination" within the meaning of subparagraph
(i) and (ii) of this Section VI(c) and (B) any shares of Common Stock included
in such dividend or distribution shall not be deemed "outstanding at the close
of business on the date fixed for such determination" within the meaning of
subparagraph (i) of this Section VI(c)). If the Board of Directors determines
the fair market value
<PAGE> 18
of any distribution for purposes of this subparagraph (iv) by reference to the
actual or when issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price Per Share of Common
Stock.
(v) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding (A) cash that
is part of the distribution referred to in (iv) above and, (B) in the case of
any quarterly cash dividend on the Common Stock, the portion thereof that does
not exceed the per share amount of the next preceding quarterly cash dividend
on the Common Stock (as adjusted to appropriately reflect any of the events
referred to in subparagraph (i), (ii), (iii), (iv) and (v) of this Section
VI(c)), or all of such quarterly cash dividend if the amount thereof per share
amount of Common Stock multiplied by four does not exceed 15% of the Current
Market Price Per Share of the Common Stock on the Trading Day next preceding
the date of declaration of such dividend), the conversion price shall be
reduced so that the same shall equal the conversion price in effect immediately
prior to the effectiveness of the conversion price reduction contemplated by
this subparagraph (v) by: (A - B)/A, where:
A = the Current Market Price Per Share of the Common Stock
on the date fixed for the payment of such distribution, and
B = the amount of cash so distributed and not excluded as
provided above applicable to one share of Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the date fixed for the payment of such distribution.
(vi) No adjustment in the conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this subparagraph (vi) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(vii) Whenever the conversion price is adjusted as herein provided: (1) the
Corporation shall compute the adjusted conversion price and shall prepare a
certificate signed by the Treasurer of the Corporation setting forth the
adjusted conversion price and showing in reasonable detail the facts upon which
such adjustment in based, and such certificate shall forthwith be filed with
the transfer agent for the Convertible Preferred
<PAGE> 19
Stock; and (2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Corporation to all record
holders of shares of Convertible Preferred Stock at their last
addresses as they shall appear upon the stock transfer books of the
Corporation.
(viii) The Corporation from time to time may reduce the conversion
price by any amount for any period of time if the period is at least
twenty days, the reduction is irrevocable during the period and the
Board of Directors of the Corporation shall have made a determination
that such reduction would be in the best interest of the Corporation,
which determination shall be conclusive. Whenever the conversion price
is reduced pursuant to the preceding sentence, the Corporation shall
mail to holders of record of the Convertible Preferred Stock a notice
of the reduction at least fifteen days prior to the date the reduced
conversion price takes effect, and such notice shall state the reduced
conversion price and the period it will be in effect.
(d) No Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Convertible Preferred Stock. If more than one
certificate evidencing shares of Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Convertible Preferred Stock so surrendered.
Instead of any fractional share of Common Stock that would otherwise be
issuable to a holder upon conversion of any shares of Convertible Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such
fractional share in an amount equal to the same fraction of the market price
per share of Common Stock (as determined by the Board of Directors or in any
manner prescribed by the Board of Directors, which, so long as the Common Stock
is listed on the New York Stock Exchange or quoted on the Nasdaq National
Market System, shall be the reported last sale price regular way) at the close
of business on the day of conversion.
(e) Reclassification, Consolidation, Merger or Sale of Assets. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination of
the Common Stock), any consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another person into the
Corporation (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Corporation), any sale or transfer of all or substantially all of the
assets of the Corporation or any share exchange) pursuant to which the Common
<PAGE> 20
Stock is converted into the right to receive other securities, cash or other
property, then lawful provisions shall be made as part of the terms of such
transaction whereby the holder of each share of Convertible Preferred Stock
then outstanding shall have the right thereafter to convert such share only
into (i) in the case of any such transaction other than a Common Stock
Fundamental Change and subject to funds being legally available for such
purpose under applicable law at the time of such conversion, the kind and
amount of securities, cash and other property receivable upon such transaction
by a holder of the number of shares of Common Stock of the Corporation into
which such share of Convertible Preferred Stock might have been converted
immediately prior to such transaction, after giving effect, in the case of any
Non-Stock Fundamental Change, to any adjustment in the conversion price
required by the provisions of Section VI(h), and (ii) in the case of a Common
Stock Fundamental Change, common stock of the kind received by holders of
Common Stock as a result of such Common Stock Fundamental Change in an amount
determined pursuant to the provisions of Section VI(h). The Corporation or the
person formed by such consolidation or resulting from such merger or which
acquires such assets or which acquires the Corporation's shares, as the case
may be, shall make provisions in its certificate or articles of incorporation
or other constituent document to establish such right. Such certificate or
articles of incorporation or other constituent document shall provide for
adjustments which, for events subsequent to the effective date of such
certificate or articles of incorporation or other constituent document, shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section VI. The above provisions shall similarly apply to successive
transactions of the foregoing type.
(f) Reservation of Shares; Etc. The Corporation shall at all times
reserve and keep available, free from preemptive rights out of its authorized
and unissued stock, solely for the purpose of effecting the conversion of the
Convertible Preferred Stock, such number of shares of its Common Stock as shall
from time to time be sufficient to effect that conversion of all shares of
Convertible Preferred Stock from time to time outstanding. The Corporation
shall from time to time, in accordance with the laws of the State of Florida,
in good faith and as expeditiously as possible endeavor to cause the authorized
number of shares of Common Stock to be increased if at any time the number of
shares of authorized and unissued Common Stock shall not be sufficient to
permit the conversion of all the then-outstanding shares of Convertible
Preferred Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the Convertible Preferred Stock hereunder require registration
with or approval of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved as the case may be. If the Common Stock is listed on
the New York Stock Exchange or any other national securities exchange or
<PAGE> 21
traded through the Nasdaq National Market, the Corporation will, if permitted
by the rules of such exchange or market, list and keep listed on such exchange
or make and keep eligible for trading on such market (as the case may be), upon
official notice of issuance, all shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock; provided, however, that such
shares of Common Stock may be delisted from such exchange or may cease to be
eligible for trading through such market (as the case may be) if, prior to or
concurrent with such delisting or cessation of eligibility for trading, the
Corporation causes such shares of Common Stock to be listed on or eligible for
trading through any other such exchange or market.
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable
in shares of Common Stock or (B) a dividend payable in cash out of its
retained earnings other than any special or nonrecurring or other
extraordinary dividend or (2) declare or authorize a redemption or
repurchase of in excess of 10% of the then-outstanding shares of
Common Stock; or
(ii) the Corporation shall authorize the granting to all holders
of Common Stock of rights or warrants to subscribe for or purchase
any shares of stock of any class or series or of any other rights or
warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the
Corporation is a party and for which approval of any shareholders of
the Corporation shall be required, or of the sale or transfer of all
or substantially all of the assets of the Corporation or of any share
exchange whereby the Common Stock is converted into other securities,
cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Convertible Preferred Stock, and shall cause to be mailed to the holders of
record of the Convertible Preferred Stock, at their last addresses as they
shall appear upon the stock transfer books of the Corporation, at least ten
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, redemption, repurchase, rights or
warrants or, if a record
<PAGE> 22
is not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective 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, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the
validity of the corporate action required to be specified in such notice).
(h) Adjustments in Case of Fundamental Changes. Notwithstanding any
other provision in this Section VI to the contrary, if any Fundamental Change
occurs, then the conversion price in effect will be adjusted immediately after
such Fundamental Change as described below. In addition, in the event of a
Common Stock Fundamental Change, each share of Convertible Preferred Stock
shall be convertible solely into common stock of the kind received by holders
of Common Stock as the result of such Common Stock Fundamental Change.
For purposes of calculating any adjustment to be made pursuant to this
Section VI(h) in the event of a Fundamental Change, immediately after such
Fundamental Change:
(i) In the case of a Non-Stock Fundamental Change, the conversion
price of the Convertible Preferred Stock shall thereupon become
the lower of (1) the conversion price in effect immediately prior to
such Non-Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to this Section VI, and (2)
the result of A x $50/B, where:
A = the greater of the Applicable Price or the then
applicable Reference Market Price, and
B = (x) the then-current Redemption Price per share of
Convertible Preferred Stock or (y) for any Non-Stock Fundamental
Change that occurs before the Convertible Preferred Stock becomes
redeemable by the Corporation pursuant to Section V, the
applicable price per share set forth for the date of such
Non-Stock Fundamental Change in the following table:
<PAGE> 23
DATE OF NON-STOCK FUNDAMENTAL CHANGE PRICE
<TABLE>
<S> <C>
After date of original issuance of Convertible
Preferred Stock and on or before August 6, 1997 . . . . . . . . . . . . . . . . $53.13
After August 7, 1997 and on or before August 6, 1998 . . . . . . . . . . . . . . . $52.81
After August 7, 1998 and on or before August 6, 1999 . . . . . . . . . . . . . . . $52.50
After August 7, 1999 and on or before August 6, 2000 . . . . . . . . . . . . . . . $52.19
</TABLE>
plus, in any case referred to in this clause (y), an amount equal to
all per share dividends on the Convertible Preferred Stock accrued and
unpaid thereon, whether or not declared, to but excluding the date of
such Non-Stock Fundamental Change; and
(ii) In the case of a Common Stock Fundamental Change, the
conversion price of the Convertible Preferred Stock in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to this
Section VI, shall thereupon be adjusted by multiplying such conversion
price by a fraction of which the numerator shall be the Purchaser
Stock Price and the denominator shall be the Applicable Price;
provided, however, that in the event of a Common Stock Fundamental
Change in which (A) 100% by value of the consideration received by a
holder of Common Stock is common stock of the successor, acquiror or
other third party (and cash, if any, is paid with respect to any
fractional interests in such common stock resulting from such Common
Stock Fundamental Change) and (B) all of the Common Stock shall have
been exchanged for, converted into or acquired for common stock (and
cash with respect to fractional interests) of the successor, acquiror
or other third party, the conversion price of the Convertible
Preferred Stock in effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by dividing such
conversion price by the number of shares of common stock of the
successor, acquiror, or other third party received by a holder of one
share of Common Stock as a result of such Common Stock Fundamental
Change.
