<PAGE> 1
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 September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
of the SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-11340
LIFE RE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 01-0437851
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
969 High Ridge Road
Stamford, Connecticut 06905
(Address of principal executive offices)
(203) 321-3000
(Registrant's telephone number, including area code)
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
Common stock outstanding ($.001 par value) as of November 3, 1997: 13,634,316
shares
<PAGE> 2
TABLE OF CONTENTS
Item Page
PART I - FINANCIAL INFORMATION
1 Financial Statements
Independent Accountants' Review Report ............................ 1
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 1997 and December 31, 1996 .......................... 2
Condensed Consolidated Statements
of Income (Unaudited)
Three and nine months ended September 30, 1997 and 1996 ........... 3
Condensed Consolidated Statements
of Cash Flows (Unaudited)
Nine months ended September 30, 1997 and 1996 ..................... 4
Notes to Condensed Consolidated Financial
Statements September 30, 1997 (Unaudited) ......................... 5
2 Management's Discussion and Analysis of
Financial Condition and Results of Operations ..................... 9
PART II - OTHER INFORMATION
6 Exhibits and Reports on Form 8-K .................................. 14
Exhibit Index ..................................................... 16
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1
Independent Accountants' Review Report
The Board of Directors
Life Re Corporation
We have reviewed the accompanying condensed consolidated balance sheet of Life
Re Corporation and subsidiaries as of September 30, 1997, and the related
condensed consolidated statements of income for the three-month and nine-month
periods ended September 30, 1997 and 1996 and the condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 1997 and
1996. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Life Re Corporation and
subsidiaries as of December 31, 1996 and the related consolidated statements of
income, shareholders' equity and cash flows for the year then ended (not
presented herein) and in our report dated February 4, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ ERNST & YOUNG LLP
----------------------------
ERNST & YOUNG LLP
Stamford, Connecticut
October 30, 1997
<PAGE> 4
PART I, ITEM 1.
LIFE RE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
(In thousands,
except share data)
<S> <C> <C>
ASSETS
Fixed maturities - at fair value
(amortized cost: $1,845,770 and $1,576,371, respectively) $ 1,916,823 $ 1,610,694
Equity securities - at fair value
(cost: $25,901 and $20,841, respectively) 27,330 21,536
Assets held by ceding company under reinsurance treaty - at fair value
(amortized cost: $102,160 and $105,519, respectively) 108,313 110,246
Mortgage loans and real estate 12,518 6,957
Short-term investments 19,952 25,589
Policy loans 71,510 58,220
----------- -----------
Total investments 2,156,446 1,833,242
Cash 5,652 6,337
Accrued investment income 35,866 31,963
Policy revenues receivable 131,565 120,809
Amounts receivable on reinsurance ceded 277,821 277,625
Deferred policy acquisition costs and value of business acquired 280,249 223,972
Other assets 20,793 25,372
----------- -----------
Total assets $ 2,908,392 $ 2,519,320
=========== ===========
LIABILITIES
Policy benefits $ 2,142,277 $ 1,982,295
Acquisition costs payable 42,236 34,059
Amounts due on reinsurance ceded 41,940 25,526
Other liabilities 112,973 62,329
Loans payable 125,000 125,000
----------- -----------
Total liabilities 2,464,426 2,229,209
----------- -----------
Corporation-obligated, mandatorily redeemable capital securities
of subsidiary trust 100,000
----------- -----------
COMMON SHAREHOLDERS' EQUITY
Common stock (par value $.001 per share;
authorized 40,000,000 shares; issued 15,830,785
and 15,700,935 shares, respectively) 16 16
Paid in capital 107,974 105,226
Net unrealized appreciation of securities 47,278 24,854
Retained earnings 236,460 206,822
Treasury stock - at cost (2,196,469 and 2,172,769
shares, respectively) (47,762) (46,807)
----------- -----------
Total common shareholders' equity 343,966 290,111
----------- -----------
Total liabilities and shareholders' equity $ 2,908,392 $ 2,519,320
=========== ===========
</TABLE>
The accompanying notes are an integral component of the condensed consolidated
financial statements.
2
<PAGE> 5
LIFE RE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands,
except per share data)
<S> <C> <C> <C> <C>
REVENUES
Policy revenues $123,573 $123,750 $360,894 $328,945
Investment income 38,784 32,587 110,021 89,873
Realized investment gains 1,069 1,009 2,858 15,719
-------- -------- -------- --------
Total revenues 163,426 157,346 473,773 434,537
-------- -------- -------- --------
BENEFITS AND EXPENSES
Policy benefits 83,914 92,307 252,526 245,628
Policy acquisition costs 36,911 29,578 105,139 81,595
Interest credited to policyholder accounts 10,485 9,523 28,628 24,119
Interest expense 2,007 2,042 5,988 6,450
Distributions on capital securities 2,180 2,786
Other operating expenses 8,169 7,823 24,953 20,990
-------- -------- -------- --------
Total benefits and expenses 143,666 141,273 420,020 378,782
-------- -------- -------- --------
Income before federal income taxes 19,760 16,073 53,753 55,755
Provision for federal income taxes 6,917 5,623 18,815 14,772
-------- -------- -------- --------
NET INCOME $ 12,843 $ 10,450 $ 34,938 $ 40,983
======== ======== ======== ========
Earnings per common share $ 0.90 $ 0.76 $ 2.47 $ 2.94
======== ======== ======== ========
Dividends per common share $ 0.13 $ 0.10 $ 0.39 $ 0.30
======== ======== ======== ========
Weighted average common and common equivalent shares 14,314 13,826 14,167 13,931
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral component of the condensed consolidated
financial statements.
3
<PAGE> 6
LIFE RE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 34,938 $ 40,983
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in accrued investment income (2,299) (2,562)
Change in policy revenues receivable (9,734) 974
Change in policy benefits (21,449) 39,436
Change in reinsurance ceded balances 16,984 7,537
Interest credited to policyholder accounts 28,629 24,119
Fees and charges deducted from policyholder accounts (25,878) (20,081)
Deferral of policy acquisition costs (44,842) (18,878)
Amortization of policy acquisition costs and value of business acquired 17,676 8,042
Net realized gains on investments (2,858) (15,719)
Provision for deferred federal income taxes 14,096 6,514
Depreciation and amortization 954 614
Other 34,432 (13,772)
--------- ---------
Net cash provided by operating activities 40,649 57,207
--------- ---------
INVESTING ACTIVITIES
Purchases of fixed maturities (448,793) (323,307)
Purchases of equity securities (4,200) (15,200)
Sales of fixed maturities 222,942 133,040
Maturities of fixed maturities 54,256 64,003
Sales or redemptions of equity securities 26,300
Change in short-term investments, policy loans and other investments 6,312 18,830
Cash received for acquisitions and in force reinsurance transactions, net 82,040 88,722
Other, net (1,750) (723)
--------- ---------
Net cash used by investing activities (89,193) (8,335)
--------- ---------
FINANCING ACTIVITIES
Purchases of common stock for treasury (956) (16,253)
Proceeds from exercises of common stock options 2,748 3,391
Issuance of corporation-obligated, mandatorily redeemable
capital securities of subsidiary trust, net of issuance costs 99,034
Loan principal repayments (15,000)
Short-term borrowings 20,000
Dividends on common stock (5,300) (4,101)
Deposits to policyholder accounts 37,881 33,580
Withdrawals from policyholder accounts (85,548) (54,641)
--------- ---------
Net cash provided (used) by financing activities 47,859 (33,024)
--------- ---------
(Decrease) increase in cash (685) 15,848
Cash, beginning of period 6,337 5,056
--------- ---------
Cash, end of period $ 5,652 $ 20,904
========= =========
</TABLE>
The accompanying notes are an integral component of the condensed consolidated
financial statements.
4
<PAGE> 7
ITEM 1.
LIFE RE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Life Re Corporation and Subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments, consisting solely of normal recurring
accruals considered necessary for a fair presentation of financial
results, have been included. Operating results for the nine month period
ended September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997. For further
information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.
All dollar amounts are reported in thousands except per share data or
unless otherwise specified.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("FAS 128"), effective for years ending after December 15, 1997. FAS 128
requires the calculation and presentation on the face of the income
statement of basic earnings per share and, if applicable, diluted earnings
per share. Basic earnings per share ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
The implementation of FAS 128 is not expected to have a material effect on
reported EPS.
5
<PAGE> 8
ITEM 1.
LIFE RE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("FAS 130"), effective for years beginning after December 15, 1997. FAS
130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full
set of general purpose financial statements. FAS 130 requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements
and requires that the accumulated balance of other comprehensive income be
displayed separately from retained earnings and additional paid-in capital
in the equity section of the balance sheet. The implementation of FAS 130
will not affect results of operations or financial position, but will
affect their presentation and disclosure. However, the Company has not
completed its analysis of the impact of implementing this new standard.
Also in June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("FAS 131"), effective
for years beginning after December 15, 1997. FAS 131 requires that a
public company report financial and descriptive information about its
reportable operating segments pursuant to criteria that differ from
current accounting practice. Operating segments, as defined, are
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance.
The financial information to be reported includes segment profit or loss,
certain revenue and expense items and segment assets and reconciliations
to corresponding amounts in the general purpose financial statements. FAS
131 also requires information about revenues from products or services,
countries where the company has operations or assets and major customers.
The implementation of FAS 131 will not affect results of operations or
financial position, but will affect the disclosure of segment information.
However, the Company has not completed its analysis of the impact of
implementing this new standard.
2. ACQUISITIONS AND REINSURANCE TRANSACTION
As of June 30, 1996, the Company's subsidiary, Reassure America Life
Insurance Company ("REALIC") acquired, for an adjusted purchase price of
$16,433, 100% of the common stock of two subsidiaries of I.C.H.
Corporation in a transaction accounted for as a purchase. The fair value
of assets acquired, consisting primarily of invested assets, was $169,276,
and the liabilities assumed, principally future policy benefits,
aggregated
6
<PAGE> 9
ITEM 1.
LIFE RE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
$152,843. By December 31, 1996, these two companies had been merged with
and into REALIC.
The following pro forma financial information has been prepared assuming
REALIC's purchase of these two subsidiaries had occurred at the beginning
of 1996 and reflects certain purchase accounting adjustments, including
amortization of the value of business acquired, net of related income tax
effects. The pro forma results are not necessarily indicative of the
results that would have occurred had these transactions been consummated
as of the assumed date nor are they necessarily indicative of future
operating results. The pro forma results reflect realized investment gains
and other income of the acquired companies of $1,495.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1996
------------------
<S> <C>
Revenues $ 443,213
Net income $ 42,575
Earnings per share $ 3.06
</TABLE>
Effective July 1, 1997, the Company entered into a reinsurance agreement
with UNUM Life Insurance Company of America and First UNUM Life Insurance
Company, subsidiaries of UNUM Corporation, to coinsure and administer a
block of insurance in force with liabilities for future policy benefits
under life insurance and annuity contracts totaling approximately
$115,000. Assets, principally cash, totaling approximately $105,000 were
transferred to the Company.
On September 30, 1997 the Company acquired, in a transaction accounted for
as a purchase, a 79% interest in American Merchants Life Insurance Company
("AML") through the purchase of 79% of the common stock of AML's parent
company, AML Acquisition Company, for a purchase price of approximately
$13,000. In conjunction with the purchase, the Company repaid $9,800 of
long-term debt of AML Acquisition Company. At September 30, 1997, the
assets of AML, consisting primarily of invested assets, had a fair value
of approximately $145,000 and the liabilities, principally future policy
benefits under life insurance and annuity contracts, aggregated
approximately $132,000. The assets and liabilities of AML are included in
the Company's consolidated balance sheet at September 30, 1997. The
transaction had no effect on results of operations for the three or nine
month periods.
7
<PAGE> 10
ITEM 1.
LIFE RE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
3. ISSUANCE OF CORPORATION-OBLIGATED, MANDATORILY REDEEMABLE CAPITAL
SECURITIES
On June 6, 1997, the Company completed a private placement under Rule 144A
of the Securities Act of 1933 of $100,000 of 8.72% capital securities of
Life Re Capital Trust I ("Trust"), a subsidiary of the Company.
Distributions are cumulative and payable in arrears beginning December 15,
1997. The securities have a maturity date of June 15, 2027 and may be
redeemed, at the option of the Company, at any time on or after June 15,
2007. Payments on the securities are fully and unconditionally guaranteed
by the Company. The securities have an effective interest rate of 8.75%.
The assets of the Trust consist of junior subordinated debentures issued
by the Company which have terms that parallel the terms of the capital
securities.
8
<PAGE> 11
ITEM 2.
LIFE RE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
With the exception of historical information, the matters contained in the
following analysis are "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements may include, but
are not limited to, projections of earnings, revenues, income or loss, capital
expenditures, plans for future operations and financing needs or plans, as well
as assumptions relating to the foregoing.
Forward looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results, performance and achievements could differ materially from
those set forth in, contemplated by or underlying the forward looking
statements. Such factors include, but are not limited to, general economic and
business conditions which may impact the need and/or financial ability to obtain
reinsurance, insurance or retrocessional reinsurance; changes in laws and
government regulations applicable to Life Re Corporation and Subsidiaries (the
"Company"); the ability of the Company to successfully implement its operating
strategies; material fluctuations in interest rate levels; material changes in
mortality and morbidity experience; material changes in persistency; material
changes in the level of operating expenses; and the success or failure of
certain of the Company's clients in premium writing.
RESULTS OF OPERATIONS
During 1997 and 1996, the Company completed several transactions through
which it acquired blocks of insurance in force (collectively "Transactions").
The 1997 Transactions, which were the purchase of AML Acquisition Company and a
coinsurance agreement with UNUM Life Insurance Company of America and First UNUM
Life Insurance Company, increased total assets by approximately $240 million.
