<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT
TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
United Home Life Insurance Company
----------------------------------
(Name of Subject Company)
SouthCap Corporation
--------------------
(Bidder)
Common Stock, $1.00 par value per share
---------------------------------------
(Title of Class of Securities)
910603-10-9
-------------------------------------
(CUSIP Number of Class of Securities)
F. W. Lazenby
Chairman, President and Chief Executive Officer
SouthCap Corporation
211 Seventh Avenue North, 4th Floor
Nashville, Tennessee 37219
(615) 244-1908
---------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Bidder)
====================
Copy to
Donald I. N. McKenzie
Sherrard & Roe, PLC
424 Church Street Suite 2000
Nashville, Tennessee 37219
(615) 742-4200
--------------------
CALCULATION OF FILING FEE
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- --------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee
- --------------------------------------------------------------------------------
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$5,242,257 $1,049
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</TABLE>
*Determined solely for the purpose of calculating the filing fee. This amount
was calculated by multiplying $4.50, the per share tender offer price, by
1,164,946, the number of shares of common stock not presently owned by
SouthCap Corporation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)
(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: ________________ Filing Party: ____________
Form or Registration No.: ________________ Date Filed: ____________
Note: The remainder of this cover page is only to be completed if this
Schedule 14D-1 (or amendment thereof) is being filed, inter alia, to satisfy
the reporting requirements of section 13(d) of the Securities Exchange Act of
1934. See General Instructions D, E and F to Schedule 14D-1.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter the
disclosure provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
================================================================================
<PAGE> 2
Cusip No. 910603-10-9 14D-1 Page 1 of 6
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1 Name of Reporting Person
SOUTHCAP CORPORATION
S.S. or I.R.S. Identification No. of above Person
62-1579070
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2 Check the appropriate Box if a Member of a Group
[ ] a
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[ ] b
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3 SEC Use Only
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4 Source of Funds (See Instructions)
WC
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5 [ ] Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) or 2(f)
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6 Citizenship or Place of Organization
TENNESSEE
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Aggregate Amount Beneficially Owned by Each Reporting Person
7 79,821
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8 Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See Instructions).
[ ]
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Percent of Class Represented by Amount in Row (7)
9 6.6%
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Type of Reporting Person (See Instructions)
10 CO
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</TABLE>
<PAGE> 3
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by SouthCap Corporation, a Tennessee corporation ("Purchaser"), to
purchase all of the outstanding shares of common stock, par value $1.00 per
share (the "Shares"), of United Home Life Insurance Company, an Indiana
insurance company (the "Company"), at a price of $4.50 per Share, payable to
the seller in cash promptly following completion of the Offer, without
interest thereon upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase dated April 3, 1997 (the "Offer to Purchase")
and in the related Letter of Transmittal (which together constitute the
"Offer"), copies of which are attached hereto as Exhibits (a) (1) and (a)
(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is United Home Life Insurance
Company, an Indiana insurance company, which has its principal executive
offices at 1499 Windhorst Way, Greenwood, Indiana 46143.
(b) The class of equity securities being sought is the common stock,
par value $1.00 per share, of the Company (the "Common Stock"). The
information set forth in the Introduction and Section 1 ("Terms of Offer;
Expiration Date") of the Offer to Purchase is incorporated herein by
reference.
(c) The information concerning the principal market in which the Shares
are traded and certain high and low sales prices for the Shares in such
principal market is set forth in Section 5 ("Price Range of Shares;
Dividends") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a-d) and (g) This Statement is filed by Purchaser, a Tennessee
corporation. The information concerning the principal business and address
of the principal office of Purchaser and certain information regarding
executive officers, directors, and certain shareholders of Purchaser, is set
forth in Section 8 ("Certain Information Concerning the Purchaser") and
Schedule A of the Offer to Purchase and is incorporated herein by reference.
(e-f) During the last five years, neither Purchaser, nor, to the best
knowledge of Purchaser, any of the persons listed in Schedule A of the Offer
to Purchase, has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of
such laws.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser") and Section 10 ("Background of Offer
to Purchase") of the Offer to Purchase is incorporated herein by reference.
Page 2 of 6 pages
<PAGE> 4
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (c) The information set forth in Section 9 ("Source and Amount
of Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) - (e) The information set forth in Section 11 ("Purpose of the
Offer and Tender") of the Offer to Purchase is incorporated herein by
reference.
(f) and (g) The information set forth in Section 6 ("Effect of the
Offer on the Market for the Shares; Market for the Shares") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain
Information Concerning the Purchaser") and Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser"), Section 10 ("Background of the Offer
to Purchase") and Section 11 ("Purpose of the Offer and Tender; Plans of the
Purchaser") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15 ("Fees and Expenses") of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The Financial Statements of Purchaser set forth as Exhibit B to the
Offer to Purchase are incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) Prior to the commencement of a tender offer or any other action
which will result in the acquisition of 10% or more of the voting securities
of an Indiana insurance company, approval of the Indiana Commissioner of
Insurance must be received. On March 27, 1997, an order approving the
tender offer was received from the Indiana Commissioner of Insurance. The
materials relating to the tender offer must be filed with and are subject to
the review and approval of the Indiana Commissioner of Securities pursuant
to Indiana Code 23-2-3.1 et seq.
(c) Not applicable.
(d) Not applicable.
Page 3 of 6 pages
<PAGE> 5
(e) Not applicable.
(f) Not applicable.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated April 8, 1997.
(a)(2) Letter of Transmittal.
(a)(4) Summary Advertisement as published in the Franklin Daily
Journal and the Indianapolis Star News on April 8, 1997.
(a)(5) Press Release issued by SouthCap Corporation on April 8, 1997.
(b) None.
(c) Stock Purchase Agreement dated December 19, 1996, between SouthCap
Corporation and Theresa J. Hull; Proxy from Theresa J. Hull to
SouthCap Corporation dated December 19, 1996.
(d) None.
(e) Not Applicable.
(f) Not Applicable.
Page 4 of 6 pages
<PAGE> 6
SIGNATURE.
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: April 8, 1997 SOUTHCAP CORPORATION
By: /s/ F. W. Lazenby
---------------------------------
F.W. Lazenby, Chairman, President
and Chief Executive Officer
Page 5 of 6 pages
<PAGE> 7
EXHIBIT INDEX
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PAGE IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF EXHIBITS SYSTEM
- ---------- ----------------------- ------
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(a) (1) Offer to Purchase dated April 8, 1997................
(a) (2) Letter of Transmittal................................
(a) (4) Summary Advertisement as published in the Franklin
Daily Journal and the Indianapolis Star News on
April 8, 1997........................................
(a) (5) Press Release issued by SouthCap Corporation on
April 8, 1997........................................
(c) Stock Purchase Agreement dated December 19, 1996,
between SouthCap Corporation and Theresa J. Hull;
Proxy from Theresa J. Hull to SouthCap Corporation
dated December 19, 1996..............................
</TABLE>
Page 6 of 6 pages
<PAGE> 1
EXHIBIT A(i)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
UNITED HOME LIFE INSURANCE COMPANY
at
$ 4.50 PER SHARE
by
SOUTHCAP CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., INDIANAPOLIS,
INDIANA TIME ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER,
THE NUMBER OF SHARES WHICH TOGETHER WITH THE SHARES CURRENTLY
OWNED BY SOUTHCAP, REPRESENTS AT LEAST 50.1% OF THE OUTSTANDING
SHARES OF COMMON STOCK OF UNITED HOME LIFE INSURANCE COMPANY.
_________________________________
IMPORTANT
ANY HOLDER OF SHARES OF COMMON STOCK OF UNITED HOME LIFE INSURANCE COMPANY
(THE "SHARES") DESIRING TO TENDER ALL OR ANY PORTION OF HIS OR HER SHARES
SHOULD EITHER: (1) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR FACSIMILE
THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND
MAIL OR DELIVER THE LETTER OF TRANSMITTAL, THE CERTIFICATES FOR THE SHARES
TENDERED, AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY; OR (2) REQUEST
HIS OR HER BROKER OR OTHER INVESTMENT PROFESSIONAL TO EFFECT THE TRANSACTION
FOR HIM OR HER. IF ANY SHARES ARE REGISTERED IN THE NAME OF A BROKER OR
INVESTMENT PROFESSIONAL, THEN A SHAREHOLDER MUST CONTACT SUCH ENTITY IN ORDER
TO TENDER ANY SHARES.
A SHAREHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES ARE NOT
IMMEDIATELY AVAILABLE, OR WHO IS UNABLE TO DELIVER ALL DOCUMENTS REQUIRED BY
THE LETTER OF TRANSMITTAL TO THE DEPOSITARY PRIOR TO THE EXPIRATION OF THE
OFFER, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURE FOR GUARANTEED
DELIVERY SET FORTH IN SECTION 3 HEREOF.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT, D.F. KING & CO., INC., AT ITS ADDRESS AND TELEPHONE NUMBERS SET FORTH ON
THE LAST PAGE OF THIS OFFER TO PURCHASE. ADDITIONAL COPIES OF THIS OFFER TO
PURCHASE AND THE LETTER OF TRANSMITTAL MAY BE OBTAINED FROM THE INFORMATION
AGENT.
_________________________________
April 8, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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INTRODUCTION..............................................................1
SUMMARY OF OFFER TO PURCHASE..............................................2
1. TERMS OF OFFER; EXPIRATION DATE.......................................3
2. ACCEPTANCE FOR PAYMENT; PAYMENT FOR SHARES............................4
3. PROCEDURE FOR TENDERING SHARES........................................5
4. WITHDRAWAL RIGHTS.....................................................6
5. PRICE RANGE OF SHARES; DIVIDENDS.....................................7
6. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES......................8
7. CERTAIN INFORMATION CONCERNING THE COMPANY............................8
8. CERTAIN INFORMATION CONCERNING THE PURCHASER.........................10
9. SOURCE AND AMOUNT OF FUNDS...........................................11
10. BACKGROUND OF OFFER TO PURCHASE.....................................12
11. PURPOSE OF THE OFFER AND TENDER; PLANS OF THE PURCHASER.............12
12. CONDITIONS OF OFFER.................................................13
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.............................14
14. CERTAIN LEGAL MATTERS...............................................15
15. FEES AND EXPENSES...................................................17
16. MISCELLANEOUS.......................................................17
SCHEDULE A - EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN SHAREHOLDERS OF
SOUTHCAP...................................................A-i
SCHEDULE B -SOUTHCAP CORPORATION - AUDITED FINANCIAL STATEMENTS.........B-i
</TABLE>
i
<PAGE> 3
TO THE HOLDERS OF THE COMMON STOCK
OF UNITED HOME LIFE INSURANCE COMPANY
INTRODUCTION
SouthCap Corporation, a Tennessee corporation ("SouthCap" or the
"Purchaser"), hereby offers to purchase all outstanding shares of common stock,
par value $1.00 per share (the "Shares"), of United Home Life Insurance
Company, an Indiana life insurance company (the "Company"), at a price of $4.50
per share, payable in cash, without interest thereon. Enclosed with this Offer
to Purchase, dated April 8, 1997 (the "Offer to Purchase"), is a related Letter
of Transmittal which should be used to reply to the Offer to Purchase (the
Letter of Transmittal and the Offer to Purchase are collectively referred to as
the "Offer").
Your attention is invited to the following:
1. The tender price is $4.50 per Share, payable in cash, without
interest thereon.
2. The Offer to Purchase is being made for all outstanding Shares, subject
only to certain conditions set forth in Section 12 hereof, which include, among
other things, there being validly tendered and not withdrawn prior to the
expiration of the Offer to Purchase a number of Shares which, together with any
Shares then owned by the Purchaser, represents at least 50.1% of the
outstanding Shares on a fully diluted basis (the "Minimum Condition"). The
Minimum Condition and other terms and conditions hereof are set forth in
Section 12. "Fully diluted" means all outstanding Shares and all other shares
of common stock of the Company issuable upon the conversion of any convertible
securities or upon the exercise of any options, warrants or rights. Based upon
the most recent information publicly disclosed by the Company, as of the date
of this Offer to Purchase, there were 1,209,298 Shares outstanding.
3. The Offer to Purchase and withdrawal rights will expire at 5:00 p.m.,
Indianapolis, Indiana, time, on Tuesday, May 20, 1997, unless the Offer is
extended.
If you wish to tender any Shares in accordance with the terms of the
Offer, you must comply with the instructions set forth in this Offer to
Purchase and the Letter of Transmittal.
The offer is made solely by this Offer to Purchase and the related Letter
of Transmittal and is being made to all holders of Shares. The Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make
a good faith effort to comply with any such state statute. If, after a good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to (nor will tenders be accepted from) the holders of Shares
in such state. In any jurisdiction where the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
will be made on behalf of the Purchaser only by registered brokers or dealers
licensed under the laws of any such jurisdiction.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1
<PAGE> 4
SUMMARY OF OFFER TO PURCHASE
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this Offer to Purchase.
SouthCap Corporation is offering to purchase all the outstanding Shares of
United Home Life Insurance Company, an Indiana insurance company (the
"Company") at a price of $4.50 per share, payable in cash, without interest
thereon. SouthCap is an insurance holding company headquartered in Nashville,
Tennessee. The Company's home office is located in Greenwood, Indiana. The
Company was founded in 1948 in Indiana and is a publicly-owned life insurance
company licensed to sell a broad line of life insurance products in 25 states
and the District of Columbia. The Company's principal lines of business (based
upon premium income) are life and annuity products with some accident and
health products. On December 31, 1996, the Company had approximately $203
million of life insurance in force with premium income of approximately $3.8
million in 1996. SouthCap has received the approval of the Indiana
Commissioner of Insurance (the "Indiana Commissioner") to make and consummate
the Offer. This offer is subject to certain terms and conditions. See Section
12 below.
Shareholders wishing to sell their Shares to SouthCap should deliver the
documents required in accordance with the instructions herein. Questions and
requests for assistance may be directed to the Information Agent, D.F. King &
Co., Inc., at the address and telephone number on the last page of this Offer
to Purchase.
THE OFFER
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Price to be paid .................. $4.50per share, payable in cash.
Fully diluted Shares outstanding .. 1,209,298
Expiration Date ................... Tuesday, May 20, 1997 at 5:00 p.m., Indianapolis,
Indiana, time
Minimum Condition ................. The valid tender, without withdrawal prior to the
expiration of the Offer to Purchase, of that
number of Shares which, together with Shares then
owned by Purchaser, represents at least 50.1% of
the outstanding Shares on a fully diluted basis.
For other terms and conditions, see Section 12.
