EXHIBIT 10.1
SECOND AMENDMENT
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SECOND AMENDMENT AND WAIVER, dated as of March 13, 1997 (this "Amendment"),
to the Credit Agreement, dated as of December 1, 1995, among LASALLE RE HOLDINGS
LIMITED, a Bermuda company (the "Borrower"), the several banks and other
financial institutions from time to time parties to this Agreement
(collectively, the "Lenders"; individually, a "Lender") and THE CHASE MANHATTAN
BANK (formerly known as CHEMICAL BANK), a New York banking corporation, as
administrative agent for the Lenders hereunder.
WITNESSETH:
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WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make,
and have made, certain loans and other extensions of credit to the Borrower;
and
WHEREAS, the Borrower has requested, and, upon this Amendment becoming
effective, the Required Lenders have agreed, that certain provisions of the
Credit Agreement be amended in the manner provided for in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
II. Amendments to Credit Agreement.
1. Amendment to Subsection 1.1. (a) The definition of "Statutory
Capital" set forth in Subsection 1.1 of Credit Agreement is hereby amended by
deleting that definition in its entirety and substituting therefor the
following:
"Statutory Capital": at any date of determination, (i)(1) the
amount set forth on line 3 of the Statutory Statement of Capital and
Surplus in the Annual Return of LaSalle Re (or, if such statement
shall be modified, the equivalent item on any applicable successor
form) or (2) the amount identified as "Statutory Capital" on the
Quarterly Certificate of LaSalle Re, whichever was most recently
delivered to the Administrative Agent and the Lenders pursuant to
subsection 5.1, (ii) plus, to the extent it is excluded or deducted in
the determination of the amount in clause (i) hereof, the amount of
any preferred stock of LaSalle Re (including the Preferred Stock and
the LaSalle Re Series A Preferred Shares) and (iii) less an amount
equal to the outstanding Loans.
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(b) The definition of "Tangible Net Worth" set forth in subsection 1.1
of Credit Agreement is hereby amended by adding the following phrase immediately
before the period at the end of such definition:
; provided that with respect to the Borrower, Tangible Net Worth shall
include all items which in accordance with GAAP would be included under
minority interest on a balance sheet of the Borrower at the date of
determination
and (c) inserting the following new definitions in their appropriate
alphabetical order:
"Holdings Series A Preferred Shares": the perpetual preferred
shares issued prior to June 1, 1997 by the Borrower in an aggregate
amount not exceeding $75,000,000 on substantially the terms and
conditions set forth in Annex I-C hereto.
"LaSalle Re Series A Preferred Shares": the perpetual preferred
shares issued prior to June 1, 1997 by LaSalle Re in an aggregate
amount not exceeding $75,000,000 on substantially the terms and
conditions set forth in Annex I-D hereto.
2. Amendment to Subsection 6.1. Subsection 6.1 of the Credit Agreement is
hereby amended by (a) deleting the amount "$250,000,000" in clause (b) thereof
and substituting therefor the amount "$300,000,000" and (b) deleting the amount
"$250,000,000" in clause (c) thereof and substituting therefor the amount
"$300,000,000".
3. Amendment to Subsection 6.2. Subsection 6.2 of the Credit Agreement is
hereby amended by (a) deleting the "and" at the end of clause (iii) and (b)
inserting immediately before the period at the end of such subsection the
following new clause:
, (v) the issue of the Holdings Series A Preferred Shares in an
aggregate amount not exceeding $75,000,000, and (vi) the issue of the
LaSalle Re Series A Preferred Shares in an aggregate amount not
exceeding $75,000,000
4. Amendment to Subsection 6.7. Subsection 6.7 of the Credit Agreement is
hereby amended by (a) deleting in its entirety clause (ii) thereof and
substituting in lieu thereof the following:
(ii) (A) LaSalle Re may pay a cash dividend on its common shares
immediately prior to December 31, 1995 in an aggregate amount not to
exceed $25,000,000, (B) the Borrower may make a share repurchase of
the common shares of the Borrower immediately prior to December 31,
1996 in an aggregate amount not to exceed $50,000,000, and (C) the
Borrower may make a share repurchase of common shares of the Borrower
prior to January 1, 1998 in an aggregate amount equal to the sum of
(1) the proceeds of the Holdings Series A Preferred Shares and (2) to
the extent not utilized, the Restricted
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Payments previously permitted pursuant to subclause (ii)(B) of this
subsection 6.7; provided that in no case shall Restricted Payments
made pursuant to this subclause (ii)(C) exceed an aggregate amount of
$125,000,000, and
and (b) deleting in its entirety clause (iii) thereof and substituting in
lieu thereof the following:
(iii) each of the Borrower and LaSalle Re may make a Restricted
Payment on its common shares and the Borrower may make Restricted
Payments in the form of cash dividends on the Holdings Series A
Preferred Shares when (A) the Consolidated Tangible Net Worth
resulting after such Restricted Payment would be at least (1) during
calendar year 1996, $350,000,000, (2) during calendar years 1997 and
1998, $375,000,000, and (3) thereafter, $400,000,000 and (B) the
aggregate Restricted Payments, resulting after such Restricted
Payment, pursuant to this clause (iii) during any fiscal quarter of
the Borrower would not exceed 12.5% of the Consolidated Net Income of
the Borrower for the immediately preceding fiscal year; provided that
the aggregate amount of Restricted Payments made pursuant to this
clause (iii) in the third quarter of the Borrower's 1997 fiscal year
shall not exceed 13.75% of the Consolidated Net Income of the Borrower
for the immediately preceding fiscal year
5. Amendment to Subsection 6.9. Subsection 6.9 of the Credit Agreement is
hereby amended by (a) deleting the "and" at the end of clause (v) thereof and
(b) inserting the following new clause immediately preceding the period at the
end of such subsection:
and (vii) Investments by the Borrower in the LaSalle Re Series A
Preferred Shares made prior to June 1, 1997
6. Amendment to Subsection 6.13. Subsection 6.13 of the Credit Agreement
is hereby amended by deleting that subsection in its entirety and substituting
in lieu thereof the following:
6.13 Limitation of Issuances of Capital Stock. Issue or sell any
shares of LaSalle Re's Capital Stock (other than the Eligible Stock)
unless such Capital Stock is subordinate to the Eligible Stock in
terms of dividends and liquidation preference and is otherwise on
terms and conditions satisfactory in all respects to the Required
Lenders; except that LaSalle Re may issue and sell to the Borrower the
LaSalle Re Series A Preferred Shares.
7. Amendment to Annexes: Annexes I-C and I-D are hereby added to the
Credit Agreement in the forms thereof set forth on Exhibits A and B,
respectively, hereto.
III. Conditions to Effectiveness. This Amendment shall become effective on
the date (the "Amendment Effective Date") on which the following condition
precedent has been satisfied or waived:
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1. The Borrower, the Agent and the Required Lenders shall have executed
and delivered this Amendment to the Agent.
IV. General.
1. Representations and Warranties. To induce the Agent and the Lenders
parties hereto to enter into this Amendment, the Borrower hereby represents and
warrants to the Agent and all of the Lenders as of the Amendment Effective Date
that:
a. Financial Condition. (1) The audited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at September 30, 1996 and the
related audited consolidated statements of income and of cash flows for the
fiscal year ended on such date, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended.
