FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1994
____________________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 1-7697
___________________________________
I.C.H. Corporation
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 43-6069928
_________________________________________________________________
(State or other jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
100 Mallard Creek Road, Suite 400, Louisville, Kentucky 40207
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(502) 894-2100
_________________________________________________________________
(Registrant's telephone number, including area code)
__________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class and Title of Shares Outstanding
Capital Stock as of May 13, 1994
__________________ __________________
<S> <C>
Common Stock, $1.00 Par Value 47,834,739
</TABLE>
Index to Exhibits appears on pages 25-26.
<PAGE>
<PAGE>
I.C.H. CORPORATION
FORM 10-Q
INDEX
Page(s)
_______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1994
and December 31, 1993 3
Consolidated Statements of Earnings (Loss)
for the Three Months Ended March 31, 1994
and 1993 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1994 and 1993 5
Notes to Financial Statements 6-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 23
Item 6. Exhibits and Reports on Form 8-K 23
Index to Exhibits 25-27
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
I.C.H. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1994 1993
_________ ____________
(In Thousands)
<S> <C> <C>
Investments:
Fixed maturities:
Available for sale at fair value $1,638,241 $1,691,693
Held to maturity at amortized cost 25,972 26,149
Equity securities, at fair value 75,757 75,831
Mortgage loans on real estate,
at amortized cost 124,841 138,504
Real estate, at lower of cost or fair value 67,100 67,491
Policy loans 176,743 177,736
Collateral loans 31,048 34,099
Investments in limited partnerships 42,593 43,640
Cash and short-term investments 301,382 366,922
Other invested assets 28,097 16,058
__________ __________
Total investments 2,511,774 2,638,123
Due from reinsurers 381,407 388,083
Notes and accounts receivable and
uncollected premiums 12,344 6,951
Accrued investment income 28,020 31,633
Deferred policy acquisition costs 192,494 168,525
Present value of future profits of
acquired business 49,415 50,705
Deferred income tax asset 62,566 53,033
Excess cost of investments in subsidiaries
over net assets acquired, net of
accumulated amortization 305,231 307,604
Other assets 55,251 47,999
Assets held in separate accounts 5,061 5,207
__________ __________
$3,603,563 $3,697,863
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Insurance liabilities:
Future policy benefits and other
policy liabilities $ 928,310 $ 927,303
Universal life and investment
contract liabilities 1,667,980 1,684,396
Notes payable:
Due within one year 34,548 34,546
Due after one year 383,229 383,435
Federal income taxes currently payable 27,002 29,015
Other liabilities 136,880 138,791
Liabilities related to separate accounts 5,061 5,207
__________ __________
3,183,010 3,202,693
__________ __________
Stockholders' equity:
Preferred stock 229,239 229,239
Common stock 71,701 71,594
Common stock, Class B 100
Additional paid-in capital 155,495 155,499
Net unrealized investment gains (losses),
net of deferred income taxes in 1993 (45,145) 20,458
Retained earnings 63,332 71,833
__________ __________
474,622 548,723
Notes receivable collateralized
by common stock (1,745) (1,729)
Treasury stock, at cost (52,324) (51,824)
__________ __________
420,553 495,170
__________ __________
$3,603,563 $3,697,863
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
__________________________
1994 1993
_________ ________
(Restated)
<S> <C> <C>
Income:
Premium income and other
considerations $ 116,574 $ 118,386
Net investment income 30,007 62,424
Realized investment gains 674 19,135
Equity in earnings (losses) of equity
investees and limited partnerships 412 11,866
Gain on sale of stock by Bankers Life
Holding Corporation 99,376
Other income 2,499 26,647
___________ ___________
150,166 337,834
___________ ___________
Benefits, expenses and costs:
Policyholder benefits 90,685 114,006
Amortization of deferred policy
acquisition costs and present
value of future profits 12,293 13,066
Other operating expenses 37,480 48,927
Amortization of excess cost 2,398 2,401
Interest expense 12,445 19,178
___________ ___________
155,301 197,578
___________ ___________
Operating earnings (loss) before
income taxes (5,135) 140,256
Income tax expense (credit) (958) 34,633
___________ ___________
Operating earnings (loss) (4,177) 105,623
Cumulative effect to January 1, 1993 of
change in method of accounting for
postretirement benefits, net of tax effect (1,812)
Extraordinary losses, net of tax effect (1,231)
___________ ___________
Net earnings (loss) (4,177) 102,580
Less dividends on preferred stock (4,325) (7,700)
___________ ___________
Net earnings (loss) applicable to
common stock $ (8,502) $ 94,880
=========== ===========
Weighted average shares outstanding 47,878,690 47,908,225
=========== ===========
Earnings (loss) per common share:
Primary:
Operating earnings (loss) $ (.18) $ 2.05
Cumulative effect to January 1, 1993
of change in method of accounting
for postretirement benefits (.04)
Extraordinary losses (.03)
___________ ___________
Net earnings (loss) $ (.18) $ 1.98
=========== ===========
Fully diluted:
Operating earnings (loss) $ (.18) $ 1.79
Cumulative effect to January 1, 1993
of change in method of accounting
for postretirement benefits (.03)
Extraordinary losses (.02)
___________ ___________
Net earnings (loss) $ (.18) $ 1.74
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
____ ____
(Restated)
<S> <C> <C>
Cash flows from operating activities:
Operating earnings (loss) $ (4,177) $ 105,623
Items not requiring (providing) cash:
Adjustments related to universal life and
investment products:
Interest credited to account balances 4,502 33,026
Charges for mortality and administration (17,587) (18,376)
Depreciation and amortization 4,056 3,820
Increase in future policy benefits 483 3,306
Decrease (increase) in deferred policy
acquisition costs (30) 2,708
Increase (decrease) in currently payable
income taxes (2,013) 5,595
Decrease (increase) in deferred income
taxes (1,280) 40,801
Increase in policy liabilities, other
policyholder funds, accounts payable
and accrued expenses 10,012 156
Decrease (increase) in notes and accounts
receivable and accrued investment income (920) 1,363
Increase (decrease) in asset valuation
allowances (13) 1,352
Equity in earnings of equity investees and
limited partnerships (412) (11,866)
Gain on termination of reinsurance (17,117)
Gain on sale of stock by Bankers Life
Holding Corporation (99,376)
Other, net 5,848 (3,023)
___________ ___________
Net cash provided (used) by operating
activities (1,531) 47,992
___________ ___________
Cash flows from investing activities:
Sales and maturities of long-term invested
assets 283,667 522,927
Purchases of fixed maturities (284,376) (342,692)
Purchases of other long-term
invested assets (47,519) (50,060)
___________ ___________
Net cash provided (used) by investing
activities (48,228) 130,175
___________ ___________
Cash flows from financing activities:
Proceeds of collateralized mortgage note
obligations 171,000
Policyholder contract deposits 42,374 46,195
Policyholder contract withdrawals (48,851) (166,146)
Principal payments on notes payable (204) (37,686)
Early retirement of subordinated debt (38,190)
Principal payments on collateralized mortgage
note obligations (172,245)
Purchase of common stock for treasury (500)
Dividends on preferred shares (4,325) (7,700)
Other (4,275)
___________ ___________
Net cash provided (used) by financing
activities (15,781) (204,772)
___________ ___________
Net decrease in cash and short-term
investments (65,540) (26,605)
Cash and short-term investments at
beginning of period 366,922 421,765
___________ ___________
Cash and short-term investments at
end of period $ 301,382 $ 395,160
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
____________
1. SIGNIFICANT ACCOUNTING POLICIES:
The financial information included herein was prepared in
conformity with generally accepted accounting principles, and
such principles were applied on a basis consistent with those
reflected in the 1993 Annual Report to Shareholders.
The information furnished includes all adjustments and
accruals which are, in the opinion of management, necessary
for a fair statement of results for the interim periods.
The disclosures in the notes presume that the users of the
interim financial information have read or have access to the
audited financial statements included in the 1993 Annual
Report to Shareholders.
For the three months ended March 31, 1993, the Company had
previously reported a non-operating gain totaling $79,459,000,
net of deferred income tax effects, representing the Company's
equity in the proceeds of a common stock offering by the
Company's then-equity investee, Bankers Life Holding
Corporation (BLHC). On September 30, 1993, the Company sold
its investment in BLHC to Conseco, Inc. (Conseco) and one of
Conseco's subsidiaries for $287,639,000. Upon the sale of the
investment in BLHC, the Company reclassified its previously
reported non-operating gain as a component of operating
earnings and, as a result of the reclassification, revenues
were increased by $99,376,000 to reflect the pre-tax gain
resulting from BLHC's stock offering and income tax expense
was increased $19,917,000 to reflect the tax effects
associated with such gain. The accompanying financial
statements for the three months ended March 31, 1993, have
been restated to reflect such reclassification. As a result
of the reclassification, primary operating earnings per common
share for the three months ended March 31, 1993, increased
from $.39 to $2.05 and fully diluted operating earnings per
common share increased from $.40 to $1.79. The
reclassification had no effect on reported net earnings or net
earnings per common share.
Primary earnings per share are computed by dividing earnings,
less preferred dividend requirements, by the weighted average
number of common shares outstanding. In computing fully
diluted earnings per share, the weighted average number of
common shares outstanding is adjusted to reflect common stock
equivalents resulting from stock options and the assumed
conversion of the Company's Series 1984-A and 1986-A Preferred
Stock into common shares, and preferred dividend requirements
are adjusted to eliminate dividends on the shares assumed to
have been converted. The computation of fully diluted
earnings per share excludes the assumed conversion of such
preferred shares for each period in which the assumed
conversion would be antidilutive.
Previously reported amounts for 1993 have, in some instances,
been reclassified to conform to the 1994 presentation.
2. INVESTMENT IN BANKERS LIFE HOLDING CORPORATION:
The Company continued to reflect its equity in the earnings of
BLHC through the date of sale. Following are unaudited
condensed statement of financial results for BLHC for the
three months March 31, 1993 and the Company's equity in such
results as reflected in its consolidated statement of earnings
(in thousands):
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
____________
2. INVESTMENT IN BANKERS LIFE HOLDING CORPORATION, continued:
<TABLE>
<S> <C>
Bankers Life Holding Corporation:
Revenues $ 354,700
Earnings from operations 29,800
Extraordinary loss from early debt retirement (4,800)
Net earnings attributable to common stock 20,500
Amounts recorded by the Company:
Equity in operating earnings of BLHC $ 11,106
Equity in extraordinary losses of BLHC (1,175)
___________
Equity in earnings of BLHC $ 9,931
===========
</TABLE>
3. NOTES PAYABLE:
Notes payable at March 31, 1994 and December 31, 1993, are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
____ ____
(In Thousands)
<S> <C> <C>
Borrowings under senior secured loan $ 30,000 $ 30,000
11 1/4% Senior Subordinated Notes due 1996 266,101 266,101
11 1/4% Senior Subordinated Notes
due 2003 91,161 91,161
9 1/2% unsecured note payable due 1996 25,550 25,550
Note payable, interest at prime, due in
monthly installments through 1999,
collateralized by aircraft equipment 4,668 4,872
Other 297 297
__________ __________
$ 417,777 $ 417,981
========== ==========
</TABLE>
At March 31, 1994, the Company has notes receivable totaling
$26,500,000 from an unaffiliated third party, which is
collateralized by the Company's note payable with a carrying
value of $20,505,000. The Company has the right to set off
its obligation against the notes receivable. In the
accompanying balance sheets, the Company's notes receivable
have been reflected net of amounts due under the note payable.
4. FEDERAL INCOME TAXES:
The provision (credit) for income taxes on operating earnings
(loss) consists of the following components:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
______________________
1994 1993
____ ____
(In Thousands)
<S> <C> <C>
Current tax expense (credit) $ 322 $ (6,168)
Deferred tax expense (credit) (1,280) 40,801
_________ _________
$ (958) $ 34,633
========= =========
</TABLE>
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
____________
4. FEDERAL INCOME TAXES, continued:
Net unrealized investment gains included in stockholders' equity
at December 31, 1993, are reflected net of deferred income taxes
totaling $8,226,000. Net unrealized investment losses included
in stockholders' equity at March 31, 1994, have not been tax
effected because of the uncertainty as to the Company's ability
to generate capital gains in an amount sufficient to offset the
unrealized capital losses.
5. COMMITMENTS, LITIGATION AND CONTINGENT LIABILITIES:
The Company and its subsidiaries have been under examination by
the Internal Revenue Service (IRS) for the tax years 1983
through 1992. The IRS has completed its examination for the
years 1983 through 1985 and had previously issued Preliminary
Notices of Deficiencies totaling approximately $17.5 million,
before interest. The Company protested such assessed
deficiencies and subsequently reached an agreement with the IRS
under which the Company and certain of its subsidiaries will
incur approximately $4.6 million of additional taxes and
interest. The IRS has not completed its examination for the
years 1986 through 1992 and therefore has not issued Notices of
Deficiencies for those years. Management believes that the
ultimate liability for additional taxes and interest for these
later years will not exceed amounts recorded in the Company's
financial statements.
Modern American Life Insurance Company (Modern) is a defendant
in a class action lawsuit filed on or about May 14, 1993 in the
Circuit Court of Jackson County, Missouri, styled WILLIAM D.
CASTLE, ET AL. V. MODERN AMERICAN LIFE INSURANCE COMPANY (the
Castle case). The suit purports to be brought on behalf of a
class of persons who own what plaintiffs denominate as charter
contracts, issued by life insurance companies merged into or
acquired by Modern and its predecessors. The suit alleges
breach of contract, and seeks declaratory judgment, costs,
expenses and such other relief as the Court deems appropriate.
As an alternative, the suit seeks rescission. I.C.H.
Corporation was added as a defendant to the CASTLE case by an
amended petition, filed February 16, 1994, alleging that the
Company should be liable for any judgment against Modern through
either disregarding Modern's corporate existence or finding
tortious interference by the Company with plaintiff's contracts
with Modern. The Company has filed a motion to dismiss the
amended petition which currently is pending.
On or about October 12, 1993, the plaintiffs in the CASTLE case
also filed a lawsuit in the Circuit Court of Cole County,
Missouri, naming Modern American and the Director of the
Missouri Department of Insurance (the Missouri Director) as
defendants. The second lawsuit, styled ROBERT J. MEYER, ET AL.
V. JAY ANGOFF, DIRECTOR OF THE MISSOURI DEPARTMENT OF INSURANCE
AND MODERN AMERICAN LIFE INSURANCE COMPANY (the MEYER case), is
an appeal from the regulatory proceedings before the Missouri
Department of Insurance, by which Modern received regulatory
approvals required for it to participate in a restructuring of
the Company's insurance holding company organization. The
restructuring was completed on or about September 29, 1993. The
plaintiffs in the MEYER case are seeking reversal or remand of
the Director's order of approval, declaratory judgment and such
other relief
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
____________
5. COMMITMENTS, LITIGATION AND CONTINGENT LIABILITIES, continued:
to which they claim they are entitled. The Cole Circuit Court
has determined that it will review the Missouri Department's
decision on the record pursuant to Missouri's administrative
procedure act.
Modern believes it has meritorious defenses to both the CASTLE
and MEYER cases and intends to defend both cases vigorously.
Various other lawsuits and claims are pending against the
Company and its subsidiaries. Based in part upon the opinion
of counsel as to the ultimate disposition of the above discussed
and other matters, management believes that the liability, if
any, will not be material.
6. REALIZED INVESTMENT GAINS (LOSSES):
Following is an analysis of the major components of gains
(losses) on investments (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
_____________________
1994 1993
____ ____
<S> <C> <C>
Fixed maturities $ 2,020 $ 14,350
Mortgage-backed
securities (1,014)
Equity securities (1,224) 6,211
Other (122) (412)
________ ________
$ 674 $ 19,135
======== ========
</TABLE>
7. EXTRAORDINARY LOSSES:
For the three months ended March 31, 1993, the Company
reflected an extraordinary loss totaling $690,000, resulting
from the premium paid to effect the early redemption of $37.5
million principal amount of the Company's 16 1/2% Senior
Subordinated Debentures due 1994. In addition, the Company
reflected its equity in the extraordinary loss of BLHC
resulting from early retirement of debt totaling $1,175,000.
The extraordinary losses have been reflected net of the
estimated tax effects totaling $634,000.
8. TRANSACTIONS WITH CONSOLIDATED FIDELITY LIFE INSURANCE
COMPANY:
Effective June 15, 1993, the Company purchased shares of
preferred stock from an affiliate, Consolidated Fidelity Life
Insurance Company (CFLIC), in exchange for certain investments
with an estimated fair value of $63 million. CFLIC is a
subsidiary of Consolidated National Corporation (CNC) and CNC
was also the then-controlling shareholder of the Company. The
purchase of the CFLIC preferred stock was the first step in a
series of transactions which are designed 1) to terminate
existing reinsurance arrangements under which business written
by a subsidiary and a former subsidiary of the Company is
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
____________
8. TRANSACTIONS WITH CONSOLIDATED FIDELITY LIFE INSURANCE
COMPANY, continued:
reinsured (through an unaffiliated insurer) by CFLIC and 2) to
redeem or retire certain of the Company's securities which are
currently held by CFLIC. See Management's Discussion and
Analysis of Financial Condition and Results of Operations for
a more detailed discussion of the anticipated effects of the
proposed transactions.
9. CHANGE IN CONTROL:
On February 11, 1994, the Company purchased all of the 100,000
shares of its Class B Common Stock held by CNC for total cash
consideration of $500,000. The Class B Common Stock had
entitled CNC to elect 75% of the Company's Board of Directors.
Upon the purchase, the Class B shares were automatically
converted into an identical number of shares of Common Stock
and at March 31, 1994, have been reflected as Treasury Shares.
Concurrently with the purchase of such stock, the Company
entered into Independent Contractor and Services Agreements
(Services Agreements) with Robert T. Shaw and C. Fred Rice,
the controlling shareholders of CNC. The Services Agreements
provide for a lump sum payment to Messrs. Shaw and Rice
totaling $2 million as of the closing date and additional
payments totaling $8,575,000 over a ten-year period. In
addition, the Company agreed to provide customary employee
benefits to Messrs. Shaw and Rice and their dependents. In
the event of the deaths of Messrs. Shaw or Rice, any amounts
not previously paid under the Services Agreements will become
immediately payable to their estates. In consideration for
the Services Agreements, Messrs. Shaw and Rice agreed that
they would attempt to identify business opportunities in the
insurance industry which may be suitable for the Company and
to consult with the Company regarding such other matters as
the Company may reasonably request. In addition, Mr. Rice
continues to serve as an executive officer of the Company and,
if re-elected, will continue to serve on the Company's Board
of Directors. The Services Agreements replaced a management
and consulting contract with CNC that provided for annual
payments to CNC totaling $2 million. In addition, Mr. Shaw
was granted an option to acquire certain aircraft equipment
currently owned by the Company at its depreciated book value.
The Company provided a liability for the present value of
amounts payable under the Services Agreements totaling
$9,050,000 in its financial statements for the year ended
December 31, 1993.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
On February 11, 1994, ICH purchased all of the 100,000 shares
of its Class B Common Stock from Consolidated National Corporation
(CNC) for total cash consideration of $500,000. The Class B Common
Stock had entitled CNC to elect 75% of ICH's Board of Directors
and, by virtue of such voting power, CNC was considered to be ICH's
controlling shareholder. The Class B shares were automatically
converted into an identical number of shares of ICH Common Stock,
which at March 31, 1994, have been reflected as Treasury Shares.
As a result of the repurchase, and subsequent conversion, ICH is no
longer authorized to issue Class B Common Stock and all references
in ICH's Certificate of Incorporation to the Class B Common Stock
have been eliminated. Concurrent with the repurchase of the Class
B Common Stock, Stephens Inc. (Stephens) and Torchmark Corporation
(Torchmark) purchased 4,457,000 shares and 4,667,000 shares,
respectively, of ICH Common Stock from CNC, which reduced CNC and
its subsidiaries' holding in ICH Common Stock to approximately
1,620,000 shares, or 3.4% of ICH's presently outstanding shares.
Additional information regarding the repurchase of the Class B
Common Stock and other terms of the transaction are included in
Note 9 of the Notes to Financial Statements in this Form 10-Q and
ICH's 1993 Annual Report to Shareholders. Management believes the
repurchase of the Class B Common Stock is significant for various
reasons. Most importantly, management believes that ICH's access
to both debt and equity capital markets has been limited because of
the control position held by CNC through the Class B Common Stock,
and that the repurchase and conversion of the Class B Common Stock
and considerable reduction in CNC's holdings of ICH Common Stock
could ultimately enhance ICH's ability to refinance its currently
outstanding debt. In May 1994, ICH engaged Stephens, an investment
banking firm, to conduct a review of ICH in order to provide advice
and recommendations to ICH's Board of Directors concerning ICH's
strategic plans. See "Transactions With Consolidated Fidelity Life
Insurance Company" below for a summary of the terms and the current
status of a proposed transaction involving CNC's subsidiary and the
Company.
