-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QuJOyz48dbiREJW1Zwg4XCTgk011i732t5txLgWSaimo4XDABY07+MlfNy0STR5s Ll8UPcR661f0zLr6R0luhg== 0000950144-96-005359.txt : 19960814 0000950144-96-005359.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950144-96-005359 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANKERS INSURANCE GROUP INC CENTRAL INDEX KEY: 0000350571 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 591985922 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09633 FILM NUMBER: 96611181 BUSINESS ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 BUSINESS PHONE: 3052532244 MAIL ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 10-Q 1 AMERICAN BANKERS INSURANCE GROUP 10-Q 06/30/96 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ---------- -------- AMERICAN BANKERS INSURANCE GROUP, INC. 11222 QUAIL ROOST DRIVE MIAMI, FLORIDA 33157 (305) 253-2244 Commission File Number: 0-9633 State of Incorporation: Florida I.R.S. Employer Identification Number: 59-1985922 Indicate, by check mark, whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Common Stock - Par Value $1.00 20,481,776 Shares Outstanding on July 24, 1996 2 Form 10-Q Company or group of companies for which report is filed: AMERICAN BANKERS INSURANCE GROUP, INC. This quarterly report, filed pursuant to Rule 13A-13 of the General Rules and Regulations under the Securities Exchange Act of 1934, consists of the following information as specified in Form 10-Q. Part I - Financial Information Item 1 - Financial Statements 1. Consolidated Balance Sheets at June 30, 1996 and December 31, 1995. 2. Consolidated Statements of Income for the three months ended June 30, 1996 and 1995. 3. Consolidated Statements of Income for the six months ended June 30, 1996 and 1995. 3. Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995. 4. Notes to Consolidated Financial Statements. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. Part II - Other Information Item 1 - Legal Proceedings Item 4 - Submission of matters to a vote of security holders Item 6 - Exhibits and Reports a. Exhibits. The following exhibits are included herein: (3a) Third Amended and Restated Articles of Incorporation. (10) Series B Cumulative Convertible Preferred Stock Underwriting Agreement. (11) Statement re: computation of earnings per share. (27) Financial Data Schedule (for SEC use only). b. Report on Form 8-K. None 2 3 Form 10-Q SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN BANKERS INSURANCE GROUP, INC. August 12, 1996 Date /s/ Arthur W. Heggen ------------------------------------ Arthur W. Heggen Vice President and Treasurer 3 4 PART I FINANCIAL INFORMATION 4 5 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995 (in thousands)
1996 1995 ---------- ---------- Assets (unaudited) - ------ Investments Held-to-Maturity securities, at amortized cost $ 728,708 $ 594,277 Available-for-Sale securities, at approximate market value 818,093 793,277 Equity securities, at approximate market value 100,487 113,028 Mortgage loans on real estate 10,754 11,793 Policy loans 8,121 7,819 Short-term and other investments 203,887 168,216 ---------- --------- Total investments 1,870,050 1,688,410 Cash 16,830 23,257 Accounts receivable, net of allowance for doubtful accounts of $5,135 in 1996 and $5,024 in 1995 122,678 130,970 Reinsurance receivable 170,905 168,128 Accrued investment income 21,959 20,943 Deferred policy acquisition costs 351,111 310,879 Prepaid reinsurance premiums 549,070 502,312 Other assets 203,896 142,835 ---------- ---------- Total assets $3,306,499 $2,987,734 ========== ========== Liabilities, Common Stock and Other Stockholders' Equity - -------------------------------------------------------- Policy liabilities $ 283,359 $ 275,250 Unearned premiums 1,284,509 1,178,867 Claim liabilities 447,283 404,745 ---------- ---------- 2,015,151 1,858,862 Other policyholders' funds 7,146 7,113 Notes payable 336,066 235,981 Deferred income taxes 23,251 29,549 Accrued commissions and other expenses 170,838 136,174 Other liabilities 210,492 207,058 ---------- ---------- Total liabilities 2,762,944 2,474,737 ---------- ---------- Commitments and Contingencies (Note 4) Common Stock and Other Stockholders' Equity - ------------------------------------------- Common stock of $1 par value. Authorized 35,000 shares. Issued and outstanding: 1996-20,459 shares; 1995-20,384 shares 20,459 20,384 Additional paid-in capital 218,650 215,121 Net unrealized investment and foreign exchange (losses) gains (5,690) 7,255 Retained earnings 320,549 282,748 Less: Treasury stock, at cost - 93 shares in 1996 and 136 shares in 1995 (1,426) (2,516) Unamortized restricted stock (3,674) (3,620) Collateralization of loan to Leveraged Employee Stock Ownership Plan (5,313) (6,375) ---------- ---------- Total common stock and other stockholders' equity 543,555 512,997 Total liabilities, common stock and other ---------- ---------- stockholders' equity $3,306,499 $2,987,734 ========== ==========
See accompanying notes to consolidated financial statements. 5 6 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS ENDED JUNE 30, 1996 AND 1995 (in thousands except per common share data) (unaudited)
1996 1995 -------- -------- Gross collected premiums $601,382 $583,051 ======== ======== Premiums and other revenues: Net premiums earned $346,777 $297,119 Net investment income 28,765 24,747 Realized investment gains 4,992 131 Other income 5,454 4,210 -------- -------- Total premiums and other revenues 385,988 326,207 -------- -------- Benefits and expenses: Net benefits, claims, losses and settlement expenses 132,159 112,391 Commissions 144,939 128,857 Operating expense 69,210 58,311 Interest expense 4,425 4,232 -------- -------- Total benefits and expenses 350,733 303,791 -------- -------- Income before taxes 35,255 22,416 -------- -------- Income tax expense (benefit): Current 12,383 3,009 Deferred (2,188) 3,359 -------- -------- 10,195 6,368 -------- -------- Net Income $ 25,060 $ 16,048 ======== ======== PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA Primary: Net Income $ 1.19 $ .77 ======== ======== Weighted average number of shares outstanding 20,972 20,786 ======== ======== Fully diluted: Net Income $ 1.19 $ .77 ======== ======== Weighted average number of shares outstanding 21,047 20,850 ======== ======== Dividends per common share $ .20 $ .19 ======== ========
See accompanying notes to consolidated financial statements. 6 7 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (in thousands except per common share data) (unaudited)
1996 1995 --------- ---------- Gross collected premiums $1,206,031 $1,052,157 ========== ========== Premiums and other revenues: Net premiums earned $ 688,631 $ 581,672 Net investment income 56,204 46,538 Realized investment gains (losses) 6,021 (1,202) Other income 10,829 8,974 ---------- ---------- Total premiums and other revenues 761,685 635,982 ---------- ---------- Benefits and expenses: Net benefits, claims, losses and settlement expenses 279,517 217,749 Commissions 272,633 248,478 Operating expense 134,867 117,972 Interest expense 8,526 7,735 ---------- ---------- Total benefits and expenses 695,543 591,934 ---------- ---------- Income before taxes 66,142 44,048 ---------- ---------- Income tax expense: Current 19,682 10,465 Deferred 764 2,664 ---------- ---------- 20,446 13,129 ---------- ---------- Net Income $ 45,696 $ 30,919 ========== ========== PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA Primary: Net Income $ 2.18 $ 1.49 ========== ========== Weighted average number of shares outstanding 20,949 20,758 ========== ========== Fully diluted: Net Income $ 2.18 $ 1.49 ========== ========== Weighted average number of shares outstanding 21,028 20,838 ========== ========== Dividends per common share $ .39 $ .37 ========== ==========
See accompanying notes to consolidated financial statements. 7 8 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (in thousands) (unaudited)
1996 1995 --------- --------- OPERATING ACTIVITIES: Net income $ 45,696 $ 30,919 Adjustments to reconcile net income to net cash provided by operating activities: Change in policy liabilities, unearned premiums, claim liabilities, reinsurance receivable and prepaid reinsurance premiums 106,755 131,768 Change in other assets and other liabilities (53,155) (2,934) Decrease (increase) in accounts receivable 8,292 (22,479) Increase in accrued investment income (1,016) (1,806) Increase in accrued commission and expenses 34,664 14,615 Increase (decrease) in policyholders' funds 33 (6,292) Increase in policy loans (302) (624) Amortization of deferred policy acquisition costs 95,398 190,957 Amortization of cost of insurance acquired 958 1,256 Policy acquisition costs deferred (135,630) (242,751) Provision for amortization and depreciation 4,109 6,057 Provision for deferred income taxes 764 2,664 Net (gain) loss on sale of investments (6,021) 1,202 Compensation and tax effect on stock option shares 2,108 631 Net cash flow from purchases and sales of trading securities (2,794) (564) --------- --------- Net cash provided by operating activities 99,859 102,619 --------- --------- INVESTING ACTIVITIES: Purchase of investments Held-to-maturity securities (171,972) (94,349) Available-for-sale securities (108,026) (198,709) Mortgage loans - (635) Proceeds from sale of investments Available-for-sale securities 55,875 28,797 Mortgage loans 1,045 816 Real Estate 1,412 - Proceeds from maturities of investments Held-to-maturity securities 38,025 58,554 Available-for-sale securities 25,563 8,425 Increase in short-term investments (36,391) (14,580) Transactions related to capital assets Capital expenditures (6,027) (6,403) Sales of capital assets 326 158 --------- --------- Net cash used in investing activities (200,170) (217,926) --------- --------- FINANCING ACTIVITIES: Proceeds from issuance of debt 138,147 85,000 Repayment of debt (37,000) (49,000) Dividends paid to shareholders (7,867) (7,452) Proceeds from issuance of common stock 773 350 Purchase of treasury stock (175) (893) --------- --------- Net cash provided by financing activities 93,878 28,005 --------- --------- Net decrease in cash (6,433) (87,302) Cash at beginning of period 23,257 89,536 Rate change effect on cash flow 6 215 Cash at end of period --------- --------- $ 16,830 $ 2,449 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 9,239 $ 6,948 Income taxes $ 15,736 $ 15,713
See accompanying notes to consolidated financial statements. 8 9 AMERICAN BANKERS INSURANCE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 (UNAUDITED) 1. Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report Form 10-K for the year ended December 31, 1995. Certain items have been reclassed to conform with 1996 presentation. 2. Translation of Foreign Currencies Unrealized foreign exchange losses, totaling $11,077,000 and $12,668,000 as of June 30, 1996 and December 31, 1995 respectively, are included in Other Stockholders' Equity under the caption "Net unrealized investment and foreign exchange (losses) gains." 3. Reinsurance The Company accounts for reinsurance contracts under Financial Accounting Standards Board's Statement 113. The Company recognizes the income on reinsurance contracts principally on a pro-rata basis over the life of the policies covered under the reinsurance agreements. Reinsurance Recoverables on Unpaid Losses are included as an asset in the Balance Sheet under the caption "Reinsurance Receivables". Ceded Unearned Premiums are included as an asset in the Balance Sheet under the caption "Prepaid Reinsurance Premiums". The effect of reinsurance on premiums earned is as follows for the six months and three months ended June 30, 1996 and 1995: (in thousands) Six Months Ended
June 30, 1996 June 30, 1995 ------------- -------------- Direct premiums $ 1,091,700 $ 887,123 Reinsurance assumed 58,881 73,670 Reinsurance ceded (461,950) (379,121) ------------- -------------- Net premiums earned $ 688,631 $ 581,672 ============= ==============
(in thousands) Three Months Ended
June 30, 1996 June 30, 1995 ------------- ---------------- Direct premiums $ 553,796 $ 459,146 Reinsurance assumed 39,446 38,814 Reinsurance ceded (246,465) (200,841) ------------ ---------------- Net premiums earned $ 346,777 $ 297,119 ============ ================
Reinsurance ceded incurred losses for the six months ended June 30, 1996 and 1995 were $154,843,000 and $133,735,000 respectively. Reinsurance ceded incurred losses for the three months ended June 30, 1996 and 1995 were $71,924,000 and $72,331,000 respectively. 9 10 4. Commitments and Contingencies For a comprehensive description of the Company's litigation, see Item III of the Company's 1995 Form 10-K. Alabama Litigation: The Company and certain of its insurance subsidiaries are presently parties to a number of individual consumer and class action lawsuits pending in Alabama involving premium, rate and policy coverage issues. While a few similar suits have been filed in other jurisdictions, the insurance and finance industries have been targeted in Alabama by plaintiffs' lawyers who enjoy a favorable judicial climate. The Company typically has been named as a co-defendant with one or several retailer or finance companies who have sold the Company's product to a consumer. A number of other insurers are also named as co-defendants in many of the suits. Although these Alabama lawsuits generally involve relatively small amounts of actual or compensatory damages, they typically assert claims requesting substantial punitive awards. The Company denies any wrongdoing in any of these suits and believes that it has not engaged in any conduct that would warrant an award of punitive damages. The Company has been advised by legal counsel that it has meritorious defenses to all claims being asserted against it. While no one case is necessarily significant in terms of financial risk to the Company, the judicial climate in Alabama is such that the outcome of these cases is extremely unpredictable. Without admitting any wrongdoing, the Company has settled a number of these suits, but there are still a significant number of cases pending, and it is expected that more suits alleging essentially the same causes of action are likely to continue to be filed during 1996. The Company intends to continue to defend itself vigorously against all such suits and believes, based on information currently available, that any liabilities that could result are not expected to have a material effect on the Company's financial position. The Company is involved with a number of cases in the ordinary course of business relating to insurance matters, or more infrequently, certain corporate matters. Generally, the Company's liability is limited to specific amounts relating to insurance or policy coverage for which provision has been made in the financial statements. Other cases involve general corporate matters which generally do not represent significant contingencies for the Company. 10 11 5. Segment Information Gross collected premiums, net premiums earned and income (loss) before federal income taxes are summarized as follows:
(in thousands) Six Months Ended June 30, -------- 1996 1995 ---- ---- GROSS COLLECTED PREMIUMS: Life $ 367,374 $ 313,018 Property and Casualty 838,657 739,139 ------------ ---------- Total $ 1,206,031 $1,052,157 ============ ========== NET PREMIUMS EARNED: Life $ 197,861 $ 179,487 Property and Casualty 490,770 402,185 ------------ ---------- Total $ 688,631 $ 581,672 ============ ========== INCOME (LOSS) BEFORE INCOME TAXES: Life $ 29,735 $ 24,350 Property and Casualty 43,304 36,493 Other 1,629 (9,060) ------------ ---------- 74,668 51,783 Interest Expense 8,526 7,735 ------------ ---------- Total Income $ 66,142 $ 44,048 ============ ==========
6. Accounting for Investments The Company accounts for its investments according to the Financial Accounting Standards Board's Statement 115 - Accounting for Certain Investments in Debt and Equity Securities. This Statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Those investments are to be classified in three categories and accounted for as follows: Held-to-Maturity - Securities for which the enterprise has the positive intent and ability to hold to maturity. These securities are carried at amortized cost. Trading Securities - Securities that are bought and held principally for the purpose of selling them in the near term. These securities are carried at market value with the unrealized holding gain or loss included in earnings. Available-for-Sale - Securities not classified as trading or held-to-maturity. These securities are carried at market value with the unrealized holding gain or loss reported as a separate component of equity, net of the income tax effect. 11 12 The detail of Cost and Statement Value for the Fixed Maturities and Equity Securities held at June 30, 1996 is as follows:
(in thousands) Amortized Statement Cost Value --------- --------- Fixed Maturities - ---------------- Held-to-Maturity Securities $ 728,708 $ 728,708 Available-for-Sale Securities 820,187 818,093 Trading Securities - - ---------- ---------- Total Fixed Maturities $1,548,895 $1,546,801 ========== ========== Net unrealized loss $ (2,094) ========== Market Cost Value --------- ---------- Equity Securities - ----------------- Held-to-Maturity Securities $ - $ - Available-for-Sale Securities 90,052 100,487 Trading Securities - - --------- ---------- Total Equity Securities $ 90,052 $ 100,487 ========= ========== Net unrealized gain $ 10,435
========== The net unrealized gain for "Available-for-Sale Securities" decreased by $14,539,000 (net of $7,276,000 in deferred income taxes) from December 31, 1995 to June 30, 1996. There were no unrealized gains and losses from transfers of Held-to-Maturity Securities. An analysis of the realized gains and losses of the Company for the six months ended June 30, 1996 is as follows: (in thousands) Gross realized gains from sales of Available-for-Sale Securities $ 8,417 Gross realized losses from sales of Available-for-Sale Securities (2,189) ---------- Net realized gain from investment activity 6,228 Net realized loss from other investment activity (207) ---------- Total realized gain $ 6,021 ==========