(2) The unaudited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at December 31, 1996 and the related unaudited
consolidated statement of income and of cash flows for the three-month period
ended on each such date, certified by a Responsible Officer, copies of which
have heretofore been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the three-period then ended
(subject to normal year-end audit adjustments).
(3) All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).
(b) Corporate Power; Authorization; Enforceable Obligations.
(1) The Borrower has the corporate power and authority, and the legal
right, to make, deliver this Amendment and to perform the Loan Documents to
which it is a party, as amended by this Amendment, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Amendment and the performance of such Loan Documents, as so amended.
(2) No consent or authorization of, approval by, notice to, filing with or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the execution and delivery of this Amendment or with
the performance, validity or enforceability of the Loan Documents to which it is
a party, as amended by this Amendment.
(3) This Amendment has been duly executed and delivered on behalf of the
Borrower.
(4) This Amendment and each Loan Document to which it is a party, as
amended by this Amendment, constitutes a legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its terms,
except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.
(c) No Legal Bar. The execution, delivery and performance of this
Amendment and the performance of the Loan Documents, as amended by this
Amendment, will not violate any Requirement of Law or Contractual Obligation of
the Borrower or of any of its Subsidiaries and will not result in, or require,
the creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.
(d) Representations and Warranties. The representations and warranties
made by the Borrower in the Loan Documents are true and correct in all material
respects on and as of the Amendment Effective Date, before and after giving
effect to the effectiveness of this Amendment, as if made on and as of the
Amendment Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date.
2. Payment of Expenses. The Borrower agrees to pay or reimburse the
Agent for all of its out-of-pocket costs and reasonable expenses incurred in
connection with this Amendment, any other documents prepared in connection
herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent.
3. No Other Amendments; Confirmation. Except as expressly amended,
modified and supplemented hereby, the provisions of the Credit Agreement are and
shall remain in full force and effect.
4. Governing Law; Counterparts. (a) This Amendment and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
(b) This Amendment may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Amendment signed by all the parties shall be lodged with
the Borrower and the Agent. This Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
LASALLE RE HOLDINGS LIMITED
By: /s/ Xxxxxx Xxxx
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Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Xxxxxxx Xxx Xxxx
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Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Xxxxxx X. Xxxxxxx
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Title: First Vice President
MELLON BANK, N.A.
By: /s/ Xxxxx X. Xxxxxxxxx
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Title: Assistant Vice President
FLEET NATIONAL BANK
By: /s/ Xxxxx Xxxxxxxx
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Title: Vice President
CITIBANK, N.A.
By: /s/ Xxxxxx X. Xxxxxx
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Title: Vice President
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A PREFERRED SHARES
OF
LASALLE RE HOLDINGS LIMITED
The Series A Preferred Shares shall have the designation, preferences and
rights, and shall be subject to the restrictions, as hereinafter appearing:
Section 1. Designation and Amount. There shall be a series of Preferred
Shares of the Company which shall be designated as "Series A Preferred Shares,"
par value $1.00 per share (hereinafter called "Series A Preferred Shares"), and
the number of shares constituting such series shall be 3,000,000. Such number of
shares may be increased or decreased at any time and from time to time by
resolution of the Company's Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Shares to a
number less than that of the shares then outstanding plus the number of shares
of Series A Preferred Shares issuable upon exercise of outstanding rights,
options or warrants or upon conversion of outstanding securities issued by the
Company.
Section 2. Definitions. For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:
"Board" shall mean the Board of Directors of the Company or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series A Preferred Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Xxxxxxxx, Bermuda, or New York, New
York are not required to be open.
"Call Date" shall mean any date which the Company establishes for the
redemption of Series A Preferred Shares, which date must be specified in
the notice mailed to holders of the Series A Preferred Shares pursuant to
Section 5(d) hereof.
"Common Shares" shall mean the common shares of the Company, par value
$1.00 per share.
"Company" shall mean LaSalle Re Holdings Limited.
"Dividend Payment Date" shall mean the first day of March, June,
September and December in each year, commencing on June 1, 1997; provided,
however, that if
any Dividend Payment Date falls on any day other than a Business Day, the
dividend payment due on such Dividend Payment Date shall be paid on the Business
Day immediately before such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
March 1, June 1, September 1 and December 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on the Issue Date
and end on and include May 31, 1997, and other than the Dividend Period during
which any Series A Preferred Shares shall be redeemed pursuant to Section 5
hereof, which shall end on and include the Call Date with respect to the Series
A Preferred Shares being redeemed).
"Dollars" or "$" shall mean U.S. Dollars.
"Excess Preferred Shares" shall have the meaning set forth in Section 9(a)
hereof.
"Fully Junior Shares" shall mean the Common Shares and any other class or
series of shares of the Company's stock now or hereafter issued and outstanding
over which the Series A Preferred Shares have preference or priority in both (i)
the payment of dividends and (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Company.
"Issue Date" shall mean the first date on which the Series A Preferred
Shares are issued and sold.
"Junior Shares" shall mean the Common Shares and any other class or series
of shares of the Company's stock now or hereafter issued and outstanding over
which the Series A Preferred Shares have preference or priority in either (i)
the payment of dividends or (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Company.
"LaSalle Re" shall mean LaSalle Re Limited, a subsidiary of the Company.
"Parity Shares" shall have the meaning set forth in Section 7(b) hereof.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Register of Members" shall mean the Register of Members of the Company.
"Repurchase Date" shall have the meaning set forth in Section 9(a) hereof.
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"Repurchase Notice" shall shall have the meaning set forth in Section 9(a)
hereof.
"Series A Preferred Shares" shall have the meaning set forth in Section 1
hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Company in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board, the allocation of
funds to be so paid on any class or series of shares of the Company's stock;
provided, however, that if any funds for any class or series of Junior Shares or
any class or series of shares of the Company's stock ranking on a parity with
the Series A Preferred Shares as to the payment of dividends or other
distributions are placed in a separate account of the Company or delivered to a
disbursing, paying or other similar agent, then "set apart for payment" with
respect to the Series A Preferred Shares shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Special Representation Right" shall have the meaning set forth in Section
8(b) hereof.
"Special Representatives" shall have the meaning set forth in Section 8(b)
hereof.
"Subsidiary Voting Right" shall have the meaning set forth in Section 8(b)
hereof.
"Transfer Agent" shall mean First Chicago Trust Company of New York, or
such other agent or agents of the Company as may be designated by the Board or
its designee as the transfer agent, registrar and dividend disbursing agent for
the Series A Preferred Shares.
"Voting Preferred Shares" shall have the meaning set forth in Section 8(b)
hereof.
Section 3. Dividends.
(a) The holders of Series A Preferred Shares shall be entitled to receive,
when, as and if declared by the Board out of funds legally available for the
payment of dividends, cumulative preferential dividends payable in cash in an
amount per share equal to 8.75% of the liquidation preference per annum
(equivalent to $2.1875 per share), except as provided in Section 3(b) hereof.
Such dividends shall begin to accrue and shall be fully cumulative from the
Issue Date, whether or not in any Dividend Period or Periods there shall be
funds of the Company legally available for
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the payment of such dividends and whether or not such dividends shall be
declared. Such dividends shall be payable quarterly, when, as and if declared by
the Board, in arrears on Dividend Payment Dates, commencing on the first
Dividend Payment Date after the Issue Date. Each such dividend shall be payable
in arrears to the holders of record of Series A Preferred Shares, as they appear
in the Register of Members at the close of business on such record dates, not
less than 30 nor more than 60 days preceding such Dividend Payment Dates
thereof, as shall be fixed by the Board. Accrued and unpaid dividends for any
past Dividend Periods may be declared and paid at any time and for such interim
periods, without reference to any regular Dividend Payment Date, to holders of
record on such date, not less than 30 nor more than 60 days preceding the
payment date thereof, as may be fixed by the Board. Any dividend payment made on
Series A Preferred Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series A Preferred Shares which remains
payable.