Depositary ........................ Fifth Third Bank, Cincinnati, Ohio
Procedure for Tendering Shares .... Deliver a completed Letter of Transmittal to:
By Mail: Fifth Third Bank
Corporate Trust Operations
Mail Drop 1090F5
38 Fountain Square Plaza
Cincinnati, OH 45263
</TABLE>
2
<PAGE> 5
1. TERMS OF OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer, SouthCap will
accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not withdrawn in accordance with Section 4 of this Offer to
Purchase. The term "Expiration Date" means 5:00 p.m. Indianapolis, Indiana
time on May 20, 1997, unless the Purchaser, in its sole discretion, shall have
extended the time during which this Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition. For a description of other conditions to the Offer, see
Section 12. If by the Expiration Date, any or all of such conditions have not
been satisfied, the Purchaser reserves the right to (i) decline to accept for
payment or pay for any of the Shares tendered, terminate the Offer and return
all tendered Shares to tendering shareholders, (ii) extend the Offer and,
subject to the withdrawal rights described in Section 4, retain the Shares
which have been tendered until the expiration of the Offer as extended, (iii)
waive such unsatisfied condition or conditions and, in accordance with
applicable law and subject to any requirement to extend the period of time
during which the Offer is open, accept for payment and pay for all Shares
validly tendered by the Expiration Date and not properly withdrawn, or (iv)
delay acceptance for payment of or payment for Shares, subject to applicable
law, until satisfaction or waiver of the conditions of the Offer.
The Purchaser's right to delay payment for Shares which it has accepted
for payment is limited by Rule 14e-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which requires a bidder to pay the
consideration offered or return the securities deposited by or on behalf of
security holders promptly after the termination or withdrawal of a tender
offer. Any such extension, delay in payment, termination or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 a.m.,
Eastern time, on the next business day after the previously scheduled
Expiration Date.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary
and making public announcement thereof no later than 9:00 a.m., Eastern time,
on the next business day after the previously scheduled Expiration Date. There
can be no assurance that the Purchaser will exercise its rights to extend the
Offer. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight Eastern time.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials to the extent required under rules
promulgated under the Exchange Act and will extend the Offer to the extent
required by applicable law in order to permit shareholders adequate time to
consider such materials. IN THE EVENT THAT PURCHASER ELECTS TO (I) EXTEND THE
PERIOD OF TIME DURING WHICH THE OFFER IS OPEN; (II) MAKE A MATERIAL CHANGE IN
THE TERMS OF THE OFFER OR THE INFORMATION CONCERNING THE OFFER; OR (III) WAIVE
A MATERIAL CONDITION OF THE OFFER (INCLUDING A WAIVER OF THE MINIMUM
CONDITION), THEN THE PURCHASER WILL CAUSE NOTICE THEREOF TO BE DELIVERED TO
EACH SHAREHOLDER OF THE COMPANY AS REQUIRED BY APPLICABLE LAW, RULE OR
REGULATION.
3
<PAGE> 6
The Securities and Exchange Commission (the "Commission") has taken the
position that the minimum period during which a tender offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or percentage of securities sought,
will depend upon the facts and circumstances, including the relative
materiality of the terms or information, and that, with respect to a change in
price or a change in percentage of securities sought, a minimum of ten business
days may be required to allow for adequate dissemination to shareholders and
investor response.
The Company has agreed to provide the Purchaser with the Company's
shareholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares and will be furnished to brokers, dealers, banks and
similar persons whose names or the names of whose nominees, appear on the list
of holders of Shares or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT; PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the purchase of and payment for Shares validly
tendered prior to the Expiration Date and not properly withdrawn will be made
as soon as practicable after the later to occur of (i) the Expiration Date and
(ii) the satisfaction or waiver of the conditions of the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
Shares (or a properly executed affidavit of lost or missing certificate), (ii)
the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed together with any required signature guarantee, and
(iii) any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) validly tendered Shares as, if and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance for payment of the Shares pursuant to the Offer. Payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price by SouthCap with a bank designated by the Depositary for the
account of the Depositary. The Depositary will act as agent for tendering
shareholders for the purpose of receiving payment from the Purchaser and will
transmit payment to tendering shareholders. Under no circumstances will
interest on the purchase price for Shares be paid by the Purchaser by reason of
any delay in transmitting payments. If, for any reason whatsoever, acceptance
for payment of or payment for any Shares tendered pursuant to the Offer is
delayed, or the Purchaser is unable to accept for payment of or pay for Shares
tendered pursuant to the Offer, then, without prejudice to the Purchaser's
rights set forth herein, the Depositary may, nevertheless, on behalf of the
Purchaser and subject to Rule 14e-1 under the Exchange Act, retain tendered
Shares and such Shares may not be withdrawn except to the extent the tendering
shareholder is entitled to withdrawal rights. See Section 4. The Purchaser
will pay any transfer taxes incident to the transfer to it of validly tendered
Shares.
If certain events occur, the Purchaser may not be obligated to accept for
payment or pay for Shares tendered pursuant to the Offer. See Section 12. If
any tendered Shares are withdrawn or not purchased pursuant to the Offer for
any reason, or if certificates are submitted for more Shares than are tendered,
certificates for Shares that are withdrawn or that are not purchased or
tendered will be returned,
4
<PAGE> 7
without expense to the tendering shareholder, as promptly as practicable
following the expiration or termination of the Offer.
The Purchaser will pay to all shareholders whose Shares are purchased
pursuant to the Offer the highest consideration paid to any shareholders whose
Shares are so purchased.
3. PROCEDURE FOR TENDERING SHARES
If Certificates are Available. For Shares to be validly tendered pursuant
to the Offer, the Letter of Transmittal (or a manually signed facsimile
thereof), properly completely and duly executed, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date and either (i) the certificates for tendered
Shares must be received by the Depositary or (ii) the tendering shareholder
must comply with the procedure described below in the event that certificates
are not available.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF
TRANSMITTAL, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, THE DEPOSITARY RECOMMENDS THAT THE
SHAREHOLDER USE REGISTERED MAIL, PROPERLY INSURED. IN ALL CASES SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
If Certificates are not Available. If a shareholder desires to tender
Shares pursuant to the Offer and such shareholder's certificates for Shares are
not available or such shareholder is unable to deliver all documents required
by the Letter of Transmittal to the Depositary on or before the Expiration
Date, such Shares may nevertheless be tendered if a properly completed and duly
executed Affidavit of Lost or Missing Stock Certificate, substantially in the
form included in the Letter of Transmittal, along with the Letter of
Transmittal, are received by the Depositary as provided below prior to the
Expiration Date.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT
OF THE PURCHASE PRICE FOR SHARES PURCHASED PURSUANT TO THE OFFER, A SHAREHOLDER
MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER OR
CERTIFY THAT HE IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares or Affidavit of Lost or Missing Stock
Certificate, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by the Letter of Transmittal.
By executing and delivering the Letter of Transmittal as described above,
a tendering shareholder irrevocably appoints designees of the Purchaser as that
shareholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by the Purchaser prior to the time of any shareholder vote or other
action and with respect to any and all other Shares. All such proxies are
coupled with an interest. Such appointment will be effective when, and only to
the extent that, the Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies or consents given
by such shareholder with respect to such
5
<PAGE> 8
Shares will, without further action, be revoked, and no subsequent proxies or
consents may be given by such shareholder and, if given, will not be effective.
The designees of the Purchaser will, with respect to such Shares, be
empowered, among other things, to exercise all voting and other rights of such
shareholder as they in their sole discretion may deem proper at any annual,
special or adjourned meeting of the Company's shareholders, by written consent
or otherwise. The Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser be able to exercise full
voting rights with respect to such Shares.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any Shares tendered pursuant to any of
the procedures described above will be determined by the Purchaser in its sole
discretion, whose determination will be final and binding. The Purchaser
reserves the absolute right to reject any and all tenders of Shares determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right to waive any of the conditions of the Offer or any
defect or irregularity in the tender of any Shares. No tender of Shares will
be deemed to have been properly made until all defects and irregularities
relating thereto have been cured or waived. The Purchaser's interpretation of
the terms and conditions of the Offer (including the Letter of Transmittal)
will be final and binding. Neither the Purchaser, the Depositary, or any other
person is or will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.
4. WITHDRAWAL RIGHTS
All tenders of Shares made pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date including any extensions thereof unless
accepted for payment pursuant to the Offer.
For a withdrawal to be effective, a written notice of withdrawal (which
may be sent by facsimile transmission) must be timely received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and (if certificates evidencing Shares have been delivered or otherwise
identified to the Depositary) the name of the registered holder of the Shares
to be withdrawn, if different from that of the person who tendered such Shares.
If certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on the particular certificates evidencing Shares to be
withdrawn and a signed notice of withdrawal must also be submitted.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. Neither the
Purchaser, the Depositary nor any other person is or will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or will incur any liability for failure to give any such notification.
Withdrawals may not be revoked and any Shares properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
6
<PAGE> 9
5. PRICE RANGE OF SHARES; DIVIDENDS
Although the Company has assets in excess of $1,000,000 and more than 750
shareholders, neither the Company nor its Shares are required to be registered
with the SEC under the Exchange Act because the Company is an insurance company
regulated by the Indiana Commissioner of Insurance under the Indiana insurance
laws.
The Company's common stock is publicly traded over-the-counter in the
"pink sheets" and quotations are available from broker-dealers. Based upon
information from the Company, there was one broker-dealer which was making a
market in the Shares as of February 25, 1997. Prior to March 31, 1997,
quotations for Shares were available on the Nasdaq National Market. Based upon
information received from Nasdaq, the Shares of the Company were "de-listed"
from the National Market System effective March 31, 1997. At February 25, 1997,
there were approximately 2,200 shareholders of record.
The following table sets forth, for the periods indicated, the high and
low bid prices, as supplied by, for 1995, the Company's annual report, and for
1996 and 1997, Bloomberg's Financial Services. The prices may not be
indicative of actual sales prices and may not reflect inter-dealer mark-ups or
mark-downs or commissions and discounts.
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
1995
First Quarter $3-1/2 $2-1/2
Second Quarter $3-1/2 $2-1/2
Third Quarter $3-1/2 $2-1/2
Fourth Quarter $3-1/2 $2-1/2
1996
First Quarter $2-5/8 $2-1/2
Second Quarter $3 $2
Third Quarter $2-7/8 $1-3/4
Fourth Quarter $3 $2-1/4
1997
First Quarter $5-1/4 $3
Second Quarter*
(through April 4) $3-3/4 $3-3/4
</TABLE>
*Because the Shares were de-listed effective March 31, 1997, the
information for the second quarter is based upon the information available from
Bloomberg's Financial Services which may not reflect any private trades or
trades by a market-maker on a work-out basis.
7
<PAGE> 10
On December 9, 1996, the last date for which a quote was available before
SouthCap filed with the Indiana Commissioner its statement regarding the
proposed acquisition of control of the Company, the highest sales price quoted
on the Nasdaq National Market was $3.00 per Share. The last reported trade for
the Company's stock was on April 1, 1997 (the last date for which Bloomberg's
Financial Services showed a trade), for 1,000 shares at $3.75 per share.
During the period beginning January 1, 1992 to the date hereof, the
Company has not paid cash dividends.
SHAREHOLDERS ARE URGED TO OBTAIN FROM A BROKER THE CURRENT BID PRICE FOR
THE SHARES.
6. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES.
Historically, there has been a limited market for the Shares. Prior to
March 31, 1997, quotations for the Shares were available on the Nasdaq National
Market, which means there were at least two market-makers for the Shares.
There was only one market-maker as of February 25, 1997 and the Shares were
"de-listed" from the Nasdaq National Market effective March 31, 1997. Since
then, the Shares have been traded over-the-counter in the "pink sheets."
Securities which are traded on the "pink sheets" are generally regarded as
having a more limited market than the Nasdaq National Market, which affects the
liquidity for Shares. The purchase of any of the Shares pursuant to the Offer
by SouthCap will reduce the number of Shares that might otherwise trade
publicly and, depending on the number of Shares so purchased, could adversely
affect the liquidity and market value of the remaining Shares held by the
public. The extent of the public market for the Shares and the availability of
quotations reported in the over-the-counter market through the "pink sheets"
depends upon the number of shareholders holding the Shares, the aggregate
market value of the Shares remaining at such time, the interest of maintaining
a market in the Shares on the part of any securities firms, and other factors.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
THE INFORMATION CONCERNING THE COMPANY IN THIS OFFER TO PURCHASE HAS BEEN
TAKEN FROM OR IS BASED UPON PUBLICLY AVAILABLE DOCUMENTS AND TESTIMONY GIVEN ON
BEHALF OF THE COMPANY IN PROCEEDINGS BEFORE THE INDIANA COMMISSIONER. THE
COMPANY IS NOT SUBJECT TO THE REPORTING REQUIREMENTS OF THE EXCHANGE ACT, AND
THUS, THE ONLY PUBLICLY AVAILABLE INFORMATION ABOUT THE COMPANY IS DERIVED FROM
THE COMPANY'S ANNUAL AND QUARTERLY REPORTS TO ITS SHAREHOLDERS, THE STATUTORY
ANNUAL STATEMENT FILED BY THE COMPANY WITH THE INSURANCE DEPARTMENT OF THE
STATE OF INDIANA (THE "INDIANA DEPARTMENT") AND FROM OTHER PUBLICLY AVAILABLE
DOCUMENTS. PURCHASER ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONCERNING THE COMPANY WHICH WAS CONTAINED IN
SUCH DOCUMENTS OR TESTIMONY.
The principal executive offices of the Company are located at 1499
Windhorst Way, Greenwood, Indiana 46143, and the telephone number of the
Company at such location is (317) 889-2111.
The Company was founded in 1948 in Indiana and is a publicly-owned life
insurance company licensed to sell a broad line of life insurance products in
25 states and the District of Columbia. The Company's operations are conducted
on the general agency plan, being represented by a field force of over 600
soliciting and general agents and 1,100 brokers. On December 31, 1996, the
Company had approximately $203 million of life insurance in force with premium
income of approximately $3.8
8
<PAGE> 11
million in 1996. The Company's principal lines of business (based upon premium
income) are life and annuity products with some accident and health products.
The Company has been concentrating its marketing in five major markets: blue
collar, senior, pre-need, payroll deduction, and current policyholders. At
February 25, 1997, the Company had 31 full-time employees and four part-time
employees. In 1996, the Company had a Best's Rating of B.
Set forth below is certain selected statutory financial data for the
Company with respect to its last five years, which was derived from the
Company's annual report to shareholders for the year ended December 31, 1995,
and its 1996 annual report filed with the Indiana Department. The Company has
stated that its statutory financial statements have been prepared in conformity
with accounting practices prescribed or permitted by the Indiana Department,
which vary in some respects from generally accepted accounting principles.
