<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
SCPIE HOLDINGS INC.
(Name Of Issuer and Person Filing Statement)
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
(Title of Class of Securities)
C-78402P
(CUSIP Number of Class of Securities)
DONALD J. ZUK
SCPIE HOLDINGS INC.
1888 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(310) 551-5900
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person(s) Filing Statement)
Copy to:
DAVID A. HAHN, ESQ.
LATHAM & WATKINS
701 B STREET, SUITE 2100
SAN DIEGO, CALIFORNIA 92101-8197
(619) 236-1234
October 14, 1999
(Date Tender Offer First Published, Sent or Given to Security
Holders)
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$ 75,000,000 $ 15,000
------------- -------------
* For the purpose of calculating the filing fee only, this amount is based on
the purchase of 2,000,000 shares of Common Stock at the maximum tender
offer price of $37.50 per share.
[ ] 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: Not applicable. Filing party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
<PAGE>
This Issuer Tender Offer Statement on Schedule 13E-4 (this "Schedule 13E-4")
relates to the offer by SCPIE Holdings Inc., a Delaware corporation (the
"Company" or the "Issuer"), to purchase up to 2,000,000 shares (or such lesser
number of shares as are properly tendered) of its Common Stock, par value
$0.0001 per share (including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement dated as of May 13, 1997, as
amended as of October 19, 1998 and August 4, 1999, between the Company and
ChaseMellon Shareholder Services, L.L.C., as the Rights Agent), at prices not in
excess of $37.50 nor less than $34.25 per share, net to the seller in cash,
without interest thereon, as specified by stockholders tendering their Shares,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated October 14, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"), and is intended to satisfy the reporting requirements
of Section 13(e) of the Securities Exchange Act of 1934, as amended. Copies of
the Offer to Purchase and the related Letter of Transmittal are filed with this
Schedule 13E-4 as Exhibits (a)(1) and (a)(2) hereto, respectively.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is SCPIE Holdings Inc., a Delaware corporation,
and the address of its principal executive office is 1888 Century Park East, Los
Angeles, California 90067.
(b) The title of the securities which are the subject of the Offer is the
Company's Common Stock, par value $0.0001 per share (the "Shares") (including
the associated Rights), and the Offer is for up to 2,000,000 Shares (or such
lesser number of Shares as are properly tendered) at prices not in excess of
$37.50 nor less than $34.25 per Share, net to the seller in cash, without
interest thereon, as specified by stockholders tendering their Shares. Unless
the context otherwise requires, all references to Shares shall include the
associated Rights. The Offer is being made to all holders of Shares, including
officers, directors and affiliates of the Company. The Company has been advised
that none of its directors or executive officers intends to tender any Shares
pursuant to the Offer. The information set forth in the "Introduction" to the
Offer to Purchase and in Sections 1 and 10 of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in the "Introduction" to the Offer to Purchase
and in Section 7 of the Offer to Purchase is incorporated herein by reference.
(d) This statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the "Introduction" to the Offer to
Purchase and in Section 8 of the Offer to Purchase is incorporated herein by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in the "Introduction" to the Offer to Purchase and
in Section 2 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERTAKINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
2
<PAGE>
ITEM 6 PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth in Section 9 of the Offer to Purchase, Exhibit
(g)(1) hereto and Exhibit (g)(2) hereto is incorporated herein by reference.
(b) The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the entire Offer to Purchase and the
related Letter of Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Letter to stockholders from Donald J. Zuk, President and Chief
Executive Officer of the Company, dated October 14, 1999.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Summary Advertisement dated October 14, 1999.
(a)(9) Press Release dated October 13, 1999.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 48 through 66, inclusive, of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998
(incorporated by reference to the Company's Annual Report on Form
10-K filed with the Commission on March 31, 1999)
(g)(2) Pages 2 through 7, inclusive, of the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1999 (incorporated by
reference to the Company's Quarterly Report on Form 10-Q filed
with the Commission on August 16, 1999)
3
<PAGE>
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: October 13, 1999 SCPIE HOLDINGS INC.
By: /s/ DONALD J. ZUK
Name: Donald J. Zuk
Title: President and Chief
Executive Officer
4
<PAGE>
EXHIBIT INDEX
EXHIBIT
Number DESCRIPTION
- ------ -----------
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Letter to stockholders from Donald J. Zuk, President and Chief
Executive Officer of the Company, dated October 14, 1999.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Summary Advertisement dated October 14, 1999.
(a)(9) Press Release dated October 13, 1999.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 48 through 66, inclusive, of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 (incorporated
by reference to the Company's Annual Report on Form 10-K filed with
the Commission on March 31, 1999)
(g)(2) Pages 2 through 7, inclusive, of the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1999 (incorporated by
reference to the Company's Quarterly Report on Form 10-Q filed with
the Commission on August 16, 1999)
5
<PAGE>
EXHIBIT 99(a)(1)
[LOGO OF SCPIE HOLDINGS, INC.]
Offer to Purchase for Cash Up To
2,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
At A Purchase Price Not In Excess of $37.50
Nor Less Than $34.25 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 10, 1999, UNLESS THE
OFFER IS EXTENDED.
SCPIE Holdings Inc., a Delaware corporation (the "Company"), hereby invites
its stockholders to tender shares of its common stock, par value $0.0001 per
share (the "Shares") (including the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Rights Agreement dated as of May 13,
1997, as amended as of October 19, 1998 and August 4, 1999, between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent), to the
Company at prices not in excess of $37.50 nor less than $34.25 per Share, net
to the seller in cash, without interest thereon, as specified by stockholders
tendering their Shares, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). Unless the
context otherwise requires, all references to Shares shall include the
associated Rights.
The Company will, upon the terms and subject to the conditions of the Offer,
determine the single per Share price, not in excess of $37.50 nor less than
$34.25 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to
the Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest
Purchase Price that will allow it to buy 2,000,000 Shares (or such lesser
number of Shares as are properly tendered at prices not in excess of $37.50
nor less than $34.25 per Share). All Shares properly tendered at prices at or
below the Purchase Price and not properly withdrawn will be purchased at the
Purchase Price, upon the terms and subject to the conditions of the Offer,
including the proration provisions. All Shares acquired in the Offer will be
acquired at the Purchase Price. The Company reserves the right, in its sole
discretion, to purchase more than 2,000,000 Shares pursuant to the Offer.
Shares tendered at prices in excess of the Purchase Price and Shares not
purchased because of proration will be returned. See Section 14.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
The Shares are listed and traded on the New York Stock Exchange (the "NYSE")
under the symbol "SKP." On October 12, 1999, the last full trading day prior
to the announcement of the Offer, the last reported sale price of the Shares
on the NYSE was $32.00. Stockholders are urged to obtain current market
quotations for the Shares. See Section 7.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SUCH STOCKHOLDER'S
SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH
SUCH SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS
DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE
OFFER.
<PAGE>
IMPORTANT
Any stockholder wishing to tender all or any part of such stockholder's
Shares should either (a) complete and sign a Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver such Letter of Transmittal, together
with any required signature guarantee, and any other required documents to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary"), and mail or
deliver the certificates for such Shares to the Depositary (together with any
other documents required by the Letter of Transmittal) or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3, or
(b) request a broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Holders of Shares registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee should contact such person if they desire to tender their Shares. Any
stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or cannot be delivered to the Depositary
or who cannot comply with the procedure for book-entry transfer or whose other
required documents cannot be delivered to the Depositary, in any case, by the
expiration of the Offer must tender such Shares pursuant to the guaranteed
delivery procedure set forth in Section 3.
TO PROPERLY TENDER SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE LETTER OF
TRANSMITTAL INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY ARE
TENDERING SHARES.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
The Dealer Manager for the Offer is:
Donaldson, Lufkin & Jenrette
October 14, 1999
ii
<PAGE>
SUMMARY
This general summary is solely for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details set forth in this Offer to Purchase.
<TABLE>
<C> <S>
Purchase Price.................. The Company will determine a single per Share
net cash price which will be not more than
$37.50 nor less than $34.25 per Share. All
Shares purchased by the Company will be
purchased at the Purchase Price even if
tendered at or below the Purchase Price. Each
stockholder desiring to tender Shares must
specify in the Letter of Transmittal the
minimum price (not more than $37.50 nor less
than $34.25 per Share) at which the
stockholder is willing to have such
stockholder's Shares purchased by the
Company.
Number of Shares................ 2,000,000 Shares (or such lesser number of
properly tendered Shares to be Purchased at
prices not in excess of $37.50 nor less than
$34.25 per share) (including the associated
Rights).
How to Tender Shares............ See Section 3. Contact the Information Agent,
the Dealer Manager or consult your broker for
assistance.
Brokerage Commissions........... None for registered stockholders who tender
their Shares directly to the Depositary.
Stockholders holding Shares through brokers
or banks are urged to consult the brokers or
banks to determine whether transaction costs
are applicable if stockholders tender Shares
through the brokers or banks and not directly
to the Depositary.
Stock Transfer Tax.............. None, if payment is made to the registered
holder of Shares.
Expiration and Proration Dates.. Wednesday, November 10, 1999, at 12:00
Midnight, New York City time, unless the
Offer is extended by the Company.
Payment Date.................... As soon as practicable after the termination
of the Offer.
Position of the Company and its
Board of Directors............. Neither the Company nor its Board of
Directors makes any recommendation to
stockholders as to whether to tender or
refrain from tendering their Shares. Each
stockholder must make the decision whether to
tender Shares and, if so, how many Shares to
tender and the price or prices at which such
Shares should be tendered. The Company has
been advised that none of its directors or
executive officers intends to tender any
Shares pursuant to the Offer.
Withdrawal Rights............... Tendered Shares may be withdrawn at any time
prior to 12:00 Midnight, New York City time,
on Wednesday, November 10, 1999, unless the
Offer is extended by the Company, and, unless
previously purchased, after 12:00 Midnight,
New York City time, on Thursday, December 9,
1999. See Section 4.
Odd Lots........................ There will be no proration of Shares tendered
by any stockholder owning beneficially or of
record less than 100 Shares, if the
stockholder tenders all Shares owned by the
stockholder at or below the Purchase Price
prior to the Expiration Date and completes
the section entitled "Odd Lots" in the Letter
of Transmittal. See Section 1.
</TABLE>
iii
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<C> <S> <C>
INTRODUCTION............................................................ 1
THE OFFER............................................................... 4
1. Number of Shares; Proration.................................... 4
2. Purpose of the Offer; Certain Effects of the Offer............. 6
3. Procedures for Tendering Shares................................ 8
4. Withdrawal Rights.............................................. 11
5. Purchase of Shares and Payment of Purchase Price............... 12
6. Certain Conditions of the Offer................................ 13
7. Price Range of Shares; Dividends............................... 15
8. Source and Amount of Funds..................................... 16
9. Certain Information Concerning the Company..................... 16
10. Interests of Directors and Officers; Transactions and 24
Arrangements Concerning Shares.................................