The 1996 Transactions increased total assets by approximately $400 million.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Net Income totaled $34.9 million for the nine months ended September 30,
1997 compared to $41.0 million for the same period last year. Included in the
1996 results was an after-tax realized gain of $13.5 million from the sale of a
strategic investment. In conjunction therewith, the Company utilized existing
tax net operating loss carryforwards to offset the taxes otherwise payable in
connection with the gain and reversed an existing deferred tax valuation
allowance, resulting in a tax benefit of $4.8 million. Income before federal
income taxes and excluding realized investment gains was $50.9 million in the
current nine month period compared to $40.0 million in the same period last
year. The increase in earnings is largely attributable to higher in force
volumes in ordinary life reinsurance and comparatively favorable mortality,
contributions from Administrative Reinsurance(SM) as a result of the 1996
Transactions and income from an automobile credit
9
<PAGE> 12
ITEM 2.
LIFE RE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
reinsurance agreement effective July 1996. These favorable results were
partially offset by higher morbidity in the group accident and health and
special risk pool business. Morbidity experience within the group accident and
health and special risk pool business is not expected to improve materially in
the near term.
Policy revenues increased by $32.0 million, or 10%, to $360.9 million in
1997 from $328.9 million in 1996. Ordinary life reinsurance policy revenues
increased by $25.5 million, or 13%, to $224.8 million due to an increase in
first year premiums of $17.5 million and higher renewal premiums resulting from
higher in force amounts. An increase in Administrative Reinsurance(SM) policy
revenues of $11.4 million is attributable to the Transactions. Future revenue
growth from Administrative Reinsurance(SM) is dependent on the completion of
similar transactions.
Group policy revenues decreased by $4.9 million, or 4%. Of the group policy
revenues, premiums of $13.3 million in the 1997 period were generated from
automobile credit reinsurance. Group life premiums declined by $7.2 million
period to period due to treaty terminations. Group accident and health and
special risk premiums decreased by $11.0 million, or 11%, primarily as a result
of an agreement, effective January 1, 1997, to retrocede 50% of 1997 group
accident and health and special risk reinsurance risks. Also contributing to the
decline were reductions in certain pool participations which were offset by
higher premium from remaining business. In October 1997, the Company announced
its withdrawal from the group accident and health and special risk pool
reinsurance marketplace. The Company will not renew or accept new participations
in group accident and health and special risk pools. The Company anticipates a
decline in policy revenues in these lines of approximately 20% for the full year
1997 from 1996 policy revenues, 50% in 1998 from 1997 policy revenues and 80% in
1999 from 1998 policy revenues, as the existing business runs off. The Company
expects no adverse financial impact from its withdrawal from this business.
Investment income increased by 22% to $110.0 million as a result of assets
received in conjunction with the Transactions, the automobile credit reinsurance
agreement and proceeds from the Company's June 1997 issuance of capital
securities, offset by a decrease in the weighted average portfolio yield rate,
which was 7.49% and 7.61% at September 30, 1997 and 1996, respectively. Future
investment income growth is dependent on, among other factors, the completion of
additional Administrative Reinsurance(SM) transactions and continued growth in
ordinary life reinsurance and automobile credit reinsurance business.
Policy benefits increased by $6.9 million from the prior period due to
higher volumes of business in force; however, as a percentage of policy
revenues, policy benefits improved to 70% in 1997 from 75% in 1996. Contributing
to the lower percentage is a shift in the mix of business from excess
reinsurance to first dollar quota share reinsurance; under first dollar quota
share reinsurance, typically a higher proportion of the reinsurance premium
funds acquisition costs and a lesser proportion funds mortality costs. Also,
improved mortality in ordinary life reinsurance was partially offset by a
deterioration in group accident and health and special risk morbidity
experience.
10
<PAGE> 13
ITEM 2.
LIFE RE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
Policy acquisition costs as a percentage of policy revenues were 29% for
the nine months ended September 30, 1997 compared to 25% for the same period of
1996. The increase is largely due to higher ultimate commission rates on
ordinary life reinsurance resulting from the shift of the mix of business.
Interest credited to policyholder accounts increased to $28.6 million in
1997 from $24.1 million in 1996 corresponding to the growth in interest
sensitive business resulting from the Transactions. These results were partially
offset by a revised estimate of certain bonus interest provisions and the
lapsation of business in force.
Interest expense declined by $.5 million as a result of a $15.0 million
principal repayment in March 1996 and a decline in the weighted average variable
rate to 6.0% from 6.2%.
Distributions on capital securities of $2.8 million were incurred from the
issuance in June 1997 of $100 million of 8.72% capital securities by a
subsidiary trust as further described in the Financial Condition and Liquidity
section (see Note 3 of "Notes to Condensed Consolidated Financial Statements").
Other operating expenses increased by $4.0 million to $25.0 million partly
as a result of increased fees for third party administration of Administrative
Reinsurance(SM), which fees increased as a result of greater in force volumes
resulting from the Transactions. The Company's higher compensation costs also
contributed to the increase in operating expenses.
Federal income taxes were provided at the federal statutory rate of 35% for
1997. The 1996 rate was 27% due to the previously mentioned tax benefit from
utilization of operating loss carryforwards.
THIRD QUARTER OF 1997 COMPARED TO THIRD QUARTER OF 1996
Net income increased by $2.4 million to $12.8 million from $10.4 million in
the third quarter of 1996 including realized investment gains, after tax, of $.7
million in each year. Income before federal income taxes and excluding realized
investment gains was $18.7 million in the current quarter compared to $15.1
million in 1996. The increase is mainly attributable to higher in force volumes
in ordinary life reinsurance and higher investment income attributable to the
1996 Transactions and the automobile credit business. These results were
partially offset by higher morbidity costs within the accident and health and
special risk reinsurance pool business.
Policy revenues were basically level at $123.6 million. Ordinary life
reinsurance policy revenues increased by $8.7 million, or 12%, to $79.3 million
mainly due to an increase in first year premiums.
11
<PAGE> 14
ITEM 2.
LIFE RE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
Group policy revenues decreased by $8.9 million, or 19%, to $37.5 million.
A decrease in group life and accident and health and special risk reinsurance
premiums was partially offset by an increase in automobile credit reinsurance
premiums. The decrease in group accident and health and special risk policy
revenues is a result of the quota share reinsurance agreement which reduces
accident and health and special risk reinsurance premiums by approximately $7.0
million for the quarter, and management's decision to selectively reduce or
eliminate participation in certain pool arrangements.
Investment income increased by 19% to $38.8 million as a result of assets
received in conjunction with the Transactions and proceeds from the Company's
June 1997 issuance of capital securities partially offset by a decline in the
weighted average portfolio yield rate.
Policy benefits decreased by $8.4 million period to period largely due to
lower volume in accident and health and special risk reinsurance. As a
percentage of policy revenues, policy benefits decreased to 68% from 75% due to
the shift in the mix of business from excess reinsurance to first dollar quota
share reinsurance, partially offset by a deterioration in group accident and
health and special risk morbidity.
Policy acquisition costs as a percentage of policy revenues were 30% for
the 1997 quarter compared to 24% for the prior year quarter largely due to
higher ultimate commission rates on ordinary life reinsurance resulting from the
shift of the mix of business.
Interest credited to policyholder accounts increased to $10.5 million in
1997 from $9.5 million in 1996 corresponding to the growth in interest sensitive
business resulting from the Transactions, partially offset by the run-off of
business in force and slightly lower interest crediting rates.
Distributions on capital securities of $2.2 million were incurred from the
issuance in June 1997 of $100 million of 8.72% capital securities by a
subsidiary trust as further described in the Financial Condition and Liquidity
section (see Note 3 of "Notes to Condensed Consolidated Financial Statements").
Other operating expenses increased by $.3 million to $8.2 million largely
due to higher compensation costs.
FINANCIAL CONDITION AND LIQUIDITY
INVESTMENTS
Invested assets grew to $2,156.4 million at September 30, 1997 from
$1,833.2 million at December 31, 1996 as a result of the issuance of $100
million of capital securities, net assets of
12
<PAGE> 15
ITEM 2.
LIFE RE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
approximately $200.0 million received from the 1997 Transactions, the
reinvestment of operating cash flows of $40.6 million and a $38.8 million
interest rate related fair value increase, partially offset by net withdrawals
from policyholder accounts of $47.7 million.
The Company's fixed maturity portfolio (including the fixed maturity
securities which are included in assets held by ceding company under reinsurance
treaty) constituted 94% of invested assets at September 30, 1997, of which $69.0
million, or 3.2% of invested assets, consisted of below investment grade
securities. At September 30, 1997, the weighted average quality rating of the
fixed maturities portfolio was "A" and no fixed maturities were in default.
LIQUIDITY
Sources of liquidity are available to the Company in the form of cash and
short-term investments and, if necessary, the sale of invested assets. The
Company may enter into reverse repurchase agreements to fund short-term cash
needs and can also borrow an additional $35.0 million under its revolving credit
agreement. Effective May 1, 1997, the credit agreement was amended to reduce the
margin over an index rate that determines the amount of interest paid by the
Company. In addition, the Company may defer the commencement of principal
amortization until January 2001. As of September 30, 1997 and December 31, 1996,
the weighted average interest rate on long-term debt was 6.0%. In addition to
debt servicing and dividend obligations, the Company's financial obligations
consist of policy benefit and acquisition costs, taxes and general operating
expenses. Management believes that these obligations will be adequately provided
for by policy revenues and investment income for the next twelve months.
The ability of the Company to make principal and interest payments under
its credit agreement and fund capital security distributions as well as to
continue to pay common stock dividends ultimately is dependent on the statutory
earnings and surplus of the insurance subsidiaries. The transfer of funds from
the subsidiaries to Life Re Corporation is subject to applicable insurance laws
and regulations. Pursuant to a stock repurchase program approved by the
Company's Board of Directors under which a total 3.0 million shares have been
authorized for purchase, the Company has repurchased approximately 2.2 million
shares for an aggregate purchase price of $46.6 million.
NEW ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board issued Statements No.
128, 130 and 131. These statements concern the calculation of earnings per share
and the presentation of comprehensive income and segment reporting,
respectively. These statements will not affect the Company's financial condition
or results of operations (see Note 1 of "Notes to Condensed Consolidated
Financial Statements").
13
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.01 Restated Certificate of Incorporation of Life Re Corporation
(the "Company"), dated November 13, 1997.
3.02 By-Laws of the Company, dated August 5, 1992.
4.01 Specimen Common Stock Certificate of the Company, incorporated
by reference to Exhibit 4.1 of the Company's Registration
Statement on Form S-1 (File No. 33-50556).
4.02 Company's Agreement to File Indenture, incorporated by
reference to Exhibit 4.02 of the Company's Form 10-Q for the
Quarterly Period Ended June 30, 1997.
10.01 Form of Amendment No. 1 to Promissory Note as Executed by
Certain Officers of the Company.
23.01 Acknowledgment Letter of Ernst & Young LLP.
27.01 Financial Data Schedule.
(b) The Company did not file a Current Report on Form 8-K with the
Securities and Exchange Commission during the three months ended
September 30, 1997.
14
<PAGE> 17
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Life Re Corporation
Dated: November 13, 1997 By: /s/ Chris C. Stroup
---------------------------
Chris C. Stroup,
Executive Vice President
and Chief Financial Officer
15
<PAGE> 18
EXHIBIT INDEX
3.01 Restated Certificate of Incorporation of Life Re Corporation (the
"Company"), dated November 13, 1997.
3.02 By-Laws of the Company, dated August 5, 1992.
4.01 Specimen Common Stock Certificate of the Company, incorporated by
reference to Exhibit 4.1 of the Company's Registration Statement on
Form S-1 (File No. 33-50556).
4.02 Company's Agreement to File Indenture, incorporated by reference to
Exhibit 4.02 of the Company's Form 10-Q for the Quarterly Period
Ended June 30, 1997.
10.01 Form of Amendment No. 1 to Promissory Note as Executed by Certain
Officers and Director of the Company.
23.01 Acknowledgment Letter of Ernst & Young LLP.
27.01 Financial Data Schedule.
16
<PAGE> 1
EXHIBIT 3.01
RESTATED CERTIFICATE OF INCORPORATION
OF
LIFE RE CORPORATION
ARTICLE ONE. The name of the Corporation is Life Re Corporation.
ARTICLE TWO. The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of its 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 corporation may be
organized under the General Corporation Law of Delaware.
ARTICLE FOUR. The total number of shares which the Corporation shall have
the authority to issue is forty-five million (45,000,000) shares, of which forty
million (40,000,000) shares, $0.001 par value, shall be Common Stock, and five
million (5,000,000) shares, $0.01 par value, shall be Preferred Stock.
The designations, powers, preferences, voting rights, and relative,
participating, and other special rights, as well as the qualifications,
limitations, and restrictions thereof, of each class of the Corporation's
capital stock are as follows:
A. COMMON STOCK. Except as otherwise provided by law, 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 (1) 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 Directors") or by the Corporation with respect to the Common
Stock and (2) in all distributions in assets or funds of the Corporation upon
the voluntary or involuntary liquidation, dissolution, or winding up of the
affairs of the Corporation. 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. The Preferred Stock may be issued from time to
time in one or more series. The designations, powers, preferences and relative,
participating, optional, and other special rights, and the qualifications,
limitations, and restrictions thereof, of each series of the Preferred Stock
shall be such as may be fixed by the Board of Directors (authority so to do
being hereby expressly granted) and stated in the resolution or resolutions
providing for the issuance, or affecting the terms, of the Preferred Stock of
such series adopted by the Board of Directors and filed in accordance with the
provisions of the Delaware General Corporation Law. Such resolution or
resolutions, with respect to each series, shall specify the series designation
and the number of shares issuable in such series, and each series, as stated or
specified in such resolution or resolutions, may:
(1) have no voting powers or have full or limited voting powers;
(2) be subject to redemption at the option of the Corporation or the
respective holder thereof, or upon the occurrence of certain specified
events, for cash, property, or rights, including without limitation
securities of the Corporation or another corporation, at certain specified
times and at certain specified prices or rates (which may be subject to
adjustment);
(3) provide for a sinking fund or purchase fund;
(4) be entitled to receive cumulative or noncumulative dividends at
certain specified times, at certain specified rates, and on certain
specified conditions, and payable in preference to, or in any other
relation to, the dividends payable on any other class or classes or series
of stock;
(5) have certain specified rights upon the dissolution of, or upon
distribution of the assets of, the Corporation, including without
limitation rights in preference to, or in any other relation to, the
rights attributable to any other class or classes or series of stock;
(6) be made convertible into, or exchangeable for, at the option of
the Corporation or the holder thereof or upon the occurrence of certain
specified events, shares of any other class or classes or of any other
series of the same or any other class or classes of the stock of the
Corporation, at certain specified prices or rates of exchange (which may
be subject to adjustment);
(7) impose conditions or restrictions upon the creation of
indebtedness of the Corporation or upon the issuance of any other class or
classes or series of stock;
(8) impose conditions or restrictions upon the payment of dividends
or the making of other distributions upon, or the redemption, purchase, or
acquisition of, any other class or classes or series of stock; and
(9) have such other powers, preferences, and relative,
participating, optional, and other special rights, and qualifications,
limitations, and restrictions thereof, as are not inconsistent with the
provisions of the Delaware General Corporation Law.