UNITED HOME LIFE INSURANCE COMPANY
SELECTED STATUTORY FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME
Premiums and annuity considerations $ 4,990,936 $ 5,254,558 $ 5,295,568 $ 4,449,222 $ 3,839,604
Investment Income, Net 3,119,132 2,833,875 2,731,568 2,818,674 2,643,470
Other 485,500 396,019 304,706 387,630 327,501
----------- ----------- ----------- ----------- -----------
Total income 8,595,568 8,484,452 8,331,842 7,655,526 6,810,575
----------- ----------- ----------- ----------- -----------
BENEFITS AND EXPENSES
Death benefits 1,833,313 2,360,793 1,682,338 1,485,800 1,697,779
Surrender benefits 2,099,841 4,621,914 2,020,842 2,093,489 1,555,035
Other policyholder benefits 950,058 481,650 365,454 439,894 944,281
Commissions 1,105,371 773,650 689,146 763,598 636,555
General insurance expenses 2,005,869 1,866,443 1,739,870 1,836,130 1,972,414
Other, net 1,456,080 (1,163,953) 2,012,787 1,191,976 260,796
----------- ----------- ----------- ----------- -----------
Total benefits and expenses 9,450,532 8,940,497 8,510,437 7,810,887 7,066,860
----------- ----------- ----------- ----------- -----------
Loss before federal income taxes
and capital gains (854,964) (456,045) (178,595) (155,361) (256,285)
Federal income tax benefits 57,000 55,000 67,000 39,000 33,815
----------- ----------- ----------- ----------- -----------
Earnings (loss) before capital gains (797,964) (401,045) (111,595) (116,361) (222,470)
Capital gains, net 307,157 192,385 --- 166,316 175,104
Net Income (loss) $ (490,807) $ (208,660) $ (111,595) $ 49,955 $ (47,366)
=========== =========== =========== =========== ===========
PER SHARE DATA
Net earnings loss $ (.39) $ (.17) $ (.10) $ .05 $ (.04)
Book value 4.38 4.54 4.60 3.69 3.90
Average shares outstanding 1,257,183 1,233,177 1,160,574 1,103,694 1,201,000
OTHER DATA
Surplus $ 3,827,259 $ 3,824,379 $ 3,855,926 $ 3,411,735 $ 3,517,496
Life insurance in force (in thousands) 269,607 245,011 232,105 216,603 202,555
Sales (Ordinary Life) (in thousands) 54,300 29,362 20,514 17,105 10,295
Total admitted assets 45,304,920 43,134,093 43,502,778 43,678,842 43,865,566
Cash and invested assets 43,502,562 41,291,084 41,892,660 42,131,179 42,265,307
</TABLE>
9
<PAGE> 12
The Company's ratio of commissions and general insurance expenses to
premium and annuity considerations was 67.9% for 1996, compared to an industry
average, reported by Conning & Company, of 30.2%. The Company's investment
expenses were $444,414, which represented, as a percentage of average assets
for 1996, 1.01%. The industry average ratio is believed by Purchaser to
approximate 0.35%
In February 1997, the Company's marketing department had five full-time
employees. In 1996, the Company's marketing organization produced 854 ordinary
life policies. In addition, the number of ordinary policies in force at the
beginning of 1996 totaled 15,376, while the number of ordinary policies at the
end of 1996 totaled 14,999, or a decrease during the year of 377.
Ownership of Shares. Based upon the Company's proxy statements for its
1996 annual meeting of shareholders dated March 25, 1996, a trust created under
the Will of Florence J. Schoettle (the "Children's Trust"), owned 496,568
Shares, which represented 39.74% of the then outstanding Shares. According to
the terms of the Children's Trust, the 14 beneficiaries thereunder are entitled
to receive their proportionate share of these Shares upon termination of the
Children's Trust. Under its terms, the Children's Trust terminated on January
27, 1997, although the Purchaser has not been advised that its assets have been
distributed to the beneficiaries. The Purchaser will purchase all Shares that
are distributed to Theresa J. Hull from the Children's Trust at a price of
$4.50 per share. The Purchaser holds a proxy to vote these Shares until they
are actually purchased by it.
The Shares formerly owned by the Children's Trust are held by Bank One,
Indianapolis, Indiana, as escrow agent (the "Escrow Agent") under an escrow
agreement among the Children's Trust, the 14 beneficiaries of the trust and the
Internal Revenue Service (the "IRS") as collateral for an estate tax liability,
and as described herein, these Shares are subject to control of the individual
Shareholders. In October 1996, the Company purchased approximately 40,000
Shares from the Children's Trust in order to pay an installment payment of
$111,041.96 to the IRS.
The 1996 proxy statement also reported that the eight directors and
executive officers of the Company, as a group, were the beneficial owners of
93,861 Shares, excluding the Shares held by the Children's Trust, which
represented 7.5% of the then outstanding Shares.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser's offices are located at 211 Seventh Avenue North, Fourth
Floor, Nashville, Tennessee 37219. The Purchaser was incorporated in September
1994 as an insurance holding company for the purpose of providing support
services to one or more legal reserve life insurance companies. On May 1,
1995, the Purchaser acquired Premier Life Insurance Company, a Tennessee
insurer which is licensed in 28 states. At December 31, 1996, the Purchaser
had total assets of $12.3 million. The Purchaser is privately-held and not
subject to the reporting requirements of the Exchange Act. Certain information
with respect to the executive officers and directors of Purchaser and certain
of its shareholders is set forth in Schedule A hereto. SouthCap's audited
financial statements from inception to December 31, 1996 are set forth in
Schedule B hereto. SouthCap raised $10.5 million in equity capital from the
sale of convertible preferred stock which bears terms customary for equity
investments in private companies. See Note 8 of the Notes to SouthCap's
audited consolidated financial statements for a description of the rights,
limitations and preferences of this preferred stock.
SouthCap's founder, Chairman of the Board of Directors, President and
Chief Executive Officer, F.W. Lazenby, has over 40 years of experience in the
life insurance industry. From 1956 to July 1983, Mr. Lazenby was employed by
the National Life and Accident Insurance Company, Nashville, Tennessee, rising
through the organization from insurance agent to President of the company until
its
10
<PAGE> 13
acquisition by American General Corporation in November 1982. In September
1983, Mr. Lazenby founded Southlife Holding Company, an insurance holding
company which acquired four life insurance companies between May 1984 and
September 1987. At the time Southlife Holding Company was acquired by Capital
Holding Corporation (now Providian Corporation) in September 1989, Southlife's
insurance subsidiaries had total assets of approximately $285 million, annual
premium income of approximately $53 million, and net income in 1988 of $5.6
million. Mr. Lazenby continued to serve as Chairman and Chief Executive
Officer of Southlife until his retirement from Providian Corporation in April
1994.
The Purchaser (i) owns 44,352 shares of the Company's Common Stock, which
represents 3.67% of the Company's outstanding Common Stock, and (ii) has the
right to acquire approximately 35,469 additional Shares (which represents
2.9%), together with a proxy to vote these additional Shares.
Pursuant to the terms of an agreement between the Purchaser and Theresa J.
Hull, on December 19, 1996, the Purchaser acquired 932 Shares from Mrs. Hull
at a price of $4.50 per share. Mrs. Hull also agreed to sell to the Purchaser
all shares to be distributed to Mrs. Hull upon distribution by the Children's
Trust.
Except as described in this Offer to Purchase, neither the Purchaser nor,
to the best knowledge of the Purchaser, any executive officer or director
thereof, has any present or proposed contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such securities of
the Company, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss, or the giving or withholding of
proxies. Neither the Purchaser nor, to the best knowledge of the Purchaser,
any executive officer or director thereof, has had any business relationships
or transactions with the Company or any of its executive officers and directors
or affiliates. Except as disclosed in this Offer to Purchase, there have been
no contacts, negotiations, or transactions between the Purchaser or, to the
best knowledge of the Purchaser, any executive officer or director thereof, on
the one hand, and the Company or its affiliates, on the other hand, concerning
a merger, acquisition, a tender offer or other acquisition of securities, an
election of directors, or a sale or other transfer of material amount of
assets.
Except as set forth in this Offer to Purchase, neither the Purchaser nor
to the best knowledge of the Purchaser, any of its executive officers or
directors or the subsidiary of the Purchaser, has effected any transactions in
the equity securities of the Company during the past 60 days.
9. SOURCE AND AMOUNT OF FUNDS
Based upon (i) 1,209,298 Shares reported to be outstanding at December 31,
1996 (derived from the 1996 annual statement of the Company filed with the
Indiana Department), and (ii) Purchaser's current ownership of 44,352 shares,
the aggregate purchase price for all such Shares which could be bought in the
Offer would be $5,242,257. Purchaser intends to obtain the funds needed to
purchase Shares pursuant to the Offer, and to pay related fees and expenses,
from available resources. At the date of this Offer to Purchase, the Purchaser
had cash, cash equivalents, and marketable securities of approximately $5.5
million. See Exhibit B for the audited financial statements of the Purchaser.
In the event Purchaser would have to liquidate certain investments to complete
the purchase of all the Shares, Purchaser may use other resources, including
possible bank borrowings. Purchaser presently has no agreements with any
financial institution. It is anticipated that any agreement with a financial
institution would contain terms and conditions, including repayment provisions,
that would be customary for a borrower in a similar situation to the Purchaser,
and that any such borrowings would be repaid from cash generated from the
operations of Purchaser and the Company.
11
<PAGE> 14
As described in Item 10 hereof, SouthCap has received, on March 27, 1997,
the approval of the Indiana Insurance Commissioner to acquire control of the
Company through a tender offer. Included within this order is a requirement
that SouthCap contribute at least $1 million to the capital or surplus of the
Company within ninety (90) days of the date on which SouthCap acquires
ownership of at least 50.1% of the outstanding Shares. This $1 million of
capital or surplus will be provided to the Company by SouthCap from SouthCap's
resources which might include bank borrowings.
10. BACKGROUND OF THE OFFER TO PURCHASE
SouthCap first acquired Shares of the Company in August 1996. On
September 10, 1996, F.W. Lazenby, the Chairman, President and Chief Executive
Officer of SouthCap, met with Michael A. Schoettle, Chairman of the Board,
President and Chief Operating Officer of the Company, at the Company's offices
in Greenwood, Indiana for the purpose of introducing SouthCap as a shareholder
of the Company to discuss the possibility of engaging in business transactions.
Thereafter, SouthCap decided to make an offer to acquire the Company and on
September 17, 1996, SouthCap proposed in writing to Mr. Schoettle to purchase
all of the outstanding Shares of the Company owned by him, his family, and the
Children's Trust for a purchase price of $4.00 per share. The proposal
included an offer to acquire the Shares of all other shareholders of the
Company at the same purchase price along with certain other terms, and the
offer indicated that it would remain open until October 4, 1996. The Company
declined SouthCap's request for the opportunity to meet with the Board of
Directors of the Company (or any committee thereof) to discuss its proposal.
SouthCap received a written response from Mr. Schoettle, dated October 2, 1996,
that the Board of Directors of the Company had rejected its offer as inadequate
to the shareholders.
SouthCap continued to seek opportunities to engage in discussions with Mr.
Schoettle and other directors of the Company. In November 1996, in response to
Mr. Schoettle's third quarter report to shareholders that the Company's Board
of Directors had appointed a committee to initiate a plan for surplus
maintenance and a plan to raise additional capital for further growth, Mr.
Lazenby requested the opportunity to meet with this committee of the Board to
see if SouthCap could be of assistance. In a letter dated November 26, 1996,
Mr. Schoettle advised Mr. Lazenby that the committee would not be in a position
to meet with him until after January 6, 1997.
As a result of SouthCap's inability to obtain a meeting with the Company,
SouthCap decided to proceed to seek regulatory approval from the Indiana
Commissioner regarding the acquisition of control of the Company. Accordingly,
on December 19, 1996, SouthCap filed its statement with the Indiana
Commissioner regarding the proposed acquisition of control of the Company. In
that statement, SouthCap said that it would prefer to acquire control of the
Company through a negotiated acquisition. However, in view of the position
taken by the Board of Directors of the Company, SouthCap had determined to seek
to acquire control of the Company through a tender offer. On March 27, 1997,
the Indiana Commissioner approved SouthCap's application to acquire control of
the Company through a tender offer.
11. PURPOSE OF THE OFFER AND TENDER; PLANS OF THE PURCHASER
The Purchaser seeks to acquire 100% of the Shares of the Company. In the
event that the Purchaser acquires all the outstanding Shares, immediately
thereafter the Purchaser will exercise its rights as a shareholder to elect a
new Board of Directors which will include at least one resident of Indiana.
The Purchaser anticipates that it will elect some or all of the members of its
Board of Directors as directors of the Company.
12
<PAGE> 15
In the event that the Purchaser acquires at least a majority of the
outstanding Shares of the Company as a result of the Offer but less than 100%
of the outstanding Shares, the Purchaser intends to exercise its rights as a
shareholder to change the composition of the Board of Directors of the Company
at the earliest opportunity by calling a special meeting of shareholders for
that purpose.
In the event that the Purchaser acquires at least a majority of the
outstanding Shares of the Company as a result of the Offer but less than 100%
of the outstanding Shares, the Purchaser intends to seek to acquire additional
Shares, in a manner permitted under applicable laws, until the Purchaser owns
at least two-thirds of the outstanding Shares. At that time, the Purchaser
would seek to consummate a statutory merger to result in all non-tendering
shareholders' being paid cash for their Shares, thereby leaving the Purchaser
as the 100% shareholder of the Company. In the event that the Purchaser were
to seek to consummate a statutory merger, shareholders of the Company at that
time would have the right under applicable Indiana law (see Ind. Code Section
27-1-9-9) to dissent from such statutory merger and to obtain payment of an
appraised value for their Shares. For a period of two years following the
conclusion of this Offer, the Purchaser may not acquire additional Shares,
whether in a statutory merger or otherwise, unless the holder of such Shares is
then afforded the opportunity to dispose of such Shares on terms substantially
equivalent to those contained in this Offer.
Plans for the Company. The Purchaser does not intend to move the
Company's principal office from its current location in Greenwood, Indiana.
The Purchaser presently intends to hold the Company as an independent
subsidiary and to continue to maintain its business as it presently exists.
The Purchaser anticipates that the new Board of Directors would evaluate the
current management and operational structures of the Company. Based upon
information presently available to it, the Purchaser anticipates that there
would be significant personnel changes in management in order to improve
operating efficiency of the Company and reduce administrative costs and
expenses.
Except as indicated in this Offer to Purchase, the Purchaser has no
present plans or proposals which relate to or would result in an extraordinary
corporate transaction involving the Company, such as a merger, reorganization,
liquidation, or a sale or transfer of all or substantially all assets of the
Company.