During the three months ended March 31, 1994, ICH experienced
a significant decline in the fair value of its available for sale
fixed maturity investments, primarily as a result of increases in
market interest rates. Because such securities are reflected at
their fair value for financial reporting purposes, the decline in
fair value, coupled with an operating loss in the 1994 first
quarter, had a significant impact on stockholders' equity and book
value per common share. Common stockholders' equity declined $74.6
million, from $265.9 million, or $5.55 per share, at year-end 1993
to $191.3 million, or $4.00 per share, at March 31, 1994. Of this
decline, $65.6 million, or $1.37 per share, was attributable to the
change in unrealized investment gains and losses. Because of its
available liquidity and other factors, management does not
anticipate that ICH will be required to liquidate a substantial
portion of its available for sale fixed maturity portfolio over the
near-term. See "Investment Portfolio" below for additional
information regarding ICH's available for sale fixed maturities.
At March 31, 1994, the parent company held cash, short-term
investments and readily-marketable fixed maturity investments
totaling approximately $120.6 million. As discussed in more detail
in ICH's 1993 Annual Report, ICH has considerable flexibility in
determining whether it will utilize cash to make a $100 million
sinking fund installment with respect to its 11 1/4% Senior
Subordinated Notes due 1996 (Old Notes). Assuming that a sinking
fund installment relative to the Old Notes is not made utilizing
available cash in 1994, management believes that ICH has sufficient
liquidity with which to meet its debt service and preferred
dividend requirements over the next twelve months. Depending on
market conditions and other factors, ICH may from time-to-time
<PAGE>
<PAGE>
utilize its available liquidity to purchase some of its Old Notes
or other outstanding securities in open-market or private placement
transactions.
TRANSACTIONS WITH CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY
Effective June 15, 1993, ICH entered into an agreement (the
Agreement) which initiated the process of terminating certain
reinsurance arrangements involving Consolidated Fidelity Life
Insurance Company (CFLIC), a subsidiary of CNC. The reinsurance
arrangements involve certain annuity business with reserves
totaling $323.3 million as of March 31, 1994, which was transferred
by a subsidiary of ICH, Southwestern Life Insurance Company
(Southwestern), to an unaffiliated reinsurer in 1990. The
unaffiliated reinsurer, in turn, transferred the business to
another CNC subsidiary, Marquette National Life Insurance Company
(Marquette). In 1991, Marquette transferred the annuity business
to CFLIC.
The reinsurance arrangements have been under review by the
Texas Department of Insurance and, in March 1993, ICH and
Southwestern agreed with the Texas Department that they would,
among other things, develop a plan to enhance and diversify the
assets supporting the liabilities reinsured by CFLIC, including
possibly recapturing the reinsured annuity business. The recapture
is subject to negotiations with the unaffiliated reinsurer and
approval by the Texas Department.
CNC and CFLIC agreed to structure the proposed recapture in a
manner that will permit ICH to redeem or retire certain of its
outstanding securities, provided CFLIC would be allowed to retain
certain assets following the recapture. CFLIC holds ICH's senior
secured debt, with a current balance of $30 million, approximately
$22.2 million stated value of ICH's Series 1984-A Preferred Stock
and $7 million stated value of ICH's Series 1987-B Preferred Stock.
CFLIC also intends to terminate another reinsurance
arrangement under which business written by Bankers Life and
Casualty Company (Bankers), a former ICH subsidiary, is reinsured
by CFLIC. Under terms of the Agreement, ICH is responsible for the
negotiation on CFLIC's behalf of both the Southwestern and Bankers
recaptures and management of the affairs of CFLIC and Marquette,
including management of their investments, until the recaptures are
effected. Upon completion of the recaptures, CFLIC will have no
remaining insurance business.
To facilitate the recaptures of the reinsured business, ICH
acquired $63 million of CFLIC preferred stock in exchange for its
ownership interest in certain investments with an estimated fair
value as of June 15, 1993, of $63 million, including its ownership
in a limited partnership (the HMC/Life Partners L.P.), which has
subsequently been liquidated, and 83 percent of ICH's ownership
interest in I.C.H. Funding Corporation (ICH Funding). ICH Funding
is a special purpose entity that was formed in 1992 to hold ICH's
residual interest in a pool of mortgage-backed securities acquired
from Bankers. The CFLIC preferred stock is non-redeemable and non-
voting, with cumulative 6% annual dividends that will be payable in
kind until the recaptures are completed. ICH and CFLIC anticipate
that the assets received by CFLIC from ICH in consideration for the
preferred stock, along with other assets held by CFLIC, including
its ownership in Marquette, will be transferred to Southwestern
upon recapture of the annuity business. Following the recaptures,
CFLIC is obligated to redeem its preferred stock by transferring
its ownership in the ICH securities and additional assets to ICH.
Upon their receipt, ICH intends to retire the ICH debt and
securities.
For financial reporting purposes, no gain or loss was
recognized on the transfer of the assets to CFLIC. The Agreement
identifies the specific assets and liabilities plus, subject to
certain conditions, an amount in cash that will be retained by
CFLIC following the recaptures. All remaining assets held by
CFLIC, including the ICH securities, will revert to ICH in
redemption of CFLIC's preferred stock. As a consequence, ICH will
benefit or suffer the consequences
<PAGE>
<PAGE>
to the extent of any appreciation or depreciation in the value of
the assets transferred to CFLIC. At March 31, 1994, ICH has
reflected its investment in the CFLIC preferred stock at its
approximate fair value of $54 million, or $9 million less than the
value assigned to such preferred stock at June 15, 1993. The
reduction in fair value between the two dates was primarily
attributable to a decline in the fair value of the 83% interest in
ICH Funding transferred to CFLIC.
Management believes the transactions with CFLIC will be
beneficial for several reasons. In addition to eliminating $30
million in scheduled debt principal requirements, the redemption or
retirement of the ICH securities would reduce ICH's interest and
preferred dividend requirements by approximately $5.4 million
annually. The termination of the reinsurance treaties is dependent
on the performance and level of concentration of the assets of
CFLIC supporting the reinsured liabilities and the completion of
successful negotiations. Management's present goal is to complete
the transactions with CFLIC as soon as possible. As part of the
transactions involving CNC, Torchmark and Stephens described under
"Liquidity and Capital Resources," ICH, CNC and CFLIC agreed with
each of Torchmark and Stephens that CFLIC's reinsurance agreements
will be terminated by May 30, 1994, on substantially the same terms
as set out in the June 15, 1993 agreement, and ICH agreed that, if
the recaptures were not completed by March 31, 1994, CNC will have
the right to transfer its ownership interest in CFLIC to ICH, in
exchange for the specified assets to be retained by CFLIC following
the transactions. As of the date of this Report on Form 10-Q, ICH
has not received notification from CNC that it is exercising such
right, and management cannot predict if such right will be
exercised.
INVESTMENT PORTFOLIO:
At December 31, 1993, ICH reflected unrealized investment
gains of $20,458,000 and at March 31, 1994, reflected unrealized
investment losses of $45,145,000. Following is an analysis of the
major components of such unrealized gains (losses) (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
____________ ____________
<S> <C> <C>
Available for sale fixed maturities $(71,042) $ 21,424
Equity securities 5,521 7,271
Equity in unrealized gains of limited
partnerships 3,568 5,349
Other 503 (159)
________ ________
(61,450) 33,885
Less effect on other balance sheet
accounts:
Deferred policy acquisition costs 5,995 (16,647)
Unearned revenue reserves (1,868) 6,266
________ ________
Gross unrealized investment gains
(losses) (57,323) 23,504
Minority interest in unrealized losses 12,178 5,180
Deferred income taxes (8,226)
________ ________
Net unrealized investment gains
(losses) $(45,145) $ 20,458
======== ========
</TABLE>
The difference between amortized cost and fair value of ICH's
available for sale fixed maturities decreased from an approximate
$21.4 million unrealized gain at year-end 1993 to an approximate
$71.0 million unrealized loss at March 31, 1994. Approximately
$74.4 million of the decrease in fair value was related to
increases in market interest rates between the two dates and the
effect of such rate increases on the fair values of traditional
debt securities. The remainder of the decrease in fair value, or
approximately $18.0 million, was attributable
<PAGE>
<PAGE>
to changes in the estimated fair value of certain investments in
mortgage-backed securities as a result of the continuation of high
levels of refinancing activity relative to underlying mortgage
loans and the resultant prepayments on such mortgage-backed
securities experienced during the 1994 first quarter. The
mortgage-backed securities were valued at March 31, 1994 by an
investment banking firm utilizing the same assumptions as utilized
at year-end 1993, including a level 400% standard prepayment
assumption (SPA). Based on currently available data regarding the
downward trend in mortgage loan refinancing activity, management
believes that ultimate prepayment rates will be substantially lower
than the 400% SPA. Consequently, management believes the
possibility exists for an upward adjustment in the values assigned
to these mortgage-backed securities in future periods.
Changes in the fair values of available for sale fixed
maturities have no effect on ICH's reported results of operations,
but can have a volatile effect on ICH's stockholders' equity and
book value per common share, as the carrying values of available
for sale fixed maturities are adjusted in ICH's balance sheet to
their fair values at each reporting date through a charge or credit
to stockholders' equity. In addition, unrealized investment losses
generally have a more significant impact on stockholders' equity
than unrealized gains because of deferred income tax effects, i.e.,
net unrealized investment gains must be tax-effected (reduced for
potential income tax expense), whereas net unrealized investment
losses usually cannot be tax-effected (reduced for potential income
tax benefits) due to the uncertainty in a rising interest rate
environment as to the Company's ability to generate sufficient
capital gains to offset capital losses. Because of its available
liquidity and other factors, such as its seasoned block of
traditional life insurance business, ICH has no current plans, and
management believes that ICH will not have the need over the near-
term, to liquidate a significant portion of its available for sale
fixed maturity investments at a loss. Following is an analysis of
gross unrealized investment gains and losses on available for sale
fixed maturities as of March 31, 1994 and December 31, 1993 (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
_____________ ____________
<S> <C> <C>
Gross unrealized gains $ 25,701 $ 63,535
Gross unrealized losses (96,743) (42,111)
________ ________
Net unrealized gains (losses) $(71,042) $ 21,424
======== ========
</TABLE>
The following table sets forth the carrying value and quality
for each of the two categories of fixed maturities as of March 31,
1994, classified in accordance with the rating assigned by Standard
& Poor's Corporation (S&P) or, if not rated by S&P, based on
ratings assigned by the National Association of Insurance
Commissioners, with Class 1 treated as A, Class 2 treated as BBB-,
Class 3 treated as BB- and Classes 4, 5 and 6 treated as B and
below (in millions):
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Held to
Available Maturity Percent of Percent
for Sale at Total Total of Total
Investment at Fair Amortized Fixed Fixed Invested
Quality Value Cost Maturities Maturities Assets
__________ ________ _________ __________ __________ ________
<S> <C> <C> <C> <C> <C>
AAA $ 639.1 $ 1.9 $ 641.0 38.5% 25.6%
AA 209.3 209.3 12.6 8.3
A 446.6 446.6 26.8 17.8
BBB+ 86.9 86.9 5.2 3.5
BBB 87.6 87.6 5.3 3.5
BBB- 83.9 83.9 5.1 3.3
________ ________ ________ _____ ____
Total
investment
grade 1,553.4 1.9 1,555.3 93.5 62.0
________ ________ ________ _____ ____
BB+ 24.6 24.6 1.5 1.0
BB and BB- 42.8 42.8 2.5 1.7
B and Below 17.4 24.1 41.5 2.5 1.6
________ ________ ________ _____ ____
Total non-
investment-
grade 84.8 24.1 108.9 6.5 4.3
________ ________ ________ _____ ____
Total
fixed
maturi-
ties $1,638.2 $ 26.0 $1,664.2 100.0% 66.3%
======== ======== ======== ===== ====
</TABLE>
Fixed maturities classified as held to maturity are
principally private placement corporate securities and gross
unrealized losses on such investments totaled $1.5 million as of
March 31, 1994.
The amortized cost and fair value of noninvestment-grade fixed
maturities totaled $111.5 million and $109.3 million, respectively,
at March 31, 1994.
Effective March 31, 1994, ICH's subsidiaries sold
substantially all of their commercial mortgage loans with remaining
principal balances of less than $300,000 for approximately $9.0
million. No significant gains or losses were incurred as a result
of such sale. ICH is considering the sale of substantially all of
its remaining commercial mortgage loan portfolio. At March 31,
1994, mortgage loans represented approximately 5% of ICH's total
investment portfolio.
Cash and short-term investments declined from $366.9 million
at year-end 1993 to $301.4 million at March 31, 1994, primarily as
a result of reinvestments made in higher-yielding longer duration
securities.
As discussed in ICH's 1993 Annual Report, the claims-paying
ratings assigned to certain of ICH's subsidiaries by various
nationally recognized statistical rating organizations were lowered
over the past two years. Except as discussed below, management
believes ICH's subsidiaries have not experienced more than normal
policy surrenders and withdrawals as a result of these ratings
downgrades. For the three months ended March 31, 1994,
policyholder contract deposits totaled $42.4 million and
policyholder contract withdrawals totaled $48.9 million.
Approximately $28.1 million of such withdrawals represented
scheduled maturities of guaranteed investment contracts (GICs)
which were not reinvested with an ICH subsidiary due to the lowered
ratings. Because of its available liquidity and readily marketable
securities, the subsidiary has not encountered, and management does
not anticipate that the subsidiary will encounter, any difficulty
in meeting its obligations relative to such withdrawals. Exclusive
of the GIC withdrawals, policyholder contract deposits exceeded
policyholder withdrawals by $21.6 million.
<PAGE>
<PAGE>
RESULTS OF OPERATIONS:
For the three months ended March 31, 1994, ICH incurred an
operating loss and a net loss, before preferred dividend
requirements, of $4.2 million. The 1994 first quarter results
compare to a restated gain from operations for the same period in
1993 of $105.6 million and net earnings, before preferred dividend
requirements, totaling $102.6 million. The 1994 first quarter
results also compare to an operating loss, before preferred
dividend requirements, in the fourth quarter of 1993 totaling $11.0
million and a net loss, before preferred dividend requirements,
totaling $16.4 million. Preferred dividend requirements totaled
$4.3 million in the 1994 first quarter, as compared to $5.7 million
in the 1993 fourth quarter and $7.7 million in the 1993 first
quarter. Results in the 1993 first quarter also included a charge
for a change in accounting for postretirement benefits totaling
$1.8 million and extraordinary losses related to the early
retirement of debt totaling $1.2 million. Results for the fourth
quarter of 1993 included a charge for a change in accounting for
debt and equity securities totaling $4.9 million and extraordinary
losses totaling $.6 million.
For the three months ended March 31, 1993, ICH had previously
reported a non-operating gain totaling $79.5 million, net of
deferred income tax effects, representing ICH's equity in the
proceeds of a common stock offering by ICH's then-equity investee,
Bankers Life Holding Corporation (BLHC). On September 30, 1993,
ICH sold its investment in BLHC to Conseco, Inc. (Conseco) and one
of Conseco's subsidiaries. Upon the sale of the investment in
BLHC, ICH reclassified its previously reported non-operating gain
as a component of operating earnings and, as a result of the
reclassification, revenues were increased by $99.4 million to
reflect the pre-tax gain resulting from BLHC's stock offering and
income tax expense was increased by $19.9 million to reflect the
tax effects associated with such gain. The accompanying financial
statements for the three months ended March 31, 1993, have been
restated to reflect such reclassification. As a result of the
reclassification, primary operating earnings per common share for
the three months ended March 31, 1993, increased from $.39 to
$2.05, and fully diluted operating earnings per common share
increased from $.40 to $1.79. The reclassification had no effect
on reported net earnings or net earnings per common share.
ICH's results for the first quarter of 1993 were affected by
several items of an infrequent and non-recurring nature, including
the gain recognized on the stock offering by BLHC and a gain from
the termination of a reinsurance arrangement with Bankers. In
addition, in the first quarter of 1993, ICH included in its results
of operations its equity in the earnings of BLHC. The results for
the fourth quarter of 1993 were affected by provisions for certain
non-recurring charges. Following is a condensed summary of results
for the three months ended March 31, 1994, December 31, 1993 and
March 31, 1993, by major sources of income and expense (in
thousands):
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
_______________________________
March 31, Dec. 31, March 31,
1994 1993 1993
_________ ________ _________
<S> <C> <C> <C>
Operating earnings before non-recurring
income (charges), equity in the earnings
of BLHC, realized investment gains
(losses), interest expense on long-term
debt, and provision for income taxes $ 6,636 $ 8,290 $ 9,835
Gain on BLHC stock offering 99,376
Gain on sale of BLHC 267
Gain on reinsurance termination 17,118
Equity in operating earnings of BLHC 11,106
Realized investment gains 674 2,580 19,135
Services Agreements with CNC principals (9,050)
Provision for cost of litigation and
other contingencies (1,000)
Interest expense on long-term debt (12,445) (14,540) (16,314)
Income tax (expense) benefit 958 2,496 (34,633)
________ ________ ________
Operating earnings (loss) (4,177) (10,957) 105,623
Less dividends on preferred stock (4,325) (5,684) (7,700)
________ ________ ________
Operating earnings (loss) attributable to
common stock $ (8,502) $(16,641) $ 97,923
======== ======== ========
</TABLE>
For the three months ended March 31, 1994, premium income and
other considerations decreased $1.8 million, or 1.5%, as compared
to the corresponding period in 1993. Following is a summary of
premiums by major line of business for each of the respective
periods (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
_____________________
1994 1993
____ ____
<S> <C> <C>
Individual life and annuity $ 29,971 $ 31,453
Individual health 54,294 54,902
Group and other 32,309 32,031
________ ________
$116,574 $118,386
======== ========
</TABLE>
Individual life and annuity premiums declined $1.5 million,
primarily as a result of the termination of the reinsurance
arrangement between Bankers and an ICH subsidiary effective March
31, 1993. Premiums earned under such reinsurance arrangement
totaled $2.6 million in the 1993 first quarter. ICH's subsidiaries
presently derive substantial revenues from their interest-sensitive
and universal life products; however, for financial reporting
purposes, these types of products are treated as deposit products
and, therefore, premiums received are not reflected as a component
of premium income.
During the first quarter of 1994, net investment income
decreased $32.4 millon, or 52%, as compared to the corresponding
period in 1993. Net investment income includes 1) earnings on
surplus investments and assets invested to support the reserve
liabilities of the Company's traditional and interest-sensitive
life and health insurance products (general investment portfolio)
and 2) investment activity related to separately held assets
supporting a GIC product, the credited rate on which is indexed to
the S&P 500 Stocks Composite Average (S&P 500). In addition, in
1993, net investment income included investment income on certain
mortgage-backed securities held in a special purpose trust (the
Trust) securing the Trust's collateralized mortgage note
obligation. The accounts of the Trust are no longer consolidated
with those of the Company for periods after July 30, 1993, as the
result of ICH's sale of a 75% interest in the Trust. Assets
supporting the S&P 500 GIC product include, among other
investments, put and call
<PAGE>
<PAGE>
options on various equity based index futures, including the S&P
500. The return on such investments is highly volatile and, under
certain market conditions, such as the overall decline in equity
markets experienced in the first quarter of 1994, can result in
investment losses, or negative investment yields. The negative
investment yield experienced in the 1994 first quarter on the
assets supporting the indexed GIC product was more than offset by
a reduction in GIC benefits as discussed below under the analysis
of change in policyholder benefits. Following is a summary of
investment income (loss) for the three categories of investments as
described above for the three months ended March 31, 1994 and 1993
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
_____________________
1994 1993
____ ____
<S> <C> <C>
General investment portfolio $ 40,533 $ 44,206
Investments supporting indexed GIC product (8,045) 11,438
Mortgage-backed securities held in the Trust 9,701
________ ________
Gross investment income 32,488 65,345
Less investment expenses (2,481) (2,921)
________ ________
Net investment expenses $ 30,007 $ 62,424
======== ========
</TABLE>
The decline in investment income from the general investment
portfolio was attributable, in part, to an approximate $190 million
decrease in the base of invested assets between the two periods.
Such decrease in invested assets resulted, in part, from the
transfer to Bankers effective March 31, 1993, of approximately
$163.6 million in invested assets upon the termination of a
reinsurance agreement between Bankers and an ICH subsidiary. In
addition, as previously discussed in ICH's 1993 Annual Report, an
ICH subsidiary experienced a significant increase in GIC
withdrawals (other than the indexed GIC product) throughout 1993,
which also contributed to the decrease in invested assets. Yields
on the general investment portfolio averaged approximately 6.7% for
each of the respective periods.