Unless otherwise fixed for a series, 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.
ARTICLE FIVE. The name and mailing address of the incorporator are as
follows:
Moore & Peterson
A Professional Corporation
2800 First City Center
Dallas, Texas 75201-4621
Attn: Katherine F. Jillson
ARTICLE SIX. The Corporation is to have perpetual existence.
ARTICLE SEVEN. The original Bylaws of the Corporation shall be adopted by
the Board of Directors. The Board of Directors shall have the power to make,
alter, amend and repeal the Bylaws of the Corporation, subject to the power of
the holders of the Voting Stock (as defined in Paragraph 3.(M) of ARTICLE
THIRTEEN) to alter, amend or repeal the Bylaws; provided, however, that,
notwithstanding any other provisions of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of the Voting Stock required by law, this Certificate of Incorporation or
any Preferred Stock Designation (as defined in
<PAGE> 2
Paragraph 1. (A) of ARTICLE THIRTEEN), the affirmative vote of the holders of at
least 80 percent of the combined voting power of all the then outstanding shares
of the Voting Stock, voting together as a single class, shall be required to
alter, amend or repeal any provision of (i) the Bylaws which is to the same
effect as ARTICLES SEVEN, TWELVE AND THIRTEEN of this Certificate of
Incorporation, or (ii) ARTICLES SEVEN, TEN, TWELVE AND THIRTEEN of this
Certificate of Incorporation.
2. Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at an annual or special meeting of stockholders of
the Corporation and may not be effected by any consent in writing by such
stockholders. Except as otherwise required by law and subject to the rights of
the holders of any class or any series of Preferred Stock having a preference
over the Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Corporation may be called only by the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exists any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption).
ARTICLE EIGHT. Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept inside or (subject to the provisions of any applicable statute) 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 Bylaws of the Corporation. Elections of
directors need not be by written ballot unless the Bylaws of the Corporation
shall so provide.
ARTICLE NINE. 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 TEN. A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from liability
or limitation thereof is not permitted under the Delaware General Corporation
Law. If the Delaware General Corporation Law is amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then
(without further action by the stockholders of the Corporation) the liability of
a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation law, as so amended from
time to time.
Any repeal or modification of this Article Ten shall not increase the
personal liability of any director of the Corporation for any act or occurrence
taking place before such repeal or modification, or otherwise adversely affect
any right or protection of a director of the Corporation existing at the time of
such repeal or modification. The provisions of this Article Ten shall not be
deemed to limit or preclude indemnification of a director by the Corporation for
any liability of a director which has not been eliminated by the provisions of
this Article Ten.
<PAGE> 3
ARTICLE ELEVEN. No stockholder of the Corporation or other person shall
have any preemptive right whatsoever to subscribe to any additional issue of
stock of the Corporation (regardless of the class or series thereof) or any
security of the Corporation convertible into such stock.
ARTICLE TWELVE. 1. Except as otherwise fixed pursuant to ARTICLE FOUR of
this Certificate of Incorporation relating to the rights of the holders of any
class or series of Preferred Stock having a preference over the Common Stock as
to dividends or upon liquidation to elect additional directors under specified
circumstances, the Board of Directors shall consist of not less than five or
more than nine persons, the exact number to be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there
exists any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board of Directors for adoption). The directors
(other than those who may be elected by the holders of any class or series of
Preferred Stock having a preference over Common Stock as to dividends or upon
liquidation) shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, as shall be provided in the manner specified in the Bylaws, one class
to hold office initially for a term expiring at the annual meeting of
stockholders to be held in 1993, another class to hold office initially for a
term expiring at the annual meeting of stockholders to be held in 1994, and
another class to hold office initially for a term expiring at the annual meeting
of stockholders to be held in 1995, with the members of each class to hold
office until their successors are elected and qualified. At each annual meeting
of the stockholders of the Corporation, the successors to the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election. The election of directors need not be by ballot.
2. Advance notice of nominations for the election of directors, other than
by the Board of Directors or a committee thereof, shall be given in the manner
provided by the Bylaws.
3. Except as otherwise fixed pursuant to the provisions of ARTICLE FOUR
hereof relating to the rights of the holders of any class or series of Preferred
Stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum of the Board of Directors. If any applicable provision of the Delaware
General Corporation Law expressly confers power on stockholders to fill such a
directorship at a special meeting of stockholders, such a directorship may be
filled at such a meeting only by the affirmative vote of at least 80 percent of
the combined voting powers of the outstanding shares of Voting Stock. Any
director elected in accordance with the two preceding sentences shall hold
office for the remainder of the full term of the class of directors in which the
new directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified. No decrease in the number of
authorized directors constituting the entire Board of Directors shall shorten
the term of any incumbent director.
<PAGE> 4
4. Subject to the rights of the holders of any class or series of
Preferred Stock having preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any director, or
the entire Board of Directors, may be removed from office at any time, but only
for cause and only by the affirmative vote of the holders of at least 80 percent
of the combined voting power of all of the then outstanding shares of the Voting
Stock, voting together as a single class (it being understood that for all
purposes of this ARTICLE TWELVE, each share of the Voting Stock shall have the
number of votes granted to it pursuant to ARTICLE FOUR of this Certificate of
Incorporation or any Preferred Stock Designation).
5. The Board of Directors of the Corporation, when evaluating any offer of
another party to (i) purchase or exchange any securities or property for any
outstanding equity securities of the Corporation or any Subsidiary (as defined
in Paragraph 3. (F) of ARTICLE THIRTEEN), (ii) merge or consolidate the
Corporation or any Subsidiary with another company or (iii) purchase or
otherwise acquire all or substantially all of the properties and assets of the
Corporation or any Subsidiary, shall, in connection with the exercise of its
judgment in determining what is in the best interests of the Corporation and its
shareholders, give due consideration not only to the price or other
consideration being offered but also to all other relevant factors, including
without limitation, (i) the financial and managerial resources and future
prospects of the other party; (ii) the possible effects on the business of the
Corporation and its Subsidiaries and on the employees, policyholders, suppliers
and creditors of the Corporation and its Subsidiaries; and (iii) the possible
effects on the communities in which the facilities of the Corporation and its
Subsidiaries are located. In evaluating any such offer, the Board of Directors
shall be deemed to be performing its duly authorized duties and acting in good
faith and in the best interests of the Corporation.
ARTICLE THIRTEEN. The vote of the stockholders of the Corporation required
to approve any Business Combination shall be as set forth in this ARTICLE
THIRTEEN. The term "Business Combination" shall have the meaning ascribed to it
in Paragraph 1. (B) of this ARTICLE THIRTEEN. Each other capitalized term in
this ARTICLE THIRTEEN shall have the meaning ascribed to it in Paragraph 3 of
this ARTICLE THIRTEEN or as otherwise set forth in this Certificate of
Incorporation.
1. (A) In addition to any affirmative vote required by law or this
Certificate of Incorporation and except as otherwise expressly provided in
Paragraph 2 of this ARTICLE THIRTEEN:
(1) any merger or consolidation of the Corporation or any Subsidiary
with (i) any Interested Stockholder or (ii) any other Person (whether or
not itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate of an Interested Stockholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
any Interested Stockholder or any Affiliate of any Interested Stockholder
of assets of the Corporation or any Subsidiary having an aggregate Fair
Market Value of $5,000,000 or more; or
<PAGE> 5
(3) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an aggregate Fair
Market Value of $5,000,000 or more, other than the issuance of securities
upon the conversion of convertible securities of the Corporation or any
Subsidiary which were not acquired by such Interested Stockholder (or such
Affiliate) from the Corporation or a Subsidiary; or
(4) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(5) any transaction involving the Corporation or any Subsidiary
(whether or not with or into or otherwise involving an Interested
Stockholder), and including, without limitation, any reclassification of
securities (including any reverse stock split), or recapitalization or
reorganization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any self tender offer for or
repurchase of securities of the Corporation by the Corporation or any
Subsidiary or any other transaction (whether or not with or into or
otherwise involving an Interested Stockholder), which in any such case has
the effect, directly or indirectly, of increasing the proportionate share
of the outstanding shares of any class of equity securities or securities
convertible into equity securities of the Corporation or any Subsidiary
which is directly or indirectly beneficially owned by any Interested
Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote of the holders of at least 80 percent of the
combined voting power of the then outstanding shares of the Voting Stock, in
each case voting together as a single class (it being understood that for
purposes of this ARTICLE THIRTEEN, each share of the Voting Stock shall have the
number of votes granted to it pursuant to ARTICLE FOUR of this Certificate of
Incorporation or any designation of the rights, powers and preferences of any
class or series of Preferred Stock made pursuant to said ARTICLE FOUR (a
"Preferred Stock Designation")), which vote shall include the affirmative vote
of at least two-thirds (2/3) of the combined voting power of the outstanding
shares of Voting Stock held by stockholders other than the Interested
Stockholder and Affiliates and Associates of the Interested Stockholder. Such
affirmative vote shall be required notwithstanding any provision of law or any
other provision of this Certificate of Incorporation or any agreement with any
national securities exchange or otherwise which might permit a lesser vote or no
vote and shall be in addition to any affirmative vote required of the holders of
any class or series of Voting Stock pursuant to law, this Certificate of
Incorporation or any Preferred Stock Designation.
(B) The term "Business Combination" as used in this ARTICLE THIRTEEN shall
mean any transaction that is referred to in any one or more of clauses (1)
through (5) of Paragraph 1.(A) of this ARTICLE THIRTEEN.
<PAGE> 6
(2) The provisions of Paragraph 1.(A) of this ARTICLE THIRTEEN shall not
be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law, any
other provision of this Certificate of Incorporation, any Preferred Stock
Designation or any agreement with any national securities exchange, if, in the
case of a Business Combination that does not involve any cash or other
consideration being received by the stockholders of the Corporation, solely in
their respective capacities as stockholders of the Corporation, the condition
specified in the following paragraph (A) is met, or, in the case of any other
Business Combination, the conditions specified in the following paragraph (A) or
the conditions specified in the following paragraph (B) are met:
(A) such Business Combination shall have been approved by a majority of
the Disinterested Directors, or
(B) each of the five conditions specified in the following clauses (1)
through (5) shall have been met:
(1) the aggregate amount of the cash and the Fair Market Value as of
the Consummation Date of any consideration other than cash to be received
per share by holders of Common Stock in such Business Combination shall be
at least equal to the highest of the following (it being intended that the
requirements of this clause (B)(1) shall be required to be met with
respect to all shares of Common Stock outstanding whether or not the
Interested Stockholder has acquired any shares of the Common Stock):
(i) if applicable, the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid in order to acquire any shares of Common Stock beneficially
owned by the Interested Stockholder which were acquired beneficially
by such Interested Stockholder (x) within the two-year period
immediately prior to the Announcement Date or (y) in the transaction
in which it became an Interested Stockholder, whichever is higher;
or
(ii) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is higher;
or
(iii) an amount which bears the same or greater percentage
relationship to the Fair Market Value of the Common Stock on the
Announcement Date as the highest per share price determined in
(B)(1)(i) above bears to the Fair Market Value of the Common Stock
on the date of the commencement of the acquisition of the Common
Stock by such Interested Stockholder; and
(2) the aggregate amount of the cash and the Fair Market Value as of
the Consummation Date of any consideration other than cash to be received
per share by holders of shares of any class or series of Voting Stock
(other than Common Stock) shall be at least equal to the highest of the
following (it being intended that the requirements of
<PAGE> 7
this clause (B)(2) shall be required to be met with respect to every class
and series of such outstanding Voting Stock, whether or not the Interested
Stockholder has previously acquired any shares of a particular class or
series of Voting Stock):
(i) if applicable, the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid in order to acquire any shares of such class or series of
Voting Stock beneficially owned by the Interested Stockholder which
were acquired beneficially by such Interested Stockholder (x) within
the two-year period immediately prior to the Announcement Date or
(y) in the transaction in which it became an Interested Stockholder,
whichever is higher;
(ii) if applicable, the highest preferential amount per share
to which the holders of shares of such class or series of Voting
Stock are entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(iii) the Fair Market Value per share of such class or series
of Voting Stock on the Announcement Date or the Determination Date,
whichever is higher; or
(iv) an amount which bears the same or greater percentage to
the Fair Market Value of such class of Voting Stock on the
Announcement Date as the highest per share price in (B) (2) (i)
above bears to the Fair Market Value of such Voting Stock on the
date of the commencement of the acquisition of such Voting Stock by
such Interested Stockholder; and
(3) the consideration to be received by holders of a particular
class or series of outstanding Voting Stock (including Common Stock) shall
be in cash or in the same form as was previously paid in order to acquire
beneficially shares of such class or series of Voting Stock that are
beneficially owned by the Interested Stockholder and, if the Interested
Stockholder beneficially owns shares of any class or series of Voting
Stock that were acquired with varying forms of consideration, the form of
consideration to be received by each holder of such class or series of
Voting Stock shall be, at the option of such holder, either cash or the
form used by the Interested Stockholder to acquire beneficially the
largest number of shares of such class or series of Voting Stock
beneficially acquired by it prior to the Announcement Date; and
(4) after such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(i) such Interested Stockholder shall not have become the
beneficial owner of any additional shares of Voting Stock of the
Corporation, except as part of the transaction in which it became an
Interested Stockholder or upon
<PAGE> 8
conversion of convertible securities acquired by it prior to
becoming an Interested Stockholder or as a result of a pro rata
stock dividend or stock split; and
(ii) such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other
financial assistance or tax credits or other tax advantages provided
by the Corporation or any Subsidiary, whether in anticipation of or
in connection with such Business Combination or otherwise; and
(iii) such Interested Stockholder shall not have caused any
material change in the Corporation's business or capital structure,
including, without limitation, the issuance of shares of capital
stock of the Corporation to any third party; and
(iv) there shall have been (x) no failure to declare and pay
at the regular date therefor the full amount of dividends (whether
or not cumulative) on any outstanding Preferred Stock, except as
approved by a majority of the Disinterested Directors, (y) no
reduction in the annual rate of dividends paid on Common Stock
(except as necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the Disinterested
Directors, and (z) an increase in such annual rate of dividends (as
necessary to prevent any such reduction) in the event of any
reclassification (including any reverse stock split),
recapitalization, reorganization, self tender offer or any similar
transaction which has the effect of reducing the number of
outstanding shares of the Common Stock, unless the failure so to
increase such annual rate was approved by a majority of the
Disinterested Directors; and
(5) a proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(or any subsequent provisions replacing such Act, rules and regulations),
whether or not the Corporation is then subject to such requirements, shall
be mailed by and at the expense of the Interested Stockholder at least
thirty (30) days prior to the consummation of such Business Combination to
the public stockholders of the Corporation (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions), and shall contain at the front thereof in a
prominent place (i) any recommendations as to the advisability (or
inadvisability) of the Business Combination which the Disinterested
Directors, if any, may choose to state, and (ii) the opinion of a
reputable national investment banking firm as to the fairness (or not) of
such Business Combination from the point of view of the remaining public
stockholders of the Corporation (such investment banking firm to be
engaged solely on behalf of the remaining public stockholders, to be paid
a reasonable fee for their services by the Corporation upon receipt of
such opinion, to be unaffiliated with such Interested Stockholder, and, if
there are at the time any Disinterested Directors, to be selected by a
majority of the Disinterested Directors).