11. Effects of the Offer on the Market for Shares; Registration 24
Under the Exchange Act.........................................
12. Certain Legal Matters; Regulatory Approvals.................... 25
13. Certain United States Federal Income Tax Consequences.......... 25
14. Extension of the Offer; Termination; Amendment................. 27
15. Fees and Expenses.............................................. 27
16. Miscellaneous.................................................. 28
</TABLE>
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF SCPIE HOLDINGS INC.:
INTRODUCTION
OFFER
SCPIE Holdings Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender shares of its Common Stock, par value $0.0001 per share
(the "Shares") (including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement dated as of May 13, 1997, as
amended as of October 19, 1998 and August 4, 1999 between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent), to the Company at
prices not in excess of $37.50 nor less than $34.25 per Share, net to the
seller in cash, without interest thereon, as specified by stockholders
tendering their Shares, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). Unless the
context otherwise requires, all references to Shares shall include the
associated Rights.
This Offer to Purchase, including without limitation this Introduction,
Section 2 and Section 9, contains certain statements that are not historical
fact and constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
based on the Company's estimates and expectations concerning future events
that may cause the actual results of the Company to be materially different
from historical results or from any results expressed or implied by such
forward-looking statements. Actuarial estimates of losses and loss expenses
(LAE) and expectations concerning the Company's ability to retain its current
insureds and to expand its product lines and its business in existing and into
new geographical areas, including through its affiliation with a major
insurance broker, Brown & Brown, are dependent upon a variety of factors,
including future economic, competitive and market conditions; future
legislative and regulatory changes; and the cyclical nature of the property
and casualty industry, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Such
risks, uncertainties and other factors also include, but are not limited to,
the Company's concentration of business in a single line in a single state;
the Company's entry into new markets; competition and other industry factors,
including uncertainties inherent in the estimate of loss and loss adjustment
expense reserves, reinsurance, importance of ratings, regulatory matters, and
changes in healthcare; the availability of bank financing; compliance of the
Company's computer systems with Year 2000 requirements; and certain structural
matters, including the Company's holding company structure, anti-takeover
measures and statutory restrictions on intercompany transactions within the
Company's holding company structure. These risks and uncertainties are
discussed in more detail under "Business--Risk Factors," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
The Company will, upon the terms and subject to the conditions of the Offer,
determine the single per Share price, not in excess of $37.50 nor less than
$34.25 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to
the Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest
Purchase Price that will allow it to buy 2,000,000 Shares (or such lesser
number of Shares as are properly tendered at prices not in excess of $37.50
nor less than $34.25 per Share). All Shares properly tendered prior to the
Expiration Date (as defined in Section 1) at prices at or below the Purchase
Price and not properly withdrawn will be purchased at the Purchase Price, upon
the terms and subject to the conditions of the Offer, including the proration
provisions. All Shares acquired in the Offer will be acquired at the Purchase
Price. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration will be returned at the Company's expense
to the stockholders who tendered such Shares. The Company reserves the right,
in its sole discretion, to purchase more than 2,000,000 Shares pursuant to the
Offer. See Section 14.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
1
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SUCH SHARES SHOULD
BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. SEE
SECTION 10.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 2,000,000 Shares (or such greater number of Shares
as the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1) who properly tender all
their Shares at or below the Purchase Price and then on a pro rata basis from
all other stockholders who properly tender Shares at prices at or below the
Purchase Price (and do not properly withdraw them prior to the expiration of
the Offer). See Section 1.
A tender of Shares pursuant to the Offer will include a tender of the
associated Rights. No separate consideration will be paid for such Rights. See
Section 7.
The Purchase Price will be paid net to the tendering stockholder in cash,
without interest thereon, for all Shares purchased. Tendering stockholders who
hold Shares in their own name and who tender their Shares directly to the
Depositary will not be obligated to pay brokerage commissions, solicitation
fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer
taxes on the purchase of Shares by the Company pursuant to the Offer.
Stockholders holding Shares through brokers or banks are urged to consult the
brokers or banks to determine whether transaction costs are applicable if
stockholders tender Shares through the brokers or banks and not directly to
the Depositary. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS
INCLUDED AS PART OF THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED
UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO THE TENDERING STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE
OFFER. SEE SECTION 3. The Company will pay all fees and expenses of Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ" or the "Dealer Manager"),
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") and ChaseMellon
Consulting Services, L.L.C. (the "Information Agent") incurred in connection
with the Offer. See Section 15.
BACKGROUND
The Company believes that it has maintained excess capital and surplus in
relation to the size of its business for some time. The excess capital and
surplus has been produced by the Company's net income, which has totaled more
than $99 million for its past three fiscal years. The Company's ratios of
premium to surplus and loss reserves to surplus have been and are
significantly more conservative than industry benchmarks. The effect of this
excess capital and surplus is that the Company has not been able to
efficiently and effectively employ its capital to produce a favorable return
on equity and earnings per share of Common Stock.
The Company has considered a number of alternatives for utilizing its excess
capital. Because of considerable excess capital in the property and casualty
industry generally, the Company has found very few opportunities to materially
expand its underwriting activities. While the Company has been profitable, the
professional liability market in California, and elsewhere, is extremely
competitive. The Company has been unwilling to incur significant underwriting
losses to expand or retain its business.
In addition, the Company has actively sought out potential acquisition
opportunities to expand its operations and thereby utilize the excess capital
and surplus. The Company has found, however, few appropriate acquisition
opportunities. The lack of opportunity to grow through normal premium writings
and the lack of acquisition opportunities has caused the Company to consider
and pursue reduction in its capital and surplus through repurchase of its
Common Stock.
2
<PAGE>
In May 1997, the Company's Board of Directors authorized the purchase of up
to 1,000,000 shares of the Company's Common Stock on the open market and
outside of the Offer. Pursuant to this program, during the period August 14,
1997 through May 3, 1999, the Company repurchased 732,200 shares in open
market transactions. In May 1999, the Company's Board of Directors terminated
the initial repurchase program and authorized a second program to purchase up
to an additional 1,000,000 shares of the Company's Common Stock on the open
market and outside of the Offer. Pursuant to this second program, during the
period May 24, 1999 through July 15, 1999, the Company repurchased 136,600
shares in open market transactions.
Consistent with this stock repurchase strategy, on August 4, 1999, the
Company's Board of Directors approved the concept of the Offer and authorized
officers of the Company to proceed with the Offer, subject to final review and
approval by the Company's Executive Committee. On October 12, 1999, the
Company's Executive Committee reviewed and approved the final terms of the
Offer. The Company believes that the Offer will result in a capital structure
more consistent with the size of the Company's current underwriting activities
and will have the effect of increasing return on equity and earnings per
share, assuming continuing profitability at approximately current levels. The
Company also believes that the use of funds for the Offer will have no impact
on its ability to continue its underwriting activities at current levels and
to expand its underwriting activities if attractive opportunities arise in the
future.
The Company's Board of Directors also believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Company's Common Stock, make this an attractive time to
repurchase a portion of the outstanding shares. In the view of the Company's
Board of Directors, the Offer is an attractive use of the Company's financial
resources and will result in a more efficient capital structure for the
Company, as described above. Accordingly, the Offer is consistent with the
Company's long term corporate goal of increasing stockholder value. After the
Offer is completed, the Company believes that its financial condition, access
to capital and outlook for continued favorable cash generation will allow it
to continue to reinvest in its core business.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not in excess of $37.50 nor less than $34.25 per Share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer and where Shares are tendered by the registered owner thereof directly
to the Depositary, to sell those Shares for cash without the usual transaction
costs associated with open market sales. In addition, the Offer may give
stockholders the opportunity to sell at prices greater than market prices
prevailing prior to the announcement of the Offer. The Offer also allows
stockholders to sell a portion of their Shares while retaining a continuing
equity interest in the Company. Stockholders who determine not to accept the
Offer will realize a proportionate increase in their relative equity interest
in the Company, and thus in the Company's future earnings and assets subject
to the Company's right to issue additional Shares and other equity securities
in the future. In determining whether to tender Shares pursuant to the Offer,
stockholders should consider the possibility that they may be able to sell
their Shares in the future on the NYSE or otherwise, including in connection
with a sale of the Company, at a net price higher than the Purchase Price. See
Section 2. The Company can give no assurance, however, as to the price at
which a stockholder may be able to sell non-tendered Shares in the future.
As of October 5, 1999, the Company had 12,068,462 issued and outstanding
Shares, 723,629 Shares held in treasury and had reserved 441,390 Shares for
issuance upon exercise of outstanding stock options ("Options") under the 1997
Equity Participation Plan of SCPIE Holdings Inc. (the "Option Plan"). 500,000
of the issued and outstanding Shares are held by SCPIE Indemnity Company, an
insurance subsidiary of the Company, and will not be tendered pursuant to the
Offer. The 2,000,000 Shares that the Company is offering to purchase pursuant
to the Offer represent approximately 16.6% of the Company's Shares outstanding
on October 5, 1999 (approximately 16.0% assuming exercise of outstanding
exercisable Options). The Shares are listed and traded on the NYSE under the
symbol "SKP." On October 12, 1999, the last full trading day prior to the
announcement of the Offer, the last reported sale price of the Shares as
reported on the NYSE was $32.00. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES. See Section 7.
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THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase 2,000,000 Shares or such lesser number of Shares as are properly
tendered (and not properly withdrawn in accordance with Section 4) prior to
the Expiration Date (as defined below) at prices not in excess of $37.50 nor
less than $34.25 per Share, net to the seller in cash, without interest
thereon.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, November 10, 1999 unless and until the Company, in its sole
discretion, shall have extended the period of time during which the Offer will
remain open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall
expire. See Section 14 for a description of the Company's right to extend,
delay, terminate or amend the Offer. The Company reserves the right to
purchase more than 2,000,000 Shares pursuant to the Offer. In accordance with
applicable regulations of the Securities and Exchange Commission (the
"Commission"), the Company may purchase pursuant to the Offer an additional
amount of Shares not to exceed 2% of the outstanding Shares without amending
or extending the Offer. See Section 14. In the event of an over-subscription
of the Offer as described below, Shares tendered at or below the Purchase
Price prior to the Expiration Date will be subject to proration, except for
Odd Lots (as defined below). The proration period also expires on the
Expiration Date. If (i) the Company increases the price to be paid for Shares
above $37.50 per Share or decreases the price to be paid for Shares below
$34.25 per Share, the Company materially increases the Dealer Manager fee or
the Company increases the number of Shares being sought in the Offer and such
increase in the number of Shares being sought exceeds 2% of the outstanding
Shares, or the Company decreases the number of Shares being sought, and (ii)
the Offer is scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from, and including, the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in Section 14, the Offer will be extended until the
expiration of such period of ten business days.
