[LETTERHEAD]
I, EDWARD J. FREEL, SECRETARY OF STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF DESIGNATION OF ""ARM FINANCIAL GROUP,
INC.'', FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF JULY, A.D.
1998, AT 9 0'CLOCK A.M.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 07/16/1998
981277351 - 2343817
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
SERIES A FIXED/ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK
($200.00 Stated Value)
of
ARM FINANCIAL GROUP, INC.
---------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
---------------------------
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors (the ""BOARD'') OF ARM Financial
Group, Inc., a Delaware corporation (hereinafter called the ""CORPORATION''),
by unanimous written consent in lieu of a meeting dated as of July 14, 1998,
with certain of the designations, preferences and rights having been fixed by
the Pricing Committee of the Board (the ""COMMITTEE''), at a meeting on July
15, 1998, pursuant to authority delegated to it by the Board pursuant to
authority delegated to it by the Board pursuant to the provisions of Section
141(c)(1) of the General Corporation Law of the State of Delaware.
RESOLVED that, pursuant to authority expressly granted to and vested
in the Committee by the Board and in the Board by provisions of the
Restated Certificate of Incorporation of the Corporation, as amended
(the ""CERTIFICATE OF INCORPORATION''), the issuance of a series of
Preferred Stock, par value $.01 per share (the ""PREFERRED STOCK''),
which shall consist of 375,000 of the 10,000,000 shares of Preferred
Stock which the Corporation now has authority to issue, is authorized,
and the Board and the Committee, pursuant to the authority expressly
granted to the Committee by the Board pursuant to the provisions of
Section 141(c)(1) of the General Corporation Law of the State of
Delaware and the Certificate of Incorporation, fix the powers,
designations, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions
thereof, of the shares of such series (in addition to the powers,
designations, preferences and relative participating, optional or other
special rights, and the qualifications, limitations or restrictions
thereof, set forth in the Certificate of Incorporation which may be
applicable to the Preferred Stock as follows:
1. DESIGNATION AND AMOUNT; FRACTIONAL SHARES. The designation for
such series of the Preferred Stock authorized by this resolution shall
be the Series A Fixed/Adjustable Rate Cumulative Preferred Stock, par
value $.01-pershare, with a stated value of $200.00 per share (the
""Series A Fixed/Adjustable Rate Preferred Stock''). The stated value per
share of Series A Fixed/Adjustable Rate Preferred Stock shall not for
any purpose be considered to be a determination by the board or the
Committee with respect to the capital and surplus of the Corporation. The
number of shares of Series A Fixed/Adjustable Rate Preferred Stock shall
be 375,000. The Series A Fixed/Adjustable Rate Preferred Stock is
issuable in whole shares only.
2. DIVIDENDS. (a) Holders of shares of Series A Fixed/Adjustable
Rate Preferred Stock will be entitled to receive cash dividends, when,
as if declared by the Board or the Committee out of assets of the
corporation legally available for payment. dividends on the Series A Fixed/
Adjustable Rate Preferred Stock, calculated as a percentage of the stated
value, will be payable quarter on March 15, June 15, September 15 and
December 15 of each year (each a ""DIVIDEND PAYMENT DATE''), commencing
September 15, 1998. From the date of issuance of the Series A Fixed/
Adjustable Rate Preferred Stock and continuing through June 15, 2003, the
rate of such dividend will be 5.575% per annum. After June 15, 2003,
dividends on the Series A Fixed/Adjustable Rate Preferred Stock will be
payable quarterly on each dividend payment date at the Applicable Rate
(as defined in paragraph 3) from time to time in effect. The Applicable
Rate per annum for any dividend period beginning on or after June 15, 2003
will be equal to .625% plus the highest of the Treasury Bill Rate, the
Ten-Year Constant Maturity Rate and the Thirty-Year Constant Maturity
Rate (each defined in paragraph 3), as determined in advance of such
dividend period. The Applicable Rate per annum for any dividend period
beginning on or after June 15, 2003 will not be less than 6.05% not greater
than 12.05% (without taking into account any adjustments set forth in
paragraph 2(b).