12. CONDITIONS OF OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment, or, subject to any applicable rules and
regulations of the Commission including Rule 14e-1(c) under the Exchange Act,
to purchase or pay for any Shares tendered, and may terminate or amend the
Offer, if (i) the minimum number of Shares necessary to meet the Minimum
Condition shall not have been validly tendered and not withdrawn on or prior to
the Expiration Date of the Offer, or (ii) subsequent to the date of this Offer
to Purchase, any of the following shall occur at or before the acceptance of
such Shares:
(a) there shall be instituted or pending (or expressly threatened, if
by any governmental authority or agency) any action or proceeding by or
before any domestic or foreign court, governmental agency or other
regulatory administrative agency or commission (which, unless instituted
or expressly threatened by a governmental agency or authority, must meet
the standard of having a reasonable likelihood of success before this
condition arises) (i) challenging the acquisition in whole or in part of
the Shares; (ii) seeking to restrain or prohibit the making or
consummation of the Offer or seeking to obtain any material damages; (iii)
seeking to prohibit or restrict the Purchaser's (or any of its respective
affiliates' or subsidiaries') ownership or operation of any material
portion of their or the Company's business or assets, or to compel the
Purchaser (or any of its respective affiliates or subsidiaries) to dispose
of or hold separate all or
13
<PAGE> 16
any material portion of the Company's business or assets as a result of
the Offer; (iv) making the purchase of, or payment for, some or all of the
Shares illegal; (v) imposing material limitations on the ability of the
Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares purchased by the Purchaser for the approval of a statutory
merger; (vi) imposing any limitations on the ability of the Purchaser or
any of its respective affiliates or subsidiaries effectively to control in
any material respect the business and operations of the Company; or (vii)
which otherwise is reasonably likely to materially adversely affect the
Company and its subsidiaries taken as a whole; provided, however, that the
Purchaser shall have made reasonable efforts to consummate and make
effective as promptly as practicable the transactions contemplated hereby
and to avoid the occurrence or continuance of any such condition; or
(b) any statute, rule, regulation or order shall be enacted,
promulgated, entered or deemed applicable to the Offer, or any other
action shall have been taken by any domestic or foreign government or
governmental authority or by any court, domestic or foreign, which is
reasonably likely, directly or indirectly, to result in any of the
consequences referred to in subsection (a)(i) through (a)(vii) above;
provided however, that the Purchaser shall have made reasonable efforts to
prevent any such order; or
(c) any change shall have occurred in the financial condition, or
results of operations, assets, liabilities (absolute, accrued or
contingent), reserves, nature of business, operations or prospects of the
Company that is or is reasonably likely to be materially adverse to the
Company, or the Purchaser shall have become aware of any fact relating to
the Company (including without limitation, any such change or development)
that is reasonably likely to have a material adverse effect with respect
to the value of the Company, or the value of the Shares taken as a whole;
or
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the Untied States, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any limitation (whether or
not mandatory) by any governmental authority on, or any other event which
is reasonably likely to adversely affect the extension of credit by banks
or other lending institutions, (v) any significant adverse change in the
United States securities or financial markets, or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof.
ANY CONDITIONS SET FORTH HEREIN, INCLUDING THE MINIMUM CONDITION, MAY BE
WAIVED BY PURCHASER AT ITS SOLE DISCRETION.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer will generally be a
taxable transaction for U.S. federal income tax purposes. A shareholder will
generally recognize gain or loss on the sale of his Shares pursuant to the
Offer equal to the difference between the amount of cash received by him and
his tax basis in the Shares. Assuming the Shares are held as a capital asset,
such gain or loss will be a capital gain or loss, and such capital gain or loss
will be long-term if, as of the date of sale, the shareholder has held the
Shares for more than one year or will be short-term if, as of the date of sale,
the shareholder has held the Shares for one year or less.
14
<PAGE> 17
Under the applicable law and regulations relating to "backup withholding,"
the Depositary, in the absence of an applicable exemption, will be required to
withhold, and will withhold, 20% of the gross proceeds of any sale of Shares
pursuant to the Offer unless the selling shareholder provides his tax
identification number and certifies that such number is correct. Each
shareholder should thus complete the Substitute Form W-9 accompanying these
materials to provide the information and certification necessary to avoid
backup withholding.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO SHAREHOLDERS IN SPECIAL
CATEGORIES SUCH AS TAX-EXEMPT ENTITIES AND FOREIGN CORPORATIONS AND
INDIVIDUALS. IN ADDITION, NO INFORMATION IS PROVIDED WITH RESPECT TO ANY
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE OFFER. SHAREHOLDERS ARE URGED
TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES TO THEM OF THE OFFER.
14. CERTAIN LEGAL MATTERS
General. Based on its examination of publicly available filings by the
Company with the Indiana Commissioner and other publicly available information,
the Purchaser is not aware of any license or other regulatory permit that
appears to be material to the business of the Company that might be adversely
affected by the acquisition of Shares by the Purchaser pursuant to the Offer
or, except as set forth below, of any approval or other action by any domestic
(federal or state) or foreign governmental, administrative or regulatory agency
that would be required prior to an acquisition of Shares by the Purchaser
pursuant to the Offer. Should any such approval or other action be required,
it is presently contemplated that such approval or action would be sought by
the Purchaser. While the Purchaser does not currently intend to delay the
acceptance for payment of Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained without substantial conditions. The
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 14. See Section 12.
Indiana Insurance Laws. As an insurance company domiciled in the State of
Indiana, the Company is subject to regulation by the Indiana Commissioner,
including regulation dealing with the acquisition of control of the Company.
On December 19, 1996, SouthCap filed with the Indiana Commissioner its
statement regarding the proposed acquisition of control of the Company. The
Company objected to certain aspects of the Purchaser's filing. The required
public hearing was commenced on February 27, 1997, at which various matters
were addressed by the Purchaser and the Company. The public hearing
recommenced on March 21, 1997. Notice of the public hearing was furnished to
the shareholders of the Company. On March 27, 1997, the Indiana Commissioner
approved the Purchaser's application to acquire control of the Company and to
make a tender offer to the shareholders of the Company. The order also
required SouthCap, within ninety (90) days of the date on which it acquires
ownership of at least 50.1% of the outstanding Shares to contribute at least $1
million to the capital or surplus of the Company. Under Indiana law, the Offer
could not commence before two business days had elapsed after the Indiana
Commissioner's approval. The Purchaser has no assurance, however, that further
approvals or actions will not be required by the laws of states in which the
Company may be licensed to do business, or will not be deemed applicable to the
Offer, in which event the Purchaser may be required to file certain information
with or receive approvals of the relevant state insurance commissioners, and
might be unable to purchase or pay for Shares tendered pursuant to, or might
incur delay in consummating, the Offer. In such case, the Purchaser may not be
obligated to purchase or pay for any Shares tendered. See Section 12.
15
<PAGE> 18
Antitrust. The Hart - Scott - Rodino Antitrust Improvements Act of 1976
is not applicable to the Purchaser's acquisition of Shares pursuant to the
Offer. Based upon an examination of information available to SouthCap relating
to the business in which it and its subsidiary and the Company are engaged, the
Purchaser believes that SouthCap and the Company would not be deemed to be
competitors and that the Purchaser's acquisition of 100% of the Shares will not
violate the antitrust laws. There can be no assurance, however, that a
challenge to the Offer on antitrust grounds will not be made.
Federal Securities Laws. Although the Company has assets in excess of $1
million and more than 750 shareholders, which would require its common stock to
be registered with the Commission under Section 12(g) of the Exchange Act, the
Company is exempt from this registration because it is an insurance company
regulated under the Indiana insurance laws by the Indiana Commissioner. The
Offer, however, is subject to regulation under Section 14 of the Exchange Act
and the rules and regulations thereunder (the "Williams Act"), and SouthCap has
filed with the Commission a Schedule 14D-1 with respect to the Offer.
Indiana Takeover Laws. The Indiana takeover statute, Ind. Code Section
23-2-3.1-3, requires any person wishing to make a takeover offer to the
shareholders of an Indiana corporation, including an Indiana insurance company
subject to regulation by the Indiana Commissioner, to file statements with the
Indiana Securities Commissioner (the "Indiana Securities Commissioner") which
sets forth certain information about the proposed offer. Where the takeover
offer is subject to the Williams Act, the statement consists of all of the
materials filed with the Commission or any other federal agency, in addition to
the information described in Ind. Code Section 23-2-3.1-5(c). On March 7,
1997, SouthCap filed its preliminary takeover materials with the Indiana
Securities Commissioner, and furnished a copy of them simultaneously to the
Company. Thereafter it was agreed that the Purchaser would file completed
tender offer materials with the Indiana Securities Commissioner and the Company
simultaneously with the filing thereof with the Commission. The Indiana
Securities Commissioner will hold the required public hearing on a date to be
established to determine whether the takeover materials provided full and fair
disclosure to the shareholders of the Company, all material information
concerning the Offer, and whether the Offer was being made to the shareholders
of the Company on substantially equivalent terms.
A number of states have enacted takeover statutes that purport, in varying
degrees, to be applicable to attempts to acquire securities of corporations
that are incorporated or have assets, stockholders, executive offices or places
of business in such states. Except with respect to the Indiana takeover
statute, the Purchaser has not undertaken to comply with any state takeover
statute or regulation. Should any governmental official or any other person
seek to apply any state takeover statute or regulation to the Offer, the
Purchaser will take such action as then appears desirable, and may contest the
applicability or validity of any such statute in appropriate legal proceedings.
If it is asserted that one or more state takeover statutes are applicable to
the Offer, and an appropriate court does not determine that such statutes are
inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities, and the Purchaser might be unable to purchase or
pay for Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept Shares for payment. See Section 12.
Absence of Appraisal Rights. No appraisal rights under Indiana insurance
or corporation law are available for holders of Shares in connection with the
Offer. See, however, Section 11 above.
See Section 12 for certain conditions of the Offer, including conditions
with respect to litigation and certain governmental actions.
16
<PAGE> 19
15. FEES AND EXPENSES
Purchaser has retained D.F. King & Co., Inc., New York, New York, as the
Information Agent, and Fifth Third Bank, Cincinnati, Ohio, as the Depositary,
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telecopy, telegraph and personal interview
and may request banks, brokers, dealers and other nominee shareholders to
forward materials relating to the Offer to beneficial owners.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services in connection with the Offer, will be
reimbursed for out-of-pocket expenses, and will be indemnified against certain
liabilities and expenses in connection therewith, including under federal
securities laws. Brokers, dealers, commercial banks and trust companies will
be reimbursed by Purchaser for customary handling and mailing expenses incurred
by them in forwarding material to their customers.
Except as set forth herein, the Purchaser will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
16. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making
or the acceptance thereof would not be in compliance with the securities, "blue
sky" or other laws of such jurisdiction. In any jurisdiction where securities,
"blue sky" or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Purchaser.
The Purchaser has filed with the Commission, pursuant to Rule 14d-3 of the
rules and regulations promulgated under the Exchange Act, a Tender Offer
Statement on Schedule 14D-1, together with exhibits, with respect to the Offer.
This Schedule, including exhibits and any amendments to such Schedule, which
furnish certain additional information with respect to the Offer, may be
examined and copies may be obtained from the Commission at the public reference
facility at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The
Commission also maintains an internet web-site located at www.sec.gov.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained in the Offer and, if
given or made, such information or representations must not be relied upon as
having been authorized.
The approval of the Indiana Commissioner of Insurance (as described in
Section 14) has been received.
17
<PAGE> 20
SCHEDULE A
EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN SHAREHOLDERS OF SOUTHCAP
<TABLE>
<S> <C>
F.W. LAZENBY Chairman of the Board, President, Chief Executive
SouthCap Corporation Officer and Director of Purchaser.
211 7th Avenue North
4th Floor August 1983 to April 1994 - Southlife Holding
Nashville, TN 37219 Company ("Southlife"): Chairman, President,
and Chief Executive Officer. Between 1983 and
1987, Southlife was acquired by Capital
Holding Corporation (now Providian
Corporation) in September 1989. Mr. Lazenby
retired from Providian Corporation on April 1,
1994
JACK O. BOVENDER, JR. Director of Purchaser.
520 Belle Meade Boulevard
Nashville, TN 37205 1992 to 1994 - Chief Operating Officer and
Executive Vice President, Hospital Corporation
of America, Nashville, Tennessee. 1994 to
present - Retired.
Mr. Bovender is a director of the following
publicly traded companies: Quorum Health
Group, Inc.; Response Oncology; and American
Services Group.
WILLIAM H. CAMMACK Director of Purchaser.
800 Nashville City Center
511 Union Street 1972 to present - Chairman of the Board, Chief
Nashville, TN 37219-1743 Executive Officer (until December 31, 1994),
Managing Director, and a member of the Board
of Directors of Equitable Securities
Corporation. Mr. Cammack is a member of the
New York Stock Exchange, Inc., and is a past
Chairman of the Southern District of the
National Association of Securities Dealers,
Inc.
JAMES HAROLD DAUGHDRILL, III Director of Purchaser.
2829 Lakeland Drive, Suite 1600
Jackson, MS 39208 1991 to present - President and Chief
Executive Officer, The Walker Companies, a
private company engaged in making investments
for its own account headquartered in Jackson,
Mississippi.
Mr. Daughdrill was formerly the Chairman of
the Board and a director of LNH REIT, Inc., a
publicly-held real estate investment trust.
R. FREDERICK DECOSIMO Director of Purchaser.
Tallan Building, Suite 1100
Two Union Square
Chattanooga, TN 37402 1985 to present - Partner, Joseph Decosimo and
Company, certified public accountants,
Chattanooga, Tennessee.
</TABLE>
A-i
<PAGE> 21
<TABLE>
<S> <C>
FRED G. FRICK Chief Financial Officer of Purchaser.
211 Seventh Avenue North
4th Floor 1968 to 1991 - Partner, Price Waterhouse,
Nashville, TN 37219 certified public accountants, Nashville,
Tennessee.
1991 to June 1996 - Financial analyst,
Vanderbilt University.
EDWARD G. NELSON Secretary and Director of Purchaser.
3401 West End Avenue, Suite 300
Nashville, TN 37203 1985 to present - Chairman of the Board and
President of Nelson Capital Corporation, a
merchant banking firm in Nashville, Tennessee.
Mr. Nelson is a director of the following
publicly traded companies: Berlitz
International, Inc., ClinTrials Research,
Inc., Central Parking Corporation, and
Advocat, Inc.
</TABLE>
The following table sets forth the number of shares and percentage of
outstanding securities of the Purchaser owned by all persons known to Purchaser
to be the holders of 10% or more of such securities. The holders of shares of
Preferred Stock of Purchaser are entitled to vote on a one-to-one basis with
the holders of the shares of common stock. Each share of Series A Preferred
Stock is convertible into one share of common stock as set forth in the Charter
of Purchaser, as amended.
<TABLE>
<CAPTION>
CLASS OF NUMBER OF PERCENTAGE OF
CAPITAL STOCK SHARES VOTING STOCK
<S> <C> <C>
COMMON STOCK
F. W. Lazenby(1) 300,000 18.2%
SERIES A PREFERRED STOCK
Vanderbilt University(2) 375,000 22.8%
Thomas F. Frist, Jr. and
Patricia C. Frist(3) 250,000 15.2%
</TABLE>
- -----------------------------------
1 Does not include 33,333 shares of Common Stock (representing 2.0% of
outstanding voting securities) owned by Mr. Lazenby's wife. Mr. Lazenby
disclaims control over these shares.
2 Vanderbilt University is a private institution of higher education in
Nashville, Tennessee. Purchaser disclaims any affiliation with or control by
Vanderbilt University and Vanderbilt disclaims any affiliation with or control
of Purchaser. The Indiana Commissioner approved, on March 11, 1997, disclaimers
of affiliation and control filed by SouthCap and Vanderbilt University pursuant
to Indiana Code 27-1-23-1(e).
3 Dr. and Mrs. Frist are residents of Nashville, Tennessee. Dr. Frist is
the Vice-Chairman of the Board of Columbia/HCA Healthcare Corporation, an owner
of hospitals and health care facilities presently headquartered in Nashville,
Tennessee. Purchaser disclaims any affiliation with or control by Dr. and Mrs.