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single per Share Purchase Price that it will pay for Shares
properly tendered and not properly withdrawn pursuant to the Offer, taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 2,000,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $37.50 nor less than $34.25 per
Share). All Shares properly tendered at prices at or below the Purchase Price
and not properly withdrawn will be purchased at the Purchase Price, upon the
terms and subject to the conditions of the Offer, including the proration
provisions. All Shares acquired in the Offer will be acquired at the Purchase
Price.
THE OFFER IS NOT CONDITIONED ON THE TENDER OF ANY MINIMUM NUMBER OF SHARES,
BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
In accordance with Instruction 5 of the Letter of Transmittal, stockholders
desiring to tender Shares must specify the price, not in excess of $37.50 nor
less than $34.25 per Share, at which they are willing to sell their Shares to
the Company pursuant to the Offer. As promptly as practicable following the
Expiration Date, the Company will, in its sole discretion, determine the
Purchase Price that it will pay for Shares properly tendered pursuant to the
Offer and not properly withdrawn, taking into account the number of Shares
tendered and the prices specified by tendering stockholders. The Company
intends to select the lowest Purchase Price, not in excess of $37.50 nor less
than $34.25 net per Share in cash, that will enable it to purchase 2,000,000
Shares (or such lesser number of Shares as are properly tendered) pursuant to
the Offer. Shares properly tendered pursuant to the Offer at or below the
Purchase Price and not properly withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including
the proration provisions. All Shares tendered and not purchased pursuant to
the Offer, including Shares tendered at prices in excess of the Purchase Price
and Shares not purchased because of proration, will be returned to the
tendering stockholders at the Company's expense as promptly as practicable
following the Expiration Date.
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If the number of Shares properly tendered at or below the Purchase Price and
not properly withdrawn prior to the Expiration Date is less than or equal to
2,000,000 Shares (or such greater number of Shares as the Company may elect to
purchase pursuant to the Offer), the Company will, upon the terms and subject
to the conditions of the Offer, purchase all Shares so tendered at the
Purchase Price.
Priority of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 2,000,000 Shares (or such greater number of Shares as the
Company may elect to purchase) have been properly tendered at prices at or
below the Purchase Price and not properly withdrawn prior to the Expiration
Date, the Company will purchase properly tendered Shares on the basis set
forth below:
(a) first, all Shares properly tendered and not properly withdrawn prior
to the Expiration Date by any Odd Lot Holder (as defined below) who:
(1) tenders all Shares owned beneficially or of record by such Odd
Lot Holder at a price at or below the Purchase Price (tenders of less
than all the Shares owned by such Odd Lot Holder will not qualify for
this preference); and
(2) completes the section entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed Delivery;
and
(b) second, after the purchase of all of the foregoing Shares, all other
Shares properly tendered at prices at or below the Purchase Price and not
properly withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares), as
described below.
Odd Lots. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below
the Purchase Price and not properly withdrawn by any person (an "Odd Lot
Holder") who owned beneficially or of record, an aggregate of fewer than 100
Shares and so certified in the appropriate place on the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery. In order to qualify
for this preference, an Odd Lot Holder must tender all Shares owned by the Odd
Lot Holder in accordance with the procedures described in Section 3. As set
forth above, Odd Lots will be accepted for payment before proration, if any,
of the purchase of other tendered Shares. This preference is not available to
partial tenders or to beneficial or record holders of an aggregate of 100 or
more Shares, even if these holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
who holds Shares in its name and tenders its Shares directly to the Depositary
would not only avoid the payment of brokerage commissions, but also would
avoid any applicable odd lot discounts in a sale of the holder's Shares. Any
stockholder wishing to tender all of such stockholder's Shares pursuant to the
Offer should complete the section entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any shareholder who tenders any Shares
beneficially owned at or below the Purchase Price and who, as a result of
proration, would then beneficially own an aggregate of fewer than 100 Shares.
If the Company exercises this right, it will increase the number of Shares
that it is offering to purchase in the Offer by the number of Shares purchased
through the exercise of such right.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the proration factor as soon as practicable following
the Expiration Date. Proration for each stockholder tendering Shares, other
than Odd Lot Holders, shall be based on the ratio of the number of Shares
properly tendered and not properly withdrawn by such stockholder to the total
number of Shares properly tendered and not properly withdrawn by all
stockholders, other than Odd Lot Holders, at or below the Purchase Price.
Because of the difficulty in determining the number of Shares properly
tendered (including Shares tendered by guaranteed delivery procedures, as
described in Section 3) and not properly withdrawn, and because of the Odd Lot
procedure, the Company does not expect that it will be able to announce the
final proration factor or commence payment for any Shares purchased pursuant
to the Offer until approximately seven business days after the Expiration
Date. The preliminary results of any proration will be announced by press
release as promptly as practicable after the Expiration Date. Stockholders may
obtain preliminary proration information from the Information Agent or the
Dealer Manager and may be able to obtain such information from their brokers.
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As described in Section 13, the number of Shares that the Company will
purchase from a stockholder pursuant to the Offer may affect the United States
federal income tax consequences to the stockholder of the purchase and,
therefore, may be relevant to a stockholder's decision whether or not to
tender Shares. The Letter of Transmittal affords each tendering stockholder
the opportunity to designate the order of priority in which Shares tendered
are to be purchased in the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of the Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list 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. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not in excess of $37.50 nor less than $34.25 per Share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer and where Shares are tendered by the registered owner thereof directly
to the Depositary, to sell those Shares for cash without the usual transaction
costs associated with open market sales. In addition, Odd Lot Holders who hold
Shares in their names and tender their Shares directly to the Depositary and
whose Shares are purchased pursuant to the Offer not only will avoid the
payment of brokerage commissions but also will avoid any applicable odd lot
discounts payable on a sale of their Shares in a NYSE transaction. The Offer
also allows stockholders to sell a portion of their Shares while retaining a
continuing equity interest in the Company. Stockholders who determine not to
accept the Offer will realize a proportionate increase in their relative
equity interest in the Company, and thus in the Company's future earnings and
assets, subject to the Company's right to issue additional Shares and other
equity securities in the future. Stockholders may be able to sell non-tendered
Shares in the future on the NYSE or otherwise, including in connection with a
sale of the Company, at a net price higher than the Purchase Price. The
Company can give no assurance, however, as to the price at which a stockholder
may be able to sell Shares in the future.
The Company believes that it has maintained excess capital and surplus in
relation to the size of its business for some time. The excess capital and
surplus has been produced by the Company's net income, which has totaled more
than $99 million for its past three fiscal years. The Company's ratios of
premium to surplus and loss reserves to surplus have been and are
significantly more conservative than industry benchmarks. The effect of this
excess capital and surplus is that the Company has not been able to
efficiently and effectively employ its capital to produce a favorable return
on equity and earnings per share of Common Stock.
The Company has considered a number of alternatives for utilizing its excess
capital. Because of considerable excess capital in the property and casualty
industry generally, the Company has found very few opportunities to materially
expand its underwriting activities. While the Company has been profitable, the
professional liability market in California, and elsewhere, is extremely
competitive. The Company has been unwilling to incur significant underwriting
losses to expand or retain its business.
In addition, the Company has actively sought out potential acquisition
opportunities to expand its operations and thereby utilize the excess capital
and surplus. The Company has found, however, few appropriate acquisition
opportunities. The lack of opportunity to grow through normal premium writings
and the lack of acquisition opportunities has caused the Company to consider
and pursue reduction in its capital and surplus through repurchase of its
Common Stock.
In May 1997, the Company's Board of Directors authorized the purchase of up
to 1,000,000 shares of the Company's Common Stock on the open market and
outside of the Offer. Pursuant to this program, during the period August 14,
1997 through May 3, 1999, the Company repurchased 732,200 shares in open
market transactions. In May 1999, the Company's Board of Directors terminated
the initial repurchase program and authorized a second program to purchase up
to an additional 1,000,000 shares of the Company's Common Stock on the open
market and outside of the Offer. Pursuant to this second program, during the
period May 24, 1999 through July 15, 1999, the Company repurchased 136,600
shares in open market transactions.
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Consistent with this stock repurchase strategy, on August 4, 1999, the
Company's Board of Directors approved the concept of the Offer and authorized
officers of the Company to proceed with the Offer, subject to final review and
approval by the Company's Executive Committee. On October 12, 1999, the
Company's Executive Committee reviewed and approved the final terms of the
Offer. The Company believes that the Offer will result in a capital structure
more consistent with the size of the Company's current underwriting activities
and will have the effect of increasing return on equity and earnings per
share, assuming continuing profitability at approximately current levels. The
Company also believes that the use of funds for the Offer will have no impact
on its ability to continue its underwriting activities at current levels and
to expand its underwriting activities if attractive opportunities arise in the
future.
The Company's Board of Directors also believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Company's Common Stock, make this an attractive time to
repurchase a portion of the outstanding shares. In the view of the Company's
Board of Directors, the Offer is an attractive use of the Company's financial
resources and will result in a more efficient capital structure for the
Company, as described above. Accordingly, the Offer is consistent with the
Company's long term corporate goal of increasing stockholder value. After the
Offer is completed, the Company believes that its financial condition, access
to capital and outlook for continued favorable cash generation will allow it
to continue to reinvest in its core business.
The funds required to complete the Offer and pay related expenses will be
provided from available cash and investments. The Company will obtain the
funds to purchase the Shares pursuant to the Offer through a dividend from its
wholly-owned subsidiary, SCPIE Indemnity Company, a domestic admitted insurer
in the State of California. The California Insurance Commissioner approved the
dividend on August 31, 1999. The Offer is not subject to the Company's receipt
of financing. See Section 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES
AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION. STOCKHOLDERS
ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT WITH
THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT
WHICH SUCH SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE
OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT
TO THE OFFER. SEE SECTION 10.
The Company may in the future purchase additional Shares on the open market,
in private transactions, through tender offers or otherwise, subject to the
approval of the Board of Directors. In May 1999, the Company's Board of
Directors approved a stock repurchase program to purchase up to 1,000,000
shares of the Company's Common Stock on the open market and outside of the
Offer. Pursuant to that authorization and after consideration of all purchases
to date, the Company has authorization to purchase up to 863,400 shares of
Common Stock in addition to the shares sought pursuant to the Offer. Future
purchases may be on the same terms or on terms which are more or less
favorable to stockholders than the terms of the Offer. However, Rule 13e-4
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
prohibits the Company and its affiliates from purchasing any Shares, other
than pursuant to the Offer, until at least ten business days after the
Expiration Date. Any possible future purchases by the Company will depend on
many factors, including the market price of the Shares, the results of the
Offer, the Company's business and financial position and general economic and
market conditions.
