UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from to
Commission file number 1-11716
BANKERS LIFE
HOLDING CORPORATION
Delaware No. 51-0342500
---------------------- -------------------------------
State of Incorporation IRS Employer Identification No.
222 Merchandise Mart Plaza
Chicago, Illinois 60654 (312) 396-6000
-------------------------- --------------
Address of principal executive offices Telephone
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 [ ]
Shares of common stock outstanding as of August 1, 1996: 49,335,020
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in millions, except per share amount)
June 30, December 31,
1996 1995
---- ----
(unaudited) (audited)
ASSETS
<S> <C> <C>
Investments:
Actively managed fixed maturity securities at fair value (amortized cost:
1996-- $3,268.4; 1995-- $3,176.4)............................................... $3,160.7 $3,252.3
Mortgage loans.................................................................... 4.8 5.2
Credit-tenant loans .............................................................. 102.0 88.9
Policy loans...................................................................... 47.6 47.3
Short-term investments............................................................ 92.2 42.8
Other invested assets............................................................. 72.2 78.4
-------- --------
Total investments............................................................. 3,479.5 3,514.9
Accrued investment income............................................................ 56.7 49.5
Accounts receivable and uncollected premiums......................................... 38.0 43.9
Reinsurance receivables.............................................................. 33.9 29.9
Cost of policies purchased........................................................... 552.5 515.6
Cost of policies produced............................................................ 312.7 244.2
Goodwill (net of accumulated amortization: 1996-- $22.6; 1995-- $17.5)............... 376.2 369.3
Other assets......................................................................... 17.8 17.9
-------- --------
Total assets.................................................................... $4,867.3 $4,785.2
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Insurance liabilities............................................................. $3,327.0 $3,265.7
Income tax liabilities............................................................ 27.2 59.8
Investment borrowings............................................................. 146.0 28.1
Notes payable..................................................................... 297.9 301.5
Other liabilities................................................................. 88.9 98.2
-------- --------
Total liabilities............................................................. 3,887.0 3,753.3
-------- --------
Shareholders' equity:
Common stock and additional paid-in capital (par value $.001; 500,000,000
shares authorized; shares issued and outstanding: 1996 -- 49,326,340;
1995-- 50,597,758).............................................................. 731.8 748.8
Unrealized appreciation (depreciation) of securities:
Fixed maturity securities (net of applicable deferred income taxes:
1996-- $(20.5); 1995-- $13.1)................................................. (34.2) 46.7
Other invested assets (net of applicable deferred income taxes:
1996-- $.2; 1995-- ($.1))..................................................... .3 (.2)
Retained earnings................................................................. 282.4 236.6
-------- --------
Total shareholders' equity.................................................... 980.3 1,031.9
-------- --------
Total liabilities and shareholders' equity.................................... $4,867.3 $4,785.2
======== ========
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in millions, except per share amounts)
(unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
(Prior basis) (Prior basis)
<S> <C> <C> <C> <C>
Revenues:
Insurance policy income...................................... $324.3 $307.0 $644.0 $620.9
Investment activity:
Net investment income ..................................... 65.8 65.9 129.8 127.9
Net trading income (losses)................................ (.9) 2.4 (2.0) 2.5
Net realized gains......................................... 2.2 14.5 5.3 13.2
Restructuring income......................................... - - 16.0 -
Other income (loss).......................................... (2.0) 2.5 (1.4) 2.4
------ ------- ------ -------
Total revenues............................................. 389.4 392.3 791.7 766.9
------ ------- ------ -------
Benefits and expenses:
Insurance policy benefits ................................... 240.0 238.0 485.8 477.8
Amortization related to operations........................... 31.6 30.4 55.6 61.0
Amortization related to realized gains....................... 2.5 7.9 5.4 7.0
Interest expense on annuities and financial products......... 20.3 18.3 40.2 38.0
Interest expense on notes payable............................ 5.6 7.9 12.7 16.1
Interest expense on investment borrowings.................... 1.5 2.7 2.3 3.4
Other operating costs and expenses........................... 36.1 35.0 74.7 69.7
------ ------- ------ -------
Total benefits and expenses................................ 337.6 340.2 676.7 673.0
------ ------- ------ -------
Income before income tax and extraordinary charge.......... 51.8 52.1 115.0 93.9
Income tax expense.............................................. 19.6 18.7 42.8 33.7
------ ------- ------ -------
Income before extraordinary charge......................... 32.2 33.4 72.2 60.2
Extraordinary charge on extinguishment of debt, net
of income tax benefit........................................ - - 10.0 -
------ ------- ------ -------
Net income................................................. $ 32.2 $ 33.4 $ 62.2 $ 60.2
====== ======= ====== =======
Earnings per common share:
Weighted average common shares outstanding................... 49,334,930 52,837,252 49,429,312 52,819,415
========== ========== ========== ==========
Income per share before extraordinary charge................. $.65 $.63 $1.46 $1.14
Extraordinary charge......................................... - - .20 -
---- ---- ------ -----
Net income ................................................ $.65 $.63 $1.26 $1.14
==== ==== ===== =====
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Dollars in millions)
(unaudited)
Six months ended
June 30,
-------------------
1996 1995
---- ----
(Prior basis)
<S> <C> <C>
Common stock and additional paid-in capital:
Balance, beginning of period................................................... $ 748.8 $ 371.1
Cost of shares acquired and effectively retired.............................. (27.7) -
Issuance of common stock..................................................... - 1.1
Adjustment of balance due to push down accounting............................ 10.7 401.3
------- -------
Balance, end of period......................................................... $ 731.8 $ 773.5(a)
======= =======
Net unrealized appreciation (depreciation) of securities:
Fixed maturity securities:
Balance, beginning of period................................................. $ 46.7 $(121.8)
Change in net unrealized appreciation (depreciation)....................... (80.7) 121.7
Adjustment of balance due to push down accounting.......................... (.2) (7.5)
------- -------
Balance, end of period....................................................... $ (34.2) $ (7.6)(a)
======= =======
Other invested assets:
Balance, beginning of period................................................. $ (.2) $ 1.3
Change in net unrealized appreciation ..................................... .5 8.5
Adjustment of balance due to push down accounting.......................... - .1
------- -------
Balance, end of period....................................................... $ .3 $ 9.9(a)
======= =======
Retained earnings:
Balance, beginning of period................................................... $236.6 $ 227.6
Net income................................................................... 62.2 60.2
Dividends on common stock.................................................... (14.8) (15.8)
Adjustment of balance due to push down accounting............................ (1.6) (83.6)
------- -------
Balance, end of period......................................................... $282.4 $ 188.4(a)
====== =======
Total shareholders' equity................................................. $980.3 $ 964.2(a)
====== =======
<FN>
(a) Period end balances reflect the adoption of a new accounting basis.
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(unaudited)
Six months ended
June 30,
---------------------
1996 1995
---- ----
(Prior basis)
<S> <C> <C>
Cash flows from operating activities:
Net income....................................................................... $ 62.2 $ 60.2
Adjustments to reconcile net income to net cash provided by operating activities:
Extraordinary charge on extinguishment of debt (before income tax)............. 15.4 -
Amortization and depreciation.................................................. 61.9 69.4
Income taxes................................................................... .7 (5.1)
Insurance liabilities.......................................................... 19.9 23.9
Interest credited to insurance liabilities..................................... 40.2 38.0
Fees charged to insurance liabilities.......................................... (11.9) (10.7)
Accrual and amortization of investment income.................................. (6.2) (12.4)
Deferral of cost of policies produced.......................................... (74.7) (79.2)
Other liabilities.............................................................. (12.2) 10.5
Realized (gains) and trading (income) losses on investments.................... (3.3) (15.7)
Other, net..................................................................... 1.1 3.1
--------- --------
Net cash provided by operating activities.................................... 93.1 82.0
--------- --------
Cash flows from investing activities:
Sales of investments............................................................. 1,129.1 472.3
Maturities and redemptions....................................................... 59.8 34.9
Purchases of investments......................................................... (1,302.0) (678.7)
Other ........................................................................... (.4) 4.3
--------- --------
Net cash used by investing activities........................................ (113.5) (167.2)
--------- --------
Cash flows from financing activities:
Issuance of common stock, net.................................................... - 1.1
Issuance of notes payable........................................................ 309.1 -
Payments on notes payable........................................................ (328.3) (16.0)
Repurchase of common stock....................................................... (27.7) -
Dividends paid on common stock................................................... (14.8) (15.8)
Deposits to insurance liabilities................................................ 111.0 156.8
Withdrawals from insurance liabilities........................................... (97.4) (89.1)
Investment borrowings............................................................ 117.9 56.3
--------- --------
Net cash provided by financing activities.................................... 69.8 93.3
--------- --------
Net increase in short-term investments....................................... 49.4 8.1
Short-term investments, beginning of period........................................... 42.8 88.7
--------- --------
Short-term investments, end of period................................................. $ 92.2 $ 96.8
========= ========
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following notes should be read in conjunction with the notes to the
consolidated financial statements contained in the 1995 Form 10-K of Bankers
Life Holding Corporation.
SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
The consolidated financial statements include Bankers Life Holding
Corporation ("we" or "BLH") and its direct and indirect wholly owned insurance
subsidiaries, all of which are collectively referred to hereinafter as
"Bankers." Insurance subsidiaries include: Bankers Life and Casualty Company and
its wholly owned subsidiary, Certified Life Insurance Company (collectively
"BLC") and their parent, Bankers Life Insurance Company of Illinois ("BLI").
Bankers markets health and life insurance and annuity products primarily to
senior citizens through approximately 200 branch offices and 3,200 career
agents. Intercompany transactions have been eliminated in consolidation. The
unaudited consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q and, therefore, do not include all
disclosures required by generally accepted accounting principles. However, these
statements include all adjustments (consisting only of normal recurring items)
necessary to present fairly the Company's financial position and the results of
operations on a basis consistent with that of prior audited financial
statements.
In preparing financial statements in conformity with generally accepted
accounting principles, we are required to make estimates and assumptions that
significantly affect various reported amounts. For example, we use significant
estimates and assumptions in calculating the cost of policies produced, the cost
of policies purchased, goodwill, insurance liabilities, liabilities related to
litigation, guaranty fund assessment accruals and deferred income taxes. If our
future experience differs materially from these estimates and assumptions, our
financial statements could be affected.
During the first six months of 1995, Conseco Inc. ("Conseco") purchased
12.8 million shares of BLH representing 24 percent of the then outstanding
shares of BLH, increasing its ownership in BLH to 85 percent. During the last
six months of 1995, BLH repurchased 2.2 million shares of its common stock at a
cost of $42.1 million. Conseco's ownership in BLH was 88 percent at December 31,
1995. During the first quarter of 1996, BLH repurchased 1.3 million shares at a
cost of $27.7 million, increasing Conseco's ownership in BLH to 90.5 percent.
As a result of Conseco's significant ownership interest in Bankers, a new
basis of accounting under the "push down" method was adopted effective June 30,
1995. Under this method, the assets and liabilities of Bankers were revalued to
reflect Conseco's cost basis, which is based on the fair values of such assets
and liabilities on the dates Conseco's ownership interests were acquired. The
new accounting basis was reflected in the consolidated balance sheet and
statement of shareholders' equity at June 30, 1995, and is reflected in the
statements of operations and cash flows for periods subsequent to June 30, 1995.
As a result, the assets and liabilities of Bankers included in the June 30,
1996, consolidated balance sheet represent the following combination of values:
(i) the portion of Bankers' net assets acquired by Conseco in the November 1992
acquisition is valued as of that acquisition date; (ii) the portion acquired in
September 1993 is valued as of that date; (iii) the portion acquired during 1995
and 1996 (including the increase in Conseco's ownership as a result of BLH's
common stock repurchases) is valued as of the date of their purchases and (iv)
the portion of Bankers' net assets owned by minority interests is valued based
on a combination of (i) above and the historical bases of net assets acquired in
the November 1992 acquisition.
6
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The effect of the use of push down accounting as a result of our common
stock repurchases during the first quarter of 1996 is as follows
(dollars in millions):
<TABLE>
<CAPTION>
Debit
(Credit)
--------
<S> <C>
Cost of policies purchased........................................ $ 9.0
Cost of policies produced......................................... (5.0)
Goodwill.......................................................... 7.2
Insurance liabilities............................................. (1.4)
Income tax liabilities............................................ (1.1)
Notes payable..................................................... (.5)
Other liabilities................................................. .7
Common stock and additional paid-in capital....................... (10.7)
Net unrealized appreciation of securities......................... .2
Retained earnings................................................. 1.6
</TABLE>
Certain amounts in the 1995 financial statements were reclassified to
conform with the 1996 presentation.
ADJUSTMENT TO ACTIVELY MANAGED FIXED MATURITIES
At June 30, 1996, we adjusted several balance sheet accounts to carry
actively managed fixed maturity securities at fair value as follows:
<TABLE>
<CAPTION>
Effect of fair value
Balance adjustment on actively
before managed fixed Reported
adjustment maturity securities amount
---------- ------------------- ------
(Dollars in millions)
<S> <C> <C> <C>
Actively managed fixed maturity securities....................... $3,268.4 $(107.7) $3,160.7
Other invested assets............................................ 68.4 3.8 72.2
Cost of policies purchased....................................... 517.4 35.1 552.5
Cost of policies produced........................................ 298.6 14.1 312.7
Income tax liabilities .......................................... 47.7 (20.5) 27.2
Unrealized depreciation of fixed maturity securities............. - (34.2) (34.2)
</TABLE>
CHANGES IN NOTES PAYABLE
In March 1996, we completed a tender offer pursuant to which $148.3 million
principal balance of our 13 percent senior subordinated notes were repurchased
for $173.2 million. The repurchased notes had a carrying value of $157.8
million. In the first quarter of 1996, we reported an extraordinary charge of
$10.0 million (net of applicable income tax) as a result of the repurchase. The
repurchase was made using the proceeds from a revolving credit facility entered
into in February 1996. In conjunction with the tender offer, holders of the
senior subordinated notes consented to amendments to the indenture for such
notes which eliminated substantially all restrictive covenants, including
covenants which limited our ability to pay dividends, incur additional
indebtedness, repurchase common stock and make certain investments. During the
second quarter of 1996, we repurchased $.1 million par value of our 13 percent
senior subordinated notes, with no material loss realized.
We can borrow up to $400 million under our new revolving credit facility
(including a competitive bid facility in the aggregate principal amount of up to
$100 million). Any borrowings are due in 2001 and accrue interest at a rate of
LIBOR plus an applicable margin of 50 or 75 basis points, depending on our ratio
of debt to consolidated net worth. The actual weighted average rate at June 30,
1996, was 6.0 percent. At June 30, 1996, the total principal balance borrowed
under the revolving credit agreement was $268.0 million. In addition to the
repurchase of the 13 percent senior subordinated notes, proceeds were used
7
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
to repay the existing $110.0 million principal balance due under the bridge loan
facility. The revolving credit agreement contains a number of covenants,
including prohibitions or limitations on indebtedness, liens, mergers,
acquisitions, sales of assets outside of the normal course of our business and
certain transactions with affiliates.
CHANGES IN CAPITAL STOCK
In January 1996, we completed the share repurchase program originally
announced in April 1994 and expanded in August 1995. During 1995, we repurchased
2,240,000 shares for $42.1 million. During the first quarter of 1996, we
repurchased 1,272,248 shares for $27.7 million.
See "Organization and Basis of Presentation" above for a discussion of the
change in basis resulting from Conseco's increased ownership of Bankers and the
adoption of the "push down" method of accounting.
During the first six months of 1996, we issued 830 shares of common stock
upon the exercise of stock options.