<PAGE> 9
3. For purposes of this ARTICLE THIRTEEN:
(A) A "Person" shall include, without limitation, any individual, firm,
corporation, partnership or group (as such term is used in Regulation 13D-G of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on September 1, 1992) or other entity.
(B) "Interested Stockholder" shall mean any Person (other than the
Corporation or any Subsidiary or any employee benefit plan of the Corporation or
any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly, of more
than 10 percent of the combined voting power of the then outstanding
shares of Voting Stock; or
(2) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10 percent or more of the
combined voting power of the then outstanding shares of Voting Stock; or
(3) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock that were at any time
within the two-year period immediately prior to the date in question
beneficially owned by an Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act of 1933, as amended.
(C) A person shall be a "beneficial owner" of any Voting Stock:
(1) which such Person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(2) which such Person or any of its Affiliates or Associates
has (a) the right to acquire (whether of not such right is exercisable
immediately) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares of Voting Stock.
(D) For the purposes of determining whether a Person is an Interested
Stockholder pursuant to paragraph 3.(B) of this ARTICLE THIRTEEN, the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned by such Interested Stockholder through application of Paragraph 3.(C) of
this ARTICLE THIRTEEN but shall not include any
<PAGE> 10
other shares of Voting Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(E) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended, as in effect on September 1,
1992.
(F) "Subsidiary" shall mean any corporation more than 50 percent of whose
outstanding equity securities having ordinary voting power in the election of
directors is owned, directly or indirectly, by the Corporation or by a
Subsidiary or by the Corporation and one or more Subsidiaries; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in Paragraph 3.(B) of this ARTICLE THIRTEEN, the term "Subsidiary" shall
mean only a corporation of which a majority of each class of Voting Stock is
owned, directly or indirectly, by the Corporation.
(G) "Disinterested Director" shall mean any member of the Board of
Directors of the Corporation who is unaffiliated with, and not a nominee of, the
Interested Stockholder and was a member of the Board of Directors prior to the
time that the Interested Stockholder became an Interested Stockholder, and any
successor of a Disinterested Director who is unaffiliated with, and not a
nominee of, the Interested Stockholder and who is recommended to succeed a
Disinterested Director by a majority of Disinterested Directors then on the
Board of Directors.
(H) "Fair Market Value" shall mean: (1) in the case of stock, the highest
closing sale price during the 30-day period commencing on the 40th day preceding
the date in question of a share of such stock on the Composite Tape for New York
Stock Exchange--Listed Stocks, or, if such stock is not quoted on the New York
Stock Exchange--Composite Tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sales price or bid quotation with respect to a
share of such stock during the 30-day period commencing on the 40th day
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or if no
such quotations are available, the fair market value on the date in question of
a share of such stock as determined by a majority of the Disinterested Directors
in good faith; and (2) in the case of stock of any class or series which is not
traded on any United States registered securities exchange nor in the
over-the-counter market or in the case of property other than cash or stock, the
fair market value of such property on the date in question as determined by a
majority of the Disinterested Directors in good faith.
(I) In the event of any Business Combination in which the Corporation
survives, the phrase "any consideration other than cash to be received" as used
in Paragraphs 2.(B)(1) and (2) of this ARTICLE THIRTEEN shall include the shares
of Common Stock and/or the shares of any other class of outstanding Voting Stock
retained by the holders of such shares.
(J) "Announcement Date" shall mean the date of first public announcement
of the proposed Business Combination.
<PAGE> 11
(K) "Determination Date" shall mean the date on which the Interested
Stockholder became an Interested Stockholder.
(L) "Consummation Date" shall mean the date of the consummation of the
Business Combination.
(M) The term "Voting Stock" shall mean all outstanding shares of capital
stock of all classes and series of the Corporation entitled to vote generally in
the election of directors of the Corporation, in each case voting together as a
single class.
4. A majority of the Disinterested Directors shall have the power and duty
to determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this ARTICLE THIRTEEN
including, without limitation:
(A) whether a Person is an Interested Stockholder;
(B) the number of shares of Voting Stock beneficially owned by any Person;
(C) whether a Person is an Affiliate or Associate of another Person;
(D) whether the requirements of Paragraph 2.(B) of this ARTICLE THIRTEEN
have been met with respect to any Business Combination;
(E) whether the assets which are the subject of any Business Combination
have, or the consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business Combination has,
an aggregate Fair Market Value of $5,000,000 or more; and
(F) such other matters with respect to which a determination is required
under this ARTICLE THIRTEEN.
The good faith determination of a majority of the Disinterested Directors
on such matters shall be conclusive and binding for all purposes of this ARTICLE
THIRTEEN.
5. Nothing contained in this ARTICLE THIRTEEN shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
6. Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 80 percent of
the combined voting power of the Voting Stock, voting together as a single
class, shall be required to alter, amend, or repeal this ARTICLE THIRTEEN or to
adopt any provision inconsistent therewith; provided, however, that if there is
an Interested Stockholder on the record date for the meeting at which such
action is submitted to the stockholders for their consideration, such 80 percent
vote must include the affirmative vote of at least two-thirds (2/3) of the
combined voting power of the outstanding shares of Voting Stock held by
stockholders other than the Interested Stockholder.
<PAGE> 1
EXHIBIT 3.02
BYLAWS
OF
LIFE RE CORPORATION
(Incorporated under the laws of the State of Delaware)
PREAMBLE
These Bylaws are subject to, and governed by, the Certificate of
Incorporation (herein so called, including all amendments thereto and statements
and designations filed therewith) of Life Re Corporation (the "Corporation") and
the statutes, regulations, common law, and other laws ("law" or "law's") of the
State of Delaware (including, without limitation, the Delaware General
Corporation Law) as currently in effect or hereafter amended. In the event of a
conflict between the provisions of these Bylaws and the mandatory provisions of
the law or of the Certificate of Incorporation, such provisions of the law or
the Certificate of Incorporation, as the case may be, will be controlling.
ARTICLE I
OFFICES
1.1 Registered Office and Agent. The registered office and registered
agent of the Corporation shall be as from time to time set forth in the
Certificate of Incorporation (including in a statement of change of registered
office or agent filed with the Secretary of State of Delaware). The
Corporation's registered office or registered agent, or both, may be changed at
any time by resolution of the Board of Directors (herein so called), filed with
the Secretary of State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such other
places both within and without the State of Delaware and within and outside the
United States of America as the business of the Corporation may require or as
the Board of Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS
2.1 Annual Meetings. Annual meetings of stockholders shall be held on the
date and at the time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. At annual meetings, the
stockholders shall transact such business as may properly be brought before the
meeting, including the election of directors to serve on the Board of Directors.
<PAGE> 2
2.2 Special Meetings. Special meetings of stockholders of the Corporation
may be called only by the Board of Directors pursuant to a resolution adopted by
a majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption).
2.3 Place for Meetings. Meetings of the stockholders for the election of
directors shall be held at such place, within or outside the State of Delaware,
as shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may be
held at such place, within or outside the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
2.4 Notice. Written or printed notice stating the place, day, and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than sixty
days before the date of the meeting, either personally or by mail, by or at the
direction of the Chairman of the Board, Vice Chairman of the Board, President,
the Secretary, or the person calling the meeting, to each stockholder of record
entitled to vote at the meeting. Business transacted at any special meeting of
the stockholders shall be limited to the purposes stated in the notice.
2.5 Exemption from Notice. Any notice required to be given to any
stockholder by law, the Certificate of Incorporation, or these Bylaws need not
be given to, nor need application be made to any governmental authority or
agency for a license or permit to give such notice to, the stockholder if (a)
communication with such stockholder would be unlawful or (b)(i) notice of two
consecutive annual meetings and all notices of meetings held during the period
between those annual meetings, if any, or (ii) all (but not less than two)
payments (if sent by first class mail) of distributions or interest on
securities during a twelve-month period have been mailed to such stockholder,
addressed at his address as shown on the stock records of the Corporation, and
have been returned undeliverable. Any action or meeting taken or held without
notice to such a person shall have the same force and effect as if the notice
had been duly given. If such a person delivers to the Corporation a written
notice setting forth his then current address, the requirement that notice be
given to that person shall be reinstated. If the action taken by the Corporation
is reflected in any certificate filed with the Secretary of State of Delaware,
such certificate may state that notice was duly given to all persons to whom
notice was required to be given.
2.6 Voting List. The officer who has charge of the stock records of the
Corporation shall prepare and make available, at least ten days before each
meeting of the stockholders, a complete
<PAGE> 3
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock records are the only
evidence as to who are the stockholders entitled to examine the stock records,
the list required by this Section 2.6 or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
2.7 Voting of Shares. Treasury shares, and shares of the Corporation's own
stock owned by another corporation the majority of the voting stock of which is
owned or controlled by the Corporation, shall not be shares entitled to be voted
at any meeting of stockholders, shall not be voted (directly or indirectly) at
such meeting, and shall not be counted in determining the total number of
outstanding voting shares at any given time. Persons holding stock in a
fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon.
2.8 Quorum: Adjournment. The holders of a majority of the issued and
outstanding shares of all classes of the Corporation's stock entitled to vote
together as a single class and of each class of the Corporation's stock entitled
to vote as a separate class, present in person or represented by proxy, shall
constitute a quorum for the transaction of business at all meetings of
stockholders, except as otherwise provided by law, the Certificate of
Incorporation, or these Bylaws. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
If the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
<PAGE> 4
2.9 Majority Vote: Withdrawal of Quorum. All issued and outstanding shares
of the Corporation's stock entitled to vote on a question brought before a
meeting of stockholders shall vote as a single class, except as otherwise
provided by the express provisions of law or of the Certificate of
Incorporation. When a quorum is present in person or represented by proxy at any
meeting of the Corporation's stockholders, each question shall be decided (a) in
each case in which classes of the Corporation's stock (or any series thereof)
will vote together as a single class, by vote of a majority of the total number
of shares of such classes (or series) present in person or represented by proxy
at the meeting and entitled to vote on the question, or (b) in each case in
which classes of the Corporation's stock will vote as separate classes, by vote
of a majority of the total number of shares of each such class (or series)
present in person or represented by proxy at the meeting and entitled to vote on
the question; provided, however, that if the express provisions of law, the
Certificate of Incorporation, or these Bylaws require a different vote to decide
a question brought before the meeting, such express provisions shall govern and
control the decision of such question. The stockholders present in person or
represented by proxy at a duly convened meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of the holders of
sufficient voting shares to leave less than a quorum.
2.10 Method of Voting. On each matter submitted to a vote at a meeting of
stockholders, every stockholder of record shall be entitled to one vote for
every outstanding share of the Corporation's capital stock, regardless of class,
standing in his name on the stock records of the Corporation as of the record
date for the meeting, except as otherwise provided by law and except to the
extent that the Certificate of Incorporation provides for more or less than one
vote per share or (if and to the extent permitted by law) limits or denies
voting rights to the holders of the shares of any class or series of the
Corporation's capital stock. If the Certificate of Incorporation provides for
more or less than one vote per share for all the outstanding shares or for the
shares of any class or any series on any matter, every reference in these Bylaws
(unless expressly stated otherwise herein), in connection with such matter, to a
specified portion of such shares shall mean such portion of the votes entitled
to be cast in respect of such shares by virtue of the provisions of the
Certificate of Incorporation. At each meeting of stockholders at which directors
will be elected, each stockholder owning shares of the respective class or
classes of the Corporation's capital stock then entitled (by law, the
Certificate of Incorporation, or these Bylaws) to be voted in the election of
such directors shall have the right to vote, in person or by proxy, all shares
of such class or classes for as many persons as there are directors to be
elected by holders of shares of such class or classes entitled to be voted in
such
<PAGE> 5
election. Cumulative voting in the election of directors is permissible only if,
at the time of such election, it is permitted in the Certificate of
Incorporation and by law.