Frist, and Dr. and Mrs. Frist disclaim any affiliation with or control of
Purchaser. The Indiana Commissioner approved, on March 11, 1997, disclaimers of
affiliation and control filed by SouthCap and Dr. and Mrs. Frist pursuant to
Indiana Code 27-1-23-1(e).
A-ii
<PAGE> 22
SCHEDULE B
SOUTHCAP CORPORATION
AUDITED FINANCIAL STATEMENTS
B-i
<PAGE> 23
Schedule B
SOUTHCAP CORPORATION AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1995 and 1996
(With Independent Auditors' Report Thereon)
<PAGE> 24
[Peat Marwick LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
SouthCap Corporation:
We have audited the accompanying consolidated balance sheets of SouthCap
Corporation and subsidiary as of December 31, 1995 and 1996, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
period from September 16, 1994 (inception) through December 31, 1994 and each of
the years in the two-year period ended December 31, 1996. These consolidated
financial statements are the responsibility of SouthCap Corporation's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SouthCap Corporation
and subsidiary as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for the period from September 16, 1994
(inception) through December 31, 1994 and for each of the years in the two-year
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
Nashville, Tennessee
March 7, 1997
1
<PAGE> 25
SOUTHCAP CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1995 and 1996
<TABLE>
<CAPTION>
ASSETS 1995 1996
----- -----
<S> <C> <C>
Securities held to maturity (note 3):
Fixed maturities, at amortized cost (estimated fair value of $2,424,946 in
1995 and $2,244,420 in 1996) $ 2,412,749 2,261,527
Securities available for sale (notes 3 and 4):
Fixed maturities, at fair value (amortized cost of $2,984,394 in 1995
and $4,176,631 in 1996) 3,017,025 4,230,213
Equity securities, at fair value (cost of $1,510,728 in 1995 and $1,009,300
in 1996) 1,598,201 1,039,876
Investment in United Home Life Insurance Company, at fair value (cost of
$149,604 in 1996) - 131,244
------------ -----------
Total investment securities 7,027,975 7,662,860
Cash and cash equivalents 3,749,454 3,462,050
Accrued investment income 168,319 153,620
Policy loans 251,899 265,210
State insurance licenses, net (note 5) 738,819 700,606
Premiums due and deferred 17,126 17,368
Other assets (note 2) 63,877 42,420
------------ -----------
Total assets $ 12,017,469 12,304,134
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accrued expenses $ - 16,755
Future policy benefits (note 10) 795,196 829,700
Accrued federal income taxes 42,900 34,200
Deferred income taxes (note 6) 34,900 21,200
------------ -----------
Total liabilities 872,996 901,855
------------ -----------
Commitments and contingencies (notes 4,7, 8, 9, and 10)
Redeemable preferred stock, Series A, convertible, authorized;
issued and outstanding 1,312,500 shares (note 8) 10,500,000 10,500,000
Shareholders' equity (note 7):
Common stock, authorized 10,000,000 shares;
issued and outstanding 333,333 shares 1,000,000 1,000,000
Accumulated deficit (1,153,576) (1,695,164)
Unpaid cumulative preferred dividends (note 8) 716,345 1,556,345
Unrealized gain on securities available for sale, net of tax 81,704 41,098
------------ -----------
Total liabilities and shareholders' equity $ 12,017,469 12,304,134
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 26
SOUTHCAP CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
Period from September 16, 1994 (inception) through December 31, 1994
and years ended December 31, 1995 and 1996
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Insurance premiums net of reinsurance (note 10) $ - 2,067 29,156
Interest and dividend income - net of $7, $23,482
and $27,789 of investment related expenses in 1994, 1995
and 1996, respectively 8,434 578,583 642,755
Gain on sale of securities available for sale (note 3) - 52,506 252,898
-------- -------- --------
Total revenues 8,434 633,156 924,809
-------- -------- --------
Costs and expenses:
Benefits to policy holders (note 10) - 13,650 56,240
Compensation 4,600 138,585 159,962
Operating and general 3,777 189,418 309,595
-------- -------- --------
Total costs and expenses 8,377 341,653 525,797
-------- -------- --------
Income before income tax expense 57 291,503 399,012
Income tax expense (note 6) 9 81,400 100,600
-------- -------- --------
Net income 48 210,103 298,412
Redeemable preferred stock dividends,
cumulated and unpaid (note 8) - 716,345 840,000
-------- -------- --------
Net income (loss) applicable to common shareholders $ 48 (506,242) (541,588)
======== ======== ========
Net income (loss) per share of common stock $ - (1.52) (1.62)
======== ======== ========
Weighted average shares outstanding 333,333 333,333 333,333
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 27
SOUTHCAP CORPORATION AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Period from September 16, 1994 (inception) through December 31, 1994
and years ended December 31, 1995 and 1996
<TABLE>
<CAPTION>
UNREALIZED
UNPAID GAIN ON
CUMULATIVE SECURITIES
COMMON ACCUMULATED PREFERRED AVAILABLE
STOCK DEFICIT DIVIDENDS FOR SALE, NET OF TAX
----- ------- --------- --------------------
<S> <C> <C> <C> <C>
Balance at September 16, 1994 $ - - - -
Issuance of common stock 1,000,000 - - -
Cost of issuance of redeemable
preferred stock (note 7) - (60,474) - -
Net income - 48 - -
---------- ---------- --------- -------
Balance at December 31, 1994 1,000,000 (60,426) - -
Cost of issuance of redeemable
preferred stock (note 7) - (586,908) - -
Net income - 210,103 -
Unpaid redeemable preferred stock
dividends (note 8) - (716,345) 716,345 -
Unrealized gain on securities available
for sale, net of tax - - - 81,704
---------- ---------- --------- -------
Balance at December 31, 1995 1,000,000 (1,153,576) 716,345 81,704
Net income - 298,412 - -
Unpaid redeemable preferred stock
dividends (note 8) - (840,000) 840,000 -
Change in unrealized gain on securities
available for sale, net of tax - - - (40,606)
---------- ---------- --------- -------
Balance at December 31, 1996 $1,000,000 (1,695,164) 1,556,345 41,098
========== ========== ========= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 28
SOUTHCAP CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Period from September 16, 1994 (inception) through December 31, 1994
and years ended December 31, 1995 and 1996
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 48 210,103 298,412
Adjustments to reconcile net income to net cash and cash equivalents
provided by operating activities, net of effects from acquisitions:
Amortization of premiums, net of (accretion) of discounts - 31,063 (1,655)
Amortization of cost of state insurance licenses - 25,477 38,213
Gain on sale of securities available for sale - (52,506) (252,898)
(Increase) decrease in accrued interest receivable - (113,808) 14,699
Increase in policy loans - (12,578) (13,311)
(Increase) decrease in other assets - (13,877) 21,215
Increase in future policy benefits - 18,392 34,504
Increase in accrued expenses and accrued Federal income taxes 4,609 37,692 8,055
------------ ------------ ------------
Net cash and cash equivalents provided by operating activities 4,657 129,958 147,234
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities held to maturity - (1,608,683) (547,123)
Purchases of securities available for sale - (7,266,281) (3,603,587)
Proceeds from calls and maturities of securities held to maturity - - 700,000
Proceeds from sale of available for sale securities - 4,594,643 2,775,954
Proceeds from maturities of available for sale securities - - 240,118
Acquisition of business, net of cash acquired (note 2) - (2,888,162) -
Purchase of state insurance licenses - (69,296) -
------------ ------------ ------------
Net cash and cash equivalents used by investing activities - (7,237,779) (434,638)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of redeemable preferred stock - 10,500,000 -
Issuance of common stock 1,000,000 - -
Cost of issuance of redeemable preferred stock (60,474) (586,908) -
------------ ------------ ------------
Net cash and cash equivalents provided by financing activities 939,526 9,913,092 -
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 944,183 2,805,271 (287,404)
Cash and cash equivalents at beginning of year - 944,183 3,749,454
------------ ------------ ------------
Cash and cash equivalents at end of year $ 944,183 3,749,454 3,462,050
============ ============ ============
</TABLE>
5
<PAGE> 29
SOUTHCAP CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
Period from September 16, 1994 (inception) through December 31, 1994
and years ended December 31, 1995 and 1996
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes paid during the year $ - 42,009 96,800
=========== ========= ========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Change in unrealized gain on securities available for sale, net of tax $ - 81,704 (40,606)
Increase in redeemable value of preferred stock (note 8) - 716,345 840,000
=========== ========= ========
Business combinations (note 2):
Fair value of assets acquired $ - 6,433,336 -
Fair value of liabilities assumed - 777,403 -
----------- --------- --------
Cash paid - 5,655,933 -
Less: cash acquired - 2,767,771 -
----------- --------- --------
Net cash paid for acquisitions $ - 2,888,162 -
=========== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 30
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1995 and 1996
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) THE ORGANIZATION
SouthCap Corporation (the Corporation) is a Tennessee corporation
formed in September 1994 for the purpose of: (i) acquiring and
maintaining a company licensed as a life insurance company in
multiple states; (ii) acquiring closed blocks of business together
with the assets required to fund the liabilities against future
claims associated with the blocks of business; and (iii) investing
and managing the assets of the Corporation in such a manner as to
generate income.
On May 1, 1995, the Corporation acquired Premier Life Insurance
Company (Premier), domiciled in Pennsylvania, a dormant life
insurance company with licenses in 28 states (see note 2). On May
1, 1995 Premier was moved to and placed under the jurisdiction of
The Department of Commerce and Insurance of the State of Tennessee.
Premier is required to maintain minimum statutory capital and
statutory surplus of $1,000,000 each. At December 31, 1995,
statutory capital and surplus as reported in Premier's 1995 annual
statement were $2,500,000 and $2,516,573, respectively. At December
31, 1996, statutory capital and surplus as reported in Premier's
1996 annual statement were $2,500,000 and $1,868,941, respectively.
Premier reported statutory net income of $138,820 and $201,861 for
the years ended December 31, 1995 and 1996, respectively.
(B) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Corporation for the period from September 16, 1994
through December 31, 1994 and for the years ended December 31, 1995
and 1996 and the accounts of Premier, its wholly-owned subsidiary,
for the period from May 1 to December 31, 1995 and for the year
ended December 31, 1996. All significant intercompany balances and
transactions have been eliminated.
(C) USE OF ESTIMATES IN THE PREPARATION OF CONSOLIDATED FINANCIAL
STATEMENTS
The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(D) CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts on deposits with banks which are due
on demand, and short-term investments with original maturities of
three months or less.
(Continued)
7
<PAGE> 31
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(E) INVESTMENT SECURITIES
Investments in equity securities that have a readily determinable
fair value are classified as available for sale. Investments in
debt securities are classified into one of three categories as
follows: securities held to maturity, trading securities, and
securities available for sale.
The classification of a debt security as held to maturity is based
on management's positive intent and the Corporation's ability to
hold such security to maturity. Investment securities held to
maturity are stated at cost adjusted for amortization of premiums
and accretion of discounts, unless there is a decline in market
value which is considered to be other than temporary, in which case
the cost basis of the security is written down to its estimated
fair value and the amount of the writedown is included in earnings.
Securities designated as trading securities are recorded at fair
value with unrealized gains and losses included in earnings.
Trading securities include securities that are bought and held
principally for the purpose of selling them in the near term. The
Corporation does not have any securities classified as trading.
Securities classified as available for sale, which are reported at
fair value with unrealized gains and losses excluded from earnings
and reported as a separate component of shareholders' equity, net
of tax, include all securities not classified as trading account
securities or securities held to maturity. Gains or losses on the
sale of securities available for sale are recognized on the trade
date of the sale based upon the specific identification of the
security sold, and are included in the consolidated statements of
income. In the event that there is a decline in market value which
is considered other than temporary, the security is recorded at
estimated fair value with the writedown included in earnings.
Premiums and discounts are amortized using the straight-line method
which approximates the effective interest method, over the term of
the securities considering estimates of prepayments.
(F) RECOGNITION OF INSURANCE PREMIUM INCOME AND RELATED EXPENSES
Insurance premiums from term life, ordinary life and annuity
policies are recognized when due. Benefits and expenses are
associated with such premiums so as to result in recognition of
profits over the life of the contracts. This association is
accomplished by means of the reserve for future policy benefits and
the deferral and subsequent amortization of policy acquisition
costs.
Future policy benefits related to ordinary life insurance policies
have been computed using a net-level premium method and are based
upon various assumptions, including interest rates ranging from 3%
to 7%, industry experience as to mortality and experience as to
withdrawals. In the determination of periodic accumulations, a
provision is made for possible adverse deviations from assumptions.
Accumulations for life policies are graded to statutory reserves
over a period of twenty years. The liability for future policy
benefits related to ordinary deferred annuity policies has been
computed using a fund accumulation method.
(G) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(Continued)
8
<PAGE> 32
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(H) EARNINGS PER SHARE
Earnings per share are based on the weighted average number of
common shares outstanding during the periods, including any
dilutive shares issuable under stock options or stock purchase
warrants. The net income (loss) per share is calculated after
deducting the accrued dividend requirements on the redeemable
preferred stock from the net income (loss).
(I) IMPAIRMENT OF LONG-LIVED ASSETS
The Corporation adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of on
January 1, 1996. This Statement requires that long-lived assets and
certain intangible assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of SFAS No. 121
did not impact the Corporation's financial statements.
(2) BUSINESS COMBINATIONS
On May 1, 1995, the Corporation acquired for cash all the outstanding
capital stock of Premier for a purchase price of $5,605,933. Costs of
$89,296 were incurred in relation to the purchase. This acquisition was
accounted for using the purchase method; accordingly, the purchased
assets and liabilities have been recorded at their estimated fair value
at the date of acquisition. The aggregate purchase price in excess of the
underlying fair value of the net tangible assets acquired of $764,296 was
allocated to the cost of licenses acquired for life insurance operations
in 28 states (note 5), and are being amortized over the 20 year estimated
life of these licenses.
On September 30, 1995, Premier acquired a block of Tennessee life
insurance business from American Progressive Life Insurance Company under
a reinsurance assumption contract. This block of life insurance business
comprises approximately $45,000 in annual premiums for 195 policies with
a face value of life insurance in force of $2,458,000. Generally, all
risks in excess of $5,000 are ceded with other companies (see note 10).
The cost of this acquisition was $50,000 and is being amortized over a 10
year period. The unamortized balance is carried on the accompanying
consolidated balance sheet in other assets. The results of Premier's
operations include the operation of this block of business for the period
from October 1, 1995 to December 31, 1996.
(Continued)
9
<PAGE> 33
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) INVESTMENT SECURITIES
SECURITIES HELD TO MATURITY
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair value of investment securities held to maturity are as
follows at December 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995
---------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ----
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government agencies and
corporations $1,018,744 13,253 7,051 1,024,946
Mortgage-backed securities 1,394,005 5,995 - 1,400,000
---------- ---------- --------- ---------
Total $2,412,749 19,248 7,051 2,424,946
========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
1996
---------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ----
<S> <C> <C> <C> <C>
Obligations of states and political
subdivisions $ 551,812 - 18,312 533,500
U.S. Treasury securities and obligations
of U.S. Government agencies and
corporations 863,848 7,410 3,198 868,060
Mortgage-backed securities 845,867 - 3,007 842,860
---------- ---------- --------- ---------
Total $2,261,527 7,410 24,517 2,244,420
========== ========== ========= =========
</TABLE>
All securities held to maturity were pledged to state regulatory authorities at
December 31, 1995 and 1996.