RELATED PARTY TRANSACTIONS
Effective January 1, 1996, the former home office employees of Bankers
became employees of Conseco. The services formerly provided by such employees
are now provided by Conseco. Fees for these services and services provided by
Conseco in 1996 and prior periods (including data processing, executive
management and investment management services) are based on negotiated rates or
Conseco's direct and directly allocable costs plus a 10 percent margin. Total
fees paid to Conseco were $58.4 million and $7.7 million during the first six
months of 1996 and 1995, respectively.
Conseco Capital Partners II, L.P. ("Partnership II") is a partnership
formed by Conseco to invest in privately negotiated acquisitions of specialized
annuity, life and accident and health insurance companies and related
businesses. Bankers participated in Partnership II's only acquisition, American
Life Holdings, Inc. ("AGP") in September 1994 and made additional investments in
November 1995. In March 1996, Conseco announced that it would be dissolving
Partnership II. Accordingly, the partners (including Bankers) have no further
commitment to make additional contributions of capital to Partnership II. In
accordance with the partnership agreement, all of Partnership II's assets
(primarily its investment in AGP) will be distributed to its partners subject to
the conditions contained in the partnership agreement. In any event, Partnership
II's assets must be distributed within two years of the announcement of the
dissolution. Bankers' investments in Partnership II and AGP have a cost of $31.7
million and a carrying value of $50.6 million at June 30, 1996. Such investments
are reported in other invested assets on the consolidated balance sheet.
8
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Financial data for periods subsequent to June 30, 1995 reflect the adoption
of a new basis of accounting under the "push down" method and, accordingly, data
for the 1995 period may not be comparable with data for the 1996 period.
Significant accounting adjustments recorded as a result of the adoption of the
new basis are described in the notes to the consolidated financial statements in
our 1995 Form 10-K. These adjustments impact the comparability of operating data
principally by replacing a portion of amortization expense for the cost of
policies produced with amortization expense for the cost of policies purchased
and goodwill, which have different amortization assumptions and bases.
Six Months Ended June 30, 1996 Compared to the Six Months Ended June 30,
1995
Insurance policy income increased 3.7 percent, to $644.0 million, in the
first six months of 1996 as a result of increases in Medicare supplement and
long-term care premiums, which were largely offset by the anticipated decrease
in comprehensive major medical product premiums resulting from prior steps taken
to improve the profitability of this product.
Net investment income increased 1.5 percent, to $129.8 million, in the
first six months of 1996. Average invested assets (amortized cost basis)
increased to $3.5 billion in 1996 from $3.4 billion in 1995 while the yield
earned on average invested assets declined to 7.4 percent in 1996 from 7.6
percent in 1995. Cash flows received during 1995 and the first six months of
1996 (including cash flows from the sales of investments) were invested in
lower-yielding securities due to the general decline in interest rates. Invested
assets grew as a result of operations.
Restructuring income in 1996, represents the gain realized as a result of
the sale of Bankers' investment in Noble Broadcast Group, Inc., a private
company that owns and operates 12 radio stations.
Net realized gains and net trading income (losses) often fluctuate from
period to period. Bankers sold $1,129.1 million of investments (principally
fixed maturity securities) in the first six months of 1996, compared to $472.3
million in 1995 generating net realized gains of $5.3 million and trading losses
of $2.0 million in 1996, compared to net realized gains of $15.4 million and
trading income of $2.5 million in 1995. In addition, during the first six months
of 1995, the Company recorded a net realized loss of $2.2 million on the
writedown of certain exchange-rate-linked securities as a result of foreign
currency fluctuations.
Selling securities at a gain and reinvesting the proceeds at lower yields
may, absent other management action, tend to decrease future investment yields.
We believe, however, that the following factors would mitigate the adverse
effect of such decreases on net income: (i) Bankers recognizes additional
amortization of the cost of policies purchased and the cost of policies produced
in the same period as the gain in order to reflect reduced future yields thereby
reducing such amortization in future periods (see amortization related to
realized gains below); (ii) Bankers can reduce interest rates credited to some
products thereby diminishing the effect of the yield decrease on the investment
spread; and (iii) the investment portfolio grows as a result of reinvesting the
realized gains.
Other income (loss) is comprised primarily of experience rating refunds
related to group accident and health contracts which fluctuate based on the
experience realized on such contracts.
Insurance policy benefits increased 1.7 percent, to $485.8 million, in the
first six months of 1996. Such increase reflects the increased amount of
business in force on which benefits are incurred.
Amortization related to operations (consisting of amortization of the cost
of policies purchased, the cost of policies produced and goodwill) decreased 8.9
percent, to $55.6 million, in the first six months of 1996. Amortization related
to operations in 1996 reflects the different amortization assumptions and bases
as a result of the adoption of a new basis of accounting.
9
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
Cost of policies produced represents the cost (primarily commissions and
certain costs of policy issuance and underwriting) which varies with and is
primarily related to the production of new business. Costs deferred may
represent amounts paid in the period the new business is written (such as
underwriting costs and first-year commissions) or in periods after the business
is written (such as commissions paid in subsequent years in excess of the lowest
ultimate commission paid each period the policy is in force, (the "ultimate
commission rate")). Cost of policies purchased represents the portion of
Conseco's cost to acquire Bankers that is attributable to the right to receive
cash flows from insurance contracts in force at the acquisition dates.
Some costs incurred after the adoption of the new accounting basis on
policies issued prior to such date, which otherwise would have been deferred had
it not been for the change in accounting basis (because they vary with and are
primarily related to the production of the acquired interests in policies), were
expensed. Such costs are primarily comprised of certain commissions paid in
excess of the ultimate commission rate which totaled approximately $5.3 million
and have been included in operating expense in the six months ended June 30,
1996. However, such amounts were considered in determining the cost of policies
purchased and related amortization.
Amortization related to realized gains fluctuates as a result of the change
in realized gains discussed above.
Interest expense on annuities and financial products increased 5.8 percent,
to $40.2 million in the first six months of 1996 primarily due to the increase
in annuity liabilities. The weighted average crediting rate for Bankers' annuity
liabilities, excluding interest bonuses guaranteed for the first year of the
annuity contract, was 5.5 percent at June 30, 1996 and 1995.
Interest expense on notes payable decreased 21 percent, to $12.7 million in
the first six months of 1996 due to the reduction in interest expense resulting
from the repurchase of $148.3 million principal balance of BLH's 13 percent
senior subordinated notes in March 1996 using the proceeds from our revolving
credit facility. The weighted average interest rate on borrowings under the
revolving credit facility was 6.0 percent for the first six months of 1996.
Interest expense on investment borrowings in the first six months of 1996
and 1995 reflects changes in investment borrowing activities and the interest
rates paid on such borrowings. Bankers' average investment borrowings were $92.0
million and $126.1 million in the first six months of 1996 and 1995,
respectively.
Income tax expense increased 27 percent, to $42.8 million in the first six
months of 1996 primarily due to the increase in pretax income. The effective tax
rate of 37 percent for 1996 and 36 percent for 1995 exceeded the statutory
corporate income tax rate (35 percent) primarily because goodwill amortization
is not deductible for federal income tax purposes.
Extraordinary charge in the first six months of 1996 represents the loss
recognized on the early extinguishment of $148.3 million principal balance of
BLH's 13 percent senior subordinated notes.
Second Quarter of 1996 Compared to the Second Quarter of 1995
Insurance policy income increased 5.6 percent, to $324.3 million in the
second quarter of 1996 consistent with the explanation above for the six month
periods.
Net investment income was $65.8 million in the second quarter of 1996,
roughly equal to 1995. Average invested assets (amortized cost basis) increased
to $3.6 billion in 1996 from $3.5 billion in 1995 while the yield earned on
average invested assets declined to 7.4 percent in 1996 from 7.6 percent in
1995. The reduction in the yield earned and the increase in invested assets is
consistent with the explanation above for the six month periods.
Net realized gains and net trading income (losses) often fluctuate from
period to period. Bankers sold $595.7 million of investments (principally fixed
maturity securities) in the second quarter of 1996, compared to $389.6 million
in 1995 generating net realized gains of $2.2 million and trading losses of $.9
million in 1996, compared to net realized gains of $14.5 million and trading
income of $2.4 million in 1995.
Other income (loss) is comprised primarily of experience rating refunds
related to group accident and health contracts which fluctuate based on the
experience realized on such contracts.
10
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
Insurance policy benefits did not fluctuate materially in the second
quarter of 1996, reflecting slightly improved experience in comparison to 1995
on increased business in force on which benefits are incurred.
Amortization related to operations increased 3.9 percent, to $31.6 million
in the second quarter of 1996. Amortization related to operations reflects (i)
an increase in business inforce; and (ii) the different assumptions and bases as
a result of the adoption of a new basis of accounting.
Amortization related to realized gains fluctuates as a result of the change
in realized gains discussed above.
Interest expense on annuities and financial products increased 11 percent,
to $20.3 million in the second quarter of 1996 primarily due to the increase in
annuity liabilities. The weighted average crediting rate for Bankers' annuity
liabilities, excluding interest bonuses guaranteed for the first year of the
annuity contract, was 5.5 percent at June 30, 1996 and 1995.
Interest expense on notes payable decreased 29 percent, to $5.6 million in
the second quarter of 1996. Such decrease is consistent with the explanation
above for the six month periods.
Interest expense on investment borrowings in the second quarters of 1996
and 1995 reflects changes in investment borrowing activities and the interest
rates paid on such borrowings. Bankers' average investment borrowings were
$120.1 million and $208.4 million in the second quarters of 1996 and 1995,
respectively.
Income tax expense increased 4.8 percent, to $19.6 million in the second
quarter of 1996. The effective tax rate of 38 percent for 1996 and 36 percent
for 1995 exceeded the statutory corporate income tax rate (35 percent) primarily
because goodwill amortization is not deductible for federal income tax purposes.
11
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
SALES
In accordance with generally accepted accounting principles, the insurance
policy income shown on our consolidated statement of operations consists
primarily of premiums we receive on policies which have life contingencies or
morbidity features. For annuity contracts without such features, accounting
rules dictate that premiums collected are not reported as revenues, but rather
as deposits to insurance liabilities. We recognize revenues for these products
in the form of investment income and surrender or other charges.
Premiums collected for the second quarter of 1996 were $372.8 million, of
which $57.0 million were recorded as deposits to policy liability accounts. This
compares to $378.7 million collected and $75.l million recorded as deposits to
policy liability accounts in the second quarter of 1995. Premiums collected for
the six months of 1996 were $757.9 million, of which $111.0 million were
recorded as deposits to policy liability accounts. This compares to $786.0
million collected and $156.8 million recorded as deposits to liability accounts
in the first six months of 1995. Collected premiums by business segment were as
follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Individual health
Medicare supplement...................................... $149.5 $146.0 $312.6 $305.9
Long-term care........................................... 47.1 39.5 92.9 77.1
Other.................................................... 19.3 24.2 40.2 50.1
------ ------ ------ ------
Total individual health........................... 215.9 209.7 445.7 433.1
Annuities................................................... 54.8 70.7 108.6 150.7
Individual life............................................. 24.2 24.3 48.6 48.3
Group and other............................................. 77.9 74.0 155.0 153.9
------ ------ ------ ------
Total............................................. $372.8 $378.7 $757.9 $786.0
====== ====== ====== ======
</TABLE>
Medicare supplement premiums increased 2.4 percent in the second quarter of
1996 and increased 2.2 percent in the first six months of 1996, compared to the
same periods in 1995. Such premiums accounted for 41 percent of total collected
premiums in 1996, compared to 39 percent in 1995. The number of new Medicare
supplement policies sold in the first six months of 1996 totaled 24,339, down 28
percent compared to the first six months of 1995. Annualized new business
premiums from such new sales totaled $23.5 million in the first six months of
1996, compared to $30.1 million in the first six months of 1995. The decline in
new Medicare supplement premiums reflects continued price competition and the
efforts of Bankers' agents to conserve existing policies.
Long-term care premiums increased 19 percent in the second quarter of 1996
and increased 20 percent in the first six months of 1996, compared to the same
periods in 1995. Such premiums accounted for 12 percent of total collected
premiums in 1996, compared to 9.8 percent in 1995. The continued growth in this
product line reflects new product introductions, the competitiveness of Bankers'
products, the success of agent cross-selling activities, increased consumer
awareness and demand and improved persistency on a larger basis of renewal
premiums. Annualized premiums from new sales were $21.7 million in the first six
months of 1996, up 15 percent over the same period in 1995.
Annuity premiums decreased 22 percent in the second quarter of 1996 and
decreased 28 percent in the first six months of 1996, compared to the same
periods in 1995. Industrywide annuity sales have been negatively affected over
the past several quarters by lower interest rates, which have made competing
products relatively more attractive.
Collected premiums for other individual health policies decreased 20
percent in the second quarter of 1996 and in the first six months of 1996,
compared to the same periods in 1995. The decrease, which was anticipated,
follows steps taken previously to improve the profitability of the comprehensive
major medical product included in this category.
12
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
Changes in the consolidated balance sheet between December 31, 1995, and
June 30, 1996, reflect: (i) the growth in Bankers' assets and liabilities from
operating activities; (ii) the notes payable and capital stock transactions
described in the accompanying notes to the consolidated financial statements;
(iii) the increase in investment borrowings; (iv) the change in the net
unrealized appreciation (depreciation) of fixed maturity securities and (v) the
change in basis resulting from the increase in Conseco's ownership of Bankers
during the first quarter of 1996 and the use of the "push down" method of
accounting.
Excluding the mark-to-market adjustment, the book value per share of
common stock was $20.57 at June 30, 1996, and $19.47 at December 31, 1995; and
the ratio of debt to shareholders' equity was 29 percent at June 30, 1996, and
31 percent at December 31, 1995. Including the mark-to-market adjustment, the
book value per share of common stock was $19.87 at June 30, 1996, and $20.39 at
December 31, 1995; and the ratio of debt to shareholders' equity was 30 percent
at June 30, 1996, and 29 percent at December 31, 1995.
Dividends declared on common stock for the six months ended June 30, 1996
were $0.30 per share.
INVESTMENTS
At June 30, 1996, the amortized cost and estimated fair value of fixed
maturity securities (all of which were actively managed) were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
United States Treasury securities and obligations of
United States government corporations and agencies $ 36.5 $ .1 $ 1.1 $ 35.5
Obligations of states and political subdivisions....... 9.9 1.1 .2 10.8
Debt securities issued by foreign governments.......... 25.5 - 1.2 24.3
Public utility securities.............................. 458.6 .6 29.2 430.0
Other corporate securities............................. 1,712.2 8.4 50.9 1,669.7
Mortgage-backed securities............................. 1,025.7 .6 35.9 990.4
-------- ----- ------ --------
Total........................................... $3,268.4 $10.8 $118.5 $3,160.7
======== ===== ====== ========
</TABLE>
13
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
The following table sets forth the investment ratings of fixed maturity
securities at June 30, 1996 (designated categories include securities with "+"
or "-" modifiers). The category assigned is the highest rating by a nationally
recognized statistical rating organization or, as to $47.3 million fair value of
fixed maturity securities not rated by such firms, the rating assigned by the
National Association of Insurance Commissioners ("NAIC"). For the purposes of
this table, NAIC Class 1 securities are included in the "A" rating; Class 2,
"BBB"; Class 3, "BB"; and Classes 4-6, "B and below":
<TABLE>
<CAPTION>
Percent of
---------------------------
Fixed Total
Investment rating maturities investments
----------------- ---------- -----------
<S> <C> <C>
AAA............................... 37% 34%
AA................................ 10 9
A ............................... 21 19
BBB............................... 25 23
--- ---
Investment-grade............... 93 85
--- ---
BB................................ 6 5
B and below....................... 1 1
--- ---
Below investment-grade......... 7 6
--- ---
Total actively managed
fixed maturities.......... 100% 91%
=== ===
</TABLE>
At June 30, 1996, our below investment grade fixed maturities had an
amortized cost of $213.4 million and estimated fair value of $206.8 million.