2.11 Voting; Proxies. Unless otherwise provided in the Certificate of
Incorporation or by the express provisions of law, at every meeting of
stockholders each stockholder shall be entitled to vote in person or by proxy,
but no proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. Each proxy shall be revocable
unless the proxy form conspicuously states that the proxy is irrevocable and
unless, and only as long as, the proxy is coupled with an interest sufficient in
law to support an irrevocable power. A proxy may be made irrevocable regardless
of whether the interest with which it is coupled is an interest in the stock
itself or an interest in the Corporation generally.
2.12 Record Date - Voting at Meetings. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix, in
advance, a record date, which shall not be less than ten nor more than sixty
days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
2.13 Record Date - Voting by Consent. In order that the Corporation may
determine the stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix, in advance, a record date,
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is
<PAGE> 6
required by law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.
2.14 Record Date - Dividends and Distributions. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If no record date
is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
2.15 Presiding Officials at Meetings. Unless some other person or persons
are elected by a vote of a majority of the shares then entitled to vote at a
meeting of stockholders, the Chairman of the Board shall preside at and the
Secretary shall prepare minutes of each meeting of stockholders.
2.16 No Stockholders' Consent. Any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.
ARTICLE III
DIRECTORS
3.1 Responsibilities of Board. The business of the Corporation shall be
managed by or under the direction of its Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders or any other person.
3.2 Election; Term; Qualification; Number. The Board of Directors shall
consist of not less than five or more than nine persons, the exact number to be
fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any such resolution is presented to the Board for adoption). At the
1992 annual meeting of stockholders, the directors shall be divided into three
classes, as nearly equal
<PAGE> 7
in number as possible, with the term of office of the first class to expire at
the 1993 annual meeting of stockholders, the term of office of the second class
to expire at the 1994 annual meeting of stockholders and the term of office of
the third class to expire at the 1995 annual meeting of stockholders. At each
annual meeting of stockholders following such initial classification and
election, directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election.
3.3 [Reserved.]
3.4 Vacancies; Newly Created Directorships. Except as otherwise fixed
pursuant to the provisions of ARTICLE FOUR of the Restated Certificate of
Incorporation relating to the rights of the holders of any class or series of
Preferred Stock having a preference over the Common Stock as to dividends or
upon liquidation to elect directors under specified circumstances, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, even though there
exists less than a quorum of the Board of Directors, acting at a regular or
special meeting. If any applicable provision of the Delaware General Corporation
Law expressly confers power on stockholders to fill such a directorship at a
special meeting of stockholders, such a directorship may be filled at such a
meeting only by the affirmative vote of at least 80 percent of the combined
voting power of all of the then outstanding shares of Voting Stock, voting
together as a single class. Any director elected in accordance with the two
preceding sentences shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified. No decrease in the authorized number of directors constituting the
entire Board of Directors shall shorten the term of any incumbent director.
3.5 Removal. Any director of the Corporation may resign at any time either
by oral tender of resignation at any meeting of the Board of Directors or by
giving written notice thereof to the Corporation. Such resignation shall take
effect at the time specified therefor, and unless otherwise specified with
respect thereto the acceptance of such resignation shall not be necessary to
make it effective. Subject to the rights of the holders of any class or series
of Preferred Stock having preference over the Common Stock as to dividends or
upon liquidation to elect directors under specified circumstances, any director,
or the entire Board of Directors, may be removed from office at any time, but
only for cause and only by the affirmative vote of the holders of at least 80
percent of the combined voting power of all of the then
<PAGE> 8
outstanding shares of stock of all classes and series of the Corporation
entitled to vote generally (the "Voting Stock"), voting together as a single
class (it being understood that, for all purposes of these Bylaws, each share of
the Voting Stock shall have the number of votes granted to it pursuant to
ARTICLE FOUR of the Certificate of Incorporation of the Corporation or any
designation of the rights, powers and preferences of any class or series of the
Preferred Stock of the Corporation made pursuant to said ARTICLE FOUR (a
"Preferred Stock Designation")). The Corporation must notify the director of the
grounds of his impending removal and the director shall have an opportunity, at
the expense of the Corporation, to present his defense to the stockholders by a
statement which accompanies or precedes the Corporation's solicitation of
proxies to remove him. The term "entire Board" as used in these Bylaws means the
total number of directors which the Corporation would have if there were no
vacancies.
3.6 First or Regular Meetings. The first meeting of each newly elected
Board of Directors may be held immediately after and at the same place (within
or outside the State of Delaware) as the annual meeting of stockholders, and
regular meetings of the Board of Directors may be held at such times and places
(within or outside the State of Delaware) as may be designated from time to time
by resolution of the Board of Directors. No notice of any such first or regular
meeting is required.
3.7 Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board on not less than twenty-four hours' notice
to each director, and special meetings shall be called by the Chairman of the
Board, President, or Secretary in like manner and on like notice on the written
request of two or more directors, unless the Board of Directors consists of only
one director, in which case special meetings shall be called by the Chairman of
the Board, President, or Secretary in like manner or on like notice on the
written request of the sole director. Special meetings of the Board of Directors
may be held at such times and places (within or outside the State of Delaware)
as shall be designated in the notice of Special meeting. Neither the business to
be transacted at, nor the purpose of, any special meeting of the Board of
Directors need be specified in the notice or waiver of notice of any special
meeting.
3.8 Quorum; Majority Vote. A whole number of directors equal to at least
one third of the total number of authorized directors of the Corporation
(whether or not there exist any vacancies in previously authorized directorships
at the time at which the existence of a quorum is to be determined with respect
to the transaction of any business by the Board) shall constitute a quorum for
the transaction of business, but if at any meeting of the Board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum shall have been obtained. The vote of a
majority of the directors
<PAGE> 9
present at a meeting at which a quorum is in attendance shall be an act of the
Board of Directors, unless the vote of a greater number is required by law, the
Certificate of Incorporation or these Bylaws. The directors present at a duly
convened meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of a sufficient number of directors to leave less
than a quorum.
3.9 Procedure; Minutes. At all meetings of the Board of Directors,
business shall be transacted in such order as the Board of Directors may
determine from time to time. The Board of Directors shall appoint at each
meeting a person to preside at the meeting and a person to act as secretary of
the meeting. The secretary of the meeting shall prepare minutes of the meeting,
which shall be delivered to the Secretary of the Corporation for placement in
the minute books of the Corporation.
3.10 Directors' Reliance. Each director shall, in the performance of his
duties, be fully protected in relying in good faith upon the records of the
Corporation and upon such information, opinions, reports, or statements
presented to the Corporation by any of the Corporation's officers or employees,
or by committees of the Board of Directors, or by any other persons as to
matters the director or member reasonably believes are within any such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation, including (in the case of
dividends, stock repurchases, or otherwise) information, opinions, reports, or
statements as to the value and amount of the assets, liabilities, or net profits
of the Corporation, or any other facts pertinent to the existence and amount of
surplus or other funds from which dividends might properly be declared and paid
or with which the Corporation's stock might properly be purchased or redeemed.
3.11 Compensation. The Board of Directors shall have the authority to fix
the compensation of directors. The directors may be paid their expenses (if any)
of, or a fixed sum for, attendance at each meeting of the Board of Directors or
may be paid a stated salary as director. The amount and manner of payment of any
such expenses and compensation shall be determined by resolution adopted by a
majority of the entire Board of Directors at any time serving. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
3.12 Nominations. Subject to the rights of holders of any class or series
of Preferred Stock having a preference over the Common Stock as to dividends or
upon liquidation, nominations for the election of directors may be made by the
Board of Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of directors generally. However,
any stockholder entitled to vote in the
<PAGE> 10
election of directors generally may nominate one or more persons for election as
directors at a meeting only if written notice of such stockholder's intent to
make such nomination or nominations has been given, either by personal delivery
or by United States mail, postage prepaid, to the Secretary of the Corporation
not later than (i) with respect to an election to be held at an annual meeting
of stockholders, ninety days prior to the anniversary date of the immediately
preceding annual meeting, and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first given to stockholders. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and (e) the consent of each nominee to serve
as a director of the Corporation if so elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
ARTICLE IV
COMMITTEES
4.1 Committees - General. The Board of Directors may, by resolution passed
by a majority of the directors, designate from among its members an executive
committee and one or more other committees, each committee to consist of one or
more directors of the Corporation. Each such committee shall have such name,
powers, responsibilities, and other attributes as may be determined from time to
time by resolution adopted by a majority of the entire Board of Directors then
serving. The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. The number of
committee members may be increased or decreased from time to time by resolution
adopted by a majority of the entire Board of Directors then serving. The
<PAGE> 11
resolution authorizing a decrease in the members of any committee may provide
that such decrease has the effect of shortening the term of any designated
member or members. Each committee member shall serve as such until he ceases to
be a director of the Corporation or until his earlier death, resignation,
removal, disqualification, or other membership termination in accordance with
law, the Certificate of Incorporation, or these Bylaws.
4.2 Authority. The executive committee (if any), unless expressly
restricted in a resolution adopted by a majority of the entire Board of
Directors at any time serving, shall have and may exercise all of the authority
of the Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it. Each other committee, to the extent provided in a
resolution adopted by a majority of the entire Board of Directors at any time
serving, shall have any, and may exercise all, of the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation. However, neither the executive committee nor any other committee
shall have any power or authority of the Board of Directors in reference to
(a) amending the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of the Corporation's stock adopted by
a majority of the Board of Directors then serving as provided in
subsection (a) of section 151 of the Delaware General Corporation Law, fix
the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, distribution of assets of
the Corporation, or conversion into, or exchange of such shares for,
shares of any other class or classes or any other series of the same or
any other class or classes of stock of the Corporation or fix the number
of shares of any series of stock or authorize the increase or decrease of
the shares of any series), (b) adopting an agreement of merger or
consolidation under Section 251 or Section 252 of the Delaware General
Corporation Law, (c) recommending to the stockholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
Corporation, (d) recommending to the stockholders a dissolution of the
Corporation or a revocation thereof, (e) amending, altering, or repealing
these Bylaws or adopting new bylaws, (f) filling vacancies in the Board of
Directors or (except as provided in Section 4.1 of these Bylaws) any
committee, (g) filling any directorship on the Board of Directors to be
filled by reason of an increase in the number of directors, (h) electing
or removing officers or committee members, (i) fixing the compensation of
any committee member, or (j) altering or repealing any resolution of the
Board of Directors which by its terms provides that it shall not be
amendable or repealable by a committee or otherwise. In
<PAGE> 12
addition, if authorized by the Certificate of Incorporation, these Bylaws,
or a resolution adopted by a majority of the entire Board of Directors
then serving, the executive committee or any other committee shall have
the power or authority to declare a dividend, authorize the issuance of
shares of the Corporation's stock (regardless of the class or series
thereof), or adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware General Corporation Law.
4.3 Committee Changes. The Board of Directors at any time may, by
resolution adopted by a majority of the entire Board of Directors then serving,
fill vacancies on any committee, change membership of any committee, or
discharge or terminate any committee. Furthermore, the Board of Directors, by
resolution adopted by a majority of the entire Board of Directors then serving,
may at any time remove any committee member, with or without cause, if in the
judgment of the Board of Directors the best interests of the Corporation will be
served by such removal. The removal of a committee member shall be without
prejudice to the contract rights, if any, of such member, but election or
appointment of a committee member shall not of itself create any contract
rights.
4.4 Regular Meetings. Regular meetings of any committee may be held at
such times and places (within or outside the State of Delaware) as may be
designated from time to time by resolution of the committee. No notice of any
such regular meeting is required.
4.5 Special Meetings. A special meeting of any committee may be held
whenever called by any committee member at such time and place (within or
outside the State of Delaware) as such committee member shall designate in the
notice of such special meeting. The committee member calling any special meeting
shall cause notice of such special meeting to be given to each committee member
at least twenty-four hours before such special meeting. Neither the business to
be transacted at, nor the purpose of, any special meeting of any committee need
be specified in the notice or waiver of notice of any special meeting.
4.6 Quorum; Majority Vote. Unless a greater number is required by law, the
Certificate of Incorporation, these Bylaws, or any resolution adopted by a
majority of the entire Board of Directors at any time serving, a majority of the
number of a committee's members designated by the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of such
committee. If a quorum is not present at a meeting of any committee, a majority
of the committee members present may adjourn the meeting from time to time,
without notice other than an announcement at the meeting, until a quorum is
present. The vote of a majority of the committee members present at any meeting
at which
<PAGE> 13
a quorum is in attendance shall be the act of the committee, unless the vote of
a greater number is otherwise required by law, the Certificate of Incorporation,
these Bylaws, or any resolution adopted by a majority of the entire Board of
Directors at any time serving. The committee members present at a duly convened
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of a sufficient number of committee members to leave less than a
quorum.
4.7 Procedure; Minutes. At each meeting of a committee, business shall be
transacted in such order as the committee may determine from time to time. The
committee shall appoint at each meeting a person to preside at the meeting and a
person to act as secretary of the meeting. The secretary of the meeting shall
prepare minutes of the meeting, which shall be delivered to the Secretary of the
Corporation for placement in the minute books of the Corporation and shall be
reported to the Board of Directors upon request of the Board of Directors.
4.8 Compensation. The committee members may be paid their expenses (if
any) of, or a fixed sum for, attendance at each meeting of the committee or may
be paid a stated salary as a committee member. The amount and manner of payment
of any such compensation shall be determined by resolution adopted by a majority
of the entire Board of Directors at any time serving. No committee member shall
be precluded from serving the Corporation in any other capacity or receiving
compensation therefor.