(i) Dividend or Interest Reinvestment Plans. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant to
any plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in shares of Common Stock under any such plan, and the issuance of any shares
of Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security
<PAGE> 24
outstanding as of the date the Convertible Preferred Stock was first designated
(except as expressly provided in Section VI(c)(ii) with respect to certain
events under the Rights Agreement), and any issuance of Rights, shall not be
deemed to constitute an issuance of Common Stock or exercisable, exchangeable
or convertible securities by the Corporation to which any of the adjustment
provisions described above applies. There shall also be no adjustment of the
conversion price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Corporation except as
specifically described in this Section VI. If any action would require
adjustment of the conversion price pursuant to more than one of the provisions
described above, only one adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value to holders of
Convertible Preferred Stock.
(j) Series A Preferred Stock Purchase Rights. So long as Rights are
attached to the outstanding shares of Common Stock of the Corporation, each
share of Common Stock issued upon conversion of the shares of Convertible
Preferred Stock prior to the earliest of any Distribution Date (as defined in
Section 3(a) of the Rights Agreement), the date of redemption of the Rights or
the date of expiration of the Rights shall be issued with Rights in an amount
equal to the amount of Rights then attached to each such outstanding share of
Common Stock.
Section VII. Voting Rights.
(a) General. The holders of shares of Convertible Preferred Stock
shall not have any voting rights except as set forth below or as otherwise from
time to time required by law. In connection with any right to vote, each
holder of a share of Convertible Preferred Stock shall have one vote for each
share held. Any shares of Convertible Preferred Stock owned, directly or
indirectly, by any entity of which the Corporation owns, directly or
indirectly, a majority of the shares entitled to vote for directors, shall not
have voting rights hereunder and shall not be counted in determining the
presence of a quorum.
So long as any shares of the Corporation's Convertible Preferred Stock
are outstanding, the Corporation will not, without the affirmative vote or
consent of the holders of at least 66 2/3% of the outstanding shares of
Convertible Preferred Stock and outstanding Parity Dividend Stock, voting or
consenting (as the case may be) as a single class (i) amend, alter or repeal
(by merger or otherwise) any provision of the Corporation's Third Amended and
Restated Articles of Incorporation, as may be amended or restated from time to
time, or the by-laws so as to affect adversely the relative rights,
preferences, qualifications, limitations or restrictions of the Convertible
Preferred Stock or (ii) effect any reclassification of the Convertible
Preferred Stock.
<PAGE> 25
(b) Default Voting Rights. Notwithstanding any other provision of the
Corporation's Third Amended and Restated Articles of Incorporation, whenever
dividends on the Convertible Preferred Stock or any other class or series of
Parity Dividend Stock shall be in arrears in an aggregate amount equal to at
least six quarterly dividends (whether or not consecutive), (i) the number of
members of the Board of Directors of the Corporation shall be increased by two,
effective as the time of election of such directors as hereinafter provided and
(ii) the holders of shares of Convertible Preferred Stock (voting separately as
a class with all other affected classes or series of Parity Dividend Stock upon
which like voting rights have been conferred and are exercisable) shall have
the exclusive right to vote for and elect such two additional directors of the
Corporation who shall continue to serve during the period such dividends remain
in arrears. The right of the holders of shares of Convertible Preferred Stock
to vote for such two additional directors shall terminate when all accrued and
unpaid dividends on the Convertible Preferred Stock and all other affected
classes or series of Parity Dividend Stock have been declared and paid or set
apart for payment. The term of office of all directors so elected shall
terminate immediately upon the termination of the right of the holders of
shares of Convertible Preferred Stock and such Parity Dividend Stock to vote
for such two additional directors, and the number of directors of the Board of
Directors of the Corporation shall immediately thereafter be reduced by two.
The foregoing right of the holders of shares of Convertible Preferred
Stock with respect to the election of two directors may be exercised at any
annual meeting of shareholders or at any special meeting of shareholders held
for such purpose. If the right to elect directors shall have accrued to the
holders of shares of Convertible Preferred Stock more than ninety days
preceding the date established for the next annual meeting of stockholders, the
President of the Corporation shall, within twenty days after the delivery to
the Corporation at its principal office of a written request for a special
meeting signed by the holders of at least 10% of all outstanding shares of
Convertible Preferred Stock, call a special meeting of the holders of
Convertible Preferred Stock to be held within sixty days after the delivery of
such request for the purpose of electing such additional directors.
Notwithstanding any other provision of the Corporation's Third Amended
and Restated Articles of Incorporation, the holders of shares of Convertible
Preferred Stock and any Parity Dividend Stock referred to above voting as a
class shall have the right to remove, without cause and at any time, and
replace any directors such holders shall have elected pursuant to this Section
VII.
Section VIII. Outstanding Shares. For purposes of this amendment, all
shares of Convertible Preferred Stock issued by the Corporation shall be deemed
outstanding except (i) from the date fixed for redemption pursuant to Section
V, all shares of Convertible Preferred Stock that have been so called for
<PAGE> 26
redemption under Section V, to the extent provided thereunder; (ii) from the
date of surrender of certificates evidencing shares of Convertible Preferred
Stock, all shares of Convertible Preferred Stock converted into Common Stock;
and (iii) from the date of registration of transfer, all shares of Convertible
Preferred Stock owned, directly or indirectly, by any entity of which the
Corporation owns, directly or indirectly, a majority of the shares entitled to
vote for directors.
Section IX. Miscellaneous.
(a) Whenever possible, each provision hereof shall be interpreted in a
manner as to be effective and valid under applicable law, but if any provision
hereof is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine that
a provision hereof would be valid or enforceable if a period of time were
extended or shortened or a particular percentage were increased or decreased,
then such court may make such change as shall be necessary to render the
provision in question effective and valid under applicable law.
(b) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in request of any issuance or
delivery of shares of Convertible Preferred Stock or shares of Common Stock or
other securities issued on account of Convertible Preferred Stock pursuant
hereto or certificates or instruments evidencing such shares or securities.
The Corporation shall not, however, be required to pay any such tax which may
be payable in respect of any transfer involved in the issuance or delivery of
shares of Convertible Preferred Stock or Common Stock or other securities in a
name other than that in which the shares of Convertible Preferred Stock with
respect to which such shares or other securities are issued or delivered were
registered, or in respect of any payment to any person with respect to any such
shares or securities other than a payment to the registered holder thereof, and
shall not required to make any such issuance, delivery or payment unless and
until the person otherwise entitled to such issuance, delivery or payment has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid or is not payable.
(c) In the event that a holder of shares of Convertible Preferred
Stock shall not by written notice designate the name in which shares of Common
Stock to be issued upon conversion of such shares should be registered or to
whom payment upon redemption of shares of Convertible Preferred Stock should be
made or the address to which the certificates or instruments evidencing such
shares
<PAGE> 27
or such payment should be sent, the Corporation shall be entitled to register
such shares and make such payment, in the name of the holder of such
Convertible Preferred Stock as shown on the records of the Corporation and to
send the certificates or instruments evidencing such shares or such payment, to
the address of such holder shown on the records of the Corporation.
Section X. Definitions. The following definitions shall apply to
terms used in connection with the Convertible Preferred Stock:
a. "Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by the holder of one share of Common Stock and (ii)
in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily Closing Prices of the Common Stock
for the ten consecutive Trading Days prior to and including the record date for
the determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change, or, if there is no such
record date, the date upon which the holders of the Common Stock shall have the
right to receive such cash, securities, property or other assets, in each case,
as adjusted in good faith by the Board of Directors of the Corporation to
appropriately reflect any of the events referred to in subparagraphs (i), (ii),
(iii), (iv) and (v) of Section VI(c).
b. "Business Day" shall mean any day other than a Saturday, Sunday or
any day on which banking institutions are authorized to close in New York, New
York.
c. "Closing Price" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices
regular way of the common stock in each case on the New York Stock Exchange,
or, if the common stock is not listed or admitted to trading on such Exchange,
on the principal national securities exchange or quotation system on which the
common stock is listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or quotation
system, the average of the closing bid and asked prices of the common stock in
the over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
of the Corporation for that purpose.
d. "Common Stock" shall mean the Corporation's now or hereafter issued
Common Stock.
e. "Common Stock Fundamental Change" shall mean any Fundamental Change
in which more than 50% by value (as determined in good faith by the Board of
Directors of the Corporation) of the consideration received by holders
<PAGE> 28
of Common Stock consists of common stock that for each of the ten consecutive
Trading Days referred to with respect to such Fundamental Change in Section
X(a) above has been admitted for listing or admitted for listing subject to
notice of issuance on a national securities exchange or quoted on the Nasdaq
National Market; provided, however, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (i) the Corporation continues to
exist after the occurrence of such Fundamental Change and the outstanding
shares of Convertible Preferred Stock continue to exist as outstanding shares
of Convertible Preferred Stock, or (ii) not later than the occurrence of such
Fundamental Change, the outstanding shares of Convertible Preferred Stock are
converted into or exchanged for shares of convertible preferred stock of a
corporation succeeding to the business of the Corporation, which Convertible
Preferred Stock has powers, preferences and relative, participating, optional
or other rights, and qualifications, limitations and restrictions,
substantially similar to those of the Convertible Preferred Stock.