The Company's investment portfolio is subject to the risk of declines in
realizable value. We attempt to mitigate this risk through the diversification
and active management of our portfolio. As of June 30, there were no fixed
maturity securities about which we had serious doubts as to the ability of the
issuer to comply with the contractual terms of its obligations on a timely
basis.
During the first six months of 1995, writedowns of exchange-rate-linked
securities totaled $2.2 million due to foreign currency fluctuations which
indicated that the full amount of these investments would not be realized.
Bankers had no exchange- rate-linked securities at June 30, 1996.
Sales of investments (principally fixed maturity securities) during the
first six months of 1996, generated proceeds of $1.1 billion and net realized
gains of $5.3 million and trading losses of $2.0 million. Sales of investments
during the first six months of 1995 generated proceeds of $.5 billion and net
realized gains of $15.4 million and trading income of $2.5 million.
Investments in mortgage-backed securities at June 30, 1996, included
collateralized mortgage obligations ("CMOs") of $463.9 million and
mortgage-backed pass-through securities of $526.5 million. CMOs are securities
backed by pools of pass-through securities and/or mortgages that are segregated
into sections or "tranches". These securities provide for sequential retirement
of principal, rather than the retirement of principal on a pro rata basis, which
return occurs on pass-through securities through regular monthly principal
payments.
The yield characteristics of mortgage-backed securities differ from those
of traditional fixed income securities. Interest and principal payments occur
more frequently, often monthly, and mortgage-backed securities are subject to
risks associated with variable prepayments. Prepayment rates are influenced by a
number of factors which cannot be predicted with certainty, including the
relative sensitivity of the mortgages backing the assets to changes in interest
rates, a variety of economic, geographic and other factors and the repayment
priority of the securities in the overall securitization structures.
In general, prepayments on the underlying mortgage loans, and on the
securities backed by these loans, increase when prevailing interest rates
decline significantly below the interest rates on such loans. Mortgage-backed
securities purchased at a discount to par will experience an increase in yield
when the underlying mortgages prepay faster than expected. Mortgage- backed
securities purchased at a premium to par that prepay faster than expected will
incur a reduction in yield. When interest
14
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
rates decline, the proceeds from prepayments are likely to be reinvested at
lower rates than the Company was earning on the prepaid securities. As interest
rates rise, prepayments decrease because fewer underlying mortgages are
refinanced. When this occurs, the average maturity and duration of the
mortgage-backed securities increase. This lowers the yield on mortgage-backed
securities purchased at a discount, since the discount is realized as income at
a slower rate, and increases the yield on those purchased at a premium, as a
result of a decrease in the annual amortization of the premium.
The following table sets forth the par value, amortized cost and estimated
fair value of investments in mortgage-backed securities including CMOs at June
30, 1996, summarized by interest rates on the underlying collateral:
<TABLE>
<CAPTION>
Par Amortized Estimated
value cost fair value
----- ---- ----------
(Dollars in millions)
<S> <C> <C> <C>
Below 7 percent............................................... $ 520.7 $ 509.3 $486.0
7 percent - 8 percent......................................... 429.5 424.5 414.2
8 percent - 9 percent......................................... 72.0 72.8 72.1
9 percent and above........................................... 18.7 19.1 18.1
-------- -------- ------
Total mortgage-backed securities......................... $1,040.9 $1,025.7 $990.4
======== ======== ======
</TABLE>
The amortized cost and estimated fair value of mortgage-backed securities
including CMOs at June 30, 1996, summarized by type of security, were as
follows:
<TABLE>
<CAPTION>
Estimated fair value
---------------------
Percent of
Amortized fixed maturity
Type cost Amount securities
- ---- ---- ------ ----------
(Dollars in millions)
<S> <C> <C> <C>
Pass-throughs and sequential and targeted amortization classes $ 665.0 $640.7 20%
Planned amortization classes and accretion directed bonds 315.0 304.7 10
Subordinated classes...................................... 45.7 45.0 1
-------- ------ ---
$1,025.7 $990.4 31%
======== ====== ===
</TABLE>
Pass-throughs and sequential and targeted amortization classes have similar
prepayment variability. Pass-throughs have historically provided the best
liquidity in the mortgage-backed securities market and the best
price/performance ratio when interest rates are volatile. This type of security
is also frequently used as collateral in the dollar-roll market. Sequential
classes pay in a strict sequence; all principal payments received by the CMO are
paid to the sequential tranches in order of priority. Targeted amortization
classes provide a modest amount of prepayment protection when prepayments on the
underlying collateral increase from those assumed at pricing; they thus offer
slightly better call protection than sequential classes or pass-throughs.
Planned amortization and targeted amortization classes are protected from
prepayment risk; the risk is absorbed by subordinated classes. Subordinated CMO
classes have both prepayment and credit risk. The subordinated classes are used
to lend credit enhancement to the senior securities and as such, both prepayment
and credit risk associated with this class are generally higher than that of the
senior securities. The credit risk of subordinated classes is derived from the
negative leverage of owning a small percentage of the underlying mortgage loan
collateral while bearing a majority of the risk of loss due to homeowners'
defaults.
15
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
Reverse repurchase agreements and dollar-roll transactions are entered into
to increase return on investments and improve liquidity. These transactions
generally terminate after 30 days and are accounted for as short-term borrowings
collateralized by pledged securities with book values approximately equal to the
loan value. Such borrowings averaged approximately $92.0 million during the
first six months of 1996, compared to approximately $126.1 million during the
same period of 1995.
STATUTORY INFORMATION
Bankers' life insurance subsidiaries are required to follow statutory
accounting practices ("SAP") prescribed or permitted by state insurance
regulators. SAP differs in many respects from generally accepted accounting
principles. After appropriate eliminations of intercompany accounts, Bankers'
life insurance subsidiaries reported combined statutory net income of $29.3
million for the six months ended June 30, 1996 and the following amounts on
their combined balance sheet at that date (dollars in millions):
<TABLE>
<S> <C>
Statutory capital and surplus (a).......................................... $345.4
Asset valuation reserve ("AVR") (b)........................................ 28.1
Interest maintenance reserve ("IMR") (b)................................... 61.7
------
Total................................................................. $435.2
======
<FN>
(a) In connection with the acquisition of its life insurance subsidiaries,
BLH increased the capital of BLI by providing $500.0 million of cash in
exchange for a surplus debenture. As required by the regulatory
authorities, the remaining unpaid principal of $400.0 million at June
30, 1996 ($430.0 million at December 31, 1995), is considered a part of
statutory capital and surplus of BLI. BLI made a scheduled principal
payment of $30.0 million plus accrued interest on the surplus debenture
on March 29, 1996.
(b) Statutory accounting practices classify certain segregated portions of
surplus, called AVR and IMR, as liabilities. The purpose of these
accounts is to stabilize statutory net income and surplus against
fluctuations in the market value and creditworthiness of investments.
The IMR captures all realized investment gains and losses resulting
from changes in interest rates and provides for subsequent amortization
of such amounts into statutory net income on a basis reflecting the
remaining life of the assets sold. The AVR captures investment gains
and losses related to changes in creditworthiness and is also adjusted
each year based on a formula related to the quality and loss experience
of the investment portfolio.
</FN>
</TABLE>
Statutory regulations restrict the amount of capital and surplus of life
insurance subsidiaries that may be transferred to the parent in the form of
dividends, loans or advances. Payments to BLH by BLI of principal and interest
on the surplus debenture may be made by BLI from its available funds only when
the Illinois Department of Insurance ("DOI") is satisfied that the financial
condition of BLI warrants that action. Such approval may not be withheld
provided the surplus of BLI exceeds, after such payment, approximately $128.0
million. BLI's statutory surplus at June 30, 1996, was $345.4 million. All
dividend payments by BLI are subject to prior written approval of the DOI.
During the six months ended June 30, 1996, BLI paid extraordinary dividends of
$10.0 million to BLH.
BLI's ability to service its obligation under the surplus debenture is
dependent upon its ability to receive dividends and tax sharing payments from
BLC. BLC may, upon prior notice to the DOI, pay dividends in any twelve-month
period up to the greater of: (i) statutory net income for the prior year; or
(ii) 10 percent of statutory capital and surplus at the end of the prior year.
Additionally, as a condition to its 1992 acquisition, BLC agreed not to pay
dividends if, immediately after such payment, BLC's ratio of adjusted capital to
risk-based capital ("RBC") would be less than 100 percent. Calculations using
the RBC formula indicate that BLC's adjusted capital was greater than twice its
total RBC at June 30, 1996. Dividends in excess of maximum amounts prescribed by
the state statutes may not be paid without DOI approval. BLC paid regular
dividends to BLI of $45 million during the first six months of 1996 and $14.6
million on July 22, 1996. During the remainder of 1996, BLC may pay additional
dividends up to $26.4 million without DOI approval.
16
<PAGE>
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 28, 1996, the shareholders voted upon the following matters at the
annual shareholders meeting:
a) The approval of an amendment to the Certificate of Incorporation
of Bankers Life Holding Corporation to eliminate the classified
Board of Directors and to reduce the term of elected Board members
from three years to one year. Shareholders cast 46,935,847 votes
for and 104,440 votes against the amendment to the Certificate of
Incorporation. There were 34,451 abstentions and no broker
non-votes.
b) The election of Kevin Cogan, Fred E. Crosley, Ngaire E. Cuneo,
Rollin M. Dick, Donald F. Gongaware, Stephen C. Hilbert, James E.
Rogers and Todd H. Stuart to serve one-year terms. The results of
the voting were as follows (there were no broker non-votes):
<TABLE>
<CAPTION>
Kevin Fred E. Ngaire E. Rollin M.
Cogan Crosley Cuneo Dick
---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
For 47,743,680 47,706,795 47,519,343 47,738,595
Withheld 60,095 96,980 284,432 65,180
Donald F. Stephen C. James E. Todd H.
Gongaware Hilbert Rogers Stuart
---------- ----------- ------------ -----------
For 47,738,595 47,704,895 47,771,095 47,771,138
Withheld 65,180 98,880 32,680 32,637
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
11 Computation of Earnings Per Share
27 Financial Data Schedule
b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
June 30, 1996.
17
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANKERS LIFE HOLDING CORPORATION
Dated: August 13, 1996 By: /s/ ROLLIN M. DICK
------------------
Rollin M. Dick
Executive Vice President and
Chief Financial Officer
(authorized officer and principal
financial officer)
18
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BANKERS LIFE HOLDING CORPORATION
It is hereby certified that Bankers Life Holding Corporation (the
"Corporation") existing pursuant to the provisions of the Delaware General
Corporation Law, as from time to time amended (the "Act"), hereby is amending
its Certificate of Incorporation, which was originally filed on August 4, 1992
under the name Bankers Life Holding Corporation, which name has not been
changed, by amending and restating the original Certificate of Incorporation, as
previously amended, in its entirety, and further certified as follows:
The exact text of the entire Certificate of Incorporation of the
Corporation, as amended and restated (the "Amended and Restated Certificate") is
set forth in its entirety below:
FIRST: The name of the Corporation is Bankers Life Holding Corporation.
SECOND: The nature of the business or purposes of the Corporation to
be conducted or promoted is to engage in any lawful act or activity for which
corporations may be organized under The Act.
THIRD: The address of the Corporation's registered office in the state
of Delaware is Corporation Trust Center, 1209 Orange Street, in the city of
Wilmington, county of New Castle. The name of the Corporation's registered agent
at such address is the Corporation Trust Company.
FOURTH: The total number of shares of Common Stock which the
Corporation shall have the authority to issue is Five Hundred Million
(500,000,000), having a par value of one-thousandth of one dollar ($.001) per
share. One Hundred-Eighty Thousand (180,000) shares of the Common Stock have
been designated as Class A Common Stock and Twenty Thousand (20,000) shares of
the Common Stock have been designated as non-voting Class B Common Stock. All
outstanding shares of Class A Common Stock will automatically be deemed to be
converted into an equal number of shares of Common Stock upon the filing of this
Amended and Restated Certificate. All outstanding shares of the non-voting Class
B Common Stock will automatically be deemed to be converted into an equal number
of shares of Common Stock upon the consummation of the initial public offering
of the Common Stock contemplated by the Corporation's Registration Statement on
Form S-1 (registration number 33-58166). The total number of shares of preferred
stock which the Corporation shall have authority to issue is Fifty Million
Eighty Thousand (50,080,000), consisting initially of Fifty Thousand (50,000)
shares of Series A and Thirty Thousand (30,000) shares of Series B Preferred
Stock, having a par value of one-hundredth of one dollar
<PAGE>
($.01) per share and Fifty Million (50,000,000) shares of other Preferred Stock
having a par value of one-thousandth of one dollar ($.001) per share.
FIFTH: A Series A Preferred Stock and Series B Preferred Stock are
hereby authorized on the terms and with the provisions herein set forth:
1. Designation, Number of Shares and Stated Value of Series A Preferred
Stock. There is hereby authorized and established a series of preferred stock
with the designation "Series A Preferred Stock", which shall consist of a
maximum of 50,000 shares of such Series A Preferred Stock, par value $.01 per
share (hereafter referred to as "Series A"). "Stated Value" per share of the
Series A Preferred Stock shall be equal to $10,000.
2. Designation, Number of Shares and Stated Value of Series B Preferred
Stock. There is hereby authorized and established a series of preferred stock
with the designation "Series B Preferred Stock", which shall consist of a
maximum of 30,000 shares of such Series B Preferred Stock, par value $.01 per
share (hereafter referred to as "Series B"). "Stated Value" per share of the
Series B Preferred Stock shall be equal to $10,000.
3. The following definitions shall apply for purposes of Sections 1
through 12 only of this Article Fifth:
"Bankers" means Bankers Life and Casualty Company, an Illinois
insurance corporation and indirect wholly-owned subsidiary of the Corporation.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York, are authorized or required by
law to close.
"Dividend Payment Date" shall mean the date on which accrued dividends
on outstanding shares of the Series are payable.
The "First Ten Years" shall mean the ten year period beginning on the
Original Issue Date through and including the day immediately preceding the
tenth anniversary of the Original Issue Date.
"Original Issue Date" shall mean the date on which shares of the Series
are first issued.
"Outstanding," when used with reference to shares of stock, shall mean
issued shares, excluding (i) shares held by the Corporation and (ii) shares
owned by any corporation in which the Corporation owns, directly or indirectly a
majority of the shares entitled to vote for directors of such corporation.
2
<PAGE>
"Person" as used herein means any corporation, partnership, trust,
organization, association, other entity, or individual.
"Voting Securities" means any securities of an entity which, in the
aggregate, entitles the holder or holders thereof to elect a majority of the
board of directors of such entity.
When these resolutions provide that dividends are "payable-in- kind",
that means that the dividend shall be paid by issuance of that number (or
fraction) of shares of the same class and series as the shares in respect of
which the dividend is payable, which have an aggregate Stated Value equal to the
dollar amount of dividends then payable. Shares issued as dividends
payable-in-kind shall be duly authorized, validly issued and non-assessable.