Dividends on shares of the Series A Fixed/Adjustable Rate
Preferred Stock will be cumulative from the date of initial issuance of
such shares of Series A Fixed/Adjustable Rate Preferred Stock. Dividends
will be payable, in arrears, to holders of record as they appear on the
stock books of the Corporation on such record dates, not more than 60 days
nor less than 10 days preceding the payment dates thereof, as shall be
fixed by the Board or the Committee. The amount of dividends payable for
the initial dividend period or any period shorter than a full dividend
period shall be calculated on the basis of a 360-day year of twelve 30-day
months. No dividends may be declared or paid or set apart for payment on
any Parity Preferred Stock (as defined in paragraph 10(b)) with regard to
the payment of dividends unless there shall also be or have been declared
and paid or set apart for payment on the Series A Fixed/Adjustable Rate
Preferred
3
Stock, like dividend for all dividend payment periods of the Series A
Fixed/Adjustable Rate Preferred Stock ending on or before the dividend
payment date of such Parity Preferred Stock ratably in proportion to the
respective amounts of dividends (x) accumulated and unpaid or payable on
such Parity Preferred Stock, on the one hand, and (y) accumulated and
unpaid through the dividend payment period or periods of the Series A
Fixed/Adjustable Rate Preferred Stock next preceding such dividend payment
date, on the other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Series A Fixed/Adjustable Rate Preferred Stock
have been paid, no dividends (other than in common Stock of the
Corporation) may be paid or declared and set aside for payment or other
distribution made upon the Common Stock or any other stock of the
Corporation ranking junior to or on a parity with the Series A
Fixed/Adjustable Rate Preferred Stock as to dividends, nor may any Common
Stock or any other stock of the Corporation ranking junior to or on a party
with the Series A Fixed/Adjustable rate Preferred Stock as to dividends be
redeemed, purchased or otherwise acquired for any consideration (or any
payment be made to or available for a sinking fund for the redemption of
any shares of such stock; PROVIDED, HOWEVER, that any moneys theretofore
deposited in any sinking fund with respect any preferred stock of the
Corporation in compliance with the provision of such sinking fund may
thereafter be applied to the purchase or redemption of such preferred stock
in accordance with the terms of such sinking fund, regardless of whether at
the time of such application full cumulative dividends upon shares of the
Series A Fixed /Adjustable Rate Preferred Stock outstanding to the last
dividend payment date shall have been paid or declared and set apart for
payment) by the Corporation PROVIDED that any such junior or parity
Preferred Stock or Common Stock may be converted into or exchanged for
stock of the Corporation ranking junior to the Series A Fixed/Adjustable
Rate Preferred Stock as to dividends.
(b) If at any times prior to January 15, 2000, one or more amendments
to the Internal Revenue Code of 1986, as amended (the CODE"), are enacted
which reduce the percentage of the dividends received deduction (currently
70%) as specified in Section 243(a)(1) of the Code or any successor
provision (the "DIVIDENDS RECEIVED PERCENTAGE"), the amount of each
dividend (if declared) on each share of the Series A Fixed/Adjustable Rate
Preferred Stock for dividend payments made on or after the effective date
of such change in the Code will be adjusted by multiplying the amount of
the dividend payable determined as described above (before adjustment) by a
factor, which will be the number determined in accordance with the
following formula (the "DRD FORMULA"), and rounding the result to the
nearest cent (with one-half cent rounded up):
4
1-[35(1-70)]
_____________
1-[35(1-DRP)]
For the purpose of the DRD Formula, "DRP" means the Dividends Received
Percentage (expressed as a decimal) applicable to the dividend in question;
PROVIDED, HOWEVER, that if the Dividends Received Percentage applicable to
the dividend in question shall be less than 50%, the DRP shall equal
50. No amendment to the Code, other than a change in the percentage of the
dividends received deduction set forth in Section 243(a)(1) of the Code, or
any successor provision thereto, will give rise to an adjustment.