The Company uses the specific identification method to determine cost for computing the realized gains and losses. There were no transfers of securities from Available-for-Sale to Trading for the six months ended June 30, 1996. 12 13 AMERICAN BANKERS INSURANCE GROUP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Gross collected premiums increased $18.3 million or 3% to $601.4 million for the three months ended June 30, 1996, from $583.1 million for the same period of 1995 (which included a $55.3 million nonrecurring assumption of a block of credit business from another insurer). Excluding the assumption, gross collected premiums increased by 14% during the second quarter of 1996 as compared to the second quarter of 1995. During the three months ended June 30, 1996, total premiums and other revenues were $386.0 million, an increase of $59.8 million over total premiums and other revenues of $326.2 million for the same period in 1995. The increase includes a $49.7 million increase in net premiums earned resulting generally from the premium growth experienced by the Company's existing clients. The overall growth in invested assets generated an additional $4.0 million of investment income for the second quarter of 1996 as compared to the same period of 1995. The increase also includes a $4.9 million increase in realized investment gains primarily resulting from sales from the Company's equity securities portfolio. Both the benefits and claims ratio and the operating expenses ratio remained flat at 38% and 18%, respectively, for the three months ended June 30, 1996, compared to the same period of 1995. However, the commissions ratio decreased slightly from 43% for the three months ended June 30, 1995, to 42% for the same period of 1996. Financial Condition Total assets at June 30, 1996, and December 31, 1995, were $3.3 billion and $3.0 billion, respectively. Invested assets at the same date were $1.9 billion and $1.7 billion, respectively. Approximately $80 million of the increase in invested assets was attributable to additional borrowing under the short-term credit facility during June 1996. Liabilities were $2.8 billion and $2.5 billion at June 30, 1996, and at December 31, 1995, respectively, and were primarily comprised of insurance liabilities of $2.0 billion. Stockholders' Equity increased $30.6 million from $513.0 million at December 31, 1995, to $543.6 million at June 30, 1996. The contribution of net income after dividends of $37.8 million was the primary cause for the increase. This was offset partially by an increase in the unrealized investment losses recorded by the Company. The increase in unrealized investment losses was a result of the impact of the declining interest rate environment on the market values of the Company's investment portfolio. Liquidity and Capital Resources On June 30, 1996, $1.9 billion of securities, short-term investments and cash comprised 57% of the Company's total assets. The securities were principally readily marketable and did not include any significant concentration in private placements. The Company does not hold significant investments in equity securities; consequently, market changes in the equity securities markets do not significantly affect the investment portfolio. The Company expects to continue its policy of paying regular cash dividends; however, future dividends are dependent on the Company's future earnings, capital requirements and financial condition. In addition, the payment of dividends is subject to the restrictions described in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The $100.1 million addition to Notes Payable was mainly attributable to the use of the Company's $250 million short-term credit facility. The proceeds were used to provide additional surplus to certain of the Company's insurance subsidiaries to support increased premium writings. At June 30, 1996, the Company had $188.1 million outstanding 13 14 related to this agreement. On June 28, 1996, the Company filed a Form S-3 registration statement for 2,300,000 shares of Convertible Preferred Stock with the Securities and Exchange Commission. The shares were subsequently sold in late July 1996 and yielded net proceeds of approximately $112 million. Proceeds of the sale of these shares are primarily intended to be used to reduce the Company's outstanding debt. Private Securities Litigation Reform Act of 1995 - Safe Harbor Cautionary Statement Except for the historical information contained herein, certain of the matters discussed in this quarterly report are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, which involve certain risks and uncertainties, including but not limited to, changes in general economic conditions, interest rates, consumer confidence, competition, environmental factors, and governmental regulations affecting the Company's operations. See the Company's Annual Report Form on 10-K for the year ended December 31, 1995, for a further discussion of these and other risks and uncertainties applicable to the Company's business. 14 15 PART II OTHER INFORMATION 15 16 Item 1 - Legal Proceedings Commitments and Contingencies information which appears on page 10 elsewhere in this report is incorporated by reference in this item. Additional information regarding litigation can be found in the Company's 1995 Annual Report on Form 10-K. Item 4 - Submission of Matters to a Vote of Security Holders The Annual Stockholders meeting was held on May 22, 1996 at the Company's Headquarters. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Act of 1934. The meeting involved the election of directors. There was no solicitation in opposition to the management's nominees as listed in the proxy statement and all of such nominees were elected. 16 EX-3.A 2 3RD AMENDED ARTICLES OF INCORPORATION 1 EXHIBIT 3A THIRD AMENDED AND RESTATED ARTICLES OF INCORPORATION OF AMERICAN BANKERS INSURANCE GROUP, INC. ------------------------------------------------------------------------- American Bankers Insurance Group, Inc., a corporation organized and existing under the laws of the State of Florida, does hereby certify pursuant to Section 607.1007, Florida Statutes, that: 1. The name of the corporation is American Bankers Insurance Group, Inc. 2. These Third Amended and Restated Articles of Incorporation have been duly adopted by the Board of Directors of American Bankers Insurance Group, Inc., without shareholder action, pursuant to a written consent to action dated as of July 16, 1996, and include amendments to Article IV authorizing a new class of preferred stock, referred to in these Third Amended and Restated Articles of Incorporation as $3.125 Series B Cumulative Convertible Preferred Stock, and setting forth the rights, preferences and limitations of such $3.125 Series B Cumulative Convertible Preferred Stock. These amendments do not require shareholder action. 3. There are no discrepancies between the provisions of the Corporation's Second Amended and Restated Articles of Incorporation as heretofore amended and the provisions of these Third Amended and Restated Articles of Incorporation other than the inclusion of the foregoing amendments and the omission of matters of historical interest. ARTICLE I - NAME The name of the Corporation is American Bankers Insurance Group, Inc. ARTICLE II - DURATION The Corporation shall exist perpetually until dissolved according to law. ARTICLE III - PURPOSE The Corporation shall be authorized to exercise and enjoy all powers, rights, and privileges granted by the laws of the State of Florida to corporations 2 organized thereunder, and all the powers conferred by all acts hereafter amendatory of or supplemental to the laws of the State of Florida. ARTICLE IV - STATED CAPITAL The Corporation shall be authorized to issue two classes of shares of stock to be designated, respectively, "Common Stock" and "Preferred Stock"; the total number of shares which the Corporation shall have authority to issue is 38,500,000; the total number of shares of Common Stock shall be 35,000,000 and each such share shall have a par value of One Dollar ($1.00); and the total number of shares of Preferred Stock shall be 3,500,000 and each share shall be without par value. Each outstanding share of Common Stock, regardless of class, shall be entitled to one (1) vote on each matter submitted to a vote at a meeting of shareholders. Shares of Common Stock may be issued for such consideration, having a value not less than the par value of the shares issued therefor, as is determined from time to time by the Board of Directors, to be paid, in whole or in part, in cash or other property, tangible or intangible, or in labor or then services actually performed for the Corporation. Shares of Common Stock may not be issued until the full amount of the consideration therefor has been paid. Thereafter, such shares shall be deemed to be paid and non-assessable. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is expressly vested with authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations and restrictions thereof, including, without limitation the voting powers, if any, the dividend rate, conversion rights, redemption price, or liquidation preference, of any series of shares of Preferred Stock, and to fix the number of shares constituting any such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series." 3 SERIES A PARTICIPATING PREFERRED STOCK Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Participating Preferred Stock." The shares constituting such series shall be without par value. The number of shares constituting such series shall be 350,000. Section 2. Dividends and Distribution. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September, and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $3.125 or (b) subject to the provisions for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1.00 per share, of the Corporation, (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock. In the event the Corporation shall at any time after February 24, 1988 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during 4 the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $3.125 per share on the Series A Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock, unless (i) the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or (ii) the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided by the Third Amended and Restated Articles of Incorporation of the Corporation, or by law, the holders of shares of 5 Series A Participating Preferred Stock and the holders of shares of Common Stock (and any other capital stock of the Corporation at the time entitled thereto) shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (C) Except as set forth herein, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on a Series A Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Series A Participating Preferred Stock, except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon 6 such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Re-acquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding-Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Participating Preferred Stock shall have received $100.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in paragraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii) the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to one (1) with respect to such Series A Participating Preferred Stock and Common Stock, on a per share basis, respectively. 7 (B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series A Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment 8 of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. Amendment. The Third Amended and Restated Articles of Incorporation of the Corporation, any further amendments thereto, and any certificate amendatory thereof or supplemental thereto shall not be amended or further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of such percentage of the outstanding shares of Series A Participating Preferred Stock, voting separately as a class, as may be required under (i) the Florida General Corporation Act or (ii) the Third Amended and Restated Articles of Incorporation of the Corporation, whichever requires a greater percentage. Section 11. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock. $3.125 SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK Section I: Designation of Series and Number of Shares to be Initially Issuable Therein. This series of Preferred Stock shall be designated "$3.125 Series B Cumulative Convertible Preferred Stock" (hereinafter called the "Convertible Preferred Stock"), no par value, of which 2,300,000 shares shall be initially issuable. Section II: Rank. All shares of Convertible Preferred Stock shall rank prior, both as to payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, to all Junior Stock. Section III. Dividends. The holders of Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds at the time legally available therefor, dividends at the rate of $3.125 per annum per share, and no more, which shall be fully cumulative, shall accrue without interest from the date of initial issuance of such shares of Convertible Preferred Stock (on a daily basis whether or not such amounts would be available at that time for distribution to holders of shares of Convertible Preferred Stock) and shall be payable in cash quarterly in arrears on February 1, May 1, August 1 and November 1 of each year commencing November 1, 1996 (with respect to the period from such date of initial issuance to November 1, 1996) (except that if any such date is not a Business Day, then such dividend shall be payable on the next Business Day) to holders of record as they appear upon the stock transfer books of the Corporation on such record dates, 9 not more than sixty days nor less than ten days preceding the payment dates for such dividends, as are fixed by the Board of Directors (or, to the extent permitted by applicable law, a duly authorized committee thereof). In no event shall any such dividend record date be fixed less than (a) six Business Days prior to any date fixed for the redemption of the Convertible Preferred Stock or (b) with respect to the dividend payment date occurring on August 1, 2000 less than ten Business Days prior to any date fixed for such redemption. Subject to the next paragraph of this Section III, dividends on account of arrears for any past dividend period may be declared and paid at any time, without reference to any regular dividend payment date. The amount of dividends payable per share of Convertible Preferred Stock for each quarterly dividend period shall be computed by dividing the annual dividend amount by four. The amount of dividends payable for the initial dividend period and any period shorter than a full quarterly period shall be computed on the basis of a 360-day year of twelve 30-day months. No interest shall be payable in respect of any dividend payment on the Convertible Preferred Stock which may be in arrears. No dividends or other distributions, other than dividends payable solely in shares of Junior Stock, shall be declared, paid or set apart for payment on shares of Junior Dividend Stock, unless and until all accrued and unpaid dividends on the Convertible Preferred Stock for all dividend payment periods ending on or before the payment date of such dividends or other distributions on Junior Dividend Stock shall have been paid or declared and set apart for payment. No payment on account of the purchase, redemption, retirement or other acquisition of shares of Junior Dividend Stock or Junior Liquidation Stock shall be made unless and until all accrued and unpaid dividends on the Convertible Preferred Stock for all dividend payment periods ending on or before such payment for such Junior Dividend Stock or Junior Liquidation Stock shall have been paid or declared and set apart for payment; provided, however, that the restrictions set forth in this sentence shall not apply to the purchase, redemption, retirement, or other acquisition of Junior Dividend Stock or Junior Liquidation Stock either (A) pursuant to any employee or director incentive or benefit plan or arrangement (including any employment, severance or consulting agreement) of the Corporation or any subsidiary of the Corporation heretofore or hereafter adopted or (B) in exchange solely for Junior Stock. No full dividends shall be declared, paid or set apart for payment on shares of Parity Dividend Stock for any period unless full cumulative dividends have been, or contemporaneously are, paid or declared and set apart for such payment on the Convertible Preferred Stock for all dividend payment periods ending on or before the payment date of such dividends on Parity Dividend Stock. No dividends shall be paid on Parity Dividend Stock except on dates on which dividends are paid on the Convertible Preferred Stock. All dividends paid 10 or declared and set apart for payment on the Convertible Preferred Stock and the Parity Dividend Stock shall be paid or declared and set apart for payment pro rata so that the amount of dividends paid or declared and set apart for payment per share on the Convertible Preferred Stock and the Parity Dividend Stock on any date shall in all cases bear to each other the same ratio that accrued and unpaid dividends to the date of payment on the Convertible Preferred Stock and the Parity Dividend Stock bear to each other. No payment on account of the purchase, redemption, retirement or other acquisition of shares of Junior Stock, Parity Dividend Stock or Parity Liquidation Stock shall be made, and, other than dividends to the extent permitted by the preceding paragraph, no distributions shall be declared, paid or set apart for payment on shares of Parity Dividend Stock or Parity Liquidation Stock, unless and until all accrued and unpaid dividends on the Convertible Preferred Stock for all dividend payment periods ending on or before such payment for, or the payment date of such distributions on, such Parity Dividend Stock or Parity Liquidation Stock shall have been paid or declared and set apart for payment; provided, however, that the restrictions set forth in this sentence shall not apply to the purchase, redemption, retirement, or other acquisition of Parity Dividend Stock or Parity Liquidation Stock either (A) pursuant to any employee or director incentive or benefit plan or arrangement (including any employment, severance or consulting agreement) of the Corporation or any subsidiary of the Corporation hereafter adopted or (B) in exchange solely for Junior Stock. Any reference to "distribution" contained in this Section III shall not be deemed, except as expressly stated, to include any distribution made in connection with any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. Section IV. Liquidation Preference. In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of Convertible Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to shareholders an amount equal to the dividends accrued and unpaid on such shares on the date of final distribution to such holders, whether or not declared, without interest, plus a sum equal to $50 per share, and no more, before any payment shall be made or any assets distributed to the holders of shares of Junior Liquidation Stock; provided, however, that such rights shall accrue to the holders of shares of Convertible Preferred Stock only with respect to assets (if any) remaining after the Corporation's payment obligations with respect to the liquidation preferences of the shares of any class or series of the Corporation's capital stock hereafter issued ranking prior to the Convertible Preferred Stock as to distributions of assets upon such liquidation, dissolution or winding up ("Senior Liquidation Stock") are fully met. The entire assets of the Corporation available for distribution to shareholders after the liquidation preferences of the shares of Senior Liquidation Stock are fully met shall be distributed ratably 11 among the holders of the Convertible Preferred Stock and any Parity Liquidation Stock in proportion to the respective preferential amounts to which each is entitled (but only to the extent of such preferential amounts). After payment in full of the liquidation preferences of the share of the Convertible Preferred Stock, the holders of such shares shall not be entitled to any further participation in any distribution of assets by the Corporation. The voluntary sale, lease, exchange or transfer of all or substantially all of the Company's property or assets to, or its consolidation or merger with one or more corporations shall not be deemed to be considered a voluntary or involuntary liquidation, dissolution or winding up of the Corporation. Section V. Redemption at Option of the Corporation. The Convertible Preferred Stock may not be redeemed by the Corporation prior to August 7, 2000. On and after such date, the Convertible Preferred Stock may be redeemed by the Corporation, at its option on any date set by the Board of Directors, in whole or in part at any time, subject to the limitations, if any, imposed by the Florida Business Corporation Act, for an amount in cash equal to the Redemption Price. In case of the redemption of less than all of the then outstanding Convertible Preferred Stock, the Corporation shall designate by lot, or in such other manner as the Board of Directors may determine to be fair, the shares to be redeemed, or shall effect such redemption pro rata. Notwithstanding the foregoing, the Corporation shall not redeem less than all of the Convertible Preferred Stock at any time outstanding until all dividends accrued and in arrears upon all Convertible Preferred Stock then outstanding shall have been paid in full for all past dividend periods. Not more than ninety nor less than thirty days prior to the date fixed for redemption by the Board of Directors, notice thereof by first class mail, postage prepaid, shall be given to the holders of record of the shares of Convertible Preferred Stock to be redeemed, addressed to such holders at their last addresses as shown upon the stock transfer books of the Corporation. Each such notice of redemption shall specify the date fixed for redemption, the Redemption Price, the place or places of payment, that payment will be made upon presentation and surrender of the shares of Convertible Preferred Stock, that on and after the date fixed for redemption dividends will cease to accrue on such shares, the then-effective conversation price pursuant to Section VI, and that the right of holders to convert shares of Convertible Preferred Stock shall terminate at 5:00 p.m. New York City time on the Business Day prior to the date fixed for redemption and if such conversion right is not exercised prior to such time, such conversion right will be lost (unless the Corporation defaults in the payment of the Redemption Price). Any notice that is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not the holder of shares of 12 Convertible Preferred Stock receives such notice; and failure to give such notice by mail, or any defect in such notice, to the holders of any shares designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Convertible Preferred Stock. On or after the date fixed for redemption as stated in such notice, each holder of the shares called for redemption shall surrender the certificate evidencing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive payment of the Redemption Price. If less than all the shares evidenced by any such surrendered certificate are