f. "Current Market Price Per Share" shall mean, as to the Common Stock
on any date in question, the average of the daily Closing Prices for the five
consecutive Trading Days prior to and including the date in question; provided,
however, that:
(1) if the Ex Date for any event (other than the issuance or
distribution requiring such computation) that required an adjustment
to the conversion price pursuant to subparagraphs (i), (ii), (iii),
(iv), or (v) of Section VI(c) ("Other Event") occurs after the fifth
Trading Day prior to the day in question and prior to the Ex Date for
the issuance or distribution requiring such computation (the "Current
Event"), the Closing Price for each Trading Day prior to the Ex Date
for such Other Event shall be adjusted by multiplying such Closing
Price by the same fraction by which the conversion price is so
required to be adjusted as a result of such Other Event,
(2) if the Ex Date for any Other Event occurs after the Ex Date
for the Current Event and on or prior to the date in question, the
Closing Price for each Trading Day on and after the Ex Date for such
Other Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the conversion price is so
required to be adjusted as a result of such Other Event,
(3) if the Ex Date for any Other Event occurs on the Ex Date for
the Current Event, one of those events, as determined by the
Corporation, shall be deemed for purposes of clauses (1) and (2) of
this proviso to have an Ex Date occurring prior to the Ex Date for the
other of those events, and
<PAGE> 29
(4) if the Ex Date for the Current Event is on or prior to the
date in question, then after taking into account any adjustment
required pursuant to clause (2) of this proviso, the Closing Price for
each Trading Day on or after such Ex Date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the date
in question (as determined in good faith by the Board of Directors in
a manner consistent with any determination of such value for purposes
of paragraph (iv) or (v) of Section VI(c), whose determination shall
be conclusive and described in a resolution of the Board of Directors)
of the portion of the rights, warrants, evidences of indebtedness,
shares of capital stock or assets being distributed applicable to one
share of Common Stock.
g. "Ex Date" shall mean (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Price
was obtained without the right to receive such issuance or distribution and (2)
when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such subdivision or
combination becomes effective.
h. "Fundamental Change" shall mean the occurrence of any transaction
or event in connection with a plan pursuant to which all or substantially all
of the Common Stock shall be exchanged for, converted into, or acquired for or
constitute solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the conversion price,
such Fundamental Change shall be deemed to have occurred when substantially all
of the Common Stock of the Corporation shall be exchanged for, converted into,
or acquired for or constitute solely the right to receive cash, securities,
property or other assets, but the adjustment shall be based upon the highest
weighted average of consideration per share which a holder of Common Stock
could have received in such transactions or events as a result of which more
than 50% of the Common Stock of the Corporation shall have been exchanged for,
converted into, or acquired for or constitute solely the right to receive cash,
securities, property or other assets.
i. "Junior Dividend Stock" shall mean the Junior Stock and any other
capital stock of the Corporation ranking junior as to dividends to the
Convertible Preferred Stock.
<PAGE> 30
j. "Junior Liquidation Stock" shall mean the Junior Stock and any
other class or series of the Corporation's capital stock ranking junior to the
Convertible Preferred Stock as to distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
k. "Junior Stock" shall mean the Common Stock, the Series A Preferred
Stock, and the Corporation's hereafter issued capital stock ranking junior to
the Convertible Preferred Stock both as to the payment of dividends and as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, when and if issued.
l. "Nasdaq National Market" shall mean the National Association of
Securities Dealers Automated Quotation National Market.
m. "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
n. "Parity Dividend Stock" shall mean any class or series of the
Corporation's capital stock hereafter issued ranking, as to dividends, on a
parity with the Convertible Preferred Stock.
o. "Parity Liquidation Stock" shall mean any class or series of the
Corporation's capital stock ranking on a parity with the Convertible Preferred
Stock as to distributions or assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary.
p. "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the common
stock received in such Common Stock Fundamental Change for the ten consecutive
Trading Days prior to and including the record date for the determination of
the holders of Common Stock entitled to receive such common stock, or, if there
is no such record date, the date upon which the holders of the Common Stock
shall have the right to receive such common stock, in each case, as adjusted in
good faith by the Board of Directors of the corporation to appropriately
reflect any of the events referred to in subparagraphs, (i), (ii), (iii), (iv)
and (v) of Section VI(c); provided, however, if no such Closing Prices of the
common stock for such Trading Days exist, then the Purchaser Stock Price shall
be set at a price determined in good faith by the Board of Directors of the
Corporation.
q. "Redemption Price" shall mean the applicable price per share set
forth for the date fixed for redemption in the following table:
DATE FIXED FOR REDEMPTION PRICE
<PAGE> 31
<TABLE>
<S> <C>
On or after August 7, 2000 and on or before August 6, 2001 . . . . . . . . . . $51.88
After August 7, 2001 and on or before August 6, 2002 . . . . . . . . . . . . . $51.56
After August 7, 2002 and on or before August 6, 2003 . . . . . . . . . . . . . $51.25
After August 7, 2003 and on or before August 6, 2004 . . . . . . . . . . . . . $50.94
After August 7, 2004 and on or before August 6, 2005 . . . . . . . . . . . . . $50.63
After August 7, 2005 and on or before August 6, 2006 . . . . . . . . . . . . . $50.31
Any date after August 7, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . $50.00
</TABLE>
plus, in each case, an amount in cash equal to all per share dividends on the
Convertible Preferred Stock accrued and unpaid thereon, whether or not
declared, to but excluding the date fixed for redemption.
r. "Reference Market Price" shall initially mean $26.92 (which is an
amount equal to 66 2/3% of the reported last sale price for the Common Stock
quoted on the Nasdaq National Market on July 23, 1996), and in the event of any
adjustment to the conversion price other than as a result of a Fundamental
Change, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the conversion price after giving effect to any
such adjustment shall always be the same as the ratio of $26.92 to the initial
conversion price per share set forth in the last sentence of Section VI(a).
s. "Rights" shall have the meaning ascribed to such term in the Rights
Agreement.
t. "Rights Agreement" shall mean the Rights Agreement dated as of
February 24, 1988, as amended, between the Corporation and the Rights Agent
named therein.
u. "Series A Preferred Stock" shall mean the Corporation's Series A
Participating Preferred Stock, when and if issued.
v. "Trading Day" shall mean a day on which securities traded on the
national securities exchange or quotation system or in the over-the-counter
market used to determine the Closing Price.
ARTICLE V - BOARD OF DIRECTORS
Section 1. Number of Directors. The number of directors of the
Corporation shall not be less than twelve (12) or more than eighteen (18), the
exact number of directors to be determined from time to time by resolution
adopted by affirmative vote of a majority of the entire Board of Directors, and
such exact number shall be fifteen (15) until otherwise determined by
resolution adopted by affirmative vote of a majority of the entire Board of
Directors.
<PAGE> 32
Section 2. Classes of Directors. The Board of Directors shall be
divided into three classes, Class I, Class II and Class III. Such classes
shall be as nearly equal in number of directors as possible. Each director
shall serve for a term ending at the third annual meeting following the annual
meeting at which such director was elected; provided, however, that the
directors first elected to Class I shall serve for a term ending on the annual
meeting next following the end of the 1983 fiscal year, the directors first
elected to Class II shall serve for a term ending at the second annual meeting
next following the end of the 1983 fiscal year, and the directors first elected
to Class III shall serve for a term ending at the third annual meeting next
following the end of the 1983 fiscal year, serving, in each case, until their
successors shall be elected and shall qualify. Any vacancies in the Board of
Directors for any reason, and any newly created directorships resulting from
any increase in the number of directors, shall be filled by the affirmative
vote of a majority of the remaining director(s) of the class in which such
vacancy occurs or if none so remains, by a majority vote of the directors of
the other two classes, and any directors so chosen shall hold office until the
next election of the class for which such directors shall have been chosen and
until their successors shall be elected and shall qualify. No decrease in the
number of directors shall shorten the term of any incumbent director. There
shall be no cumulative voting in the election of directors.
Section 3. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any director or the entire Board of Directors may
be removed, but only for, cause, and only by the affirmative vote of the
holders of 75% or more of the outstanding shares of capital stock of the
Corporation then entitled to vote at an election of directors.
Section 4. Nomination of Directors. Except for the filling of any
vacancies in the Board of Directors which is governed by Section 2 of this
Article V, nominations for the election of directors may be made by the Board
of Directors or by any shareholder entitled to vote for the election of
directors. Nominations by any shareholder shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 5 days nor more than 60 days prior
to any meeting of the shareholders called for the election of directors. Each
notice shall set forth (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee and (iii) the number of shares of
stock of the Corporation which are beneficially owned by each such nominee.
The Secretary of the Corporation shall determine whether any
nomination by any shareholder is made in conformance with the procedures set
forth in this Section 4. Nominations not made in conformance with the
procedures set forth in this Section 4 shall be null and void and shall be
disregarded by the Corporation.
<PAGE> 33
ARTICLE VI - INDEMNIFICATION
The Corporation shall indemnify any present or former officer or director, or
person exercising powers and duties of a director, to the full extent now or
hereafter permitted under Florida Statutes now or hereafter in force.
ARTICLE VII - BYLAWS
The power to adopt, alter, amend or repeal Bylaws shall be vested in the Board
of Directors and the shareholders, but the Board of Directors may not alter,
amend or repeal any Bylaws adopted by the shareholders if the shareholders
provided that such Bylaws shall not be altered, amended or repealed by the
Board of Directors.
ARTICLE VIII - APPROVAL OF CERTAIN BUSINESS COMBINATIONS
A. In addition to any affirmative vote required by law or under any other
provision of these Third Amended and Restated Articles of Incorporation,
and except as otherwise expressly provided in Paragraph C: (1) any merger
orconsolidation of the Corporation or any Subsidiary (as hereinafter
defined) with or into (a) any 30% Shareholder (as hereinafter defined) or
(b) any other corporation (whether or not itself a 30% Shareholder) which,
after such merger or consolidation, would be an Affiliate (as hereinafter
defined) of a 30% Shareholder; or, (2) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a
series of related transactions) to or with any 30% Shareholder of any
assets of the Corporation or any Subsidiary having an aggregate fair
market value of $5,000,000 or more; or, (3) the issuance or transfer by
the Corporation or any Subsidiary (in one transaction or a series of
related transactions) of any securities of the Corporation or any
Subsidiary to any 30% Shareholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate fair market
value of $5,000,000 or more; or, (4) the adoption of any plan or proposal
for the liquidation or dissolution of the Corporation; or, (5) any
reclassification of securities (including any reverse stock split),
recapitalization, reorganization, merger or consolidation of the
Corporation with any of its Subsidiaries or any similar transaction
(whether or not with or into or otherwise involving a 30% Shareholder)
which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which is
directly or indirectly owned by any 30% Shareholder, shall require the
affirmative vote of the holders of at least 85% of the outstanding shares
of capital stock of the Corporation entitled to vote generally in the
election of directors, considered for the purpose of this Article VIII as
one class ("Voting Shares"), which shall include the
<PAGE> 34
affirmative vote of at least 50% of the Voting Shares by shareholders other
than any 30% Shareholder. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that some lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
B. The term "business combination" as used in this Article VIII shall mean
any transaction which is referred to in any one or more of clauses (1)
through (5) of Paragraph A hereof.