Notwithstanding the foregoing provisions, in the event that, with respect
to any such amendment, the Corporation receives either an unqualified
opinion of nationally recognized independent tax counsel selected by the
Corporation or a private letter ruling or similar form of authorization
from the Internal Revenue Service ("IRS") to the effect that such an
amendment does not apply to dividends payable on the Series A
Fixed/Adjustable Rate Preferred Stock, then any such amendment will not
results in the adjustment provided for pursuant to the DRD Formula. The
opinion reference in the previous sentence will be based upon the
legislation amending or establishing the DRP or upon a published
pronouncement of the IRS addressing such legislation
If any such amendment to the Code is enacted after the dividend
payable on a Dividend Payment Date has been declared, the amount of the
dividend payable on such Dividend Payment Date will not be increased;
instead, additional dividends (the "POST DECLARATION DATE DIVIDENDS") equal
to the excess, if any, of (x) the product of the dividend paid by the
Corporation on such Dividend Payment Date and the DRD Formula (where the
DRP used in the DRD Formula would be equal to the greater of the Dividend
Received Percentage and .50) applicable to the dividend in question over
(y) the dividend paid by the Corporation on such Dividend Payment Date,
will be payable (if declared) to holders of Series A Fixed/Adjustable Rate
Preferred stock on the record date applicable to the next succeeding
Dividend Payment Date or, if the Series A Fixed/Adjustable Rate Preferred
Stock is called for redemption prior to such record date, to holders of
Series A Fixed/Adjustable Rate Preferred Stock on the redemption date, as
the case may be, in addition to any other amounts payable on such date.
Notwithstanding the foregoing provisions, if with respect to any such
amendment, the Corporation receives either an unqualified opinion of
nationally recognized independent tax counsel selected by the Corporation
or a private letter ruling or similar form of authorization from the IRS to
the effect that such amendment does not apply to a dividend so payable on
the Series A Fixed/Adjustable Rate Preferred Stock, then such amendment
will not result in the
5
payment of Post Declaration Date Dividends. The opinion referenced in
the previous sentence will be based upon the legislation amending or
establishing the DRP or upon a published pronouncement of the IRS
addressing such legislation.
If any such amendment to the Code is enacted and the reduction in the
Dividends Received Percentage retroactively applies to a Dividend Payment
Date as to which the Corporation previously paid dividends on the Series A
Fixed/Adjustable Rate Preferred Stock (each, an "AFFECTED DIVIDEND PAYMENT
DATE"), the Corporation will pay (if declared) additional dividends (the
"RETROACTIVE DIVIDENDS") to holders of Series A Fixed/Adjustable Rate
Preferred Stock on the record date applicable to the next succeeding
Dividend Payment Date (or, if such amendment is enacted after the dividend
payable on such Dividend Payment Date has been declared, to holders of
Series A Fixed/Adjustable Rate Preferred Stock on the record date following
the date of enactment) or, if the Series A Fixed/Adjustable Rate Preferred
Stock is called for redemption prior to such record date, to holders of
Series A Fixed/Adjustable Rate Preferred Stock on the redemption date, as
the case may be, in an amount equal to the excess of (x) the product of the
sum of the dividends paid by the Corporation on each Affected Dividend
Payment Date and the DRD Formula (where the DRP used in the DRD Formula
would be equal to the greater of the Dividends Received Percentage and .50)
applied to each Affected Dividend Payment Date over (y) the sum of the
dividends paid by the Corporation on each Affected Dividend Payment Date.
The Corporation will only make one payment of Retroactive Dividends for any
such amendment. Notwithstanding the foregoing provisions, if, with respect
to any such amendment, the Corporation receives either an unqualified
opinion of nationally recognized independent tax counsel selected by the
Corporation or a private letter ruling or similar form of authorization
from the IRS to the effect that such amendment does not apply to a dividend
payable on an Affected Dividend Payment Date for the Series A
Fixed/Adjustable Rate Preferred Stock, then such amendment will not result
in the payment of Retroactive Dividends with respect to such Affected
Dividend Payment Date. The opinion referenced in the previous sentence will
be based upon the legislation amending or establishing the DRP or upon a
published pronouncement of the IRS addressing such legislation.
Notwithstanding the foregoing, no adjustment in the dividends payable
by the Corporation will be made, and no Post Declaration Date Dividends or
Retroactive Dividends will be payable by the Corporation, in respect of the
enactment of any amendment to the Code at any time on or after January 15,
2000 that reduces the Dividends Received Percentage.