redeemed, a new certificate shall be issued evidencing the unredeemed shares. No fractional shares of Convertible Preferred Stock shall be issued upon redemption of less than all Convertible Preferred Stock. If more than one certificate evidencing shares of Convertible Preferred Stock shall be held at one time by the same holder, the number of full shares issuable upon redemption of less than all of such shares of Convertible Preferred Stock shall be computed on the basis of the aggregate number of shares of Convertible Preferred Stock so held. Instead of any fractional share of Convertible Preferred Stock that would otherwise be issuable to a holder upon redemption of less than all shares of Convertible Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional share in an amount equal to the same fraction of the fair value per share of Convertible Preferred Stock (as determined in good faith by the Board of Directors or in any manner prescribed by the Board of Directors) at the close of business on the date fixed for redemption. Notice having been given as aforesaid, if, on the date fixed for redemption, funds necessary for the redemption shall be available therefor and shall have been deposited with a bank or trust company with irrevocable instructions and authority to pay the Redemption Price to the holders of the Convertible Preferred Stock, then, notwithstanding that the certificates evidencing any shares so called for redemption shall not have been surrendered, dividends with respect to the shares so called shall cease to accrue on and after the date fixed for redemption, such shares shall no longer be deemed outstanding, the holders thereof shall cease to be shareholders of the Corporation and all rights whatsoever with respect to the shares so called for redemption (except the right of the holders to receive the Redemption Price without interest upon surrender of their certificates therefor) shall terminate. If funds legally available for such purpose are not sufficient for redemption of the shares of Convertible Preferred Stock which were to be redeemed, then the certificates evidencing such shares shall be deemed not to be surrendered, such shares shall remain outstanding, and the right of holders of shares of Convertible Preferred Stock thereafter shall continue to be only those of a holder of shares of the Convertible Preferred Stock. Upon an optional redemption by the Corporation, if at any time the Corporation does not pay amounts sufficient to redeem all Convertible Preferred 13 Stock, then such funds which are paid shall be applied to redeem such shares of Convertible Preferred Stock as the Corporation may designate by lot or in such other manner as the Board of Directors may determine to be fair, or such redemption shall be effected pro rata. The shares of Convertible Preferred Stock shall not be subject to the operation of any mandatory purchase, retirement or sinking fund. Section VI. Conversion Privilege. (a) Right of Conversion. Each share of Convertible Preferred Stock shall be convertible at the option of the holder thereof, at any time prior to the 5:00 p.m. New York City time on the Business Day prior to the date fixed for redemption of such share as herein provided, into fully paid and nonassessable shares of Common Stock, at the rate of that number of shares of Common Stock for each full share of Convertible Preferred Stock that is equal to $50 divided by the conversion price applicable per share of Common Stock, or into such additional or other securities, cash or property and at such other rates as required in accordance with the provisions of this Section VI. For purposes of this resolution, the "conversion price" applicable per share of Common Stock shall initially be equal to $50.065 and shall be adjusted from time to time in accordance with the provisions of this Section VI. (b) Conversion Procedures. Any holder of shares of Convertible Preferred Stock desiring to convert such shares into Common Stock shall surrender the certificate or certificates evidencing such shares of Convertible Preferred Stock at the office of the transfer agent for the Convertible Preferred Stock, which certificate or certificates, if the Corporation shall so require, shall be duly endorsed to the Corporation or in blank, or accompanied by proper instruments of transfer to the Corporation or in blank, accompanied by irrevocable written notice to the Corporation that the holder elects so to convert such shares of Convertible Preferred Stock and specifying the name or names (with address or addresses) in which a certificate or certificates evidencing shares of Common Stock are to be issued. No payments or adjustments in respect of dividends on shares of Convertible Preferred Stock surrendered for conversion or on account of any dividend on the Common Stock issued upon conversion shall be made upon the conversion of any shares of Convertible Preferred Stock; provided, however, that: (i) if a dividend record date fixed for the Convertible Preferred Stock as established herein results in a holder who undertakes conversion being eligible to receive on any dividend payment date both a dividend on the Convertible Preferred Stock and a dividend on the Common Stock issued 14 upon conversion thereof, then such holder shall be entitled to receive only the higher of such dividend amounts; and (ii) if the Corporation shall, by dividend or otherwise, declare or make a distribution on its Common Stock referred to in Section VI(c)(iv) or VI(c)(v) (including, without limitation, dividends or distributions referred to in the last sentence of Section VI(c)(iv)), the holder of each share of Convertible Preferred Stock, upon the conversion thereof subsequent to the close of business on the date fixed for the determination of shareholders entitled to receive such distribution and prior to the effectiveness of the conversion price adjustment in respect of such distribution, shall also be entitled to receive for each share of Common Stock into which such share of Convertible Preferred Stock is converted, the portion of the shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Common Stock; provided, however, that at the election of the Corporation (whose election shall be evidenced by a resolution of the Board of Directors) with respect to all holders so converting, the Corporation may, in lieu of distributing to such holder any portion of such distribution not consisting of cash or securities of the Corporation, pay such holder an amount in cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors). If any conversion of a share of Convertible Preferred Stock described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Common Stock which the holder of the share of Convertible Preferred Stock so converted is entitled to receive in accordance with the immediately preceding sentence, the Corporation may elect (such election to be evidenced by a resolution of the Board of Directors) to distribute to such holder a due bill for the shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets to which such holder is so entitled, provided that such due bill (i) meets any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded and (ii) requires payment or delivery of such shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets no later than the date of payment or delivery thereof to holders of shares of Common Stock receiving such distribution. The Corporation shall, as soon as practicable after such deposit of certificates evidencing shares of Convertible Preferred Stock accompanied by the written notice and compliance with any other conditions herein contained, deliver at such office of such transfer agent to the person for whose account such shares of Convertible Preferred Stock were so surrendered, or to the nominee or nominees of such person, certificates evidencing the number of full 15 shares of Common Stock to which such person shall be entitled as aforesaid, together with a cash adjustment in respect of any fraction of a share of Common Stock as hereinafter provided. Such conversion shall be deemed to have been made as of the date of such surrender of the shares of Convertible Preferred Stock to be converted, and the person or persons entitled to receive the Common Stock deliverable upon conversion of such Convertible Preferred Stock shall be treated for all purposes as the record holder or holders of such Common Stock on such date. (c) Adjustment of Conversion Price. The conversion price at which a share of Convertible Preferred Stock is convertible into Common Stock shall be subject to adjustment from time to time as follows: (i) In case the Corporation shall pay or make a dividend or other distribution on its Common Stock exclusively in Common Stock or shall pay or make a dividend or other distribution on any other class or series of capital stock of the Corporation which dividend or distribution includes Common Stock, the conversion price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be reduced by multiplying such conversion price by: A/(A + B), where: A = the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination; and B = the total number of shares of Common Stock constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For purposes of this subparagraph (i), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (ii) In case the Corporation shall pay or make a dividend or other distribution on its Common Stock consisting exclusively of, or shall otherwise issue to all holders of its Common Stock, rights or warrants entitling the holders thereof to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price Per Share of the Common Stock on the date fixed for the determination of shareholders entitled to receive such rights or warrants, the conversion price in effect at the opening of business on the day 16 following the date fixed for such determination shall be reduced by multiplying such conversion price by: (A + B)/(A + C), where: A = the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination, B = the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price Per Share, and C = the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. In case any rights or warrants referred to in this subparagraph (ii) in respect of which an adjustment shall have been made shall expire unexercised within 45 days after the shares shall have been distributed or issued by the Corporation the conversion price shall be readjusted at the time of such expiration to the conversion price that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. For the purposes of this Section VI(c)(ii), if both (A) a Distribution Date (as defined in Section 3(a) of the Rights Agreement) and (B) an event set forth in Section 11(a)(ii) or 13(a) of the Rights Agreement shall have occurred, then the later to occur of such events shall be deemed to constitute an issuance of rights to purchase shares of the related common stock. (iii) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the conversion price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the conversion price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. 17 (iv) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class or series of capital stock, cash or assets (including securities, but excluding any rights or warrants referred to in subparagraph (ii) of this Section VI(c), any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in subparagraph (i) of this Section VI(c)), the conversion price shall be reduced so that the same shall equal the price determined by multiplying the conversion price in effect immediately prior to the effectiveness of the conversion price reduction contemplated by this subparagraph (iv) by: (A - B)/A, where: A = the Current Market Price Per Share of the Common Stock on the date fixed for the payment of such distribution (the "Reference Date"), and B = the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors), on the Reference Date, of the portion of the evidence of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the Reference Date, provided, however, that for purposes of this subparagraph (iv), any dividend or distribution that includes shares of Common Stock or rights or warrants to subscribe for or purchase shares of Common Stock shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, cash, assets or shares of capital stock other than such shares of Common Stock or rights or warrants (making any further conversion price reduction required by this subparagraph (iv)) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights or warrants (making any further conversion price reduction required by subparagraph (i) or (ii) of this Section VI(c), except (A) the Reference Date of such dividend or distribution as defined in this subparagraph (iv) shall be substituted as "the date fixed for the determination of shareholders entitled to receive such dividend or other distribution", "the date fixed for the determination of shareholders entitled to receive such rights or warrants" and "the date fixed for such determination" within the meaning of subparagraph (i) and (ii) of this Section VI(c) and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (i) of this Section VI(c)). If the Board of Directors determines the fair market value 18 of any distribution for purposes of this subparagraph (iv) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price Per Share of Common Stock. (v) In case the Corporation shall pay or make a dividend or other distribution on its Common Stock exclusively in cash (excluding (A) cash that is part of the distribution referred to in (iv) above and, (B) in the case of any quarterly cash dividend on the Common Stock, the portion thereof that does not exceed the per share amount of the next preceding quarterly cash dividend on the Common Stock (as adjusted to appropriately reflect any of the events referred to in subparagraph (i), (ii), (iii), (iv) and (v) of this Section VI(c)), or all of such quarterly cash dividend if the amount thereof per share amount of Common Stock multiplied by four does not exceed 15% of the Current Market Price Per Share of the Common Stock on the Trading Day next preceding the date of declaration of such dividend), the conversion price shall be reduced so that the same shall equal the conversion price in effect immediately prior to the effectiveness of the conversion price reduction contemplated by this subparagraph (v) by: (A - B)/A, where: A = the Current Market Price Per Share of the Common Stock on the date fixed for the payment of such distribution, and B = the amount of cash so distributed and not excluded as provided above applicable to one share of Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution. (vi) No adjustment in the conversion price shall be required unless such adjustment would require an increase or decrease of at least 1% in the conversion price; provided, however, that any adjustments which by reason of this subparagraph (vi) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (vii) Whenever the conversion price is adjusted as herein provided: (1) the Corporation shall compute the adjusted conversion price and shall prepare a certificate signed by the Treasurer of the Corporation setting forth the adjusted conversion price and showing in reasonable detail the facts upon which such adjustment in based, and such certificate shall forthwith be filed with the transfer agent for the Convertible Preferred 19 Stock; and (2) a notice stating that the conversion price has been adjusted and setting forth the adjusted conversion price shall forthwith be required, and as soon as practicable after it is required, such notice shall be mailed by the Corporation to all record holders of shares of Convertible Preferred Stock at their last addresses as they shall appear upon the stock transfer books of the Corporation. (viii) The Corporation from time to time may reduce the conversion price by any amount for any period of time if the period is at least twenty days, the reduction is irrevocable during the period and the Board of Directors of the Corporation shall have made a determination that such reduction would be in the best interest of the Corporation, which determination shall be conclusive. Whenever the conversion price is reduced pursuant to the preceding sentence, the Corporation shall mail to holders of record of the Convertible Preferred Stock a notice of the reduction at least fifteen days prior to the date the reduced conversion price takes effect, and such notice shall state the reduced conversion price and the period it will be in effect. (d) No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Convertible Preferred Stock. If more than one certificate evidencing shares of Convertible Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Convertible Preferred Stock so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable to a holder upon conversion of any shares of Convertible Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional share in an amount equal to the same fraction of the market price per share of Common Stock (as determined by the Board of Directors or in any manner prescribed by the Board of Directors, which, so long as the Common Stock is listed on the New York Stock Exchange or quoted on the Nasdaq National Market System, shall be the reported last sale price regular way) at the close of business on the day of conversion. (e) Reclassification, Consolidation, Merger or Sale of Assets. In the event that the Corporation shall be a party to any transaction (including without limitation any recapitalization or reclassification of the Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the Common Stock), any consolidation of the Corporation with, or merger of the Corporation into, any other person, any merger of another person into the Corporation (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Corporation), any sale or transfer of all or substantially all of the assets of the Corporation or any share exchange) pursuant to which the Common 20 Stock is converted into the right to receive other securities, cash or other property, then lawful provisions shall be made as part of the terms of such transaction whereby the holder of each share of Convertible Preferred Stock then outstanding shall have the right thereafter to convert such share only into (i) in the case of any such transaction other than a Common Stock Fundamental Change and subject to funds being legally available for such purpose under applicable law at the time of such conversion, the kind and amount of securities, cash and other property receivable upon such transaction by a holder of the number of shares of Common Stock of the Corporation into which such share of Convertible Preferred Stock might have been converted immediately prior to such transaction, after giving effect, in the case of any Non-Stock Fundamental Change, to any adjustment in the conversion price required by the provisions of Section VI(h), and (ii) in the case of a Common Stock Fundamental Change, common stock of the kind received by holders of Common Stock as a result of such Common Stock Fundamental Change in an amount determined pursuant to the provisions of Section VI(h). The Corporation or the person formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Corporation's shares, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section VI. The above provisions shall similarly apply to successive transactions of the foregoing type. (f) Reservation of Shares; Etc. The Corporation shall at all times reserve and keep available, free from preemptive rights out of its authorized and unissued stock, solely for the purpose of effecting the conversion of the Convertible Preferred Stock, such number of shares of its Common Stock as shall from time to time be sufficient to effect that conversion of all shares of Convertible Preferred Stock from time to time outstanding. The Corporation shall from time to time, in accordance with the laws of the State of Florida, in good faith and as expeditiously as possible endeavor to cause the authorized number of shares of Common Stock to be increased if at any time the number of shares of authorized and unissued Common Stock shall not be sufficient to permit the conversion of all the then-outstanding shares of Convertible Preferred Stock. If any shares of Common Stock required to be reserved for purposes of conversion of the Convertible Preferred Stock hereunder require registration with or approval of any governmental authority under any Federal or State law before such shares may be issued upon conversion, the Corporation will in good faith and as expeditiously as possible endeavor to cause such shares to be duly registered or approved as the case may be. If the Common Stock is listed on the New York Stock Exchange or any other national securities exchange or 21 traded through the Nasdaq