(b) The holders of Series A Preferred Shares shall be entitled to receive,
when, as and if declared by the Board, a partial dividend for the initial
Dividend Period from the Issue Date until May 31, 1997. The amount of dividends
payable for such period, or any other period shorter than a full Dividend
Period, on the Series A Preferred Shares shall be computed on the basis of a
360-day year of twelve 30-day months. Holders of Series A Preferred Shares shall
not be entitled to any dividends, whether payable in cash, property or stock, in
excess of cumulative dividends, as herein provided, on the Series A Preferred
Shares. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series A Preferred Shares
that may be in arrears.
(c) So long as any Series A Preferred Shares are outstanding, no dividends
or other distributions, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment on any class or
series of Parity Shares for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series A Preferred
Shares for all Dividend Periods terminating on or prior to the dividend payment
date in respect of the dividend or other distribution on such class or series of
Parity Shares. When dividends on the Series A Preferred Shares are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, all
dividends declared upon Series A Preferred Shares and all dividends declared
upon any class or series of Parity Shares shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on the
Series A Preferred Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series A Preferred Shares are outstanding, no dividends
or other distributions (other than dividends or distributions paid solely in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Fully Junior Shares) shall be declared or paid or set apart for payment and
no other distribution shall be declared or paid or set apart for payment upon
Junior Shares, nor shall any
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Junior Shares be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Shares made for
purposes of an employee incentive or benefit plan of the Company or any
subsidiary of the Company) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any Junior
Shares) by the Company, directly or indirectly (except by conversion into
or exchange for Fully Junior Shares), unless in each case (i) the full
cumulative dividends on all outstanding Series A Preferred Shares and any
Parity Shares shall have been or contemporaneously are declared and paid or
declared and set apart for payment for all past Dividend Periods with
respect to the Series A Preferred Shares and all past dividend periods with
respect to such Parity Shares and (ii) sufficient funds shall have been or
contemporaneously are declared and set apart for the payment of the
dividend for the current Dividend Period with respect to the Series A
Preferred Shares and the current dividend period with respect to such
Parity Shares.
(e) No dividends on Series A Preferred Shares shall be declared by the
Board or paid or set apart for payment by the Company at such time as the
terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibit such declaration, payment
or setting apart for payment or provide that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration, payment or setting apart shall be
restricted or prohibited by law.
(f) If there shall be any change in the law, regulation or official
directive (whether or not having the force of law) or in the interpretation
by any Bermuda Government authority or court of competent jurisdiction
which imposes on the Company any condition with respect to the Series A
Preferred Shares as a result of which any dividend payment is reduced, the
Company shall give notice to the holders of Series A Preferred Shares of
such event and all such reductions shall be borne in full by the holders of
Series A Preferred Shares (but only to the extent permitted by law).
Section 4. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, before any dividend payment or
distribution of the assets of the Company (whether capital or surplus)
shall be made or set apart for payment to the holders of Junior Shares, the
holders of the Series A Preferred Shares shall be entitled to receive
$25.00 per Series A Preferred Share plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date
of final distribution to such holders; but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Company, the assets of the Company, or proceeds thereof,
distributable among the holders of the Series A Preferred Shares shall be
insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any shares of any class or series of Parity
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Shares, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series A Preferred Shares and any such Parity Shares
ratably in accordance with the respective amounts that would be payable on
such Series A Preferred Shares and any such Parity Shares if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i)
a consolidation, amalgamation or merger of the Company with one or more
corporations or other entities, (ii) a sale, lease or conveyance of all or
substantially all of the shares of capital stock or the property or
business of the Company or (iii) a statutory share exchange shall not be
deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Company.
(b) Subject to the rights of the holders of shares of any series or
class or classes of shares of the Company's stock ranking on a parity with
or prior to the Series A Preferred Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the Company,
after payment shall have been made in full to the holders of the Series A
Preferred Shares, as provided in this Section 4, any other series or class
or classes of Junior Shares shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, according to their respective
numbers of shares, and the holders of the Series A Preferred Shares shall
not be entitled to share therein.
Section 5. Redemption at the Option of the Company.
(a) Subject to Section 5(d) and Section 9 hereof, the Series A
Preferred Shares shall not be redeemable by the Company prior to the tenth
anniversary of the Issue Date. On and after the tenth anniversary of the
Issue Date, the Company, at its option, may redeem the Series A Preferred
Shares, in whole at any time or from time to time in part at the option of
the Company, for cash at a redemption price of $25.00 per Series A
Preferred Share, plus any amounts payable pursuant to Section 5(b) hereof.
(b) Upon any redemption of Series A Preferred Shares pursuant to this
Section 5, the Company shall pay all accrued and unpaid dividends, if any,
thereon to the Call Date, without interest. If the Call Date falls after a
dividend payment record date and prior to the corresponding Dividend
Payment Date, then each holder of Series A Preferred Shares at the close of
business on such dividend payment record date shall be entitled to the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares before such Dividend Payment
Date or the Company's default in the payment of the dividend due. Except as
provided above, the Company shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on Series A Preferred Shares called
for redemption.
(c) Unless full cumulative dividends on the Series A Preferred Shares
and any class or series of Parity Shares shall have been declared and paid
or declared and
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set apart for payment for all past Dividend Periods and the then current
Dividend Period (including such dividend periods on any Parity Shares), the
Series A Preferred Shares and any Parity Shares may not be redeemed under
this Section 5 in part and the Company may not otherwise purchase or
acquire Series A Preferred Shares or any Parity Shares, otherwise than
pursuant to a purchase or exchange offer made on the same terms to all
holders of Series A Preferred Shares and Parity Shares or pursuant to
Section 9 hereof.
(d) At any time prior to the tenth anniversary of the Issue Date,
if the Company shall have submitted to the holders of its Common Shares a
proposal for amalgamation, consolidation, merger, statutory share exchange
or any proposal for any other matter that requires for its validation or
effectuation an affirmative vote of the holders of the Series A Preferred
Shares at the time outstanding, acting as a single class, the Company, at
its option, may redeem all of the outstanding Series A Preferred Shares for
cash at a redemption price of $26.00 per Series A Preferred Share, plus any
amounts payable pursuant to Section 5(b) hereof.