In the event that the amount of dividends payable per share of the
Series A Fixed/Adjustable Rate Preferred Stock is adjusted pursuant to the
DRD Formula
6
and/or Post declaration Date dividends or Retroactive Dividends are to be
paid, the corporation will give notice of each such adjustment and if
applicable, any Post Declaration Date Dividends and Retroactive Dividends
to the holders of records as they appear on the stock books of the
Corporation on such record date, not more than 60 days nor less than 10
days preceding the payment date thereof as shall be fixed by the Board or
the Committee.
Unless the context otherwise requires references herein to dividends
include dividends as adjusted by the DRD Formula, Post Declaration Date
Dividends and Retroactive Dividends. The Corporation's calculation of the
dividends payable, as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified public
accountants then regularly engaged by the Corporation, will be final and
not subject to review absent manifest error.
If the Dividends Received Percentage is reduced 50% or less prior to
January 15,200, the Corporation may at its option, redeem the Series A
Fixed/Adjustable Rated Preferred Stock as a whole but not in part as
described in paragraph 7 hereof.
3. APPLICABLE RATE Except as provided above in paragraph 2, the "APPLICABLE
RATE" per annum for any dividend period beginning on or after June15,2003
will be equal to .625% plus the Effective Rate (as defined herein), but not
less than 6.05% nor greater that 12.05% (without taking into account any
adjustment as described in paragraph 2(b)). The "EFFECTIVE RATE" for any
dividend period beginning on or after Jun 15, 2003 will be equal to the
highest of the Treasury Bill Rate, the Ten-Year Constant Maturity Rate and
the Thirty-Year Constant Maturity Rate (each as defined herein) for such
dividend period. If the Corporation determines in good faith that for any
reason; (i) any one of the Treasury Bill Rate, the Ten-Year Constant
Maturity Rate or the Thirty-Year Constant Maturity Rate cannot be
determined for any dividend period beginning on or after June 15, 2003,
then the Effective Rate for such dividend period will be equal to the
higher of whichever two of such rates can be so determined; (ii) only Year
Constant Maturity Rate can be determined for any dividend period beginning
on or after June 15, 2003, then the Effective Rate for such dividend
period will be equal to whichever such rates can so be determined; or
(iii) none of the Treasury Bill Rate, the Ten-Year Constant Maturity Rate
or the Thirty-Year Constant Maturity Rate can be determined for any
dividend period beginning on or after June 15, 2003, then the Effective
Rate for the preceding dividend period will be continued for such dividend
period.
7
The "TREASURY BILL RATE" for each dividend period will be the
arithmetic average of the tow most recent weekly per annum market discount
rate (or the one weekly per annum market discount rate if only one such
rate is published during the relevant Calendar Period (as defined herein)
for three- month U.S. Treasury bills, as published weekly by the Federal
Reserve Board (as defined herein) during the Calendar Period immediately
preceding the tenth calendar day preceding the dividend period for which
the dividend rate on the Series A Fixed/Adjustable Rate Preferred Stock is
being determined.
The "TEN-YEAR CONSTANT MATURITY RATE" for each dividend period will be
the arithmetic average of the two most recent weekly per annum Ten-Year
Average Yields (as defined herein)(or the one weekly per annum Ten-Year
Average Yield, if only one such yield is published during the relevant
Calendar Period), as published weekly by the Federal Reserve Board during
the Calendar Period immediately preceding the tenth calendar day preceding
the dividend period for which the dividend rate on the Series A
Fixed/Adjustable Rate Preferred Stock is being determined.
The "THIRTY-YEAR CONSTANT MATURITY RATE" for each dividend period will
be the arithmetic average of the two most recent weekly per annum
Thirty-Year Average Yields (as defined herein) (or the one weekly per annum
Thirty-Year Average Yield, if only one such yield is published during the
relevant Calendar Period), as published weekly by the Federal Reserve Board
during the Calendar Period immediately preceding the tenth calendar day
preceding the dividend period for which the dividend rate on the Series A
Fixed/Adjustable Rate Preferred Stock is being determined.