Shares the Company acquires pursuant to the Offer will be held in the
Company's treasury (unless and until the Company determines to retire any such
Shares) and will be available for the Company to issue without further
stockholder action (except as required by applicable law or the rules
applicable to companies with shares traded on the NYSE or any other securities
exchange on which the Shares may be listed) for purposes including, but
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<PAGE>
not limited to, the acquisition of other businesses, the raising of additional
capital for use in the Company's business and the satisfaction of obligations
under existing or future employee benefit plans. The Company has no current
plans for the issuance of Shares repurchased pursuant to the Offer by the
Company.
Except as disclosed in this Offer to Purchase, the Company currently has no
plans or proposals that relate to or would result in (a) the acquisition by
any person of additional securities of the Company or the disposition of
securities of the Company; (b) an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business;
(g) any change in the Company's Certificate of Incorporation or By-Laws or
other actions which may impede the acquisition of control of the Company by
any person; (h) a class of equity security of the Company being delisted from
a national securities exchange or ceasing to be authorized for quotation in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity security of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act;
or (j) the suspension of the Company's obligation to file reports pursuant to
Section 15(d) of the Exchange Act.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be tendered properly pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedure for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), including any required
signature guarantees, and any other documents required by the Letter of
Transmittal, must be received prior to 12:00 Midnight, New York City time, on
the Expiration Date by the Depositary at its address set forth on the back
cover of this Offer to Purchase, or (b) the tendering stockholder must comply
with the guaranteed delivery procedure set forth below. IN ACCORDANCE WITH
INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, STOCKHOLDERS DESIRING TO TENDER
SHARES PURSUANT TO THE OFFER MUST PROPERLY INDICATE IN THE SECTION CAPTIONED
"PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON THE
LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF $.125) AT WHICH SHARES ARE
BEING TENDERED. Stockholders who desire to tender Shares at more than one
price must complete a separate Letter of Transmittal for each price at which
Shares are tendered, provided that the same Shares cannot be tendered (unless
properly withdrawn previously in accordance with the terms of the Offer) at
more than one price. TO PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX
MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
IN ADDITION, ODD LOT HOLDERS WHO TENDER ALL SHARES MUST COMPLETE THE SECTION
CAPTIONED "ODD LOTS" IN THE LETTER OF TRANSMITTAL AND, IF APPLICABLE, IN THE
NOTICE OF GUARANTEED DELIVERY, TO QUALIFY FOR THE PREFERENTIAL TREATMENT
AVAILABLE TO ODD LOT HOLDERS AS SET FORTH IN SECTION 1.
STOCKHOLDERS WHO HOLD SHARES THROUGH BROKERS OR BANKS ARE URGED TO CONSULT
THE BROKERS OR BANKS TO DETERMINE WHETHER TRANSACTION COSTS ARE APPLICABLE IF
STOCKHOLDERS TENDER SHARES THROUGH THE BROKERS OR BANKS AND NOT DIRECTLY TO
THE DEPOSITARY.
Signature Guarantees and Method of Delivery. No signature guarantee is
required: (i) if the Letter of Transmittal is signed by the registered holder
of the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company (the "Book-Entry Transfer
Facility") whose name appears on a security position listing as the owner of
the Shares) tendered therewith and such holder has not completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal; or (ii) if Shares are
tendered for the account of a bank, broker, dealer,
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credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which is an
"eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each of the foregoing
constituting an "Eligible Institution"). See Instruction 1 of the Letter of
Transmittal. If a certificate for Shares is registered in the name of a person
other than the person executing a Letter of Transmittal, or if payment is to
be made, or Shares not purchased or tendered are to be issued, to a person
other than the registered holder, then the certificate must be endorsed or
accompanied by an appropriate stock power, in either case, signed exactly as
the name of the registered holder appears on the certificate, with the
signature guaranteed by an Eligible Institution.
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 a timely confirmation of the book-entry
transfer of the Shares into the Depositary's account at the Book-Entry
Transfer Facility as described above), a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) and any other
documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL
DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing the
Book-Entry Transfer Facility to transfer Shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (i) a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantees and any other
required documents must, in any case, be transmitted to and received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or (ii) the guaranteed delivery
procedure described below must be followed. DELIVERY OF THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
United States Federal Income Tax Backup Withholding. Under the United States
federal income tax backup withholding rules, unless an exemption applies under
the applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Internal Revenue Service ("IRS"), unless the stockholder
or other payee provides its taxpayer identification number (employer
identification number or social security number) to the Depositary (as payor)
and certifies under penalties of perjury that such number is correct.
Therefore, each tendering stockholder should complete and sign the Substitute
Form W-9 included as part of the Letter of Transmittal so as to provide the
information and certification necessary to avoid backup withholding unless
such stockholder otherwise establishes to the satisfaction of the Depositary
that the stockholder is not subject to backup withholding. If the Depositary
is not provided with the correct taxpayer identification number, the United
States Holder (as defined in Section 13 herein) may be subject to penalties
imposed by the IRS. If withholding results in an overpayment of taxes, a
refund may be obtained. Certain "exempt recipients" (including, among others,
all corporations and certain Non-United States Holders (as defined in Section
13 herein)) are not subject to these backup withholding and information
reporting requirements. In order for a Non-United States Holder to qualify as
an exempt recipient, that stockholder must submit an IRS Form W-8 or a
Substitute Form W-8, signed under penalties of perjury, attesting to that
stockholder's exempt status. Such statements can be obtained from the
Depositary. See Instruction 14 of the Letter of Transmittal.
TO PREVENT UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31%
OF THE GROSS PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT
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TO THE OFFER, EACH STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION
FROM SUCH BACKUP WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE
STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER
INFORMATION BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE
LETTER OF TRANSMITTAL.
Withholding For Non-United States Holders. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding,
the Depositary will withhold United States federal income taxes equal to 30%
of the gross payments payable to a Non-United States Holder or his agent
unless the Depositary determines that a reduced rate of withholding is
available pursuant to a tax treaty or that an exemption from withholding is
applicable because the gross proceeds are effectively connected with the
conduct of a trade or business within the United States. In order to obtain a
reduced rate of withholding pursuant to a tax treaty, a Non-United States
Holder must deliver to the Depositary before the payment a properly completed
and executed IRS Form 1001. In order to obtain an exemption from withholding
on the grounds that the gross proceeds paid pursuant to the Offer are
effectively connected with the conduct of a trade or business within the
United States, a Non-United States Holder must deliver to the Depositary a
properly completed and executed IRS Form 4224. The Depositary will determine a
stockholder's status as a Non-United States Holder and eligibility for a
reduced rate of, or exemption from, withholding by reference to any
outstanding certificates or statements concerning eligibility for a reduced
rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224)
unless facts and circumstances indicate that such reliance is not warranted. A
Non-United States Holder may be eligible to obtain a refund of all or a
portion of any tax withheld if such Non-United States Holder meets those tests
described in Section 13 that would characterize the exchange as a sale (as
opposed to a dividend) or is otherwise able to establish that no tax or a
reduced amount of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and the stockholder's Share certificates are not immediately
available or cannot be delivered to the Depositary prior to the Expiration
Date (or the procedure for book-entry transfer cannot be completed on a timely
basis) or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date, the Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, overnight courier, telegram or
facsimile transmission, on or prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in
the form the Company has provided with this Offer to Purchase (specifying
the price at which the Shares are being tendered), including (where
required) a signature guarantee by an Eligible Institution in the form set
forth in such Notice of Guaranteed Delivery; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any required signature guarantees or other
documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of receipt by the
Depositary of the Notice of Guaranteed Delivery.
Return of Tendered Shares. If any tendered Shares are not purchased, or if
less than all Shares evidenced by a stockholder's certificates are tendered,
certificates for unpurchased Shares will be returned as promptly as
practicable after the expiration or termination of the Offer or, in the case
of Shares tendered by book-entry transfer at the Book-Entry Transfer Facility,
the Shares will be credited to the appropriate account maintained by the
tendering stockholder at the Book-Entry Transfer Facility, in each case
without expense to the stockholder.
10
<PAGE>
Company Stock Option Plan. The Company is not offering, as part of the
Offer, to purchase any options ("Options") outstanding under the Company's
Stock Option Plan and tenders of Options will not be accepted. Holders of
Options who wish to participate in the Offer may either (i) comply with the
procedure for guaranteed delivery set forth above without having to exercise
their Options until after the results of the Offer are known (provided,
however, that an Option holder will not be required to make the requisite
tender through an Eligible Institution and may personally execute and deliver
the Notice of Guaranteed Delivery) or (ii) exercise their Options and purchase
Shares of the Company's Common Stock and then tender the Shares pursuant to
the Offer, provided that, in the case of either (i) or (ii), any exercise of
an Option and tender of Shares is in accordance with the terms of the Option
Plan and the Options. In no event are any Options to be delivered to the
Depositary in connection with a tender of Shares hereunder. An exercise of an
Option cannot be revoked even if Shares received upon the exercise and
tendered in the Offer are not purchased in the Offer for any reason.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by the Company, in its sole
discretion, and its determination shall be final and binding on all parties.
The Company reserves the absolute right to reject any or all tenders of any
Shares that it determines are not in proper form or the acceptance for payment
of or payment for which may, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular stockholder and the
Company's interpretation of the terms of the Offer will be final and binding
on all parties. No tender of Shares will be deemed to have been properly made
until all defects or irregularities have been cured by the tendering
stockholder or waived by the Company. None of the Company, the Dealer Manager,
the Depositary, the Information Agent or any other person shall be obligated
to give notice of any defects or irregularities in tenders, nor shall any of
them incur any liability for failure to give any notice.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer, as well as the tendering stockholder's
representation and warranty to the Company that (a) the stockholder has a net
long position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 promulgated by the Commission
under the Exchange Act and (b) the tender of Shares complies with Rule 14e-4.
It is a violation of Rule 14e-4 for a person, directly or indirectly, to
tender Shares for that person's own account unless, at the time of tender and
at the end of the proration period or period during which Shares are accepted
by lot (including any extensions thereof), the person so tendering (i) has a
net long position equal to or greater than the amount of (x) Shares tendered
or (y) other securities convertible into or exchangeable or exercisable for
the Shares tendered and will acquire the Shares for tender by conversion,
exchange or exercise and (ii) will deliver or cause to be delivered the Shares
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Company upon the terms and conditions of the
Offer.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL,
MUST BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY. ANY SUCH DOCUMENTS
DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT BE DEEMED TO BE PROPERLY TENDERED.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be
withdrawn at any time after 12:00 Midnight, New York City time, on Thursday,
December 9, 1999.
11
<PAGE>
For a withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic, telex or facsimile transmission form and must be received in a
timely manner 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 tendering stockholder, the number of Shares to be withdrawn and the name
of the registered holder of such Shares. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates for Shares to
be withdrawn and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares tendered
for the account of an Eligible Institution). If Shares have been tendered
pursuant to the procedure for book-entry transfer set forth in Section 3, the
notice of withdrawal also must specify the name and the number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Shares
and must otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including the time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any
other person shall be obligated to give notice of any defects or
irregularities in any notice of withdrawal nor shall any of them incur
liability for failure to give any notice.