(e) Notice of the redemption of any Series A Preferred Shares under
this Section 5 shall be mailed by first-class mail to each holder of record
of Series A Preferred Shares to be redeemed at the address of each such
holder as shown in the Register of Members, not less than 30 nor more than
90 days prior to the Call Date. Neither the failure to mail any notice
required by this paragraph (e), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to
the other holders. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given on the date
when the same would be delivered in the ordinary course of transmission,
whether or not the holder receives the notice. Each such mailed notice
shall state, as appropriate: (1) the Call Date; (2) the number of Series A
Preferred Shares to be redeemed and, if fewer than all the Series A
Preferred Shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the redemption price; (4) the
place or places at which certificates for such shares are to be
surrendered; and (5) that dividends on the Series A Preferred Shares to be
redeemed shall cease to accrue on such Call Date except as otherwise
provided herein. Notice having been mailed as aforesaid, from and after the
Call Date (unless the Company shall fail to make available, as hereinafter
provided, an amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, dividends on the Series A Preferred
Shares so called for redemption shall cease to accrue; (ii) such shares
shall no longer be deemed to be outstanding; (iii) all rights of the
holders thereof as holders of Series A Preferred Shares of the Company
shall cease (except the right to receive cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any dividends payable thereon);
and (iv) any officer of the Company shall be entitled, on behalf of such
holder and as its attorney-in-fact, to execute and deliver any and all
documents as may be necessary to effect such redemption. The Company's
obligation to provide
-7-
cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Company shall deposit with a bank or
trust company (which may be an affiliate of the Company) that has an office
in the Borough of Manhattan, City of New York, and that has, or is an
affiliate of a bank or trust company that has, capital and surplus of at
least $50,000,000, funds necessary for such redemption, in trust, with
irrevocable instructions that such cash be applied to the redemption of the
Series A Preferred Shares so called for redemption. No interest shall
accrue for the benefit of the holders of Series A Preferred Shares to be
redeemed on any cash so set aside by the Company. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call
Date shall revert to the general funds of the Company, after which
reversion the holders of such shares so called for redemption shall look
only to the general funds of the Company for the payment of such cash.
As promptly as practicable after the surrender, in accordance with the
notice given as aforesaid, of the certificates for any Series A Preferred
Shares so redeemed (properly endorsed or assigned for transfer, if the
Company shall so require and if the notice shall so state), such shares
shall be exchanged for any cash (without interest thereon) for which such
shares have been redeemed. If fewer than all the outstanding Series A
Preferred Shares are to be redeemed, shares to be redeemed shall be
selected by the Company from outstanding Series A Preferred Shares not
previously called for redemption pro rata (as nearly as may be
practicable), by lot or by any other method determined by the Company in
its sole discretion to be equitable. If fewer than all the Series A
Preferred Shares represented by any certificate are redeemed, then new
certificates representing the unredeemed shares shall be issued without
cost to the holder thereof.
Section 6. Shares To Be Retired. All Series A Preferred Shares which shall
have been issued and reacquired in any manner by the Company shall be restored
to the status of authorized but unissued shares of the Company's stock, without
designation as to class or series.
Section 7. Ranking. Any class or series of shares of the Company's stock
shall be deemed to rank:
(a) prior to the Series A Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of Series A Preferred Shares;
(b) on a parity with the Series A Preferred Shares, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof shall
be different from those of the Series A Preferred Shares, if the holders of
such class or series and the Series A Preferred
-8-
Shares shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Shares");
(c) junior to the Series A Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series A Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Fully Junior
Shares.
Section 8. Special Representation and Voting Rights.
(a) Except as otherwise provided in this Section 8 and as otherwise
required by law, holders of the Series A Preferred Shares shall have no
voting rights; provided, however, that each holder of Series A Preferred
Shares shall be entitled to notice of all shareholders' meetings at the
same time and in the same manner as notice is given to the shareholders
entitled to vote at such meetings and shall have the right to attend such
meetings.
(b) Whenever, at any time or times, dividends payable on Series A
Preferred Shares or any class or series of Parity Shares shall be in
arrears (whether or not such dividends have been earned or declared) in an
amount equivalent to dividends for six full Dividend Periods (whether or
not consecutive), then, immediately upon the happening of such event, the
holders of Series A Preferred Shares, together with the holders of shares
of every other class or series of Parity Shares (all such other classes or
series, the "Voting Preferred Shares"), voting as a single class regardless
of class or series, shall have the right (the "Special Representation
Right") to elect two special representatives (the "Special
Representatives"). The Special Representatives shall not be directors or
officers of the Company but shall be entitled to receive notice of all
Board meetings and to take part in such Board meetings, with the privilege
of voice but not vote. At any time after the Special Representation Right
shall have been vested, the Secretary of the Company may, and upon the
written request of any holder of Series A Preferred Shares (addressed to
the Secretary at the principal office of the Company) shall, call a special
meeting of the holders of the Series A Preferred Shares and of the Voting
Preferred Shares for the election of the two Special Representatives, such
call to be made by notice similar to that provided in the Bye-Laws of the
Company for a special general meeting of the shareholders or as required by
law. If any such special meeting required to be called as above provided
shall not be called by the Secretary within 20 days after receipt of any
such request, then any holder of Series A Preferred Shares may call such
meeting, upon the notice above provided, and for that purpose shall have
access to the Register of Members. Alternatively, the two Special
-9-
Representatives may be elected by a resolution in writing, which may be in
counterparts, signed by all of the holders of the Series A Preferred Shares
and of the Voting Preferred Shares. Any Special Representative elected by
the holders of the Series A Preferred Shares and the Voting Preferred
Shares may be removed, with or without cause, and any vacancy that may
occur in the position of Special Representative may be filled (i) by a
majority vote at any special meeting of the holders of the Series A
Preferred Shares and the Voting Preferred Shares, voting as a single class,
or (ii) by a resolution in writing, which may be in counterparts, signed by
all of the holders of the Series A Preferred Shares and the Voting
Preferred Shares. If any interim vacancy shall occur in the position of
Special Representative prior to a special meeting or written resolution of
the holders of the Series A Preferred Shares and the Voting Preferred
Shares, a successor shall be chosen by the then remaining Special
Representative or the successor of such remaining Special Representative,
to serve until a successor is elected at a special meeting or by written
resolution, or until the position of Special Representative terminates as
hereinafter provided. At any time or times when the Special Representation
Right shall have been vested and shall not have ceased pursuant to this
paragraph, the Company shall cause, to the extent permitted under Bermuda
law, the election of two additional directors of LaSalle Re who shall be
designated by the Special Representatives (the "Subsidiary Voting Right").
In the event that the Special Representatives do not agree with respect to
the designation of the aforesaid two directors, each Special Representative
shall be entitled to designate one of such directors. Whenever all
arrearages in dividends on the Series A Preferred Shares and the Voting
Preferred Shares then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been declared
and paid or declared and set apart for payment, then the Special
Representation Right and the Subsidiary Voting Right shall cease (but
subject always to the same provision for the vesting of such rights in the
case of any future arrearages in an amount equivalent to dividends for six
full Dividend Periods), and the positions of all persons elected as Special
Representatives shall forthwith terminate.
(c) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or by
the Company's Bye-Laws, as amended, the affirmative vote of the holders of
at least 75% of the Series A Preferred Shares at the time outstanding,
acting as a single class, given either in writing without a meeting or by
vote in person or by proxy at any meeting called for the purpose, shall be
necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of the Company's Memorandum of Association, Bye-Laws or
this Certificate of Designation that would vary the rights,
preferences or voting powers of the holders of the Series A Preferred
Shares;
(ii) An amalgamation, consolidation, merger or statutory share
exchange that affects the Series A Preferred Shares, unless in each
such case
-10-
each Series A Preferred Share (i) shall remain outstanding with no
variation in its rights, preferences or voting powers or (ii) shall be
converted into or exchanged for preferred shares of the surviving
entity having rights, preferences and voting powers identical to that
of a Series A Preferred Share;
(iii) The authorization, creation or any increase in the
authorized amount of, any shares of any class or series or any
security convertible into shares of any class or series ranking prior
to the Series A Preferred Shares in the payment of dividends or the
distribution of assets on any liquidation, dissolution or winding up
of the Company; or
(iv) Any other transaction or action which would amount to a
variation of the rights, preferences or voting powers of the holders
of the Series A Preferred Shares;
provided, however, that any action to authorize or create or to increase
the authorized amount of, any Fully Junior Shares or Parity Shares shall
not be deemed to vary the rights, preferences or voting powers of the
holders of Series A Preferred Shares; and provided, further, that no such
vote of the holders of Series A Preferred Shares shall be required if,
prior to the time when any of the foregoing actions is to take effect, all
outstanding Series A Preferred Shares shall have been redeemed.