If the Federal Reserve Board does not publish a weekly annum market
discount rate, Ten-Year Average Yield or Thirty-Year Yield during any
applicable Calendar Period, then the Treasury Bill Rate, Ten-Year Constant
Maturity Rate or Thirty-Year Constant Maturity Rate, as the case may be,
for such dividend period will be the arithmetic average of the two most
recent weekly per annum market discount rates for three-month U.S. Treasury
bill, Ten-Year Average Yields or Thirty-Year Average Yields, as the case
may be (or the one weekly per annum rate, if only one such rate is
published during the relevant Calendar Period), as published weekly during
such Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. If any such rate is not
published by the Federal Reserve Board or by any Federal Reserve Bank or by
any U.S. Government department or agency during such Calendar Period then
the Treasury Bill Rate, Ten-Year Constant Maturity Rate or Thirty-Year
Constant Maturity Rate or Thirty-Year Constant Maturity Rate for such
dividend period will be the arithmetic of the tow most recent weekly per
annum (i) in the case of the Treasury Bill Rate, market discount rate (or
the one weekly
8
per annum market discount rate, if only such rate is published during the
relevant Calendar Period) for all of the U.S. Treasury bills then having
remaining maturities of not less than 80 nor more than 100 days, and (ii)
in the case of the Ten-Year Constant Maturity Rate, average yields to
maturity (or the one weekly per annum average yield to maturity, if only
one such yield is published during the relevant Calendar Period) for all
of the actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities (as defined herein) then
having remaining maturities of not less than eight nor more than
twelve years, and (iii), in the case of the Thirty-Year Constant
Maturity Rate, average yield to maturity (or the one weekly per annum
average yield to maturity, if only one such yield is published during the
relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities)
then having remaining maturities of not less than twenty-eight nor more
than thirty years, in each case as published during such Calendar Period
by the Federal Reserve or, if the Federal Reserve Board does not publish
such rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. If the Corporation
determines in god faith that for any reason (i) no such U.S. Treasury bill
rates are published as provided above during such Calendar Period or (ii)
the Corporation cannot determine the Treasury Bill Rate for any dividend
period; then the Treasury Bill Rate for such dividend period will be the
arithmetic average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of
marketable non-interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the date of each
such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations are not generally
available) to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation. If the Corporation
determines in good faith that for any reason the Corporation cannot
determine the Ten-Year Constant Maturity Rate or Thirty-Year Constant
Maturity Rate for any dividend period as provided above, then the
applicable rate for such dividend period will be the arithmetic average of
the per annum average yields to maturity based upon the closing bids during
such Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date (i) in the case of the Ten-Year
Constant Maturity Rate, not lessthan eight nor more than twelve years
from the date of each such quotation, and (ii) in the case of the
Thirty-Year Constant Maturity Rate, not less than twenty-eight nor
more than thirty years from the date of date of each such quotation,
in each case as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations are not generally
available) to the Corporation by at least three recognized dealers
in the United States.
9
The Treasury Bill Rate, the Ten-Year Constant Maturity Rate and the
Thirty-Year Constant Maturity Rate will each be rounded to the nearest five
hundredth of percent, with .025% being rounded upward.
The Applicable Rate with respect to each dividend period beginning on
or after June 15, 2003 will be calculated as promptly as practicable by the
Corporation according to the appropriate method described above. The
Corporation will cause notice of each Applicable Rate to be given to the
holders of Series A Fixed/Adjustable Rate Preferred Stock when payment is
made of the dividend for the immediately preceding dividend period.
As used in this paragraph 3, the term "CALENDAR PERIOD" means a period
of fourteen calendar days; the term "FEDERAL RESERVE BOARD" means the Board
of Governors of the Federal Reserve System; the term "SPECIAL SECURITIES"
means securities which can, at the option of the holder, be surrendered at
face value in payment of any Federal estate tax or which provided tax
benefits to the holder and are priced to reflect such tax benefits or which
provide tax benefits to the holder and are priced to reflect such tax
benefits or which were originally issued at a deep or substantial discount;
the term "TERM-YEAR AVERAGE YIELD" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of ten year); and the term "THIRTY-YEAR
AVERAGE YIELD" means the average yield to maturity for activity traded
marketable U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of thirty years).