National Market, the Corporation will, if permitted by the rules of such exchange or market, list and keep listed on such exchange or make and keep eligible for trading on such market (as the case may be), upon official notice of issuance, all shares of Common Stock issuable upon conversion of the Convertible Preferred Stock; provided, however, that such shares of Common Stock may be delisted from such exchange or may cease to be eligible for trading through such market (as the case may be) if, prior to or concurrent with such delisting or cessation of eligibility for trading, the Corporation causes such shares of Common Stock to be listed on or eligible for trading through any other such exchange or market. (g) Prior Notice of Certain Events. In case: (i) the Corporation shall (1) declare any dividend (or any other distribution) on its Common Stock, other than (A) a dividend payable in shares of Common Stock or (B) a dividend payable in cash out of its retained earnings other than any special or nonrecurring or other extraordinary dividend or (2) declare or authorize a redemption or repurchase of in excess of 10% of the then-outstanding shares of Common Stock; or (ii) the Corporation shall authorize the granting to all holders of Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; or (iii) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Corporation is a party and for which approval of any shareholders of the Corporation shall be required, or of the sale or transfer of all or substantially all of the assets of the Corporation or of any share exchange whereby the Common Stock is converted into other securities, cash or other property; or (iv) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then the Corporation shall cause to be filed with the transfer agent for the Convertible Preferred Stock, and shall cause to be mailed to the holders of record of the Convertible Preferred Stock, at their last addresses as they shall appear upon the stock transfer books of the Corporation, at least ten days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record (if any) is to be taken for the purpose of such dividend, distribution, redemption, repurchase, rights or warrants or, if a record 22 is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up is expected to become effective and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). (h) Adjustments in Case of Fundamental Changes. Notwithstanding any other provision in this Section VI to the contrary, if any Fundamental Change occurs, then the conversion price in effect will be adjusted immediately after such Fundamental Change as described below. In addition, in the event of a Common Stock Fundamental Change, each share of Convertible Preferred Stock shall be convertible solely into common stock of the kind received by holders of Common Stock as the result of such Common Stock Fundamental Change. For purposes of calculating any adjustment to be made pursuant to this Section VI(h) in the event of a Fundamental Change, immediately after such Fundamental Change: (i) In the case of a Non-Stock Fundamental Change, the conversion price of the Convertible Preferred Stock shall thereupon become the lower of (1) the conversion price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to this Section VI, and (2) the result of A x $50/B, where: A = the greater of the Applicable Price or the then applicable Reference Market Price, and B = (x) the then-current Redemption Price per share of Convertible Preferred Stock or (y) for any Non-Stock Fundamental Change that occurs before the Convertible Preferred Stock becomes redeemable by the Corporation pursuant to Section V, the applicable price per share set forth for the date of such Non-Stock Fundamental Change in the following table: 23 DATE OF NON-STOCK FUNDAMENTAL CHANGE PRICE After date of original issuance of Convertible Preferred Stock and on or before August 6, 1997 . . . . . . . . . . . . . . . . $53.13 After August 7, 1997 and on or before August 6, 1998 . . . . . . . . . . . . . . . $52.81 After August 7, 1998 and on or before August 6, 1999 . . . . . . . . . . . . . . . $52.50 After August 7, 1999 and on or before August 6, 2000 . . . . . . . . . . . . . . . $52.19
plus, in any case referred to in this clause (y), an amount equal to all per share dividends on the Convertible Preferred Stock accrued and unpaid thereon, whether or not declared, to but excluding the date of such Non-Stock Fundamental Change; and (ii) In the case of a Common Stock Fundamental Change, the conversion price of the Convertible Preferred Stock in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to this Section VI, shall thereupon be adjusted by multiplying such conversion price by a fraction of which the numerator shall be the Purchaser Stock Price and the denominator shall be the Applicable Price; provided, however, that in the event of a Common Stock Fundamental Change in which (A) 100% by value of the consideration received by a holder of Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, is paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (B) all of the Common Stock shall have been exchanged for, converted into or acquired for common stock (and cash with respect to fractional interests) of the successor, acquiror or other third party, the conversion price of the Convertible Preferred Stock in effect immediately prior to such Common Stock Fundamental Change shall thereupon be adjusted by dividing such conversion price by the number of shares of common stock of the successor, acquiror, or other third party received by a holder of one share of Common Stock as a result of such Common Stock Fundamental Change. (i) Dividend or Interest Reinvestment Plans. Notwithstanding the foregoing provisions, the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in shares of Common Stock under any such plan, and the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any employee benefit plan or program of the Corporation or pursuant to any option, warrant, right or exercisable, exchangeable or convertible security 24 outstanding as of the date the Convertible Preferred Stock was first designated (except as expressly provided in Section VI(c)(ii) with respect to certain events under the Rights Agreement), and any issuance of Rights, shall not be deemed to constitute an issuance of Common Stock or exercisable, exchangeable or convertible securities by the Corporation to which any of the adjustment provisions described above applies. There shall also be no adjustment of the conversion price in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of the Corporation except as specifically described in this Section VI. If any action would require adjustment of the conversion price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of adjustment which has the highest absolute value to holders of Convertible Preferred Stock. (j) Series A Preferred Stock Purchase Rights. So long as Rights are attached to the outstanding shares of Common Stock of the Corporation, each share of Common Stock issued upon conversion of the shares of Convertible Preferred Stock prior to the earliest of any Distribution Date (as defined in Section 3(a) of the Rights Agreement), the date of redemption of the Rights or the date of expiration of the Rights shall be issued with Rights in an amount equal to the amount of Rights then attached to each such outstanding share of Common Stock. Section VII. Voting Rights. (a) General. The holders of shares of Convertible Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by law. In connection with any right to vote, each holder of a share of Convertible Preferred Stock shall have one vote for each share held. Any shares of Convertible Preferred Stock owned, directly or indirectly, by any entity of which the Corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors, shall not have voting rights hereunder and shall not be counted in determining the presence of a quorum. So long as any shares of the Corporation's Convertible Preferred Stock are outstanding, the Corporation will not, without the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding shares of Convertible Preferred Stock and outstanding Parity Dividend Stock, voting or consenting (as the case may be) as a single class (i) amend, alter or repeal (by merger or otherwise) any provision of the Corporation's Third Amended and Restated Articles of Incorporation, as may be amended or restated from time to time, or the by-laws so as to affect adversely the relative rights, preferences, qualifications, limitations or restrictions of the Convertible Preferred Stock or (ii) effect any reclassification of the Convertible Preferred Stock. 25 (b) Default Voting Rights. Notwithstanding any other provision of the Corporation's Third Amended and Restated Articles of Incorporation, whenever dividends on the Convertible Preferred Stock or any other class or series of Parity Dividend Stock shall be in arrears in an aggregate amount equal to at least six quarterly dividends (whether or not consecutive), (i) the number of members of the Board of Directors of the Corporation shall be increased by two, effective as the time of election of such directors as hereinafter provided and (ii) the holders of shares of Convertible Preferred Stock (voting separately as a class with all other affected classes or series of Parity Dividend Stock upon which like voting rights have been conferred and are exercisable) shall have the exclusive right to vote for and elect such two additional directors of the Corporation who shall continue to serve during the period such dividends remain in arrears. The right of the holders of shares of Convertible Preferred Stock to vote for such two additional directors shall terminate when all accrued and unpaid dividends on the Convertible Preferred Stock and all other affected classes or series of Parity Dividend Stock have been declared and paid or set apart for payment. The term of office of all directors so elected shall terminate immediately upon the termination of the right of the holders of shares of Convertible Preferred Stock and such Parity Dividend Stock to vote for such two additional directors, and the number of directors of the Board of Directors of the Corporation shall immediately thereafter be reduced by two. The foregoing right of the holders of shares of Convertible Preferred Stock with respect to the election of two directors may be exercised at any annual meeting of shareholders or at any special meeting of shareholders held for such purpose. If the right to elect directors shall have accrued to the holders of shares of Convertible Preferred Stock more than ninety days preceding the date established for the next annual meeting of stockholders, the President of the Corporation shall, within twenty days after the delivery to the Corporation at its principal office of a written request for a special meeting signed by the holders of at least 10% of all outstanding shares of Convertible Preferred Stock, call a special meeting of the holders of Convertible Preferred Stock to be held within sixty days after the delivery of such request for the purpose of electing such additional directors. Notwithstanding any other provision of the Corporation's Third Amended and Restated Articles of Incorporation, the holders of shares of Convertible Preferred Stock and any Parity Dividend Stock referred to above voting as a class shall have the right to remove, without cause and at any time, and replace any directors such holders shall have elected pursuant to this Section VII. Section VIII. Outstanding Shares. For purposes of this amendment, all shares of Convertible Preferred Stock issued by the Corporation shall be deemed outstanding except (i) from the date fixed for redemption pursuant to Section V, all shares of Convertible Preferred Stock that have been so called for 26 redemption under Section V, to the extent provided thereunder; (ii) from the date of surrender of certificates evidencing shares of Convertible Preferred Stock, all shares of Convertible Preferred Stock converted into Common Stock; and (iii) from the date of registration of transfer, all shares of Convertible Preferred Stock owned, directly or indirectly, by any entity of which the Corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors. Section IX. Miscellaneous. (a) Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. (b) The Corporation shall pay any and all stock transfer and documentary stamp taxes that may be payable in request of any issuance or delivery of shares of Convertible Preferred Stock or shares of Common Stock or other securities issued on account of Convertible Preferred Stock pursuant hereto or certificates or instruments evidencing such shares or securities. The Corporation shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issuance or delivery of shares of Convertible Preferred Stock or Common Stock or other securities in a name other than that in which the shares of Convertible Preferred Stock with respect to which such shares or other securities are issued or delivered were registered, or in respect of any payment to any person with respect to any such shares or securities other than a payment to the registered holder thereof, and shall not required to make any such issuance, delivery or payment unless and until the person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable. (c) In the event that a holder of shares of Convertible Preferred Stock shall not by written notice designate the name in which shares of Common Stock to be issued upon conversion of such shares should be registered or to whom payment upon redemption of shares of Convertible Preferred Stock should be made or the address to which the certificates or instruments evidencing such shares 27 or such payment should be sent, the Corporation shall be entitled to register such shares and make such payment, in the name of the holder of such Convertible Preferred Stock as shown on the records of the Corporation and to send the certificates or instruments evidencing such shares or such payment, to the address of such holder shown on the records of the Corporation. Section X. Definitions. The following definitions shall apply to terms used in connection with the Convertible Preferred Stock: a. "Applicable Price" shall mean (i) in the event of a Non-Stock Fundamental Change in which the holders of the Common Stock receive only cash, the amount of cash received by the holder of one share of Common Stock and (ii) in the event of any other Non-Stock Fundamental Change or any Common Stock Fundamental Change, the average of the daily Closing Prices of the Common Stock for the ten consecutive Trading Days prior to and including the record date for the determination of the holders of Common Stock entitled to receive cash, securities, property or other assets in connection with such Non-Stock Fundamental Change or Common Stock Fundamental Change, or, if there is no such record date, the date upon which the holders of the Common Stock shall have the right to receive such cash, securities, property or other assets, in each case, as adjusted in good faith by the Board of Directors of the Corporation to appropriately reflect any of the events referred to in subparagraphs (i), (ii), (iii), (iv) and (v) of Section VI(c). b. "Business Day" shall mean any day other than a Saturday, Sunday or any day on which banking institutions are authorized to close in New York, New York. c. "Closing Price" of any common stock on any day shall mean the last reported sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way of the common stock in each case on the New York Stock Exchange, or, if the common stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange or quotation system on which the common stock is listed or admitted to trading or quoted, or, if not listed or admitted to trading or quoted on any national securities exchange or quotation system, the average of the closing bid and asked prices of the common stock in the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service, or, if not so available in such manner, as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors of the Corporation for that purpose. d. "Common Stock" shall mean the Corporation's now or hereafter issued Common Stock. e. "Common Stock Fundamental Change" shall mean any Fundamental Change in which more than 50% by value (as determined in good faith by the Board of Directors of the Corporation) of the consideration received by holders 28 of Common Stock consists of common stock that for each of the ten consecutive Trading Days referred to with respect to such Fundamental Change in Section X(a) above has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the Nasdaq National Market; provided, however, that a Fundamental Change shall not be a Common Stock Fundamental Change unless either (i) the Corporation continues to exist after the occurrence of such Fundamental Change and the outstanding shares of Convertible Preferred Stock continue to exist as outstanding shares of Convertible Preferred Stock, or (ii) not later than the occurrence of such Fundamental Change, the outstanding shares of Convertible Preferred Stock are converted into or exchanged for shares of convertible preferred stock of a corporation succeeding to the business of the Corporation, which Convertible Preferred Stock has powers, preferences and relative, participating, optional or other rights, and qualifications, limitations and restrictions, substantially similar to those of the Convertible Preferred Stock. f. "Current Market Price Per Share" shall mean, as to the Common Stock on any date in question, the average of the daily Closing Prices for the five consecutive Trading Days prior to and including the date in question; provided, however, that: (1) if the Ex Date for any event (other than the issuance or distribution requiring such computation) that required an adjustment to the conversion price pursuant to subparagraphs (i), (ii), (iii), (iv), or (v) of Section VI(c) ("Other Event") occurs after the fifth Trading Day prior to the day in question and prior to the Ex Date for the issuance or distribution requiring such computation (the "Current Event"), the Closing Price for each Trading Day prior to the Ex Date for such Other Event shall be adjusted by multiplying such Closing Price by the same fraction by which the conversion price is so required to be adjusted as a result of such Other Event, (2) if the Ex Date for any Other Event occurs after the Ex Date for the Current Event and on or prior to the date in question, the Closing Price for each Trading Day on and after the Ex Date for such Other Event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the conversion price is so required to be adjusted as a result of such Other Event, (3) if the Ex Date for any Other Event occurs on the Ex Date for the Current Event, one of those events, as determined by the Corporation, shall be deemed for purposes of clauses (1) and (2) of this proviso to have an Ex Date occurring prior to the Ex Date for the other of those events, and 29 (4) if the Ex Date for the Current Event is on or prior to the date in question, then after taking into account any adjustment required pursuant to clause (2) of this proviso, the Closing Price for each Trading Day on or after such Ex Date shall be adjusted by adding thereto the amount of any cash and the fair market value on the date in question (as determined in good faith by the Board of Directors in a manner consistent with any determination of such value for purposes of paragraph (iv) or (v) of Section VI(c), whose determination shall be conclusive and described in a resolution of the Board of Directors) of the portion of the rights, warrants, evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock. g. "Ex Date" shall mean (1) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance or distribution and (2) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective. h. "Fundamental Change" shall mean the occurrence of any transaction or event in connection with a plan pursuant to which all or substantially all of the Common Stock shall be exchanged for, converted into, or acquired for or constitute solely the right to receive cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); provided, however, in the case of a plan involving more than one such transaction or event, for purposes of adjustment of the conversion price, such Fundamental Change shall be deemed to have occurred when substantially all of the Common Stock of the Corporation shall be exchanged for, converted into, or acquired for or constitute solely the right to receive cash, securities, property or other assets, but the adjustment shall be based upon the highest weighted average of consideration per share which a holder of Common Stock could have received in such transactions or events as a result of which more than 50% of the Common Stock of the Corporation shall have been exchanged for, converted into, or acquired for or constitute solely the right to receive cash, securities, property or other assets. i. "Junior Dividend Stock" shall mean the Junior Stock and any other capital stock of the Corporation ranking junior as to dividends to the Convertible Preferred Stock. 