4. The holders of outstanding shares of Series A and Series B Preferred
Stock shall be entitled to receive cumulative dividends out of funds of the
Corporation legally available for the payment of dividends at the rate of $1,100
per share per annum, during the First Ten Years, and thereafter at the rate of
$1,200 per share per annum, subject, in any case, to appropriate adjustment in
the event of any stock split, reverse stock split, or similar transaction with
respect to the Series A or Series B Preferred Stock. During the First Ten Years,
accrued dividends on outstanding shares of Series A and Series B shall be
payable-in-kind semiannually. The Dividend Payment Date for dividends accruing
during the First Ten Years shall be the first Business Day in January and July
of each calendar year, commencing the first such date to occur after the date of
issue of such shares, provided, however, that the last Dividend Payment Date for
dividends accruing during the First Ten Years shall be the tenth anniversary of
the Original Issue Date. Following the tenth anniversary of the Original Issue
Date, accrued dividends on outstanding shares of Series A and Series B shall be
payable semiannually, on the first Business Day in January and July of each
calendar year occurring after the tenth anniversary of the Original Issue Date,
in cash. The amount of dividends payable per share of the Series A and Series B
for any full semiannual dividend period shall be computed by dividing by two the
annual dividend rate specified above. Dividends payable on the Series A and
Series B for any period less than a full semiannual dividend period shall be
computed on the basis of a 360-day year of twelve 30-day months.
Dividends on shares of the Series A and Series B shall be cumulative
and shall accrue from and including the date of issuance of such shares (the
"Issue Date"). If any dividend payable-in-kind is not paid in full on any
Dividend Payment Date occurring on or before the tenth anniversary of the
Original Issue Date, the rate at which dividends shall thereafter accrue shall
be compounded as if (a) such dividend had been paid in full and (b) the shares
which would have been issued in payment of such dividend were issued on such
Dividend Payment Date and upon such issuance began accruing dividends. Declared
dividends on shares of Series A and Series B
3
<PAGE>
shall be payable to record holders thereof as they appear on the stock register
of the Corporation at the close of business on the tenth Business Day
immediately preceding the respective Dividend Payment Date or on such other
record date as may be fixed by the Board of Directors of the Corporation in
advance of a Dividend Date, provided that no such record date shall be less than
10 nor more than 60 calendar days preceding such Dividend Payment Date.
Notwithstanding anything contained herein to the contrary, dividends payable on
shares of Series A and Series B (i) on any Redemption Date (as defined in
Section 7 below) or (ii) on any final distribution date relating to a
dissolution, liquidation or winding up of the Corporation, shall be payable in
cash and, if the payment date does not occur on a regular Dividend Payment Date,
shall be calculated on the basis of the actual number of days elapsed (including
the Redemption Date or final distribution date) over a 360-day year of twelve
30-day months.
No dividend or distribution in cash or other property shall be paid or
declared and set apart for payment on any date on or in respect of the common
stock, $.001 par value per share, of the Corporation (the "Common Stock") or on
any other series of stock issued by the Corporation ranking junior to the Series
A and Series B Preferred Stock in payment of dividends or distributions or upon
liquidation, dissolution, or winding-up of the Corporation (the Common Stock and
such other series of stock are collectively hereinafter referred to as the
"Junior Securities") (any such dividend or distribution is hereinafter referred
to as a "Junior Securities Distribution") unless all dividends with respect to
the Series A and Series B Preferred Stock for all periods ending on or before
the payment date set for any Junior Securities Distribution have been paid or
have been declared and set apart for payment.
No dividend or distribution in cash or other property shall be paid or
declared and set apart for payment on any date on or in respect of any series of
stock issued by the Corporation ranking pari passu with the Series A and Series
B Preferred Stock in payment of dividends or distributions or upon liquidation,
dissolution, or winding-up of the Corporation (collectively, the "Pari Passu
Stock") (any such dividend or distribution is hereinafter referred to as a "Pari
Passu Stock Distribution") unless at the same time a like proportionate dividend
with respect to the Series A and Series B Preferred Stock for all periods ending
on or before the payment date set for any Pari Passu Stock Distribution shall
have been paid or shall have been declared and set apart for payment.
In no event may the Corporation redeem, purchase, or otherwise acquire
for value any Junior Securities or Pari Passu Stock (or set aside monies for any
such purpose) unless all dividends with respect to the Series A and Series B
Preferred Stock for all dividend periods ending on or before the date of such
redemption, purchase or acquisition (or such setting aside of monies) shall
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have been paid or shall have been declared and set apart for payment. Except as
provided in this paragraph and the immediately following paragraph, this Section
4 shall not prohibit (A) the payment or declaration and setting aside of a
dividend payable on shares of Junior Securities or Pari Passu Stock in shares of
Junior Securities or Pari Passu Stock, respectively, (B) a redemption, purchase,
or acquisition of Junior Securities or Pari Passu Stock with shares of Junior
Securities or Pari Passu Stock respectively, or (C) a redemption of shares of
Series A and Series B Preferred Stock in accordance with Section 7 below.
In no event may the Corporation redeem, purchase or otherwise acquire
for value, or pay any dividends or distributions with respect to, any Junior
Securities or Pari Passu Stock (or set aside any monies for any such purpose)
with the proceeds of any public offering of (i) any Voting Securities of the
Corporation, (ii) any Voting Securities of any corporation which owns, directly
or indirectly, 50% or more of the Voting Securities of Bankers, or (iii) any
Voting Securities of Bankers, unless, in the case of each of (i) through (iii)
above, all outstanding shares of the Series A and Series B Preferred Stock shall
first have been redeemed pursuant to Section 6 hereof.
5. Preference on Liquidation of Series A and Series B Preferred Stock.
In the event of any voluntary or involuntary liquidation, dissolution, or
winding-up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus), or proceeds thereof, shall be
made to or set apart for the holders of shares of any Junior Securities, the
holders of shares of the Series A and Series B Preferred Stock shall be entitled
to receive payment equal to the Stated Value per share held by them, plus an
amount in cash equal to all accumulated and unpaid dividends thereon to the date
of such payment, whether or not declared, subject to appropriate adjustment in
the event of any stock split, reverse stock split, or similar transaction with
respect to the Series A and Series B Preferred Stock. If, upon any voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation, the
assets of the Corporation, or proceeds thereof, available for distribution among
the holders of shares of the Series A and Series B Preferred Stock and any Pari
Passu Stock shall be insufficient to pay in full the respective preferential
amounts on shares of the Series A and Series B Preferred Stock and such Pari
Passu Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of all such stock ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full. After payment of the full amount of the liquidation
preference to which the holders of Series A and Series B Preferred Stock are
entitled, such holders will not be entitled to any further participation in any
distribution of assets of the Corporation. For the purposes of this Section 5,
neither the merger nor the consolidation of the Corporation into or with another
corporation,
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nor the merger or consolidation of any other corporation into or with the
Corporation, nor the voluntary sale, conveyance, exchange, transfer, or other
disposition (for cash, shares of stock, securities, or other consideration) of
all or substantially all the property or assets of the Corporation, shall be
deemed to be a voluntary or involuntary liquidation, dissolution, or winding-up
of the Corporation.
6. Retirement of Shares of Series A or Series B Preferred Stock.
Shares of Series A or Series B Preferred Stock that are redeemed, repurchased,
or reacquired in any manner by the Corporation shall be retired and may not be
reissued by the Corporation.
7. Optional and Conditional Redemption of Series A or Series
B Preferred Stock.
(a) The Corporation may, at the option of the Board of
Directors of the Corporation, redeem at any time, from any source of
funds legally available therefore, in whole or in part, in the manner
provided below any and all shares of the Series A and Series B
Preferred Stock at a redemption price per share (the "Redemption
Price") equal to the Stated Value per share redeemed plus an amount in
cash equal to the aggregate dollar amount of all accumulated and unpaid
dividends through the Redemption Date (including a prorated dividend
from the last Dividend Payment Date to the Redemption Date) which have
not been added to the Stated Value thereof.
In the event of a redemption of only a portion of the then
outstanding shares of Series A and Series B Preferred Stock, the
Corporation shall effect such redemption pro rata according to the
number of shares held by each holder of Series A and Series B Preferred
Stock.
At least twenty (20) days and not more than sixty (60) days
prior to the date fixed for any redemption of any shares of the Series
A and Series B Preferred Stock (the "Redemption Date"), written notice
(the "Redemption Notice") shall be mailed, postage prepaid, to each
holder of record of the Series A or Series B Preferred Stock at the
post office address last shown on the records of the Corporation for
such holder. The Redemption Notice shall state:
(i) whether all or less than all the outstanding
shares of Series A and Series B Preferred Stock are to be
redeemed and the total number of shares of Series A or Series
B Preferred Stock being redeemed;
(ii) the number of shares of Series A and Series B
Preferred Stock held by the holder that the Corporation
intends to redeem;
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(iii) the Redemption Date and the Redemption Price;
and
(iv) that the holder is to surrender to the
Corporation, in the manner and at the place designated, his
certificate or certificates representing the shares of Series
A and Series B Preferred Stock to be redeemed.
On or before the Redemption Date each holder of Series A and
Series B Preferred Stock shall surrender to the Corporation the
certificate or certificates representing such shares of Series A and
Series B Preferred Stock to be redeemed, in the manner and at the place
designated in the Redemption Notice, and thereupon the Redemption Price
for such shares shall be payable in cash on the Redemption Date to the
person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be cancelled and
retired. The Corporation shall not be obligated to make any redemption
payment unless or until the certificates representing the shares to be
redeemed have been surrendered in accordance with this subparagraph. In
the event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
Unless the Corporation defaults in the payment in full of the
Redemption Price, dividends on the Series A and Series B Preferred
Stock called for redemption shall cease to accumulate on the Redemption
Date, and all rights of the holders of such shares redeemed shall cease
to have any further rights with respect thereto on the Redemption Date,
other than to receive the Redemption Price without interest.
(b) The Corporation shall, at the Redemption Price and in the
manner provided in this Section 7, redeem from any source of funds
legally available therefor, all shares of Series A and Series B
Preferred Stock outstanding on the Redemption Date. For purposes of
this subsection 7(b), "Redemption Date" means the business day
immediately preceding (i) a Change in Control of the Corporation, (ii)
a Change in Control of any other corporation which owns, directly or
indirectly, 50% or more of the Voting Securities of Bankers, or (iii) a
Change in Control of Bankers. For purposes of this subsection 7(b),
"Change in Control" shall mean (i) a change in the direct or indirect
power to direct or cause the direction of the management and policies
of an entity, (ii) the Corporation's merger or consolidation with or
into another Person or (iii) the conveyance, transfer or lease by the
Corporation of all or substantially all of its assets to any Person.
If there are insufficient legally available funds for
redemption under this subsection 7(b), the Corporation shall
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redeem such lesser number of shares of Series A or Series B Preferred
Stock, to the extent there are funds legally available therefor, and
shall redeem all or part of the remainder of the shares of Series A or
Series B Preferred Stock subject to redemption as soon as the
Corporation has sufficient funds which are legally available therefor.
If the redemption is delayed because of insufficient legally available
funds, dividends shall continue to accrue on shares of Series A and
Series B Preferred Stock outstanding, and shall be added to and become
a part of the Redemption Price of such shares, until the Redemption
Price for such shares is paid in full.
8. Voting Rights of Series A and Series B Preferred Stock. Except as
required by law or any provision of the Amended and Restated Certificate of the
Corporation or this Section 8 or Section 9 below, the holders of Series A and
Series B Preferred Stock shall not be entitled to vote on any matter submitted
to a vote of stockholders.
During the First Ten Years, if the Corporation shall be in arrears in
the payment of any annual payable-in-kind dividends on the outstanding shares of
Series A and Series B Preferred Stock or, following the tenth anniversary of the
Original Issue Date, if the Corporation shall be in arrears in the payment of
any two consecutive semiannual dividends on the outstanding shares of the Series
A and Series B Preferred Stock, then, automatically, the number of members of
the Board of Directors of the Corporation shall be increased by one (such
additional director being hereinafter referred to as the "Series A and B
Director"), and the holders of Series A and Series B Preferred Stock, voting
together as a class, shall have the exclusive right to elect the Series A and B
Director, immediately, and at the next and every subsequent annual meeting of
stockholders called for the election of directors, at which the term of office
of the Series A and Series B Director expires.
The right of the holders of Series A and Series B Preferred Stock,
voting together as a class, to elect the Series A and B Director as aforesaid
shall continue until such time as all dividends accumulated on the Series A and
Series B Preferred Stock shall have been paid in full at which time the office
of the Series A and B Director shall be eliminated and the special right of the
holders of Series A and Series B Preferred Stock so to vote separately as a
class for the election of the Series A and B Director shall terminate, subject
to revesting at such time as the Corporation shall be in arrears in the payment
of dividends on the outstanding shares of Series A and Series B Preferred Stock
as set forth in the first sentence of the immediately preceding paragraph. If
the annual meeting of stockholders of the Corporation is not, for any reason,
held within the time fixed in the By-Laws of the Corporation at a time when the
holders of Series A and Series B
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Preferred Stock, voting together as a class, shall be entitled to elect the
Series A and B Director, or if a vacancy shall exist in the office of the Series
A and B Director, a proper officer of the Corporation, upon the written request
of the holders of record of at least ten percent (10%) of the shares of the
Series A and Series B Preferred Stock then outstanding, addressed to the
Secretary of the Corporation, shall call a special meeting in lieu of the annual
meeting of stockholders, or in the event of a vacancy, a special meeting of the
holders of Series A and Series B Preferred Stock, for the purpose of electing
the Series A and B Director. Any such meeting shall be held at the earliest
practicable date at the place for the holding of the annual meetings of
stockholders. If such meeting shall not be called by the proper officer of the
Corporation within twenty (20) days after personal service of said written
request upon the Secretary of the Corporation, or within twenty (20) days after
mailing the same within the United States by certified mail, addressed to the
Secretary of the Corporation at its principal executive offices, then the
holders of record of at least ten percent (10%) of the outstanding shares of the
Series A and Series B Preferred Stock may designate in writing one of their
number to call such meeting at the expense of the Corporation, and such meeting
may be called by the person so designated upon the notice required for the
annual meetings of stockholders of the Corporation and shall be held at the
place for holding the annual meetings of stockholders. Any holder of Series A
and Series B Preferred Stock so designated shall have access to the lists of
stockholders to be called pursuant to the provisions hereof.
At any meeting held for the purpose of electing a director at which the
holders of Series A and Series B Preferred Stock shall have the right, voting
together as a class, to elect the Series A and B Director as aforesaid, the
presence in person or by proxy of the holders of at least thirty-three and
one-third percent (33- 1/3%) of the outstanding Series A and Series B Preferred
Stock, as a group, shall be required to constitute a quorum of such Series A and
Series B Preferred Stock.
The Series A and B Director shall agree, prior to his election to
office, to resign immediately upon any termination of the right of the holders
of Series A and Series B Preferred Stock to vote together as a class for a
director as herein provided, and upon any such termination the Series A and B
Director shall forthwith resign and the size of the Board of Directors of the
Corporation shall automatically be reduced accordingly. Unless otherwise
required to resign as aforesaid, the term of office of the Series A and B
Director shall terminate upon the election of a successor Series A and B
Director at any meeting of stockholders held for the purpose of electing
directors.
In any case in which the holders of Series A and Series B Preferred
Stock shall be entitled to vote pursuant to this Section 8, Section 9 below, or
pursuant to law, each holder of Series A and
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Series B Preferred Stock shall be entitled to one vote for each share of Series
A and Series B Preferred Stock held.