C. The provisions of Paragraph A shall not be applicable to any particular
business combination, and such business combination shall require only
such affirmative vote as is required by law if:
(1) The Board of Directors of the Corporation has by at least a 75% vote
of the members of the Board then in office:
(a) given prior approval to the acquisition by the 30% Shareholder
involved in the business combination of 30% or more of the
outstanding common stock of the Corporation; or
(b) approved the business combination prior to the 30% Shareholder
involved in the business combination having become a 30%
Shareholder; or,
(2) All of the following conditions are satisfied:
(a) the ratio of the aggregate amount of the cash and the fair
market value of other consideration to be received per share by
holders of common stock of the Corporation ("Common Stock") in such
business combination to the market price of the Common Stock
immediately prior to the announcement of such business combination,
is at least as great as the ratio of the highest per share price
(including brokerage commissions, transfer taxes and soliciting
dealers' fees) which such 30% Shareholder has paid for any shares
of Common Stock acquired by it within the two-year period prior to
the business combination to the market price of the Common Stock
immediately prior to the initial acquisition by such 30%
Shareholder of any Common Stock;
(b) the aggregate amount of the cash and fair market value of other
consideration to be received per share by holders of Common Stock in such
business combination is not less than the highest per share price (including
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
such 30% Shareholder in acquiring any of its holdings of Common Stock, and is
not less
<PAGE> 35
than the earnings per share of Common Stock for the four full
consecutive fiscal quarters immediately preceding the record date
for solicitation of votes on such business combination multiplied
by the then price/earnings multiple (if any) of such 30%
Shareholder as customarily computed and reported in the financial
community;
(c) the consideration to be received by holders of Common Stock
in such business combination shall be the same form and of the same
kind as the consideration paid by the 30% Shareholder in acquiring
the shares of Common Stock already owned by it;
(d) after becoming a 30% Shareholder and prior to the consummation
of such business combination: (i) the 30% Shareholder shall have
taken steps to ensure that the Corporation's Board of Directors
included at all times representation by continuing director(s) (as
hereinafter defined) proportionate to the ratio that the Voting
Shares which from time to time are owned by persons who are not 30%
Shareholders ("Public Holders") bear to all Voting Shares
outstanding at such respective times (with a continuing director to
occupy any resulting fractional board position); (ii) there shall
have been no reduction in the rate of dividends payable on the
Common Stock except as necessary to insure that a quarterly
dividend payment does not exceed 15% of the net income of the
Corporation for the four full consecutive fiscal quarters
immediately preceding the declaration date of such dividend, or
except as may have been approved by a unanimous vote of all
directors (the "entire Board"); (iii) such 30% Shareholder shall
not have acquired any newly issued shares of stock, directly or
indirectly, from the Corporation (except upon conversion of
convertible securities acquired by it prior to obtaining a 30%
interest or as a result of a pro rate stock dividend or stock
split); and (iv) such 30% Shareholder shall not have acquired any
additional shares of the Common Stock or securities convertible
into or exchangeable for Common Stock except as a part of the
transaction which resulted in such 30% Shareholder acquiring its
30% interest;
(e) prior to the consummation of such business combination, such
30% Shareholder shall not have received the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or tax
credits provided by the Corporation, or made any change in the
Corporation's business or equity capital structure without the
unanimous approval of the entire Board; and,
<PAGE> 36
(f) a proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 shall have been mailed to all
holders of Voting Shares for the purpose of soliciting shareholder
approval of such business combination. Such proxy statement shall
contain at the front thereof, in a prominent place, any
recommendations as to the advisability (or inadvisability) of the
business combination which the continuing directors, or any of
them, may have furnished in writing and, if deemed advisable by a
majority of the continuing directors, an opinion of independent
financial advisers as to the fairness (or lack of fairness) of the
terms of such business combination, from the point of view of the
holders of Voting Shares other than any 30% Shareholder (such
independent financial advisers to be selected by a majority of the
continuing directors, and to be paid a reasonable fee for their
services upon receipt by the Corporation of such opinion).
D. For the purposes of this Article VIII:
(1) A "person" shall mean any individual, firm, corporation or
other entity.
(2) "30% Shareholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which, as of the record date for the
determination of shareholders entitled to notice of and to vote on
such business combination, or immediately prior to the consummation
of any such transaction: (a) is the beneficial owner, directly or
indirectly, of not less than 30% of the Voting Shares; or, (b) is
an Affiliate of the Corporation and at any time within 2 years
prior thereto was the beneficial owner, directly or indirectly, of
not less than 30% of the then outstanding Voting Shares; or, (c) is
an assignee of or has otherwise succeeded to any shares of capital
stock of the Corporation which were at any time within 2 years
prior thereto beneficially owned by any 30% Shareholder, and such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(a) which such person or any of its Affiliates and Associates (as
hereinafter defined) beneficially own, directly or indirectly; or,
(b) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, warrants, or options, or otherwise, or (ii) the
right to vote pursuant to any agreement, arrangement or
understanding; or, (c) which are beneficially owned, directly or
indirectly,
<PAGE> 37
by any other person with which such first-mentioned person or any of
its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of sub-paragraph (3), above, but shall not include
any other Voting Shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or options,
or otherwise.
(5) "Continuing director" shall mean a person who was a member of the
Board of Directors of the Corporation elected by the Public Holders
prior to the date as of which any 30% Shareholder acquired in excess
of 5% of the then outstanding Voting Shares, or a person designated
(before his initial election as a director) as a continuing director
by a majority of the then continuing directors.
(6) "Other consideration to be received" shall mean common stock of the
Corporation retained by its Public Holders in the event of a business
combination in which the Corporation is the surviving corporation.
(7) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on February
23, 1983.
(8) "Subsidiary" means any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as
in effect on February 23, 1983) is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the
definition of 30% Shareholder set forth in sub-paragraph (2), above,
the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security owned directly or
indirectly, by the Corporation.
E. A majority of the continuing directors shall have the power and
duty to determine for the purposes of this Article VIII, on the basis
of information known to them: (a) the number of Voting Shares
beneficially owned by any person; (b) whether a person is an Affiliate
or Associate of another; (c) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in sub-paragraph (3), above, or, (d) whether the assets subject to
any business combination have an aggregate fair market value of
$5,000,000 or more.
F. Nothing contained in this Article VIII shall be construed to
relieve any 30% Shareholder from any fiduciary obligation imposed by
law.
<PAGE> 38
ARTICLE IX
Action shall be taken by the shareholders only at annual or special meetings of
shareholders, and shareholders may not act by written consent. Special
meetings of shareholders may be called only by the holders of not less than 75%
of the Voting Shares as defined in Article VIII, or by such other persons or
bodies as may be authorized by the Bylaws of the Company.
ARTICLE X - AMENDMENTS
Any amendment, alteration, change or repeal of Article V, Article VIII, Article
IX, or Article X of this Third Amended and Restated Articles of Incorporation
shall require the affirmative vote of the holders of at least 85% of the then
outstanding Voting Shares as defined in Article VIII, which shall include the
affirmative vote of at least 50% of the Voting Shares other than any 30%
Shareholders; provided that this Article X shall not apply to, and such 85%
vote shall not be required for any amendment, alteration, change or repeal
recommended to the shareholders by at least a majority of the entire Board and
by at least two-thirds of the continuing directors, as defined in Article VIII.
<PAGE> 39
IN WITNESS WHEREOF, American Bankers Insurance Group, Inc. has caused
these Amended and Restated Articles of Incorporation to be executed on this
day of July, 1996.
- ----
(Corporate Seal) AMERICAN BANKERS INSURANCE GROUP, INC.
- ---------------- --------------------------------------
Attest:
- ------
By:
---------------------------------------------
Leonardo F. Garcia, Gerald N. Gaston, Vice Chairman of the Board,
Secretary Chief Executive Officer and President
STATE OF FLORIDA )
)
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this of July, 1996 by
--
Gerald N. Gaston as Vice Chairman of the Board, Chief Executive Officer and
President for American Bankers Insurance Group, Inc.
NOTARY PUBLIC, State of Florida
My Commission Expires:
Personally Known OR Produced Identification
Type of Identification Produced
<PAGE> 1
EXHIBIT 10
2,000,000 SHARES
AMERICAN BANKERS INSURANCE GROUP, INC.
$3.125 SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
(Liquidation preference $50 per share)
UNDERWRITING AGREEMENT
July 23, 1996
CS FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
FURMAN SELZ LLC
MCDONALD & COMPANY SECURITIES, INC.