(Continued)
10
<PAGE> 34
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
The amortized cost and estimated fair value of investment securities held
to maturity at December 31, 1996, by the estimated maturity are shown
below. The estimated maturity dates are based on the stated maturity of
the investment.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
------ --------
<S> <C> <C>
Due within one year $ 250,171 250,100
Due after one year through five years 613,677 617,960
Due after five years through ten years 551,812 533,500
---------- ---------
1,415,660 1,401,560
Mortgage-backed securities 845,867 842,860
---------- ---------
$2,261,527 2,244,420
========== =========
</TABLE>
SECURITIES AVAILABLE FOR SALE
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair value of securities available for sale are as follows at
December 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995
---------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Mortgage-backed securities $1,038,837 13,075 - 1,051,912
U.S. Treasury securities and obligations
of U.S. Government agencies and
corporations 100,000 813 - 100,813
Corporate bonds 1,845,557 38,962 20,219 1,864,300
---------- ---------- --------- ---------
Total debt securities 2,984,394 52,850 20,219 3,017,025
Equity securities 1,510,728 88,873 1,400 1,598,201
---------- ---------- --------- ---------
Total $4,495,122 141,723 21,619 4,615,226
========== ========== ========= =========
</TABLE>
(Continued)
11
<PAGE> 35
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
1996
---------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Mortgage-backed securities $1,499,625 9,313 1,500 1,507,438
Corporate bonds 2,677,006 76,500 30,731 2,722,775
---------- ---------- --------- ---------
Total debt securities 4,176,631 85,813 32,231 4,230,213
Equity securities 1,009,300 33,613 3,037 1,039,876
---------- ---------- --------- ---------
Total $5,185,931 119,426 35,268 5,270,089
========== ========== ========= =========
</TABLE>
Proceeds from the sales of securities available for sale totaled
$4,594,643 in 1995, which resulted in $54,162 of gross realized gains and
gross realized losses of $1,656. Proceeds from the sales of investment
securities available for sale totaled $2,775,954 in 1996, which resulted
in $264,942 of gross realized gains and gross realized losses of $12,044.
The amortized cost and estimated fair value of investment securities
available for sale at December 31, 1996, by estimated maturity are shown
below. The estimated maturity dates are based on the stated maturity of
the investment. Investments in equity securities are excluded as they
have no stated maturity.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
------ --------
<S> <C> <C>
Due within one year $ 101,098 100,719
Due after one year through five years 474,002 481,019
Due after five years through ten years 1,892,394 1,919,181
Due after ten years 209,512 221,856
---------- ---------
2,677,006 2,722,775
Mortgage-backed securities 1,499,625 1,507,438
---------- ---------
$4,176,631 4,230,213
========== =========
</TABLE>
(4) INVESTMENT IN UNITED HOME LIFE INSURANCE COMPANY
In November 1996, the Corporation's Board of Directors approved an offer
to acquire the stock of United Home Life Insurance Company (UHL), a
publicly held life insurance company which is approximately 50%
controlled by the family of its founder. The Corporation offered to
acquire UHL for $4.00 per share, or approximately $5,000,000 for all of
the outstanding shares of UHL. This offer was rejected by UHL.
In December 1996 the Corporation acquired an investment in UHL at a cost
of $149,604 which has an estimated fair value at December 31, 1996 of
$131,244.
(Continued)
12
<PAGE> 36
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
On December 18, 1996, the Corporation filed with the Indiana Commissioner
of Insurance an application for permission to acquire control of UHL. The
application seeks approval to acquire UHL either through a negotiated
acquisition or a public tender offer. This application indicates that a
tender offer would carry a per share price of $4.50, or approximately
$5,625,000 if all shares were to be tendered. A series of hearings on the
application with the Indiana commissioner of Insurance commenced in
February 1997 and are expected to be concluded in late March 1997. The
results of these hearings are expected in early April 1997.
Management believes that the Corporation's existing resources are
adequate to complete the acquisition of the stock of UHL and that such
acquisition will not have an adverse impact on its financial condition.
(5) STATE INSURANCE LICENSES
At December 31, 1995 and 1996, the cost of state insurance licenses and
accumulated amortization is summarized as follows:
<TABLE>
<CAPTION>
1995 1996
----- -----
<S> <C> <C>
Cost of licenses (note 2) $764,296 764,296
Less accumulated amortization 25,477 63,690
-------- -------
$738,819 700,606
======== =======
</TABLE>
Amortization expense for the period from May 1, 1995 to December 31,
1995, was $25,477. Amortization expense for the year ended December 31,
1996 was $38,213.
(6) INCOME TAXES
The Corporation and Premier are required to file separate income tax
returns.
Income tax expense attributable to income from continuing operations for
the period from September 16, 1994 (inception) through December 31, 1994
and for the years ended December 31, 1995 and 1996 consists of:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Current income tax expense:
Federal $ 9 81,400 88,100
State - - 12,500
------- ------- -------
Total current income tax expense 9 81,400 100,600
------- ------- -------
Deferred income tax expense:
Federal - - -
State - - -
------- ------- -------
Total deferred income tax expense - - -
------- ------- -------
Total income tax expense $ 9 81,400 100,600
======= ======= =======
</TABLE>
(Continued)
13
<PAGE> 37
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Income tax expense attributable to income before income tax expense
differed from the amount computed by applying the U.S. Federal income tax
rate of 34 percent to income before income tax expense as a result of the
following:
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ------------------ --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $19 34.00% $ 99,111 34.00% $ 135,644 34.00%
Increases (reductions) resulting from:
State income taxes - - - - 8,250 2.07
Amortization of cost of licenses - - 8,662 2.97 12,992 3.26
Key man life insurance premiums - - 4,163 1.43 6,339 1.59
Surtax exemption - - (2,175) (.75) (1,688) (.42)
Dividends received deduction - - (2,824) (.97) (9,230) (2.31)
Alternative minimum tax credit
carryforwards - - 20,068 6.88 6,403 1.60
Small life company deduction - - (49,908) (17.12) (33,977) (8.52)
Other 10 17.54 4,303 1.48 (24,133) (6.05)
--- ----- -------- ----- --------- -----
$ 9 16.46% $ 81,400 27.92% $ 100,600 25.22%
=== ===== ======== ===== ========= =====
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations for the years ended December 31, 1995
and 1996 are as follows:
<TABLE>
<CAPTION>
1995 1996
----- -----
<S> <C> <C>
Deferred tax benefit
(exclusive of the effects of other components listed below) $ 32,430 4,747
(Increase) in beginning-of-the-year balance of the valuation allowance
for deferred tax assets (32,430) (4,747)
--------- -----
$ - -
========= =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1995 and 1996 are presented below.
<TABLE>
<CAPTION>
1995 1996
----- -----
<S> <C> <C>
Deferred tax assets:
Life insurance policy reserves $ 10,740 19,066
Deferred acquisition costs 11,142 16,681
Alternative minimum tax carryforward 20,068 15,448
Other 3,480 2,262
------ ------
Total gross deferred tax assets 45,430 53,457
Less valuation allowance (32,430) (37,177)
------ ------
Net deferred tax assets 13,000 16,280
------ ------
Deferred tax liabilities:
Unrealized gain on securities available for sale (38,400) (24,730)
Value of business acquired (9,500) (12,750)
------ ------
Total gross deferred tax liabilities (47,900) (37,480)
------ ------
Net deferred tax liability $(34,900) (21,200)
====== ======
</TABLE>
(Continued)
14
<PAGE> 38
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
The net change in the total valuation allowance for the years ended
December 31, 1995 and 1996 was an increase of $32,430 and $4,747,
respectively. Management will continue to evaluate the propriety of the
valuation reserve based on evaluation of the likelihood of realizing
deferred tax assets using the more likely than not criterion.
(7) CAPITAL STOCK
The Corporation's authorized capital stock consists of 10,000,000 shares
of Common Stock, and 5,000,000 shares of preferred stock with
preferences, limitations and relative rights to be determined by the
Board of Directors of the Corporation. The Board of Directors of the
Corporation has designated 1,312,500 shares of its preferred stock as
Series A Convertible Preferred Stock. At December 31, 1996, 333,333
shares of Common Stock and 1,312,500 of Series A Convertible Preferred
Stock of the Corporation were issued and outstanding. The net proceeds of
the preferred stock issuance was $9,852,618 and the issuance had a
redemption value of $10,500,000. The difference between the redemption
value and the net proceeds from the issue has been recorded to
accumulated deficit.
(A) COMMON STOCK
Each outstanding share of Common Stock is entitled to one vote per
share on all matters submitted to a vote of shareholders. In the
event of any liquidation, dissolution, or winding up of the
Corporation, holders of Common Stock are entitled to share ratably
in the assets of the Corporation remaining after provision for
payment of creditors and after the liquidation preference of any
shares of preferred stock outstanding at the time. 150,000 shares
of Common Stock have been reserved for issuance pursuant to an
Incentive Stock Option Plan (note 9) and 65,625 shares of Common
Stock are reserved for issuance pursuant to the stock purchase
warrants granted by the Corporation, as described below.
(B) WARRANTS
The Corporation has granted Equitable Securities Corporation and
Nelson Capital Corporation, warrants to purchase an aggregate of
65,625 shares of Common Stock of the Corporation which equals 5% of
the number of shares of the Series A Preferred Stock sold in 1995.
These warrants will be exercisable, in whole or in part, for a
period of five years from February 21, 1995 at an exercise price of
$8.00 per share.
(C) REGISTRATION RIGHTS AGREEMENT
Purchasers of the Series A Preferred Stock will be entitled to
registration rights consisting of unlimited "piggy-back"
registration rights with respect to the Common Stock into which the
Series A Preferred Stock may be converted. There will be no
"demand" registration rights.
(8) REDEEMABLE PREFERRED STOCK
Voting. The holders of the Series A Preferred Stock are entitled to vote
as a group with the Common Stock on an as-converted basis on any matter
submitted to a vote of the shareholders of the Corporation. In addition,
the approval of the holders of the Series A Preferred Stock, voting as a
class, shall be required on all matters requiring voting as a class under
the Tennessee Business Corporation Act (the "TBCA").
(Continued)
15
<PAGE> 39
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Conversion. The Series A Preferred Stock is convertible at any time at
the option of the record holder into one share of Common Stock of the
Corporation. The Corporation is required to at all times reserve and keep
available, for the purpose of issuing upon conversion of the Series A
Preferred Stock, the number of shares of Common Stock issuable upon
conversion of all outstanding shares of Series A Preferred Stock. The
Corporation may pay cash for any fractional shares of Common Stock
resulting from the conversion of the Series A Preferred Stock. All
outstanding shares of Series A Preferred Stock shall be converted
automatically into shares of Common Stock at the then-prevailing
conversion ratio immediately prior to the closing of either: (i) an
underwritten initial public offering pursuant to a registration statement
under the Securities Act of 1933 covering the offer and sale of Common
Stock of the Corporation in which the aggregate price to the public of
the shares sold for the Corporation is equal to or greater than $15
million and at a per share purchase price of at least $16 per share
(subject to anti-dilutive adjustments) (a "Qualified Public Offering"),
(ii) the merger of the Corporation in which the Corporation shall not be
the surviving entity ("Merger"), or (iii) the sale or transfer of all or
substantially all of the assets of the Corporation ("Sale").
Redemption. If the Corporation has not completed a Qualified Public
Offering, a Merger, or Sale prior to February 21, 2000, holders of the
Series A Preferred Stock, for a period of six months beginning on
February 21, 2000, will have an option to request that the Corporation
redeem their shares at an amount equal to the original purchase price
plus all cumulated dividends (the "redemption price"). The Board of
Directors of the Corporation must redeem the Series A Preferred Stock
unless it determines in good faith that the redemption is not permitted
under the TBCA, or that it would impair the capital of any insurance
company subsidiary based upon then existing statutes or regulations,
applicable to life insurance companies or insurance holding companies. At
the election of the Board of Directors of the Corporation, payment of the
redemption price may be made 20% in cash and the balance in four equal
semi-annual installments bearing interest at the prime rate as published
in The Wall Street Journal. In the event that no request is made
regarding redemption, at the end of the six month period, the Series A
Preferred Stock shall automatically convert into Common Stock and the
Corporation shall pay, in cash or marketable securities, all accumulated
but unpaid dividends.
Dividends. A dividend will cumulate on the Series A Preferred Stock for a
period of five years at a rate of 8% per annum. No dividend shall be paid
on the Common Stock until all cumulated dividends shall have been paid on
the Series A Preferred Stock. The cumulative dividend shall be payable in
cash out of funds legally available therefor and subject to the prior
approval of applicable insurance commissioners of dividends payable to
the Corporation by its life insurance subsidiaries. In certain
circumstances, the dividends may be payable in marketable securities of
the Corporation or some other entity. After five years, no further
dividends shall cumulate on the Series A Preferred Stock. At December 31,
1996, cumulated and unpaid dividends totaled $1,556,345.
Preference Payments. In the event of the voluntary or involuntary
dissolution, sale of substantially all the Corporation's assets, or
winding-up of the Corporation, after payment in full of all amounts due
to creditors, the holders of the Series A Preferred Stock shall be
entitled, before any distribution is made with respect to any other
capital stock of the Corporation, to receive a preferential payment from
the assets of the Corporation of cash or property (to the extent of funds
legally available therefor) equal to $8.00 per share plus an amount equal
to all cumulated but unpaid dividends (the "Preference Amount"), computed
to the date of payment thereof. Thereafter, the holders of Series A
Preferred Stock shall not be entitled to any further payment. If upon
such dissolution, sale of assets, or winding-up of the Corporation, the
assets to be distributed among the holders of the Series A Preferred
Stock shall be insufficient to permit payment of the Preference Amount in
full, then all the assets of the Corporation shall be distributed ratably
among the holders of the Series A Preferred Stock.
Anti-dilution Adjustments. If the Corporation subdivides or combines its
outstanding shares of Common Stock into a larger or smaller number of
shares, then the number of shares of Common Stock issuable upon
conversion of Series A Preferred Stock will be proportionally increased
in the case of a subdivision and decreased in the case of a combination.
(Continued)
16
<PAGE> 40
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Restrictions on Transfer of Shares. The transfer of shares of Series A
Preferred Stock will be restricted by federal and state securities laws.
Shares of Series A Preferred Stock may only be resold by shareholders
after a substantial holding period and thereafter sales must be made in
compliance with applicable securities laws.