9. Other Rights of Series A or Series B Preferred Stock. So
long as any shares of the Series A and Series B Preferred Stock shall remain
Outstanding, the Corporation will not, without the affirmative vote at a meeting
or the written consent with or without a meeting of the holders of at least a
majority of the outstanding shares of Series A and Series B Preferred Stock,
voting as one class unless the Series A and Series B Preferred are affected
differently by such action (in which case each such Series will vote as a
separate class), (i) create, issue or reissue any class or series of stock
ranking prior to or on a parity with the Series A and Series B Preferred Stock
either as to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, or (ii) amend, alter or repeal (whether
by merger, consolidation or otherwise) any of the provisions of the
Corporation's Amended and Restated Certificate or By-Laws so as to affect
adversely the preferences, special rights or powers of the Series A and Series B
Preferred Stock.
10. Reports for Series A and Series B Preferred Stock. So long as any
of the Series A or Series B Preferred Stock is outstanding, the Corporation will
furnish the holders thereof with any quarterly and annual financial statements
(including a balance sheet and income statement) regularly prepared by or for
the Corporation.
11. General Provisions for Series A and Series B Preferred Stock.
(a) The headings of the sections herein are for convenience of
reference only and shall not define, limit, or affect any of the
provisions hereof.
(b) Each holder of Series A Preferred Stock or Series B
Preferred Stock, by acceptance thereof, acknowledges and agrees that
payments of dividends, interest, premium and principal on, and
exchange, redemption, and repurchase of, such securities by the
Corporation are subject to restrictions contained in certain credit and
financing agreements of the Corporation.
(c) The Series A and Series B Preferred Stock rank pari passu
in payment of dividends, distributions or upon liquidation, dissolution
or winding up of the Corporation.
12. Set Off Against Series B Preferred Stock. The dividends payable on
the Series B Preferred Stock are subject to a right of set off pursuant to those
certain Securities Purchase Agreements executed by and between the Corporation
and Southwestern Life Insurance Company, a Texas insurance corporation and
Philadelphia
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American Life Insurance Company, a Pennsylvania insurance corporation,
respectively.
13. Additional Preferred Stock. Additional Preferred Stock may be
issued from time to time in one or more classes or series, each of which class
or series thereof shall possess such voting powers, full or limited, or no
voting powers, and such powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations, or restrictions thereof, as may be established by resolution of the
Board of Directors of the Corporation providing for the issuance thereof, which
is vested to the fullest extent permitted by law with authority to fix the
powers, designations, preferences, rights, qualifications, limitations or
restrictions for the Preferred Stock or any class or any series thereof,
including without limiting the generality of the foregoing, the following:
(i) The distinctive designation of such class or series and
the number of shares which shall constitute each class or series of
Preferred Stock which number may be increased (except where otherwise
provided by the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time by like
action of the Board of Directors;
(ii) The rate or rates and the time or times at which
dividends and other distributions on the shares of each class or each
series thereof shall be paid, the relationship or priority of such
dividends to those payable on Common Stock or to other classes or
series of Preferred Stock, and whether or not any such dividends shall
be cumulative (and, if so, from which date or dates);
(iii) Whether a class or series shall have voting powers,
and if voting powers are granted, the extent thereof;
(iv) The amount payable on the shares of each class or series
in the event of the voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation, and the relative
priorities, if any, to be accorded such payments in liquidation;
(v) The terms and conditions upon which either the Corporation
may exercise a right to redeem shares of each class or series or upon
which the holder of such shares may exercise a right to require
redemption of such stockholder's Preferred Stock, including any
premiums or penalties applicable to exercise of such rights;
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(vi) Whether or not a sinking fund shall be created for the
redemption of the shares of a class or series, and the terms and
conditions of any such fund;
(vii) Whether shares of any class or series will be
convertible or exchangeable into shares of Common Stock or into other
classes or series of other capital stock or other securities and the
prices, premiums or penalties, ratios, adjustment provisions and other
terms applicable to any such conversion or exchange;
(viii) Restrictions on acquisition, rights of first refusal or
other limitations on transfer as may be applicable to any class or
series, including any series intended to be offered to a special class
or group;
(ix) The conditions and restrictions, if any, on the payment
of dividends or on the making of other distributions on, or the
purchase, redemption or other acquisition by the Corporation of Common
Stock or of any other class or series of stock of the Corporation;
(x) The conditions and restrictions, if any, on the creation
of indebtedness of the Corporation or any subsidiary, or on the
authorization or issue of any additional stock of the Corporation; and
(xi) Any other preferences, limitations, qualifications or
restrictions on the Preferred Stock or any class or series of such
shares, including rights and remedies in the event of default in
connection with dividends, other distributions or redemptions.
SIXTH: Subject to the provisions of any applicable law or of the
By-laws of the Corporation, as from time to time in effect, with respect to the
fixing of a record date for the determination of stockholders entitled to vote,
and to the rights of the holders of Preferred Stock, and except as otherwise
provided by law or by this Amended and Restated Certificate or any resolution or
resolutions providing for the issuance of any class or series of Preferred
Stock, each holder of shares of Common Stock shall be entitled at any and all
meetings of the stockholders of the Corporation to one vote for each share of
such stock standing in his name on the books of the Corporation.
Subject to the restrictions set forth in this Article Sixth or any
resolution or resolutions providing for the issuance of any class or series of
Preferred Stock, the holders of the Common Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of the assets of the
Corporation that are by law available therefor, dividends payable in cash, in
property or in shares of capital stock.
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Except as otherwise provided by this Amended and Restated Certificate
or any resolution or resolutions providing for the issuance of any class or
series of Preferred Stock, the number of authorized shares of any class or
classes of stock may be increased or decreased by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote.
SEVENTH: In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of Common Stock shall
be entitled, after payment or provision for payment of the debts and other
liabilities of the Corporation and the amounts to which the holders of the
Preferred Stock shall be entitled, to share ratably in the remaining net assets
of the Corporation. Neither a consolidation or merger of the Corporation with or
into any other corporation, nor a merger of any other corporation into the
Corporation, nor a reorganization of the Corporation, nor the purchase or
redemption of all or part of the outstanding shares of stock of any class or
series of the Corporation nor a sale or transfer of the property and business of
the Corporation as or substantially as an entirety, shall be considered a
liquidation, dissolution or winding up of the Corporation for purposes of the
preceding sentence.
EIGHTH: The number of directors shall be from time to time fixed
pursuant to the By-laws of the Corporation. Qualifications for the directors, if
any, shall be set out in the By-laws. Election of directors need not be by
written ballot unless the Bylaws so provide.
NINTH: [Deleted]
TENTH: By-laws will be adopted by the Board of Directors from time to
time. The Board of Directors is authorized to make, alter or repeal the By-laws
of the Corporation.
ELEVENTH: A director, in determining what is in the best interest of
the Corporation when considering the taking of any action, or refraining from
taking any action, including (without limitation) any action with respect to a
tender offer or proposal of acquisition, merger, consolidation or sale of
assets, may consider, in addition to consideration of the effects of any action
on stockholders and all other factors that such director may lawfully consider,
certain other factors such as (i) the effects of the action on the Corporation's
and any of its subsidiaries' employees, suppliers, creditors, customers
(including policyholders) or other constituencies; (ii) the effects of the
action on the communities in which the Corporation or any of its subsidiaries
operates; and (iii) the long-term as well as short-term interests of the
Corporation and its stockholders, including the possibility that these interests
may be best served by the continued independence of the Corporation. If, on the
basis of any of such factors, the Board of Directors determines that the taking
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of any action, or refraining from taking any action is not in the best interests
of the Corporation, it may act in accordance with such determination.
Notwithstanding any provision of this Amended and Restated Certificate
to the contrary, the provisions of this Article Eleventh may not be amended,
altered, changed or repealed, nor may any provision inconsistent with said
provision be added to this Amended and Restated Certificate or to the By-laws of
the Corporation, except upon the affirmative vote of the holders of not less
than 80% of the total voting power of all outstanding shares of the voting stock
(as defined in subparagraph (c) of Article Thirteenth) of the Corporation voting
as a single class.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate, in the
manner now or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
THIRTEENTH: This Article Thirteenth shall govern the approval of
certain business combination transactions involving the Corporation. Each
capitalized term used in this Article Thirteenth shall have the meaning ascribed
to it in subparagraph (c) hereof.
(a) Except as provided in subsection (b) of this Article Thirteenth,
holders of Voting Stock shall not be entitled to vote on a Special Business
Combination Transaction and such Special Business Combination Transaction shall
not be effected unless the aggregate amount of the cash and the fair value of
any consideration other than cash to be received per share by holders of the
Corporation's Common Stock in such Special Business Combination Transaction
shall be at least equal to the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees and adjusted for any
intervening stock splits and stock dividends) paid in order to acquire any
shares of Common Stock beneficially owned by the Related Person, and the
aggregate amount of the cash and the fair value of any consideration other than
cash to be received per share by holders of any class or series of the
Corporation's Preferred Stock in such Special Business Combination Transaction
shall be at least equal to the highest per share price (including any brokerage
commissions, transfer taxes, and soliciting dealers' fees and adjusted for any
intervening stock splits and stock dividends) paid in order to acquire any
shares of such class or series of Preferred Stock beneficially owned by the
Related Person. In the event of a Special Business Combination Transaction in
which the Corporation survives, the phrase "any consideration other than cash to
be received" as used in this subparagraph (a) of this Article Thirteenth shall
include the shares of Common Stock or Preferred Stock retained by the holders
thereof.
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(b) The provisions of subparagraph (a) of this Article Thirteenth shall
not apply to any Special Business Combination Transaction if such Special
Business Combination Transaction shall have been approved by two-thirds of the
Continuing Directors.
(c) For purposes of this Article Thirteenth, the following definitions
shall apply:
(1) The term "Special Business Combination Transaction"
shall mean:
(i) any merger or consolidation of the Corporation or
any Subsidiary with (x) any Related Person or (y) any other
corporation or entity (whether or not itself a Related Person)
which is, or after each merger or consolidation would be, an
Affiliate of a Related Person; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or in a
series of transactions) to or with any Related Person or any
Affiliate of any Related Person of all or a Substantial Part
of the assets of the Corporation (including, without
limitation, any securities of a Subsidiary) or any Subsidiary;
or
(iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of a Related Person or any Affiliate of a Related
Person; or
(iv) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or in a series of related
transactions) of any securities of the Corporation or any
Subsidiary to a Related Person, or any Affiliate of a Related
Person, in exchange for cash, securities or other property (or
a combination thereof); or
(v) 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 or
any Subsidiary by the Corporation or any
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Subsidiary, or any other transaction (whether or not with or
into or otherwise involving a Related Person) which in any
such case has the effect, directly or indirectly, of
increasing the proportionate shares of the outstanding shares
of any class or series of stock or securities convertible into
stock of the Corporation or any Subsidiary which is directly
or indirectly beneficially owned by any Related Person or any
Affiliate of any Related Person.
(2) The term "Substantial Part" (as distinguished from the
phrase "all or substantially all") shall mean more than 10% of the book
value of the total assets of the person or entity in question, as of
the end of its most recent fiscal year ending prior to the time of the
determination.
(3) The term "person" shall mean any individual, firm,
corporation, partnership, group (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as in effect on the date
hereof) or other entity.
(4) The term "Related Person" shall mean any person (other
than the Corporation or Subsidiary or any employee benefit plan of the
Corporation or any Subsidiary) who or which, as of the date on which
such determination is made:
(i) is the beneficial owner, directly or indirectly,
of more than 10% of the combined voting power of the then
outstanding shares of Voting Stock; or
(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior thereto was
the beneficial owner, directly or indirectly, of 10% or more
of the combined voting power of the then outstanding shares of
Voting Stock; or
(iii) which 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 thereto beneficially owned by a Related
Person, if such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
utilizing the facilities of a national securities exchange,
occurring in the national
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over-the-counter market or involving a public distribution.
(5) A person shall be a "beneficial owner" of any Voting
Stock:
(i) which such person or any of its Affiliates or
Associates beneficially owns, directly; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
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
(iii) which is 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.
(6) For the purposes of determining whether a person is a
Related Person pursuant to subparagraph (c)(4) of this Article
Thirteenth, the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through application of
subparagraph (c)(5) of this Article Thirteenth but shall not include
any 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.
(7) The terms "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.
(8) "Subsidiary" shall mean any corporation more than 50% of
whose outstanding stock 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 Related
Person set forth in
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subparagraph (c)(4) of this Article Thirteenth, the term "Subsidiary"
shall mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the Corporation.
(9) "Continuing Director" shall mean any director who (i) is a
director of the Corporation on March 15, 1993, (ii) was designated
(before such person's initial election as a director) by a majority of
the Continuing Directors as a Continuing Director, (iii) with respect
to a Special Business Combination Transaction, was a member of the
Board of Directors immediately prior to the date on which any Related
Person involved, either directly or through an Affiliate or Associate,
in such Special Business Combination Transaction first became a Related
Person.
(10) 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 (it being understood that
for purposes of this Article Thirteenth each share of the voting Stock
shall have the number of votes granted to it pursuant to Article Sixth
of this Amended and Restated Certificate).
(d) A majority of the Continuing 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
Thirteenth, including, without limitation:
(1) whether a person is a Related Person;
(2) the number of shares of Voting Stock beneficially owned
by any person;
(3) whether a person is an Affiliate or Associate of another
person; and
(4) the fair value of any consideration other than cash to be
received by holders of shares of any class or series of Voting Stock in
a Special Business Combination Transaction.
The good faith determination of a majority of the Continuing Directors
on such matters shall be conclusive and binding for all purposes of this Article
Thirteenth.
18
<PAGE>
(e) Notwithstanding any provision of this Amended and Restated
Certificate to the contrary, the provisions set forth in this Article Thirteenth
may not be amended, altered, changed or repealed, nor may any provision
inconsistent with said provisions be added to this Amended and Restated
Certificate or to the By-laws, except upon the affirmative vote of the holders
of not less than 80% of the total voting power of all outstanding shares of the
Voting Stock of the Corporation voting as a single class.
FOURTEENTH: (a) At any time as such may be permitted under the Act, the
By-laws of the Corporation may provide that advance notice of nominations for
the Board of Directors, other than nominations by the Board of Directors itself
or a committee thereof, shall be given to the Corporation in the manner provided
in the By-laws.
(b) Notwithstanding any provision of this Amended and Restated
Certificate to the contrary, the provision set forth in subparagraph (a) of this
Article Fourteenth may not be amended, altered, changed or repealed, nor may any
provision inconsistent with said provisions be added to this Amended and
Restated Certificate or to the By-laws, except upon the affirmative vote of the
holders of not less than 80% of the total voting power of all outstanding shares
of the Voting Stock (as defined in subparagraph (c) of Article Thirteenth) of
the Corporation voting as a single class.
FIFTEENTH: (a) Except as otherwise may be required by this Amended and
Restated Certificate or any resolution or resolutions providing for the issuance
of any class or series of Preferred Stock, special meetings of stockholders
shall be called only by the Board of Directors acting by the affirmative vote of
a majority of the directors then in office.
(b) Notwithstanding any provision of this Amended and Restated
Certificate to the contrary, the provision set forth in subparagraph (a) of this
Article Fifteenth may not be amended, altered, changed or repealed, nor may any
provision inconsistent with said provisions be added to this Amended and
Restated Certificate or to the By-laws, except upon the affirmative vote of the
holders of not less than 80% of the total voting power of all outstanding shares
of the Voting Stock (as defined in subparagraph (c) of Article Thirteenth) of
the Corporation voting as a single class.