As Representatives of the Several Underwriters
c/o CS First Boston Corporation,
Park Avenue Plaza,
New York, N.Y. 10055
Dear Sirs:
1. Introductory. American Bankers Insurance Group, Inc., a Florida
corporation (the "Company"), proposes to issue and sell 2,000,000 shares ("Firm
Securities") of its $3.125 Series B Cumulative Convertible Preferred Stock
(liquidation preference $50 per share) ("Securities") and also proposes to
issue and sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than 300,000 additional shares ("Optional Securities") of
the Securities as set forth below. The Firm Securities and the Optional
Securities are herein collectively called the "Offered Securities". This
Underwriting Agreement, as amended, supplemented or modified from time to time
is referred to herein as "this Agreement". The Company hereby agrees with the
several Underwriters named in Schedule A hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-3 (No. 333-07209) relating to
the Offered Securities and the shares of common stock, $1.00 par value
(the "Common Stock"), of the Company into which the Securities are
convertible (the "Underlying Securities"), including a form of
prospectus, has been filed with the Securities and Exchange Commission
("Commission") and either (i)
<PAGE> 2
has been declared effective under the Securities Act of 1933, as amended
("Act"), and is not proposed to be amended or (ii) is proposed to be
amended by amendment or post-effective amendment. If such registration
statement ("initial registration statement") has been declared effective,
either (i) an additional registration statement ("additional registration
statement") relating to the Offered Securities and the Underlying Shares into
which the Securities are convertible may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Offered Securities
and such Underlying Shares all have been duly registered under the Act pursuant
to the initial registration statement and, if applicable, the additional
registration statement or (ii) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities and such Underlying Shares will all have been duly
registered under the Act pursuant to the initial registration statement and
such additional registration statement. If the Company does not propose to
amend the initial registration statement or if an additional registration
statement has been filed and the Company does not propose to amend it, and if
any post-effective amendment of either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become effective
upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act or, in the
case of the additional registration statement, Rule 462(b). For purposes of
this Agreement, "Effective Time" with respect to the initial registration
statement or, if filed prior to the execution and delivery of this Agreement,
the additional registration statement means (i) if the Company has advised the
Representatives that it does not propose to amend such registration statement,
the date and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c), or (ii) if the Company
has advised the Representatives that it proposes to file an amendment or
post-effective amendment to such registration statement, the date and time as
of which such registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed prior
to the execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect to
such additional registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule 462(b).
"Effective Date" with respect to the initial registration statement or the
additional registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective Time,
including all information contained or incorporated by reference in the
additional registration statement (if any) and deemed to be part of the initial
registration statement as of the Effective Time of the additional registration
statement pursuant to the General Instructions of the Form on which it is filed
and including all information (if any) deemed to be a part of the initial
registration statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as amended at
its Effective Time, including
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the contents of the initial registration statement incorporated by reference
therein and including all information (if any) deemed to be part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration Statement".
The Initial Registration Statement and the Additional Registration Statement are
herein referred to collectively as the "Registration Statements" and
individually as a "Registration Statement". The form of prospectus relating to
the Offered Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing
is required) as included in a Registration Statement, including all material
incorporated by reference in such prospectus, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective
Date of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) on the Effective Date of the Additional Registration Statement
(if any), each Registration Statement conformed, or will conform, in all
respects to the requirements of the Act and the Rules and Regulations and did
not include, or will not include, any untrue statement of a material fact and
did not omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) on the date of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects to the
requirements of the Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated therein
or necessary to make the
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<PAGE> 4
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act and the Rules and Regulations, none of such
documents will include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration Statement has
been or will be filed. The two preceding sentences do not apply to statements
in or omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter through the
Representatives specifically for use or incorporation by reference therein, it
being understood and agreed that the only such information is that described as
such in Section 7(b).
(c) All financial statements, proxy statements, schedules or reports
(i) required to be filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or (ii)
incorporated by reference into the Registration Statements ("Incorporated
Documents") when filed with the Commission, or when amended, as appropriate,
complied with the applicable requirements of the Exchange Act, and the
applicable rules and regulations thereunder ("1934 Act Rules and Regulations"),
and did not include at the time of filing or as of the time of any subsequent
amendment any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
(d) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Florida, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; and the Company is duly qualified to
do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification except where the failure to so qualify or
be in good standing would not have a material adverse effect on the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole ("Material Adverse Effect").
(e) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction of
its incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and each
subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification
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<PAGE> 5
except where the failure to so qualify or be in good standing would not have a
Material Adverse Effect; except as set forth on Schedule B all of the issued
and outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable and is owned
directly or indirectly by the Company; and the capital stock of each subsidiary
owned by the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects.
(f) The Offered Securities have been duly authorized; when the
Offered Securities have been delivered and paid for in accordance with this
Agreement on each Closing Date (as defined below), such Offered Securities will
have been validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus.
(g) When the Offered Securities are delivered and paid for pursuant
to this Agreement on each Closing date, such Offered Securities will be
convertible into the Underlying Shares of the Company in accordance with their
terms; the Underlying Shares initially issuable upon conversion of such Offered
Securities have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly issued, fully
paid and nonassessable; the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and conform to
the description thereof contained in the Prospectus; and no holder of any
security of the Company has any preemptive rights with respect to the Offered
Securities or the Underlying Shares.
(h) Other than as contemplated by this Agreement or as except as
disclosed in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person which would give rise to a
valid claim against the Company or any Underwriter for a brokerage commission,
finder's fee or other like payment.
(i) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(j) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the consummation
of the transactions contemplated by this Agreement in connection with the
issuance and sale of the Offered Securities by the Company, except such as have
been obtained and made under the Act, the Rules and Regulations, the
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<PAGE> 6
Exchange Act, the 1934 Rules and Regulations, and the by-laws of the National
Association of Securities Dealers, Inc. (the "NASD") and such as may be
required under state or foreign securities laws.
(k) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws
affecting creditors' rights generally, except that the remedies of specific
performance and injunctive and other forms of equitable relief are subject to
the discretion of the court before which any proceeding therefor may be brought
and except with respect to the obligations of the Company regarding
indemnification and contribution as provided in Section 7 below).
(l) The execution, delivery and performance of this Agreement, and
the issuance and sale of the Offered Securities and compliance with the terms
and provisions thereof (including, without limitation, the issuance of the
Underlying Securities upon conversion of the Offered Securities) will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of their
properties, or of any agreement or instrument to which the Company or such
subsidiary is a party or by which the Company or any such subsidiary is bound
or to which any of the properties of the Company or any such subsidiary is
subject, or the charter or by-laws of the Company or any such subsidiary, which
breach or violation would have a Material Adverse Effect; and the Company has
full power and authority to authorize, issue and sell the Offered Securities
and to consummate the transactions contemplated by this Agreement (including,
without limitation, the issuance of the Underlying Securities upon conversion
of the Offered Securities).
(m) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its subsidiaries hold
any leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be made
thereof by them.
(n) The Company, and each of its subsidiaries, hold all licenses,
certificates and permits from governmental authorities (including, without
limitation, insurance licenses from the Insurance Departments of the various
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<PAGE> 7
states in which the subsidiaries write insurance business (the "Insurance
Licenses") which are necessary to the conduct of their businesses; the
Company's subsidiaries have fulfilled and performed all obligations necessary
to maintain their respective Insurance Licenses except to the extent that the
failure to fulfill or perform such obligations would not have a Material
Adverse Effect, and no event or events have occurred which may be reasonably
expected to result in the impairment, modification, termination or revocation
of such Insurance Licenses except to the extent that such event would not have
a Material Adverse Effect.
(o) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings (including, without limitation, any proceeding to
revoke or deny renewal of any Insurance License) against or affecting the
Company and any of its subsidiaries or any of their respective properties that,
if determined adversely to the Company and any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement (including without limitation the issuance of
the Underlying Securities upon conversion of the Offered Securities), or which
are otherwise material in the context of the sale of the Offered Securities and
the issuance of the Underlying Securities; and no such actions, suits or
proceedings (including, without limitation, any proceeding to revoke or deny
renewal of any Insurance License) are threatened or, to the Company's
knowledge, contemplated.
(p) The financial statements included or incorporated by reference in
each Registration Statement and the Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis; and the schedules included or incorporated by reference in each
Registration Statement present fairly the information required to be stated
therein.
(q) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included or incorporated by reference in
the Prospectus there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole, and, except as disclosed in,
incorporated by reference in or contemplated by the Prospectus, there has been
no dividend or distribution of any kind declared, paid or made by the Company
on any class of its respective common or preferred securities or capital stock.
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<PAGE> 8
(r) The Company is not, and after giving effect to the offering and
sale of the Offered Securities and the issuance of the Underlying
Securities upon conversion of the offered Securities and the
application of the proceeds thereof as described in the Prospectus,
will not be an "investment company" as defined in the Investment
Company Act of 1940.
(s) Neither the Company nor any of its respective affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Securities it
commences doing such business.
(t) The statutory financial statements of each of the Company's
insurance subsidiaries, from which certain ratios and other
statistical data contained or incorporated by reference in the
Registration Statement have been derived, have for each relevant
period been prepared in accordance with accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners ("NAIC"), and with respect to each insurance subsidiary,
the appropriate Insurance Department of the state of domicile of such
subsidiary; and such accounting practices have been applied on a
consistent basis throughout the periods involved, except as disclosed
therein.
(u) The Offered Securities will have been approved for listing on the
Nasdaq Stock Market's National Market ("Nasdaq National Market")
subject to notice of issuance and registered under the Exchange Act
in accordance with the 1934 Rules and Regulations prior to or
concurrently with the effectiveness of the Registration Statement; the
Underlying Securities have been approved for listing on the Nasdaq
National Market prior to or concurrently with this the effectiveness
of this Registration Statement.
3. Purchase, Sale and Delivery of Offered Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
sell to the Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Company, at a purchase price of $48.62 per share
plus accumulated dividends, if any, from July 29, 1996 to the First Closing
Date (as hereinafter defined) the respective numbers of shares of Firm
Securities set forth opposite the names of the Underwriters in Schedule A
hereto.
The Company will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in funds available on the same day by wire transfer to the
account of the Company at a bank acceptable to CS First Boston Corporation ("CS
First Boston") or by official Federal Reserve Bank check or checks drawn to the
order of the Company at the office of Dewey Ballantine, at 10 A.M., New York
time, on July 29, 1996 or at such other
8
<PAGE> 9
time not later than seven full business days thereafter as CS First Boston and
the Company determine, such time being herein referred to as the "First Closing
Date". For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934,
the First Closing Date (if later than the otherwise applicable settlement date)
shall be the settlement date for payment of funds and delivery of securities for
all the Offered Securities sold pursuant to the Offering. The certificates for
the Firm Securities so to be delivered will be in definitive form, in such
denominations and registered in such names as CS First Boston requests and will
be made available for checking and packaging at the office of CS First Boston at
least 24 hours prior to the First Closing Date.