(9) INCENTIVE STOCK OPTION PLAN
The Corporation has adopted an incentive stock option plan (the "Stock
Option Plan") under which 150,000 shares of Common Stock have been
reserved for future grants to officers, key employees, and directors, as
determined from time to time by the Board of Directors. The Stock Option
Plan provides that options granted may be either incentive stock options
under Section 422 of the Code or non-qualified options. The terms and
conditions of any options will be determined by the Board of Directors
(or a committee appointed to administer the Plan).
Prior to January 1, 1996, the Corporation accounted for its stock option
plan in accordance with the provisions of Accounting Principles Board
(APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. As such, compensation expense would be recorded
on the date of grant only if the current market price of the underlying
stock exceeded the exercise price. On January 1, 1996, the Corporation
adopted SFAS No. 123, Accounting for Stock-Based Compensation, which
permits entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant. Alternatively, SFAS
No. 123 also allows entities to continue to apply the provisions of APB
Opinion No. 25 and provide pro forma net income and pro forma earnings
per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123
had been applied. The Corporation has elected to continue to apply the
provisions of APB Opinion No. 25. The provisions of SFAS No. 123 need not
be applied to immaterial items. As such, pro forma disclosures are not
provided.
As of December 31, 1996, options had been granted to the officers and
directors of the Corporation to purchase 56,000 shares of the
Corporation's Common Stock. Compensation expense was not recorded in
connection with issuance of these options as the option price equaled or
exceeded the estimated market of the Corporation's Common Stock at the
date of grant.
The following table presents information on stock options:
<TABLE>
<CAPTION>
TOTAL OPTION
OPTIONS EXERCISABLE PRICE
SHARES OPTIONS RANGE
------ ------- ------
<S> <C> <C> <C>
Options outstanding at January 1, 1995 - - -
Granted 56,000 - $6.80 - 7.48
Options that became exercisable - 14,000 6.80 - 7.48
------ ------ ------------
Options outstanding at December 31, 1995 56,000 14,000 6.80 - 7.48
Options that became exercisable - 14,000 6.80 - 7.48
------ ------ ------------
Options outstanding at December 31, 1996 56,000 28,000 6.80 - 7.48
====== ====== ============
</TABLE>
(Continued)
17
<PAGE> 41
SOUTHCAP CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
The stock options become exercisable ratably through 1998 and become
fully exercisable in the event of an initial public offering at which the
aggregate price equals or exceeds $15,000,000 at a price per share equal
to $16.00 or the sale, merger, or change in majority control of the
Corporation. The options expire on July 11, 2000.
(10) REINSURANCE
Premier cedes life insurance business pursuant to reinsurance agreements.
In 1996, Premier paid $15,473 in reinsurance premiums. The impact to the
consolidated financial statements of the ceded reinsurance activities for
the years ended December 31, 1995 and 1996, are as follows:
<TABLE>
<CAPTION>
1995
----------------------------------------
DIRECT ASSUMED CEDED NET
------ ------- ----- ---
<S> <C> <C> <C> <C>
Insurance premiums earned $ 9,987 - 7,920 2,067
Benefits to policyholders 13,650 - - 13,650
Future policy benefits $806,846 - 11,650 795,196
======== ======== ====== =======
</TABLE>
<TABLE>
<CAPTION>
1996
----------------------------------------
DIRECT ASSUMED CEDED NET
------ ------- ----- ---
<S> <C> <C> <C> <C>
Insurance premiums earned $ 44,629 - 15,473 29,156
Benefits to policyholders 96,240 - 40,000 56,240
Future policy benefits $840,621 - 10,921 829,700
======== ======== ====== =======
</TABLE>
A contingent liability exists with respect to reinsurance ceded that
would become a liability of Premier should the reinsurers be unable to
meet their obligations.
18
<PAGE> 42
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
shareholder or such shareholder's investment professional to the Depositary at
one of the addresses set forth below.
THE DEPOSITARY IS:
Fifth Third Bank
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Facsimile Transmission
Fifth Third Bank Fifth Third Bank (513) 744-6785
Corporate Trust Operations Corporate Trust Operations All faxes will be confirmed
Mail Drop 1090F5 15th Floor telephonically if the presenter
38 Fountain Square Plaza 38 Fountain Square Plaza provides a telephone
Cincinnati, OH 45263 Cincinnati, OH 45263 number for such purpose
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Affidavit of Lost or Missing
Stock Certificate may be directed to D.F. King & Co., Inc. at its telephone
number and location listed below. You may also contact your broker, dealer,
commercial bank, trust company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is.
D. F. King & Co., Inc.
77 Water Street
New York, NY 10005
(212) 269-5550 (Call Collect)
(800) 848-3374 (Toll-free)
<PAGE> 1
EXHIBIT a(2)
LETTER OF TRANSMITTAL
To Tender Shares of
Common Stock
of
UNITED HOME LIFE
INSURANCE COMPANY
Pursuant to the Offer to Purchase
Dated April 8, 1997
of
SouthCap Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
INDIANAPOLIS, INDIANA, TIME, ON TUESDAY, MAY 20, 1997,
UNLESS THE OFFER IS EXTENDED
The Depositary for the Offer:
Fifth Third Bank
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Carrier:
Fifth Third Bank Fifth Third Bank Fifth Third Bank
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
Mail Drop 1090F5 15th Floor Mail Drop 1090F5
38 Fountain Square Plaza 38 Fountain Square Plaza 38 Fountain Square Plaza
Cincinnati, OH 45263 Cincinnati, OH 45263 Cincinnati, OH 45263
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders if
certificates evidencing Shares (the "Share Certificates") are to be forwarded
herewith.
<PAGE> 2
Shareholders whose Share Certificates are lost, stolen or destroyed or who
cannot deliver their Share Certificates and all other documents required hereby
to the Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) and who wish to tender their Shares may do so by executing
and returning the enclosed Affidavit of Lost or Missing Stock Certificate (the
"Affidavit") along with this Letter of Transmittal to the Depository prior to
the Expiration Date. See Instruction 2.
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank, exactly as name(s) appear(s) Shares Certificate(s) and Share(s) Tendered
on Share Certificate(s)) (Attach additional list, if necessary)
Total Number of
Share Certificate Shares Evidenced by Number of
Number(s)* Share Certificate(s) Shares Tendered
<S> <C> <C> <C>
________________________________________ _________________ _________________ ________________
________________________________________ _________________ _________________ ________________
________________________________________ _________________ _________________ ________________
________________________________________ _________________ _________________ ________________
Total Shares
</TABLE>
*Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered hereby.
See Instruction 4
2
<PAGE> 3
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to SouthCap Corporation, a Tennessee
corporation ("Purchaser"), the above-described shares of common stock, par
value $1.00 per share (the "Shares"), of United Home Life Insurance Company
(the "Company"), pursuant to Purchaser's offer to purchase all the outstanding
Shares for $4.50 per share, payable to the seller in cash promptly following
the completion of the Offer for each outstanding Share, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 8, 1997 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to Purchaser all right, title and interest
in and to all the Shares that are being tendered hereby (or orders the
registration of such Shares delivered by book-entry transfer) and all
dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, paid or distributed in respect of such
Shares on or after April 8, 1997 (collectively, "Distributions"), and
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company, and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints F. W. Lazenby and Fred G.
Frick, and each of them, as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his or her substitute shall, in his or her sole discretion, deem
proper and otherwise act (by written consent or otherwise) with respect to all
the Shares tendered hereby that have been accepted for payment by Purchaser
prior to the time of any vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of shareholders of the Company
(whether annual or special and whether or not an adjourned or postponed
meeting) or consent in lieu of any such meeting or otherwise. This proxy and
power of attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all other proxies and
powers of attorney granted by the undersigned at any time with respect to such
Shares (and all Shares and other securities issued in Distributions in respect
of such Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and, if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights with respect to such Shares and all Distributions,
including, without limitation, voting at any meeting of the Company's
shareholders then scheduled.
3
<PAGE> 4
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof,
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby, or deduct from such purchase price the amount or value of such
Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares
purchased and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of, and mail such check and Share Certificates to,
the person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any
Shares from the name of the registered holder(s) thereof if Purchaser does not
purchase any of the Shares tendered hereby.
4
<PAGE> 5
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 7)
To be completed ONLY if the check for the SPECIAL DELIVERY INSTRUCTIONS
purchase price of Shares purchased or Share (SEE INSTRUCTION 1, 5 AND 7)
Certificates evidencing Shares not tendered or
not purchased are to be issued in the name of To be completed ONLY if the check
someone other than the undersigned. for the purchase price of Shares
Issue check and/or certificate(s) to: purchased or Share Certificates
Name ______________________________ evidencing Shares not tendered or
(PLEASE PRINT) not purchased are to be mailed to
Address ____________________________ someone other than the undersigned,
(INCLUDE ZIP CODE) or to the undersigned at an address
other than that shown under
"Description of Shares Tendered."
__________________________________________________ Mail check and/or certificate(s) to:
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) Name ____________________________
(SEE SUBSTITUTE FORM W-9 ON INSICDE BACK COVER) (PLEASE PRINT)
__________________________________________________ Address __________________________
(ACCOUNT NUMBER) (INCLUDE ZIP CODE)
</TABLE>
5
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: _______________, 1997
(Must be signed by registered holder(s) exactly as such registered
holder(s) appear(s) on Share Certificates. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.)
Name(s): ______________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): ________________________________________________________
Address: ______________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: __________________________________________________
Taxpayer Identification or Social Security No.: _______________________________
(SEE SUBSTITUTE FORM W-9 ON INSIDE BACK COVER)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
STATE OF __________)
COUNTY OF__________)
Before me, the undersigned, a Notary Public in and for the County and
State aforesaid, personally appeared ___________________________________ the
within named bargainor, with whom I am personally acquainted (or proved to me on
the basis of satisfactory evidence), and who acknowledged that he/she executed
the within instrument for the purposes therein contained.
Witness my hand and seal, at office in _______________, _____________,
this ____ day of ___________, 19_____.
----------------------------------------------
Notary Public
My Commission Expires:
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
INSTRUCTION 1. Guarantee of Signatures. If this Letter of Transmittal is
signed by any party other than the registered holder(s) of the Shares, then
signatures on this Letter of Transmittal must be notarized.
INSTRUCTION 2. Delivery of Letter of Transmittal and Share Certificates. This
Letter of Transmittal is to be used when Share Certificates are forwarded
herewith. Share Certificates evidencing all physically tendered Shares and any
other documents required by this Letter of Transmittal, MUST BE RECEIVED by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are lost, stolen or destroyed
or who cannot deliver their Share Certificates and all other required documents
to the Depositary prior to the Expiration Date may tender their Shares pursuant
to the guaranteed delivery procedure described in Section 3 of the Offer to
Purchase. Pursuant to such procedure, a properly completed and duly executed
Affidavit of Lost or Missing Stock Certificate in the form included herewith
must be received by the Depositary prior to the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
INSTRUCTION 3. Inadequate Space. If the space provided herein under
"Description of Shares Tendered" is inadequate, the Share Certificate numbers,
the number of Shares evidenced by such Share Certificates and the number of
Shares tendered should be listed on a separate schedule and attached hereto.
INSTRUCTION 4. Partial Tenders. If fewer than all of the Shares evidenced by
any Share Certificate delivered to the Depositary herewith are to be tendered
hereby, fill in the number of Shares that are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, new Share Certificate(s)
evidencing the remainder of the Shares that were evidenced by the Share
Certificates delivered to the Depositary herewith will be sent to the person(s)
signing this Letter of Transmittal, unless otherwise provided in the box
entitled "Special Delivery Instructions" on the reverse hereof, as soon as
practicable after the expiration or termination of the Offer. All Shares
evidenced by Share Certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
INSTRUCTION 5. Signatures on Letter of Transmittal, Stock Powers and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the Share Certificates evidencing such
Shares without alteration, enlargement or any other change whatsoever.
7
<PAGE> 8
If any Share tendered hereby is owned of record by two or more persons,
all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name
of, a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s).
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority so to act
must be submitted.
INSTRUCTION 6. Stock Transfer Taxes. Except as otherwise provided in this
Instruction 6, Purchaser will pay all stock transfer taxes with respect to the
sale and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price of any Shares purchased is to be made
to, or Shares Certificate(s) evidencing Shares not tendered or not purchased
are to be issued in the name of, a person other than the registered holder(s),
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer
to such other person will be deducted from the purchase price of such Shares
purchased, unless evidence satisfactory to Purchaser of the payment of such
taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 6, it will not be necessary for transfer tax stamps to be affixed
to the Share Certificates evidencing the Shares tendered hereby.
INSTRUCTION 7. Special Payment and Delivery Instructions. If a check for the
purchase price of any Shares tendered hereby is to be issued, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be
issued, in the name of a person other than the person(s) signing this Letter of
Transmittal or if such check or any such Share Certificate is to be sent to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Shares Tendered" on the reverse
hereof, the appropriate boxes on the reverse of this Letter of Transmittal must
be completed.
INSTRUCTION 8. Questions and Requests for Assistance or Additional Copies.
Questions and requests for assistance may be directed to the Information Agent,
D.F. King & Co., Inc., at 77 Water Street, New York, New York 10005, (212)
269-5550 (collect) or (800) 848-3374 (toll free). Additional copies of the
Offer to Purchase, this Letter of Transmittal and the Affidavit of Lost or
Missing Stock
8
<PAGE> 9
Certificate may be obtained from the Information Agent or from SouthCap
Corporation at 211 Seventh Avenue, North, 4th Floor, Nashville, Tennessee
37219.
INSTRUCTION 9. Substitute Form W-9. Each tendering shareholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
the Substitute Form W-9 which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, that such number is correct
and that such shareholder is not subject to backup withholding of federal
income tax. If a tendering shareholder has been notified by the Internal
Revenue Service that such shareholder is subject to backup withholding, such
shareholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such shareholder has since been notified by the Internal
Revenue Service that such shareholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such shareholder. If
the tendering shareholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such shareholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute
Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.
Important: This Letter of Transmittal (or facsimile hereof), properly
completed and duly executed, or a properly completed and duly executed Notice
of Guaranteed Delivery must be received by the Depositary prior to the
Expiration Date (as defined in the Offer to Purchase).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
Depositary is not provided with the correct TIN, the shareholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such shareholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding of 31% (as described below).
Certain shareholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such individual must submit an Internal Revenue Service Form
W-8, signed under penalties of perjury, attesting to such individual's exempt
status. A Form W-8 may be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
9
<PAGE> 10
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering shareholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For," in the space provided for
the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% of all payments of the purchase price to
such shareholder until a TIN is provided to the Depositary.
10
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
SUBSTITUTE PART 1 - Taxpayer Identification Number
FORM W-9
Department of the For all accounts, enter taxpayer
Treasury Internal identification number in the box at
Revenue Service right. (For most individuals, this is
your social security number. If you do
not have a number, see "Obtaining a ____________________
Number" in the enclosed Guidelines.) SOCIAL SECURITY NUMBER
Certify by signing and dating below. OR ________________
Note: If the account is in more than one EMPLOYER IDENTIFICATION
name, see the chart in the enclosed NUMBER
Guidelines to determine which number to (If awaiting TIN
give the payer. write "Applied For")
Payer's Request for
Taxpayer Identification PART II -- For Payees Exempt from Backup Withholding, see the enclosed
Number (TIN) Guidelines and complete as instructed therein.