SIXTEENTH: A director of the Corporation shall not be personally liable
either to the Corporation or any stockholder for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for any matter in respect of which such
19
<PAGE>
director shall be liable under Section 174 of the Act, or (iv) for any
transaction from which the director derived improper personal benefit. If the
Act is amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Act, as so amended. Any repeal or modification of this Article Sixteenth by
the stockholders shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
SEVENTEENTH: (a) The Corporation shall indemnify any person who was or
is a party or is a threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that such person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interest of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
20
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Court of Chancery of the State of Delaware or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subparagraphs (a) and (b) of this
Article Seventeenth, or in defense of any claim, issue or matter therein, he or
she shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
(d) Any indemnification under subparagraphs (a) and (b) of this Article
Seventeenth (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in subparagraphs (a)
and (b) of this Article Seventeenth. Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, (ii) if such a quorum is
not obtainable or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (iii) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation pursuant to this Article Seventeenth. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Seventeenth shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any By-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in an official capacity
and as to action in another capacity while holding such office.
(g) For purposes of this Article Seventeenth, any reference to the
"Corporation" shall include, in addition to the resulting or surviving
corporation, any constituent corporation (including any
21
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constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article Seventeenth with respect to the resulting or
surviving corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.
(h) For purposes of this Article Seventeenth, any reference to "other
enterprise" shall include employee benefit plans; any reference to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and any reference to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he or she 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 Corporation" as referred to in
this Article Seventeenth.
(i) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person.
(j) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of Section 145
of the Act.
This Amended and Restated Certificate has been duly adopted in
accordance with the provisions of Sections 228, 242 and 245 of the Act.
22
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate to be executed pursuant to Section 103(a)(2) of the General
Corporation Law of the State of Delaware by the undersigned duly authorized
officers of the Corporation on this 28th day of May, 1996.
BANKERS LIFE HOLDING CORPORATION
By: /s/Lawerence W. Inlow
----------------------
Lawrence W. Inlow, General Counsel
Attest:
/s/Karl W. Kindig
- -----------------
Karl W. Kindig,
Assistant Secretary
G:\ARTOFIN\AMD|^|RST.BLH
23
AMENDED AND RESTATED BY-LAWS
OF
BANKERS LIFE HOLDING CORPORATION
May 28, 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I. Stockholders ----
- --------- ------------
<S> <C> <C>
Section 1.1 Annual Meeting.................................................................... 1
Section 1.2 Special Meetings.................................................................. 1
Section 1.3 Notice of Meetings and Adjourned Meetings......................................... 1
Section 1.4 Quorum............................................................................ 2
Section 1.5 Voting............................................................................ 2
Section 1.6 Notice of Stockholder Nominations
and Business...................................................................... 2
Section 1.7 Proxies........................................................................... 5
Section 1.8 Fixing Date for Determination
of Stockholders of Record......................................................... 6
Section 1.9 Stockholder List.................................................................. 7
Section 1.10 Voting of Shares by Certain Holders............................................... 7
Section 1.11 Voting Procedures and Inspectors
of Elections...................................................................... 8
Section 1.12 Consent of Stockholders in Lieu
of Meeting........................................................................ 9
ARTICLE II. Directors.
Section 2.1 General Powers.................................................................... 10
Section 2.2 Number, Election and Term of Office
of Directors...................................................................... 10
Section 2.3 Resignation or Removal............................................................ 10
Section 2.4 Vacancies......................................................................... 10
Section 2.5 Place of Meetings................................................................. 10
Section 2.6 Regular Meetings.................................................................. 11
Section 2.7 Special Meetings.................................................................. 11
Section 2.8 Quorum and Voting................................................................. 11
Section 2.9 Telephonic Meeting................................................................ 11
Section 2.10 Compensation...................................................................... 12
Section 2.11 Presumption of Assent............................................................. 12
Section 2.12 Action without Meeting............................................................ 12
Section 2.13 Presiding Officer................................................................. 12
Section 2.14 Executive Committee............................................................... 12
Section 2.15 Other Committees.................................................................. 13
Section 2.16 Alternates........................................................................ 13
Section 2.17 Quorum and Manner of Acting-Committees............................................ 13
Section 2.18 Committee Chairman, Books, and Records, Etc....................................... 13
Section 2.19 Reliance upon Records............................................................. 14
Section 2.20 Interested Directors.............................................................. 14
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE III. Officers.
- ----------- ---------
<S> <C> <C>
Section 3.1 Number and Designation............................................................ 14
Section 3.2 Election and Term of Office....................................................... 15
Section 3.3 Removal and Resignation........................................................... 15
Section 3.4 Vacancies......................................................................... 15
Section 3.5 President......................................................................... 15
Section 3.6 The Vice Presidents............................................................... 16
Section 3.7 The Secretary..................................................................... 16
Section 3.8 The Treasurer..................................................................... 16
Section 3.9 Assistant Treasurers and Secretaries.............................................. 17
Section 3.10 Salaries.......................................................................... 17
ARTICLE IV. Contracts, Loans, Checks and Deposits.
- ----------- --------------------------------------
Section 4.1 Contracts......................................................................... 17
Section 4.2 Loans............................................................................. 17
Section 4.3 Checks, Drafts, Etc............................................................... 18
Section 4.4 Deposits.......................................................................... 18
ARTICLE V. Certificates of Stock and Their Transfer
- ---------- ----------------------------------------
Section 5.1 Certificates of Stock............................................................. 18
Section 5.2 Lost, Stolen or Destroyed Certificates............................................ 18
Section 5.3 Transfers of Stock................................................................ 19
Section 5.4 Stockholders of Record............................................................ 19
ARTICLE VI. General Provisions.
- ----------- -------------------
Section 6.1 Fiscal Year....................................................................... 20
Section 6.2 Seal.............................................................................. 20
ARTICLE VII. Offices.
- ------------ --------
Section 7.1 Registered Office................................................................. 20
Section 7.2 Other Offices..................................................................... 20
ARTICLE VIII. Notices.
- ------------- --------
Section 8.1 Manner of Notice.................................................................. 20
Section 8.2 Waiver of Notice..................................................................21
ARTICLE IX. Dividends.........................................................................22
- ---------- ---------
ARTICLE X. Amendments........................................................................22
- --------- ----------
</TABLE>
(ii)
<PAGE>
ARTICLE I
STOCKHOLDERS
Section 1.1. Annual Meeting. The annual meeting of
stockholders for the election of directors and the transaction of such other
business as may properly come before such meeting shall be held each year on
such date and at such time and place, within or without the State of Delaware,
as shall be determined by resolution of the Board of Directors. If the day fixed
for the annual meeting is a legal holiday, such meeting shall be held on the
next succeeding business day. If the election of directors shall not be held on
the day designated herein for the annual meeting of stockholders, or at any
adjournment thereof, the Board of Directors shall cause such election to be held
at a special meeting of stockholders to be called as soon thereafter as is
convenient.
Section 1.2. Special Meetings. Subject to the rights of the
holders of any class or series of stock having preference over the Common Stock
of the Corporation as to dividends or upon liquidation ("Preferred Stock"),
special meetings of stockholders may be called only by the Board of Directors
pursuant to a resolution adopted by a majority of the entire Board of Directors.
Special meetings of stockholders may be held at such time and place, within or
without the State of Delaware, as shall be determined by resolution of the Board
of Directors or as may be specified in the call of any such special meeting. If
not otherwise designated, the place of any special meeting shall be the
principal place of business of the Corporation in the State of the Corporation's
principal executive office as determined by the Board of Directors (the
"Corporation's Principal Executive Office"). Business transacted at any special
meeting shall be confined to the purpose or purposes stated in the notice of
such special meeting.
Section 1.3. Notice of Meetings and Adjourned Meetings.
Written notice of every meeting of stockholders, stating the place, date, time
and purposes thereof, shall, except when otherwise required by the Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation") or the
laws of the State of Delaware, be given at least 10 but not more than 60 days
prior to such meeting to each stockholder of record entitled to vote thereat, in
the manner set forth in Section 8.1 of these By-laws, by or at the direction of
the Board of Directors. Any meeting at which a quorum of stockholders is
present, in person or by proxy, may be adjourned from time to time without
notice, other than announcement at such meeting, until its business shall be
completed. At such adjourned meeting, any business may be transacted which might
have been transacted at the original meeting. If the adjournment is for more
than 30 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, written notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote thereat as above provided.
<PAGE>
Section 1.4. Quorum. Except as otherwise provided by the laws
of the State of Delaware or by the Certificate of Incorporation, the presence,
in person or by proxy, of the holders of record of shares of capital stock of
the Corporation entitling the holders thereof to cast a majority of the votes
entitled to be cast on the question shall constitute a quorum at any meeting of
stockholders, notwithstanding the subsequent withdrawal of enough stockholders
to leave less than a quorum. If at any meeting a quorum shall not be present,
the chairman of such meeting shall, if approved by the affirmative vote of the
holders of a majority of the voting power of the shares of capital stock of the
Corporation so represented, adjourn such meeting to another time and/or place
without notice other than announcement at such meeting. If the adjournment is
for more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, written notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote thereat as above provided.
At such adjourned meeting, if a quorum shall be present or represented, any
business may be transacted which might have been transacted at the original
meeting, notwithstanding the subsequent withdrawal of enough stockholders to
leave less than a quorum.
Section 1.5. Voting. Unless otherwise provided by these
By-Laws, the Certificate of Incorporation or in any Preferred Stock Designation
(as defined in Article FIFTH of the Certificate of Incorporation) (a "Preferred
Stock Designation"), each stockholder entitled to vote at any meeting of
stockholders shall be entitled to one vote for each share of capital stock of
the Corporation held of record. Election of directors at all meetings of the
stockholders at which directors are to be elected shall be by ballot, and,
except as otherwise set forth in any Preferred Stock Designation with respect to
the right of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances, a plurality of the votes cast thereat
shall elect directors. Except as otherwise provided by law, the Certificate of
Incorporation, any Preferred Stock Designation, these By-Laws or resolution
adopted by the entire Board of Directors, with respect to all matters other than
the election of directors submitted to the stockholders at any meeting the
affirmative vote of the holders of a majority of the voting power of the shares
of capital stock of the Corporation represented at the meeting and entitled to
vote on the question shall be the act of the stockholders.
Section 1.6. Notice of Stockholder Nominations and Business.
(a) At any annual meeting of the stockholders, nominations of persons for
election to the Board of Directors and the proposal of business to be considered
by the stockholders shall be brought before the annual meeting (i) pursuant to
the Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder who was a stockholder of record at the
time of giving of notice provided for in this Section 1.6(a), who is entitled to
vote with respect
2
<PAGE>
thereto and who complies with the notice procedures set forth in this Section
1.6(a). For nominations or other business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice must
be delivered to or mailed to and received by the Secretary at the Corporation's
Principal Executive Office not later than the close of business on the 60th day
nor earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is more than 30 days before or
more than 60 days after such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the close of business on the 90th
day prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the close of business on
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation, which ever occurs first. In no event
shall the public or other announcement of an adjournment of an annual meeting or
the adjournment thereof commence a new time period for the giving of a
stockholder's notice as described above. A stockholder's notice to the Secretary
shall set forth (i) as to each person whom such stockholder proposes to nominate
for election or reelection as a director, all information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (ii) as to any other business such
stockholder proposes to bring before the annual meeting, a brief description of
the business desired to be brought before the annual meeting, the reasons for
conducting such business at the annual meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (iii) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made,
(A) the name and address of such stockholder, as they appear on the books of the
Corporation, and the name and address of such beneficial owner and (B) the class
and number of shares of the capital stock of the Corporation that are owned
beneficially and of record by such stockholder and such beneficial owner.
Notwithstanding anything in the third sentence of the
preceding paragraph of this Section 1.6(a) to the contrary, in the event that
the number of directors to be elected to the Board of Directors is increased and
there is no public announcement by the Corporation naming all of the nominees
for director or specifying the size of the increased Board of Directors at least
70 days prior
3
<PAGE>
to the first anniversary of the preceding year's annual meeting, a stockholder's
notice required by this Section 1.6(a) shall be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to or mailed to and received by the Secretary not later than the
close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.
(b) At any special meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting
pursuant to the Corporation's notice of meeting. Nomination of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the Corporation's
notice of meeting (i) by or at the direction of the Board of Directors or (ii)
provided that the Board of Directors has determined that directors shall be
elected at such special meeting, by any stockholder who is a stockholder of
record at the time of giving of notice provided for in this Section 1.6. In the
event the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be) for election to such
position(s) as specified in the Corporation's notice of meeting if the
stockholder's notice required by Section 1.6(a) shall be delivered to the
Secretary at the Corporation's Principal Executive Office not earlier than the
close of business on the 90th day prior to such special meeting and not later
than the close of business on the later of the 60th day prior to such special
meeting or the 10th day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting. In no event shall the public
or other announcement of an adjournment of the special meeting or the
adjournment thereof commence a new time period for the giving of a stockholder's
notice as described above.
(c) (i) Notwithstanding anything in the By-Laws to the
contrary, only such persons who are nominated in accordance with the procedures
set forth in this Section 1.6 shall be eligible for election as directors and
only such business shall be brought before or conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 1.6. The chairman of the meeting shall,
if the facts so warrant, determine and declare to the meeting that a nomination
was not made, or other business was not brought before the meeting, in
accordance with the provisions of this Section 1.6 and, if he or she should so
determine, he or she shall so declare to the meeting, and any such defective
nomination or other business so determined to be not properly brought before the
meeting shall be disregarded.
4
<PAGE>
(ii) For purposes of this Section 1.6, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section
1.6, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.6. Nothing in this Section 1.6 shall be
deemed to affect any rights (A) of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (B) of the holders of any series of Preferred Stock to elect
directors under specified circumstances.
Section 1.7. Proxies. At every meeting of stockholders, each
stockholder having the right to vote thereat shall be entitled to vote in person
or by proxy. Such proxy shall be filed with the Secretary before or at the time
of the meeting. No proxy shall be valid after three years from its date, unless
such proxy provides for a longer period.
A stockholder may authorize another person or persons to act
for such stockholder as proxy (i) by executing a writing authorizing such person
or persons to act as such, which execution may be accomplished by such
stockholder or such stockholder's authorized officer, director, employee or
agent signing such writing or causing his or her signature to be affixed to such
writing by any reasonable means, including, but not limited to, facsimile
signature, or (ii) by transmitting or authorizing the transmission of a
telegram, cablegram or other means of electronic transmission (a "Transmission")
to the person who will be the holder of the proxy or to a proxy solicitation
firm, proxy support service organization or like agent duly authorized by the
person who will be the holder of the proxy to receive such Transmission;
provided, however, that any such Transmission must either set forth or be
submitted with information from which it can be determined that such
Transmission was authorized by such stockholder. The Secretary or such other
person or persons as shall be appointed from time to time by the Board of
Directors shall examine Transmissions to determine if they are valid. If it is
determined that a Transmission is valid, the person or persons making that
determination shall specify the information upon which such person or persons
relied. Any copy, facsimile telecommunication or other reliable reproduction of
such a writing or such a Transmission may be substituted or used in lieu of the
original writing or Transmission for any and all purposes for which the original
writing or Transmission could be used; provided, however, that such copy,
facsimile telecommunication or other reproduction shall be a
5
<PAGE>
complete reproduction of the entire original writing or Transmission.
Section 1.8. Fixing Date for Determination of Stockholders of
Record. (a) 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 a record date, which record
date shall not precede the date upon which the resolution fixing such record
date shall be adopted by the Board of Directors, and which record date shall not
be more than 60 nor less than 10 days before the date of such meeting. If no
such record date shall have been fixed by the Board of Directors, such record
date shall be at the close of business on the day next preceding the day on
which such notice is given or, if such notice is waived, at the close of
business on the day next preceding the day on which such meeting shall be held.