(d) The holders of the Series A Preferred Shares shall not be
entitled to vote on any sale of all or substantially all of the assets of
the Company.
(e) For purposes of any vote by the holders of the Series A
Preferred Shares pursuant to the foregoing provisions of this Section 8,
each Series A Preferred Share shall have one (1) vote per share, except
that when any class or series of Voting Preferred Shares shall have the
right to vote with the Series A Preferred Shares as a single class on any
matter, then the Series A Preferred Shares and such class or series of
Voting Preferred Shares shall have with respect to such matters one (1)
vote per $25.00 of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the Series A Preferred
Shares shall not have any other voting rights or powers, and the consent of
the holders thereof shall not be required for the taking of any action by
the Company.
Section 9. Limitation on Ownership.
(a) Limitation. Notwithstanding any other provision of the terms
of the Series A Preferred Shares, except as provided in the next sentence
and in Section 9(b), no Person shall at any time directly or indirectly
acquire ownership of more than 9.9% of the outstanding Series A Preferred
Shares. Any Series A Preferred Shares owned by a Person in excess of such
9.9% shall be deemed "Excess Preferred Shares." Within 10 days of becoming
aware of the existence of Excess Preferred Shares (whether by notice on
Schedule 13D or otherwise), the Company shall initiate
-11-
the repurchase of any and all Excess Preferred Shares by giving notice of
repurchase (the "Repurchase Notice") to the holder or holders thereof,
unless, prior to the giving of such Repurchase Notice the holder shall have
disposed of its ownership in the Excess Preferred Shares. The Repurchase
Notice shall set forth the number of Series A Preferred Shares constituting
Excess Preferred Shares, the repurchase price and the place and date of the
closing at which the certificates representing such Excess Preferred Shares
are to be surrendered and the repurchase price paid. The closing date shall
be no more than 10 days after the date on which the Company mails the
Repurchase Notice by first-class mail (such date of mailing hereinafter
referred to as the "Repurchase Date"). The Company will be entitled to
assign its repurchase right to a third party or parties, who may be other
shareholders of the Company, with the consent of any such assignee(s). The
Company may revoke the Repurchase Notice at any time before it (or its
assignee) pays for the Series A Preferred Shares. Neither the Company nor
its assignee(s) shall be obliged to give general notice to the Company's
shareholders of any intention to repurchase or the conclusion of any
repurchase of Series A Preferred Shares. The repurchase price of each
Excess Preferred Share called for such repurchase shall be the average
daily per Series A Preferred Share closing sales price, if the Series A
Preferred Shares are listed on a national securities exchange or are
reported on the Nasdaq National Market System, and if the Series A
Preferred Shares are not so listed or reported, shall be the mean between
the average per Series A Preferred Share closing bid prices and the average
per Series A Preferred Share closing asked prices, in each case during the
30-day period ending on the Business Day prior to the Repurchase Date, or
if there have been no sales on a national securities exchange or the Nasdaq
National Market System and no published bid quotations and no published
asked quotations with respect to Series A Preferred Shares during such 30-
day period, the repurchase price shall be the price determined by the Board
in good faith. From and after the Repurchase Date (i) except as otherwise
provided herein, dividends on the Series A Preferred Shares so called for
repurchase shall cease to accrue; (ii) such shares shall no longer be
deemed to be outstanding; (iii) all rights of the holders thereof as
holders of Series A Preferred Shares of the Company shall cease (except the
right to receive cash payable upon such repurchase, without interest
thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon); and (iv) any
officer of the Company shall be entitled, on behalf of such holder and as
its attorney-in-fact, to execute and deliver any and all documents as may
be necessary to effect such repurchase. Nothing in this Section 9(a) shall
preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
(b) Exemptions. The limitation on ownership set forth in Section
9(a) shall not apply to the acquisition of Series A Preferred Shares by an
underwriter in a public offering of Series A Preferred Shares and shall not
apply to the ownership of Series A Preferred Shares by a managing
underwriter in the initial public offering of Series A Preferred Shares.
The Board, in its sole and absolute discretion, may exempt from the
ownership limitation set forth in Section 9(a) certain designated Series A
Preferred Shares owned by a Person who has provided the Board with evidence
and assurances
-12-
acceptable to the Board that ownership of such shares will cause no adverse
tax, legal or regulatory consequences to the Company, any of the Company's
subsidiaries or any of the Company's shareholders.
Section 10. Record Holders. The Company and the Transfer Agent may deem
and treat the record holder of any Series A Preferred Shares, as the same
appears in the Register of Members, as the true and lawful owner thereof for all
purposes, and neither the Company nor the Transfer Agent shall be affected by
any notice to the contrary. Payments in respect of Series A Preferred Shares
shall be sent to the holders thereof at their address most recently noted on the
Register of Members and, in the case of joint holders of Series A Preferred
Shares, may be made to all such joint holders but sent to that one of the joint
holders of Series A Preferred Shares who is first named in the Register of
Members at his address most recently noted in the Register of Members or shall
be made payable to such person or persons and sent to such address as all the
joint holders of such Series A Preferred Shares may in writing direct. Cheques
in payment of any obligation of the Company to holders of Series A Preferred
Shares shall be sent by first-class mail at the risk of the holder of the Series
A Preferred Shares, and due payment of a cheque shall be full satisfaction of
the obligation represented thereby notwithstanding any notice which the Company
may have whether express or otherwise of any right, title or interest or claim
of any other person to or in such Series A Preferred Shares.
Section 11. Sinking Fund. The Series A Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.
Section 12. Conversion. The Series A Preferred Shares shall not be
convertible into or exchangeable for any other securities of the Company.
-13-
EXHIBIT B
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A PREFERRED SHARES
OF
LASALLE RE LIMITED
The Series A Preferred Shares shall have the designation, preferences and
rights, and shall be subject to the restrictions, as hereinafter appearing:
Section 1. Designation and Amount. There shall be a series of Preferred
Shares of the Company which shall be designated as "Series A Preferred Shares,"
par value $1.00 per share (hereinafter called "Series A Preferred Shares"), and
the number of shares constituting such series shall be 3,000,000. Such number
of shares may be increased or decreased at any time and from time to time by
resolution of the Company's Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Shares to a
number less than that of the shares then outstanding plus the number of shares
of Series A Preferred Shares issuable upon exercise of outstanding rights,
options or warrants or upon conversion of outstanding securities issued by the
Company.
Section 2. Definitions. For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:
"Additional Directors" shall have the meaning set forth in Section
8(b) hereof.
"Board" shall mean the Board of Directors of the Company or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series A Preferred Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Xxxxxxxx, Bermuda, or New York, New
York are not required to be open.