In addition, upon written notice from CS First Boston given to
the Company from time to time not more than 30 days subsequent to the date of
the Prospectus, the Underwriters may purchase all or less than all of the
Optional Securities at the purchase price per Security (including any
accumulated dividends thereon to the related Option Closing Date) to be paid
for the Firm Securities. The Company agrees to sell to the Underwriters the
number of shares of Optional Securities specified in such notice and the
Underwriters agree, severally and not jointly, to purchase such Optional
Securities. Such Optional Securities shall be purchased for the account of
each Underwriter in the same proportion as the number of shares of Firm
Securities set forth opposite such Underwriter's name bears to the total number
of shares of Firm Securities (subject to adjustment by CS First Boston to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the
Firm Securities. No Optional Securities shall be sold or delivered unless the
Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by CS First
Boston to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CS
First Boston but shall be not later than five full business days after written
notice of election to purchase Optional Securities is given. The Company will
deliver the Optional Securities being purchased on each Optional Closing Date
to the Representatives for the accounts of the several Underwriters, against
payment of the purchase price therefor in funds available on the same day by
wire transfer to the account of the Company at a bank acceptable to CS First
Boston or by official Federal Reserve Bank check or checks drawn to the order
of the Company, at the office of CS First Boston. The certificates for the
Optional Securities being purchased on each Optional Closing Date will be in
definitive form, in such denominations and registered in such names as CS First
Boston requests upon reasonable notice prior to such Optional Closing
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<PAGE> 10
Date and will be made available for checking and packaging at the office of CS
First Boston at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Offered Securities for sale to the
public as set forth in the Prospectus.
5. Certain Agreements of the Company. The Company agree
with the several Underwriters that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this
Agreement, the Company will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (1)
or (2) (as consented to by CS First Boston) of Rule 424(b) not
later than the second business day following the execution and
delivery of this Agreement or, if applicable and if consented
to by CS First Boston, subparagraph (4) or (5) of Rule 424(b).
The Company will advise CS First Boston promptly of any such
filing pursuant to Rule 424(b). If the Effective Time of the
Initial Registration Statement is prior to the execution and
delivery of this Agreement and an additional registration
statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has
not occurred as of such execution and delivery, the Company
will file the additional registration statement or, if filed,
will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on
or prior to 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been
consented to by CS First Boston.
(b) The Company will advise CS First Boston promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or
the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CS First
Boston's consent; and the Company will also advise CS First
Boston promptly of the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment
or supplementation of a Registration Statement or the
Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement
and will use its best reasonable efforts to prevent the
issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
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(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with the
sales by any Underwriter or dealer, any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will promptly notify CS First Boston of
such event and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance with the Act.
Neither CS First Boston's consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Initial Registration Statement (or,
if later, the Effective Date of the Additional Registration Statement) which
will satisfy the provisions of Section 11(a) of the Act. For the purpose of
the preceding sentence, "Availability Date" means the 45th day after the end of
the fourth fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last quarter
of the Company's fiscal year, "Availability Date" means the 90th day after the
end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives hard copies of
each Registration Statement (four of which will be signed and will include all
exhibits), copies of each EDGAR filing of each Registration Statement (and
confirmations for each EDGAR filing of each Registration Statement), each
related preliminary prospectus, and, so long as delivery of a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents in each case in such quantities as
CS First Boston reasonably requests. The Prospectus shall be so furnished on
or prior to 3:00 P.M., New York time, on the business day following the later
of the execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other documents shall be so furnished as
soon as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale and the determination of their eligibility for investment
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<PAGE> 12
under the laws of such jurisdiction as CS First Boston designates and will
continue such qualifications in effect so long as required for the
distribution.
(g) During the period of ten years hereafter, the Company will
furnish to the Representatives, and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a copy
of its annual report to stockholders for such year; and the Company will
furnish to the Representatives (i) as soon as available, a copy of each report
and any definitive proxy statement of the Company filed with the Commission
under the Exchange Act or mailed to stockholders, and (ii) from time to time,
such other information concerning the Company as CS First Boston may reasonably
request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Underwriters (if
and to the extent incurred by them) for any filing fees and other expenses
(including fees and disbursements of counsel) incurred by them in connection
with qualification of the Offered Securities for sale under the laws of such
jurisdictions as CS First Boston designates and the printing of memoranda
relating thereto, for the filing fee of the NASD relating to the Offered
Securities, for any travel expenses of the Company officers and employees and
any other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities and for expenses
incurred in distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters.
(i) The Company will notify CS First Boston of any material adverse
change affecting any of its representations, warranties, agreements and
indemnities herein at any time prior to payment to the Company on the First
Closing Date or any Optional Closing Date.
(j) The Company will use the net proceeds received by it from the
sale of the Offered Securities, in the manner specified in the Prospectus under
the caption "Use of Proceeds."
(k) The Company will use its best efforts to list the Offered
Securities and the Underlying Securities on the Nasdaq National Market subject
to notice of issuance and to register the Offered Securities under the Exchange
Act in accordance with the 1934 Rules and Regulations.
(l) During the period commencing on the date hereof and continuing
for 90 days, without CS First Boston's written permission, the Company will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under the Act
relating to, any additional shares of its Securities or Common Stock or
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<PAGE> 13
securities convertible into or exchangeable or exercisable for any shares of
its Securities or Common Stock, or publicly disclose of its intention to make
any such offer, sale, pledge, disposal or filing.
(m) The Company will cause each of its directors and certain
executive officers listed on Schedule C hereto to
agree that during the period commencing on the date hereof and continuing for
90 days, without CS First Boston's written permission, such directors and
executive officers will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a registration
statement under the Act relating to, any additional shares of its Securities or
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of its Securities or Common Stock, or publicly disclose of its
intention to make any such offer, sale, pledge, disposal or filing.
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the First Closing Date and the Optional Securities to be
purchased on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of Price Waterhouse LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
audited by them and included or incorporated by reference in the
Registration Statements comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing
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Standards No. 71, Interim Financial Information, in the unaudited financial
statements included or incorporated by reference in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the Company,
inquiries of officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements included or incorporated by
reference in the Registration Statements do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the related published Rules and Regulations or any
material modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited financial statements in the Prospectus;
(B) at the date of the latest available balance sheet read by such
accountants, or at a subsequent specified dated not more than five
days prior to the date of this Agreement, there was any change in the
capital stock (other than as a result of the exercise of employee
stock options in the ordinary course of business) or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries, or, at the date of the latest available
balance sheet read by such accountants, there was any decrease in
total assets or stockholder's equity as compared with amounts shown on
the latest balance sheet included or incorporated by reference in the
Prospectus; or
(C) for the period from the closing date of the latest income
statement included or incorporated by reference in the Prospectus to
the closing date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period for the previous year, in the total or per share
amounts of consolidated income before extraordinary items, gross
collected premiums, net income or in the ratio of earnings to fixed
charges and preferred stock dividends combined;
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except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained or incorporated by reference in the Registration Statements
(in each case to the extent that such dollar amounts, percentages and
other financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the internal
controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records
and other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter; and
(v) they have examined the statutory financial statements of each of
the Company's insurance subsidiaries listed on Schedule B hereto, from
which certain ratios and other statistical data contained or
incorporated by reference in the Registration Statement have been
derived, and in their opinion such statements, with respect to each
such insurance subsidiary, have for each relevant period been prepared
in accordance with accounting practices prescribed or permitted by the
appropriate Insurance Department of the state of domicile of such
subsidiary, except as disclosed therein.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery of
this Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the execution
and delivery of this Agreement but the Effective Time of the Additional
Registration Statement is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and the
additional registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to its
Effective Time, and (iii) "Prospectus" shall mean the prospectus included in
the Registration Statements. All financial statements and schedules included
in material incorporated by reference into the Prospectus shall be deemed
included in the Registration Statements for purposes of this subsection.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time
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<PAGE> 16
shall have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or such later date as shall have been consented to by CS First
Boston. If the Effective Time of the Additional Registration Statement (if
any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York time, on
the date of this Agreement or, if earlier, at the time the Prospectus is
printed and distributed to any Underwriter, or shall have occurred at such
later date as shall have been consented to by CS First Boston. If the
Effective Time of the Initial Registration Statement is prior to the execution
and delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of
this Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Company or the Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company or its subsidiaries taken as a whole
which, in the judgment of a majority in interest of the Underwriters including
the Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale of
and payment for the Offered Securities; (ii) any downgrading in the rating of
any debt securities or preferred securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such organization
has under surveillance or review its rating of any debt securities or preferred
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating) or any downgrading of the financial and operating
performance of the Company's insurance subsidiaries by A.M. Best Company; (iii)
any suspension or limitation of trading in securities generally on the New York
Stock Exchange or the Nasdaq National Market, or any setting of minimum prices
for trading on such exchange or system, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market;
(iv) any banking moratorium declared by U.S. Federal or New York authorities;
or (v) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the judgment of a
majority in interest of the Underwriters including the Representatives the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
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<PAGE> 17
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Jorden Burt Berenson & Johnson LLP, counsel for the Company to
the effect that:
(i) Each of the Company and the subsidiaries listed on Schedule
D hereto (the "Material Subsidiaries") has been duly incorporated and
is an existing corporation in good standing under the laws of the
state of its incorporation, with power and authority (corporate and
otherwise) to own its properties and conduct its business as described
in the Prospectus; and each of the Company and its Material
Subsidiaries is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification except where the failure to be so qualified would not
individually or in the aggregate have a Material Adverse Effect; all
of issued and outstanding capital stock of each Material Subsidiary of
the Company has been duly authorized and validly issued, and is fully
paid and nonassessable; and except as set forth in Schedule D all the
capital stock of the Material Subsidiaries is owned by the Company
(directly or through Material Subsidiaries); and the capital stock of