A determination of stockholders of record entitled to notice of or to vote at
any meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
(b) 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 a record date, which record date shall
not precede the date upon which the resolution fixing such record date shall be
adopted by the Board of Directors, and which record date shall not be more than
10 days after the date upon which such resolution shall be adopted. If no such
record date shall have been fixed by the Board of Directors, such record date
shall be, if no prior action by the Board of Directors shall be required by the
laws of the State of Delaware, the first date on which a signed written consent
setting forth the action taken or proposed to be taken shall be delivered to the
Corporation at its registered office in the State of Delaware or to the
Secretary at the Corporation's Principal Executive Office. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no such record date shall have been fixed by
the Board of Directors and prior action by the Board of Directors shall be
required by the laws of the State of Delaware, such record date shall be at the
close of business on the day on which the Board of Directors shall adopt the
resolution taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or any allotment of any rights or the stockholders entitled to exercise any
rights in respect of any change, conversion or exchange of any capital 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 such record date shall be adopted by the Board of Directors,
and which record date shall not be more than 60 days
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prior to such payment, allotment or other action. If no such record date shall
have been fixed, such record date shall be at the close of business on the day
on which the Board of Directors shall adopt the resolution relating to such
payment, allotment or other action.
Section 1.9. Stockholder List. The Secretary or any other
officer who has charge of the stock ledger of the Corporation shall prepare, at
least 10 days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, arranged in alphabetical order,
and showing the address of each stockholder 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 such meeting, during ordinary
business hours, for a period of at least 10 days prior to such meeting, either
at a place within the city where such meeting is to be held, which place shall
be specified in the notice of such meeting, or, if not so specified, at the
place where such meeting is to be held. The list shall also be produced and kept
at the time and place of such meeting during the whole time thereof, and may be
inspected by any stockholder who is present. Such stock ledger shall be the only
evidence as to who are the stockholders entitled to examine such stock ledger,
such list or the books of the Corporation or to vote in person or by proxy at
any meeting of stockholders.
Section 1.10. Voting of Shares by Certain Holders. Shares of
capital stock of the Corporation standing in the name of another corporation,
domestic or foreign, and entitled to vote may be voted by such officer, agent or
proxy as the by-laws of such other corporation may prescribe or, in the absence
of such provision, as the board of directors of such other corporation may
determine.
Shares of capital stock of the Corporation standing in the
name of a deceased person, a minor, an incompetent or a corporation declared
bankrupt and entitled to vote may be voted by an administrator, executor,
guardian, conservator or trustee, as the case may be, either in person or by
proxy, without transfer of such shares into the name of the official so voting.
A stockholder whose shares of capital stock of the Corporation
are pledged shall be entitled to vote such shares unless on the transfer books
of the Corporation the pledgor has expressly empowered the pledgee to vote such
shares, in which case only the pledgee, or such pledgee's proxy, may represent
such shares and vote thereon.
Shares of capital stock of the Corporation belonging to the
Corporation, or to another corporation if a majority of the shares entitled to
vote in the election of directors of such other corporation shall be held by the
Corporation, shall not be voted at
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any meeting of stockholders and shall not be counted in determining the total
number of outstanding shares for the purpose of determining whether a quorum is
present. Nothing in this Section 1.10 shall be construed to limit the right of
the Corporation to vote shares of capital stock of the Corporation held by it in
a fiduciary capacity.
Section 1.11. Voting Procedures and Inspectors of Elections.
(a) The Board of Directors shall, in advance of any meeting of stockholders,
appoint one or more inspectors (individually an "Inspector," and collectively
the "Inspectors") to act at such meeting and make a written report thereof. The
Board of Directors may designate one or more persons as alternate Inspectors to
replace any Inspector who shall fail to act. If no Inspector or alternate shall
be able to act at such meeting, the person presiding at such meeting shall
appoint one or more other persons to act as Inspectors thereat. No director or
candidate for the office of director shall be appointed as an Inspector.
Each Inspector, before entering upon the discharge of his or
her duties, shall take and sign an oath faithfully to execute the duties of
Inspector with strict impartiality and according to the best of his or her
ability.
(b) The Inspectors shall (i) ascertain the number of shares of
capital stock of the Corporation outstanding and the voting power of each, (ii)
determine the shares of capital stock of the Corporation represented at such
meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the Inspectors and
(v) certify their determination of the number of such shares represented at such
meeting and their count of all votes and ballots. The Inspectors may appoint or
retain other persons or entities to assist them in the performance of their
duties.
(c) The date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at such meeting
shall be announced at such meeting. No ballots, proxies or votes, nor any
revocations thereof or changes thereto, shall be accepted by the Inspectors
after the closing of the polls unless the Court of Chancery of the State of
Delaware upon application by any stockholder shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the Inspectors shall be limited to an examination of the proxies, any
envelopes submitted with such proxies, any information provided in accordance
with the second paragraph of Section 1.7 of these By-Laws, ballots and the
regular books and records of the Corporation, except that the Inspectors may
consider other reliable information for the limited purpose of reconciling
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proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by a stockholder of record to cast or more votes than such
stockholder holds of record. If the Inspectors consider other reliable
information for the limited purpose permitted herein, the Inspectors, at the
time they make their certification pursuant to paragraph (b) of this Section
1.11, shall specify the precise information considered by them, including the
person or persons from whom they obtained such information, when the information
was obtained, the means by which such information was obtained and the basis for
the Inspectors' belief that such information is accurate and reliable.
Section 1.12. Consent of Stockholders in Lieu of Meeting.
Except as otherwise provided in the Certificate of Incorporation or these
By-Laws with respect to the election of directors by stockholders, any action
required to be taken or which may be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote if a consent or consents in writing, setting forth the action so taken,
shall be signed by persons entitled to vote capital stock of the Corporation
representing not less than the minimum number of shares that would be necessary
to authorize or take such action at a meeting at which all shares of capital
stock of the Corporation entitled to vote thereon were present and voted. Every
written consent shall bear the date of signature of each stockholder (or his,
her or its proxy) who shall sign such consent. Prompt notice of the taking of
corporate action without a meeting of stockholders by less than unanimous
written consent shall be given to those stockholders who shall not have
consented in writing. All such written consents shall be delivered to the
Corporation at its registered office in the State of Delaware or to the
Secretary at the Corporation's Principal Executive Office. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. No written consent shall be effective to
authorize or take the corporate action referred to therein unless, within 60
days of the earliest dated written consent delivered in the manner required by
this Section 1.12 to the Corporation, written consents signed by a sufficient
number of persons to authorize or take such action shall be delivered to the
Corporation at its registered office in the State of Delaware or to the
Secretary at the Corporation's Principal Executive Office as aforesaid. All such
written consents shall be filed with the minutes of proceedings of the
stockholders and actions authorized or taken under such written consents shall
have the same force and effect as those adopted by vote of the stockholders at
any annual or special meeting thereof.
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ARTICLE II
DIRECTORS
Section 2.1. General Powers. The business and affairs
of the Corporation shall be managed by or under the direction of
the Board of Directors.
Section 2.2. Number, Election and Term of Office of Directors.
Subject to the rights of the holders of any series of Preferred Stock to elect
directors under specified circumstances, (i) the number of directors shall be
fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the entire Board of Directors and (ii) any
election of directors by stockholders must be effected at an annual or special
meeting of stockholders and may not be effected by the written consent of
stockholders. Directors need not be residents of the State of Delaware or
stockholders of the Corporation.
Section 2.3. Resignation or Removal. Any director may resign
by giving written notice to the Board of Directors, the Chairman of the Board or
the President. Any such resignation shall take effect at the time of receipt of
such notice or at any later time specified therein; and, unless otherwise
specified therein, acceptance of such resignation shall not be necessary to make
it effective. Subject to the rights of the holders of any series of Preferred
Stock, 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 a majority of all of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
as a single class.
Section 2.4. Vacancies. Subject to the rights of the holders
of any series of Preferred Stock, and unless the Board of Directors otherwise
determines, 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 of directors then in
office, though less than a quorum, and directors so chosen shall hold office for
a term expiring at the next annual meeting of stockholders and until such
director's successor shall have been duly elected and shall have qualified or
until his or her earlier death, retirement, resignation, disqualification or
removal. No decrease in the number of authorized directors constituting the
entire Board of Directors shall shorten the term of any incumbent director.
Section 2.5. Place of Meetings. Meetings of the Board of
Directors may be held at such places, within or without the
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State of Delaware, as the Board of Directors may from time to time determine or
as may be specified in the call of any such meeting.
Section 2.6. Regular Meetings. A regular annual meeting of the
Board of Directors shall be held, without call or notice, immediately after and
at the same place as the annual meeting of stockholders, for the purpose of
organizing the Board of Directors, electing officers and transacting any other
business that may properly come before such meeting. If the stockholders shall
elect the directors by written consent of stockholders to the extent permitted
by Section 2.2 of these By-Laws, a special meeting of the Board of Directors
shall be called as soon as practicable after such election for the purposes
described in the preceding sentence. Additional regular meetings of the Board of
Directors may be held without call or notice at such times as shall be fixed by
resolution of the Board of Directors.
Section 2.7. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman of the Board, or the President or by
any two directors then in office. Notice of each special meeting shall be mailed
by the Secretary to each director at least two days before such meeting, or be
given by the Secretary personally or by telegraph or telecopy at least 24 hours
before such meeting, in the manner set forth in Section 8.1 of these By-laws.
Such notice shall set forth the date, time and place of such meeting but need
not, unless otherwise required by the laws of the State of Delaware, state the
purpose of such meeting.
Section 2.8. Quorum and Voting. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors. The act of the majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, unless otherwise provided by the laws of the State of
Delaware, the Certificate of Incorporation or these By-Laws. A majority of the
directors present at any meeting at which a quorum shall be present may adjourn
such meeting to any other date, time or place without further notice other than
announcement at such meeting. If at any meeting a quorum shall not be present, a
majority of the directors present may adjourn such meeting to any other date,
time or place without notice other than announcement at such meeting.
Section 2.9. Telephonic Meetings. Members of the Board of
Directors or of any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or such committee through
conference telephone or similar communications equipment by means of which all
persons participating in such meeting can hear each other, and participation in
any meeting conducted pursuant to this Section 2.9 shall constitute presence in
person at such meeting.
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Section 2.10. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors. The directors shall be paid their reasonable
expenses, if any, of attendance at each meeting of the Board of Directors or a
committee thereof and may be paid a fixed sum for attendance at each such
meeting and an annual retainer or salary for services as a director or committee
member. No such payment shall preclude any director from serving the Corporation
in any other capacity and receiving compensation therefor.
Section 2.11. Presumption of Assent. Unless otherwise provided
by the laws of the State of Delaware, a director who is present at a meeting of
the Board of Directors or a committee thereof at which action is taken on any
corporate matter shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of such meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as secretary of such meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary immediately after the
adjournment of such meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 2.12. Action without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee thereof, may be taken without a meeting if a written consent
thereto is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or such committee.
Section 2.13. Presiding Officer. The presiding officer at any
meeting of the Board of Directors or stockholders shall be the Chairman of the
Board, or the President in the absence of the Chairman of the Board or, in the
absence of the President, any director elected chairman by vote of a majority of
the directors present at such meeting.
Section 2.14. Executive Committee. The Board of Directors may,
in its discretion, by resolution passed by a majority of the entire Board of
Directors, designate an Executive Committee consisting of such number of
directors as the Board of Directors shall determine. The Executive Committee
shall have and may exercise all of the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation with
respect to any matter which may require action prior to, or which in the opinion
of the Executive Committee may be inconvenient, inappropriate or undesirable to
be postponed until, the next meeting of the Board of Directors; provided,
however, that the Executive Committee shall not have the power or authority of
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the Board of Directors in reference to changing the membership or filling
vacancies in the Board of Directors or the Executive Committee, amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of such a
dissolution, amending these By-Laws, declaring a dividend, authorizing the
issuance of capital stock of the Corporation or adopting a certificate of
ownership and merger. Any member of the Board of Directors may request the
chairman of the Executive Committee to call a meeting of the Executive Committee
with respect to a specified subject. The Board of Directors shall have the power
to change at any time the members of the Executive Committee, to fill vacancies
and to dissolve the Executive Committee.
Section 2.15. Other Committees. The Board of Directors may
from time to time, in its discretion, by resolution passed by a majority of the
entire Board of Directors, designate other committees of the Board of Directors
consisting of such number of directors as the Board of Directors shall
determine, which shall have and may exercise such lawfully delegable powers and
duties of the Board of Directors as shall be conferred or authorized by such
resolution. The Board of Directors shall have the power to change at any time
the members of any such committee, to fill vacancies and to dissolve any such
committee.
Section 2.16. Alternates. The Board of Directors may from time
to time designate from among the directors alternates to serve on any committee
of the Board of Directors to replace any absent or disqualified member at any
meeting of such committee. Whenever a quorum cannot be secured for any meeting
of any committee from among the regular members thereof and designated
alternates, the member or members of such committee present at such meeting and
not disqualified from voting, whether or not constituting a quorum, may
unanimously appoint another director to act at such meeting in place of any
absent or disqualified member.
Section 2.17. Quorum and Manner of Acting-Committees. A
majority of the members of any committee of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of such
committee, and the act of a majority of the members present at any meeting at
which a quorum is present shall be the act of such committee.
Section 2.18. Committee Chairman, Books and Records, Etc. The
chairman of each committee of the Board of Directors shall be selected from
among the members of such committee by the Board of Directors.
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Each committee shall keep a record of its acts and
proceedings, and all actions of each committee shall be reported to the Board of
Directors at its next meeting.
Each committee shall fix its own rules of procedure not
inconsistent with these By-Laws or the resolution of the Board of Directors
designating such committee and shall meet at such times and places and upon such
call or notice as shall be provided by such rules.
Section 2.19. Reliance upon Records. Every director, and every
member of any committee of the Board of Directors, shall, in the performance of
his or her 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 committees of the Board of Directors, or by any other person as to matters
the director or member reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation, including, but not limited to, such records,
information, opinions, reports or statements as to the value and amount of the
assets, liabilities and/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
capital stock might properly be purchased or redeemed.
Section 2.20. Interested Directors. The presence of a
director, who is directly or indirectly a party in a contract or transaction
with the Corporation, or between the Corporation and any other corporation,
partnership, association or other organization in which such director is a
director or officer or has a financial interest, may be counted in determining
whether a quorum is present at any meeting of the Board of Directors or a
committee thereof at which such contract or transaction is discussed or
authorized, and such director may participate in such meeting to the extent
permitted by applicable law, including Section 144 of the General Corporation
Law of the State of Delaware.
ARTICLE III
OFFICERS
Section 3.1. Number and Designation. The officers of the
Corporation shall be a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Corporation also may have, at the discretion of the Board of
Directors, such Assistant Secretaries, Assistant Treasurers or other officers or
agents as may be elected or appointed by the Board of Directors. Any two or more
offices
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may be held by the same person unless the Certificate of Incorporation or these
By-Laws provide otherwise.
Section 3.2. Election and Term of Office. The officers of the
Corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after the election of directors. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as may be convenient. Vacancies may be filled or new
offices created and filled at any meeting of the Board of Directors. Each
officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her earlier death, resignation
or removal.
Section 3.3. Removal and Resignation. Any officer or agent
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation would
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any officer or agent may resign at any
time by giving written notice to the Board of Directors, the President or the
Secretary. Any such resignation shall take effect at the time of receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective.