4. "LIQUIDATION PREFERENCE". The shares of Series A Fixed/Adjustable
Rate Preferred Stock shall rank, as to liquidation, dissolution or winding
up of the Corporation, prior to the shares of Common Stock and any other
class of stock of the Corporation ranking junior to the Series A
Fixed/Adjustable Rate Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Corporation, so that in the event of any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holder of the Series A Fixed/Adjustable Rate
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, before any distribution is made to holders of
shares of Common Stock or any other such junior stock, an amount equal to
$200.00 per share (the "LIQUIDATION PREFERENCE" of a share of Series A
Fixed/Adjustable Rate Preferred Stock) plus an amount equal to all
dividends (whether or not earned or declared) accrued and accumulated and
unpaid on the shares of Series A Fixed/Adjustable Rate Preferred Stock to
the date of final distribution. The holders of the Series A
Fixed/Adjustable Rate Preferred Stock will not be entitled to receive
the Liquidation Preference until the liquidation preference of any
other class of stock of the Corporation ranking senior to the Series A
Fixed/Adjustable Rate Preferred Stock as to rights upon liquidation,
dissolution or winding up shall
10
have been paid (or a sum set aside therefor sufficient to provide for
payment) in full. After payment of the full amount of the Liquidation
Preference and such dividends, the holders of shares of Series A
Fixed/Adjustable Rate Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Corporation. If, upon
any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
shares of Parity Preferred Stock shall be sufficient to pay in full the
preferential amount aforesaid, then such assets, or the proceeds thereof,
shall be distributable among such holders ratably in accordance with the
respective amount which would be payable on such shares if all amounts
payable thereon were paid in full. For the purposes hereof, neither a
consolidation or merger of the Corporation with or into any other
corporation, nor a merger of any other corporation with or into the
Corporation, nor sale or transfer of all or any part of the Corporation's
assets for cash or securities shall be considered a liquidation,
dissolution or winding up of the Corporation.
5. CONVERSION. The Series A Fixed/Adjustable Rate Preferred Stock
is not convertible into shares of any other class or series of stock of
the Corporation.
6. VOTING RIGHTS. The holders of shares of Series A
Fixed/Adjustable Rate Preferred Stock shall have no voting rights
whatsoever, except for any voting rights to which they may be entitled
under the laws of the State of Delaware, and except as follows:
(a) Whenever, at any time or times, dividends payable on the
shares of Series A Fixed/Adjustable Rate Preferred Stock or on any
Parity Preferred Stock shall be in arrears for an aggregate number
of days equal to six calendar quarters or more, whether or not
consecutive, the holders of the outstanding shares of Series A
Fixed/Adjustable Rate Preferred Stock shall have the right, with
holders of shares of any one or more other class or series of stock
upon which like voting rights have been conferred and are
exercisable (voting together as a class) to elect two of the
authorized number of members of the Board at the Corporation's next
annual meeting of stockholders and at each subsequent annual meeting
of stockholders until such arrearages have been paid or set apart
for payment, at which time such right shall terminate except as
herein or by law expressly provided subject to revesting in the
event of each and every subsequent default of the character above
mentioned. Upon any termination of the right of the holders of
shares of Series A Fixed/Adjustable Rate Preferred Stock as a class
to vote for directors as herein provided, the term of office of all
directors then in office elected by the holders of shares of Series
A Fixed/Adjustable Rate Preferred Stock shall terminate immediately.
11
Any director who shall have been so elected pursuant to this paragraph
may be removed at any time, either with or without cause. Any vacancy
thereby created may be filled only by the affirmative vote of the
holders of shares of Series A Fixed/Adjustable Rate Preferred Stock voting
separately as a class (together with the holders of shares of any other
class or series of stock upon which like voting rights have been
conferred and are exercisable). If the office of any director elected by
the holders of shares of Series A Fixed/Adjustable Rate Preferred Stock
voting as a class becomes vacant for any reason other than removal from
office as aforesaid, the remaining director elected pursuant to this
paragraph may choose a successor who shall hold office for the unexpired
term in respect of which such vacancy occurred. At elections for such
directors, each holder of shares of Series A Fixed/Adjustable Rate
Preferred Stock shall be entitled to one vote for each share held (the
holders of shares of any other class or series of preferred stock having
like voting rights being entitled to such number of votes, if any, for
each share of such stock held as may be granted to them).
(b) So long as any shares of Series A Fixed/Adjustable Rate
Preferred Stock remain outstanding, the consent of the holders of at least
two-thirds of the shares of Series A Fixed/Adjustable Rate Preferred
Stock outstanding at the time and all other classes or series of stock
upon which like voting rights have been conferred and are exercisable
(voting together as a class) given in person or by proxy, either in
writing or any any meeting called for the purpose, shall be necessary to
permit, effect or validate any one or more of the following.