Withdrawals may not be rescinded and any Shares properly withdrawn will
thereafter be deemed not properly tendered for purposes of the Offer unless
the withdrawn Shares are properly rendered prior to the Expiration Date by
following one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or is
unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (i) will determine the
Purchase Price it will pay for the Shares properly tendered and not properly
withdrawn prior to the Expiration Date, taking into account the number of
Shares so tendered and the prices specified by tendering stockholders, and
(ii) will accept for payment and pay for (and thereby purchase) Shares
properly tendered at prices at or below the Purchase Price and not properly
withdrawn prior to the Expiration Date. For purposes of the Offer, the Company
will be deemed to have accepted for payment (and therefore purchased) Shares
that are properly tendered at or below the Purchase Price and not properly
withdrawn (subject to the proration provisions of the Offer) only when, as and
if it gives oral or written notice to the Depositary of its acceptance of the
Shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single per Share Purchase Price for 2,000,000 Shares (subject to increase or
decrease as provided in Section 14) properly tendered, or such lesser number
of Shares as are properly tendered, at prices not in excess of $37.50 nor less
than $34.25 per Share and not properly withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from the Company and transmitting payment to the tendering
stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately seven business days after the Expiration Date.
Certificates for all Shares tendered and not
12
<PAGE>
purchased, including all Shares tendered at prices in excess of the Purchase
Price and Shares not purchased due to proration, will be returned (or, in the
case of Shares tendered by book-entry transfer, will be credited to the
account maintained with the Book-Entry Transfer Facility by the participant
therein who so delivered the Shares) to the tendering stockholder at the
Company's expense as promptly as practicable after the Expiration Date or
termination of the Offer without expense to the tendering stockholders. UNDER
NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE BE PAID BY THE COMPANY BY
REASON OF ANY DELAY IN MAKING PAYMENT. In addition, if certain events occur,
the Company may not be obligated to purchase Shares pursuant to the Offer. See
Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any
person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person signing the Letter
of Transmittal, the amount of all stock transfer taxes, if any (whether
imposed on the registered holder or the other person), payable on account of
the transfer to the person will be deducted from the Purchase Price unless
satisfactory evidence of the payment of the stock transfer taxes, or exemption
therefrom, is submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER
OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX BACKUP
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO THE STOCKHOLDER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR NON-UNITED STATES HOLDERS.
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company will not be
required to accept for payment, purchase or pay for any Shares tendered, and
may terminate or amend the Offer or may postpone the acceptance for payment
of, or the purchase of and the payment for Shares tendered, subject to Rule
13e-4(f) under the Exchange Act, if at any time on or after October 14, 1999
and prior to the Expiration Date any of the following events shall have
occurred (or shall have been determined by the Company to have occurred) that,
in the Company's judgment and regardless of the circumstances giving rise
thereto (including any action or omission to act by the Company), makes it
inadvisable to proceed with the Offer or with acceptance for payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or any other person, domestic or foreign,
before any court, authority, agency or tribunal that directly or indirectly
(i) challenges the making of the Offer, the acquisition of some or all of
the Shares pursuant to the Offer or otherwise relates in any manner to the
Offer, or (ii) in the Company's sole judgment, could materially and
adversely affect the business, condition (financial or other), income,
operations or prospects of the Company and its subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated future
conduct of the business of the Company or any of its subsidiaries or
materially impair the contemplated benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's sole judgment, would or might directly or indirectly
(i) make the acceptance for payment of, or payment for, some or all of the
Shares illegal or otherwise restrict or prohibit consummation of the Offer,
(ii) delay or restrict the ability of the Company, or render the Company
unable, to accept for payment or pay for some or all of the Shares, (iii)
materially impair the contemplated benefits of the Offer to the Company or
(iv) materially and adversely affect the
13
<PAGE>
business, condition (financial or other), income, operations or prospects
of the Company and its subsidiaries, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of the Company or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market, (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, regulatory or administrative agency or authority on, or any
event that, in the Company's sole judgment, might affect, the extension of
credit by banks or other lending institutions in the United States, (v) any
significant decrease in the market price of the Shares or any change in the
general political, market, economic or financial conditions in the United
States or abroad that could, in the sole judgment of the Company, have a
material adverse effect on the Company's business, operations or prospects
or the trading in the Shares, (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 or (vii) any decline in either the Dow
Jones Industrial Average or the Standard and Poor's Index of 500 Industrial
Companies by an amount in excess of 10% measured from the close of business
on October 13, 1999;
(d) a tender or exchange offer for any or all of the Shares (other than
the Offer), or any merger, business combination or other similar
transaction with or involving the Company or any subsidiary, shall have
been proposed, announced or made by any person;
(e)(i) any entity, "group" (as that term is used in Section 13(d)(3) of
the Exchange Act) or person shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding Shares (other than
any such person, entity or group who has filed a Schedule 13D or Schedule
13G with the Commission on or before October 13, 1999), (ii) any such
entity, group or person who has filed a Schedule 13D or Schedule 13G with
the Commission on or before October 13, 1999 shall have acquired or
proposed to acquire beneficial ownership of an additional 2% or more of the
outstanding Shares or (iii) any person, entity or group shall have filed a
Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or made a public announcement
reflecting an intent to acquire the Company or any of its subsidiaries or
any of their respective assets or securities other than in connection with
a transaction authorized by the Board of Directors of the Company;
(f) any change or changes shall have occurred in the business, financial
condition, assets, income, operations, prospects or stock ownership of the
Company or its subsidiaries that, in the Company's sole judgment, is or may
be material to the Company or its subsidiaries; or
(g) the Company determines that the consummation of the Offer and the
purchase of the Shares may cause the Shares to be delisted from the NYSE or
to be eligible for deregistration under the Exchange Act.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action
or omission by the Company) giving rise to any such condition, and may be
waived by the Company, in whole or in part, at any time and from time to time
in its sole discretion. The Company's failure at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by the Company concerning the events
described above will be final and binding on all parties.
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<PAGE>
7. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the NYSE. The following table sets
forth, for the fiscal quarters indicated, the high and low sales prices per
Share on the NYSE Composite Tape and the cash dividends paid, or to be paid,
per Share in each of such fiscal quarters.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
1997
First quarter (since January 30)...................... $24.63 $19.50 $0.05
Second quarter........................................ 27.81 19.25 0.05
Third quarter......................................... 31.56 24.50 0.05
Fourth quarter........................................ 32.00 26.94 0.05
1998
First quarter......................................... $31.63 $27.31 $0.06
Second quarter........................................ 38.38 30.25 0.06
Third quarter......................................... 35.38 28.50 0.06
Fourth quarter........................................ 32.25 27.94 0.06
1999
First quarter......................................... $30.13 $25.75 $0.08
Second quarter........................................ 32.63 23.88 0.08
Third quarter......................................... 32.81 28.69 0.08
Fourth quarter (through October 12, 1999) 32.06 31.50 --
</TABLE>
On October 12, 1999, the last full trading day prior to the announcement of
the Offer, the last reported sale price of the Shares on the NYSE Composite
Tape was $32.00. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
The Company's Board of Directors declared a regular quarterly dividend of
$0.08 per Share to holders of record of the Company's Common Stock at the
close of business on September 15, 1999. The dividend was paid September 30,
1999.
Rights Plan. On May 13, 1997, the Board of Directors of the Company adopted
a Rights Agreement with ChaseMellon Shareholder Services, LLC, as Rights Agent
(as amended, the "Rights Agreement"), pursuant to which the Company declared a
dividend of one preferred share purchase right (a "Right") for each Share
outstanding at the close of business on June 3, 1997. One Right attaches to
each share of Common Stock, and, when exercisable, each Right will entitle the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock, $1.00 par value per share (the
"Preferred Shares"), at a price of $80.00 per one one-hundredth of a Preferred
Share, subject to adjustment (the "Purchase Price").
In general, the Rights Agreement operates by providing that in the event
that any person acquires a number of Shares above the 20% threshold defined in
the Rights Agreement (an "Acquiring Person") or if the Company were the
surviving corporation in a merger with an Acquiring Person or any affiliate or
associate of an Acquiring Person and the Shares were not changed or exchanged,
each holder of a Right, other than Rights that are or were acquired or
beneficially owned by the 20% stockholder (which Rights will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Shares having a market value of two times the then current Purchase Price of
the Right. In the event that, after a person has become an Acquiring Person,
the Company were acquired in a merger or other business combination
transaction or more than 50% of its assets or earning power were sold, proper
provision shall be made so that each holder of a Right shall thereafter have
the right to receive, upon the exercise thereof at the then current Purchase
Price of the Right, that number of shares of common stock of the acquiring
company which at the time of such transaction would have a market value of two
times the then current Purchase Price of the Right.
The Rights will expire on May 12, 2007, subject to the Company's right to
extend such date, unless earlier redeemed or exchanged by the Company or
terminated. The Rights may be redeemed in whole, but not in part,
15
<PAGE>
at a price of $.01 per Right by the Board of Directors at any time prior to
the time a person becomes an Acquiring Person. The Rights may also be
exchanged at any time after a person becomes an Acquiring Person and prior to
the acquisition of 50% or more of the then-outstanding Shares (except for the
Rights of the Acquiring Person) for that number of Shares having an aggregate
value equal to the Spread (the excess of the value of the Shares issuable upon
exercise of a Right after a Person becomes an Acquiring Person over the
Purchase Price) per Right (subject to adjustment). Any of the provisions of
the Rights Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date as defined in the Rights Agreement. After the
Distribution Date, the Company and the Rights Agent may amend or supplement
the Rights Agreement without the approval of any holders of Right Certificates
under certain circumstances provided that the interests of the holders of
Right Certificates (other than an Acquiring Person or an affiliate or
associate of an Acquiring Person) are not adversely affected thereby.
The foregoing description of the Rights is qualified in its entirety by
reference to the Rights Agreement, a copy of which has been filed as an
exhibit to a Form 8-A filed by the Company on May 22, 1997 and copies of
amendments thereto which have been filed as exhibits to a Form 8-A filed by
the Company on November 11, 1998 and a Form 8-A filed by the Company on August
27, 1999, in each case filed with the Commission. Such reports and exhibits
may be obtained from the Commission in the manner provided in Section 9.
8. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases 2,000,000 Shares pursuant to the Offer at a
purchase price of $37.50 per Share, the Company expects the maximum aggregate
cost, including all fees and expenses applicable to the Offer, to be
approximately $75,645,000. The Company expects to fund the purchase of Shares
pursuant to the Offer and the payment of related fees and expenses from
available cash and investments. At June 30, 1999, the Company had aggregate
cash and investments of approximately $746 million. The Company will obtain
the funds to purchase the Shares pursuant to the Offer through a dividend from
its wholly-owned subsidiary, SCPIE Indemnity Company, a domestic admitted
insurer in the State of California. The California Insurance Commissioner
approved the dividend on August 31, 1999.
9. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The Company is the parent company of a group of insurance and
insurance-related companies conducting business principally in California. It
began operating as an independent publicly held company on January 29, 1997,
as the result of the merger of Southern California Physicians Insurance
Exchange ("SCPIE" or the "Exchange") into SCPIE Indemnity Company, a
California domiciled insurance company and subsidiary of the Company ("SCPIE
Indemnity"), and the issuance of 9,994,652 shares of common stock of the
Company to approximately 10,400 members of the Exchange in exchange for their
membership interests in SCPIE and 500,000 shares to SCPIE Indemnity (the
"Reorganization"). On January 30, 1997, the Company sold an additional
2,300,000 shares in a public offering of its common stock.
SCPIE Holdings was organized in February 1996, as a Delaware corporation.
The Company principally engages in conducting the business of its predecessor,
the Exchange, through its subsidiaries. The insurance company subsidiaries of
SCPIE Holdings include SCPIE Indemnity, American Healthcare Indemnity Company
("AHI") and American Healthcare Specialty Insurance Company ("AHSIC"). AHI and
AHSIC were inactive insurance companies acquired by the Company in 1996 to
expand the Company's operations outside California. AHI, domiciled in
Delaware, is licensed to transact insurance in 46 states and the District of
Columbia, and AHSIC, domiciled in Arkansas, is eligible to write policies as
an excess and surplus lines insurer in 24 states and the District of Columbia.
During 1997, SCPIE Holdings contributed $25.0 million and $23.0 million to the
capital and surplus of AHI and AHSIC, respectively. The other subsidiaries of
SCPIE include SCPIE Insurance Services, Inc., a California licensed insurance
agency, and two companies providing management services. The term "Insurance
Subsidiaries" refers to SCPIE Indemnity, AHI and AHSIC.
The Company is one of the nation's leading providers of medical malpractice
insurance, based on direct premiums written in 1998. The Company currently
insures more than 13,500 physicians, other providers and oral and
maxillofacial surgeons practicing alone or in medical groups, clinics or other
healthcare organizations.
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<PAGE>
The Company also insures a variety of healthcare facilities, including
hospitals, emergency departments, outpatient surgery and hemodialysis centers,
and clinical and pathology laboratories. The Company currently writes
professional liability insurance in 14 states, principally in California.
Medical malpractice insurance, or medical professional liability insurance,
insures the physician, hospital or other healthcare provider against
liabilities arising from the rendering of, or failure to render, professional
medical services. Under the typical medical malpractice insurance policy, the
insurer also defends the insured against potentially covered claims. Based on
data compiled by A.M. Best & Co. ("A.M. Best"), in 1998, total medical
malpractice premiums in the United States were approximately $6.0 billion. In
California, the second largest market for medical malpractice insurance based
on direct premiums written, approximately $674.0 million of medical
malpractice premiums were written in 1998. The Company's share of the direct
medical malpractice premiums written in California in 1998 was approximately
17%. The Company's market share is substantially higher in Southern California
where more than 95% of the Company's insureds are located.
The Company believes that its considerable market share for medical
malpractice insurance in California is in large part due to the loyalty of its
insured physicians. The Company attributes this loyalty to the high quality,
personalized service it provides and its traditional focus on the California
physician marketplace. Eight county medical associations and several specialty
societies in California have endorsed the medical malpractice insurance
offered by the Company.
The Company believes that the growth in managed healthcare and the emergence
of multi-state integrated healthcare providers and delivery systems has led to
major changes in the medical malpractice insurance industry. Practice
management organizations, hospitals, administrators of large group practices
and managed care organizations have an increasing influence over the
purchasing decision for the medical malpractice insurance coverages of their
affiliated physicians. As the consolidation of healthcare providers continues,
the number of physicians insured through such organizations will increase and
the Company believes that such organizations increasingly will seek well-
capitalized medical malpractice insurers that can provide a full range of
products and a high level of service in each state in which such organizations
conduct business.
17
<PAGE>
Summary Historical Consolidated Financial Information. Set forth below is
certain summary historical consolidated financial information of the Company
and its subsidiaries. The historical financial information has been derived
from the audited consolidated financial statements of the Company as reported
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998 and from the unaudited consolidated financial statements of the
Company as reported in the Company's Quarterly Report on Form 10-Q for the
six-month periods ended June 30, 1999 and 1998, which were prepared on a basis
substantially consistent with the audited financial statements, and reflect,
in the opinion of management, all adjustments necessary to a fair
representation of the financial position and results of operations for such
periods. The results for the six months ended June 30, 1999 and 1998 are not
necessarily indicative of the results for the full year. The summary
historical financial information below should be read in conjunction with, and
is qualified in its entirety by reference to, the Company's consolidated
financial statements and notes thereto, which are incorporated herein by
reference. More comprehensive financial information is included in such
financial statements, related notes and the audit report contained therein,
copies of which may be inspected or obtained from the Commission in the manner
specified in "-- Additional Information" below.
SCPIE HOLDINGS INC. AND SUBSIDIARIES
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
------------------------- -----------------
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1998 1997 1999 1998
------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Income Statement Data
Total Revenues................... $209,961 $183,735 $106,668 $104,437
Net Income....................... 36,976 32,176 19,598 17,417
Basic earnings per share of
common stock.................... 3.06 2.66 1.67 1.43
Diluted earnings per share of
common stock.................... 3.06 N/A 1.67 1.42
Average number of shares
outstanding basic............... 12,074 12,108 11,711 12,208
Average number of shares
outstanding diluted............. 12,089 N/A 11,711 12,226
<CAPTION>
AS OF
-------------------------------------------
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1998 1997 1999 1998
------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Balance Sheet Data
Total investments................ 793,616 785,664 737,011 796,441
Total assets..................... 921,469 888,449 869,924 912,667
Total liabilities................ 534,951 527,334 500,417 538,681
Total stockholders' equity....... 386,518 361,115 369,507 373,986
Book value per common share...... $ 32.54 $ 29.41 $ 31.89 $ 30.81
</TABLE>
18
<PAGE>
NOTES TO SUMMARY HISTORICAL
CONSOLIDATED FINANCIAL INFORMATION
Basic earnings per share of common stock was computed using the weighted
average number of shares of common stock outstanding for the respective
periods. The adoption of Statement of Financial Accounting Standards No. 128,
Earnings Per Share, had no impact on the calculation of earnings per share
amounts.
Unaudited Consolidated Pro Forma Financial Information. The following
unaudited consolidated pro forma financial information gives effect to the
purchase of the Shares pursuant to the Offer, including the payment of related
fees and expenses, based on the assumptions described in the footnotes below,
as if such transactions had occurred on the first day of each of the periods
presented, with respect to the income statement data, and on December 31, 1998
and June 30, 1999, with respect to the balance sheet data. The summary
unaudited consolidated pro forma financial information should be read in
conjunction with the Summary Historical Consolidated Financial Information set
forth above and the historical consolidated financial information incorporated
by reference herein and does not purport to be indicative of the results that
would actually have been obtained, or results that may be obtained in the
future, or the financial condition that would have resulted, if the purchase
of the Shares pursuant to the Offer and the payment of related fees and
expenses had been completed at the dates indicated.
19
<PAGE>
SCPIE HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
AS OF JUNE 30, 1999
--------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Securities available-for-sale:
Fixed maturities investments, at fair value
(amortized cost $667,485)(1)............... $659,230 $(75,645) $583,585
Equity investments, at fair value (cost
$26,680)................................... 28,553 28,553
-------- --------
Total securities available-for-sale....... 687,783 612,138
Short-term investments........................ 49,228 49,228
-------- --------
Total investments......................... 737,011 661,366
Cash.......................................... 9,072 9,072
Accrued investment income..................... 10,947 10,947
Reinsurance recoverable....................... 29,440 29,440
Deferred federal income taxes................. 20,061 20,061
Costs in excess of net assets acquired........ 7,397 7,397
Property and equipment, net................... 20,638 20,638
Other assets.................................. 35,358 35,358
-------- -------- --------
Total assets.............................. $869,924 $(75,645) $794,279
======== ======== ========
LIABILITIES
Reserves:
Loss and loss adjustment expenses........... $455,309 455,309
Unearned premiums........................... 22,752 22,752
-------- --------
Total reserves............................ 478,061 478,061
Other liabilities............................. 22,356 22,356
-------- --------
Total liabilities......................... 500,417 500,417
</TABLE>
Commitments and contingencies
<TABLE>
<S> <C> <C> <C>
STOCKHOLDERS' EQUITY
Preferred stock-par value $1.00, 5,000,000
shares authorized, no shares issued or
outstanding................................ -- --
Common stock-par value $.0001, 30,000,000
shares authorized, 12,937,091 shares
issued, 11,588,391 shares outstanding...... 1 1
Additional paid-in capital.................. 36,386 36,386
Retained earnings........................... 362,308 362,308
Treasury stock, at cost, 848,700 shares(1).. (24,896) (75,645) (100,541)
Accumulated other comprehensive income...... (4,292) (4,292)
---------- ---------- ---------
Total stockholders' equity.............. 369,507 (75,645) 293,862
---------- ---------- ---------
Total liabilities and stockholders'
equity................................. $ 869,924 $ (75,645) $ 794,279
========== ========== =========
Shares of common stock outstanding.......... 11,588,391 (2,000,000) 9,588,391
Book value per share........................ $ 31.89 $ 30.65
</TABLE>
20
<PAGE>
SCPIE HOLDINGS INC. AND SUBSIDIARIES
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1999
--------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
REVENUES:
Premiums earned............................ $80,393 $80,393
Net investment income(2)................... 19,437 $(2,107) 17,330
Realized investment gains.................. 6,608 6,608
Other revenue.............................. 230 230
------- ------- -------
Total revenues........................... 106,668 (2,107) 104,561
EXPENSES:
Losses and loss adjustment expenses........ 65,750 65,750
Other operating expenses................... 14,249 14,249
------- -------
Total expenses........................... 79,999 79,999
------- -------
Income before federal income taxes........... 26,669 (2,107) 24,562
Federal income taxes(5)...................... 7,071 (559) 6,512
------- ------- -------
Net income............................... $19,598 $(1,548) $18,050
======= ======= =======
Basic earnings per share of common
stock(2)(4)(5).............................. $ 1.67 $ 1.86
======= =======
Diluted earnings per share of common
stock(2)(4)(5).............................. $ 1.67 $ 1.86
======= =======
</TABLE>
21
<PAGE>
SCPIE HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Securities available-for-sale:
Fixed maturities investments, at fair
value
(amortized cost 1998-$698,971)(1)..... $ 722,196 $ (75,645) $ 646,551
Equity investments, at fair value (cost
1998-$31,493)......................... 37,015 37,015
----------- ----------
Total securities available-for-sale.. 759,211 683,566
Short-term investments................... 34,405 34,405
----------- ----------
Total investments.................... 793,616 717,971
Cash..................................... 12,305 12,305
Accrued investment income................ 11,440 11,440
Reinsurance recoverable.................. 24,899 24,899
Deferred federal income taxes............ 12,163 12,163
Costs in excess of net assets acquired... 7,811 7,811
Property and equipment, net.............. 19,706 19,706
Other assets............................. 39,529 39,529
----------- ----------- ----------
Total assets......................... $ 921,469 $ (75,645) $ 845,824
=========== =========== ==========
LIABILITIES
Reserves:
Loss and loss adjustment expenses...... $ 477,631 477,631
Unearned premiums...................... 24,591 24,591
----------- ----------
Total reserves....................... 502,222 502,222
Other liabilities........................ 32,729 32,729
----------- ----------
Total liabilities.................... 534,951 534,951
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock-par value $1.00,
5,000,000 shares authorized, no shares
issued or outstanding................... -- --
Common stock-par value $.0001, 30,000,000
shares authorized, 12,792,091 shares
issued, 1998-11,878,791 shares
outstanding............................. 1 1
Additional paid-in capital............... 36,386 36,386
Retained earnings........................ 344,587 344,587
Treasury stock, at cost, (1998-413,300
shares)(1).............................. (13,141) (75,645) (88,786)
Accumulated other comprehensive income... 18,685 18,685
----------- ----------- ----------
Total stockholders' equity........... 386,518 (75,645) 310,873
----------- ----------- ----------
Total liabilities and stockholders'
equity.............................. $ 921,469 $ (75,645) $ 845,824
=========== =========== ==========
Shares of common stock outstanding....... 11,878,791 (2,000,000) 9,878,791
Book value per share..................... $ 32.54 $ 31.47
</TABLE>
22
<PAGE>
SCPIE HOLDINGS INC. AND SUBSIDIARIES
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
REVENUES:
Premiums earned............................ $157,976 $157,976
Net investment income(2)................... 40,367 $(4,296) 36,071
Realized investment gains.................. 11,129 11,129
Other revenue.............................. 489 489
-------- ------- --------
Total revenues........................... 209,961 (4,296) 205,665
EXPENSES:
Losses and loss adjustment expenses........ 132,208 132,208
Other operating expenses................... 28,211 28,211
-------- --------
Total expenses........................... 160,419 160,419
-------- --------
Income before federal income taxes........... 49,542 (4,296) 45,246
Federal income taxes(3)...................... 12,566 (1,092) 11,474
-------- ------- --------
Net income............................... $ 36,976 $(3,204) $ 33,772
======== ======= ========
Basic earnings per share of common
stock(2)(3)(4).............................. $ 3.06 $ 3.35
======== ========
Diluted earnings per share of common
stock(2)(3)(4).............................. $ 3.06 $ 3.35
======== ========
</TABLE>
NOTES TO SUMMARY HISTORICAL
CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(1) Adjusted for the Company's use of $75 million of investments to purchase
2,000,000 shares of Common Stock at a purchase price of $37.50 per share,
plus related fees and expenses.