Realized investment gains totaled $.7 million for the 1994
first quarter, as compared to investment gains totaling $19.1
million for the comparable 1993 period. Investment gains in 1993
included $8.2 million of gains resulting from BLHC's redemption of
certain of its securities utilizing proceeds of its stock offering.
Other gains in 1993 resulted primarily from sales of fixed
maturities and equity securities. See Note 6 of the Notes to
Financial Statements for a comparative analysis of realized
investment gains and losses.
Equity in the earnings (losses) of equity investees and
limited partnerships includes ICH's pro rata share of the operating
earnings of BLHC and other investments in limited partnerships
which are accounted for by the equity method. Following is an
analysis of the components of such earnings (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
______________________
1994 1993
______ ______
<S> <C> <C>
Equity in operating earnings of:
BLHC $ 11,106
Limited partnership investments $ 412 760
________ _________
$ 412 $ 11,866
======== =========
</TABLE>
In 1993, other income included $17.1 million of non-recurring
income associated with the termination of a reinsurance agreement
between Bankers and an ICH subsidiary as previously discussed.
Excluding the income from the reinsurance transaction, other income
decreased from $9.5 million in 1993 to $2.5 million in 1994. A
substantial portion of the decline in other income resulted from
reduced profits earned through reinsurance experience refunds.
<PAGE>
<PAGE>
Following is a summary of policyholder benefits by major
business segment (in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
_______________________________
1994 1993
______ ______
<S> <C> <C>
Individual life and annuity $ 36,754 $ 38,696
Individual health 39,670 36,460
Group and other 20,717 19,760
Accumulation products (6,456) 19,090
________ ________
$ 90,685 $114,006
======== ========
</TABLE>
Life and annuity benefits decreased approximately $1.9
million, or 5%, a substantial portion of which was attributable to
a reduction in credited rates on interest-sensitive life insurance
policies between the periods. Individual health benefits increased
$3.2 million, reflecting a deterioration in the individual health
benefit ratio from 66.4% in 1993 to 73.1% in 1994. Group benefits
increased approximately $1.0 million, or 5%, resulting in an
increase in the group benefit ratio from 61.7% in 1993 to 64.1% in
1994. Benefits related to accumulation products include primarily
interest credited to annuity and GIC account balances. As
previously discussed, benefits attributable to the GIC product
indexed to the S&P 500 totaled a negative $10.5 million in the 1994
first quarter as compared to benefit expense totaling $11.2 million
in 1993.
Other operating expenses decreased approximately $11.3 million
from the 1993 period to the 1994 period. Following is a summary of
the major items included in other operating expenses (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
____________________________
1994 1993
______ ______
<S> <C> <C>
Non-deferrable commissions $ 10,070 $ 11,719
General and administrative expenses 23,709 28,258
Taxes, licenses and fees 3,701 4,537
Placement fee for collateralized mortgage
note obligations 4,413
________ ________
$ 37,480 $ 48,927
======== ========
</TABLE>
Non-deferrable commissions decreased primarily as a result of
a reduction in the sale of new group health insurance products.
General and administrative expenses decreased primarily as a result
of the expense reduction and consolidation programs implemented
during 1993. The placement fee in 1993 relates to the refinancing
of a previously-consolidated subsidiary's collateralized mortgage
note obligations.
Interest expense declined $6.7 million, or approximately 35%
in the first three months of 1994 as compared to the same period in
1993. In 1994, ICH incurred interest expense only on its
outstanding long-term debt, whereas in 1993 it had two categories
of interest expense, including interest on long-term debt and
collateralized mortgage obligations. Interest expense relative to
long-term debt declined $3.8 million, or 24%, primarily as a result
of the retirement of approximately $120.9 million of ICH's 16 1/2%
Senior Subordinated Debentures during 1993. During the first
quarter of 1993, ICH's consolidated results included the accounts
of the Trust that held mortgage-backed securities used to
collateralize certain promissory notes payable to unaffiliated
parties. ICH, through ICH Funding, sponsored the formation of and
held a residual equity interest in the Trust. Interest expense
related to the Trust's obligations and included in ICH's
consolidated results totaled $2.9 million for the first three
months of 1993. In July 1993, ICH's and an affiliate's ownership
interests were reduced through a sale of a 75% interest in the
Trust. As a consequence of the sale, the accounts of the Trust are
no longer included in ICH's consolidated
<PAGE>
<PAGE>
results and there was no similar interest expense was incurred in
1994.
Income tax expense in the 1994 first quarter represented 18.7%
of ICH's pre-tax loss, as compared to 24.7% of pre-tax earnings in
the corresponding period in 1993. The effective tax rate differed
from the expected 35% rate in 1994 primarily as a result of
amortization of excess cost for which there are no income tax
consequences. In 1993, the effective tax rate differed from the
then-expected 34% rate as a result of amortization of excess cost
and a $13.9 million reduction in the valuation allowance relative
to ICH's deferred income tax assets. ICH's deferred income tax
assets, before valuation allowance, declined from $145.1 million at
year-end 1992 to $69.3 million at March 31, 1993, primarily as a
result of the gain recognized on the BLHC stock offering and other
realized and unrealized investment gains in the first quarter of
1993. Accordingly, the valuation allowance relative to ICH's
deferred income tax assets totaling $24.1 million at year-end 1992
was reduced to $10.2 million at March 31, 1993, based on
management's assessment that ICH's ability to realize the benefits
of its remaining tax assets, specifically its capital loss
carryforwards, had been significantly enhanced.
ICH recognized a $1.8 million charge, net of $.9 million in
deferred taxes, for the cumulative effective to January 1, 1993, of
the adoption of Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions." ICH had previously provided a liability totaling
$20.1 million for postretirement benefits for retirees of certain
acquired companies through its purchase accounting relative to
such companies. The 1993 charge reflected the cost of providing
postretirement benefits for its remaining employees. ICH also
reported extraordinary losses in 1993 totaling $1.2 million, net of
tax effects, related to early extinguishment of debt. See Note 7
of the Notes to Financial Statements for additional information
regarding such losses.
Preferred dividend requirements declined $3.4 million from
$7.7 million in the 1993 first quarter to $4.3 million in the 1994
first quarter. Utilizing proceeds from the sale of its interest in
BLHC, ICH redeemed $50 million stated value of its 11% Series 1987-
A Preferred Stock on September 30, 1993, and $50 million stated
value of its 16% Series 1987-C Preferred Stock on December 2, 1993.
The results for the three months ended March 31, 1994
reflected improvement over the results as reported for the three
months ended December 31, 1993. Following is condensed comparative
statement of earnings information for the respective periods (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
____________________
March 31, Dec. 31,
1994 1993
_______ ________
<S> <C> <C>
Revenues $150,166 $169,781
======== ========
Operating loss $ (4,177) $(10,957)
Cumulative effect of accounting change, net of
tax effect (4,922)
Extraordinary losses, net of tax effect (559)
________ ________
Net loss (4,177) (16,438)
Less dividends on preferred stock (4,325) (5,684)
________ ________
Net loss applicable to common stock $ (8,502) $(22,122)
======== ========
Per common share, primary basis:
Operating loss $ (.18) $ (.35)
======== ========
Net loss $ (.18) $ (.46)
======== ========
</TABLE>
<PAGE>
<PAGE>
Revenues declined $19.6 million in the first quarter of 1994
as compared to the last quarter of 1993, primarily as a result of
the negative investment income on assets supporting the indexed GIC
product, as previously discussed. Investment income on such assets
totaled $6.7 million for the 1993 fourth quarter, as compared to a
negative $8.0 million in the 1994 first quarter, or a net change of
$14.7 million. Other factors contributing to the decline in
revenues included a $2.3 million reduction in premium income
(principally annuity premiums), a $1.9 million decrease in
investment gains, and other miscellaneous reductions totaling $.7
million.
The operating loss in the first quarter of 1994 totaled $4.2
million, as compared to an operating loss of $11.0 million in the
1993 fourth quarter. As previously reflected, the fourth quarter
1993 results included non-recurring charges totaling $10.0 million,
of which $9.0 million represented a provision for the Services
Agreements entered into with the principal shareholders of CNC.
Operating earnings before non-recurring credits and charges,
realized investment gains, interest expense on long-term debt and
income tax benefits declined from $8.3 million in the 1993 fourth
quarter to $6.6 million in the 1994 first quarter, primarily as a
result of increased claims incurred in the individual life and
health segments. Individual life claims, which can vary
significantly from quarter to quarter, increased approximately $4.9
million. Individual health benefits increased approximately $9.1
million, reflecting an increase in the individual health benefit
ratio from 55.5% to 73.1%. The increase in individual health
benefits was offset, in part, by an approximate $5.3 million
improvement in results of the group segment, primarily as a result
of the corrective actions taken in the fourth quarter of 1993 (as
discussed in ICH's 1993 Annual Report). Group operations continued
to operate at a slight loss in the 1994 first quarter, but based on
actions taken to date to discontinue coverage for certain
unprofitable group cases and to implement appropriate premium rate
increases, management expects that the group segment will return to
profitability in future quarters. The accumulation segment also
reflected an approximate $2.4 million improvement in operating
results primarily as a result of an improvement in the spread
between rates earned on invested assets and rates credited to
policyholder account balances. Incurred operating expenses,
primarily insurance taxes, licenses and fees, also declined
approximately $5.0 million between the periods. The Company
reflected substantial provisions for guaranty fund assessments in
the 1993 fourth quarter and had no similar charges in the 1994
first quarter. Interest expense decreased approximately $2.1
million primarily as a result of the redemption effective at year-
end 1993 of ICH's remaining $45.9 million principal amount of 16
1/2% Senior Subordinated Debentures due 1994. Preferred dividend
requirements declined an approximate $1.4 million, as a result of
ICH's redemption of $50 million stated value of its 16% Series
1987-C Preferred Stock in December 1993.
Reporting results of insurance operations on a quarterly basis
necessitates numerous estimates throughout the year, principally in
the calculation of reserves and in the determination of the
effective rate for federal income taxes. It is the Company's
practice to review its estimates at the end of each quarter and, if
necessary, make appropriate refinements, with the resulting effect
being reported in current operations. Only at year-end is the
Company able to assess retrospectively the precision of its
previous quarter estimates. The Company's fourth quarter results
contain the effect of the difference between previous estimates and
final year end results, and therefore, the results for an interim
period may not be indicative of the results for the entire year.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Modern American Life Insurance Company ("Modern"), a
subsidiary of I.C.H. Corporation ("ICH"), is a Defendant in a class
action lawsuit filed by William D. Castle and others on or about
May 14, 1993 in the Circuit Court of Jackson County, Missouri,
styled WILLIAM D. CASTLE, ET AL. V. MODERN AMERICAN LIFE INSURANCE
COMPANY, CV93-10275 (the "CASTLE case"). The suit purports to be
brought on behalf of a class of persons who own what Plaintiffs
denominate as charter contracts, issued by life insurance companies
merged into or acquired by Modern American Life Insurance Company
and its predecessors. The suit alleges breach of contract by
Modern, and seeks declaratory judgment, costs, expenses and such
other relief as the Court deems appropriate. As an alternative,
the suit seeks rescission. ICH was added as a Defendant to the
CASTLE case by an Amended Petition, filed February 16, 1994,
alleging that ICH should be liable for any judgment against Modern
through either disregarding Modern's corporate existence or finding
tortious interference by ICH with Plaintiffs' contracts with
Modern. ICH has filed a motion to dismiss the Amended Petition
which currently is pending.
On or about October 12, 1993, the Plaintiffs in the CASTLE
case also filed a lawsuit in the Circuit Court of Cole County,
Missouri, naming Modern American and the Director of the Missouri
Department of Insurance (the "Missouri Director") as Defendants.
The second lawsuit, styled ROBERT J. MEYER, ET AL. V. JAY ANGOFF,
DIRECTOR OF THE MISSOURI DEPARTMENT OF INSURANCE AND MODERN
AMERICAN LIFE INSURANCE COMPANY, CV193-1331CC (the "MEYER case"),
is an appeal from the regulatory proceedings before the Missouri
Department of Insurance, by which Modern American received
regulatory approvals required for it to participate in the
restructuring of the ICH insurance holding company organization.
The restructuring was completed on or about September 29, 1993.
The Plaintiffs in the MEYER case are seeking reversal or remand of
the Missouri Director's order of approval. The Cole Circuit Court
has determined that it will review the Department's decision on the
record pursuant to Missouri's administrative procedure act.
Modern American and ICH believe they have meritorious defenses
to both the CASTLE and MEYER cases and intend to defend both cases
vigorously.
ICH and Robert L. Beisenherz, Chairman and Chief Executive
Officer of the Company (collectively "the Company"), as well as
Robert T. Shaw, former Chairman of the Company, and certain former
affiliates of the Company, were added by an Amended Complaint,
filed December 3, 1993, as Defendants in a lawsuit pending in
Marion Circuit Court in Indianapolis, Indiana. MUTUAL SECURITY
LIFE INSURANCE COMPANY, BY ITS LIQUIDATOR, JOHN F. MORTELL V. JAMES
M. FAIL, EMILY S. FAIL, JACK A. GOCHENAUR, ALVIN R. TOWNSEND, SR.
JANICE T. TOWNSEND, CHARLES D. CASPER, HARRY T. CARNEAL, CLIFFORD
G. SMITH, KATHERYN F. SMITH, THOMAS K. PENNINGTON, MICHAEL
BOEDEKER, MELVIN R. SCHOCK, LIFESHARES GROUP, INC. LSC-MARKETING,
INC., LIFESHARES SERVICES COMPANY, MICHAEL S. LANG, LANG ASSOCI-
ATES, INC., BETA FINANCIAL CORPORATION, THE OKLAHOMA BANK, ROBERT
T. SHAW, CONSOLIDATED NATIONAL CORPORATION, I.C.H. CORPORATION,
BANKERS LIFE AND CASUALTY COMPANY, MARQUETTE NATIONAL LIFE
INSURANCE COMPANY, ROBERT L. BEISENHERZ, MARILYN BEISENHERZ,
THEODORE L. KESSNER, AND CROSBY, GUENZEL, DAVIS, KESNER & KUESTER
(the "Mutual Security case"). On January 3, 1994, the suit was
removed to the United States District Court, the Southern District
of Indiana at Indianapolis, Case No. IP94-0001C. A motion to
remand the MUTUAL SECURITY case back to state court, filed by the
Plaintiff Liquidator, has been denied. The Plaintiff, the
Commissioner of Insurance, who had been appointed Liquidator of
Mutual Security Life Insurance Company ("MSL") pursuant to a Final
Order of Liquidation, entered on December 6, 1991, alleges in the
amended complaint that the Defendant Fail and others who controlled
MSL misused assets of MSL to acquire control of Bluebonnet Savings
Bank, FSB, thereby contributing to the insolvency of MSL. The
allegations
<PAGE>
<PAGE>
against the Company arise primarily from a loan that was made to
James Fail in 1989 by Bankers Life and Casualty Company, at that
time a subsidiary of the Company. The Plaintiff alleges that the
Company and others are liable for the acts of James Fail under
doctrines of joint venture and conspiracy, including alleged
violations of the Racketeer Influenced & Corrupt Organizations Act
("RICO"), 18 U.S.C. Section 1961, ET SEQ. The complaint seeks unspecified
compensatory damages, treble damages, costs, attorney fees and all
other appropriate relief. I.C.H. and certain former affiliates of
the company have filed a Motion to Dismiss certain claims set forth
in the Amended Complaint, which motions are currently pending. The
Company believes it has meritorious defenses to the MUTUAL SECURITY
case and intends to defend the suit vigorously.
ITEM 2. CHANGES IN SECURITIES.
On March 11, 1994, the Board of Directors of I.C.H. Corporation
(the "Company") adopted resolutions to retire the Class B Common
Stock of the Company, all of the outstanding shares of which had
been repurchased by the Company on February 11, 1994, and to
eliminate all references to the Class B Common Stock in the
Company's Certificate of Incorporation. A Certificate of Retire-
ment of Class B Common Stock of I.C.H. Corporation was filed, in
accordance with the General Corporation Law of the State of
Delaware, on March 14, 1994, the effect of which was to eliminate
from the Company's Certificate of Incorporation all references to
the Class B Common Stock. The elimination of all references to the
Class B Common Stock in the Company's Certificate of Incorporation
removed from the Company's Certificate of Incorporation, among
other things, provisions relating to, and implementing, the special
voting rights of the Class B Common Stock in the election of
directors of the Company, including provisions classifying the
Board of Directors of the Company into Common Stock Directors and
Class B Common Directors; requiring that the number of directors be
at least four; requiring that no less than 50% of the Class B
Common Directors, Common Stock Directors and Preferred Directors be
independent directors, as defined therein; and relating to the
removal of directors and the filling of vacancies. The Company has
restated its Certificate of Incorporation, in accordance with the
General Corporation Law of the State of Delaware, to reflect the
elimination of the Class B Common Stock.
The Certificate of Incorporation defines the rights of the holders
of the Company's Common Stock and $1.75 Convertible Exchangeable
Preferred Stock, Series 1986-A (the Series 1986-A Preferred Stock).
The elimination of all references to the Class B Common Stock in
the Company's Certificate of Incorporation, following the repur-
chase of that stock, did not alter the rights of holders of Common
Stock and Series 1986-A Preferred Stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The description of exhibits listed on the Index to Exhibits
appearing on pages 25-27 of this Report is incorporated herein by
reference.
During the quarter ended March 31, 1994, I.C.H. Corporation
(the "Registrant") filed a Report on Form 8-K, dated January 15,
1994, to report, under Item 5 of that form, the execution of Stock
Purchase Agreements pursuant to which the Registrant agreed to
repurchase its Class B Common Stock from Consolidated National
Corporation ("CNC") and CNC agreed to sell shares of the
Registrant's Common Stock to Torchmark Corporation and Stephens
Inc.; and a Report on Form 8-K, dated February 11, 1994, to report
under Item 1 of that form, the closing of said Stock Purchase
Agreements and the sales of Common Stock and Class B Common Stock
and other transactions contemplated thereby.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
I.C.H. CORPORATION
BY: ______________________________
Robert L. Beisenherz, Chairman
of the Board, Chief Executive
Officer and President
BY: ______________________________
John T. Hull, Executive Vice
President, Treasurer and
Principal Accounting Officer
Date: May 16, 1994
<PAGE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
_______ ___________ __________
<S> <C> <C>
2.9 Stock Acquisition Agreement dated February 20,
1992, between the Registrant and Conseco, Inc.
(filed as Exhibit 2.10 to the Registrant's
Current Report on Form 8-K dated February 20,
1992 and incorporated herein by reference) and
amendments thereto (filed as Exhibit 2.15 to
the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1991, and as
Exhibit 2.16 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1992, and incorporated herein by
reference). . . . . . . . . . . . . . . . . .
2.17 Agreement, dated June 15, 1993, among I.C.H.
Corporation, Consolidated National Corporation
and Consolidated Fidelity Life Insurance
Company (filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated
June 15, 1993 and incorporated herein by
reference) . . . . . . . . . . . . . . . . .
3.1 Corrected Restated Certificate of
Incorporation of the Registrant. . . . . . .
10.1 Management and Consulting Agreement effective
January 22, 1985 among the Registrant,
Consolidated National Corporation and
Consolidated National Successor Corporation
(filed as Exhibit 10.21 to the Registrant's
Registration Statement on Form S-14, No.
2-96685, and incorporated herein by
reference) . . . . . . . . . . . . . . . . .
10.2 Termination Agreement, dated February 11,
1994, between I.C.H. Corporation and
Consolidated National Corporation relating to
the Management and Consulting Agreement
referenced as Exhibit 10.1 above (filed as
Exhibit 10.2 of the Registrant's Annual Report
on Form 10-K for the year ended December 31,
1993 and incorporated herein by reference) .
10.28 Retirement/Retainer Agreement, dated May 26,
1993, among I.C.H. Corporation, Facilities
Management Installation, Inc. and Phillip E.
Allen (filed as Exhibit 10.2 of the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993 and
incorporated herein by reference). . . . . .
10.29 Agreement, dated September 11, 1993, between
I.C.H. Corporation and Conseco, Inc. (filed as
Exhibit 4 to Amendment No. 1 to the Schedule
13D relating to the common stock of Bankers
Life Holding Corporation, filed by I.C.H.
Corporation, Consolidated National
Corporation, Robert T. Shaw and C. Fred Rice,
dated September 15, 1993 and incorporated
herein by reference) . . . . . . . . . . . .
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
_______ ___________ __________
<S> <C> <C>
10.30 Agreement, dated September 11, 1993, between
I.C.H. Corporation and Bankers National Life
Insurance Company (filed as Exhibit 5 to
Amendment No. 1 to the Schedule 13D relating
to the common stock of Bankers Life Holding
Corporation, filed by I.C.H. Corporation,
Consolidated National Corporation, Robert T.