30 j. "Junior Liquidation Stock" shall mean the Junior Stock and any other class or series of the Corporation's capital stock ranking junior to the Convertible Preferred Stock as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. k. "Junior Stock" shall mean the Common Stock, the Series A Preferred Stock, and the Corporation's hereafter issued capital stock ranking junior to the Convertible Preferred Stock both as to the payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, when and if issued. l. "Nasdaq National Market" shall mean the National Association of Securities Dealers Automated Quotation National Market. m. "Non-Stock Fundamental Change" shall mean any Fundamental Change other than a Common Stock Fundamental Change. n. "Parity Dividend Stock" shall mean any class or series of the Corporation's capital stock hereafter issued ranking, as to dividends, on a parity with the Convertible Preferred Stock. o. "Parity Liquidation Stock" shall mean any class or series of the Corporation's capital stock ranking on a parity with the Convertible Preferred Stock as to distributions or assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. p. "Purchaser Stock Price" shall mean, with respect to any Common Stock Fundamental Change, the average of the daily Closing Prices of the common stock received in such Common Stock Fundamental Change for the ten consecutive Trading Days prior to and including the record date for the determination of the holders of Common Stock entitled to receive such common stock, or, if there is no such record date, the date upon which the holders of the Common Stock shall have the right to receive such common stock, in each case, as adjusted in good faith by the Board of Directors of the corporation to appropriately reflect any of the events referred to in subparagraphs, (i), (ii), (iii), (iv) and (v) of Section VI(c); provided, however, if no such Closing Prices of the common stock for such Trading Days exist, then the Purchaser Stock Price shall be set at a price determined in good faith by the Board of Directors of the Corporation. q. "Redemption Price" shall mean the applicable price per share set forth for the date fixed for redemption in the following table: DATE FIXED FOR REDEMPTION PRICE 31 On or after August 7, 2000 and on or before August 6, 2001 . . . . . . . . . . $51.88 After August 7, 2001 and on or before August 6, 2002 . . . . . . . . . . . . . $51.56 After August 7, 2002 and on or before August 6, 2003 . . . . . . . . . . . . . $51.25 After August 7, 2003 and on or before August 6, 2004 . . . . . . . . . . . . . $50.94 After August 7, 2004 and on or before August 6, 2005 . . . . . . . . . . . . . $50.63 After August 7, 2005 and on or before August 6, 2006 . . . . . . . . . . . . . $50.31 Any date after August 7, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . $50.00
plus, in each case, an amount in cash equal to all per share dividends on the Convertible Preferred Stock accrued and unpaid thereon, whether or not declared, to but excluding the date fixed for redemption. r. "Reference Market Price" shall initially mean $26.92 (which is an amount equal to 66 2/3% of the reported last sale price for the Common Stock quoted on the Nasdaq National Market on July 23, 1996), and in the event of any adjustment to the conversion price other than as a result of a Fundamental Change, the Reference Market Price shall also be adjusted so that the ratio of the Reference Market Price to the conversion price after giving effect to any such adjustment shall always be the same as the ratio of $26.92 to the initial conversion price per share set forth in the last sentence of Section VI(a). s. "Rights" shall have the meaning ascribed to such term in the Rights Agreement. t. "Rights Agreement" shall mean the Rights Agreement dated as of February 24, 1988, as amended, between the Corporation and the Rights Agent named therein. u. "Series A Preferred Stock" shall mean the Corporation's Series A Participating Preferred Stock, when and if issued. v. "Trading Day" shall mean a day on which securities traded on the national securities exchange or quotation system or in the over-the-counter market used to determine the Closing Price. ARTICLE V - BOARD OF DIRECTORS Section 1. Number of Directors. The number of directors of the Corporation shall not be less than twelve (12) or more than eighteen (18), the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors, and such exact number shall be fifteen (15) until otherwise determined by resolution adopted by affirmative vote of a majority of the entire Board of Directors. 32 Section 2. Classes of Directors. The Board of Directors shall be divided into three classes, Class I, Class II and Class III. Such classes shall be as nearly equal in number of directors as possible. Each director shall serve for a term ending at the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to Class I shall serve for a term ending on the annual meeting next following the end of the 1983 fiscal year, the directors first elected to Class II shall serve for a term ending at the second annual meeting next following the end of the 1983 fiscal year, and the directors first elected to Class III shall serve for a term ending at the third annual meeting next following the end of the 1983 fiscal year, serving, in each case, until their successors shall be elected and shall qualify. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the number of directors, shall be filled by the affirmative vote of a majority of the remaining director(s) of the class in which such vacancy occurs or if none so remains, by a majority vote of the directors of the other two classes, and any directors so chosen shall hold office until the next election of the class for which such directors shall have been chosen and until their successors shall be elected and shall qualify. No decrease in the number of directors shall shorten the term of any incumbent director. There shall be no cumulative voting in the election of directors. Section 3. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director or the entire Board of Directors may be removed, but only for, cause, and only by the affirmative vote of the holders of 75% or more of the outstanding shares of capital stock of the Corporation then entitled to vote at an election of directors. Section 4. Nomination of Directors. Except for the filling of any vacancies in the Board of Directors which is governed by Section 2 of this Article V, nominations for the election of directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of directors. Nominations by any shareholder shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 5 days nor more than 60 days prior to any meeting of the shareholders called for the election of directors. Each notice shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. The Secretary of the Corporation shall determine whether any nomination by any shareholder is made in conformance with the procedures set forth in this Section 4. Nominations not made in conformance with the procedures set forth in this Section 4 shall be null and void and shall be disregarded by the Corporation. 33 ARTICLE VI - INDEMNIFICATION The Corporation shall indemnify any present or former officer or director, or person exercising powers and duties of a director, to the full extent now or hereafter permitted under Florida Statutes now or hereafter in force. ARTICLE VII - BYLAWS The power to adopt, alter, amend or repeal Bylaws shall be vested in the Board of Directors and the shareholders, but the Board of Directors may not alter, amend or repeal any Bylaws adopted by the shareholders if the shareholders provided that such Bylaws shall not be altered, amended or repealed by the Board of Directors. ARTICLE VIII - APPROVAL OF CERTAIN BUSINESS COMBINATIONS A. In addition to any affirmative vote required by law or under any other provision of these Third Amended and Restated Articles of Incorporation, and except as otherwise expressly provided in Paragraph C: (1) any merger orconsolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (a) any 30% Shareholder (as hereinafter defined) or (b) any other corporation (whether or not itself a 30% Shareholder) which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of a 30% Shareholder; or, (2) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any 30% Shareholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $5,000,000 or more; or, (3) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any 30% Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $5,000,000 or more; or, (4) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation; or, (5) any reclassification of securities (including any reverse stock split), recapitalization, reorganization, merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving a 30% Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any 30% Shareholder, shall require the affirmative vote of the holders of at least 85% of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article VIII as one class ("Voting Shares"), which shall include the 34 affirmative vote of at least 50% of the Voting Shares by shareholders other than any 30% Shareholder. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. B. The term "business combination" as used in this Article VIII shall mean any transaction which is referred to in any one or more of clauses (1) through (5) of Paragraph A hereof. C. The provisions of Paragraph A shall not be applicable to any particular business combination, and such business combination shall require only such affirmative vote as is required by law if: (1) The Board of Directors of the Corporation has by at least a 75% vote of the members of the Board then in office: (a) given prior approval to the acquisition by the 30% Shareholder involved in the business combination of 30% or more of the outstanding common stock of the Corporation; or (b) approved the business combination prior to the 30% Shareholder involved in the business combination having become a 30% Shareholder; or, (2) All of the following conditions are satisfied: (a) the ratio of the aggregate amount of the cash and the fair market value of other consideration to be received per share by holders of common stock of the Corporation ("Common Stock") in such business combination to the market price of the Common Stock immediately prior to the announcement of such business combination, is at least as great as the ratio of the highest per share price (including brokerage commissions, transfer taxes and soliciting dealers' fees) which such 30% Shareholder has paid for any shares of Common Stock acquired by it within the two-year period prior to the business combination to the market price of the Common Stock immediately prior to the initial acquisition by such 30% Shareholder of any Common Stock; (b) the aggregate amount of the cash and fair market value of other consideration to be received per share by holders of Common Stock in such business combination is not less than the highest per share price (including brokerage commissions, transfer taxes and soliciting dealers' fees) paid by such 30% Shareholder in acquiring any of its holdings of Common Stock, and is not less 35 than the earnings per share of Common Stock for the four full consecutive fiscal quarters immediately preceding the record date for solicitation of votes on such business combination multiplied by the then price/earnings multiple (if any) of such 30% Shareholder as customarily computed and reported in the financial community; (c) the consideration to be received by holders of Common Stock in such business combination shall be the same form and of the same kind as the consideration paid by the 30% Shareholder in acquiring the shares of Common Stock already owned by it; (d) after becoming a 30% Shareholder and prior to the consummation of such business combination: (i) the 30% Shareholder shall have taken steps to ensure that the Corporation's Board of Directors included at all times representation by continuing director(s) (as hereinafter defined) proportionate to the ratio that the Voting Shares which from time to time are owned by persons who are not 30% Shareholders ("Public Holders") bear to all Voting Shares outstanding at such respective times (with a continuing director to occupy any resulting fractional board position); (ii) there shall have been no reduction in the rate of dividends payable on the Common Stock except as necessary to insure that a quarterly dividend payment does not exceed 15% of the net income of the Corporation for the four full consecutive fiscal quarters immediately preceding the declaration date of such dividend, or except as may have been approved by a unanimous vote of all directors (the "entire Board"); (iii) such 30% Shareholder shall not have acquired any newly issued shares of stock, directly or indirectly, from the Corporation (except upon conversion of convertible securities acquired by it prior to obtaining a 30% interest or as a result of a pro rate stock dividend or stock split); and (iv) such 30% Shareholder shall not have acquired any additional shares of the Common Stock or securities convertible into or exchangeable for Common Stock except as a part of the transaction which resulted in such 30% Shareholder acquiring its 30% interest; (e) prior to the consummation of such business combination, such 30% Shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or tax credits provided by the Corporation, or made any change in the Corporation's business or equity capital structure without the unanimous approval of the entire Board; and, 36 (f) a proxy statement responsive to the requirements of the Securities Exchange Act of 1934 shall have been mailed to all holders of Voting Shares for the purpose of soliciting shareholder approval of such business combination. Such proxy statement shall contain at the front thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the business combination which the continuing directors, or any of them, may have furnished in writing and, if deemed advisable by a majority of the continuing directors, an opinion of independent financial advisers as to the fairness (or lack of fairness) of the terms of such business combination, from the point of view of the holders of Voting Shares other than any 30% Shareholder (such independent financial advisers to be selected by a majority of the continuing directors, and to be paid a reasonable fee for their services upon receipt by the Corporation of such opinion). D. For the purposes of this Article VIII: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "30% Shareholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which, as of the record date for the determination of shareholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (a) is the beneficial owner, directly or indirectly, of not less than 30% of the Voting Shares; or, (b) is an Affiliate of the Corporation and at any time within 2 years prior thereto was the beneficial owner, directly or indirectly, of not less than 30% of the then outstanding Voting Shares; or, (c) is an assignee of or has otherwise succeeded to any shares of capital stock of the Corporation which were at any time within 2 years prior thereto beneficially owned by any 30% Shareholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: (a) which such person or any of its Affiliates and Associates (as hereinafter defined) beneficially own, directly or indirectly; or, (b) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, warrants, or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or, (c) which are beneficially owned, directly or indirectly, 37 by any other person with which such first-mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of sub-paragraph (3), above, but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. (5) "Continuing director" shall mean a person who was a member of the Board of Directors of the Corporation elected by the Public Holders prior to the date as of which any 30% Shareholder acquired in excess of 5% of the then outstanding Voting Shares, or a person designated (before his initial election as a director) as a continuing director by a majority of the then continuing directors. (6) "Other consideration to be received" shall mean common stock of the Corporation retained by its Public Holders in the event of a business combination in which the Corporation is the surviving corporation. (7) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on February 23, 1983. (8) "Subsidiary" means any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on February 23, 1983) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of 30% Shareholder set forth in sub-paragraph (2), above, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security owned directly or indirectly, by the Corporation. E. A majority of the continuing directors shall have the power and duty to determine for the purposes of this Article VIII, on the basis of information known to them: (a) the number of Voting Shares beneficially owned by any person; (b) whether a person is an Affiliate or Associate of another; (c) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in sub-paragraph (3), above, or, (d) whether the assets subject to any business combination have an aggregate fair market value of $5,000,000 or more. F. Nothing contained in this Article VIII shall be construed to relieve any 30% Shareholder from any fiduciary obligation imposed by law. 38 ARTICLE IX Action shall be taken by the shareholders only at annual or special meetings of shareholders, and shareholders may not act by written consent. Special meetings of shareholders may be called only by the holders of not less than 75% of the Voting Shares as defined in Article VIII, or by such other persons or bodies as may be authorized by the Bylaws of the Company. ARTICLE X - AMENDMENTS Any amendment, alteration, change or repeal of Article V, Article VIII, Article IX, or Article X of this Third Amended and Restated Articles of Incorporation shall require the affirmative vote of the holders of at least 85% of the then outstanding Voting Shares as defined in Article VIII, which shall include the affirmative vote of at least 50% of the Voting Shares other than any 30% Shareholders; provided that this Article X shall not apply to, and such 85% vote shall not be required for any amendment, alteration, change or repeal recommended to the shareholders by at least a majority of the entire Board and by at least two-thirds of the continuing directors, as defined in Article VIII. 39 IN WITNESS WHEREOF, American Bankers Insurance Group, Inc. has caused these Amended and Restated Articles of Incorporation to be executed on this day of July, 1996. - ---- (Corporate Seal) AMERICAN BANKERS INSURANCE GROUP, INC. - ---------------- -------------------------------------- Attest: - ------ By: --------------------------------------------- Leonardo F. Garcia, Gerald N. Gaston, Vice Chairman of the Board, Secretary Chief Executive Officer and President STATE OF FLORIDA ) ) COUNTY OF DADE ) The foregoing instrument was acknowledged before me this of July, 1996 by -- Gerald N. Gaston as Vice Chairman of the Board, Chief Executive Officer and President for American Bankers Insurance Group, Inc. NOTARY PUBLIC, State of Florida My Commission Expires: Personally Known OR Produced Identification Type of Identification Produced EX-10 3 UNDERWRITING AGREEMENT 1 EXHIBIT 10 2,000,000 SHARES AMERICAN BANKERS INSURANCE GROUP, INC. $3.125 SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK (Liquidation preference $50 per share) UNDERWRITING AGREEMENT July 23, 1996 CS FIRST BOSTON CORPORATION DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION FURMAN SELZ LLC MCDONALD & COMPANY SECURITIES, INC. As Representatives of the Several Underwriters c/o CS First Boston Corporation, Park Avenue Plaza, New York, N.Y. 10055 Dear Sirs: 1. Introductory. American Bankers Insurance Group, Inc., a Florida corporation (the "Company"), proposes to issue and sell 2,000,000 shares ("Firm Securities") of its $3.125 Series B Cumulative Convertible Preferred Stock (liquidation preference $50 per share) ("Securities") and also proposes to issue and sell to the Underwriters, at the option of the Underwriters, an aggregate of not more than 300,000 additional shares ("Optional Securities") of the Securities as set forth below. The Firm Securities and the Optional Securities are herein collectively called the "Offered Securities". This Underwriting Agreement, as amended, supplemented or modified from time to time is referred to herein as "this Agreement". The Company hereby agrees with the several Underwriters named in Schedule A hereto ("Underwriters") as follows: 2. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the several Underwriters that: (a) A registration statement on Form S-3 (No. 333-07209) relating to the Offered Securities and the shares of common stock, $1.00 par value (the "Common Stock"), of the Company into which the Securities are convertible (the "Underlying Securities"), including a form of prospectus, has been filed with the Securities and Exchange Commission ("Commission") and either (i) 2 has been declared effective under the Securities Act of 1933, as amended ("Act"), and is not proposed to be amended or (ii) is proposed to be amended by amendment or post-effective amendment. If such registration statement ("initial registration statement") has been declared effective, either (i) an additional registration statement ("additional registration statement") relating to the Offered Securities and the Underlying Shares into which the Securities are convertible may have been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has become effective upon filing pursuant to such Rule and the Offered Securities and such Underlying Shares all have been duly registered under the Act pursuant to the initial registration statement and, if applicable, the additional registration statement or (ii) such an additional registration statement is proposed to be filed with the Commission pursuant to Rule 462(b) and will become effective upon filing pursuant to such Rule and upon such filing the Offered Securities and such Underlying Shares will all have been duly registered under the Act pursuant to the initial registration statement and such additional registration statement. If the Company does not propose to amend the initial registration statement or if an additional registration statement has been filed and the Company does not propose to amend it, and if any post-effective amendment of either such registration statement has been filed with the Commission prior to the execution and delivery of this Agreement, the most recent amendment (if any) to each such registration statement has been declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act or, in the case of the additional registration statement, Rule 462(b). For purposes of this Agreement, "Effective Time" with respect to the initial registration statement or, if filed prior to the execution and delivery of this Agreement, the additional registration statement means (i) if the Company has advised the Representatives that it does not propose to amend such registration statement, the date and time as of which such registration statement, or the most recent post-effective amendment thereto (if any) filed prior to the execution and delivery of this Agreement, was declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c), or (ii) if the Company has advised the Representatives that it proposes to file an amendment or post-effective amendment to such registration statement, the date and time as of which such registration statement, as amended by such amendment or post-effective amendment, as the case may be, is declared effective by the Commission. If an additional registration statement has not been filed prior to the execution and delivery of this Agreement but the Company has advised the Representatives that it proposes to file one, "Effective Time" with respect to such additional registration statement means the date and time as of which such registration statement is filed and becomes effective pursuant to Rule 462(b). "Effective Date" with respect to the initial registration statement or the additional registration statement (if any) means the date of the Effective Time thereof. The initial registration statement, as amended at its Effective Time, including all information contained or incorporated by reference in the additional registration statement (if any) and deemed to be part of the initial registration statement as of the Effective Time of the additional registration statement pursuant to the General Instructions of the Form on which it is filed and including all information (if any) deemed to be a part of the initial registration statement as of its Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter referred to as the "Initial Registration Statement". The additional registration statement, as amended at its Effective Time, including 2 3 the contents of the initial registration statement incorporated by reference therein and including all information (if any) deemed to be part of the additional registration statement as of its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as the "Additional Registration Statement". The Initial Registration Statement and the Additional Registration Statement are herein referred to collectively as the "Registration Statements" and individually as a "Registration Statement". The form of prospectus relating to the Offered Securities, as first filed with the Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is required) as included in a Registration Statement, including all material incorporated by reference in such prospectus, is hereinafter referred to as the "Prospectus". No document has been or will be prepared or distributed in reliance on Rule 434 under the Act. (b) If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement: (i) on the Effective Date of the Initial Registration Statement, the Initial Registration Statement conformed in all respects to the requirements of the Act and the rules and regulations of the Commission ("Rules and Regulations") and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) on the Effective Date of the Additional Registration Statement (if any), each Registration Statement conformed, or will conform, in all respects to the requirements of the Act and the Rules and Regulations and did not include, or will not include, any untrue statement of a material fact and did not omit, or will not omit, to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) on the date of this Agreement, the Initial Registration Statement and, if the Effective Time of the Additional Registration Statement is prior to the execution and delivery of this Agreement, the Additional Registration Statement each conforms, and at the time of filing of the Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the Effective Date of the Additional Registration Statement in which the Prospectus is included, each Registration Statement and the Prospectus will conform, in all respects to the requirements of the Act and the Rules and Regulations, and neither of such documents includes, or will include, any untrue statement of a material fact or omits, or will omit, to state any material fact required to be stated therein or necessary to make the 3 4 statements therein not misleading. If the Effective Time of the Initial Registration Statement is subsequent to the execution and delivery of this Agreement: on the Effective Date of the Initial Registration Statement, the Initial Registration Statement and the Prospectus will conform in all respects to the requirements of the Act and the Rules and Regulations, none of such documents will include any untrue statement of a material fact or will omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and no Additional Registration Statement has been or will be filed. The two preceding sentences do not apply to statements in or omissions from a Registration Statement or the Prospectus based upon written information furnished to the Company by any Underwriter through the Representatives specifically for use or incorporation by reference therein, it being understood and agreed that the only such information is that described as such in Section 7(b). (c) All financial statements, proxy statements, schedules or reports (i) required to be filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"), or (ii) incorporated by reference into the Registration Statements ("Incorporated Documents") when filed with the Commission, or when amended, as appropriate, complied with the applicable requirements of the Exchange Act, and the applicable rules and regulations thereunder ("1934 Act Rules and Regulations"), and did not include at the time of filing or as of the time of any subsequent amendment any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (d) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Florida, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification except where the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole ("Material Adverse Effect"). (e) Each subsidiary of the Company has been duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and each subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification 4 5 except where the failure to so qualify or be in good standing would not have a Material Adverse Effect; except as set forth on Schedule B all of the issued and outstanding capital stock of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable and is owned directly or indirectly by the Company; and the capital stock of each subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects. (f) The Offered Securities have been duly authorized; when the Offered Securities have been delivered and paid for in accordance with this Agreement on each Closing Date (as defined below), such Offered Securities will have been validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus. (g) When the Offered Securities are delivered and paid for pursuant to this Agreement on each Closing date, such Offered Securities will be convertible into the Underlying Shares of the Company in accordance with their terms; the Underlying Shares initially issuable upon conversion of such Offered Securities have been duly authorized and reserved for issuance upon such conversion and, when issued upon such conversion, will be validly issued, fully paid and nonassessable; the outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and conform to the description thereof contained in the Prospectus; and no holder of any security of the Company has any preemptive rights with respect to the Offered Securities or the Underlying Shares. (h) Other than as contemplated by this Agreement or as except as disclosed in the Prospectus, there are no contracts, agreements or understandings between the Company and any person which would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder's fee or other like payment. (i) There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to a Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Act. (j) No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Offered Securities by the Company, except such as have been obtained and made under the Act, the Rules and Regulations, the 5 6 Exchange Act, the 1934 Rules and Regulations, and the by-laws of the National Association of Securities Dealers, Inc. (the "NASD") and such as may be required under state or foreign securities laws. (k) This Agreement has been duly authorized, executed and delivered by the Company and constitutes the valid and binding obligation of the Company enforceable in accordance with its terms (except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting creditors' rights generally, except that the remedies of specific performance and injunctive and other forms of equitable relief are subject to the discretion of the court before which any proceeding therefor may be brought and except with respect to the obligations of the Company regarding indemnification and contribution as provided in Section 7 below). (l) The execution, delivery and performance of this Agreement, and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof (including, without limitation, the issuance of the Underlying Securities upon conversion of the Offered Securities) will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or of any agreement or instrument to which the Company or such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject, or the charter or by-laws of the Company or any such subsidiary, which breach or violation would have a Material Adverse Effect; and the Company has full power and authority to authorize, issue and sell the Offered Securities and to consummate the transactions contemplated by this Agreement (including, without limitation, the issuance of the Underlying Securities upon conversion of the Offered Securities). (m) Except as disclosed in the Prospectus, the Company and its subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the Prospectus, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them. (n) The Company, and each of its subsidiaries, hold all licenses, certificates and permits from governmental authorities (including, without limitation, insurance licenses from the Insurance Departments of the various 6 7 states in which the subsidiaries write insurance business (the "Insurance Licenses") which are necessary to the conduct of their businesses; the Company's subsidiaries have fulfilled and performed all obligations necessary to maintain their respective Insurance Licenses except to the extent that the failure to fulfill or perform such obligations would not have a Material Adverse Effect, and no event or events have occurred which may be reasonably expected to result in the impairment, modification, termination or revocation of such Insurance Licenses except to the extent that such event would not have a Material Adverse Effect. (o) Except as disclosed in the Prospectus, there are no pending actions, suits or proceedings (including, without limitation, any proceeding to revoke or deny renewal of any Insurance License) against or affecting the Company and any of its subsidiaries or any of their respective properties that, if determined adversely to the Company and any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement (including without limitation the issuance of the Underlying Securities upon conversion of the Offered Securities), or which are otherwise material in the context of the sale of the Offered Securities and the issuance of the Underlying Securities; and no such actions, suits or proceedings (including, without limitation, any proceeding to revoke or deny renewal of any Insurance License) are threatened or, to the Company's knowledge, contemplated. (p) The financial statements included or incorporated by reference in each Registration Statement and the Prospectus present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the schedules included or incorporated by reference in each Registration Statement present fairly the information required to be stated therein. (q) Except as disclosed in the Prospectus, since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in, incorporated by reference in or contemplated by the Prospectus, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its respective common or preferred securities or capital stock. 7 8 (r) The Company is not, and after giving effect to the offering and sale of the Offered Securities and the issuance of the Underlying Securities upon conversion of the offered Securities and the application of the proceeds thereof as described in the Prospectus, will not be an "investment company" as defined in the Investment Company Act of 1940. (s) Neither the Company nor any of its respective affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes and the Company agrees to comply with such Section if prior to the completion of the distribution of the Offered Securities it commences doing such business. (t) The statutory financial statements of each of the Company's insurance subsidiaries, from which certain ratios and other statistical data contained or incorporated by reference in the Registration Statement have been derived, have for each relevant period been prepared in accordance with accounting practices prescribed or permitted by the National Association of Insurance Commissioners ("NAIC"), and with respect to each insurance subsidiary, the appropriate Insurance Department of the state of domicile of such subsidiary; and such accounting practices have been applied on a consistent basis throughout the periods involved, except as disclosed therein. (u) The Offered Securities will have been approved for listing on the Nasdaq Stock Market's National Market ("Nasdaq National Market") subject to notice of issuance and registered under the Exchange Act in accordance with the 1934 Rules and Regulations prior to or concurrently with the effectiveness of the Registration Statement; the Underlying Securities have been approved for listing on the Nasdaq National Market prior to or concurrently with this the effectiveness of this Registration Statement. 3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company, at a purchase price of $48.62 per share plus accumulated dividends, if any, from July 29, 1996 to the First Closing Date (as hereinafter defined) the respective numbers of shares of Firm Securities set forth opposite the names of the Underwriters in Schedule A hereto. The Company will deliver the Firm Securities to the Representatives for the accounts of the Underwriters, against payment of the purchase price in funds available on the same day by wire transfer to the account of the Company at a bank acceptable to CS First Boston Corporation ("CS First Boston") or by official Federal Reserve Bank check or checks drawn to the order of the Company at the office of Dewey Ballantine, at 10 A.M., New York time, on July 29, 1996 or at such other 8 9 time not later than seven full business days thereafter as CS First Boston and the Company determine, such time being herein referred to as the "First Closing Date". For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First Closing Date (if later than the otherwise applicable settlement date) shall be the settlement date for payment of funds and delivery of securities for all the Offered Securities sold pursuant to the Offering. The certificates for the Firm Securities so to be delivered will be in definitive form, in such denominations and registered in such names as CS First Boston requests and will be made available for checking and packaging at the office of CS First Boston at least 24 hours prior to the First Closing Date. In addition, upon written notice from CS First Boston given to the Company from time to time not more than 30 days subsequent to the date of the Prospectus, the Underwriters may purchase all or less than all of the Optional Securities at the purchase price per Security (including any accumulated dividends thereon to the related Option Closing Date) to be paid for the Firm Securities. The Company agrees to sell to the Underwriters the number of shares of Optional Securities specified in such notice and the Underwriters agree, severally and not jointly, to purchase such Optional Securities. Such Optional Securities shall be purchased for the account of each Underwriter in the same proportion as the number of shares of Firm Securities set forth opposite such Underwriter's name bears to the total number of shares of Firm Securities (subject to adjustment by CS First Boston to eliminate fractions) and may be purchased by the Underwriters only for the purpose of covering over-allotments made in connection with the sale of the Firm Securities. No Optional Securities shall be sold or delivered unless the Firm Securities previously have been, or simultaneously are, sold and delivered. The right to purchase the Optional Securities or any portion thereof may be exercised from time to time and to the extent not previously exercised may be surrendered and terminated at any time upon notice by CS First Boston to the Company. Each time for the delivery of and payment for the Optional Securities, being herein referred to as an "Optional Closing Date," which may be the First Closing Date (the First Closing Date and each Optional Closing Date, if any, being sometimes referred to as a "Closing Date"), shall be determined by CS First Boston but shall be not later than five full business days after written notice of election to purchase Optional Securities is given. The Company will deliver the Optional Securities being purchased on each Optional Closing Date to the Representatives for the accounts of the several Underwriters, against payment of the purchase price therefor in funds available on the same day by wire transfer to the account of the Company at a bank acceptable to CS First Boston or by official Federal Reserve Bank check or checks drawn to the order of the Company, at the office of CS First Boston. The certificates for the Optional Securities being purchased on each Optional Closing Date will be in definitive form, in such denominations and registered in such names as CS First Boston requests upon reasonable notice prior to such Optional Closing 9 10 Date and will be made available for checking and packaging at the office of CS First Boston at a reasonable time in advance of such Optional Closing Date. 4. Offering by Underwriters. It is understood that the several Underwriters propose to offer the Offered Securities for sale to the public as set forth in the Prospectus. 