(2) Adjusted for the reduction in interest income earned on $75 million of
bonds assuming the Company purchases 2,000,000 shares of Common Stock at a
purchase price of $37.50 per share, plus related fees and expenses. It is
assumed that these investment securities have an effective yield of 5.6%
($75,000,000 X 5.6%).
(3) Adjusted to reflect a 25.4% effective tax rate, which equals the
historical effective tax rate for 1998.
(4) Reflects the Company's purchase of 2,000,000 shares of Common Stock.
(5) Adjusted to reflect a 26.5% effective tax rate which equals the historical
effective tax rate for the first six months of 1999.
23
<PAGE>
Additional Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 2120,
Washington, D.C. 20549; at its regional offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, New
York, New York 10048. Copies of such material may also be obtained by mail,
upon payment of the Commission's customary charges, from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. Such reports, proxy statements and other
information concerning the Company also can be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York.
10. INTEREST OF DIRECTORS AND OFFICERS AND PRINCIPAL SHAREHOLDER; TRANSACTIONS
AND ARRANGEMENTS CONCERNING SHARES.
As of October 5, 1999, the Company had 12,068,462 issued and outstanding
Shares, 723,629 Shares held in treasury and had reserved 441,390 Shares for
issuance upon exercise of outstanding Options. 500,000 of the issued and
outstanding Shares are held by SCPIE Indemnity Company, an insurance
subsidiary of the Company, and will not be tendered pursuant to the Offer. The
2,000,000 Shares that the Company is offering to purchase represents
approximately 16.6% of the Shares outstanding on October 5, 1999
(approximately 16.0% assuming exercise of outstanding exercisable Options).
As of October 5, 1999, the Company's directors and executive officers as a
group (15 persons) beneficially owned an aggregate of 258,713 Shares
representing approximately 2.14% of the outstanding Shares, assuming the
exercise by such persons of their currently exercisable Options. Each of the
Company's executive officers and directors has advised the Company that he
does not intend to tender any Shares pursuant to the Offer. If the Company
purchases 2,000,000 Shares pursuant to the Offer, and none of the executive
officers or directors tender Shares pursuant to the Offer, then after the
purchase of Shares pursuant to the Offer, the Company's executive officers and
directors as a group would own beneficially approximately 2.56% of the
outstanding Shares immediately after the Offer, assuming the exercise by such
persons of their currently exercisable Options.
Based on the Company's records and on information provided to the Company by
its directors, executive officers and subsidiaries, neither the Company, nor
any associate or subsidiary of the Company nor, to the best of the Company's
knowledge, any of the directors or executive officers of the Company or any of
its subsidiaries, nor any associates or subsidiaries of any of the foregoing,
has effected any transactions involving the Shares during the 40 business days
prior to the date hereof.
Except as otherwise described herein, neither the Company nor, to the best
of the Company's knowledge, any of its affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer or 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, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies, consents or
authorizations.
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of stockholders. Nonetheless, the Company anticipates that there will
be a sufficient number of Shares outstanding and publicly traded following
consummation of the
24
<PAGE>
Offer to ensure a continued trading market for the Shares. Based upon
published guidelines of the NYSE, the Company does not believe that its
purchase of Shares pursuant to the Offer will cause the Company's remaining
Shares to be delisted from the NYSE.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, the
Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares
becoming eligible for deregistration under the Exchange Act.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company will obtain the funds to purchase the Shares pursuant to the
Offer through a dividend from its wholly-owned subsidiary, SCPIE Indemnity
Company, a domestic admitted insurer in the State of California. The
California Insurance Commission approved the dividend on August 31, 1999.
Except as described above, the Company is not aware of any license or
regulatory permit that appears to be material to the Company's business that
might be adversely affected by the Company's acquisition of Shares as
contemplated herein or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
the Company as contemplated herein. Should any such approval or other action
be required, the Company presently contemplates that such approval or other
action will be sought. The Company is unable to predict whether it will be
required to delay the acceptance for payment of or payment for 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
or would be obtained without substantial conditions or that the failure to
obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company's obligations under the
Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 6.
13. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes the principal United States federal income
tax consequences to United States Holders (as defined below) of an exchange of
Shares pursuant to the Offer. Those Stockholders who do not participate in the
exchange should not incur any United States federal income tax liability from
the exchange. This summary is based upon the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), existing and proposed United States
Treasury Regulations promulgated thereunder, published rulings, administrative
pronouncements and judicial decisions, changes to which could affect the tax
consequences described herein (possibly on a retroactive basis).
This summary addresses only Shares held as capital assets. It does not
address all of the tax consequences that may be relevant to particular
stockholders in light of their personal circumstances, or to certain types of
stockholders (such as certain financial institutions, dealers or traders in
securities or commodities, insurance companies, "S" corporations, expatriates,
tax-exempt organizations, Non-United States Holders (as defined below),
persons who are subject to alternative minimum tax, or persons who hold Shares
as a position in a "straddle" or as part of a "hedging" or "conversion"
transaction or that have a functional currency other than the United States
dollar). This summary may not be applicable with respect to Shares acquired as
compensation (including Shares acquired upon the exercise of stock options or
which were or are subject to forfeiture restrictions). This summary also does
not address the state, local or foreign tax consequences of participating in
the Offer. EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR AS
TO THE PARTICULAR CONSEQUENCES TO SUCH HOLDER OF PARTICIPATION IN THE OFFER.
25
<PAGE>
A "United States Holder" is a holder of Shares that for United States
federal income tax purposes is (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized in or under the laws of
the United States or any State or division thereof (including the District of
Columbia), (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source or (iv) a trust (a) the
administration over which a United States court can exercise primary
supervision and (b) all of the substantial decisions of which one or more
United States persons have the authority to control and certain other trusts
considered United States Holders for federal income tax purposes. A "Non-
United States Holder" is a holder of Shares other than a United States Holder.
An exchange of Shares for cash pursuant to the Offer will be a taxable
event. A United States Holder participating in the exchange will be treated
either as having sold Shares or as having received a dividend distribution
from the Company. A United States Holder's exchange of Shares for cash
pursuant to the Offer will be treated as a dividend to the extent of the
Company's current or accumulated earnings and profits as determined under
Federal income tax principles, unless the exchange (i) results in a "complete
termination" of such holder's stock interest in the Company under section
302(b)(3) of the Code, (ii) is a "substantially disproportionate" redemption
with respect to such holder under section 302(b)(2) of the Code, or (iii) is
"not essentially equivalent to a dividend" with respect to such holder under
section 302(b)(1) of the Code. In determining whether any of these tests have
been met, a United States Holder must take into account not only Shares it
actually owns, but also stock it constructively owns within the meaning of
section 318 of the Code.
A distribution to a stockholder is "not essentially equivalent to a
dividend" if it results in a "meaningful reduction" in the stockholder's stock
interest in the Company. If, as a result of an exchange of Shares for cash
pursuant to the Offer, a United States Holder of Shares whose relative stock
interest in the Company is minimal and who exercises no control over corporate
affairs suffers a reduction in its proportionate interest in the Company
(including any ownership of preferred stock and any shares constructively
owned), that United States Holder should generally be regarded as having
suffered a meaningful reduction in its interest in the Company. Satisfaction
of the "complete termination" and "substantially disproportionate" exceptions
is dependent upon compliance with the respective objective tests set forth in
section 302(b)(3) and section 302(b)(2) of the Code.
If an exchange of Shares for cash by a United States Holder pursuant to the
Offer is not treated as a distribution taxable as a dividend, such holder will
recognize capital gain or loss equal to the difference between the amount of
cash received and such holder's adjusted tax basis in the Shares tendered to
the Company, except to the extent that the amount of cash received includes
dividends that have been declared by the Board of Directors of the Company
prior to the exchange. Such gain or loss would be capital gain or loss and
would be long-term capital gain or loss if the holding period for the Shares
exceeded one year.