Shaw and C. Fred Rice, dated September 15,
1993 and incorporated herein by reference) .
10.31 Letter agreement, dated September 11, 1993,
among I.C.H. Corporation, Conseco, Inc. and
Bankers Life Holding Corporation (filed as
Exhibit 6 to Amendment No. 1 to the Schedule
13D relating to the common stock of Bankers
Life Holding Corporation, filed by I.C.H.
Corporation, Consolidated National
Corporation, Robert T. Shaw and C. Fred Rice,
dated September 15, 1993 and incorporated
herein by reference) . . . . . . . . . . . .
10.32 Stock Purchase Agreement, dated January 15,
1994, among Consolidated National Corporation,
Consolidated Fidelity Life Insurance Company,
Robert T. Shaw, C. Fred Rice, I.C.H.
Corporation and Torchmark Corporation (filed
as Exhibit No. 1 of the Registrant's Current
Report on Form 8-K dated January 15, 1994), as
amended (incorporated by reference to Exhibit
10 of the Registrant's Current Report on Form
8-K dated February 11, 1994 and incorporated
herein by reference) . . . . . . . . . . . .
10.33 Stock Purchase Agreement, dated January 15,
1994, among Consolidated National Corporation,
Consolidated Fidelity Life Insurance Company,
Robert T. Shaw, C. Fred Rice, I.C.H.
Corporation and Stephens Inc. (filed as
Exhibit No. 2 of the Registrant's Current
Report on Form 8-K dated January 15, 1994 and
incorporated herein by reference). . . . . .
10.34 Letter from I.C.H. Corporation to Robert T.
Shaw effective January 15, 1994 (filed as
Exhibit 10.34 of the Registrant's Annual
Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by
reference) . . . . . . . . . . . . . . . . .
10.35 Letter, dated January 15, 1994, from I.C.H.
Corporation to Robert T. Shaw (filed as
Exhibit No. 5 of the Registrant's Current
Report on Form 8-K dated January 15, 1994 and
incorporated herein by reference). . . . . .
10.36 Letter, dated January 15, 1994, from I.C.H.
Corporation to Consolidated National
Corporation (filed as Exhibit No. 6 of the
Registrant's Current Report on Form 8-K dated
January 15, 1994 and incorporated herein by
reference) . . . . . . . . . . . . . . . . .
10.37 Independent Contractor and Services Agreement,
dated February 11, 1994, between I.C.H. Corpo-
ration and Robert T. Shaw (filed as Exhibit
No. 7 of the Registrant's Current Report on
Form 8-K dated February 11, 1994 and
incorporated herein by reference). . . . . .
</Table
<PAGE>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
_______ ___________ __________
<S> <C> <C>
10.38 Independent Contractor and Services Agreement,
dated February 11, 1994, between I.C.H. Corpo-
ration and C. Fred Rice (filed as Exhibit No.
8 of the Registrant's Current Report on Form
8-K dated February 11, 1994 and incorporated
herein by reference) . . . . . . . . . . . .
10.39 Mutual Release, dated February 11, 1994, among
I.C.H. Corporation and Consolidated National
Corporation, Robert T. Shaw, C. Fred Rice and
Edward J. Carlisle (filed as Exhibit No. 9 of
the Registrant's Current Report on Form 8-K
dated February 11, 1994 and incorporated
herein by reference) . . . . . . . . . . . .
10.40 Form of Agreement entered into by I.C.H.
Corporation and certain of its employees,
including John T. Hull and W. Sherman Lay
(filed as Exhibit No. 10.40 of the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 and
incorporated herein by reference). . . . . .
10.41 Stock Purchase Agreement, dated January 15,
1994, between Consolidated National
Corporation and I.C.H. Corporation (filed as
Exhibit No. 3 of the Registrant's Current
Report on Form 8-K dated January 15, 1994 and
incorporated herein by reference). . . . . .
10.43 Amendment to Retirement/Retainer Agreement
referenced as Exhibit No. 10.28 above. . . .
11.1 Computation of Earnings (Loss) Per Share of
Common Stock on Average Shares Outstanding and
Fully Diluted Bases for the three months ended
March 31, 1994 and 1993. . . . . . . . . . .
</TABLE>
<PAGE>
<PAGE>
Exhibit 3.1
CERTIFICATE OF CORRECTION
TO THE
1994 RESTATED CERTIFICATE OF INCORPORATION
OF
I.C.H. CORPORATION
I.C.H. Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corpora-
tion Law of the State of Delaware, DOES HEREBY CERTIFY:
1. The name of the Corporation is I.C.H. Corporation.
2. A 1994 Restated Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on
March 18, 1994 and said 1994 Restated Certificate of Incorporation
requires correction as permitted by Section (f) of Section 103 of
the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said 1994 Restate Certificate
of Incorporation to be corrected is that said 1994 Restated
Certificate of Incorporation incorrectly included certain provi-
sions that theretofore had been eliminated from the Certificate of
Incorporation of the Corporation as a result of the filing of a
Certificate of Retirement of Class B Common Stock of the Corpora-
tion with the Secretary of State of Delaware on March 14, 1994.
Accordingly, the 1994 Restated Certificate of Incorporation filed
with the Secretary of State on March 18, 1994 is an inaccurate
record of the provisions of the certificate of incorporation of the
Corporation as theretofore amended and supplemented, was filed in
error, is null and void in its entirety and is of no force or
effect.
IN WITNESS WHEREOF, I.C.H. Corporation has caused this
Certificate of Correction to be executed this 14th day of April,
1994.
I.C.H. CORPORATION
By: /s/ Sheryl G. Snyder
_______________________________
Sheryl G. Snyder
Executive Vice President
Attest:
BY: /s/ Cynthia W. Young
__________________________
Cynthia W. Young
Secretary
<PAGE>
<PAGE>
1994
RESTATED
CERTIFICATE OF INCORPORATION
OF
I.C.H. CORPORATION
(PURSUANT TO SECTION 245 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
I.C.H. Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify that:
FIRST: The name of the Corporation is I.C.H. Corporation.
I.C.H. Corporation was originally incorporated under the name
I.C.H., Inc., and the original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of
Delaware on April 22, 1977.
SECOND: The Restated Certificate of Incorporation of the
Corporation only restates and integrates, and does not further
amend, the provisions of the Corporation's Certificate of Incorpo-
ration as heretofore amended or supplemented, and there is no
discrepancy between those provisions and the provisions of the
Restated Certificate of Incorporation.
THIRD: The Restated Certificate of Incorporation of the
Corporation was duly adopted by the directors of the Corporation in
accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware.
FOURTH: The text of the Certificate of Incorporation is
hereby restated to read in its entirety as follows:
ARTICLE ONE. The name of the Corporation is:
I.C.H. Corporation.
ARTICLE TWO. The address of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of the
registered agent at such address is The Corporation Trust Company.
ARTICLE THREE. The nature of the business or purpose for which the
Corporation is to be conducted or promoted is:
To engage in any lawful act or activity for which a corpora-
tion may be organized under the General Corporation Law of
Delaware.
<PAGE>
<PAGE>
ARTICLE FOUR. The total number of shares of stock that the
Corporation is authorized to issue is Two Hundred Fifty Million
(250,000,000) shares, of which Two Hundred Million (200,000,000)
shares, with a par value of One Dollar ($1.00) per share, shall be
designated "Common Stock"; and Fifty Million (50,000,000) shares,
without par value, shall be designated "Series Preferred Stock."
The designations, preferences, limitations and relative rights
of the shares of each class of stock of the Corporation are as
follows:
A. COMMON STOCK. Except as otherwise provided by law or in
this Article Four, all shares of Common Stock shall be identical in
all respects and have equal rights and privileges. Subject to the
rights, if any, of any series of Series Preferred Stock, these
rights and privileges include, without limitation, the right to
share ratably on a per share basis (i) in such cash, stock or other
dividends and distributions as from time to time may be declared by
the Board of Directors of the Corporation (the "Board of Direc-
tors") or by the Corporation with respect to the Common Stock and
(ii) upon the voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, in all distributions
in assets or funds of the Corporation.
1. Voting. With respect to any matter on which the
holders of Common Stock shall be entitled to vote, such holders
shall be entitled to one vote for each outstanding share of Common
Stock respectively owned of record by them.
B. SERIES PREFERRED STOCK. Series Preferred Stock may be
issued in one or more series. The designations, powers, preferenc-
es and relative, participating, optional and other special rights,
and the qualifications, limitations and restrictions thereof, of
each series of Series Preferred Stock shall be such as are stated
and expressed herein, and to the extent not stated and expressed
herein, shall be such as may be fixed by the Board of Directors
(authority so to do being hereby expressly granted) and stated in
a resolution or resolutions providing for the issuance, or
affecting the terms, of Series Preferred Stock of such series
adopted by the Board of Directors and filed in the Office of the
Secretary of State of Delaware and recorded in the Office of the
Recorder of New Castle County, Delaware, in accordance with the
provisions of the Delaware General Corporation Law. Such resolu-
tion or resolutions, with respect to each series, shall (1) specify
the series designation, (2) specify the stated value or capital
value, if any, to be assigned to such series, which amount shall
not be less than the amount to which each share of such series
shall be entitled to receive upon the voluntary or involuntary
liquidation, dissolution or winding up of the
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<PAGE>
<PAGE>
Corporation, (3) fix the dividend rate, if any, thereof, and
stipulate whether or not dividends on such series shall be
cumulative and if so the date from which they shall be cumulative,
(4) fix the amount which the holders of such series shall be
entitled to be paid in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, (5)
state whether or not such series shall be redeemable and at what
times and under what conditions and the amount or amounts payable
thereon in the event of redemption; and may, in a manner not
inconsistent with the provisions of the Corporation's Certificate
of Incorporation, as amended from time to time (the "Certificate"),
(i) designate the number of shares of such series which may be
issued, (ii) provide for a sinking or purchase fund applicable to
such series, (iii) grant voting rights to holders of shares of such
series in addition to those required by the Delaware General
Corporation Law and not inconsistent with such law or this Article
Four, (iv) impose conditions or restrictions upon the creation of
indebtedness of the Corporation or upon the issuance of additional
Series Preferred Stock or other capital stock ranking equally
therewith or with priority thereto as to dividends or liquidation
rights, (v) impose conditions or restrictions upon the payment of
dividends or the making of other distributions upon, or the
redemption, purchase or acquisition of, shares of any Common Stock,
or other capital stock ranking junior to such series of Series
Preferred Stock as to dividends or liquidation rights, (vi) grant
to the holders of such series as a class the right to convert
shares of such series on the terms and at the conversion ratio
fixed for such series, into shares of Common Stock or other capital
stock of the Corporation ranking junior to such series as to
dividends or distribution of assets on liquidation, (vii) prescribe
the rights of the Corporation to reissue each series purchased or
otherwise reacquired or redeemed or retired through the operation
of a purchase or sinking fund or otherwise, or surrendered to the
Corporation on conversion, (viii) grant such other special rights
to the holders of shares of such series as shall not be inconsis-
tent with the provisions of the Delaware General Corporation Law or
this Article Four and (ix) impose such other qualifications,
rights, preferences and restrictions as are not inconsistent with
the Certificate or the provisions of the Delaware General Corpora-
tion Law. The phrase "fixed for such series" and any similar
terms, when referring to a series of Series Preferred Stock, shall
mean "stated and expressed in a resolution or resolutions providing
for the issuance, or affecting the terms, of any series of Series
Preferred Stock adopted by the Board of Directors and filed in the
Office of the Secretary of State of the State of Delaware and the
Office of the Recorder of New Castle County, Delaware."
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<PAGE>
1. Dividends. Subject to the conditions set forth
herein, unless otherwise fixed for such series, the holders of the
Series Preferred Stock of each series shall be entitled to receive,
when and as declared by the Board of Directors, out of any funds
legally available for that purpose, preferential dividends in cash
at the rate per annum, or in other property, fixed for such series,
and such additional, participating or other dividends as may be
fixed for such series. Unless otherwise fixed for such series,
such dividends shall be payable on such date or dates as may be
fixed by the Board of Directors (hereinafter severally referred to
as a "dividend payment date") to holders of record on a date, not
exceeding fifty days preceding each such dividend payment date,
fixed for such series in advance of payment of each particular
dividend. Preferential dividends (but not additional, participat-
ing or other dividends) on shares of the Series Preferred Stock
shall accrue from the dividend payment date immediately preceding
the date of issuance (unless the date of issuance shall be a
dividend payment date, in which case they shall accrue from that
date) or from such other date or dates as may be fixed for such
series.
(a) Unless otherwise fixed for such series, each
series of Series Preferred Stock shall rank on a parity with each
other series of Series Preferred Stock, irrespective of series,
with respect to preferential dividends at the respective rates
fixed for such series, and no dividend shall be declared and paid
or set apart for payment on Series Preferred Stock of any series
unless at the same time a preferential dividend in like proportion
to the preferential dividends accrued upon the Series Preferred
Stock of each other series shall be declared and paid or set apart
for payment, as the case may be, on Series Preferred Stock of each
other series then outstanding. Unless otherwise fixed for such
series, until preferential dividends at the rate fixed for each
series shall be declared and paid or set apart for payment in full
on all outstanding shares of Series Preferred Stock for all
previous dividend periods and for the current dividend period, no
dividends, additional dividends or participating dividends shall be
declared or paid upon, and no assets shall be distributed to or set
apart for, shares of any series of Series Preferred Stock, any
Common Stock, or other capital stock of the Corporation. Unless
otherwise fixed for such series, no shares of a series of Series
Preferred Stock shall be purchased or redeemed by the Corporation,
except for a sinking fund or funds, unless all preferential
dividends on each then outstanding series of the Series Preferred
Stock for all past and current dividend periods shall have been
paid, or declared and a sum sufficient for the payment thereof set
apart for payment. Unless otherwise fixed for such series, accrued
and unpaid preferential dividends on the Series Preferred Stock
shall not bear interest.
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(b) Subject to the dividend rights of the holders
of Series Preferred Stock, the holders of the outstanding shares of
Common Stock shall be entitled to receive such dividends as may be
declared thereon from time to time by the Board of Directors, in
its discretion, out of any assets of the Corporation at the time
legally available for the payments of dividends; provided, however,
that no dividends may be declared or paid on the Common Stock
unless at the same time the Board of Directors shall also declare
and pay to the holders of the other such class of stock a per share
dividend equal, in kind and amount, to the per share dividend paid
or declared and set apart for payment to the holders of Common
Stock.
(c) Subject to the preferential dividend rights of
the holders of the Series Preferred Stock as a class, the holders
of any series of Series Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of any
funds legally available for such purpose, such additional or
participating dividends, if any, as may be fixed for such series.
(d) Unless otherwise fixed for such series, the
term "accrued and unpaid dividends" as used in this Article Four
with respect to the Series Preferred Stock shall mean "preferential
dividends on all outstanding shares of a series of Series Preferred
Stock at the rates respectively fixed for such series, from the
respective dates from which such preferential dividends shall
accrue to the date as of which accrued and unpaid dividends are
being determined, less the aggregate of preferential dividends
theretofore paid or declared and set apart for payment upon such
outstanding Series Preferred Stock during such period."
2. Voting. Except as otherwise provided by law or by
the provisions of this Article Four, the resolution of the Board of
Directors providing for the issuance, or affecting the terms, of
any series of Series Preferred Stock may, but need not, provide
that the holders of such series of Series Preferred Stock have such
voting rights as the Board of Directors shall determine. In
addition to any other voting rights, the Board of Directors may
grant holders of any series of Series Preferred Stock the right to
vote in the election of Common Stock Directors as provided in
Section A.l. of this Article Four. The Board of Directors also may
grant holders of any series of Series Preferred Stock the right to
vote to elect one or more directors of the Corporation (the
"Preferred Directors") if, but only to the extent, dividends on
such series are in arrears for a period, in an amount, or upon such
other terms and conditions as are fixed for such series. The
election of any Preferred Director shall have the effect of
enlarging the Board of Directors by the number of Preferred
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Directors elected. Unless otherwise fixed for such series, a
Preferred Director may be removed, with or without cause, by vote
of the holders of each series of Series Preferred Stock having the
right to vote in the election of such Preferred Director, and any
director appointed to fill a vacancy of a Preferred Director shall
be appointed by the sole remaining Preferred Director or by a
majority of the remaining Preferred Directors whether or not a
quorum. Unless otherwise fixed for such series, all series of
Series Preferred Stock that have the right to vote in the election
of a Preferred Director shall vote together as a single class in
the election or removal of any Preferred Director.
3. Conversion. The Series Preferred Stock of any
series may be convertible into shares of any class or series of
capital stock of the Corporation ranking junior to such series as
to dividends or distribution of assets on liquidation. Conversion
of Series Preferred Stock of any series shall be permitted only if
and in the manner and at the conversion ratio fixed for such
series; provided, however, that as to any shares of any series of
Series Preferred Stock that shall be subject to redemption and that
shall have been called for redemption, any right of conversion
shall terminate at the close of business on the third full business
day before the date fixed for redemption, unless otherwise fixed
for such series. At the time of the conversion, unless otherwise
fixed for such series, no payment or adjustment need be made for
accrued and unpaid dividends on any shares of any series of Series
Preferred Stock that shall be converted or for dividends on any
shares of the Corporation's capital stock that shall be issuable
upon such conversion. Unless otherwise fixed for such series, all
accrued and unpaid dividends on such shares of Series Preferred
Stock up to the dividend payment date immediately preceding the
date of conversion shall constitute a debt of the Corporation
payable to the converting stockholder, and no dividend shall be
paid upon any shares of Common Stock until such debt shall be paid
or sufficient funds set apart for the payment thereof. Unless
otherwise fixed for such series, the Series Preferred Stock of any
series that is convertible may be converted (subject to the above
time limitation in the case of a call for redemption) only into
full shares of the Corporation's capital stock, at the conversion
ratio in effect for such series at the time of the conversion.
Unless otherwise fixed for such series, no fraction of a share of
such capital stock shall be issued upon any conversion, but, in
lieu of such issuance, there shall be paid to any holder of shares
of any series of Series Preferred Stock surrendered for conversion,
as soon as practicable after the date such shares are surrendered
for conversion, an amount in cash equal to the same fraction of the
market value of a full share of such capital stock issuable upon
conversion of such series. For such purpose, unless otherwise
fixed for such series, the market value of a share of
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such capital stock shall be the closing price on the principal
national securities exchange on which such capital stock is listed
for trading, or if not so listed, on the National Association of
Securities Dealers National Market System; or if no such closing
price is available, at the average of the closing bid and asked
prices reported on the National Association of Securities Dealers
Automated Quotation System on the trading day immediately preceding
the date upon which such conversion occurs; or in the absence of
any of the foregoing, the fair market value as determined and set
forth in a resolution adopted by the Board of Directors (whose
determination shall be final and conclusive).
(a) The conversion ratio of any series of Series
Preferred Stock shall be subject to adjustment in accordance with
any anti-dilution provisions fixed for such series.
(b) Unless otherwise fixed for such series, any
adjustment of the conversion ratio as provided in the resolution
establishing such series shall remain in effect until further
adjustment of the conversion ratio as required thereunder. Upon
each such adjustment, unless otherwise fixed for such series, a
written instrument, signed by an officer of the Corporation,
setting forth such adjustment and a computation and a summary of
the facts upon which it is based and the resolutions, if any, of
the Board of Directors passed in connection therewith, shall
forthwith be filed with the transfer agent or agents for the Series
Preferred Stock and made available for inspection by the stockhold-
ers, and any adjustment so evidenced, made in good faith, shall be
binding upon all stockholders and upon the Corporation.
(c) Unless otherwise fixed for such series, in
order to convert shares of any series of Series Preferred Stock
into shares of the Corporation's capital stock, the holder thereof
shall surrender the certificate or certificates for shares of such
series, duly endorsed to the Corporation or in blank, at the office
of any transfer agent for the Series Preferred Stock (or such other
place as may be designated by the Corporation), and shall give
written notice to the Corporation at said office that he elects to
convert the same and shall state in writing therein the name or
names in which he wishes the certificate or certificates for shares
of such capital stock to be issued. Unless otherwise fixed for
such series, the Corporation will, as soon as practicable thereaf-
ter, deliver at said office to such holder of the converted shares
of Series Preferred Stock, or to his nominee or nominees, a
certificate or certificates for the number of full shares of the
Corporation's capital stock to which he shall be entitled as
aforesaid and make payment for any fractional shares. Unless
otherwise fixed for such series,
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shares of Series Preferred Stock shall be deemed to have been
converted as of the date of the surrender of such shares for
conversion as provided above, and the person or persons entitled to
receive shares of the Corporation's capital stock issuable upon
such conversion shall be treated for all purposes as the record
holder or holders of such shares of the Corporation's capital stock
on such date. Unless otherwise fixed for such series, all shares
of any series of Series Preferred Stock that shall have been
surrendered for conversion shall no longer be deemed to be
outstanding and all rights with respect to such shares shall
forthwith cease and terminate except only the right of the holder
thereof to receive in exchange therefor full shares of the
Corporation's capital stock and payment for any fractional shares.