5. Certain Agreements of the Company. The Company agree with the several Underwriters that: (a) If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to and in accordance with subparagraph (1) or (2) (as consented to by CS First Boston) of Rule 424(b) not later than the second business day following the execution and delivery of this Agreement or, if applicable and if consented to by CS First Boston, subparagraph (4) or (5) of Rule 424(b). The Company will advise CS First Boston promptly of any such filing pursuant to Rule 424(b). If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement and an additional registration statement is necessary to register a portion of the Offered Securities under the Act but the Effective Time thereof has not occurred as of such execution and delivery, the Company will file the additional registration statement or, if filed, will file a post-effective amendment thereto with the Commission pursuant to and in accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on the date of this Agreement or, if earlier, on or prior to the time the Prospectus is printed and distributed to any Underwriter, or will make such filing at such later date as shall have been consented to by CS First Boston. (b) The Company will advise CS First Boston promptly of any proposal to amend or supplement the initial or any additional registration statement as filed or the related prospectus or the Initial Registration Statement, the Additional Registration Statement (if any) or the Prospectus and will not effect such amendment or supplementation without CS First Boston's consent; and the Company will also advise CS First Boston promptly of the effectiveness of each Registration Statement (if its Effective Time is subsequent to the execution and delivery of this Agreement) and of any amendment or supplementation of a Registration Statement or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of a Registration Statement and will use its best reasonable efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. 10 11 (c) If, at any time when a prospectus relating to the Offered Securities is required to be delivered under the Act in connection with the sales by any Underwriter or dealer, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act, the Company will promptly notify CS First Boston of such event and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance with the Act. Neither CS First Boston's consent to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. (d) As soon as practicable, but not later than the Availability Date (as defined below), the Company will make generally available to its securityholders an earnings statement covering a period of at least 12 months beginning after the Effective Date of the Initial Registration Statement (or, if later, the Effective Date of the Additional Registration Statement) which will satisfy the provisions of Section 11(a) of the Act. For the purpose of the preceding sentence, "Availability Date" means the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes such Effective Date, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter. (e) The Company will furnish to the Representatives hard copies of each Registration Statement (four of which will be signed and will include all exhibits), copies of each EDGAR filing of each Registration Statement (and confirmations for each EDGAR filing of each Registration Statement), each related preliminary prospectus, and, so long as delivery of a prospectus relating to the Offered Securities is required to be delivered under the Act in connection with sales by any Underwriter or dealer, the Prospectus and all amendments and supplements to such documents in each case in such quantities as CS First Boston reasonably requests. The Prospectus shall be so furnished on or prior to 3:00 P.M., New York time, on the business day following the later of the execution and delivery of this Agreement or the Effective Time of the Initial Registration Statement. All other documents shall be so furnished as soon as available. The Company will pay the expenses of printing and distributing to the Underwriters all such documents. (f) The Company will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment 11 12 under the laws of such jurisdiction as CS First Boston designates and will continue such qualifications in effect so long as required for the distribution. (g) During the period of ten years hereafter, the Company will furnish to the Representatives, and, upon request, to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to the Representatives (i) as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to stockholders, and (ii) from time to time, such other information concerning the Company as CS First Boston may reasonably request. (h) The Company will pay all expenses incident to the performance of its obligations under this Agreement and will reimburse the Underwriters (if and to the extent incurred by them) for any filing fees and other expenses (including fees and disbursements of counsel) incurred by them in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions as CS First Boston designates and the printing of memoranda relating thereto, for the filing fee of the NASD relating to the Offered Securities, for any travel expenses of the Company officers and employees and any other expenses of the Company in connection with attending or hosting meetings with prospective purchasers of the Offered Securities and for expenses incurred in distributing preliminary prospectuses and the Prospectus (including any amendments and supplements thereto) to the Underwriters. (i) The Company will notify CS First Boston of any material adverse change affecting any of its representations, warranties, agreements and indemnities herein at any time prior to payment to the Company on the First Closing Date or any Optional Closing Date. (j) The Company will use the net proceeds received by it from the sale of the Offered Securities, in the manner specified in the Prospectus under the caption "Use of Proceeds." (k) The Company will use its best efforts to list the Offered Securities and the Underlying Securities on the Nasdaq National Market subject to notice of issuance and to register the Offered Securities under the Exchange Act in accordance with the 1934 Rules and Regulations. (l) During the period commencing on the date hereof and continuing for 90 days, without CS First Boston's written permission, the Company will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to, any additional shares of its Securities or Common Stock or 12 13 securities convertible into or exchangeable or exercisable for any shares of its Securities or Common Stock, or publicly disclose of its intention to make any such offer, sale, pledge, disposal or filing. (m) The Company will cause each of its directors and certain executive officers listed on Schedule C hereto to agree that during the period commencing on the date hereof and continuing for 90 days, without CS First Boston's written permission, such directors and executive officers will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to, any additional shares of its Securities or Common Stock or securities convertible into or exchangeable or exercisable for any shares of its Securities or Common Stock, or publicly disclose of its intention to make any such offer, sale, pledge, disposal or filing. 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Firm Securities on the First Closing Date and the Optional Securities to be purchased on each Optional Closing Date will be subject to the accuracy of the representations and warranties on the part of the Company herein to the accuracy of the statements of the Company's officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent: (a) The Representatives shall have received a letter, dated the date of delivery thereof (which, if the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement, shall be on or prior to the date of this Agreement or, if the Effective Time of the Initial Registration Statement is subsequent to the execution and delivery of this Agreement, shall be prior to the filing of the amendment or post-effective amendment to the registration statement to be filed shortly prior to such Effective Time), of Price Waterhouse LLP confirming that they are independent public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder and stating to the effect that: (i) in their opinion the financial statements and schedules audited by them and included or incorporated by reference in the Registration Statements comply as to form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations; (ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing 13 14 Standards No. 71, Interim Financial Information, in the unaudited financial statements included or incorporated by reference in the Registration Statements; (iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that: (A) the unaudited financial statements included or incorporated by reference in the Registration Statements do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations or any material modifications should be made to such unaudited financial statements for them to be in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements in the Prospectus; (B) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified dated not more than five days prior to the date of this Agreement, there was any change in the capital stock (other than as a result of the exercise of employee stock options in the ordinary course of business) or any increase in short-term indebtedness or long-term debt of the Company and its consolidated subsidiaries, or, at the date of the latest available balance sheet read by such accountants, there was any decrease in total assets or stockholder's equity as compared with amounts shown on the latest balance sheet included or incorporated by reference in the Prospectus; or (C) for the period from the closing date of the latest income statement included or incorporated by reference in the Prospectus to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period for the previous year, in the total or per share amounts of consolidated income before extraordinary items, gross collected premiums, net income or in the ratio of earnings to fixed charges and preferred stock dividends combined; 14 15 except in all cases set forth in clauses (B) and (C) above for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (iv) they have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained or incorporated by reference in the Registration Statements (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company's accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter; and (v) they have examined the statutory financial statements of each of the Company's insurance subsidiaries listed on Schedule B hereto, from which certain ratios and other statistical data contained or incorporated by reference in the Registration Statement have been derived, and in their opinion such statements, with respect to each such insurance subsidiary, have for each relevant period been prepared in accordance with accounting practices prescribed or permitted by the appropriate Insurance Department of the state of domicile of such subsidiary, except as disclosed therein. For purposes of this subsection, (i) if the Effective Time of the Initial Registration Statement is subsequent to the execution and delivery of this Agreement, "Registration Statements" shall mean the initial registration statement as proposed to be amended by the amendment or post-effective amendment to be filed shortly prior to its Effective Time, (ii) if the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement but the Effective Time of the Additional Registration Statement is subsequent to such execution and delivery, "Registration Statements" shall mean the Initial Registration Statement and the additional registration statement as proposed to be filed or as proposed to be amended by the post-effective amendment to be filed shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the prospectus included in the Registration Statements. All financial statements and schedules included in material incorporated by reference into the Prospectus shall be deemed included in the Registration Statements for purposes of this subsection. (b) If the Effective Time of the Initial Registration Statement is not prior to the execution and delivery of this Agreement, such Effective Time 15 16 shall have occurred not later than 10:00 P.M., New York time, on the date of this Agreement or such later date as shall have been consented to by CS First Boston. If the Effective Time of the Additional Registration Statement (if any) is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than 10:00 P.M., New York time, on the date of this Agreement or, if earlier, at the time the Prospectus is printed and distributed to any Underwriter, or shall have occurred at such later date as shall have been consented to by CS First Boston. If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement, the Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing Date, no stop order suspending the effectiveness of a Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company or the Representatives, shall be contemplated by the Commission. (c) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company or its subsidiaries taken as a whole which, in the judgment of a majority in interest of the Underwriters including the Representatives, is material and adverse and makes it impractical or inadvisable to proceed with completion of the public offering or the sale of and payment for the Offered Securities; (ii) any downgrading in the rating of any debt securities or preferred securities of the Company by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities or preferred securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating) or any downgrading of the financial and operating performance of the Company's insurance subsidiaries by A.M. Best Company; (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange or the Nasdaq National Market, or any setting of minimum prices for trading on such exchange or system, or any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by U.S. Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters including the Representatives the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the public offering or the sale of and payment for the Offered Securities. 16 17 (d) The Representatives shall have received an opinion, dated such Closing Date, of Jorden Burt Berenson & Johnson LLP, counsel for the Company to the effect that: (i) Each of the Company and the subsidiaries listed on Schedule D hereto (the "Material Subsidiaries") has been duly incorporated and is an existing corporation in good standing under the laws of the state of its incorporation, with power and authority (corporate and otherwise) to own its properties and conduct its business as described in the Prospectus; and each of the Company and its Material Subsidiaries is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification except where the failure to be so qualified would not individually or in the aggregate have a Material Adverse Effect; all of issued and outstanding capital stock of each Material Subsidiary of the Company has been duly authorized and validly issued, and is fully paid and nonassessable; and except as set forth in Schedule D all the capital stock of the Material Subsidiaries is owned by the Company (directly or through Material Subsidiaries); and the capital stock of each Material Subsidiary owned by the Company, directly or through Material Subsidiaries, is owned free from liens, encumbrances and defects; (ii) The Offered Securities when issued and delivered on such Closing Date have been duly authorized for issuance and sale pursuant to this Agreement, and when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth in this Agreement will be validly issued, are fully paid and nonaccessable and conform to the description thereof contained in the Prospectus; (iii) The Offered Securities when issued and delivered on such Closing Date are convertible into the Underlying Securities of the Company in accordance with their terms; the Underlying Securities initially issuable upon conversion of such Offered Securities have been duly authorized and reserved for issuance upon such conversion and, when issued upon such conversion, will be validly issued, fully paid and nonassessable; the outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and conform to the description thereof contained in the Prospectus; and no holder of any security of the Company has any preemptive rights with respect to the Securities or the Underlying Securities; (iv) To such counsel's knowledge, there are no contracts, agreements or understandings between the Company and any person 17 18 granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Act; (v) No consent, approval, authorization or order of, or filing with, any governmental agency or body or, to such counsel's knowledge, any court is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance or sale of the Offered Securities by the Company, except such as have been obtained and made under the Act, the Rules and Regulations, the Exchange Act, the 1934 Act Rule and Regulations, or the bylwas of the NASD and such as may be required under state (including Puerto Rico) securities laws; (vi) The execution, delivery and performance of this Agreement and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof (including, without limitation, the issuance of the Underlying Securities upon conversion of the Offered Securities) will not result in a breach or violation of any of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or, to the best of the knowledge of such counsel, order of any governmental agency or body or any court having jurisdiction over the Company or any Material Subsidiary of the Company or any of their properties, or any agreement or instrument to which the Company or any such Material Subsidiary is a party or by which the Company or any such Material Subsidiary is bound or to which any of the properties of the Company or any such Material Subsidiary is subject, or the charter or by-laws of the Company or any such Material Subsidiary which breach of, violation of or default under would have a Material Adverse Effect and the Company has full power and authority to authorize, issue and sell the Offered Securities as contemplated by this Agreement (including, without limitation, the issuance of the Underlying Securities upon conversion of the offered Securities); (vii) The Initial Registration Statement was declared effective under the Act as of the date and time specified in such opinion, the Additional Registration Statement (if any) was filed and became effective under the Act as of the date and time (if determinable) specified in such opinion, the Prospectus either was filed with the Commission pursuant to the subparagraph of Rule 424(b) specified in such opinion on the date specified therein or was included in the Initial 18 19 Registration Statement or the Additional Registration Statement (as the case may be), and, to the knowledge of such counsel, no stop order suspending the effectiveness of a Registration Statement or any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and each Registration Statement and the Prospectus, and each amendment or supplement thereto, as of their respective effective or issue dates, complied as to form in all material respects with the requirements of the Act and the Rules and Regulations; such counsel has no reason to believe that any part of a Registration Statement or any amendment thereto, as of its effective date or as of such Closing Date, contained or incorporated by reference any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto, as of its issue date or as of such Closing Date, contained or incorporated by reference any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; the descriptions in the Registration Statements and Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be shown; and such counsel does not know of any legal or governmental proceedings required to be described in a Registration Statement or the Prospectus which are not described as required or any contracts or documents of a character required to be described in a Registration Statement or the Prospectus or to be filed as exhibits to a Registration Statement which are not described