Section 3.4. Vacancies. A vacancy in any office because of
death, retirement, resignation, disqualification, removal or otherwise may be
filled by the Board of Directors for the unexpired portion of the term.
Section 3.5. President. The President shall be the Chief
Executive Officer of the Corporation and shall have charge of and supervision
and authority over all of the affairs, business and operations of the
Corporation in the ordinary course of its business, with all such duties, powers
and authority with respect to such affairs, business and operations as may be
reasonably incident to such responsibilities. He shall have general supervision
of and direct all officers, agents and employees of the Corporation; and shall
see that all orders and resolutions of the Board are carried into effect. He
shall have the authority to sign, with the Secretary or an Assistant Secretary,
any and all certificates for shares of the capital stock of the Corporation and
shall have the authority to sign singly deeds, bonds, mortgages, contracts, or
other instruments to which the Corporation is a party (except in cases where the
signing and execution thereof shall be expressly delegated by the Board or by
these By-laws, or by law to some other officer or agent of the Corporation);
and, in the event of the absence or disability of the Chairman of the Board,
shall preside at meetings of the stockholders and of the Board of Directors. He
shall also serve the Corporation in such other
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capacities and perform such other duties and have such additional authority and
powers as are incident to his office or as may be defined in these By-laws or
delegated to him from time to time by the Board of Directors.
Section 3.6. The Vice Presidents. In the absence of the
President or in the event of his or her inability or refusal to act, the Vice
President (or in the event there shall be more than one Vice President, the Vice
Presidents in the order determined by the Board of Directors or, if there shall
have been no such determination, then in the order of their election) shall
perform the duties of the President and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Board
of Directors may also designate certain Vice Presidents as being in charge of
designated divisions, plants or functions of the Corporation's business and add
appropriate descriptions to their titles. In addition, any Vice President shall
perform such duties as from time to time may be assigned to him or her by the
President or the Board of Directors.
Section 3.7. The Secretary. The Secretary shall (a) keep the
minutes of proceedings of the stockholders, the Board of Directors and any
committee of the Board of Directors in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation; (d) affix the seal of the
Corporation or a facsimile thereof, or cause it to be affixed, and, when so
affixed, attest the seal by his or her signature, to all certificates for shares
of capital stock of the Corporation prior to the issue thereof and to all other
documents the execution of which on behalf of the Corporation under its seal is
duly authorized by the Board of Directors or otherwise in accordance with the
provisions of these By-Laws; (e) keep a register of the post office address of
each stockholder, director or committee member, which shall be furnished to the
Secretary by such stockholder, director or member; (f) have general charge of
the stock transfer books of the Corporation; and (g) in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him or her by the President or the Board of Directors.
Section 3.8. The Treasurer. The Treasurer shall have charge
and custody of and be responsible for all funds and securities of the
Corporation, receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, deposit all such moneys in the name of
the Corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article IV of these By-Laws,
disburse the funds of the Corporation as ordered by the Board of Directors, the
Chairman of the Board or the President or as otherwise required in the conduct
of the business of the
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Corporation and render to the President or the Board of Directors, upon request,
an accounting of all his or her transactions as Treasurer and a report on the
financial condition of the Corporation. The Treasurer shall in general perform
all the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him or her by the President or the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond (which shall be renewed regularly), in such sum and with such surety or
sureties as the Board of Directors shall determine, for the faithful discharge
of his or her duties and for the restoration to the Corporation, in case of his
or her death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the Corporation.
Section 3.9. Assistant Treasurers and Secretaries. In the
absence of the Secretary or the Treasurer, as the case may be, or in the event
of his or her inability or refusal to act, the Assistant Secretaries and the
Assistant Treasurers, respectively, in the order determined by the Board of
Directors (or if there shall have been no such determination, then in the order
of their election), shall perform the duties and exercise the powers of the
Secretary or the Treasurer, as the case may be. In addition, the Assistant
Secretaries and the Assistant Treasurers shall, in general, perform such duties
as may be assigned to them by the President, the Secretary, the Treasurer or the
Board of Directors. Each Assistant Treasurer shall, if required by the Board of
Directors, give a bond (which shall be renewed regularly), in such sum and with
such surety or sureties as the Board of Directors shall determine, for the
faithful discharge of his or her duties.
Section 3.10. Salaries. The salaries of the officers and
agents of the Corporation shall be fixed from time to time by the Board of
Directors or by such officer as it shall designate for such purpose. No officer
shall be prevented from receiving such salary by reason of the fact that he or
she is also a director of the Corporation.
ARTICLE IV
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 4.1. Contracts. The Board of Directors may authorize
any officer or officers, or agent or agents, to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
Section 4.2. Loans. No loans shall be contracted on behalf
of the Corporation and no evidences of indebtedness shall be issued in the name
of the Corporation unless authorized by or
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pursuant to a resolution adopted by the Board of Directors. Such authority may
be general or confined to specific instances.
Section 4.3. Checks, Drafts, Etc. All checks, drafts or other
orders for payment of money issued in the name of the Corporation shall be
signed by such officers, employees or agents of the Corporation as shall from
time to time be designated by the Board of Directors, the President or the
Treasurer.
Section 4.4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as shall be
designated from time to time by the Board of Directors, the President or the
Treasurer; and such officers may designate any type of depository arrangement
(including, but not limited to, depository arrangements resulting in net debits
against the Corporation) as may from time to time be offered or made available.
ARTICLE V
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 5.1. Certificates of Stock. Shares of capital stock of
the Corporation shall be represented by certificates which shall be in such form
as may be determined by the Board of Directors, shall be numbered and shall be
entered on the books of the Corporation as they are issued. Such certificates
shall indicate the holder's name and the number of shares evidenced thereby and
shall be signed by the President or a Vice President and by the Secretary or an
Assistant Secretary. If any stock certificate shall be manually signed (a) by a
transfer agent or an assistant transfer agent or (b) by a transfer clerk acting
on behalf of the Corporation and a registrar, the signature of any officer of
the Corporation may be facsimile. In case any such officer whose facsimile
signature has been used on any such stock certificate shall cease to be such
officer, whether because of death, resignation, removal or otherwise, before
such stock certificate shall have been delivered by the Corporation, such stock
certificate may nevertheless be delivered by the Corporation as though the
person whose facsimile signature has been used thereon had not ceased to be such
officer.
Section 5.2. Lost, Stolen or Destroyed Certificates. The Board
of Directors in individual cases, or by general resolution or by delegation to
the transfer agent for the Corporation, may direct that a new stock certificate
or certificates for shares of capital stock of the Corporation be issued in
place of any stock certificate or certificates theretofore issued by the
Corporation claimed to have been lost, stolen or destroyed, upon the filing of
an affidavit to that effect by the person claiming such loss, theft or
destruction. When authorizing such an issuance of a new stock
18
<PAGE>
certificate or certificates, the Board of Directors may, in its discretion and
as a condition precedent to such issuance, require the owner of such lost,
stolen or destroyed stock certificate or certificates to advertise the same in
such manner as the Corporation shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the stock certificate or
certificates claimed to have been lost, stolen or destroyed.
Section 5.3. Transfers of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation of a stock certificate for
shares of capital stock of the Corporation duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer or, if the
relevant stock certificate for shares of capital stock of the Corporation is
claimed to have been lost, stolen or destroyed, upon compliance with the
provisions of Section 5.2 of these By-laws, and upon payment of applicable taxes
with respect to such transfer, and in compliance with any restrictions on
transfer applicable to such stock certificate or the shares represented thereby
of which the Corporation shall have notice and subject to such rules and
regulations as the Board of Directors may from time to time deem advisable
concerning the transfer and registration of stock certificates for shares of
capital stock of the Corporation, the Corporation shall issue a new stock
certificate or certificates for such shares to the person entitled thereto,
cancel the old stock certificate and record the transaction upon its books.
Transfers of shares shall be made only on the books of the Corporation by the
registered holder thereof or by such holder's attorney or successor duly
authorized as evidenced by documents filed with the Secretary or transfer agent
of the Corporation. Whenever any transfer of shares of capital stock of the
Corporation shall be made for collateral security, and not absolutely, it shall
be so expressed in the entry of transfer if, when the stock certificate or
certificates representing such shares are presented to the Corporation for
transfer, both the transferor and transferee request the Corporation to do so.
Section 5.4. Stockholders of Record. The Corporation shall be
entitled to treat the holder of record of any share of capital stock of the
Corporation as the holder thereof and shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Delaware.
19
<PAGE>
ARTICLE VI
GENERAL PROVISIONS
Section 6.1. Fiscal Year. The fiscal year of the Corporation
shall end on the 31st day of December in each year or such other day as may be
fixed from time to time by the Board of Directors.
Section 6.2. Seal. The corporate seal of the Corporation shall
have inscribed thereon the name of the Corporation and the words "CORPORATE
SEAL" and "DELAWARE"; and it shall otherwise be in the form approved by the
Board of Directors. Such seal may be used by causing it, or a facsimile thereof,
to be impressed or affixed or otherwise reproduced.
ARTICLE VII
OFFICES
Section 7.1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle, and
the name of its registered agent is The Corporation Trust Company.
Section 7.2. Other Offices. The Corporation may have offices
at such other places, both within or without the State of Delaware, as shall be
determined from time to time by the Board of Directors or as the business of the
Corporation may require.
ARTICLE VIII
NOTICES
Section 8.1. Manner of Notice. Except as otherwise provided by
law, whenever under the provisions of the laws of the State of Delaware, the
Certificate of Incorporation or these ByLaws notice is required to be given to
any stockholder, director or member of any committee of the Board of Directors,
such notice may be given by personal delivery or by depositing it, in a sealed
envelope, in the United States mails, air mail or first class, postage prepaid,
addressed, or by delivering it to a telegraph company, charges prepaid, for
transmission, or by transmitting it via telecopier, to such stockholder,
director or member either at the address of such stockholder, director or member
as it appears on the books of the Corporation or, in the case of such a director
or member, at his or her business address; and such notice shall be deemed to be
given at the time when it is thus personally delivered, deposited, delivered or
transmitted, as the case may be.
20
<PAGE>
Such requirement for notice shall also be deemed satisfied, except in the case
of stockholder meetings with respect to which written notice is required by law,
if actual notice is received orally or by other writing by the person entitled
thereto as far in advance of the event with respect to which notice is being
given as the minimum notice period required by the laws of the State of Delaware
or these By-Laws.
Whenever notice is required to be given under any provision of
the laws of the State of Delaware, the Certificate of Incorporation or these
By-Laws to any stockholder to whom (i) notice of two consecutive annual meetings
of stockholders, and all notices of meetings of stockholders or of the taking of
action by stockholders by written consent without a meeting to such stockholder
during the period between such two consecutive annual meetings, or (ii) all, and
at least two, payments (if sent by first class mail) of dividends or interest on
securities of the Corporation during a 12-month period, have been mailed
addressed to such stockholder at the address of such stockholder as shown on the
records of the Corporation and have been returned undeliverable, the giving of
such notice to such stockholder shall not be required. Any action or meeting
which shall be taken or held without notice to such stockholder shall have the
same force and effect as if such notice had been duly given. If any such
stockholder shall deliver to the Corporation a written notice setting forth the
then current address of such stockholder, the requirement that notice be given
to such stockholder shall be reinstated.
Section 8.2. Waiver of Notice. Whenever any notice is required
to be given under any provision of the laws of the State of Delaware, the
Certificate of Incorporation or these By-Laws, a written waiver thereof, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to such notice. Attendance by a
person at a meeting shall constitute a waiver of notice of such meeting, except
when such person attends such meeting for the express purpose of objecting, at
the beginning of such meeting, to the transaction of any business because such
meeting has not been lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of
stockholders, the Board of Directors or a committee of the Board of Directors
need be specified in any written waiver of notice unless so required by the laws
of the State of Delaware, the Certificate of Incorporation or these By-Laws.
21
<PAGE>
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends, in cash, in property or in shares of capital
stock of the Corporation, on its outstanding shares of capital stock in the
manner and upon the terms and conditions provided by law and by the Certificate
of Incorporation.
ARTICLE X
AMENDMENTS
These By-Laws may be altered, amended or repealed by the Board
of Directors or the stockholders; provided, however, that with respect to any
alteration, amendment or repeal of any provision of the By-Laws by the
stockholders, notwithstanding any other provision of these By-Laws 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 capital stock of the Corporation required by law, the Certificate of
Incorporation, any Preferred Stock Designation or these By-Laws, the affirmative
vote of the holders of at least 80% of the voting power of all of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting as a single class, shall be
required for such an alteration, amendment or repeal by the stockholders.
G:\BYLAWS\BLHC.DEL
22
<TABLE>
<CAPTION>
EXHIBIT 11
BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES
Computation of Earnings Per Share
(unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period...................... 49,326,340 52,836,931 50,597,758 52,782,700
Weighted average shares issued (retired) during the period:
Employee defined contribution plan....................... - 321 - 36,715
Stock options (1)........................................ - - 459 -
Shares acquired and effectively retired (2).............. - - (1,184,001) -
Common stock equivalents related to stock options........ 8,590 - 15,096 -
---------- ----------- ----------- -----------
Weighted average shares outstanding ................... 49,334,930 52,837,252 49,429,312 52,819,415
=========== =========== =========== ===========
Net income ................................................ $32,198,000 $33,436,000 $62,246,000 $60,241,000
=========== =========== =========== ===========
Net income per common share............................ $.65 $.63 $1.26 $1.14
==== ==== ===== =====
<FN>
(1) Bankers issued 830 shares during the six months ended June 30, 1996 upon the exercise of stock options.
(2) Bankers purchased 1,272,248 common shares during the six months ended June 30, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FORM 10-Q FOR BANKERS LIFE HOLDING
CORPORATION, DATED JUNE 30, 1996, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 3,160,700
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 106,800 <F1>
<REAL-ESTATE> 0
<TOTAL-INVEST> 3,479,500
<CASH> 0
<RECOVER-REINSURE> 33,900
<DEFERRED-ACQUISITION> 865,200 <F2>
<TOTAL-ASSETS> 4,867,300
<POLICY-LOSSES> 2,813,300
<UNEARNED-PREMIUMS> 203,200
<POLICY-OTHER> 193,200
<POLICY-HOLDER-FUNDS> 117,300
<NOTES-PAYABLE> 297,900
<COMMON> 731,800
0
0
<OTHER-SE> 248,500 <F3>
<TOTAL-LIABILITY-AND-EQUITY> 4,867,300
644,000
<INVESTMENT-INCOME> 129,800
<INVESTMENT-GAINS> 3,300 <F4>
<OTHER-INCOME> 14,600 <F5>
<BENEFITS> 526,000 <F6>
<UNDERWRITING-AMORTIZATION> 55,900 <F7>
<UNDERWRITING-OTHER> 74,700
<INCOME-PRETAX> 115,000
<INCOME-TAX> 42,800
<INCOME-CONTINUING> 72,200
<DISCONTINUED> 0
<EXTRAORDINARY> (10,000)
<CHANGES> 0
<NET-INCOME> 62,200
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> Includes $102,000 of credit-tenant loans.
<F2> Includes $552,500 of cost of policies purchased.
<F3> Includes retained earnings of $282,400, offset by net
unrealized depreciation of securities of $33,900.
<F4> Includes net realized gains of $5,300 and a net trading loss of $2,000.
<F5> Includes restructuring income of $16,000 and other losses of $1,400.
<F6> Includes insurance policy benefits of $485,800 and interest expense on
annuities and financial products of $40,200.
<F7> Includes amortization of cost of policies purchased of $24,900 and
cost of policies produced of $25,600 and amortization related to
realized gains of $5,400.
</FN>
</TABLE>