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for
a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a result of failure to report
all interest or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of under reporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were subject to backup withholding,
you received another notification from the IRS that you are no longer subject to backup withholding,
do not cross out item (2). (See also instructions in the enclosed Guidelines.)
SIGNATURE _______________________________________ DATE ___________, 1997
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. FOR
ADDITIONAL DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
---------------------------
11
<PAGE> 12
The Information Agent for the Offer is.
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
(212) 269-5550 (Call Collect)
(800) 848-3374 (Toll-free)
----------------
April 8, 1997
12
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The offer (as defined below) is made
solely by the Offer to purchase dated April 8, 1997 and the related Letter of
Transmittal, and is being made to all holders of Shares. Purchaser (as defined
below) is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any state statute. If Purchaser
becomes aware of any valid state statute prohibiting the making of the Offer or
the acceptance of Shares pursuant thereto, Purchaser will make a good faith
effort to comply with any such state statute. If after such good faith effort,
Purchaser cannot comply with any such state statute, the Offer will not be made
cto nor will tenders be accepted from or on behalf of the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by a registered broker or dealer
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
UNITED HOME LIFE INSURANCE COMPANY
at
$4.50 Per Share without interest
by
SOUTHCAP CORPORATION
SouthCap Corporation, a Tennessee corporation ("Purchaser"), is offering
to purchase all outstanding shares of common stock, par value $1.00 per share
(the "Shares"), of United Home Life Insurance Company (the "Company"), at a
price of $4.50 per Share, in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated April 8,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"). Following the Offer, Purchaser intends to
effect the actions described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 p.m., INDIANAPOLIS,
INDIANA TIME, ON TUESDAY, MAY 20, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which, together with any Shares then owned by Purchaser, represents at
least 50.1% of the Shares on a fully diluted basis (fully diluted shall include,
without limitation, all Shares issuable upon the conversion of any convertible
securities or upon the exercise of any options, warrants or rights, unless the
holder thereof shall have entered into an agreement to cash out such options,
warrants or rights).
As soon as practicable after the purchase of Shares pursuant to the
Offer and the satisfaction of the other conditions and in accordance with
relevant provisions of the Indiana Business Corporation Law (the "IBCL"), and
the Indiana Insurance Department (the "IID"), the Purchaser will cause to be
called a special meeting of shareholders for the purpose of electing its
designated directors. If the Purchaser acquires a sufficient number of shares
to permit such actions, it will effect a statutory merger of the Company (the
"Merger"). At the effective time of the Merger (the "Effective Time"), each
Share issued and outstanding immediately prior to the Merger held by the
Purchaser will continue to be outstanding, and Shares owned by persons other
than the Purchaser will be converted into the right to receive $4.50 per Share
in cash.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to Fifth Third Bank (the
"Depositary") of the Purchaser's acceptance for payment of such Shares pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering shareholders for the purpose of receiving payments from
the Purchaser and transmitting such payments to the tendering shareholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depository
of: (i) the certificates
<PAGE> 2
evidencing such Shares (the "Share Certificates"); (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees; and (iii) any other documents required by
the Letter of Transmittal.
The term "Expiration Date" shall mean 5:00 p.m. Indianapolis, Indiana
time, on Tuesday, May 20, 1997, unless and until Purchaser, shall have extended
the period of time for the Offer, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. Purchaser expressly reserves the right, in its sole
discretion at any time and from time to time, to extend for any reason the
period of time during which the Offer is open by giving oral or written notice
of such extension to the Depositary. Any such extension will be followed as
promptly as practicable by public announcement thereof, such announcement to be
made no later than 9:00 a.m., Eastern time, on the next business day after the
previously scheduled Expiration Date of the Offer. During any such extension
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of a tendering shareholder to withdraw such
shareholder's Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn by the
tendering shareholder at any time prior to the Expiration Date, including any
extensions thereof, unless accepted for payment by Purchaser pursuant to the
Offer. For the withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. Prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed. Withdrawals may not be rescinded,
and any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Date or any extensions thereof
by following one of the procedures described in Section 3 of the Offer to
Purchase. All questions as to the form and validity (including the time of
receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Purchaser has requested that the Company provide it with its
stockholders list and security position listings so that the Offer to Purchase
and the related Letter of Transmittal can be mailed to record holders of Shares
whose names appear on the Company's shareholder list and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder list or, if
applicable, mailed to those who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealer or other person (other than the
Information Agent).
The Information Agent for the Offer is
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
(212) 269-5550 (Call Collect)
(800) 848-3374 (Toll-free)
April 8, 1997
<PAGE> 1
EXHIBIT (a)(5)
PRESS RELEASE CONTACT PERSON:
F.W. LAZENBY (615) 244-1908
Chairman, President,
Chief Executive Officer
FRED G. FRICK
Executive Vice President
SOUTHCAP CORPORATION ANNOUNCES TENDER OFFER FOR UNITED
HOME LIFE INSURANCE COMPANY
Nashville, Tennessee (April 8, 1997) - SouthCap Corporation announced
today that it is offering to purchase all the outstanding shares of common
stock of United Home Life Insurance Company ("United Home Life") in a cash
tender offer at $4.50 per share. On March 27, 1997, SouthCap received the
approval of the Indiana Commissioner of Insurance to make the tender offer.
United Home Life currently has 1,209,298 shares of common stock outstanding.
SouthCap will use cash from available resources to pay for the shares acquired
in the tender offer. SouthCap Corporation stated that its offer will expire at
5:00 p.m. Indianapolis, Indiana time on Tuesday, May 20, 1997, unless extended,
and that the cash tender offer is subject, among other things, to SouthCap
Corporation receiving at least 50.1% (fifty and one-tenth percent) of the
outstanding common stock of United Home Life.
SouthCap Corporation announced that it has appointed Fifth Third Bank,
Cincinnati, Ohio, as Depository and D.F. King & Co., Inc. as Information Agent
for the offer.
SouthCap Corporation stated that the offer is being made only by its Offer
to Purchase dated April 8, 1997 and related Letter of Transmittal, copies of
which may be obtained from D.F. King & Co., Inc.
SouthCap Corporation is a privately held life insurance holding company
headquartered in Nashville, Tennessee. SouthCap Corporation presently owns
3.6% of the outstanding common stock of United Home Life and has the right to
acquire an additional 2.8%.
United Home Life Insurance Company is an Indiana life insurance company
with its home office in Greenwood, Indiana. The common stock of United Home
Life is traded over-the-counter on the "pink sheets". United Home Life had
approximately $216 million of life insurance in force at December 31, 1996, and
it had premium income of approximately $3.8 million in 1996. United Home Life
incurred a loss of approximately $47,000 in 1996.
- END -
<PAGE> 1
Exhibit 3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of December 19, 1996, is by
and between THERESA A. HULL, an individual resident of Indiana (the
"Shareholder"), and SOUTHCAP Corporation, a Tennessee corporation ("SOUTHCAP").
RECITALS:
SOUTHCAP is interested in purchasing shares of the common stock of
United Home Life Insurance Company, an Indiana insurance company (the
"Company"). Shareholder is presently the record holder of that number shares of
common stock of the Company set forth opposite the Shareholder's name on the
signature page hereof (the "Current Stock"). In addition, Shareholder is a
beneficiary under the trust created by the will of Florence J. Schoettle dated
January 30, 1986 (the "Trust"), which owns approximately 496,568 shares of
common stock of the Company. The terms of the Trust provide for its dissolution
on January 26, 1997, and at such time, all of the shares of common stock of the
Company which are held by the Trust are to be distributed equally to all
beneficiaries. Upon dissolution, Shareholder will receive a distribution of
approximately 35,469 shares of common stock of the Company (all of such shares
to be received shall be referred to as "Future Stock"). SOUTHCAP desires to
purchase all of the Current Stock and all of the Future Stock, and the
Shareholder is willing to sell all of such shares to SOUTHCAP, all on the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the premises, the Shareholder
and SOUTHCAP hereby agree as follows:
1. PURCHASE AND SALE OF STOCK. Shareholder hereby agrees to sell to
SOUTHCAP, and SOUTHCAP agrees to purchase from Shareholder, the Current Stock
and the Future Stock, upon the dissolution of the Trust and the distribution of
the shares to the Shareholder, all on the terms and conditions set forth
herein.
2. PURCHASE PRICE. The purchase price to be paid for the Current
Stock and the Future Stock (the "Purchase Price") shall be $4.50 per share,
subject to increase as provided herein. The Purchase Price to be paid shall be
increased to the per share amount paid by SOUTHCAP in the event that SOUTHCAP
makes a general tender offer to all shareholders of the Company which results
in SOUTHCAP owning a majority of all outstanding shares of the Company and the
amount paid to those shareholders in the tender offer exceeds the sum of $4.50
per share.
3. CLOSING DATE. The closing with respect to the Current Stock
shall be as mutually agreed upon, and in no event after the closing with
respect to the Future Stock at the offices of Baker & Daniels, Indianapolis,
Indiana. The closing with respect to the Future Stock shall be ten (10) days
after receipt of those shares. In the event that the Future Stock has not been
distributed to Shareholder and delivered pursuant to the terms hereof on or
before June 1, 1997, SOUTHCAP may, upon notice to Shareholder, terminate its
obligations to purchase the Future Stock.
4. VOTING RIGHTS; COOPERATION. At the closing of the purchase of
the Current Stock, Shareholder shall execute and deliver to SOUTHCAP the proxy
in the form attached hereto as Exhibit A granting SOUTHCAP the right to
exercise all voting with respect to all shares of Future Stock (the "Future
Stock Proxy"). The proxy shall be irrevocable for so long as shares of Future
Stock are subject to purchase by SOUTHCAP pursuant to this Agreement. In
addition, Shareholder agrees to cooperate to provide information as reasonably
requested by SOUTHCAP with respect to Future Stock and the Trust.
<PAGE> 2
5. DELIVERIES AT CLOSING.
(a) SOUTHCAP has delivered to Shareholder the sum of $ -0- as a
deposit toward the purchase of the Current Stock and the Future Stock which
shall be applied toward the Purchase Price. At the closing(s), (i) SOUTHCAP
will deliver to Shareholder its company check in the amount of the Purchase
Price for the shares to be purchased at that closing, less the amount of the
deposit previously delivered, and (ii) the Shareholder shall deliver (A) the
stock certificate or certificates representing all shares of the Current Stock
and the Future Stock, as appropriate, said certificates being duly endorsed or
accompanied by an appropriate stock transfer power, duly executed, at
Shareholder's expense, or an appropriate stock transfer power duly executed at
Shareholder's expense, and (B) the Future Stock Proxy, duly executed by
Shareholder. In the event the Shareholder does not have the stock certificate
for the Current Stock in her possession at the time of closing, the Shareholder
shall execute and deliver an appropriate stock transfer power at the closing
and deliver the stock certificate to SOUTHCAP within three (3) days after
Shareholder receives the stock certificate.
(b) In the event of an increase in the per share consideration
as set forth herein, SOUTHCAP shall mail to Shareholder at the address set
forth on the signature page hereof the additional sum warranted no later than
ten (10) days after the purchase of shares in the tender offer.
6. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder owns
the entire record and beneficial interest in the Current Stock and the entire
beneficial interest in the Future Stock and has the complete and unrestricted
power and the unqualified right to sell, assign, transfer, and deliver the
Current Stock and Future Stock, and SOUTHCAP shall acquire at closing, good,
valid, and marketable title to all of the Current Stock and Future Stock free
and clear of any liabilities, obligations, claims, liens, options, charges,
encumbrances, and restrictions of any kind whatever. The Current Stock and the
Future Stock represents all of the shares of common stock of the Company owned,
directly or beneficially, by the Shareholder.
7. REPRESENTATIONS AND WARRANTIES OF SOUTHCAP. SOUTHCAP represents
and warrants to the Shareholder that it is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Tennessee
and that the execution and delivery of this Agreement by SOUTHCAP together with
the performance of its obligations have been duly authorized by all necessary
corporate actions and authorizations. SOUTHCAP represents and warrants to the
Shareholder that this Agreement has been duly and validly executed and
delivered by SOUTHCAP and that this Agreement constitutes a legal, valid, and
binding obligation of SOUTHCAP enforceable in accordance with the terms.
SOUTHCAP acknowledges that it is relying solely upon information which it has
obtained respecting the Company, and that it is not relying upon any
information provided by the Shareholder relating to the Company except as set
forth herein.
8. CONDITIONS TO OBLIGATIONS OF SOUTHCAP. SOUTHCAP's obligation to
purchase the Current Stock and the Future Stock are conditioned only upon the
receipt of any required consent or approval by the Indiana Department of
Insurance affecting acquisition of greater than 10% of the outstanding
securities of an Indiana insurer without prior approval. SOUTHCAP represents
that it will take all steps reasonably necessary to apply for such approval, if
required.
9. MISCELLANEOUS.
a. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains
the entire understanding of the parties with respect to its subject
matter. This Agreement may be amended only by a written instrument
duly executed by all parties or their respective heirs, successors,
assigns or legal personal representatives. Any condition to a
party's obligations hereunder may be waived by such party in
writing.
b. CAPTIONS AND HEADINGS. The section and paragraph
headings contained in this
<PAGE> 3
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretations of this Agreement.
c. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
SOUTHCAP CORPORATION
By: /s/ John P. Hatter, Jr.
-----------------------------------------
John P. Hatter, Jr., its Attorney-in-Fact
SHAREHOLDER:
Number of Shares /s/ Theresa A. Hull
Owned: 932 ---------------------------------------------
Name: Theresa A. Hull
Mailing Address:
2730 Shelby Street
Indianapolis, IN 46203
<PAGE> 4
IRREVOCABLE PROXY
The undersigned shareholder of United Home Life Insurance
Company ("United") hereby constitutes and appoints F. W. Lazenby and Fred G.
Frick, or either of them, her agent, attorney and proxy, with full power of
substitution, to vote in her name, place and stead, all of the shares of voting
stock of United that she now or hereafter owns or is entitled to vote on any
and all proposals or matters submitted to the shareholders of United.
This Proxy is coupled with an interest under a Stock Purchase
Agreement dated December 19, 1996 between Theresa Hull and SouthCap Corporation
and shall be irrevocable. Theresa Hull shall have no right to vote her shares
of voting stock of United nor to revoke this Proxy.
/s/ Theresa A. Hull
-----------------------------------
Theresa Hull
Dated: December 19, 1996
STATE OF INDIANA )
)SS:
COUNTY OF MARION )
Before me, a Notary Public, in and for the State of Indiana,
personally appeared Theresa Hull, who having been first duly sworn,
acknowledged the execution of the foregoing Irrevocable Proxy, and stated that
any representations contained therein are true.
WITNESS my hand and Notarial Seal this 19th day of December,
1996.
/s/ Sarah Jane Oglesby
--------------------------------------
My Commission Expires: Sarah Jane Oglesby
--------------------------------------
Printed
8/6/96
- --------------------
I am a resident of:
Marion County, Indiana