and filed as required; it being understood that such counsel need express no opinion as to the financial statements or other financial data contained or incorporated by reference in the Registration Statement or the Prospectus; (viii) The Incorporated Documents when filed with the Commission, or when amended, as appropriate, complied with the applicable requirements of the 1934 Act Rules and Regulations, and such counsel had no reason to believe that the Incorporated Documents included at the time of filing or as of the time of any subsequent amendment any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein in light of the circumstances under which they were made, not misleading; (ix) This Agreement has been duly authorized, executed and delivered by the Company and constitutes the valid and binding obligations of the Company enforceable in accordance with its terms 19 20 (except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting creditors' rights generally, except that the remedies of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and the discretion of the court before which any proceeding therefor may be brought, and except that no opinion need be expressed with respect to the obligations of the Company regarding indemnification and contribution as provided in Section 7 below); (x) The Company and each of the Material Subsidiaries hold all licenses, certificates and permits from all governmental authorities (including, without limitation, Insurance Licenses) which are necessary to the conduct of their respective businesses except to the extent that the failure to hold any such licenses, certificates and permits from a governmental authority (including, without limitation, Insurance Licenses) would not have a Material Adverse Effect; to such counsel's knowledge, the Material Subsidiaries have fulfilled and performed all obligations necessary to maintain their respective Insurance Licenses, and, to such counsel's knowledge, no event or events have occurred which may be reasonably expected to result in the material impairment, modification, termination or revocation of such Insurance Licenses; (xi) The statements in the Prospectus under the captions "Description of Capital Stock-Convertible Preferred Stock" insofar as they purport to constitute a summary of the terms of the securities therein described, and under the caption "Underwriting" (other than statements based on information furnished by an Underwriter expressly for use or incorporation by reference therein), insofar as they purport to constitute summaries of the terms of the documents referred to therein, and the statements in the Prospectus under "Business-Government Regulation" insofar as they purport to constitute descriptions of laws, rules, regulations or NAIC model laws, fairly summarize the terms of such documents or laws, rules, regulations or NAIC model laws as the case may be; (xii) All statements contained in the Registration Statement under the heading "Certain Federal Income Tax Consequences" are true and correct in all material respects; (xiii) The Company is not, and after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, will not be an "investment company" or an entity "controlled" by an "investment company" required to be registered under the Investment Company Act of 1940; and 20 21 (xiv) The Offered Securities have been approved for listing on the Nasdaq National Market subject to notice of issuance and registered under the Exchange Act; the Underlying Securities have been approved for listing on the Nasdaq National Market. In rendering the foregoing opinions, such counsel may rely as to matters of fact upon certificates of the officers of the Company and its subsidiaries, as to matters involving good standing, authorization to do business and other matters within their knowledge, upon certificates of public officials, and, as to matters involving the application of laws of any jurisdiction other than the State of Florida or the United States, upon opinions of local counsel shall state that they believe both you and they are justified in relying upon such certificates and opinions. (e) The Representatives shall have received from Dewey Ballantine, counsel for the Underwriters, such opinion or opinions, dated such Closing Date, with respect to the incorporation of the Company, the validity of the Offered Securities delivered on such Closing Date, the Registration Statements, the Prospectus and other related matters as the Representatives may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In rendering such opinion, Dewey Ballantine may rely as matters governed the laws of the State of Florida upon the opinions of Jorden Burt Berenson & Johnson LLP referred to above. (f) The Representatives shall have received a certificate, dated such Closing Date, of the President or any Vice-President and a principal financial or accounting officer of the Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that: the representations and warranties of the Company in this Agreement are true and correct; the Company complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date, and that, to their knowledge, no stop order suspending the effectiveness of any Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission; the Additional Registration Statement (if any) satisfying the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including payment of the applicable filing fee in accordance with Rule 111(a) or (b) under the Act, prior to the time the Prospectus was printed and distributed to any Underwriter; and, subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in or contemplated by the Prospectus or as described in such certificate. 21 22 (g) The Representatives shall have received a letter, dated such Closing Date, from Price Waterhouse LLP which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than five days prior to such Closing Date for the purposes of this subsection. (j) The Offered Securities to be sold by the Company at the Closing Date shall have been duly listed on the Nasdaq National Market subject to notice of issuance and shall have been registered under the Exchange Act in accordance with the 1934 Rules and Regulations; the Underlying Securities at the Closing Date shall have been approved for listing on the Nasdaq National Market. (k) The Representatives shall have received the lock-up letters of the Company and the directors and executive officers as contemplated by Sections 5(l) and 5(m), respectively. The Company will furnish the Representatives with such conformed copies of such opinions, certificates, letters and documents as the Representatives may reasonably request. CS First Boston may in its sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder, whether in respect of an Optional Closing Date or otherwise. 7. Indemnification and Contribution. (a) The Company will, severally and jointly, indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in any Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use or incorporation by reference therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in subsection (b) below. 22 23 Insofar as the foregoing indemnity agreement, or the representations and warranties contained in Section 2(b), may permit indemnification for liabilities under the Act of any person who is an Underwriter or a partner or controlling person of an Underwriter within the meaning of Section 15 of the Act and who, at the date of this Agreement, is a director, officer or controlling person of the Company, the Company has been advised that in the opinion of the Commission such provisions may contravene Federal public policy as expressed in the Act and may therefore be unenforceable. In the event that a claim for indemnification under such agreement or such representations and warranties for any such liabilities (except insofar as such agreement provides for the payment by the Company of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such a person, the Company will submit to a court of appropriate jurisdiction (unless in the opinion of counsel for the Company the matter has already been settled by controlling precedent) the question of whether or not indemnification by it for such liabilities is against public policy as expressed in the Act and therefore unenforceable, and the Company will be governed by the final adjudication of such issue. (b) Each Underwriter will severally and not jointly indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in any Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives specifically for use or incorporation by reference therein, and will reimburse any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Underwriter consists of (i) the following information in the Prospectus furnished on behalf of each Underwriter: the last paragraph at the bottom of the cover page concerning the terms of the offering by the Underwriters, the legend concerning over-allotments and stabilizing on the inside front cover page, and the concession and reallowance figures appearing in the paragraph under the caption "Underwriting"; and (ii) the information in the Prospectus furnished on behalf of Furman Selz LLC in the penultimate paragraph appearing under the caption "Underwriting." (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect 23 24 thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election to or assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with 24 25 investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Company under this Section shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions to each officer of the Company, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company, to each officer of the Company who has signed a Registration Statement and to each person, if any, who controls the Company within the meaning of the Act. 8. Default of Underwriters. If any Underwriter or Underwriters default in their obligations to purchase Offered Securities hereunder on either the First or any Optional Closing Date and the aggregate number of shares of Offered Securities that such defaulting Underwriter or Underwriters agreed, but failed, to purchase does not exceed 10% of the total number of Offered Securities that the Underwriters are obligated to purchase on such Closing Date, CS First Boston may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate number of shares of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total number of shares of Offered Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to CS First Boston and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 9 (provided that if such default occurs with respect to Optional Securities after the First Closing Date, this Agreement will not terminate as to the Firm Securities or any Optional Securities purchased prior to such termination). As used in this Agreement, the term 25 26 "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default. 9. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company or and its officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 8 or if for any reason the purchase of the Offered Securities by the Underwriters is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 and the respective obligations of the Company and the Underwriters pursuant to Section 7 shall remain in effect, and if any Offered Securities have been purchased hereunder, the representations and warranties in Section 2 and all obligations under Section 5 shall also remain in effect. If the purchase of the Offered Securities by the Underwriters is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 8 or the occurrence of any event specified in clause (iii), (iv) or (v) of Section 6(c), the Company will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities. 10. Notices. All communications hereunder will be in writing and, if sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed to the Representatives, c/o CS First Boston Corporation, 55 E. 52nd Street, Park Avenue Plaza, New York, N.Y. 10055, Attention: Investment Banking Department--Transactions Advisory Group, or, if sent to the Company will be mailed, delivered or telegraphed and confirmed to it at American Bankers Insurance Group, Inc., 11222 Quail Roost Drive, Miami, FL 33157-6596, Attention: Leonardo Garcia and with a copy to Jorden Burt Berenson & Johnson LLP, 777 Brickwell Avenue, Suite 500, Miami, Florida 33131-2803, Attention: Josephine Cicchetti; provided, however, that any notice to an Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Underwriter. 11. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder. 12. Representation of Underwriters. The Representatives will act for the several Underwriters in connection with this financing, and any action under this Agreement taken by the Representative jointly or by CS First Boston will be binding upon all the Underwriters. 26 27 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 14. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws. The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 27 28 If the foregoing is in accordance with the Representatives' understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms. Very truly yours, AMERICAN BANKERS INSURANCE GROUP, INC. By /s/ Floyd Denison --------------------------------- Name: Floyd Denison Title: Executive Vice President The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. CS FIRST BOSTON CORPORATION DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION FURMAN SELZ LLC MCDONALD & COMPANY SECURITIES, INC. By CS FIRST BOSTON CORPORATION By s/ Richard G. Spiro ----------------------- Name: Richard G. Spiro Title: Director 28 29 SCHEDULE A
Underwriter Number of Firm Securities - ----------- ------------------------- CS First Boston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 Furman Selz LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 McDonald & Company Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 Advest, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 The Chicago Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Deutsche Morgan Grenfell/C.J. Lawrence Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 The Robinson-Humphrey Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Total 2,000,000 ---------
29 30 SCHEDULE B OWNERSHIP CHART OF CAPITAL STOCK OF COMPANY'S SUBSIDIARIES 30 31 EXHIBIT B AMERICAN BANKERS INSURANCE GROUP, INC ORGANIZATIONAL STRUCTURE AMERICAN BANKERS INSURANCE GROUP, INC. - - ABIG Service de Mexico, S.A.(1) - American Bankers Management Company, Inc. - - AB Warranty Company - Consumer Asset Network Association, Inc. - - AB Warranty Company of Florida - American Bank Seguros de Vida, S.A. (5) - - American Bankers Capital, Inc. - American Reliable Insurance Comoany - - American Bankers Compania de Seguros, S.A. (2) - American Summit General Agency, Inc. - - American Bankers Financial Services - Caravanner Insurance Agency - ABFS Insurance Agency, Inc. - Associated Insurance Agency - Grand General Insurance Agency - Bankers Atlantic Reinsurance Company - - American Bankers Insurance Company of Florida - Bankers American Life Assurance Company - American Bankers General Agency, Inc. - Bankers Insurance Company, Ltd. - Caydeaux Group, Ltd (54%) - Bankers Insurance Group Mgmt. (IOM) Ltd. - Caydeaux Life Assurance Company, Ltd. (54%) - Bankers Insurance Service Company, Ltd. - Caydeaux Insurance Company, Ltd. (54%) - Roadgard Motor Club, Inc. (Canada) - Caribbean American Property Insurance Co. (4) - - American Bankers Life Assurance Company of Florida - Caribbean American Insurance Agency Company - Caribbean American Life Assurance Company - Federal Warranty Service Corporation - Condeaux Life Insurance Company (79%) - Federal Warranty Service Corporation (Canada) - - American Bankers Sales Corporation, Inc. - - Financial Exchange, Inc. - Attorney-in-Fact for Financial Insurance Exchange - - Green Streak Incorporated - - Guardian Investment Services, Inc. - - H&D Graphics, Inc. - - National Insurance Agency - - Roadguard Motor Club, Inc. - - Sureway, Inc. - Guardian Travel,Inc. - - Voyager Group, Inc. - Voyager American Insurance Company, Ltd. - Voyager Indemnity Insurance Company - Voyager Service Programs, Inc. - - Voyager Life and Health Insurance Company - - Voyager Life Insurance Company - Voyager Property & Casualty Insurance Company - - Voyager Service Warranties, Inc.
32 (1) ABIG Servicios de Mexico, S.A. de C.V. 5,000 shares outstanding ABIG - 4,999 shares Guardian Investment Services, Inc.* - 1 share (2) American Bankers Compania de Seguros, S.A. de C.V. 335,250 shares outstanding ABIG - 335,249 Guardian Investment Services, Inc.* - 1 share (3) Caribbean American Life Assurance Company 160,000 shares outstanding ABLAC - 159,992 shares R. Kirk Landon - 1 share Frank Minton - 1 share Angela Wayne - 1 share Alberto Baco - 1 share Yvonne Shepard - 1 share Alvaro Calderon - 1 share Alexander Odishelidze - 1 share Juan Sarro - 1 share (4) Carribean American Property Insurance Company 200,000 shares outstanding ABIG - 199,992 shares R. Kirk Landon - 1 share Frank Minton - 1 share Angela Wayne - 1 share Alberto Baco - 1 share Yvonne Shepard - 1 share Alvaro Calderon, Jr. - 1 share Alexander Odishelidze - 1 share Juan Sarro - 1 share 31 33 (5) American Bankers Sequros de Vida, S.A. 30,000 shares outstanding ABIG - 29,990 Guardian Investment Services, Inc. - 10 shares * Guardian Investment Services, Inc. is a wholly owned subsidiary of ABIG. 32 34 SCHEDULE C DIRECTORS AND EXECUTIVE OFFICERS TO SIGN LOCK-UPS William H. Allen, Jr. Eugene E. Becker Nicholas A. Buoniconti Armando M. Codina Floyd G. Denison Peter J. Dolora Jay R. Fuchs Leonardo F. Garcia Gerald N. Gaston Arthur W. Heggen Jason J. Israel Bernard Janis Daryl L. Jones James F. Jorden Jack F. Kemp John P. Laborde R. Kirk Landon Eugene M. Matalene, Jr. Malcolm G. MacNeill Albert Nahmad Michael P. Ray Nicholas J. St. George Robert C. Strauss Stephen T. Williams George E. Williamson III 35 SCHEDULE D COMPANY'S MATERIAL SUBSIDIARIES
Percent of State of Voting Securities Material Subsidiaries Incorporation Owned --------------------- ------------- ----- American Bankers Insurance Company of Florida Florida 100% American Bankers Life Assurance Company of Florida 100% Florida American Reliable Insurance Company Arizona 100% Bankers American Life Assurance Company New York 100% Caribbean American Life Assurance Company Puerto Rico (1) 100% Caribbean American Property Insurance Company Puerto Rico (2) 100% Voyager Group, Inc. Florida 100% Voyager Life and Health Insurance Company Georgia 100% Voyager Life Insurance Company Georgia 100%
- --------------------------- (1) Of the 160,000 issued and outstanding shares of common stock of Caribbean American Life Assurance Company ("CALAC"), 159,992 shares of common stock are owned, directly or through its subsidiaries, by the Company; the remaining 8 shares are held by directors of CALAC. (2) Of the 200,000 issued and outstanding shares of common stock of Caribbean American Property Insurance Company ("CAPIC"), 199,992 shares of common stock are owned, directly or through its subsidiaries, by the Company; the remaining 8 shares are held by directors of CAPIC. EX-11 4 COMPUTATION OF EARNINGS PER SHARE 1 Item 6 (a) Exhibits Exhibit 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE (in thousands except per common share data)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 ----------------------------------------------------- PRIMARY: 1996 1995 1996 1995 ---- ---- ---- ---- Weighted average shares outstanding 20,972 20,786 20,949 20,758 ======= ======= ======= ======= Net Income $25,060 $16,048 $45,696 $30,919 ======= ======= ======= ======= Net Income - per share $ 1.19 $ .77 $ 2.18 $ 1.49 ======= ======= ======= ======= FULLY DILUTED: Weighted average of shares outstanding 20,972 20,786 20,949 20,758 Assumed conversion of common stock equivalents 75 64 79 80 ------- ------- ------- ------- Total 21,047 20,850 21,028 20,838 ======= ======= ======= ======= Net income $25,060 $16,048 $45,696 $30,919 Add convertible debenture interest, net of federal 61 7 123 130 income tax ------- ------- ------- ------- Total $25,121 $16,055 $45,819 $31,049 ======= ======= ======= ======= Net income - per share $ 1.19 $ .77 $ 2.18 $ 1.49 ======= ======= ======= =======
ITEM 6 (b) REPORTS ON FORM 8-K None. 17 EX-27 5 FINANCIAL DATA SCHEDULE
7 THIS SUMMARY CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE FINANCIAL STATEMENTS OF AMERICAN BANKERS FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIIFED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 0 728,708 818,093 100,487 10,754 0 1,870,050 16,830 122,678 351,111 3,306,499 283,359 1,284,509 447,283 7,146 336,066 0 0 20,459 523,096 3,306,499 688,631 56,204 6,021 10,829 279,517 0 0 66,142 20,446 45,696 0 0 0 45,696 2.18 2.18 0 0 0 0 0 0 0
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