(i) the issuance or increase of the authorized amount of any
class or series of shares ranking prior (as that term is defined in
paragraph 10(a) hereof) to the shares of the Series A
Fixed?Adjustable Rate Preferred Stock or
(ii) the amendment, alteration repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the
Certificate of Incorporation (including this resolution or any
provisions hereof) that would materially and adversely affect any
power, preference, or special right of the shares of Series A
Fixed?Adjustable Rate Preferred Stock or of the holders thereof;
PROVIDED, HOWEVER, that any increase in the amount of authorized Common
Stock or authorized Preferred Stock or any increase or decrease in the
number of shares of any series of Preferred Stock or the creation and
issuance of other series of Common Stock or Preferred Stock in each case
12
ranking on a parity with or junior to the shares of Series A
Fixed?Adjustable Rate Preferred Stock with respect to the payment
of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such powers, preferences or special rights.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of Series A Fixed?Adjustable Rate Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
7. REDEMPTION. The shares of the Series A Fixed/Adjustable Rate
Preferred Stock may be redeemed at the option of the Corporation, as a
whole, or from time to time in part, at any time, upon not less than
thirty nor more than sixty days' prior notice mailed to the holders of
the shares to be redeemed at their addresses as shown on the stock books
of the Corporation; PROVIDED, HOWEVER, that shares of the Series A
Fixed/Adjustable Rate Preferred Stock shall not be redeemable prior to
June 15, 2003, except as stated below. Subject to the foregoing, on or
after such date, shares of the Series A Fixed/Adjustable Rate Prefrerred
Stock are redeemable at $200.00 per share plus accrued and unpaid dividends
(whether or not declared and including any increase in dividends payable
due to changes in the Dividends Received Percentage) from the immediately
preceding Dividend Payment Date to the date fixed for redemption (but
without any accumulation for unpaid dividends for prior dividend periods on
the Series A Fixed/Adjustable Rate Preferred Stock).
If full cumulative dividends on the Series A Fixed/Adjustable Rate
Preferred Stock have not been paid, the Series A Fixed/Adjustable Rate
Preferred Stock may not be redeemed in part and the Corporation may not
purchase or acquire any shares of the Series A Fixed/Adjustable Rate
Preferred Stock otherwise than pursuant to a purchase or exchange offer
made on the same terms to all holders of the Series A Fixed/Adjustable
Rate Preferred Stock. If fewer than all outstanding shares of Series A
Fixed/Adjustable Rate Preferred Stock are to be redeemed, the
Corporation will select those to be redeemed by lot or a substantially
equivalent method.
If a notice of redemption has been given pursuant to this paragraph 7
and if, on or before the date fixed for redemption, the funds necessary
for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds in trust for the pro rate
benefit of the holders of the shares of Series A Fixed/Adjustable Rate
Preferred Stock so called for redemption, then,
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notwithstanding that any certificates for such shares have not been
surrendered for cancellation, on the redemption date dividends shall
cease to accrue on the shares to be redeemed, and at the close of
business on the redemption date the holders of such shares shall cease
to be stockholders with respect to such shares and shall have no interest
in or claims against the Corporation by virtue thereof and shall have no
voting or other rights with respect to such shares, except the right to
receive the moneys payable upon surrender (and endorsement, if required
by the Corporation) of their certificates, and the shares evidenced
thereby shall no longer be outstanding. Subject to applicable escheat
laws, any moneys so set aside by the Corporation an unclaimed a the end
of two years form the redemption date shall revert to the general funds
of the Corporation for the payment of the amounts payable upon such
redemption. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.