4.9 Responsibility. Neither the designation of any committee nor the
delegation of authority to it shall operate to relieve the Board of Directors or
any director of any responsibility imposed upon it or such director by law. The
Board of Directors may reverse, modify, supplement, or approve any actions taken
by any committee. Unless the context otherwise requires, the terms "Board of
Directors" and "director" as used in these Bylaws (including, without
limitation, Section 3.10 and Article VIII of these Bylaws, but excluding this
Article IV) shall respectively include each committee or committee member that,
under the law, the Certificate of Incorporation, these Bylaws, or a resolution
adopted by a majority of the entire Board of Directors at any time serving, has
the authority to act with respect to the matter stated in or contemplated by
these Bylaws.
ARTICLE V
GENERAL PROVISIONS RELATING TO MEETINGS AND WRITTEN CONSENTS
5.1 Notice. Any notice required or permitted (under the law, the
Certificate of Incorporation, or these Bylaws) to be given to any stockholder,
director, or committee member of the Corporation shall be in writing and in
English unless some other form of notice is expressly permitted by law or by
lawful provision of the
<PAGE> 14
Certificate of Incorporation or these Bylaws. Whenever the law, the Certificate
of Incorporation, or these Bylaws require or permit any notice to be given to
any stockholder, director, or committee member of the Corporation and do not
specify the form such notice shall take or how such notice shall be given, such
notice may be in the form of a letter, telegram, telecopy, or other written
communication and may be given by mail, personal delivery, or any other method
expressly required or permitted by law or by lawful provision of the Certificate
of Incorporation or these Bylaws; provided, however, that notice of meetings of
the Board of Directors or any committee thereof may be given by telephone if
followed that same day by written notice in accordance with this Section 5.1. A
stockholder's address for any notice shall be as set forth from time to time in
the stock records of the Corporation (maintained by the Corporation or its
transfer agent), and a director's or committee member's address for any notice
shall be as set forth in a directory or other records of the Corporation
maintained for such purpose. Unless otherwise expressly provided by law or by
any lawful provision of the Certificate of Incorporation or these Bylaws, any
notice required or permitted to be given to any stockholder, director, or
committee member shall be deemed to be delivered and given upon the first to
occur of (a) the deposit of such notice in the United States mail, postage
prepaid and addressed to the stockholder, director, or committee member at his
address for notice as stated above, (b) the delivery of such notice at the
stockholder's, director's, or committee member's address for notice as stated
above, whether or not such delivery is made to or receipted for by the
addressee, or (c) the receipt of such notice by the stockholder, director, or
committee member, whether or not at his address for notice as stated above.
5.2 Waiver of Notice; Attendance. Whenever any notice is required to be
given by law, the Certificate of Incorporation, or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or committee members
need be specified in any written waiver of notice unless so required by the
Certificate of Incorporation or these Bylaws. Attendance of a person at any
regular or special meeting of the stockholders, directors, or committee members
shall constitute a waiver of notice of such meeting, except when the person
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
5.3 Director Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all directors or committee members, as the
case may
<PAGE> 15
be, consent thereto in writing, and if the writing or writings are filed with
the minutes of proceedings of the Board of Directors or committee.
5.4 Stockholder Action Without Meeting. Any action that may be taken, or
is required by law, the Certificate of Incorporation, or these Bylaws to be
taken, at an annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted; provided, however, that each such written
consent shall bear the respective date of signature of each stockholder who
signs the consent, and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the Corporation, written consents signed by a
sufficient number of holders to take action are delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
Prompt notice of the taking of any corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any
provision of the Delaware General Corporation Law, if such action had been voted
on by stockholders at a meeting thereof, the certificate filed under such other
provision shall state, in lieu of any statement required by such provision
concerning any vote of stockholders, that written consent and written notice
have been given in accordance with the Delaware General Corporation Law.
5.5 Telephone and Similar Meetings of Directors. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment through which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at the meeting, as permitted by
law. No meeting of stockholders of the Corporation may be held by means of a
conference telephone or similar communications equipment unless and until the
same is permitted by law.
<PAGE> 16
ARTICLE VI
OFFICERS AND OTHER AGENTS
6.1 Number; Titles; Election. The Corporation shall have a Chairman of the
Board, a Vice Chairman of the Board, a President, a Secretary, and any other
officers the Board of Directors may deem necessary or desirable. Each such
officer of the Corporation shall be elected by the Board of Directors, which
election may be held at the first duly convened meeting of the Board of
Directors following an election of directors by the Corporation's stockholders
or at any other meeting of the Board of Directors. In addition to its officers,
the Corporation may have such assistant officers and other agents as are
appointed or elected from time to time by the Board of Directors, or as are
chosen from time to time by the Chairman of the Board (whose choices shall be
named in a written statement included in the Corporation's minute books). Any
two or more offices may be held by the same person. No officer, agent, or
assistant officer need be a stockholder or director of the Corporation, a
resident of the State of Delaware, or a citizen of the United States. No failure
to elect officers of the Corporation shall dissolve or otherwise affect the
Corporation.
6.2 Term of Office; Removal. Each officer, assistant officer, and agent of
the Corporation shall hold office until his successor is chosen and shall
qualify or until his earlier death, resignation, removal, disqualification, or
other termination of office in accordance with law, the Certificate of
Incorporation, these Bylaws, or otherwise. Any officer, assistant officer, or
agent elected or appointed by the Board of Directors may be removed, with or
without cause, at any time by majority vote of the Board of Directors, if in the
judgment of the Board of Directors the best interests of the Corporation will be
served by such removal. Furthermore, the Chairman of the Board, by written
statement included in the Corporation's minute books, may at any time remove any
assistant officer or agent chosen by the Chairman of the Board, with or without
cause, if in the judgment of the Chairman of the Board the best interests of the
Corporation will be served by such removal. Any removal of an officer, assistant
officer, or agent by the Board of Directors or the Chairman of the Board shall
be without prejudice to the contract rights, if any, of the person so removed,
but election, appointment, or other selection of an officer, assistant officer,
or agent shall not of itself create any contract rights.
6.3 Vacancies. Any vacancy occurring as a result of the death,
resignation, removal, disqualification, or other termination of any officer of
the Corporation may be filled by the Board of Directors, provided that any
vacancy in the office of Chairman of the Board, President, or Secretary shall be
filled by the Board of Directors. Any vacancy occurring as a result of the
death, resignation, removal, disqualification, or other termination of any agent
or
<PAGE> 17
assistant officer of the Corporation may be filled by the Board of Directors or
the Chairman of the Board provided that any vacancy in the registered agent of
the Corporation shall be filled by the Board of Directors.
6.4 Authority. Officers, assistant officers, and agents shall have such
authority and perform such duties in the management of the Corporation as are
provided in these Bylaws, or in a resolution of the Board of Directors not
inconsistent with these Bylaws.
6.5 Compensation. The Corporation may compensate officers, assistant
officers, agents, and employees for serving in such capacity. The amounts and
manner of payment of any such compensation will be determined by the Board of
Directors or (in the case of compensation of any assistant officer, agent, or
employee other than the Chairman of the Board) by the Chairman of the Board;
provided, however, that the Chairman of the Board may not determine or modify
the amount or manner of payment of the compensation of any officer, assistant
officer, agent, or employee whose compensation has been established, or with
respect to whose compensation the power of the Chairman of the Board under this
Section 6.5 has been restricted or withdrawn, by resolution of the Board of
Directors or by these Bylaws. No officer, assistant officer, agent, or employee
shall be precluded from serving the Corporation in any other capacity or
receiving compensation therefor.
6.6 Employment and Other Contracts. By resolution, the Board of Directors
may authorize any officer, assistant officer, agent, or employee of the
Corporation to enter into any contract or execute and deliver any instrument in
the name or on behalf of the Corporation, and such authority may be general or
confined to specific instances. The Board of Directors also may authorize
employment contracts with any officer, assistant officer, agent, or employee
upon such terms and conditions as the Board of Directors may deem appropriate.
6.7 Chairman of the Board. The Chairman of the Board shall be the chief
executive officer of the Corporation and, subject to the supervision of the
Board of Directors, shall preside at all meetings of stockholders and the Board
of Directors and shall haven general supervision, management, and control of the
business, properties, officers, assistant officers, agents, and employees of the
Corporation, including, without limitation, the power to choose, remove, or
suspend agents and assistant officers of the Corporation; to employ, discharge,
or suspend employees of the Corporation; to fix the compensation of agents,
assistant officers, and employees of the Corporation, except as provided in
Section 6.5 of these Bylaws; and to suspend, with or without cause, any officer
of the Corporation pending final action by the Board of Directors with respect
to the suspension, removal, or reinstatement of such officer. The Chairman of
the Board shall see that all orders and
<PAGE> 18
resolutions of the Board of Directors and any committee thereof are carried into
effect and shall perform such other duties and have such other authority and
powers as the Board of Directors, the Certificate of Incorporation, or these
Bylaws may from time to time prescribe.
6.8 Vice Chairman of the Board. The Vice Chairman of the Board shall have
such powers and duties as may be prescribed from time to time by the Board of
Directors, or as may be delegated from time to time by the Chairman of the
Board. The Vice Chairman of the Board shall exercise the powers and duties of
the Chairman of the Board during such officer's absence, suspension, or
inability to act.
6.9 President. The President shall have such powers and duties as may be
prescribed from time to time by the Board of Directors, or as may be delegated
from time to time by the Chairman of the Board or the Vice Chairman of the
Board. The President shall exercise the powers and duties of the Vice Chairman
of the Board during such officer's absence, suspension, or inability to act.
6.10 Vice Presidents. Each Vice President shall have such powers and
duties as may be prescribed from time to time by the Board of Directors, or as
may be delegated from time to time by the Chairman of the Board, the Vice
Chairman of the Board, or the President. The Vice Presidents (in the order
designated by the Board of Directors by title or otherwise, or in the absence of
such designation, as determined by the length of time each has held the office
of Vice President continuously) shall exercise the Powers and duties of the
President during such officer's absence, suspension, or inability to act.
6.11 Assistant Vice Presidents. Each Assistant Vice President shall
perform such duties as may be prescribed from time to time by the Board of
Directors, or as may be delegated from time to time by the Chairman of the
Board, the Vice Chairman of the Board, the President, or any Vice President.
Each Assistant Vice President (in the order designated by the board of Directors
by title or otherwise, or in the absence of such designation, as determined by
the length of time each has held the office of Assistant Vice President
continuously) shall exercise the powers and duties of his respective Vice
President during any such officers absence, suspension, or inability to act.
6.12 Secretary. The Secretary shall attend all meetings of stockholders
and such meetings of the Board of Directors or any committee thereof as the
Chairman of the Board, the Board of Directors, or the respective committee shall
request, and he shall record all the proceedings of such meetings in minute
books to be kept for that purpose. The Secretary shall give, or cause to be
given, notice of meetings of stockholders, the Board of Directors, and
committees in accordance with and whenever required by law, the Certificate of
Incorporation, or these Bylaws. The Secretary shall
<PAGE> 19
have charge of the stock certificate books and stock transfer books of the
Corporation and such other stock records as the Board of Directors may direct,
all of which shall at all reasonable times be open to inspection by any
director. The Secretary shall perform such other duties as may be prescribed
from time to time by the Board of Directors, or as may be delegated from time to
time by the Chairman of the Board, the Vice Chairman of the Board, the
President, or any Vice President.
6.13 Assistant Secretaries. Each Assistant Secretary shall perform such
duties as may be prescribed from time to time by the Board of Directors, or as
may be delegated from time to time by the Secretary, the Chairman of the Board,
the Vice Chairman of the Board, the President, or any Vice President. The
Assistant Secretaries (in the order designated by the Board of Directors by
title or otherwise, or in the absence of such designation, as determined by the
length of time each has held the office of Assistant Secretary continuously)
shall exercise the powers and duties of the Secretary during such officer's
absence, suspension, or inability to act.
6.14 Treasurer. The Treasurer shall have custody of the Corporation's
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors or the Chairman
of the Board. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors or the Chairman of the Board, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board
and the Board of Directors, when the Chairman of the Board or the Board of
Directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. The Treasurer shall have power to
endorse (for deposit, collection, or otherwise) all checks, drafts, notes, bills
of exchange, and other commercial paper payable to the Corporation and to give
proper receipts and discharges for all payments to the Corporation. The
Treasurer shall perform such other duties as may be described from time to time
by the Board of Directors, or as may be delegated from time to time by the
Chairman of the Board, the Vice Chairman of the Board, the President, or any
Vice President. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond which shall be renewed at least as often as every six
years) in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
removal, disqualification, or other termination of office, of all books, papers,
vouchers, moneys, and other property of whatever kind in his possession or under
his control belonging to the Corporation.
<PAGE> 20
6.15 Assistant Treasurers. Each Assistant Treasurer shall perform such
duties as may be prescribed from time to time by the Board of Directors, or as
may be delegated from time to time by the Treasurer, the Chairman of the Board,
the Vice Chairman of the Board, the President, or any Vice President. The
Assistant Treasurers (in the order designated by the Board Of Directors by title
or otherwise, or in the absence of such designation, as determined by the length
of time each has held the office of Assistant Treasurer continuously) shall
exercise the powers of the Treasurer during such officer's absence, suspension,
or inability to act.
ARTICLE VII
CERTIFICATES AND STOCK TRANSFERS
7.1 Issuance of Shares. The Board of Directors shall have the power and
authority to issue shares of the Corporation's capital stock authorized under
the Certificate of Incorporation. Unissued shares (with or without par value)
may be issued, and treasury shares (with or without par value) may be disposed
of, at such times and for such consideration (expressed in U.S. dollars) as the
Board of Directors shall fix and determine; provided, however, that if the
Certificate of Incorporation reserves to the Stockholders the right to fix the
consideration for the issuance of unissued shares (with or without par value),
the consideration shall be fixed, before such issuance, by vote of the holders
of a majority of all shares entitled to vote thereon. The consideration for
subscriptions to, or the purchase of, shares to be issued by the Corporation
shall be paid in such form and such manner as the Board of Directors shall
determine, and in the absence of fraud in the transaction, the judgment of the
Board of Directors as to value of the consideration shall be exclusive. The
shares of the Corporation's capital stock so issued shall be deemed to be fully
paid and nonassessable stock, if:
(a) the entire amount of such consideration has been received by the
Corporation in the form of cash, services rendered, personal property, real
property, leases of real property, or a combination thereof; or
(b) not less than the amount of the consideration determined to be
capital pursuant to Section 154 of the Delaware General Corporation Law has
been received by the Corporation in such form, and the Corporation has
received a binding obligation of the subscriber or purchaser to pay the
balance of the subscription or purchase price; provided, however, nothing
contained in this paragraph (b) shall prevent the Board of Directors from
issuing partly paid shares under Section 156 of the Delaware General
Corporation Law.