Unless otherwise fixed for such series, any shares of any series of
Series Preferred Stock so converted shall be returned to the status
of authorized but unissued shares of Series Preferred Stock without
designation as to series and may be reissued as Series Preferred
Stock of any future series to be designated by the Board of
Directors.
(d) A number of authorized shares of capital stock
of the Corporation sufficient to provide for the conversion of all
series of Series Preferred Stock outstanding and having conversion
rights shall at all times be reserved for conversion in accordance
with the terms of the respective resolutions authorizing such
series.
4. Liquidation. In the event of the liquidation,
dissolution, or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the assets of the Corporation
shall be distributed among the holders of its capital stock in
accordance with the following schedule of priorities and preferenc-
es:
(a) Unless otherwise fixed for such series, there
shall be paid to the holders of Series Preferred Stock from any
available assets such preferential amounts, in cash or other
property, as may be fixed respectively for each such series, plus
in each case a further amount per share equal to all accrued and
unpaid dividends thereon, all of which shall be paid or set apart
for payment before the payment or setting apart for payment of any
amount for, or the distribution of any assets of the Corporation
to, holders of Common Stock; provided, however, that unless
otherwise fixed for such series, no such payment shall be made to
holders of shares of any series of the Series Preferred Stock
unless at the same time the respective preferential amounts to
which the shares of each other series of the Series Preferred Stock
are entitled shall likewise be paid or set apart for payment to
holders of shares of each such other series. In the event the
assets of the Corporation available for distribution to the holders
of Series
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Preferred Stock shall be insufficient to permit payment to the
holders of all series of Series Preferred Stock of the full
preferential amount or amounts, then unless otherwise fixed for
such series, the entire remaining assets shall be distributed to
the holders of all series of the Series Preferred Stock in amounts
in like proportion to the respective preferential amounts to which
they are entitled.
(b) After the amounts provided for by Section
B.4.(a) have been paid or distributed, the remaining assets and
funds of the Corporation shall be distributed among the holders of
the Common Stock and any series of Series Preferred Stock or other
capital stock of the Corporation that ranks on parity with the
Common Stock as to distribution of assets on liquidation, pro rata
on a per share basis.
(c) Unless otherwise fixed for a series of Series
Preferred Stock, neither the consolidation nor merger of the
Corporation into or with another corporation or corporations, nor
the merger or consolidation of another corporation or corporations
with or into the Corporation, nor a reorganization of the Corpora-
tion, nor the purchase or redemption of all or part of the
outstanding shares of any class or classes of the capital stock of
the Corporation, nor a sale or transfer of the property and
business of the Corporation as, or substantially as, an entity,
shall be deemed a liquidation, dissolution, or winding up of the
affairs of the Corporation, within the meaning of any of the
provisions of this Article Four.
5. Redemption. Subject to the limitations of this
Article Four, the Series Preferred Stock of any series, to the
extent, if any, fixed for such series, may be redeemed at the
option of the Corporation at any time or from time to time at such
redemption price or prices per share as may be fixed for such
series plus, in each case and unless otherwise fixed for such
series, an amount equal to accrued and unpaid dividends thereon to
the date designated for redemption or to such other date, and upon
such other terms not inconsistent herewith, as may be fixed for
such series. In the event that at any time less than all the
Series Preferred Stock of any series is to be redeemed, the shares
to be redeemed may be selected pro rata, or by lot, or by such
other equitable method as may be determined by the Board of
Directors. Unless otherwise fixed for such series, notice of
redemption shall be mailed or caused to be mailed by the Corpora-
tion, addressed to each holder of record of shares to be redeemed,
at his last address as the same appears on the books of the
Corporation at least 30 days before the date designated for
redemption. Unless otherwise fixed for such series, if such notice
of redemption shall have been duly mailed, for such shares, and if
on or before the redemption date designated in such notice, all
funds necessary
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for such redemption shall have been irrevocably set aside by the
Corporation in trust for the account of the holders of the shares
of one or more series of Series Preferred Stock to be redeemed, so
as to be available therefor, then, from and after the setting aside
of such funds and the mailing of such notice, notwithstanding that
any certificate for shares of any series of Series Preferred Stock
so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby shall no longer be
deemed outstanding, and the holder of such certificate or certifi-
cates shall have with respect to such shares no rights in or with
respect to the Corporation except the right to receive the
redemption price thereof, without interest, upon the surrender of
such certificate or certificates and the right, if and to the
extent fixed for such series by the resolution of the Board of
Directors providing for the issuance of shares of the series, to
convert such shares, on or before the close of business on the
third full business day before the date designated for redemption,
into other capital stock of the Corporation, and after the date
designated for redemption such shares shall not be transferable on
the books of the Corporation except to the Corporation. Unless
otherwise fixed for such series, any moneys so set aside in trust
by the Corporation and unclaimed at the end of six years from the
date fixed for such redemption shall be repaid to the Corporation,
after which repayment, holders of the shares so called for
redemption shall look only to the Corporation for repayment
thereof. Unless otherwise fixed for such series, any shares of any
Series Preferred Stock so redeemed shall be returned to the status
of authorized but unissued shares of Series Preferred Stock so
redeemed shall be returned to the status of authorized but unissued
shares of Series Preferred Stock without designation as to series
and may be reissued as Series Preferred Stock of any future series
designated by the Board of Directors.
6. Authorized Shares. The number of authorized shares
of the Series Preferred Stock or of any particular series may be
increased or decreased by the affirmative vote of the holders of a
majority of the shares of Common Stock.
C. SERIES 1984-A PREFERRED STOCK. At a meeting duly held on
October 8, 1984, the Board of Directors of the Corporation duly
adopted the following resolutions (with recitals therein accurate
at and as of such date) designating a new series of Series
Preferred Stock of the Corporation:
WHEREAS, the Corporation's Certificate of Incorporation, as
amended (the "Certificate"), now authorizes the issuance of
9,000,000 shares of common stock, with a par value of $1.00 per
share ("Common Stock"), and 5,000,000 shares of series preferred
stock, without par value ("Series Preferred Stock"); and
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WHEREAS, Article Four of the Certificate now expressly vests
in the Board of Directors the authority to fix by resolution or
resolutions providing for the issuance of the Series Preferred
Stock the stated or capital value, voting powers, designations,
preferences and relative, participating, optional or other special
rights and the qualifications, limitations or restrictions thereon
of the shares of Series Preferred Stock that are not fixed by the
Certificate; and
WHEREAS, the Corporation desires to create a new series of
Series Preferred Stock.
NOW, THEREFORE, be it
RESOLVED, that, pursuant to the authority expressly granted to
and vested in the Board of Directors by the provisions of the
Certificate, unissued shares of the Series Preferred Stock hereby
are classified and authorized for issuance, and the designation and
number and the voting powers, designations, preferences and
relative, participating, optional and other special rights of such
shares, and the qualifications, limitations and restrictions of
such shares, hereby are fixed as follows:
1. NUMBER AND DESIGNATION. A series of 541,563 shares
of the Series Preferred Stock hereby is established and designated
Series 1984-A Preferred Stock (the "Series 1984-A Preferred
Stock"). The Board of Directors may, from time to time, by duly
adopted resolution, increase or decrease the number of shares of
Series 1984-A Preferred Stock so designated.
2. STATED VALUE. The stated value of each share of
Series 1984-A Preferred Stock shall be $41.07.
3. VOTING PROVISIONS. The holders of shares of Series
1984-A Preferred Stock shall have the right to one vote per share,
as a single class with the Common Stock, whether nor or hereafter
issued, on all matters submitted to a vote of the holders of the
Common Stock. Nothing contained in this SECTION 3 shall prevent
the creation of one or more additional series of Series Preferred
Stock which have the right to vote with the Series 1984-A Preferred
Stock and the Common Stock as a single class on all or particular
matters submitted to a vote of the holders of the Common Stock.
4. DIVIDEND PROVISIONS. The holders of Series 1984-A
Preferred Stock, in preference and priority to the holders of
Common Stock and any other shares of the Company's capital stock
ranking junior to the Series 1984-A Preferred Stock as to dividends
or liquidation rights, whether now or hereafter issued ("Junior
Stock"), shall be entitled to
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receive, when and as declared by the Board of Directors, 12% cash
dividends at the rate of $4.93 per share per calendar year, and no
more. Such dividends shall be payable quarterly, commencing
January 1, 1985, on the first days of January, April, July and
October of each year ("Dividend Payment Dates"), to holders of
record of shares of Series 1984-A Preferred Stock at the close of
business on such date preceding the respective Dividend Payment
Date as may be fixed by the Board of Directors in a manner
consistent with the Certificate and the laws of the State of
Delaware.
(a) Dividends on Series 1984-A Preferred Stock
shall accumulate and be cumulative from the date of original
issuance, whether or not in any quarterly dividend period there are
funds of the Corporation legally available for payment.
(b) For so long as any Series 1984-A Preferred
Stock is outstanding, the Corporation shall not declare or pay any
dividend or distribution upon any class of Junior Stock unless all
current and accumulated cash dividends have been paid or declared
and set apart for payment upon all outstanding shares of the Series
1984-A Preferred Stock.
(c) For so long as any Series 1984-A Preferred
Stock shall be outstanding, the Corporation shall not purchase,
redeem, or otherwise acquire any shares of any Junior Stock, nor
shall any funds be set apart or made available for any sinking fund
for the purpose or redemption of any Junior Stock, unless all
current and accumulated cash dividends have been paid or declared
and set apart for payment upon all outstanding shares of the Series
1984-A Preferred Stock.
(d) Cash dividends payable on the Series 1984-A
Preferred Stock shall be computed for each full quarterly dividend
period by dividing the annual rate by four and, for any period less
than a full quarterly dividend period, by multiplying such
quarterly dividend by a fraction, the numerator of which is the
actual number of days elapsed in the quarter and the denominator of
which is the actual number of days in the quarter, in each case
including the Dividend Payment Date.
5. REDEMPTION PROVISIONS. The Series 1984-A Preferred
Stock may be redeemed by the Corporation, as hereinafter provided,
in whole or in part, at a cash redemption price equal to its stated
value of $41.07 per share, plus current and accumulated unpaid cash
dividends to the date fixed for redemption, whether or not earned,
declared or in arrears.
(a) No redemption of the Series 1984-A Preferred
Stock may be made before the fourth anniversary of the date of
issuance of the shares called for redemption.
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Commencing on the January 1 first occurring four years after
issuance of any Series 1984-A Preferred Stock, the Corporation may
call for mandatory redemption, during that calendar year and each
calendar year thereafter, a number of shares of Series 1984-A
Preferred Stock equal to 20% of the aggregate number of shares of
Series 1984-A Preferred Stock which on such January 1 had been
outstanding more than four years. The right of mandatory redemp-
tion granted in this SECTION 5(A) shall be cumulative from year to
year.
(b) If less than all of the Series 1984-A Preferred
Stock is to be so redeemed, the redemption shall be made in such
amount and by such method, either by lot or PRO RATA, and subject
to such provisions of convenience, as shall from time to time be
determined by the Board of Directors.
(c) Notice of any such redemption shall be mailed
or caused to be mailed by the Corporation, postage prepaid, not
less than 30 days before the date fixed for redemption, to each
holder of record of the shares of Series 1984-A Preferred Stock to
be redeemed at his address, as the same shall appear upon the books
of the Corporation, stating such election on the part of the
Corporation, and that on the redemption date there will become due
and payable upon each of the shares of Series 1984-A Preferred
Stock to be redeemed, at the place specified in such notice, the
redemption price of $41.07 per share, plus current and accumulated
unpaid dividends as provided in this SECTION 5. Any failure by the
Corporation to cause proper notice to be given shall not affect the
validity of the proceedings for such redemption except as to the
stockholder who was not notified properly.
(d) If on or before the date fixed for redemption
the Corporation shall deposit with any of the Corporation's
transfer agents and registrars, as a trust fund for the benefit of
the respective holders of the shares of Series 1984-A Preferred
Stock to be redeemed, sums sufficient to redeem such shares of
Series 1984-A Preferred Stock called for redemption with irrevoca-
ble instructions and authority to such transfer agent and registrar
to give or complete notice of redemption in the name of the
Corporation required by this SECTION 5 and to pay on or after the
date fixed for such redemption, to the respective holders of such
shares of Series 1984-A Preferred Stock, the redemption price
thereof upon the surrender of the certificates representing the
shares of Series 1984-A Preferred Stock so called for redemption,
then from and after the time of such deposit, although before the
date fixed for redemption, such shares of Series 1984-A Preferred
Stock so called for redemption shall be deemed to be redeemed and
such deposit shall be deemed to constitute full payment of such
shares of Series 1984-A Preferred Stock to the respective holders
thereof, and such shares of Series 1984-A Preferred
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Stock shall no longer be deemed to be outstanding, and the holders
thereof shall cease to be stockholders with respect to such shares
of Series 1984-A Preferred Stock and shall have no rights with
respect thereto, except only the right to receive from such
transfer agent and registrar payment of the redemption price of
such shares of Series 1984-A Preferred Stock, without interest,
upon surrender of the certificates representing the shares of
Series 1984-A Preferred Stock so called for redemption and the
right to convert such shares into shares of Common Stock, as
provided in SECTION 7 below, on or before the close of business on
the third full business day before the date fixed for redemption.
Money so deposited and unclaimed at the end of six years shall be
repaid to the Corporation and thereafter holders of such shares of
Series 1984-A Preferred Stock called for redemption shall look only
to the Corporation for payment.
(e) All shares of Series 1984-A Preferred Stock
redeemed by the Corporation or which may otherwise be acquired by
the Corporation shall be returned to the status of authorized and
unissued shares of Series Preferred Stock without any series
designation or any powers, preferences or other rights or limita-
tions except as may be subsequently fixed by resolution or
resolutions adopted by the Board of Directors.
6. LIQUIDATION PROVISIONS. In the event of the
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, resulting in any distribution of the
Corporation's assets to its stockholders, before any distribution
or payment shall be made to the holders of Junior Stock, the
holders of the shares of Series 1984-A Preferred Stock shall be
entitled to be paid in cash the sum of $41.07 for each share of
Series 1984-A Preferred Stock, plus all current and accumulated
unpaid cash dividends that such holder would otherwise have been
entitled to receive to the date of distribution. If the assets of
the Corporation distributable to the holders of shares of Series
1984-A Preferred Stock or to the holders of shares of capital stock
of the Corporation ranking in parity with the Series 1984-A
Preferred Stock with respect to preferences upon liquidation are
insufficient for the payment to them of the full preferential
amount described above, the entire remaining assets shall be
distributed to the holders of all shares of the Series Preferred
Stock in amounts in like proportion to the respective preferential
amounts to which they are entitled.
7. CONVERSION. The holders of shares of Series 1984-A
Preferred Stock shall have the right, at their option, to convert
all or any part of such shares into shares of Common Stock at any
time on, and subject to, the following terms and conditions:
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(a) The number of shares or percentage of a single
share of Common Stock (calculated to the nearest 1/100th of a
share) issuable upon conversion of each share of Series 1984-A
Preferred Stock shall be equal to the $41.07 stated value of a
share of Series 1984-A Preferred Stock divided by the conversion
price in effect at the time of conversion as hereinafter provided.
The price at which shares of Common Stock shall be delivered upon
conversion (the "Conversion Price") initially shall be $77.875 per
share of Common Stock, subject to adjustment from time to time in
certain instances as hereinafter provided.
(b) Upon conversion the Corporation shall make no
payment or adjustment on account of current or accumulated cash
dividends on the shares of Common Stock issuable upon, or the
Series 1984-A Preferred Stock surrendered for, conversion whether
or not earned, declared or in arrears, but all accrued and unpaid
dividends on such shares of Series 1984-A Preferred Stock, up to
the Dividend Payment Date immediately preceding the date of
conversion, shall constitute a debt of the Corporation payable to
the converting stockholder in accordance with the Certificate.
(c) In the event of a call for redemption of any
shares of Series 1984-A Preferred Stock, such right of conversion,
as to the shares designated for redemption, shall continue up to
the close of business on the third full business day before the
date fixed for redemption and such right of conversion shall
thereupon terminate; provided, however, that if the Corporation
shall default in the payment of the redemption price on the date
fixed for redemption, such right of conversion shall continue past
the date fixed for redemption.
(d) Before any holder of shares of Series 1984-A
Preferred Stock shall be entitled to convert any such shares into
shares of Common Stock, such holder shall surrender the certificate
or certificates for such shares at the office of any transfer agent
of the Corporation for the Series 1984-A Preferred Stock, or at the
office of the Corporation if there shall then be no transfer agent
for the Series 1984-A Preferred Stock, duly endorsed to the
Corporation in blank or accompanied by proper instruments of
transfer to the Corporation, and shall give written notice to the
Corporation at such office that such holder elects to convert such
shares of Series 1984-A Preferred Stock, and shall state in writing
therein the name or names in which such holder wishes the certifi-
cate or certificates for shares of the Common Stock to be issued.
(e) The Corporation shall, as soon as practicable
after such surrender of certificate(s) for shares of Series 1984-A
Preferred Stock as above provided, deliver to
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the holder or the holder's designee, upon the written order of the
holder of the certificate(s) so surrendered, certificates for the
number of full shares of Common Stock to which such holder shall be
entitled as herein provided, together with cash in respect of any
fraction of a share as hereinafter provided, and, if only a part of
such shares of Series 1984-A Preferred Stock is converted, a
certificate or certificates for the unconverted shares of Series
1984-A Preferred Stock. Such conversions shall be deemed to have
been made as of the date of such surrender of shares of Series
1984-A Preferred Stock to be converted, and the person or persons
entitled to receive the Common Stock issuable on conversion of such
shares shall be treated for all purposes as having become the
record holder or holders of such Common Stock on said date.
(f) The Conversion Price in effect at any time
shall be subject to adjustment as follows:
(i) In case the Corporation shall (A) declare
a dividend on the Common Stock in shares of its capital stock, (B)
subdivide outstanding shares of Common Stock, (C) combine outstand-
ing shares of Common Stock into a smaller number of shares, or (D)
issue by reclassification of any of the Common Stock (including any
such reclassification in connection with a consolidation or merger
in which the Corporation is the surviving or continuing corpora-
tion) any shares of its capital stock, the Conversion Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that the holder of any share
of the Series 1984-A Preferred Stock surrendered for conversion
after such time shall be entitled to receive the kind and amount of
shares that he would have owned or would have been entitled to
receive had such share of the Series 1984-A Preferred Stock been
converted immediately before such time. Such adjustment shall be
made successively whenever any event listed above shall occur.
(ii) In case the Corporation shall issue
rights or warrants to all holders of the Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price
per share less than the Current Market Price (as defined in
paragraph (iv) below) on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the
Conversion Price shall be adjusted by multiplying the Conversion
Price in effect immediately before such date by a fraction, of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares so offered
for subscription or purchase would purchase at such Current Market
Price and the
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denominator shall be the number of shares of Common Stock outstand-
ing at the close of business on the date fixed for such determina-
tion plus the number of shares of Common Stock so offered for
subscription or purchase. Such adjustment shall be made succes-
sively whenever any such rights or warrants are issued and shall
become effective immediately after the opening of business on the
business day following the date fixed for such determination. In
determining whether any rights or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering
price of such shares, there shall be taken into account any
consideration received by the Corporation for such rights or
warrants, the value of such consideration, if other than cash, to
be as determined and set forth in a resolution adopted by the Board
of Directors, whose determination shall be final and conclusive.
(iii) In case the Corporation shall distribute
to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the
Corporation is the surviving or continuing corporation) evidences
of its indebtedness or assets (excluding dividends or other
distributions paid out of earned surplus) or subscription rights or
warrants (excluding those referred to in paragraph (ii) above), the
Conversion Price in effect immediately before the date fixed for
the determination of stockholders entitled to receive such
distribution shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately before the close of business on such date by a
fraction, of which the numerator shall be the Current Market Price
per share on the date fixed for such determination less the then
fair market value (as determined and set forth in a resolution
adopted by the Board of Directors, whose determination shall be
final and conclusive) of the portion of the assets or evidences of
indebtedness or such rights or warrants so distributed, attribut-
able to one share of Common Stock, and the denominator shall be
such Current Market Price per share. Such adjustment shall be made
successively whenever any such distribution is made and shall
become effective immediately before the opening of business on the
day following the date fixed for the determination of stockholders
entitled to receive such distribution.