"Call Date" shall mean any date which the Company establishes for the
redemption of Series A Preferred Shares, which date must be specified in
the notice mailed to holders of the Series A Preferred Shares pursuant to
Section 5(d) hereof.
"Common Shares" shall mean the common shares of the Company, par value
$1.00 per share.
"Company" shall mean LaSalle Re Limited.
"Dividend Payment Date" shall mean the first day of March, June,
September and December in each year, commencing on June 1, 1997; provided,
however, that if any Dividend Payment Date falls on any day other than a
Business Day, the dividend payment due on such Dividend Payment Date shall
be paid on the Business Day immediately before such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
March 1, June 1, September 1 and December 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period, which shall commence on the
Issue Date and end on and include May 31, 1997, and other than the Dividend
Period during which any Series A Preferred Shares shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Call Date
with respect to the Series A Preferred Shares being redeemed).
"Dollars" or "$" shall mean U.S. Dollars.
"Fully Junior Shares" shall mean the Common Shares and any other class
or series of shares of the Company's stock now or hereafter issued and
outstanding over which the Series A Preferred Shares have preference or
priority in both (i) the payment of dividends and (ii) the distribution of
assets on any liquidation, dissolution or winding up of the Company.
"LaSalle Re Holdings" shall mean LaSalle Re Holdings Limited, of which
the Company is a subsidiary.
"Issue Date" shall mean the first date on which the Series A Preferred
Shares are issued and sold.
"Junior Shares" shall mean the Common Shares and any other class or
series of shares of the Company's stock now or hereafter issued and
outstanding over which the Series A Preferred Shares have preference or
priority in either (i) the payment of dividends or (ii) the distribution of
assets on any liquidation, dissolution or winding up of the Company.
"Parity Shares" shall have the meaning set forth in Section 7(b)
hereof.
"Person" shall mean any individual, firm, partnership, corporation,
limited liability company or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Register of Members" shall mean the Register of Members of the
Company.
"Series A Preferred Shares" shall have the meaning set forth in
Section 1 hereof.
-2-
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Company in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to
a declaration of dividends or other distribution by the Board, the
allocation of funds to be so paid on any class or series of shares of the
Company's stock; provided, however, that if any funds for any class or
series of Junior Shares or any class or series of shares of the Company's
stock ranking on a parity with the Series A Preferred Shares as to the
payment of dividends or other distributions are placed in a separate
account of the Company or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to the Series A
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Transfer Agent" shall mean First Chicago Trust Company of New York,
or such other agent or agents of the Company as may be designated by the
Board or its designee as the transfer agent, registrar and dividend
disbursing agent for the Series A Preferred Shares.
"Voting Preferred Shares" shall have the meaning set forth in Section
8(b) hereof.
Section 3. Dividends.
(a) The holders of Series A Preferred Shares shall be entitled to
receive, when, as and if declared by the Board out of funds legally
available for the payment of dividends, cumulative preferential dividends
payable in cash in an amount per share equal to 8.75% of the liquidation
preference per annum (equivalent to $2.1875 per share), except as provided
in Section 3(b) hereof. Such dividends shall begin to accrue and shall be
fully cumulative from the Issue Date, whether or not in any Dividend Period
or Periods there shall be funds of the Company legally available for the
payment of such dividends and whether or not such dividends shall be
declared. Such dividends shall be payable quarterly, when, as and if
declared by the Board, in arrears on Dividend Payment Dates, commencing on
the first Dividend Payment Date after the Issue Date. Each such dividend
shall be payable in arrears to the holders of record of Series A Preferred
Shares, as they appear in the Register of Members at the close of business
on such record dates, not less than 30 nor more than 60 days preceding such
Dividend Payment Dates thereof, as shall be fixed by the Board. Accrued and
unpaid dividends for any past Dividend Periods may be declared and paid at
any time and for such interim periods, without reference to any regular
Dividend Payment Date, to holders of record on such date, not less than 30
nor more than 60 days preceding the payment date thereof, as may be fixed
by the Board. Any dividend payment made on Series A Preferred Shares shall
first be credited against the earliest accrued but unpaid dividend due with
respect to Series A Preferred Shares which remains payable.
-3-
(b) The holders of Series A Preferred Shares shall be entitled to
receive, when, as and if declared by the Board, a partial dividend for the
initial Dividend Period from the Issue Date until May 31, 1997. The amount
of dividends payable for such period, or any other period shorter than a
full Dividend Period, on the Series A Preferred Shares shall be computed on
the basis of a 360-day year of twelve 30-day months. Holders of Series A
Preferred Shares shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of cumulative dividends, as herein
provided, on the Series A Preferred Shares. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series A Preferred Shares that may be in arrears.
(c) So long as any Series A Preferred Shares are outstanding, no
dividends or other distributions, except as described in the immediately
following sentence, shall be declared or paid or set apart for payment on
any class or series of Parity Shares for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
the Series A Preferred Shares for all Dividend Periods terminating on or
prior to the dividend payment date in respect of the dividend or other
distribution on such class or series of Parity Shares. When dividends on
the Series A Preferred Shares are not paid in full or a sum sufficient for
such payment is not set apart, as aforesaid, all dividends declared upon
Series A Preferred Shares and all dividends declared upon any class or
series of Parity Shares shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Series A
Preferred Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series A Preferred Shares are outstanding, no
dividends or other distributions (other than dividends or distributions
paid solely in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Fully Junior Shares) shall be declared or paid or
set apart for payment and no other distribution shall be declared or paid
or set apart for payment upon Junior Shares, nor shall any Junior Shares be
redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Common Shares made for purposes of an
employee incentive or benefit plan of the Company or any subsidiary of the
Company) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any Junior Shares) by the Company,
directly or indirectly (except by conversion into or exchange for Fully
Junior Shares), unless in each case (i) the full cumulative dividends on
all outstanding Series A Preferred Shares and any Parity Shares shall have
been or contemporaneously are declared and paid or declared and set apart
for payment for all past Dividend Periods with respect to the Series A
Preferred Shares and all past dividend periods with respect to such Parity
Shares and (ii) sufficient funds shall have been or contemporaneously are
declared and set apart for the payment of the dividend for the current
Dividend Period with respect to the Series A Preferred Shares and the
current dividend period with respect to such Parity Shares.
-4-
(e) No dividends on Series A Preferred Shares shall be declared by
the Board or paid or set apart for payment by the Company at such time as
the terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibit such declaration, payment
or setting apart for payment or provide that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration, payment or setting apart shall be
restricted or prohibited by law.
(f) If there shall be any change in the law, regulation or official
directive (whether or not having the force of law) or in the interpretation
by any Bermuda Government authority or court of competent jurisdiction
which imposes on the Company any condition with respect to the Series A
Preferred Shares as a result of which any dividend payment is reduced, the
Company shall give notice to the holders of Series A Preferred Shares of
such event and all such reductions shall be borne in full by the holders of
Series A Preferred Shares (but only to the extent permitted by law).