<PAGE> 21
7.2 Certificates for Shares. Issued shares of the Corporation's capital
stock shall be evidenced by certificates that shall be in form conforming with
the law and approved by the Board of Directors. The certificates shall be
consecutively numbered, shall be entered (as they are issued) in the stock
records of the Corporation or of the Corporation's transfer agent, if any, and
shall state the stockholder's name, the number and class or series of shares,
the par value of such shares or a statement that such shares are without par,
and such other matters (including legends) as may be required by law, contract,
or otherwise. If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the designations, powers,
preferences, and relative, participating, optional, and other special rights of
each class of stock or series thereof and the qualifications, limitations, and
restrictions thereof shall be set forth in full or summarized on the face or
back of the certificate which the Corporation shall issue to represent such
class or series of stock; provided, however, that except otherwise provided in
Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests, a statement of the designations, powers, preferences, and
relative, participating, optional and other special rights of each class of
stock or series thereof and the qualifications, limitations, and restrictions
thereof.
7.3 Signatures on Certificates. The certificates for issued shares of the
Corporations capital stock shall be signed by the Chairman of the Board, the
Vice Chairman of the Board, or the President and by the Secretary, or by any
other officers of the Corporation so authorized by these Bylaws (including,
without limitation, any Vice President acting for the President and any
Assistant Secretary, Treasurer, or Assistant Treasurer acting for the Secretary)
or by a resolution of the Board of Directors, and may be sealed with the seal of
the Corporation or a facsimile thereof. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, the certificate may be issued by the Corporation with the
same effect as if the person or entity, as the case may be, were such officer,
transfer agent, or registrar at the date of issuance.
7.4 Lost, Stolen, or Destroyed Certificates. The corporation shall issue,
or shall cause its transfer agent or registrar to issue, a new certificate in
place of any certificate for shares previously issued if, in accordance with and
to the extent required
<PAGE> 22
by written instructions of the corporation (and its transfer agent or registrar,
if any), the registered owner of the certificate, or his legal representative:
(a) makes proof by affidavit, in form and substance satisfactory to
the Corporation (and its transfer agent or registrar, if any), that a
previously issued certificate for shares has been lost, destroyed, or
stolen;
(b) requests the issuance of a new certificate before the
Corporation (or its transfer agent or registrar, if any) has notice that
the certificate has been acquired by a purchaser for value in good faith
and without notice of an adverse claim;
(c) delivers to the Corporation (and its transfer agent and
registrar, if any) a bond, in form and substance satisfactory to
Corporation (and its transfer agent and registrar, if any) with such
surety or sureties and with fixed or open penalty, if, as, and when the
Corporation may direct, to indemnify the Corporation (and its transfer
agent and registrar, if any) against any claim that may be made on account
of the alleged loss, destruction, or theft of the certificate; and
(d) satisfies any other reasonable requirements imposed by the
Corporation (or its transfer agent or registrar, if any), including
advertising the loss, theft, or destruction of such certificate in such
manner as the Corporation (or its transfer agent or registrar, if any) may
specify.
If the stockholder of record of a certificate that has been lost, stolen, or
destroyed fails to notify the Corporation (and its transfer agent and registrar,
if any) within a reasonable time after he has notice of it, and if the
Corporation (or its transfer agent or registrar, if any) registers a transfer of
the shares represented by the certificate before receiving such notification,
the stockholder of record shall be precluded from making any claim against the
Corporation (or its transfer agent or registrar, if any) for the transfer or for
a new certificate. The requirements of this Section 7.4 shall be decided upon
for the Corporation by the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board( the President, or the Treasurer.
7.5 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the stock records of the Corporation or its transfer agent,
if any, by the stockholders thereof in person or by their duly authorized
attorneys or legal representatives. Upon surrender to the Corporation or its
transfer agent of a certificate representing shares duly endorsed or accompanied
by proper evidence of succession, assignment, or authority to transfer, the
Corporation or its transfer agent shall
<PAGE> 23
issue a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction upon its stock books.
7.6 Recognition of Ownership Rights. The Corporation shall be entitled to
recognize the exclusive right of a person registered on the stock books of the
Corporation (or its transfer agent or registrar, if any) as the owner of shares
to receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on the part
of any other person, whether or not the Corporation (or its transfer agent or
registrar, if any) shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VIII
INDEMNIFICATION
8.1 Definitions. As used in this Article VIII, the following terms have
the indicated meanings:
(a) Awards. The term "Awards" means all monetary damages,
liabilities, fines (including, without limitation, excise taxes assessed with
respect to employee benefit plans), penalties, deficiencies, assessments,
settlement amounts, and other awards, and all interest on any thereof,
whether actual, compensatory, liquidated, exemplary, or punitive.
(b) Company. The term "Company" means the Corporation and any
domestic or foreign successor of the Corporation in a merger, consolidation,
or other transaction in which the liabilities of the Corporation are
transferred to such successor by operation of law, and in any other
transaction in which such successor assumes the liabilities of the
Corporation but does not specifically exclude liabilities that are the
subject matter of this Article VIII.
(c) Director. The term "Director" means any person who is or was a
director or advisory director of the Company and any person who, while a
director or advisory director of the Company, is or was serving at the
request of the Company as a director, officer, assistant officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of any
other foreign or domestic corporation or of any foreign or domestic
partnership, joint venture, sole proprietorship, trust, employee benefit
plan, or other enterprise.
(d) Expenses. The term "Expenses" means such costs of court, fees
and disbursements of attorneys and experts, and other costs and expenses
(except Awards) as are incurred in connection with any Proceeding, including,
without limitation, any investigation or preparation therefor and any
Proceeding to
<PAGE> 24
establish an Indemnitee's right to indemnification under this Article VIII.
(e) Indemnitee. The term "Indemnitee" means (i) any person who is or
was a director, advisory director, officer, or assistant officer of the
Company, (ii) any present or former director, advisory director, officer, or
assistant officer of the Company who, while serving the company as such, is
or was serving at the request of the Company as a director, officer,
assistant officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of any other foreign or domestic corporation or of any
foreign or domestic partnership, joint venture, sole proprietorship trust,
employee benefit plan, or other enterprise, and (iii) any estate, executor,
administrator, personal representative, trustee, heir, or beneficiary of any
person specified in clauses (i) or (ii) of this subsection (e); provided,
however, that the term "Indemnitee" shall not include any person specified in
clause (ii) of this subsection (e) (or any estate, executor, administrator,
personal representative, trustee, heir, or beneficiary of such person) if a
resolution of the Board of Directors, in effect at the time of the act or
circumstance for which indemnification is sought hereunder, excludes such
person from this definition or from the benefits of this Article VIII.
(f) Officer. The term "Officer" means any person who is or was an
officer or assistant officer of the Company and any person who, while an
officer or assistant officer of the Company, is or was serving at the request
of the Company as a director, officer, assistant officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of any other
foreign or domestic corporation or of any foreign or domestic partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise.
(g) Proceeding. The term "Proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative; any appeal in such an action,
suit, or proceeding; and any inquiry or investigation that could lead to such
an action, suit, or proceeding.
(h) Serving at the Request of the Company. The term "serving at the
request of the Company", or any similar phrase, means providing services
pursuant to these Bylaws or a resolution of the Board of Directors or any
committee thereof or pursuant to the performance by the Company's director,
advisory director, officer, assistant officer, employee, or agent of his
regular duties to the Company.
<PAGE> 25
8.2 Mandatory Indemnification.
(a) General. The Company shall Indemnify, and shall advance Expenses
to, each Indemnitee to the fullest extent required or permitted under the
laws of the State of Delaware (including, without limitation, the Delaware
General Corporation Law) as currently in effect or hereafter amended. Without
limiting the generality of the foregoing:
(b) Non-Derivative Actions. The Company shall indemnify each
Indemnitee who is a party to or is threatened to be made a party to or
otherwise involved in any Proceeding (other than a Proceeding by or in the
right of the Company to procure a judgment in favor of the Company), by
reason of the fact that such Indemnitee is or was a Director or Officer,
against all Expenses and Awards actually and reasonably paid or incurred by
such Indemnitee in connection with the defense or settlement of such
Proceeding, but only if such Indemnitee acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of
the Company and, in the case of a criminal Proceeding, also had no reasonable
cause to believe that his conduct was unlawful. The termination of any such
Proceeding by judgment, order of court, settlement, or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not, of itself, create a
presumption that such Indemnitee did not act in good faith and in a manner
that he reasonably believed to be in the best interests of the Company, and
with respect to any criminal Proceeding, that such Indemnitee had reasonable
cause to believe that his conduct was unlawful.
(c) Derivative Actions. The Company shall indemnify each Indemnitee
who is a party to or is threatened to be made a party to or otherwise
involved in any Proceeding by or in the right of the Company to procure a
judgment in favor of the Company, by reason of the fact that such Indemnitee
is or was a Director or Officer, against all Expenses actually and reasonably
paid or incurred by such Indemnitee in connection with the defense or
settlement of such Proceeding, but only if such Indemnitee acted in good
faith and in a manner that he reasonably believed to be in or not opposed to
the best interests of the Company; provided, however, that no indemnification
for Expenses shall be made under this subsection (c) in respect of any claim,
Issue, or matter as to which such Indemnitee shall have been adjudged to be
liable to the Company unless, but only to the extent that, the Delaware Court
of Chancery or any court in which such Proceeding was brought or appealed
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, much Indemnitee is fairly
and reasonably entitled to indemnification for such Expenses as such court
shall deem proper.
<PAGE> 26
(d) Employee Benefit Plans. An Indemnitee who acted in good faith
and in a manner that he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner not opposed to the best interests of the Company as
referred to in this Article VIII.
(e) Determinations. Any indemnification pursuant to this Article
VIII shall be made by the Company only as ordered by a court of competent
jurisdiction or as authorized in the specific case upon a determination that
such indemnification is required or permitted in the circumstances because,
in addition to the other requirements of this Article VIII, the applicable
standard of conduct set forth in subsections (b), (c), or (d) of this Section
8.2 has been met by the Director or Officer. The foregoing determination
shall be made in each instance, as soon as reasonably practicable, (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
are not parties to the respective Proceeding, or (ii) if such quorum is not
obtainable, or (although obtainable) if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by
the stockholders. If an Indemnitee meets the applicable standard of conduct
and other requirements for some, but not all, claims for indemnification
under this Article VIII, the Company shall indemnify such Indemnitee for such
Awards and Expenses as to which it is determined that the applicable
standards of conduct and other requirements have been met.
(f) Claims for Indemnification. To the fullest extent required or
permitted under the laws of the State of Delaware (including, without
limitation, the Delaware General Corporation Law) as currently in effect or
hereafter amended:
(i) each Indemnitee's right to indemnification or advances as
provided by this Article VIII shall be enforceable by such Indemnitee in
any Proceeding before any court of competent jurisdiction:
(ii) the burden of proving that indemnification or advances under
this Article VIII are not required or permitted shall be on the person
alleging any Indemnitee's non-entitlement; and
(iii) neither the failure of the Company (including, without
limitation, its stockholders, Board of Directors, or independent legal
counsel) to have made a determination, before the commencement of such
Proceeding, that indemnification or advances are required or permitted in
the circumstances because such Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Company (including, without
limitation, its stockholders,
<PAGE> 27
Board of Directors, or independent legal counsel) that such Indemnitee has
not met such applicable standard of conduct, shall be a defense to the
Proceeding or create a presumption that such Indemnitee has not met the
applicable standard of conduct.
(g) Successful Defense. Notwithstanding any other provision of this
Article VIII, to the extent that an Indemnitee has been successful, on the
merits or otherwise, in the defense of any Proceeding or in the defense of
any claim, issue, or matter therein, including, without limitation, the
dismissal of such Proceeding without prejudice, such Indemnitee shall be
indemnified by the Company against all Expenses incurred by him in connection
with such defense.
(h) Advances of Expenses. All Expenses paid or incurred by an
Indemnitee in the defense of any Proceeding shall be paid or reimbursed
promptly by the Company in advance of the final disposition of such
Proceeding upon receipt of a written undertaking by or on behalf of such
Indemnitee to repay the amount of such Expenses if, but only to the extent
that, it is ultimately determined that such Indemnitee is not entitled to be
indemnified by the Company pursuant to this Article VIII. Such written
undertaking shall be an unlimited general obligation of such Indemnitee, but
need not be secured and may be accepted without reference to any financial
ability to make repayment.
(i) Subrogation. Notwithstanding any other provision of this Article
VIII, the Company shall not be liable to any Indemnitee for Awards or
Expenses that have been collected or are collectible by or on behalf of such
Indemnitee from persons or entities other than the Company, including,
without limitation, those amounts collected or collectible under valid and
enforceable director and officer liability insurance policies,
indemnification agreements, or other similar arrangements. In each instance
in which the Company makes any indemnification payment to an Indemnitee,
pursuant to this Article VIII or otherwise, (i) the Company shall be
subrogated, to the extent of each such indemnification payment, to all of
such indemnitee's rights of recovery against persons or entities other than
the Company relating to the claims upon which the Awards or Expenses were
incurred, including, without limitation, all of such Indemnitee's rights of
set off, rights of appeal, and rights under director and officer liability
insurance policies, indemnification agreements, and other similar
arrangements; and (ii) such Indemnitee shall execute such documents and
perform such acts as the Company may reasonably request to effect the
subrogation contemplated by this subsection (i).