(iv) For the purpose of any computation under
paragraphs (ii) and (iii) above, the "Current Market Price" on any
date shall be deemed to be the closing price per share of Common
Stock of the Corporation on the principal national securities
exchange on which the Common Stock is listed or, if not so listed,
on the National Association of Securities Dealers National Market
System; or if no such closing price is available, at the average of
the closing bid
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and asked prices reported on the National Association of Securities
Dealers Automated Quotation System; or in the absence of any of
the foregoing, the market value as determined and set forth in a
resolution adopted by the Board of Directors (whose determination
shall be final and conclusive).
(v) Notwithstanding the provisions of
subparagraphs (i) through (iii) above, no adjustment in the
Conversion Price shall be required unless such adjustment would
require a change of at least 1% in such price; provided, however,
that any adjustments which by reason of this paragraph are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this SECTION
7(F) shall be made to the nearest cent or to the nearest 1/100th of
a share, as the case may be.
(vi) Whenever the Conversion Price is adjusted
as provided in this SECTION 7 the Corporation shall file promptly
with the transfer agent or transfer agents for the Common Stock and
the Series 1984-A Preferred Stock a certificate of an officer of
the Corporation setting forth the adjusted Conversion Price and
showing in reasonable detail a computation and a summary of the
facts upon which such adjustment is based, including a statement of
the consideration received or to be received by the Corporation for
any shares of Common Stock issued or deemed to have been issued,
and a copy of the resolutions, if any, adopted by the Board of
Directors in connection with such adjustment. Such certificate
shall be made available for inspection by the stockholders of the
Corporation and any adjustment so evidenced, made in good faith,
shall be binding upon the Corporation and the holders of the
outstanding shares of Series 1984-A Preferred Stock.
(g) In case of recapitalization or reorganization
of the Corporation, or in case of the consolidation or merger of
the Corporation with or into any other corporation (other than a
consolidation or merger in which the Corporation is the surviving
or continuing corporation), or in case of any sale or transfer of
all or substantially all assets of the Corporation, the holder of
each share of the Series 1984-A Preferred Stock upon such recapi-
talization, reorganization, consolidation, merger, sale or transfer
shall have the right to convert such share of the Series 1984-A
Preferred Stock into the kind and amount of securities, cash and
other property which such holder would have been entitled to
receive upon such consolidation, merger, sale or transfer if he had
held the Common Stock issuable upon the conversion of such share of
the Series 1984-A Preferred Stock immediately before such recapi-
talization, reorganization, consolidation, merger, sale or
transfer.
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(h) In the event that at any time, as a result of
any adjustment made pursuant to SECTION 7(F)(I) or 7(G), the holder
of any share of the Series 1984-A Preferred Stock thereafter
surrendered for conversion shall become entitled to receive any
securities other than shares of Common Stock, the amount of such
other securities so receivable upon conversion of any share of the
Series 1984-A Preferred Stock shall be subject to the provisions
with respect to the Common Stock respectively contained in SECTION
7(F) and 7(G), and the provisions of this SECTION 7(H) with respect
to the Common Stock shall apply on like terms to any such other
securities.
(i) In case at any time the Corporation shall
propose to effect any of the transactions referred to in SECTION
7(F) or 7(G) above, or to effect the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, then, in
each such case, the Corporation shall cause to be filed with the
transfer agent or transfer agents for the Series 1984-A Preferred
Stock and shall cause to be mailed, first class postage prepaid, to
the holders of record of the outstanding shares of Series 1984-A
Preferred Stock, at least 10 days before the applicable record date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of determining the stockhold-
ers entitled to any distribution or rights, or, if a record is not
to be taken, the date as of which the holders of record of Common
Stock to be entitled to such distribution or rights are to be
determined, provided, however, that no such notification need be
made in respect of a record date for any such distribution or
rights unless the corresponding adjustment required in the
Conversion Price would be an increase or decrease of at least 1%,
or (y) the date on which any such other transaction or dissolution,
liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of Common
Stock of the Corporation shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
transaction, dissolution, liquidation or winding up. Failure to
give such notice, or any defect therein, shall not affect the
legality or validity of such transaction or dissolution, liquida-
tion or winding up.
(j) The Corporation shall at all times reserve for
issuance the actual number of full shares of Common Stock then
issuable upon the conversion of all outstanding shares of the
Series 1984-A Preferred Stock.
(k) The Corporation shall not be required to pay
any taxes that may be payable in respect of the issue or delivery
of shares of Common Stock on conversion of shares of the Series
1984-A Preferred Stock pursuant hereto, and no such issue or
delivery shall be made unless and until the person
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requesting such issue 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.
D. $1.75 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES
1986-A. At meetings duly held on October 7, 1986, November 4,
1986, and March 17, 1987, the Board of Directors of I.C.H.
Corporation (the "Company"), and a duly authorized committee
thereof, duly adopted the following resolutions (with recitals
therein accurate at and as of March 17, 1987) designating a new
series of Series Preferred Stock of the Company:
WHEREAS, the Company's Certificate of Incorporation, as
amended (the "Certificate"), now authorizes the issuance of
99,900,000 shares of Common Stock, with a par value of $1.00 per
share, 100,000 shares of Class B Common Stock (herein so called),
with a par value of $1.00 per share, and 50,000,000 shares of
Series Preferred Stock (herein so called), without par value and
issuable from time to time in one or more series as determined by
the Board of Directors; and
WHEREAS, Article Four of the Certificate expressly vests in
the Board of Directors the authority to fix by resolution or
resolutions providing for the issuance of the Series Preferred
Stock the stated or capital value, dividend rate, voting powers,
designations, preferences, and relative, participating, optional or
other special rights and the qualifications, limitations or
restrictions of the shares of Series Preferred Stock that are not
fixed by the Certificate; and
WHEREAS, the Board of Directors has designated and issued, by
resolution originally adopted on October 8, 1984, 541,563 shares of
Series 1984-A Preferred Stock (herein so called), with a stated
value of $41.07 per share; and
WHEREAS, the Company desires to designate and establish a new
series of Series Preferred Stock.
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the
authority expressly granted to and vested in the Board of Directors
by the provisions of the Certificate, the Company's issuance of
8,000,000 shares of a new series of the Series Preferred Stock is
hereby authorized, and that the powers, designations, preferences,
and relative, participating, optional and other special rights, as
well as the qualifications, limitations and restrictions, of such
shares (in addition to the powers, designations, preferences and
rights set forth in, and the qualifications, limitations and
restrictions imposed by, the Certificate with respect to the Series
Preferred Stock) hereby are fixed and determined by the Board of
Directors, as follows:
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1. Designation, Number and Stated Value. The series of
Series Preferred Stock authorized and established hereby is
designated as the $1.75 Convertible Exchangeable Preferred Stock,
Series 1986-A (hereinafter called "this Series"). The number of
shares of this Series shall be 8,000,000. The stated value of each
share of this Series shall be $25.00, and each share of this Series
shall be validly issued and fully paid upon receipt by the Company
of legal consideration in an amount at least equal to such stated
value and shall not thereafter be assessable.
2. Dividends. The holders of outstanding shares of
this Series shall be entitled to receive, when and as declared by
the Board of Directors out of assets of the Company legally
available for payment, annual cash dividends at the rate of $1.75
per share, and no more, payable in equal quarterly installments on
the 1st calendar day of March, June, September, and December in
each year (unless such day is a non-business day, in which event on
the next business day thereafter), commencing March 1, 1987 (each
such payment date being hereinafter called a "Dividend Date" and
each regular quarterly or shorter (in the case of the first such
period) period ending with a Dividend Date being hereinafter called
a "Dividend Period"; the term "Dividend Period," when used with
respect to any Parity Dividend Stock, as hereinafter defined, also
shall mean each dividend accrual period ending on a regular date
for the payment of cumulative dividends on such Parity Dividend
Stock). Such dividends shall be cumulative and shall accrue from
the first date of issuance of any shares of this Series (the "Issue
Date"), whether or not in any Dividend Period the Company has
assets legally available for payment thereof. Dividends payable on
shares of this Series (i) as of March 1, 1987, (ii) on any
Redemption Date (as defined in Section 5 below) not occurring on a
regular Dividend Date or (iii) on any final distribution date
relating to a dissolution, liquidation or winding up of the Company
and not occurring on a regular Dividend Date shall be calculated on
the basis of the actual number of days elapsed, (including the
Redemption Date or final distribution date) over a 365-day period.
Declared dividends on outstanding shares of this Series shall be
payable to record holders thereof as they appear on the stock
register of the Company at the close of business on the 15th day of
the month preceding the respective Dividend Date or on such other
record date as may be fixed by the Board of Directors in advance of
a Dividend Date, provided that no such record date shall be less
than 10 or more than 60 calendar days preceding such Dividend Date.
If at any time full cumulative dividends payable for all past
Dividend Periods have not been or are not contemporaneously
declared and paid or set apart for payment on outstanding shares of
this Series and any other stock ranking
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on a parity as to dividend rights with this Series (the "Parity
Dividend Stock"), all dividends declared and paid or set apart for
payment on outstanding shares of this Series and the Parity
Dividend Stock shall be declared and paid or set apart for payment
pro rata so that the amount of such dividends per share of this
Series and the Parity Dividend Stock shall in all cases bear to
each other the same proportions that the respective accrued and
unpaid dividends per share on this Series and the Parity Dividend
Stock bear to each other. Unless full cumulative dividends payable
on outstanding shares of this Series and Parity Dividend Stock for
all past Dividend Periods have been or contemporaneously are
declared and paid or set apart for payment, (a) no dividends shall
be declared and paid or set apart for payment on the Common Stock
(as defined in Section 8 below), Series 1984-A Preferred Stock or
any other class or series of stock of the Company ranking junior to
this Series as to dividend rights (collectively, the "Junior
Dividend Stock") except for dividends payable in shares of Junior
Dividend Stock, and (b) no shares of Junior Dividend Stock shall be
redeemed, purchased or otherwise acquired by the Company for value
except as a result of conversion into or exchange for, or with the
proceeds from the sale of, other shares of Junior Dividend Stock;
provided, however, that, subject to the provisions of Subsection
3(c) below, the Company shall have the right to redeem, purchase or
otherwise acquire under any circumstances shares of any class or
series of its stock (including the Series Preferred Stock) other
than the Junior Dividend Stock.
3. Voting. The shares of this Series shall not have
any voting powers or rights whatsoever, except for such voting
powers as are required by law or as are granted by this Section 3,
as follows:
(a) At any time or times that dividends payable on
outstanding shares of this Series or any Parity Dividend Stock
shall have been in arrears and remain unpaid in an aggregate amount
equal to or exceeding the amount of dividends payable thereon for
six Dividend Periods (a "Dividend Default"), then the holders of
record of outstanding shares of this Series and the Parity Dividend
Stock shall have, in addition to the other voting rights set forth
herein, the exclusive right, voting together as a single class
without regard to series, to elect two Preferred Directors (as
defined in the Certificate) who shall be in addition to the
directors constituting the Board of Directors immediately before
such election. The vote (at an annual meeting of the Company's
stockholders) of the record holders of a
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majority of the outstanding shares of this Series and the Parity
Dividend Stock, voting together as a single class without regard to
series, then present and voting (in person or by proxy), or the
execution of a written consent by the record holders of a majority
of the outstanding shares of this Series and the Parity Dividend
Stock then entitled to vote, shall be sufficient to nominate or
elect any such Preferred Directors. The holders of a majority of
the issued and outstanding shares of the voting class, present in
person or represented by proxy, shall constitute a quorum at any
meeting for the election of Preferred Directors. The voting rights
provided by this Subsection 3(a) shall continue until such time as
all accrued and unpaid dividends for all past Dividend Periods on
outstanding shares of this Series and the Parity Dividend Stock
shall have been declared and paid or set aside for payment in full,
at which time such voting rights shall terminate subject to
revesting in the event any subsequent Dividend Default shall occur
and be continuing. Such Preferred Directors shall be Independent
Directors (as defined in the Certificate) and shall serve as such
until the earlier occurrence of the election of their respective
successors or the termination of the voting rights of holders of
shares of this Series and the Parity Dividend Stock as provided in
the preceding sentence. So long as a Dividend Default shall
continue, any vacancy in the office of such a Preferred Director
may be filled by the remaining Preferred Director; provided,
however, that any Preferred Director may be removed (with or
without cause), and any vacancy resulting from such removal shall
be filled, by vote (at an annual meeting of the Company's stock-
holders) of the record holders of a majority of the outstanding
shares of this Series and the Parity Dividend Stock, voting
together as a single class without regard to series, then present
and voting (in person or by proxy), or the execution of a written
consent by the record holders of a majority of the outstanding
shares of this Series and the Parity Dividend Stock then entitled
to vote.
(b) So long as any shares of this Series are
outstanding, the Company shall not, directly or through merger or
consolidation with any other corporation:
(i) without the consent of the holders of at
least 66-2/3% of all shares at the time outstanding of this Series
and any other series of Series Preferred Stock ranking on a parity
with this Series as to dividend and liquidation rights (the "Parity
Preferred Stock"), voting together as a single class without regard
to series, given in person or by proxy, either in writing or by a
vote at an annual meeting of the Company's stockholders or at a
special meeting called for the purpose, authorize, create or
designate any shares of any class or series of preferred stock of
the Company ranking senior to the shares of this Series as to
dividend or liquidation rights;
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(ii) without the consent of the holders of at
least 66-2/3% of all shares at the time outstanding of this Series,
given in person or by proxy, either in writing or by a vote at an
annual meeting of the Company's stockholders or a special meeting
called for the purpose, amend, alter or repeal any of the prefer-
ences, rights, powers or privileges given to shares of this Series
by the provisions of the Certificate, by this Certificate of
Designation, or otherwise, so as to affect adversely such prefer-
ences, rights, powers or privileges; or
(iii) without the consent of the holders of at
least a majority of all shares at the time outstanding of this
Series and the Parity Preferred Stock, voting together as a single
class without regard to series, given in person or by proxy, either
in writing or by a vote at an annual meeting of the Company's
stockholders or at a special meeting called for the purpose,
authorize, create or designate any shares of any class or series of
preferred stock of the Company ranking on a parity with this Series
as to dividend or liquidation rights.
(c) Unless all accrued and unpaid dividends for all
past Dividend Periods on outstanding shares of this Series have
been declared and paid or set aside for payment in full, the
Company shall not redeem or purchase less than all outstanding
shares of this Series (except through an offer made on the same
terms to all holders of outstanding shares of this Series) without
the consent of the holders of at least a majority of all shares at
the time outstanding of this Series, given in person or by proxy,
either in writing or by a vote at a meeting called for the purpose.
(d) In each case in which the vote or consent of
holders of shares of this Series is required by law or is granted
by this Section 3, such holders shall be entitled to one vote for
each outstanding share of this Series respectively owned of record
by them. With respect to any matter (other than a matter provided
for above in this Section 3) on which the Series Preferred Stock is
entitled to vote by law, the Series Preferred Stock will vote as a
single class with the Common Stock unless otherwise required by
law.
4. Liquidation. Upon the dissolution, liquidation or
winding up of the Company, whether voluntary or involuntary, the
holders of outstanding shares of this Series shall be entitled to
receive out of the assets of the Company available for distribution
to stockholders, before any payment or distribution of assets shall
be made to holders of the Common Stock, Series 1984-A Preferred
Stock or any other class or series of stock of the Company ranking
junior to this Series as to liquidation rights (collectively, the
"Junior Liquidation Stock"), cash liquidating distributions in the
amount of the stated value of $25.00 per share, plus a sum equal to
all
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dividends (whether or not earned or declared) on such shares of
this Series accrued and unpaid thereon to the date of final
distribution. Neither the consolidation nor merger of the Company
into or with another corporation or corporations, nor the merger or
consolidation of another corporation or corporations with or into
the Company, nor a reorganization of the Company, nor the purchase
or redemption of all or part of the outstanding shares of any class
or series of capital stock of the Company, nor a sale or transfer
of the property and business of the Company as, or substantially
as, an entity, shall be deemed a liquidation, dissolution or
winding up of the affairs of the Company, whether voluntary or
involuntary, within the meaning of this Section 4. After the
payment to the holders of the shares of this Series of the full
preferential amounts provided for in this Section 4, the holders of
shares of this Series as such shall have no right or claim to, and
shall not be entitled to participate further in any distribution
of, the remaining assets of the Company. In the event the assets
of the Company available for distribution to stockholders upon any
dissolution, liquidation or winding up of the Company, whether
voluntary or involuntary, shall be insufficient to pay in full all
preferential amounts to which holders of shares of this Series and
each series of Series Preferred Stock ranking, as to liquidation
rights, on a parity with this Series are entitled, the holders of
all such shares shall participate ratably in any distribution of
assets of the Company in proportion to the respective full
preferential amounts to which holders of all such shares would be
entitled to receive upon such dissolution, liquidation or winding
up if all such amounts were then available for distribution.
5. Optional Redemption.
(a) The shares of this Series are redeemable, at
any time as a whole or (subject to the provisions of Subsection
3(c) hereof) from time to time in part, on or after December 1,
1988, at the option of the Company exercisable by resolution of the
Board of Directors, at the following redemption prices per share,
plus in each case accrued and unpaid dividends to the date fixed
for redemption by the Board of Directors (the "Redemption Date"),
if redeemed during the 12-month period beginning December 1 of the
years indicated below:
<TABLE>
<CAPTION>
Year Price Year Price
<S> <C> <C> <C>
1988 $26.400 1993 $25.525
1989 26.225 1994 25.350
1990 26.050 1995 25.175
1991 25.875 1996 (and thereafter) 25.000
1992 25.700
</TABLE>
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(b) If the Company shall elect to redeem shares of
this Series, notice of such redemption (the "Redemption Notice")
shall be given by first-class mail, postage prepaid, mailed not
less than 10 nor more than 60 calendar days before the Redemption
Date, to each holder of the shares to be redeemed, at such holder's
address as the same appears on the stock register of the Company.
Each Redemption Notice shall state the Redemption Date; the number
of shares of this Series to be redeemed and, if fewer than all
shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder and (if deemed appropriate
by the Company) the number(s) of the certificate(s) representing
such shares; the redemption price per share; and the place or
places where certificates for such shares are to be surrendered for
payment of the redemption price. Neither the failure by the
Company to cause proper Redemption Notice to be given, nor any
defect in the Redemption Notice, shall affect the legality or
validity of proceedings for such redemption.
(c) Upon surrender in accordance with the Redemp-
tion Notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of
Directors shall so require), such shares shall be redeemed by the
Company at the redemption price specified in the Redemption Notice;
provided, however, that if on or before the Redemption Date all
funds necessary for the redemption shall have been irrevocably set
aside by the Company in trust for the account of the holders of the
shares of this Series called for redemption, then from and after
the mailing of the Redemption Notice and the setting aside of such
funds (provided that the provisions of Subsection 3(c) above do not
preclude such redemption), notwithstanding that any certificate for
any such shares has not been surrendered, all shares of this Series
called for redemption shall be deemed to have been redeemed and
shall cease to be outstanding, and all rights of the holders
thereof as stockholders of the Company, except the right to receive
the respective redemption price (including accrued and unpaid
dividends to the Redemption Date but without interest) upon
surrender of their stock certificates and the right to convert such
shares of this Series in accordance with and subject to the
provisions of Section 6, shall cease and terminate. If less than
all outstanding shares of this Series are to be redeemed, the
shares to be redeemed shall be selected by lot or pro rata, as the
Company's Board of Directors may determine, from outstanding shares
of this Service not previously called for redemption. If less than
all shares owned by a stockholder shall be redeemed, a new
certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
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6. Conversion.
(a) Subject to and upon compliance with the
provisions of this Section 6, each holder of outstanding shares of
this Series shall have the right, at his option exercisable at any
time before the close of business on the third full business day
before any Redemption Date with respect to any such shares (unless
the Company shall thereafter default in the payment of the
redemption price therefor) or before the close of business on the
Exchange Date (as defined in Section 7), to convert any or all of
his outstanding shares of this Series into that number of duly
authorized, validly issued, fully paid and nonassessable whole
shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) as shall be obtained by dividing the
stated value of the shares of this Series to be converted by the
Conversion Price then in effect. As used in this Certificate of
Designation, "Conversion Price" shall mean the price at which one
whole share of Common Stock will be issued upon conversion of
outstanding shares of this Series pursuant to this Section 6. The
Conversion Price shall initially be $32.50, but shall be subject to
adjustment or reduction as provided in this Section 6.