Section 4. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, before any dividend payment
or distribution of the assets of the Company (whether capital or surplus)
shall be made or set apart for payment to the holders of Junior Shares, the
holders of the Series A Preferred Shares shall be entitled to receive
$25.00 per Series A Preferred Share plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date
of final distribution to such holders; but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Company, the assets of the Company, or proceeds thereof,
distributable among the holders of the Series A Preferred Shares shall be
insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any shares of any class or series of Parity Shares,
then such assets, or the proceeds thereof, shall be distributed among the
holders of Series A Preferred Shares and any such Parity Shares ratably in
accordance with the respective amounts that would be payable on such Series
A Preferred Shares and any such Parity Shares if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation, amalgamation or merger of the Company with one or more
corporations or other entities, (ii) a sale, lease or conveyance of all or
substantially all of the shares of capital stock or the property or
business of the Company or (iii) a statutory share exchange shall not be
deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary, of the Company.
(b) Subject to the rights of the holders of shares of any series or
class or classes of shares of the Company's stock ranking on a parity with
or prior to the Series A Preferred Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the Company,
after payment shall have been made in full to the holders of the Series A
Preferred Shares, as provided in this
-5-
Section 4, any other series or class or classes of Junior Shares shall,
subject to the respective terms and provisions (if any) applying thereto,
be entitled to receive any and all assets remaining to be paid or
distributed, according to their respective numbers of shares, and the
holders of the Series A Preferred Shares shall not be entitled to share
therein.
Section 5. Redemption at the Option of the Company.
(a) The Company, at its option, may redeem the Series A Preferred
Shares, in whole at any time or from time to time in part at the option of
the Company, for cash at a redemption price of $25.00 per Series A
Preferred Share, plus any amounts payable pursuant to Section 5(b) hereof;
provided, however, that the Company may only redeem the Series A Preferred
Shares, in whole or in part, if LaSalle Re Holdings shall have made
alternative arrangements to provide a means for it to continue to have
adequate resources to meet its dividend obligations to the holders of its
series A preferred shares.
(b) Upon any redemption of Series A Preferred Shares pursuant to
this Section 5, the Company shall pay all accrued and unpaid dividends, if
any, thereon to the Call Date, without interest. If the Call Date falls
after a dividend payment record date and prior to the corresponding
Dividend Payment Date, then each holder of Series A Preferred Shares at the
close of business on such dividend payment record date shall be entitled to
the dividend payable on such shares on the corresponding Dividend Payment
Date notwithstanding the redemption of such shares before such Dividend
Payment Date or the Company's default in the payment of the dividend due.
Except as provided above, the Company shall make no payment or allowance
for unpaid dividends, whether or not in arrears, on Series A Preferred
Shares called for redemption.
(c) Unless full cumulative dividends on the Series A Preferred
Shares and any class or series of Parity Shares shall have been declared
and paid or declared and set apart for payment for all past Dividend
Periods and the then current Dividend Period (including such dividend
periods on any Parity Shares), the Series A Preferred Shares and any Parity
Shares may not be redeemed under this Section 5 in part and the Company may
not otherwise purchase or acquire Series A Preferred Shares or any Parity
Shares, otherwise than pursuant to a purchase or exchange offer made on the
same terms to all holders of Series A Preferred Shares and Parity Shares.
(d) Notice of the redemption of any Series A Preferred Shares under
this Section 5 shall be mailed by first-class mail to each holder of record
of Series A Preferred Shares to be redeemed at the address of each such
holder as shown in the Register of Members, not less than 30 nor more than
90 days prior to the Call Date. Neither the failure to mail any notice
required by this paragraph (d), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency
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of the notice or the validity of the proceedings for redemption with
respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on
the date when the same would be delivered in the ordinary course of
transmission, whether or not the holder receives the notice. Each such
mailed notice shall state, as appropriate: (1) the Call Date; (2) the
number of Series A Preferred Shares to be redeemed and, if fewer than all
the Series A Preferred Shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (3) the redemption
price; (4) the place or places at which certificates for such shares are to
be surrendered; and (5) that dividends on the Series A Preferred Shares to
be redeemed shall cease to accrue on such Call Date except as otherwise
provided herein. Notice having been mailed as aforesaid, from and after
the Call Date (unless the Company shall fail to make available, as
hereinafter provided, an amount of cash necessary to effect such
redemption), (i) except as otherwise provided herein, dividends on the
Series A Preferred Shares so called for redemption shall cease to accrue;
(ii) such shares shall no longer be deemed to be outstanding; (iii) all
rights of the holders thereof as holders of Series A Preferred Shares of
the Company shall cease (except the right to receive cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of
their certificates if so required and to receive any dividends payable
thereon); and (iv) any officer of the Company shall be entitled, on behalf
of such holder and as its attorney-in-fact, to execute and deliver any and
all documents as may be necessary to effect such redemption. The Company's
obligation to provide cash in accordance with the preceding sentence shall
be deemed fulfilled if, on or before the Call Date, the Company shall
deposit with a bank or trust company (which may be an affiliate of the
Company) that has an office in the Borough of Manhattan, City of New York,
and that has, or is an affiliate of a bank or trust company that has,
capital and surplus of at least $50,000,000, funds necessary for such
redemption, in trust, with irrevocable instructions that such cash be
applied to the redemption of the Series A Preferred Shares so called for
redemption. No interest shall accrue for the benefit of the holders of
Series A Preferred Shares to be redeemed on any cash so set aside by the
Company. Subject to applicable escheat laws, any such cash unclaimed at
the end of two years from the Call Date shall revert to the general funds
of the Company, after which reversion the holders of such shares so called
for redemption shall look only to the general funds of the Company for the
payment of such cash.
As promptly as practicable after the surrender, in accordance with the
notice given as aforesaid, of the certificates for any Series A Preferred
Shares so redeemed (properly endorsed or assigned for transfer, if the
Company shall so require and if the notice shall so state), such shares
shall be exchanged for any cash (without interest thereon) for which such
shares have been redeemed. If fewer than all the outstanding Series A
Preferred Shares are to be redeemed, shares to be redeemed shall be
selected by the Company from outstanding Series A Preferred Shares not
previously called for redemption pro rata (as nearly as may be
practicable), by lot or by any other method determined by the Company in
its sole discretion to be equitable. If fewer than all the Series A
Preferred Shares represented by any certificate are redeemed, then new
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certificates representing the unredeemed shares shall be issued without
cost to the holder thereof.
Section 6. Shares To Be Retired. All Series A Preferred Shares which shall
have been issued and reacquired in any manner by the Company shall be restored
to the status of authorized but unissued shares of the Company's stock, without
designation as to class or series.
Section 7. Ranking. As to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up of the Company, the Series A
Preferred Shares shall rank junior to the preferred stock authorized by the
Board on November 28, 1995 in connection with the Credit Agreement dated as of
December 1, 1995 among LaSalle Re Holdings, certain banks and Chemical Bank as
administrative agent. Any other class or series of shares of the Company's stock
shall be deemed to rank:
(a) prior to the Series A Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of Series A Preferred Shares;
(b) on a parity with the Series A Preferred Shares, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof shall
be different from those of the Series A Preferred Shares, if the holders of
such class or series and the Series A Preferred Shares shall be entitled to
the receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of
accrued and unpaid dividends per share or liquidation preferences, without
preference or priority one over the other ("Parity Shares");
(c) junior to the Series A Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series A Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Fully Junior
Shares.
Section 8. Voting Rights.
(a) Except as otherwise provided in this Section 8 and as otherwise
required by law, holders of the Series A Preferred Shares shall have no
voting rights; provided, however, that each holder of Series A Preferred
Shares shall be entitled to notice of all shareholders' meetings at the
same time and in the same manner as
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notice is given to the shareholders entitled to vote at such meetings and
shall have the right to attend such meetings.