8.3 Incorporator Indemnification. The Company shall, to the fullest extent
required or permitted by the laws of the State of Delaware (including, without
limitation, the Delaware General
<PAGE> 28
Corporation Law) as currently in effect or hereafter amended, indemnify and hold
harmless the incorporator of the Company from and against any and all Expenses
incurred by such incorporator by virtue of the incorporation of the Company by
such incorporator and other services provided by such incorporator.
8.4 Changes in Mandatory Indemnification. The rights of indemnification
and advancement of Expenses provided under Sections 8.2 and 8.3 of these Bylaws
shall be expanded, automatically and without any further action by the Board of
directors or stockholders of the Corporation, to include any additional rights
that are required or permitted by any and all laws of the State of Delaware that
are enacted, adopted, or otherwise promulgated after the date such Sections 8.2
and 8.3 were first approved by the Board of Directors. Furthermore, such
Sections 8.2 and 8.3 shall be deemed a contract between the Company and each
Indemnitee and the incorporator, respectively. Accordingly, although this
Article VIII (including, without limitation, such Sections 8.2 and 8.3) may be
modified, amended, or repealed in the manner provided in Section 9.9 of these
Bylaws, with or without the consent of any Indemnitee or the incorporator, no
such modification, amendment, or repeal shall have the effect of decreasing or
eliminating any rights under this Article VIII of any Indemnitee or the
incorporator with respect to any Proceeding, event, or circumstance occurring
before such modification, amendment, or repeal.
8.5 Optional Indemnification Provisions. Notwithstanding any other
provision of this Article VIII, the Company (pursuant to a resolution adopted by
its stockholders, the Board of Directors by a majority vote of a quorum of the
disinterested directors or a committee of such disinterested directors):
(a) may pay or reimburse Expenses paid or incurred by an Indemnitee
in connection with his appearance as a witness or other participation in any
Proceeding at a time when he is not a named defendant or respondent in such
Proceeding; and
(b) may indemnify and advance Expenses to (i) any person who is or
was an employee or agent of the Company and (ii) any present or former
Director, advisory director, Officer, employee, or agent of the Company who,
regardless of whether then serving the Company as such, is or was serving at
the request of the Company as a director, officer, assistant officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of any other foreign or domestic corporation or of any foreign or
domestic partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise to the same extent that the Company may
indemnify and advance Expenses to any Indemnitee under this Article VIII; and
(c) may indemnify and advance Expenses to any present or former
Director, Officer, employee, agent, or other person
<PAGE> 29
(including, without limitation, any present or former director, officer,
assistant officer, employee, or agent of any predecessor or subsidiary of the
Company) to such further extent, consistent with the laws of the State of
Delaware (including, without limitation, the Delaware General Corporation
Law) as currently in effect or hereafter amended, as may be provided by the
Certificate of Incorporation, these Bylaws, any general or specific action of
the Board of Directors or any committee thereof, or any contract or as
required or permitted by common law.
8.6 Non-Exclusivity. The indemnification and advancement of Expenses
required or permitted by this Article VIII shall not be deemed exclusive of any
other rights to which any Director, Officer, employee, agent, or other person
seeking indemnification or advancement of Expenses may be entitled under any
present or future bylaw, contract, vote of stockholders or disinterested
directors, or otherwise, whether as to action or inaction in the official
capacity of any of the foregoing persons or as to action or inaction in another
capacity while holding such office with, or so employed or engaged by, the
Company.
8.7 Insurance. The Company may purchase and maintain insurance on behalf
of any person who is or was a Director, officer, employee, or agent of the
Company or who is or was serving at the request of the Company as a director,
officer, assistant officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of any other foreign or domestic corporation or of
any foreign or domestic partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such a person, whether or not the Company would have the power to
indemnify him against that liability under this Article VIII.
ARTICLE IX
GENERAL PROVISIONS
9.1 Dividends. Subject to provisions of law and the Certificate of
Incorporation, the Board of Directors at any regular or special meeting thereof
may declare dividends upon the shares of the Corporation's capital stock, and
the Corporation may pay such dividends. Such declaration and payment shall be at
the discretion of the Board of Directors. Dividends may be paid in cash, in
property, or in shares of the capital stock of the Corporation. If the dividend
is to be paid in shares of the Corporations capital stock theretofore unissued,
the Board of Directors shall, by resolution, direct that there be designated as
capital in respect of such shares an amount that, in the case of par-value
shares being declared as a dividend, is not less than the aggregate par value of
such shares and, in the case of shares without par value
<PAGE> 30
being declared as a dividend, is not less than such amount as shall be
determined by the Board of Directors. No such designation as capital shall be
necessary if shares are being distributed by the Corporation pursuant to
split-up or division of its stock rather than as payment of a dividend declared
payable in stock of the Corporation.
9.2 Reserves for Dividends. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute discretion,
shall determine proper as a reserve or reserves to meet loss contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall
determine, and the Board of Directors may modify or abolish any such reserve in
the manner in which it was created.
9.3 Statement of Business Condition. The Board of Directors may present at
each annual meeting of stockholders, and at any special meeting of the
stockholders when called for vote of the stockholders, a full and clear
statement of the business and condition of the Corporation.
9.4 Instruments. All notes, checks or demands for money, and other
instruments of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to time
designate.
9.5 Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors; provided, however, that if such fiscal
year is not fixed by the Board of Directors, it shall be the calendar year.
9.6 Corporate Seal. The corporate seal, if any, of the Corporation shall
have inscribed thereon the name of the Corporation and the words "Corporate
Seal, Delaware" or may be in such other form as may from time to time be
approved by the Board of Directors. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise. The
Secretary shall have custody of the corporate seal of the Corporation. Tee
Secretary or the Treasurer shall have authority to affix the seal to any
instrument requiring it, and when so affixed, the seal may be attested by either
such officer's signature. The Board of Directors may give general authority to
any officer to affix the seal of the Corporation and to attest the affixing by
his signature. With respect to any contract, instrument, or other document
executed by the Corporation through its duly authorized officer or officers, the
attestation to such execution by the Secretary, the Treasurer, or any other
officer of the Corporation shall not be necessary to constitute such contract,
instrument, or other document a valid or binding obligation of the Corporation
<PAGE> 31
unless the resolution, if any, of the Board of Directors authorizing such
execution expressly states that such attestation is necessary.
9.7 Resignations. Any director, committee member, officer, assistant
officer, or agent may resign by giving written notice to the Corporation. The
effective time of such resignation shall be the time specified in the written
notice given to the Corporation, or immediately if no time is specified or if an
earlier time than when given is specified. In no event may the effective time of
such resignation be before the time such notice is given. Unless a resignation
specifies otherwise, it is effective without being accepted.
9.8 Securities of Other Corporations. The Chairman of the Board, the Vice
Chairman of the Board, the President, or any Vice President of the Corporation,
or any other person or committee authorized by resolution of the Board of
Directors, shall have the power and authority to transfer, endorse for transfer,
vote, consent, or take any other action with respect to any securities of
another issuer that may be held or owned by the corporation and to make,
execute, and deliver any waiver, proxy, or consent with respect to any such
securities.
9.9 Amendment. These Bylaws may be amended, added to, rescinded or
repealed at any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change was given in the notice of the meeting
or, in the case of a meeting of the Board of Directors, in a notice given not
less than two days prior to the meeting; provided, however, that,
notwithstanding any other provisions of these Bylaws or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the Voting
Stock required by law, the Certificate of Incorporation, any Preferred Stock
Designation or these Bylaws, the affirmative vote of the holders of at least 80
percent of the combined voting power of all the then outstanding shares of the
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal Sections 2.2 and 2.16 of ARTICLE II of these Bylaws, Sections
3.2, 3.4, 3.5, 3.8 and 3.12 of ARTICLE III of these Bylaws or this proviso to
this Section 9.9 of ARTICLE IX of these Bylaws.
9.10 Interested Persons. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of the Corporation's directors or officers are
themselves directors or officers, or have a financial interest, shall be void or
voidable solely for this reason, or solely because the director or officer is
present at or participates in any meeting of the Board of
<PAGE> 32
Directors, or any committee thereof, at which the contract or transaction is
approved or authorized, or solely because his or their votes are counted for
such purpose, if:
(a) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative vote of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(c) the contract or transaction is fair as to the Corporation as of
the time it is authorized, approved, or ratified by the Board of Directors,
a committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee authorizing or
approving the contract or transaction.
9.11 Severability. If any provision of these Bylaws is held to be illegal,
invalid, or unenforceable under present or future laws. such provision shall be
fully severable, and these Bylaws shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof.
The remaining provisions hereof shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of these
Bylaws a legal, valid, and enforceable provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible.
9.12 Table of Contents; Headings. The Table of Contents and headings used
in these Bylaws have been inserted for convenience only and do not constitute
matters to be construed or interpreted in connection with these Bylaws.
9.13 Construction. Unless the context otherwise requires, (a) the
masculine gender shall include each other gender, (b) words using the singular
or plural number shall include the plural and singular number, respectively, (c)
the term "including" and derivative or similar words shall mean "including,
without
<PAGE> 33
limitation," (d) the term "person" shall include any natural person,
corporation, partnership, joint venture, proprietorship, trust, union,
association, or other entity or authority, and (e) the term "or" shall mean
"and/or."
The undersigned Secretary of the Corporation hereby certifies that the
foregoing Bylaws were adopted by the Board of Directors as of the 5th day of
August, 1992, TO WITNESS WHICH I have hereunto affixed by signature.
/s/ W. Weldon Wilson
--------------------------------
W. Weldon Wilson, Secretary
<PAGE> 1
EXHIBIT 10.01
AMENDMENT NO. 1 TO PROMISSORY NOTE
Stamford, Connecticut September 5, 1997
Reference is made to a Promissory Note (the "Note") dated August 4, 1992
in the original principal amount of $[330,000.00] [38,500.00] made by [Samuel V.
Filoromo][Theresa L. Rudolph] ("Maker") in favor of Life Re Corporation
("Lender").
Whereas, Lender has indicated its willingness to extend the repayment
period under the Note, and in that connection Maker has indicated his
willingness to amend the Note as provided for in this Amendment No. 1 to
Promissory Note (the "Amendment").
Now, therefore, in consideration of the above premises, the Maker hereby
amends the Note as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Note after giving effect to this Amendment.
2. Amendment to Second Full Paragraph of Note. The second full paragraph
of the Note is hereby amended by deleting it in its entirety and replacing it
with the following second paragraph:
"Interest on the principal balance hereof from time to time remaining
unpaid prior to maturity shall accrue at a rate per annum ("Rate") equal
to the lesser of (a) 6.34% or (b) the Maximum Interest Rate, calculated on
the basis of a [365] [360]-day year. At the end of each calendar quarter,
all interest on this Note accrued for such quarter shall be added to the
principal balance."
3. Amendment to Fourth Full Paragraph of Note. The fourth full paragraph
of the Note is hereby amended by deleting it in its entirety and replacing it
with the following paragraph:
"On the earlier to occur of (i) thirty (30) days after the termination of
Maker's employment relationship with Lender; (ii) the sale or transfer by
Maker of all or any portion of the Collateral; or (iii) December 31, 1997,
Maker will pay to Lender all principal and accrued interest outstanding
under this Note. In any such event, the Lender shall immediately and
automatically release any interest it has in the Collateral without the
need for any further action on the part of the Lender. In such event, this
Note shall become an unsecured Note until Maker has repaid the Note as
provided for in this fourth full paragraph of the Note; provided, however,
that if such repayment does not occur within a period of three business
days (the "Unsecured Period") after the occurrence of any such events, the
Lender shall have recourse against any and all assets of Maker. In that
connection, and only after the expiration of, and Maker's failure to repay
during, the Unsecured Period, Maker hereby grants Lender, upon expiration
of the Unsecured Period, a security interest in any and all of Maker's
assets, including both real and personal property, and agrees that Lender
is and shall be entitled to
<PAGE> 2
take such legal action as Lender deems necessary to fully secure its
interest in, and provide for repayment of, all principal and interest due
and owing Lender under the Note. In this event, the parties hereto agree
that the ninth full paragraph of the Note shall be deleted and of no
further force and effect."
4. No Other Amendments. Except as expressly amended herein, the Note shall
be unmodified and shall continue to be in full force and effect in accordance
with its terms.
5. Outstanding Indebtedness. Maker hereby acknowledges that as of June 30,
1997, the aggregate outstanding principal and accrued interest owing under the
Note was $[449,415.41] [52,655.42] and that such principal and accrued
interest is payable pursuant to the Note, as amended hereby, without offset,
withholding, counterclaim or deduction of any kind.
6. Governing Law. This Amendment shall be governed by, and interpreted in
accordance with, the law of the State of Connecticut.
IN WITNESS WHEREOF, Maker has executed this Amendment No. 1 to Promissory
Note as of the day, month and year first above written.
/s/ [Samuel V. Filoromo]/[Theresa L. Rudolph]
---------------------------------------------
<PAGE> 1
EXHIBIT 23.01
Acknowledgment Letter
The Board of Directors
Life Re Corporation
We are aware of the incorporation by reference in the Registration Statements
(Form S-8s: Numbers 33-54138, 33-80251, and 33-80737) pertaining to The Life Re
Corporation Stock Investment Plan, The Life Re Corporation Stock Option Plan and
The Life Re Corporation 1993 Non-Employee Directors Stock Option Plan,
respectively, and in the Registration Statement (Form S-3 Number No. 333-35031)
pertaining to the registration of shares of common stock in connection with
certain employees' restricted stock grant of our report dated October 30,
1997 relating to the unaudited condensed consolidated interim financial
statements of Life Re Corporation that are included in its Form 10-Q for the
quarter ended September 30, 1997.
/s/ ERNST & YOUNG LLP
--------------------------
ERNST & YOUNG LLP
Stamford, Connecticut
October 30, 1997
17
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