(b) In order to exercise the conversion privilege,
any holder of outstanding shares of this Series to be converted:
(i) shall surrender the certificate or certificates for such shares
during regular business hours at the office or agency maintained by
the Company in the City of New York, Borough of Manhattan or at
such other offices or agencies as the Company may determine (a
"Conversion Agent"), which certificate or certificates shall be
duly endorsed or accompanied by proper instruments for transfer to
the Company or in blank and shall be accompanied by payment of all
amounts owed to the Company as provided in Subsection 6(o) below;
(ii) shall give written notice to the Company at said office or
agency that he elects so to convert such shares of this Series; and
(iii) shall state in writing therein the name or names (with
address or addresses) in which he desires the certificate or
certificates for shares of Common Stock to be issued.
As soon as practicable after the surrender of a certifi-
cate or certificates for shares of this Series to be converted and
all instruments, amounts and notices above prescribed, the Company
shall issue and deliver to the respective Conversion Agent a
certificate or certificates for the number of whole shares of
Common Stock (or other securities) issuable upon such conversion,
together with a cash payment in lieu of any fraction of a share as
provided in Subsection 6(d) and a new certificate or certificates
for any unconverted shares of this Series formerly represented by
one or more of the converting stockholder's surrendered certifi-
cates, to the person or persons entitled thereto.
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Shares of this Series surrendered for conversion shall be deemed to
have been converted as of the close of business on the date of such
surrender, accompanied by all instruments, amounts and notices
above prescribed, and the person or persons entitled to receive the
shares of Common Stock (or other securities) issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such shares from and after such time of surrender;
provided, however, that any such surrender on any date when the
stock transfer books of the Company are closed for any purpose
shall not be effective to constitute the person or persons entitled
to receive the shares of Common Stock or other securities upon such
conversion as the record holder or holders of such shares on such
date, but such surrender shall be effective to constitute the
person or persons in whose name or names the certificates for such
shares of Common Stock or other securities are to be issued as the
record holder or holders thereof for all purposes immediately
before the close of business on the next succeeding day on which
such stock transfer books are open, and such conversion shall be at
the Conversion Price in effect at such time on such succeeding day.
(c) No payment or adjustment shall be made by or on
behalf of the Company on account of dividends accrued, declared or
in arrears on shares of this Series surrendered for conversion or
on shares of Common Stock or other securities issued upon such
conversion, except all dividends on shares of this Series surren-
dered for conversion that are accrued and unpaid up to the Dividend
Date immediately preceding the date of such conversion shall
constitute a debt of the Company payable to the converting
stockholder in accordance with the Certificate.
(d) No fractional share of Common Stock or other
security shall be issued upon any conversion of shares of this
Series, but in lieu of such issuance the Company shall purchase the
fractional share for cash in an amount equal to the product
obtained by multiplying such fractional share by the Closing Price
(as hereinafter defined) of the Common Stock or such other
security, as the case may be, on the date on which the respective
shares of this Series are duly surrendered for conversion or, if no
such Closing Price is then available, on the most recent Trading
Day (as hereinafter defined) before such date of surrender for
which such a Closing Price is available. If more than one
certificate representing shares of this Series shall be surrendered
for conversion at any one time by the same stockholder, the number
of whole shares of Common Stock or other security that shall be
issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of this Series represented by all
certificates so surrendered.
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"Closing Price" as to any security on any day shall mean the
closing sale price on the principal national securities exchange on
which the security is listed for trading, or if not so listed, on
the National Association of Securities Dealers National Market
System; or if no such closing price is available, at the average of
the closing bid and asked quotations of the security reported on
the National Association of Securities Dealers Automated Quotation
System; or, if neither such System provides prices or quotations
for such security, the fair market value of such security as
determined and set forth in a resolution adopted by the Board of
Directors (whose determination shall be final and conclusive).
"Trading Day" as to any security shall mean a date on which
the principal national securities exchange on which the security is
listed or admitted to trading is open for the transaction of
business; or if the security is not listed or admitted to trading
on any national securities exchange, a date on which any New York
Stock Exchange member firm is open for the transaction of business.
(e) (i) In case the Company shall at any time (A)
make a distribution or pay a dividend on the Common Stock in shares
of the Common Stock, (B) subdivide the outstanding shares of Common
Stock into a greater number of shares, or (C) combine the outstand-
ing shares of Common Stock into a smaller number of shares, then
the Conversion Price in effect immediately before such action shall
be adjusted so that the holder of outstanding shares of this Series
thereafter converted may receive the number of shares of Common
Stock that he would have owned immediately following such action if
he had converted the shares of this Series immediately before the
record date (or, if no record date, the effective date) for such
action. The adjustment in the Conversion Price pursuant to this
paragraph (i) shall become effective immediately after the record
date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination
or reclassification.
(ii) In case the Company shall at any time (A)
make a distribution on the Common Stock in shares of its capital
stock other than Common Stock, or (B) issue by reclassification of
the Common Stock (other than pursuant to a change from no par value
to par value, or from par value to no par value, or a change in par
value, or as a result of a subdivision or combination of shares of
Common Stock) any shares of its capital stock other than the Common
Stock, the Company shall, upon the subsequent conversion of any
share of this Series, issue to the holder of such share (in
addition to the number of shares of Common Stock issuable upon such
conversion) the number of shares of capital stock (other than
Common Stock) that such holder would have received if he had
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converted the share of this Series immediately before the record
date (or, if no record date, the effective date) for such action.
The number of shares of such capital stock (other than Common
Stock) so receivable shall be subject to adjustment on terms
comparable to those applicable to Common Stock in paragraph (i) of
Subsection 6(e).
(iii) In case the Company shall distribute
to all holders of outstanding shares of the Common Stock on the
record date mentioned below rights or warrants entitling them for
a period expiring on or before 60 calendar days following said
record date to subscribe for or purchase shares of Common Stock at
a price per share less than the Current Market Price per share of
Common Stock at such record date, the Conversion Price shall be
adjusted so that the same shall equal the amount determined by
multiplying the Conversion Price in effect immediately before such
distribution by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate
exercise price of the shares of Common Stock covered by such rights
or warrants would purchase at such Current Market Price (which
latter number of shares shall be the quotient resulting from the
division of (A) an amount equal to the product obtained by
multiplying the number of shares of Common Stock initially
purchasable pursuant to such rights or warrants by the exercise
price for such rights or warrants by (B) such Current Market Price)
and of which the denominator shall be the number of shares of
Common Stock outstanding on such record date plus the number of
shares of Common Stock initially purchasable pursuant to such
rights or warrants. Such adjustment shall be made whenever such
rights or warrants are distributed and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants.
(iv) In case the Company shall distribute to
all holders of outstanding shares of the Common Stock on the record
date mentioned below debt securities or assets (excluding cash
dividends or cash distributions paid out of consolidated current
and retained earnings of the Company as shown on its books) or
rights or warrants (excluding rights or warrants subject to the
provisions of paragraph (iii) of Subsection 6(e) above) to
subscribe for or purchase shares of Common Stock, then in each such
case the Conversion Price shall be determined by multiplying the
Conversion Price in effect immediately before such distribution by
a fraction, of which the numerator shall be the remainder obtained
by subtracting (A) the fair market value on such record date of the
assets, debt securities, rights or warrants applicable to one share
of Common Stock as determined by the Board of Directors (whose
determination of such fair market value shall be final and
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conclusive and shall be set forth in a resolution filed with each
Conversion Agent) from (B) the Current Market Price per share of
Common Stock on such record date, and of which the denominator
shall be such Current Market Price. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(f) For the purpose of any computation under
Subsection 6(e), the "Current Market Price" per share of Common
Stock at any date shall be deemed to be the average of the daily
Closing Prices of a share of Common Stock for the 30 consecutive
Trading Days commencing before such date.
(g) No adjustment of the Conversion Price pursuant
to this Section 6 need be made unless such adjustment would require
an increase or decrease of at least 1% in the Conversion Price, but
in such case any adjustment that would otherwise be required then
to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment. All calcula-
tions under this Section 6 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be.
(h) No adjustment in the Conversion Price, or in
securities issuable upon conversion of shares of this Series, shall
be made for any sale of, or distribution of rights or warrants to
purchase, Common Stock (or other securities issuable upon conver-
sion of the shares of this Series) to the extent that such sale or
distribution occurs in connection with a dividend or interest
reinvestment plan providing for sales of Common Stock (or other
securities issuable upon conversion of the shares of this Series)
at a price equal to at least 95% of the fair market value (as
defined in such plan) of such Common Stock (or such other securi-
ties). If shares of this Series become convertible solely into
cash, no adjustment shall be made thereafter, and interest shall
not accrue on the cash.
(i) Irrespective of any adjustments in the actual
Conversion Price (or the number of shares of Common Stock or other
securities into which any share of this Series is convertible), any
share of this Series issued before, upon or after such adjustment
may continue to express the Conversion Price and conversion rate
stated in certificates representing the initially issued shares of
this Series.
(j) In case any consolidation or merger of the
Company into another corporation, or any merger of another
corporation into the Company (excluding such a merger in which the
Company is the surviving or continuing corporation and
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which does not result in any reclassification, conversion, exchange
or cancellation of the outstanding shares of Common Stock), or any
sale of all or substantially all of the Company's assets to another
corporation or person shall be effected, then, as a condition of
such consolidation, merger or sale (a "Transaction"), lawful and
adequate provision shall be made whereby the right of each holder
of outstanding shares of this Series to convert such shares shall
become the right from and after the Transaction to receive, upon
surrender and conversion of such shares of this Series and upon the
basis, terms and conditions specified herein and in lieu of the
shares of the Common Stock and other securities that would have
been issuable upon conversion of such shares of this Series
immediately before the Transaction, such shares of stock, securi-
ties or assets as such holder would have owned immediately after
the Transaction if he had converted his shares of this Series
immediately before the effective date of the Transaction. The
Company shall not effect any Transaction unless prior to or
simultaneously with the consummation thereof the successor
corporation or person (if other than the Company) resulting from
the Transaction or purchasing assets in the Transaction shall
assume by written instrument the obligation to deliver to each such
holder such shares of stock, securities or assets as in accordance
with the foregoing provisions, such holder may be entitled to
receive upon surrender and conversion of his outstanding shares of
this Series.
(k) The Company from time to time may reduce the
Conversion Price by any amount for any period of time if the period
is at least 20 calendar days and if the reduction is irrevocable
during such period; provided, however, that the Conversion Price
shall not be reduced to an amount less than the par value, if any,
of a share of Common Stock. Whenever the Conversion Price is
reduced, the Company shall give notice of the reduction at least 10
calendar days before the date the reduced Conversion Price takes
effect, which notice shall be given in the manner set forth in
Subsection 6(m) and shall state the reduced Conversion Price and
the period it will be in effect. A reduction in the Conversion
Price pursuant to this Subsection shall not change or adjust the
Conversion Price otherwise in effect for purposes of this Section
6.
(l) Whenever the Conversion Price, or the securi-
ties issuable upon conversion, shall be adjusted as hereinabove
provided, the Company shall forthwith file, with each Conversion
Agent, a statement that shall be signed by the Chairman of the
Board, the President, any Vice President or the Treasurer of the
Company and that shall reflect in detail the facts requiring such
adjustment and the actual Conversion Price, or the securities
issuable upon conversion, to be in effect after such adjustment.
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(m) In case the Company at any time shall (i) take
any action that would require an adjustment in the Conversion
Price, or the securities issuable upon conversion, pursuant to
paragraph (i), (ii), (iii) or (iv) of Subsection 6(e), (ii) become
a party to any Transaction specified in Subsection 6(j), or (iii)
liquidate, dissolve or wind up its affairs, whether voluntarily or
involuntarily, then the company shall cause to be filed with each
Conversion Agent, and shall cause to be mailed, first-class postage
prepaid, to each record holder of outstanding shares of this Series
at his address appearing in the stock records of the Company, a
notice describing such action to be taken and stating the record
date, if any, for the respective action and the date on which the
respective action is expected to become effective. Such notice
shall be given at least 10 calendar days before (i) the record date
of any action subject to the provisions of clause (A) of paragraph
(i) of Subsection 6(e) or clause (A) of paragraph (ii) of Subsec-
tion 6(e) or to the provisions of paragraph (iii) or (iv) of
Subsection 6(e) or (ii) the expected effective date of any other
action requiring notice pursuant to this Subsection 6(m). Neither
the failure of the Company to cause such notice to be given, nor
any defect therein, shall affect the legality or validity of the
action for which such notice is required.
(n) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its treasury stock
or authorized but unissued Common Stock, or both, solely for the
purpose of effecting the conversion of shares of this Series
hereunder, such number of whole shares of Common Stock as shall
then be sufficient to effect the conversion of all outstanding
shares of this Series.
(o) The Company shall pay any and all transfer
taxes that may be payable in respect of the issuance or delivery of
shares of Common Stock or other securities on conversion of shares
of this Series pursuant hereto; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issuance or delivery of
shares in a name other than that of the holder of the shares of
this Series to be converted, and no such issuance or delivery shall
be made unless and until the person requesting such issuance has
paid to the Company the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been paid or
is not due.
7. Exchange Provisions.
(a) The outstanding shares of this Series are
exchangeable in whole, but not in part, at the option of the
Company, exercisable by resolution adopted by the Board of
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Directors, on any Dividend Date beginning December 1, 1988, for 7%
Convertible Subordinated Debentures due 2011 of the Company (the
"Debentures"). Holders of outstanding shares of this Series shall
be entitled to receive $25.00 principal amount of the Debentures in
exchange for each outstanding share of this Series held of record
by them at the time of exchange except that any holder of fewer
than 20 shares of this Series shall receive a cash payment of
$25.00 per share for each share held; accrued and unpaid dividends
on all shares to be exchanged will be paid as provided in Section
2 in cash in either case. If the Company elects to exchange the
Debentures for the shares of this Series, it shall mail written
notice of its intention to exchange to each holder of record of the
shares of this Series not less than 30 nor more than 60 calendar
days before the date fixed by the Board of Directors for the
exchange (the "Exchange Date"). Before giving such notice of
exchange, the Company shall execute and deliver with a bank or
trust company selected by the Company an Indenture (the "Inden-
ture") substantially in the form filed as an Exhibit to the
Registration Statement (File No. 33-9455), as amended on the
effective date thereof, relating to the Debentures and filed with
the Securities and Exchange Commission, with such changes in the
Indenture or the Debentures as the Company or the Indenture trustee
shall deem necessary or appropriate. The Company shall cause the
Debentures to be authenticated on the Exchange Date; at the close
of business on the Exchange Date, the rights of the holders of
shares of this Series as stockholders of the Company shall
immediately cease and terminate (except the right to receive on the
Exchange Date an amount equal to accrued and unpaid dividends on
such shares to, but excluding, the Exchange Date), and the persons
entitled to receive the Debentures issuable upon exchange shall be
treated for all purposes as the registered holders of such
Debentures pursuant to the Indenture. The Debentures shall be
delivered, and payment for accrued and unpaid dividends on shares
of this Series shall be made, to the persons entitled thereto upon
surrender to the Company or its agent appointed for that purpose of
certificates for the shares of this Series being exchanged
therefor.
(b) The Company shall not give notice of its
intention to exchange pursuant to this Section 7 unless:
(i) it shall have filed at the office or
agency of the Company maintained in the City of New York, Borough
of Manhattan, for the conversion of shares of this Series an
opinion of counsel (who may be an employee of the Company) that the
Indenture has been duly authorized by the Company, has been duly
qualified under the Trust Indenture Act of 1989 and will, upon
execution and delivery thereof, constitute a valid and binding
agreement of the Company which is enforceable against the Company
in accordance with its terms (subject, as to enforcement of
remedies, to bankruptcy,
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reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect, to
equitable principles and to such other qualifications as are then
customarily contained in opinions of counsel experienced in such
matters); that the Debentures have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered in exchange for the shares of this Series,
will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture (subject as aforesaid);
and that the Debentures have been registered under the Securities
Act of 1933 or that the exchange of the Debentures for the shares
of this Series is exempt from registration under the Securities Act
of 1933; and
(ii) all accrued and unpaid dividends on the
outstanding shares of this Series for all past Dividend Periods
ending on the last Dividend Date immediately preceding the Exchange
Date have been declared and paid or set aside for payment.
8. Common Stock Defined. The term "Common Stock" shall
mean the Common Stock, par value $1.00 per share, of the Company as
the same exists on the date of this Certificate of Designation and
any other class of the Company's capital stock into which such
Common Stock may hereafter have been changed.
9. Miscellaneous. Holders of shares of this Series or
of the Common Stock issued upon conversion thereof shall not have
any preemptive rights. Of the consideration to be received for the
issuance of shares of this Series, the Board of Directors hereby
determines that an amount equal to the stated value of $25.00 per
share shall constitute capital of the Company, and no part of such
consideration shall constitute additional paid-in capital of the
Company. MBank Dallas, National Association is hereby appointed
Transfer Agent, Registrar, Conversion Agent and Dividend Disbursing
Agent for this Series. Subject to the provisions of Subsection
3(b), the Board of Directors reserves the right by subsequent
amendment of this Certificate of Designation from time to time to
increase or decrease the number of shares constituting this Series
(but not below the number of shares thereof then outstanding) and
in other respects to amend this Certificate of Designation within
the limitations provided hereby and by law and the Certificate.
E. $4.50 REDEEMABLE PREFERRED STOCK, SERIES 1987-B. The
Board of Directors of I.C.H. Corporation (the "Company") and a duly
authorized committee thereof, at a meeting duly held on Septem-
ber 23, 1987 and by unanimous consent dated as of January 14, 1988,
duly adopted the following resolutions (with recitals therein
accurate at and as of such date) designating a new series of Series
Preferred Stock of the Company:
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WHEREAS, the Company's Certificate of Incorporation, as
amended (the "Certificate"), now authorizes the issuance of
99,900,000 shares of Common Stock (herein so called), with a par
value of $1.00 per share, 100,000 shares of Class B Common Stock
(herein so called), with a par value of $1.00 per share, and
50,000,000 shares of Series Preferred Stock (herein so called),
without par value and issuable from time to time in one or more
series as determined by the Board of Directors; and
WHEREAS, Article Four of the Certificate now expressly vests
in the Board of Directors the authority to fix by resolution or
resolutions providing for the issuance of the Series Preferred
Stock the stated or capital value, dividend rate, voting powers,
designations, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or
restrictions thereon of the shares of Series Preferred Stock that
are not fixed by the Certificate; and
WHEREAS, the Board of Directors has designated and issued, by
resolution originally adopted on October 8, 1984, 541,563 shares of
Series 1984-A Preferred Stock (herein so called), with a stated
value of $41.07 per share; and
WHEREAS, the Board of Directors has designated, by resolution
originally adopted on October 7, 1986, 9,200,000 shares of $1.75
Convertible Exchangeable Preferred Stock, Series 1986-A ("Series
1986-A Preferred Stock"), with a stated value of $25.00 per share,
and has issued 8,000,000 shares of Series 1986-A Preferred Stock;
and
WHEREAS, the Board of Directors decreased, by resolution
originally adopted on March 17, 1987, the number of authorized
shares of Series 1986-A Preferred Stock from 9,200,000 to
8,000,000; and
WHEREAS, the Board of Directors has designated, by resolution
originally adopted on September 23, 1987, 2,000,000 shares of $5.50
Redeemable Preferred Stock, Series 1987-A ("Series 1987-A Preferred
Stock"), with a stated value of $50.00 per share, and has issued
1,000,000 shares of Series 1987-A Preferred Stock; and
WHEREAS, the Board of Directors has designated and issued, by
resolution originally adopted on December 28, 1987, 1,000,000
shares of $8.00 Redeemable Preferred Stock, Series 1987-C ("Series
1987-C Preferred Stock"), with a stated value of $50.00 per share;
and
WHEREAS, the Company desires to designate and establish a new
series of Series Preferred Stock.
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NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the
authority expressly granted to and vested in the Board of Directors
by the provisions of the Certificate, the Company's issuance of
140,000 shares of a new series of the Series Preferred Stock, which
shall rank junior to the Series 1986-A Preferred Stock, and on a
parity with the Series 1984-A Preferred Stock, the Series 1987-A
Preferred Stock and the Series 1987-C Preferred Stock, in each case
as to dividends and the distribution of assets upon liquidation,
dissolution, or winding up of the Company, is hereby authorized,
and that the winding up of the Company, is hereby authorized, and
that the powers, designations, preferences, and relative, partici-
pating, optional and other special rights, as well as the qualifi-
cations, limitations and restrictions, of such shares (in addition
to the powers, designations, preferences and rights set forth in,
and the qualifications, limitations and restrictions imposed by,
the Certificate with respect to the Series Preferred Stock) hereby
are fixed and determined by the Board of Directors, as follows:
1. Designation, Number and Stated Value. The series of
Series Preferred Stock authorized and established hereby is
designated as the $4.50 Redeemable Preferred Stock, Series 1987-B
(hereinafter called "this Series"). The number of shares of this
Series shall be 140,000. The stated value of each share of this
Series shall be $50.00, and each share of this Series shall be
validly issued and fully paid upon receipt by the Company of legal
consideration in an amount at least equal to such stated value and
shall not thereafter be assessable.