(b) Whenever, at any time or times, dividends payable on Series A
Preferred Shares or any class or series of Parity Shares shall be in
arrears (whether or not such dividends have been earned or declared) in an
amount equivalent to dividends for six full Dividend Periods (whether or
not consecutive), then, immediately upon the happening of such event, the
holders of Series A Preferred Shares, together with the holders of shares
of every other class or series of Parity Shares (all such other classes or
series, the "Voting Preferred Shares"), voting as a single class regardless
of class or series, shall have the right to increase the size of the Board
by two directors and to elect two additional directors to serve on the
Board (the "Additional Directors") at any general meeting of shareholders
or at a special meeting of the holders of the Series A Preferred Shares and
the Voting Preferred Shares called as hereinafter provided. At any time
after such voting power shall have been so vested in the holders of Series
A Preferred Shares and the Voting Preferred Shares, the Secretary of the
Company may, and upon the written request of any holder of Series A
Preferred Shares (addressed to the Secretary at the principal office of the
Company) shall, call a special meeting of the holders of the Series A
Preferred Shares and of the Voting Preferred Shares for the election of the
Additional Directors, such call to be made by notice similar to that
provided in the Bye-Laws of the Company for a special general meeting of
the shareholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the
Secretary within 20 days after receipt of any such request, then any holder
of Series A Preferred Shares may call such meeting, upon the notice above
provided, and for that purpose shall have access to the Register of
Members. Alternatively, the Additional Directors may be elected by a
resolution in writing, which may be in counterparts, signed by all of the
holders of the Series A Preferred Shares and the Voting Preferred Shares.
The Additional Directors shall hold office until the next annual general
meeting of the shareholders or until the office of Additional Director
terminates as hereinafter provided. Any Additional Director may be
removed, with or without cause, by a majority vote at any special meeting
of the holders of the Series A Preferred Shares and of the Voting Preferred
Shares, voting as a single class, provided that the notice of any such
meeting convened for the purpose of removing an Additional Director shall
contain a statement of the intention so to do and be served on such
Additional Director not less than 14 days before the meeting and at such
meeting such Additional Director shall be entitled to be heard on the
motion for such Additional Director's removal. In the event of any vacancy
in the office of Additional Director, a successor shall be elected by the
holders of the Series A Preferred Shares and the Voting Preferred Shares,
voting as a single class, at any general meeting of shareholders or at a
special meeting of the holders of the Series A Preferred Shares and the
Voting Preferred Shares called in accordance with the procedures described
above for the election of Additional Directors, or by a written resolution
as provided above, such successor to hold office until the next annual
general meeting of the shareholders or until the office of Additional
Director
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terminates as hereinafter provided. If an interim vacancy shall occur in
the office of Additional Director prior to a general meeting of the
shareholders or a special meeting or written resolution of the holders of
the Series A Preferred Shares and the Voting Preferred Shares, a successor
shall be elected by the Board upon nomination by the then remaining
Additional Director or the successor of such remaining Additional Director,
to serve until a successor is elected in accordance with the preceding
sentence or until the office of Additional Director terminates as
hereinafter provided; provided, however, that if no remaining Additional
Director or successor of such Additional Director is then in office,
Additional Directors shall be elected in accordance with the procedures
described in the immediately preceding sentence. Whenever all arrearages in
dividends on the Series A Preferred Shares and the Voting Preferred Shares
then outstanding shall have been paid and dividends thereon for the current
quarterly dividend period shall have been declared and paid or declared and
set apart for payment, then the right of the holders of the Series A
Preferred Shares and the Voting Preferred Shares to elect the Additional
Directors shall cease (but subject always to the same provision for the
vesting of such right in the case of any future arrearages in an amount
equivalent to dividends for six full Dividend Periods), and the terms of
office of all persons elected as Additional Directors pursuant thereto
shall forthwith terminate and the number of directors constituting the
Board shall be reduced accordingly.
(c) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or by
the Company's Bye-Laws, as amended, the affirmative vote of the holders of
at least 75% of the Series A Preferred Shares at the time outstanding,
acting as a single class, given either in writing without a meeting or by
vote in person or by proxy at any meeting called for the purpose, shall be
necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of the Company's Memorandum of Association, Bye-Laws or
this Certificate of Designation that would vary the rights,
preferences or voting powers of the holders of the Series A Preferred
Shares;
(ii) An amalgamation, consolidation, merger or statutory share
exchange that affects the Series A Preferred Shares, unless in each
such case each Series A Preferred Share (i) shall remain outstanding
with no variation in its rights, preferences or voting powers or (ii)
shall be converted into or exchanged for preferred shares of the
surviving entity having rights, preferences and voting powers
identical to that of a Series A Preferred Share;
(iii) The authorization, creation or any increase in the
authorized amount of, any shares of any class or series or any
security convertible into shares of any class or series ranking prior
to the Series A Preferred Shares in the payment of dividends or the
distribution of assets on any liquidation, dissolution or winding up
of the Company; or
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(iv) Any other transaction or action which would amount to a
variation of the rights, preferences or voting powers of the holders
of the Series A Preferred Shares;
provided, however, that any action to authorize or create or to increase
the authorized amount of, any Fully Junior Shares or Parity Shares shall
not be deemed to vary the rights, preferences or voting powers of the
holders of Series A Preferred Shares; and provided, further, that no such
vote of the holders of Series A Preferred Shares shall be required if,
prior to the time when any of the foregoing actions is to take effect, all
outstanding Series A Preferred Shares shall have been redeemed.
(d) For purposes of any vote by the holders of the Series A
Preferred Shares pursuant to the foregoing provisions of this Section 8,
each Series A Preferred Share shall have one (1) vote per share, except
that when any class or series of Voting Preferred Shares shall have the
right to vote with the Series A Preferred Shares as a single class on any
matter, then the Series A Preferred Shares and such class or series of
Voting Preferred Shares shall have with respect to such matters one (1)
vote per $25.00 of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the Series A Preferred
Shares shall not have any other voting rights or powers, and the consent of
the holders thereof shall not be required for the taking of any action by
the Company.
Section 9. Record Holders. The Company and the Transfer Agent may deem and
treat the record holder of any Series A Preferred Shares, as the same appears in
the Register of Members, as the true and lawful owner thereof for all purposes,
and neither the Company nor the Transfer Agent shall be affected by any notice
to the contrary. Payments in respect of Series A Preferred Shares shall be sent
to the holders thereof at their address most recently noted on the Register of
Members and, in the case of joint holders of Series A Preferred Shares, may be
made to all such joint holders but sent to that one of the joint holders of
Series A Preferred Shares who is first named in the Register of Members at his
address most recently noted in the Register of Members or shall be made payable
to such person or persons and sent to such address as all the joint holders of
such Series A Preferred Shares may in writing direct. Cheques in payment of any
obligation of the Company to holders of Series A Preferred Shares shall be sent
by first-class mail at the risk of the holder of the Series A Preferred Shares,
and due payment of a cheque shall be full satisfaction of the obligation
represented thereby notwithstanding any notice which the Company may have
whether express or otherwise of any right, title or interest or claim of any
other person to or in such Series A Preferred Shares.
Section 10. Sinking Fund. The Series A Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.
Section 11. Conversion. The Series A Preferred Shares shall not be
convertible into or exchangeable for any other securities of the Company.
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