each Material Subsidiary owned by the Company, directly or through
Material Subsidiaries, is owned free from liens, encumbrances and
defects;
(ii) The Offered Securities when issued and delivered on such
Closing Date have been duly authorized for issuance and sale pursuant
to this Agreement, and when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set
forth in this Agreement will be validly issued, are fully paid and
nonaccessable and conform to the description thereof contained in the
Prospectus;
(iii) The Offered Securities when issued and delivered on such
Closing Date are convertible into the Underlying Securities of the
Company in accordance with their terms; the Underlying Securities
initially issuable upon conversion of such Offered Securities have
been duly authorized and reserved for issuance upon such conversion
and, when issued upon such conversion, will be validly issued, fully
paid and nonassessable; the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; and no holder of any security of the Company has any
preemptive rights with respect to the Securities or the Underlying
Securities;
(iv) To such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any person
17
<PAGE> 18
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Act;
(v) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or, to such counsel's knowledge, any court is
required for the consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the Offered Securities by
the Company, except such as have been obtained and made under the Act, the
Rules and Regulations, the Exchange Act, the 1934 Act Rule and Regulations, or
the bylwas of the NASD and such as may be required under state (including
Puerto Rico) securities laws;
(vi) The execution, delivery and performance of this Agreement and
the issuance and sale of the Offered Securities and compliance with the terms
and provisions thereof (including, without limitation, the issuance of the
Underlying Securities upon conversion of the Offered Securities) will not
result in a breach or violation of any of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or, to the
best of the knowledge of such counsel, order of any governmental agency or body
or any court having jurisdiction over the Company or any Material Subsidiary of
the Company or any of their properties, or any agreement or instrument to which
the Company or any such Material Subsidiary is a party or by which the Company
or any such Material Subsidiary is bound or to which any of the properties of
the Company or any such Material Subsidiary is subject, or the charter or
by-laws of the Company or any such Material Subsidiary which breach of,
violation of or default under would have a Material Adverse Effect and the
Company has full power and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement (including, without limitation,
the issuance of the Underlying Securities upon conversion of the offered
Securities);
(vii) The Initial Registration Statement was declared effective under
the Act as of the date and time specified in such opinion, the Additional
Registration Statement (if any) was filed and became effective under the Act as
of the date and time (if determinable) specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the subparagraph of
Rule 424(b) specified in such opinion on the date specified therein or was
included in the Initial
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<PAGE> 19
Registration Statement or the Additional Registration Statement (as the case
may be), and, to the knowledge of such counsel, no stop order suspending the
effectiveness of a Registration Statement or any part thereof has been issued
and no proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and the Prospectus,
and each amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the requirements
of the Act and the Rules and Regulations; such counsel has no reason to believe
that any part of a Registration Statement or any amendment thereto, as of its
effective date or as of such Closing Date, contained or incorporated by
reference any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained or
incorporated by reference any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; the
descriptions in the Registration Statements and Prospectus of statutes, legal
and governmental proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel does not
know of any legal or governmental proceedings required to be described in a
Registration Statement or the Prospectus which are not described as required or
any contracts or documents of a character required to be described in a
Registration Statement or the Prospectus or to be filed as exhibits to a
Registration Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus;
(viii) The Incorporated Documents when filed with the Commission, or
when amended, as appropriate, complied with the applicable requirements of the
1934 Act Rules and Regulations, and such counsel had no reason to believe that
the Incorporated Documents included at the time of filing or as of the time of
any subsequent amendment any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein in light of the circumstances under which they were made, not
misleading;
(ix) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the valid and binding obligations of the Company
enforceable in accordance with its terms
19
<PAGE> 20
(except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting creditors' rights generally, except
that the remedies of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and the discretion of
the court before which any proceeding therefor may be brought, and except that
no opinion need be expressed with respect to the obligations of the Company
regarding indemnification and contribution as provided in Section 7 below);
(x) The Company and each of the Material Subsidiaries hold all
licenses, certificates and permits from all governmental authorities
(including, without limitation, Insurance Licenses) which are necessary to the
conduct of their respective businesses except to the extent that the failure to
hold any such licenses, certificates and permits from a governmental authority
(including, without limitation, Insurance Licenses) would not have a Material
Adverse Effect; to such counsel's knowledge, the Material Subsidiaries have
fulfilled and performed all obligations necessary to maintain their respective
Insurance Licenses, and, to such counsel's knowledge, no event or events have
occurred which may be reasonably expected to result in the material impairment,
modification, termination or revocation of such Insurance Licenses;
(xi) The statements in the Prospectus under the captions "Description
of Capital Stock-Convertible Preferred Stock" insofar as they purport to
constitute a summary of the terms of the securities therein described, and
under the caption "Underwriting" (other than statements based on information
furnished by an Underwriter expressly for use or incorporation by reference
therein), insofar as they purport to constitute summaries of the terms of the
documents referred to therein, and the statements in the Prospectus under
"Business-Government Regulation" insofar as they purport to constitute
descriptions of laws, rules, regulations or NAIC model laws, fairly summarize
the terms of such documents or laws, rules, regulations or NAIC model laws as
the case may be;
(xii) All statements contained in the Registration Statement under
the heading "Certain Federal Income Tax Consequences" are true and correct in
all material respects;
(xiii) The Company is not, and after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" or an
entity "controlled" by an "investment company" required to be registered under
the Investment Company Act of 1940; and
20
<PAGE> 21
(xiv) The Offered Securities have been approved for listing on the
Nasdaq National Market subject to notice of issuance and registered
under the Exchange Act; the Underlying Securities have been approved
for listing on the Nasdaq National Market.
In rendering the foregoing opinions, such counsel may rely as to
matters of fact upon certificates of the officers of the Company and its
subsidiaries, as to matters involving good standing, authorization to do
business and other matters within their knowledge, upon certificates of public
officials, and, as to matters involving the application of laws of any
jurisdiction other than the State of Florida or the United States, upon
opinions of local counsel shall state that they believe both you and they are
justified in relying upon such certificates and opinions.
(e) The Representatives shall have received from Dewey Ballantine,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of the
Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives
may require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion, Dewey Ballantine may rely as
matters governed the laws of the State of Florida upon the opinions of
Jorden Burt Berenson & Johnson LLP referred to above.
(f) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice-President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date, and that, to their
knowledge, no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs
(1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including
payment of the applicable filing fee in accordance with Rule 111(a) or (b)
under the Act, prior to the time the Prospectus was printed and distributed
to any Underwriter; and, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change, nor
any development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Prospectus or as described in such
certificate.
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<PAGE> 22
(g) The Representatives shall have received a letter, dated such
Closing Date, from Price Waterhouse LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than five days prior to such
Closing Date for the purposes of this subsection.
(j) The Offered Securities to be sold by the Company at the Closing
Date shall have been duly listed on the Nasdaq National Market subject to
notice of issuance and shall have been registered under the Exchange Act in
accordance with the 1934 Rules and Regulations; the Underlying Securities at
the Closing Date shall have been approved for listing on the Nasdaq National
Market.
(k) The Representatives shall have received the lock-up letters of
the Company and the directors and executive officers as contemplated by
Sections 5(l) and 5(m), respectively.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives may
reasonably request. CS First Boston may in its sole discretion waive on behalf
of the Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will, severally
and jointly, indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained or incorporated by reference in any Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives specifically for
use or incorporation by reference therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
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<PAGE> 23
Insofar as the foregoing indemnity agreement, or the
representations and warranties contained in Section 2(b), may permit
indemnification for liabilities under the Act of any person who is an
Underwriter or a partner or controlling person of an Underwriter within the
meaning of Section 15 of the Act and who, at the date of this Agreement, is a
director, officer or controlling person of the Company, the Company has been
advised that in the opinion of the Commission such provisions may contravene
Federal public policy as expressed in the Act and may therefore be
unenforceable. In the event that a claim for indemnification under such
agreement or such representations and warranties for any such liabilities
(except insofar as such agreement provides for the payment by the Company of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such a
person, the Company will submit to a court of appropriate jurisdiction (unless
in the opinion of counsel for the Company the matter has already been settled
by controlling precedent) the question of whether or not indemnification by it
for such liabilities is against public policy as expressed in the Act and
therefore unenforceable, and the Company will be governed by the final
adjudication of such issue.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained or incorporated by reference in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through the Representatives specifically for use or
incorporation by reference therein, and will reimburse any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of (i) the following information in the
Prospectus furnished on behalf of each Underwriter: the last paragraph at the
bottom of the cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and stabilizing on the
inside front cover page, and the concession and reallowance figures appearing
in the paragraph under the caption "Underwriting"; and (ii) the information in
the Prospectus furnished on behalf of Furman Selz LLC in the penultimate
paragraph appearing under the caption "Underwriting."
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect
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<PAGE> 24
thereof is to be made against the indemnifying party under subsection (a) or
(b) above, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election to or assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with
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<PAGE> 25
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions to each officer of the Company, to
each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section shall be in
addition to any liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each director of the
Company, to each officer of the Company who has signed a Registration Statement
and to each person, if any, who controls the Company within the meaning of the
Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder on either
the First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed, but
failed, to purchase does not exceed 10% of the total number of Offered
Securities that the Underwriters are obligated to purchase on such Closing
Date, CS First Boston may make arrangements satisfactory to the Company for the
purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Offered Securities that
such defaulting Underwriters agreed but failed to purchase on such Closing
Date. If any Underwriter or Underwriters so default and the aggregate number
of shares of Offered Securities with respect to which such default or defaults
occur exceeds 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on such Closing Date and arrangements
satisfactory to CS First Boston and the Company for the purchase of such
Offered Securities by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9
(provided that if such default occurs with respect to Optional Securities after
the First Closing Date, this Agreement will not terminate as to the Firm
Securities or any Optional Securities purchased prior to such termination). As
used in this Agreement, the term
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<PAGE> 26
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or and its officers and of the several Underwriters
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Offered Securities. If this
Agreement is terminated pursuant to Section 8 or if for any reason the purchase
of the Offered Securities by the Underwriters is not consummated, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Company and the
Underwriters pursuant to Section 7 shall remain in effect, and if any Offered
Securities have been purchased hereunder, the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (iii),
(iv) or (v) of Section 6(c), the Company will reimburse the Underwriters for
all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities.
10. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representatives, c/o CS First Boston Corporation, 55 E. 52nd
Street, Park Avenue Plaza, New York, N.Y. 10055, Attention: Investment Banking
Department--Transactions Advisory Group, or, if sent to the Company will be
mailed, delivered or telegraphed and confirmed to it at American Bankers
Insurance Group, Inc., 11222 Quail Roost Drive, Miami, FL 33157-6596,
Attention: Leonardo Garcia and with a copy to Jorden Burt Berenson & Johnson
LLP, 777 Brickwell Avenue, Suite 500, Miami, Florida 33131-2803, Attention:
Josephine Cicchetti; provided, however, that any notice to an Underwriter
pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to
such Underwriter.
11. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act
for the several Underwriters in connection with this financing, and any action
under this Agreement taken by the Representative jointly or by CS First Boston
will be binding upon all the Underwriters.
26
<PAGE> 27
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
27
<PAGE> 28
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement between
the Company and the several Underwriters in accordance with its terms.
Very truly yours,
AMERICAN BANKERS INSURANCE GROUP, INC.
By /s/ Floyd Denison
---------------------------------
Name: Floyd Denison
Title: Executive Vice President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
CS FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
FURMAN SELZ LLC
MCDONALD & COMPANY SECURITIES, INC.
By CS FIRST BOSTON CORPORATION
By s/ Richard G. Spiro
-----------------------
Name: Richard G. Spiro
Title: Director
28
<PAGE> 29
SCHEDULE A
<TABLE>
<CAPTION>
Underwriter Number of Firm Securities
- ----------- -------------------------
<S> <C>
CS First Boston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000
Donaldson, Lufkin & Jenrette
Securities Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000
Furman Selz LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000
McDonald & Company Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000
Advest, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
The Chicago Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
The Robinson-Humphrey Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Total 2,000,000
---------
</TABLE>
29
<PAGE> 30
SCHEDULE B
OWNERSHIP CHART OF CAPITAL STOCK
OF COMPANY'S SUBSIDIARIES
30
<PAGE> 31
EXHIBIT B
AMERICAN BANKERS INSURANCE
GROUP, INC
ORGANIZATIONAL STRUCTURE
AMERICAN BANKERS INSURANCE GROUP, INC.
<TABLE>
<S> <C>
- - ABIG Service de Mexico, S.A.(1) - American Bankers Management Company, Inc.
- - AB Warranty Company - Consumer Asset Network Association, Inc.
- - AB Warranty Company of Florida - American Bank Seguros de Vida, S.A. (5)
- - American Bankers Capital, Inc. - American Reliable Insurance Comoany
- - American Bankers Compania de Seguros, S.A. (2) - American Summit General Agency, Inc.
- - American Bankers Financial Services - Caravanner Insurance Agency
- ABFS Insurance Agency, Inc. - Associated Insurance Agency
- Grand General Insurance Agency - Bankers Atlantic Reinsurance Company
- - American Bankers Insurance Company of Florida - Bankers American Life Assurance Company
- American Bankers General Agency, Inc. - Bankers Insurance Company, Ltd.
- Caydeaux Group, Ltd (54%) - Bankers Insurance Group Mgmt. (IOM) Ltd.
- Caydeaux Life Assurance Company, Ltd. (54%) - Bankers Insurance Service Company, Ltd.
- Caydeaux Insurance Company, Ltd. (54%)
- Roadgard Motor Club, Inc. (Canada) - Caribbean American Property Insurance Co. (4)
- - American Bankers Life Assurance Company of Florida - Caribbean American Insurance Agency Company
- Caribbean American Life Assurance Company
- Federal Warranty Service Corporation
- Condeaux Life Insurance Company (79%)
- Federal Warranty Service Corporation (Canada)
- - American Bankers Sales Corporation, Inc.
- - Financial Exchange, Inc.
- Attorney-in-Fact for
Financial Insurance Exchange
- - Green Streak Incorporated
- - Guardian Investment Services, Inc.
- - H&D Graphics, Inc.
- - National Insurance Agency
- - Roadguard Motor Club, Inc.
- - Sureway, Inc.
- Guardian Travel,Inc.
- - Voyager Group, Inc.
- Voyager American Insurance
Company, Ltd.
- Voyager Indemnity Insurance
Company
- Voyager Service Programs, Inc.
- - Voyager Life and Health Insurance Company
- - Voyager Life Insurance Company
- Voyager Property & Casualty
Insurance Company
- - Voyager Service Warranties, Inc.
</TABLE>
<PAGE> 32
(1) ABIG Servicios de Mexico, S.A. de C.V.
5,000 shares outstanding
ABIG - 4,999 shares
Guardian Investment Services, Inc.* - 1 share
(2) American Bankers Compania de Seguros, S.A. de C.V.
335,250 shares outstanding
ABIG - 335,249
Guardian Investment Services, Inc.* - 1 share
(3) Caribbean American Life Assurance Company
160,000 shares outstanding
ABLAC - 159,992 shares
R. Kirk Landon - 1 share
Frank Minton - 1 share
Angela Wayne - 1 share
Alberto Baco - 1 share
Yvonne Shepard - 1 share
Alvaro Calderon - 1 share
Alexander Odishelidze - 1 share
Juan Sarro - 1 share
(4) Carribean American Property Insurance Company
200,000 shares outstanding
ABIG - 199,992 shares
R. Kirk Landon - 1 share
Frank Minton - 1 share
Angela Wayne - 1 share
Alberto Baco - 1 share
Yvonne Shepard - 1 share
Alvaro Calderon, Jr. - 1 share
Alexander Odishelidze - 1 share
Juan Sarro - 1 share
31
<PAGE> 33
(5) American Bankers Sequros de Vida, S.A.
30,000 shares outstanding
ABIG - 29,990
Guardian Investment Services, Inc. - 10 shares
* Guardian Investment Services, Inc. is a wholly owned subsidiary
of ABIG.
32
<PAGE> 34
SCHEDULE C
DIRECTORS AND EXECUTIVE OFFICERS TO SIGN LOCK-UPS
William H. Allen, Jr.
Eugene E. Becker
Nicholas A. Buoniconti
Armando M. Codina
Floyd G. Denison
Peter J. Dolora
Jay R. Fuchs
Leonardo F. Garcia
Gerald N. Gaston
Arthur W. Heggen
Jason J. Israel
Bernard Janis
Daryl L. Jones
James F. Jorden
Jack F. Kemp
John P. Laborde
R. Kirk Landon
Eugene M. Matalene, Jr.
Malcolm G. MacNeill
Albert Nahmad
Michael P. Ray
Nicholas J. St. George
Robert C. Strauss
Stephen T. Williams
George E. Williamson III
<PAGE> 35
SCHEDULE D
COMPANY'S MATERIAL SUBSIDIARIES
<TABLE>
<CAPTION>
Percent of
State of Voting Securities
Material Subsidiaries Incorporation Owned
--------------------- ------------- -----
<S> <C> <C>
American Bankers Insurance Company of Florida Florida 100%
American Bankers Life Assurance Company of Florida 100%
Florida
American Reliable Insurance Company Arizona 100%
Bankers American Life Assurance Company New York 100%
Caribbean American Life Assurance Company Puerto Rico (1) 100%
Caribbean American Property Insurance Company Puerto Rico (2) 100%
Voyager Group, Inc. Florida 100%
Voyager Life and Health Insurance Company Georgia 100%
Voyager Life Insurance Company Georgia 100%
</TABLE>
- ---------------------------
(1) Of the 160,000 issued and outstanding shares of common stock of
Caribbean American Life Assurance Company ("CALAC"), 159,992 shares of common
stock are owned, directly or through its subsidiaries, by the Company; the
remaining 8 shares are held by directors of CALAC.
(2) Of the 200,000 issued and outstanding shares of common stock of
Caribbean American Property Insurance Company ("CAPIC"), 199,992 shares of
common stock are owned, directly or through its subsidiaries, by the Company;
the remaining 8 shares are held by directors of CAPIC.
<PAGE> 1
Item 6 (a) Exhibits
Exhibit 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(in thousands except per common share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-----------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY: 1996 1995 1996 1995
---- ---- ---- ----
Weighted average shares outstanding 20,972 20,786 20,949 20,758
======= ======= ======= =======
Net Income $25,060 $16,048 $45,696 $30,919
======= ======= ======= =======
Net Income - per share $ 1.19 $ .77 $ 2.18 $ 1.49
======= ======= ======= =======
FULLY DILUTED:
Weighted average of shares outstanding 20,972 20,786 20,949 20,758
Assumed conversion of common stock equivalents 75 64 79 80
------- ------- ------- -------
Total 21,047 20,850 21,028 20,838
======= ======= ======= =======
Net income $25,060 $16,048 $45,696 $30,919
Add convertible debenture interest, net of federal 61 7 123 130
income tax
------- ------- ------- -------
Total $25,121 $16,055 $45,819 $31,049
======= ======= ======= =======
Net income - per share $ 1.19 $ .77 $ 2.18 $ 1.49
======= ======= ======= =======
</TABLE>
ITEM 6 (b) REPORTS ON FORM 8-K
None.
17
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SUMMARY CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE FINANCIAL
STATEMENTS OF AMERICAN BANKERS FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND IS
QUALIIFED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 728,708
<DEBT-MARKET-VALUE> 818,093
<EQUITIES> 100,487
<MORTGAGE> 10,754
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,870,050
<CASH> 16,830
<RECOVER-REINSURE> 122,678
<DEFERRED-ACQUISITION> 351,111
<TOTAL-ASSETS> 3,306,499
<POLICY-LOSSES> 283,359
<UNEARNED-PREMIUMS> 1,284,509
<POLICY-OTHER> 447,283
<POLICY-HOLDER-FUNDS> 7,146
<NOTES-PAYABLE> 336,066
0
0
<COMMON> 20,459
<OTHER-SE> 523,096
<TOTAL-LIABILITY-AND-EQUITY> 3,306,499
688,631
<INVESTMENT-INCOME> 56,204
<INVESTMENT-GAINS> 6,021
<OTHER-INCOME> 10,829
<BENEFITS> 279,517
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 66,142
<INCOME-TAX> 20,446
<INCOME-CONTINUING> 45,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,696
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.18
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