Notwithstanding the foregoing provisions, if at any time prior to
January 15, 2000, one or more amendments to the Code are enacted that
reduce the Dividends Received Percentage to 50% or less, and as a
result, the amount of dividends of the Series A Fixed/Adjustable Rate
Preferred Stock payable on any Dividend Payment Date may be adjusted
upwards as described above in paragraph 2, the Corporation, at its
option, may redeem all, but not less than all, of the outstanding share
of the Series A Fixed/Adjustable Rate Preferred Stock, provided that,
within sixty days of the date on which an amendment to the Code is
enacted that reduces the Dividends Received Percentage to 50% or less,
the Corporation sends notice to holders of the Series A Fixed/Adjustable
Rate Preferred Stock of such redemption. Any redemption of the Series A
Fixed/Adjustable Rate Preferred Stock will be at a redemption price of
$204.00 per share (equivalent to $31.00 per depositary share), plus
accrued and unpaid dividends (whether or not declared and including any
increase in dividends payable due to changes in the Dividends Received
Percentage) from the immediately preceding Dividends Payment Date or the
date of original issuance of the Series A Fixed/Adjustable Rate
Preferred Stock, as the case may be, to the date fixed for redemption
(but without any accumulation for unpaid dividends for prior dividend
periods on the Series A Fixed/Adjustable Rate Preferred Stock).
8. AUTHORIZATION AND ISSUANCE OF OTHER SECURITIES. No consent of
the holders of the Series A Fixed/Adjustable Rate Preferred Stock shall
be required for (a) the creation of any kind of the Corporation (b) the
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creation, or increase or decrease in the amount, of any class or
series of stock of the Corporation not ranking prior as to dividients or
upon liquidation, dissolution or winding up to the Series A
Fixed/Adjustable Rate Preferred Stock or (c) any increase or decrease in
the amount of authorized Common Stock or any increase, decrease of
change in the par value thereoif or in any other terms thereof.
9. AMENDMENT OF RESOLUTION. The Board and the Committee each
reserves the right by subsequent amendment of this resolution from time
to time to increase or decrease the number of shares that constitute the
Series A Fixed/Adjustable Rate Preferred Stock (but not below the number
of shares thereof then outstanding) and in other respects to amend this
resolution within the limitations provided by law, this resolution
within the limitations provided by law, this resolution and the
Certificate of Incorporation.
10. RANK. For the purposes of this resolution, any stock of any
class or classes of the Corporation shall be deemed to rank:
(a) prior to shares of the Series A Fixed/Adjustable Rate
Preferred Stock, either as to divides or upon liquidation,
dissolutionor winding up, or both, if the holders of stock of such
class or classes shall be entitled by the terms thereof 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 shares of the Series A Fixed/Adjustable
Rate Preferred Stock,
(b) on a parity with shares of the Series A Fixed/Adjustable
Rate Preferred Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, whether or not the dividend rates,
dividend payment dates, or redemptionor liquidation prices per share
thereof be different from those of the Series A Fixed/Adjustable Rate
Preferred Stock, if the holders of stock of such class or classes
shall be entitled by the terms thereof to the receipt of dividends or
of amounts distributed upon liquidation, dissolution, or winding up,
as the case may be, in proportion to their respective dividend rates
or liquidation prices, without preference or priority of one over the
other as between the holders of such stock and the holders of shares
of Series A Fixed/Adjustable Rate Preferred Stock (the term ""PARTY
PREFERRED STOCK'' being used to refer to any stock ona parity with
the shares of Series A Fixed/Adjustable Rate Preferred Stock, either
asto dividends or upon liquidation, dissolution or winding up or
both as the context may require), and
(c) junior to shares of the Series A Fixed/Adjustable Rate
Preferred Stock, either as to dividends or upon liquidation,
dissolution or winding up or both. If such class shall be Common
Stock or if the holders of the Series A Fixed/Adjustable Rate
Preferred Stock shall be entitled to the receipt of dividends
r of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of stock of such class or classes.
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The Series A Fixed/Adjustable Rate Preferred Stock shall be entitled
to the receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, to the Common Stock and on a parity with the
Corporation 9-1/2% Cumulative Perpetual Preferrer Stock, with a
liquidation value of $200.00 per share.
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IN WITNESS WHEREOF, ARM Financial Group, Inc. has caused this
Certificate to be made under the seal of the Corporation and signed by Martin
H. Ruby, its Chairman of the Board of Directors and Chief Executive officer
(Principal Executive Officer), and attested by Robert H. Scott, its Executive
Vice President, General Counsel and Secretary, this 16th day of July, 1998.
ARM FINANCIAL GROUP, INC.
By: /s/ Martin H. Ruby
-----------------------
Name: Martin H. Ruby
Title: Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
[SEAl]
Attest:
/s/ P A Scott
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