2. Dividends. The holders of outstanding shares of
this Series shall be entitled to receive, when and as declared by
the Board of Directors out of the assets of the Company legally
available for payment, annual cash dividends at the rate of $4.50
per share, and no more, payable in equal quarterly installments on
the 1st calendar day of January, April, July, and October in each
year (unless such day is a nonbusiness day, in which event on the
next business day thereafter), commencing April 1, 1988 (each such
payment date being hereinafter called a "Dividend Date" and each
regular quarterly or shorter (if, in the case of the first such
period, the Issue Date, as hereinafter defined, is subsequent to
January 1, 1988) period ending with a Dividend Date being hereinaf-
ter called a "Dividend Period"; the term "Dividend Period," when
used with respect to any Parity Dividend Stock, as hereinafter
defined, also shall mean each dividend accrual period ending on a
regular date for the payment of cumulative dividends on such Parity
Dividend Stock). Such dividends shall be cumulative and shall
accrue from January 1, 1988 or, if subsequent to January 1, 1988,
the first date of issuance of any shares of this Series (the "Issue
Date"), whether or not in
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any Dividend Period the Company has assets legally available for
payment thereof. Dividends payable on shares of this Series (i) as
of April 1, 1988, (ii) on any Redemption Date (as defined in
Section 5 below) not occurring on a regular Dividend Date or (iii)
on any final distribution date relating to a dissolution, liquida-
tion or winding up of the Company and not occurring on a regular
Dividend Date shall be calculated on the basis of the actual number
of days elapsed (including the Redemption Date or final distribu-
tion date) over a 365-day period. Declared dividends on outstand-
ing shares of this Series shall be payable to record holders
thereof as they appear on the stock register of the Company at the
close of business on the 15th day of the month preceding the
respective Dividend Date or on such other record date as may be
fixed by the Board of Directors in advance of a Dividend Date,
provided that no such record date shall be less than 10 nor more
than 60 calendar days preceding such Dividend Date.
No dividends shall be declared and paid or set apart for
payment, on the shares of this Series in respect of any Dividend
Period unless dividends have been or are contemporaneously declared
and paid or set apart for payment on all shares of the Series 1986-
A Preferred Stock and any other class or series of stock of the
Company ranking prior, as to dividends, to this Series for all
dividend periods coinciding with or ending before such Dividend
Period.
If at any time full cumulative dividends payable for all past
Dividend Periods have not been or are not contemporaneously
declared and paid or set apart for payment on outstanding shares of
this Series and any other stock ranking on a parity as to dividend
rights with this Series (the "Parity Dividend Stock"), all
dividends declared and paid or set apart for payment on outstanding
shares of this Series and the Parity Dividend Stock shall be
declared and paid or set apart for payment pro rata so that the
amount of such dividends per share of this Series and the Parity
Dividend Stock shall in all cases bear to each other the same
proportions that the respective accrued and unpaid dividends per
share on this Series and the cumulative dividends payable on
outstanding shares of this Series and Parity Dividend Stock bear to
each other. Unless full cumulative dividends payable on outstand-
ing shares of this Series and Parity Dividend Stock for all past
Dividend Periods have been or contemporaneously are declared and
paid or set apart for payment, (a) no dividends shall be declared
and paid or set apart for payment on the Common Stock, or any other
class or series of stock of the Company ranking junior to this
Series as to dividend rights (collectively, the "Junior Dividend
Stock") except for dividends payable in shares of Junior Dividend
Stock, and (b) no shares of Parity Dividend Stock or Junior
Dividend Stock shall be redeemed, purchased or otherwise acquired
by the Company for value except as a result
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of conversion into or exchange for, or with the proceeds from the
sale of, other shares of Parity Dividend Stock or Junior Dividend
Stock; provided, however, the Company shall have the right to
redeem, purchase or otherwise acquire under any circumstances
shares of any class or series of its stock (including the Series
Preferred Stock) other than the Parity Dividend Stock or Junior
Dividend Stock.
3. Voting. The shares of this Series shall not have
any voting powers or rights whatsoever, except for such voting
powers as are required by law or as are granted by this Section 3,
as follows:
(a) At any time or times that dividends payable on
outstanding shares of this Series or any Parity Dividend Stock
shall have been in arrears and remain unpaid in an aggregate amount
equal to or exceeding the amount of dividends payable thereon for
six Dividend Periods (a "Dividend Default"), then the holders of
record of outstanding shares of this Series and the Parity Dividend
Stock shall have, in addition to the other voting rights set forth
herein, the exclusive right, voting together as a single class
without regard to series, to elect two Preferred Directors (as
defined in the Certificate) who shall be in addition to the
directors constituting the Board of Directors immediately before
such election. The vote (at an annual meeting of the Company's
stockholders) of the record holders of a majority of the outstand-
ing shares of this Series and the Parity Dividend Stock, voting
together as a single class without regard to series, then present
and voting (in person or by proxy), or the execution of a written
consent by the record holders of a majority of the outstanding
shares of this Series and the Parity Dividend Stock then entitled
to vote, shall be sufficient to nominate or elect any such
Preferred Directors. The holders of a majority of the issued and
outstanding shares of the voting class, present in person or
represented by proxy, shall constitute a quorum at any meeting for
the election of Preferred Directors. The voting rights provided by
this Subsection 3(a) shall continue until such time as all accrued
and unpaid dividends for all past Dividend Periods on outstanding
shares of this Series and the Parity Dividend Stock shall have been
declared and paid or set aside for payment in full, at which time
such voting rights shall terminate subject to revesting in the
event any subsequent Dividend Default shall occur and be continu-
ing. Such Preferred Directors shall be Independent Directors (as
defined in the Certificate) and shall serve as such until the
earlier occurrence of the election of their respective successors
or the termination of the voting rights of holders of shares of
this Series and the Parity Dividend Stock as provided in the
preceding sentence. So long as a Dividend Default shall continue,
any vacancy in the office of such a Preferred Director may be
filled by the remaining
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Preferred Director; provided, however, that any Preferred Director
may be removed (with or without cause), and any vacancy resulting
from such removal shall be filled, by vote (at an annual meeting of
the Company's stockholders) of the record holders of a majority of
the outstanding shares of this Series and the Parity Dividend
Stock, voting together as a single class without regard to series,
then present and voting (in person or by proxy), or the execution
of a written consent by the record holders of a majority of the
outstanding shares of this Series and the Parity Dividend Stock
then entitled to vote.
(b) So long as any shares of this Series are
outstanding, the Company shall not, directly or through merger or
consolidation with any other corporation:
AR\ without the consent of the holders of at
least 66-2/3% of all shares at the time outstanding of this Series
and any other series of Series Preferred Stock ranking on a parity
with this Series as to dividend and liquidation rights (the "Parity
Preferred Stock"), voting together as a single class without regard
to series, given in person or by proxy, either in writing or by a
vote at an annual meeting of the Company's stockholders or at a
special meeting called for the purpose, authorize, create or
designate any shares of any class or series of preferred stock of
the Company ranking senior to the shares of this Series as to
dividend or liquidation rights; or
(ii) without the consent of the holders of at
least 66-2/3% of all shares at the time outstanding of this Series,
given in person or by proxy, either in writing or by a vote at an
annual meeting of the Company's stockholders or a special meeting
called for the purpose, amend, alter or repeal any of the prefer-
ences, rights, powers or privileges given to shares of this Series
by the provisions of the Certificate, by this Certificate of
Designation, or otherwise, so as to affect materially and adversely
such preferences, rights, powers or privileges; provided, however,
that any increase in the authorized Series Preferred Stock or the
creation and issuance of any class or series of stock of the
Company ranking on a parity with or junior to this Series shall not
be deemed to materially and adversely affect such preferences,
rights, powers or privileges.
(c) Unless all accrued and unpaid dividends for all
past Dividend Periods on outstanding shares of this Series have
been declared and paid or set aside for payment in full, the
Company shall not redeem or purchase less than all outstanding
shares of this Series (except through an offer made on the same
terms to all holders of outstanding shares of this Series) without
the consent of the holders of at least a
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<PAGE>
<PAGE>
majority of all shares at the time outstanding of this Series,
given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose.
(d) In each case in which the vote or consent of
holders of shares of this Series is required by law or is granted
by this Section 3, such holders shall be entitled to one vote for
each outstanding share of this Series respectively owned of record
by them. With respect to any matter (other than a matter provided
for above in this Section 3) on which the Series Preferred Stock is
entitled to vote by law, the Series Preferred Stock will vote as a
single class with the Common Stock unless otherwise required by
law.
4. Liquidation. Upon the dissolution, liquidation, or
winding up of the Company, whether voluntary of involuntary, the
holders of outstanding shares of this Series shall be entitled to
receive out of the assets of the Company available for distribution
to stockholders, before any payment or distribution of assets shall
be made to holders of the Common Stock, or any other class or
series of stock of the Company ranking junior to this Series as to
liquidation rights and after any such payment or distribution to
holders of the shares of the Series 1986-A Preferred Stock and any
other class or series of stock of the Company ranking prior upon
liquidation, dissolution, or winding up, cash liquidating distribu-
tions in an amount of the stated value of $50.00 per share, plus a
sum equal to all dividends on such shares of this Series accrued
and unpaid thereon to the date of final distribution. Neither the
consolidation nor merger of the Company into or with another
corporation or corporations, nor the merger or consolidation of
another corporation or corporations with or into the Company, nor
a reorganization of the Company, nor the purchase or redemption of
all or part of the outstanding shares of any class or series of
capital stock of the Company, nor a sale or transfer of the
property and business of the Company as, or substantially as, an
entity, shall be deemed a liquidation, dissolution, or winding up
of the affairs of the Company, whether voluntary or involuntary,
within the meaning of this Section 4. After the payment to the
holders of the shares of this Series of the full preferential
amounts provided for in this Section 4, the holders of shares of
this Series as such shall have no right or claim to, and shall not
be entitled to participate further in any distribution of, the
remaining assets of the Company. In the event the assets of the
Company available for distribution to stockholders upon any
dissolution, liquidation, or winding up of the Company, whether
voluntary or involuntary, shall be insufficient to pay in full all
preferential amounts to which holders of shares of this Series and
each series of Preferred Stock ranking, as to liquidation rights,
on a parity with this Series are entitled, the holders of all such
shares shall participate ratably in any
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<PAGE>
distribution of assets of the Company in proportion to the
respective full preferential amounts to which holders of all such
shares would be entitled to receive upon such dissolution,
liquidation, or winding up if all such amounts were then available
for distribution.
5. Redemption.
(a) The shares of this Series are redeemable, at
any time as a whole or from time to time in part, at the option of
the Company exercisable by resolution of the Board of Directors, at
a Redemption Price (herein so called), payable in cash, equal to
its stated value of $50.00 per share plus accrued and unpaid
dividends to the date fixed for redemption by the Board of
Directors (the "Redemption Date").
(b) If the Company shall elect to redeem shares of
this Series, notice of redemption of shares of this Series (the
"Redemption Notice") shall be given by first-class mail, postage
prepaid, mailed not less than 10 nor more than 60 calendar days
before the Redemption Date, to each holder of the shares to be
redeemed, at such holder's address as the same appears on the stock
register of the Company. Each Redemption Notice shall state the
Redemption Date; the number of shares of this Series to be redeemed
and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder
and (if deemed appropriate by the Company) the number(s) of the
certificate(s) representing such shares; the Redemption Price per
share; and the place or places where certificates for such shares
are to be surrendered for payment of the Redemption Price. Neither
the failure by the Company to cause proper Redemption Notice to be
given, nor any defect in the Redemption Notice, shall affect the
legality or validity of proceedings for such redemption.
(c) Upon surrender in accordance with the Redemp-
tion Notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of
Directors shall so require), such shares shall be redeemed by the
Company at the Redemption Price specified in the Redemption Notice;
provided, however, that if on or before the Redemption Date all
funds necessary for the redemption shall have been irrevocably set
aside by the Company in trust for the account of the holders of the
shares of this Series called for redemption, then from and after
the mailing of the Redemption Notice and the setting aside of such
funds, notwithstanding that any certificate for any such shares has
not been surrendered, all shares of this Series called for
redemption shall be deemed to have been redeemed and shall cease to
be outstanding, and all rights of the holders thereof as stockhold-
ers of the Company, except the right to receive the respective
Redemption Price (including accrued and unpaid
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<PAGE>
dividends to the Redemption Date, but without interest) upon
surrender of their stock certificates.
6. Conversion. Shares of this Series are not convert-
ible into any other shares of capital stock of the Company.
7. Miscellaneous. Holders of shares of this Series
shall not have any preemptive rights. Of the consideration to be
received for the issuance of shares of this Series, the Board of
Directors hereby determines that an amount equal to the stated
value of $50.00 per share shall constitute capital of the Company,
and no part of such consideration shall constitute additional paid-
in capital of the Company. The Transfer Agent, Registrar, and
Disbursing Agent for this Series shall be appointed from time to
time by resolution of the Board of Directors; provided, however,
that in the absence of any such appointment or a vacancy in any
such agency, the Company shall serve in each such nonappointed or
vacant capacity. The Board of Directors reserves the right by
subsequent amendment of this Certificate of Designation from time
to time to increase or decrease the number of shares constituting
this Series (but not below the number of shares thereof then
outstanding) and in other respects to amend this Certificate of
Designation within the limitations provided hereby and by law and
the Certificate.
ARTICLE FIVE. The Corporation is to have perpetual existence.
ARTICLE SIX. In furtherance and not in limitation of the powers
conferred by statute, the By-Laws of the Corporation may be made,
altered, amended or repealed by the stockholders or by the Board of
Directors.
ARTICLE SEVEN. Meetings of the stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The
books of the Corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the Board
of Directors or in the By-Laws of the Corporation. Elections of
directors need not be by written ballot unless the By-Laws of the
Corporation shall so provide.
ARTICLE EIGHT. The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
ARTICLE NINE. To the fullest extent permitted by the Delaware
General Corporation Law as the same exists or hereafter may be
amended, no director of this corporation shall be liable to
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<PAGE>
this corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director.
IN WITNESS WHEREOF, the Corporation has caused this Certifi-
cate to be executed in its name and on its behalf by its duly
authorized officer and its corporate seal to be affixed hereto and
attested as of the 14th day of April, 1994.
I.C.H. CORPORATION
By: /s/ Sheryl G. Snyder
________________________________
Sheryl G. Snyder
Executive Vice President
ATTEST:
By: /s/ Cynthia W. Young
_____________________________
Cynthia W. Young
Secretary
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<PAGE>
Exhibit 10.43
FIRST AMENDMENT TO RETIREMENT/RETAINER AGREEMENT
THIS FIRST AMENDMENT TO RETIREMENT/RETAINER AGREEMENT made and
entered into by and between I.C.H. CORPORATION, a Delaware
corporation ("ICH"), FACILITIES MANAGEMENT INSTALLATION, INC, a
Delaware corporation ("FMI") and PHILLIP E. ALLEN ("Allen"),
W-I-T-N-E-S-S-E-T-H:
WHEREAS, Allen, ICH and FMI entered into a Retirement/Retainer
Agreement ("Agreement") as of the 26th day of May, 1993; and
WHEREAS, Allen, ICH and FMI desire to amend the Agreement as
hereinafter set forth,
NOW, THEREFORE, for $10.00 in hand paid by Allen to each of
ICH and FMI, the receipt and sufficiency of which is hereby
acknowledged, they hereby covenant and agree as follows:
1. The first sentence of Paragraph 6 of the Agreement is
hereby amended to read as follows:
"ICH agrees that commencing on the effective date of this
Agreement, that Allen shall have the right to use, rent free, until
ninety (90) days after receipt of written notice from ICH ("Use
Period"), his former office and the reception and secretarial space
immediately adjacent thereto ("Former Office") and the furniture,
fixtures and equipment therein, situated on the first floor of the
Western Pioneer Building at 4211 Norbourne Blvd., Louisville,
Kentucky."
2. Paragraph 11 of the Agreement is hereby amended to read
as follows:
"ICH and FMI hereby release Allen and Allen hereby releases
ICH and FMI from all liabilities, claims and/or causes of actions,
if any, which they may have against each other as of the date of
this Agreement; provided that there is expressly excluded from this
release (i) Allen's rights to any and all monies or other benefits
which Allen is entitled to receive from ICH and FMI in his capacity
as an employee of FMI and as a participant in the ICH Companies
Benefit Plans, to include, without limitation, ICH's deferred
compensation and savings plans, (ii) Allen's rights under the
Indemnification Agreement entered into between ICH and Allen dated
July 22, 1987, and (iii) Allen's rights to indemnification from ICH
and/or its direct or indirect subsidiary companies ("Subsidiaries")
pursuant to Delaware or other applicable law or pursuant to the
Articles of Incorporation, Charter and/or By-laws of ICH and/or its
Subsidiaries."
<PAGE>
<PAGE>
3. The Agreement shall otherwise remain unchanged and in
full force and effect.
EXECUTED as of the 22nd day of March, 1994.
______________________________
Phillip E. Allen
I.C.H. Corporation
By:___________________________
Robert L. Beisenherz
Chairman, Chief Executive
Officer and President
Facilities Management
Installation, Inc.
By:___________________________
Robert L. Beisenherz
Chairman, Chief Executive
Officer and President
<PAGE>
<PAGE>
Exhibit 11.1
I.C.H. CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
ON AVERAGE SHARES OUTSTANDING AND FULLY DILUTED BASES
(Unaudited)
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
______________________
1994 1993
____ ____
(Restated)
<S> <C> <C>
Computation for statements of earnings:
Operating earnings (loss) $ (4,177) $ 105,623
Less dividends on preferred stock (4,325) (7,700)
___________ ___________
Operating earnings (loss) applicable
to common stock (8,502) 97,923
Cumulative effect to January 1, 1993 of
change in method of accounting for
postretirement benefits (1,812)
Extraordinary losses (1,231)
___________ ___________
Net earnings (loss) applicable to
common stock $ (8,502) $ 94,880
=========== ===========
Weighted average common shares outstanding 47,870,690 47,908,225
=========== ===========
Earnings (loss) per common share:
Operating earnings (loss) $ (.18) $ 2.05
Cumulative effect to January 1, 1993 of
change in method of accounting for
postretirement benefits (.04)
Extraordinary losses (.03)
___________ ___________
Net earnings (loss) $ (.18) $ 1.98
=========== ===========
Additional computations(A):
Weighted average common shares outstanding 47,878,690 47,908,225
Incremental common shares applicable to common
stock options based on the common stock
daily average market price during the
period 825,657 995,313
___________ ___________
Weighted average common shares, as adjusted 48,704,347 48,903,538
=========== ===========
Weighted average common shares outstanding 47,878,690 47,908,225
Incremental common shares applicable to common
stock options based on the more dilutive of the
common stock ending or daily average market
price during the period 826,028 1,298,964
Assumed conversion of convertible
preferred shares 7,867,451 7,867,542
___________ ___________
Weighted average common shares, assuming full
dilution 56,572,169 57,074,731
=========== ===========
Net earnings (loss) applicable to common stock
assuming conversion of convertible preferred
stock $ (4,334) $ 99,048
=========== ===========
<FN>
______________
(A) These calculations are submitted in accordance with Securities
Exchange Act of 1934 Release No. 9083, although not required by footnote
2 to paragraph 14 of Accounting Principles Board Opinion No. 15 because
they result in dilution of less than 3% or antidilution.
</TABLE>
(Continued)
<PAGE>
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
ON AVERAGE SHARES OUTSTANDING AND FULLY DILUTED BASES, Continued
(Unaudited)
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
______________________
1994 1993
____ ____
(Restated)
<S> <C> <C>
Additional computations, continued(A):
Earnings (loss) per common share:
Average shares outstanding:
Operating earnings (loss) $ (.17) $ 2.01
Cumulative effect to January 1, 1993 of
change in method of accounting for
postretirement benefits (.04)
Extraordinary losses (.03
___________ ___________
Net earnings (loss) $ (.17) $ 1.94
=========== ===========
Fully diluted, assuming conversion of all
applicable securities(B):
Operating earnings (loss) $ (.08) $ 1.79
Cumulative effect to January 1,
1993 of change in method of
accounting for postretirement
benefits (.03)
Extraordinary losses (.02)
___________ ___________
Net earnings (loss) $ (.08) $ 1.74
=========== ===========
<FN>
______________
(B) Fully diluted earnings in 1994 as reflected in this exhibit are
considered "antidilutive" because they result in per share earnings
that exceed per share earnings as determined on the primary basis or
per share losses that are less than per share losses as determined on
the primary basis. Fully diluted earnings per share in 1994 as reflected
in the consolidated statement of earnings (loss) were determined based on
primary earnings per share calculations as a result of such antidilution.
</TABLE>
2