If the amount received by a United States Holder in the Offer is treated as
a distribution that is taxable as a dividend (as opposed to consideration
received in a sale or exchange), the amount of the distribution will be the
amount of cash received by such holder. Such amount will be treated as a
dividend, taxable as ordinary income to the United States Holder, to the
extent of the Company's current or accumulated earnings and profits as
determined under Federal income tax principles. To the extent that the amount
of such distribution exceeds the Company's current and accumulated earnings
and profits, the excess first will be treated as a return of capital that will
reduce the holder's tax basis in the Shares exchanged in the Offer. Any
remaining amount after the United States Holder's basis has been reduced to
zero will be taxable as capital gain. The United States Holder's adjusted tax
basis in its Shares exchanged in the Offer generally will be transferred to
any of its remaining stockholdings in the Company, subject to reduction or
possible gain recognition under section 1059 of the Code in an amount equal to
the non-taxed portion of such dividend. If the United States Holder does not
retain any actual stock ownership in the Company (having a stock interest only
constructively), the holder may lose the benefit of such holder's adjusted tax
basis in its Shares. A dividend received by a corporate United States Holder
may be (i) eligible for a dividends-received deduction (subject to applicable
exceptions and limitations) and (ii) subject to the "extraordinary dividend"
provisions of section 1059 of the Code. Corporate stockholders should consult
their own tax advisors regarding (i) whether a dividends-received deduction
will be available to them, and (ii) the possible application of section 1059
to the ownership and disposition of their Shares.
26
<PAGE>
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to Non-United States Holders and the
backup withholding tax requirements.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
EACH STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE OFFER,
INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
14. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 6 shall have occurred or shall be deemed by the Company
to have occurred, to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and payment for, any Shares by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. The Company also expressly reserves the right, in
its sole discretion, to terminate the Offer and not accept for payment or pay
for any Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of
the conditions specified in Section 6 hereof by giving oral or written notice
of such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay
the consideration offered or return the Shares tendered promptly after
termination or withdrawal of a tender offer. Subject to compliance with
applicable law, the Company further reserves the right, in its sole
discretion, and regardless of whether any of the events set forth in Section 6
shall have occurred or shall be deemed by the Company to have occurred, to
amend the Offer in any respect (including, without limitation, by decreasing
or increasing the consideration offered in the Offer to holders of Shares or
by decreasing or increasing the number of Shares being sought in the Offer).
Amendments to the Offer may be made at any time and from time to time effected
by public announcement thereof, such announcement, in the case of an
extension, to be issued no later than 9:00 a.m., New York City time, on the
next business day after the last previously scheduled or announced Expiration
Date. Any public announcement made pursuant to the Offer will be disseminated
promptly to stockholders in a manner reasonably designed to inform
stockholders of such change. Without limiting the manner in which the Company
may choose to make a public announcement, except as required by applicable
law, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules provide that the
minimum period during which an 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 a change in percentage of securities sought) will
depend on the facts and circumstances, including the relative materiality of
such terms or information. If (i) the Company increases or decreases the price
to be paid for Shares, materially increases the Dealer Manager fee or
increases or decreases the number of Shares being sought in the Offer and, in
the event of an increase in the number of Shares being sought, such increase
exceeds 2% of the outstanding Shares, and (ii) the Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that such notice of an increase or
decrease is first published, sent or given in the manner specified in this
Section 14, the Offer will be extended until the expiration of such period of
ten business days. For the 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 am through 12:00 midnight, New York City time.
15. FEES AND EXPENSES.
The Company has retained Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") to act as its financial advisor, as well as the Dealer Manager, in
connection with the Offer. DLJ will receive reasonable and
27
<PAGE>
customary compensation. The Company also has agreed to reimburse DLJ for
certain reasonable out-of-pocket expenses incurred in connection with the
Offer, including reasonable fees and expenses of counsel, and to indemnify DLJ
against certain liabilities in connection with the Offer, including
liabilities under the federal securities laws.
The Company has retained ChaseMellon Consulting Services, L.L.C. to act as
Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telegraph and personal interviews and
may request brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners. The Information Agent
and the Depositary will each receive reasonable and customary compensation for
their respective services, will be reimbursed by the Company for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws.
No fees or commissions will be payable by the Company to brokers, dealers or
other persons (other than fees to the Dealer Manager and the Information Agent
as described above) for soliciting tenders of Shares pursuant to the Offer.
Stockholders holding Shares through brokers or banks are urged to consult the
brokers or banks to determine whether transaction costs are applicable if
stockholders tender Shares through such brokers or banks and not directly to
the Depositary. The Company, however, upon request, will reimburse brokers,
dealers and commercial banks for customary mailing and handling expenses
incurred by them in forwarding the Offer and related materials to the
beneficial owners of Shares held by them as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank or trust company has been
authorized to act as the agent of the Company, the Dealer Manager, the
Information Agent or the Depositary for purposes of the Offer. The Company
will pay or cause to be paid all stock transfer taxes, if any, on its purchase
of Shares except as otherwise provided in Instruction 7 in the Letter of
Transmittal.
16. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer or the acceptance of Shares
pursuant thereto is not in compliance with any valid applicable law, the
Company will make a good faith effort to comply with the applicable law. If,
after such good faith effort, the Company cannot comply with the applicable
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares in such jurisdiction. In any jurisdiction 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 the Company's behalf
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of the jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission the Schedule 13E-4
which contains additional information with respect to the Offer. Such Schedule
13E-4, including the exhibits and any amendments thereto, may be examined, and
copies may be obtained, at the same places and in the same manner as is set
forth in Section 9 with respect to information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE DEALER MANAGER.
SCPIE Holdings Inc.
October 14, 1999
28
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Mail Drop--Reorg South Hackensack,
Attn: Reorganization Dept. Ridgefield Park, New Jersey 07660 New Jersey 07606
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
Facsimile Transmission:
(201) 296-4293
(FOR ELIGIBLE INSTITUTIONS ONLY)
Confirm Receipt of Facsimile by Telephone:
(201) 296-4860
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at the
telephone numbers and addresses set forth below. Stockholders may also contact
their broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Offer. To confirm delivery of Shares, stockholders are directed
to contact the Depositary.
The Information Agent for the Offer is:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 West 33rd Street
14th Floor
New York, NY 10001
(212) 273-8035 (Call Collect)
or
Call Toll-Free (888) 566-9475
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, NY 10172
(212) 892-3763 (Call Collect)
29
<PAGE>
EXHIBIT 99(a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Right)
of
SCPIE Holdings Inc.
Pursuant to the Offer to Purchase
Dated October 14, 1999
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 10, 1999, UNLESS THE OFFER IS
EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Ridgefield Park, New Jersey 07660 South Hackensack, New Jersey 07606
Attn: Reorganization Dept. Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
Facsimile Transmission:
(201) 296-4293
(for Eligible Institutions Only)
Confirm Receipt of Facsimile by Telephone:
(201) 296-4860
THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank, exactly as name(s) appear(s) on Share Description of Shares Tendered
Certificate(s)) (Attach Additional Signed List if necessary)
- -------------------------------------------------------------------------------------------------------------------
Total Number of
Shares Evidenced
by Number
Share Certificate Share of Shares
Number(s)* Certificate(s) Tendered**
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
<S> <C> <C> <C>
Total Shares
</TABLE>
- -------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are
to be purchased in event of proration.*** Attach additional signed list if
necessary. See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
* DOES NOT need to be completed by stockholders tendering Shares by book-
entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
evidenced by each certificate delivered to the Depositary are being
tendered hereby. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be completed only if (a) certificates
representing Shares (as defined below) are to be forwarded herewith, or (b) a
tender of Shares is to be made concurrently by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company
(hereinafter referred to as the "Book-Entry Transfer Facility") pursuant to
Section 3 of the Offer to Purchase (as defined below). Stockholders who desire
to tender Shares pursuant to the Offer (as defined below), but whose Share
certificates are not immediately available or who cannot deliver such
certificates and all other documents required by this Letter of Transmittal to
the Depositary on or prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot comply with the procedure for book-entry transfer on
a timely basis, may nevertheless tender their Shares pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
See Instruction 2.
[_]CHECK HERE IF ANY CERTIFICATE REPRESENTING SHARES TENDERED HEREBY HAS BEEN
LOST, STOLEN, DESTROYED OR MUTILATED. SEE INSTRUCTION 15.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account No.: _______________________________________________________________
Transaction Code No.: ______________________________________________________
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Date of execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
Window Ticket Number (if any): _____________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
To ChaseMellon Shareholder Services, L.L.C.:
The undersigned hereby tenders to SCPIE Holdings Inc., a Delaware
corporation (the "Company"), the above-described shares of the Company's
Common Stock, par value $0.0001 per share (the "Shares") (including the
associated preferred stock purchase rights (the "Rights") issued pursuant to
the Rights Agreement dated as of May 13, 1997, as amended as of October 19,
1998 and August 4, 1999 between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent), at the price per Share indicated in this
Letter of Transmittal, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated October 14, 1999 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). Unless the
context otherwise requires, all references to Shares shall include the
associated Rights.
Subject to, and effective upon, acceptance for payment of the Shares
tendered hereby in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title
and interest in and to all Shares tendered hereby and orders the registration
of all such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (with full
knowledge that the Depositary also acts as the agent of the Company), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to: (a) deliver certificate(s)
representing such Shares or transfer ownership of such Shares on the account
books maintained by the Book-Entry Transfer Facility, together, in either such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of the Company upon receipt by the Depositary, as the undersigned's
agent, of the Purchase Price (as defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer on the
Company's books; and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares, subject to the next paragraph,
all in accordance with the terms and subject to the conditions of the Offer.
The undersigned hereby covenants, represents and warrants to the Company
that:
(a) the undersigned has full power and authority to tender, sell, assign
and transfer the Shares tendered hereby and that when and to the extent the
same are accepted for payment by the Company, the Company will acquire
good, marketable and unencumbered title thereto, free and clear of all
security interests, liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer of
such Shares, and not subject to any adverse claims;
(b) the undersigned understands that tenders of Shares pursuant to any
one 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, including the undersigned's
representation and warranty that (i) the undersigned has a net long
position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), and (ii) such tender of
Shares complies with Rule 14e-4;
(c) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby; and
(d) the undersigned has read, understands and agrees to all of the terms
of the Offer.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of
the Offer. The undersigned acknowledges that no interest will be paid on the
Purchase Price for tendered Shares regardless of any extension of the Offer or
any delay in making such payment.
3
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and
legal representatives of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares
that the undersigned wishes to tender, should be set forth in the appropriate
boxes above. The price at which such Shares are being tendered should be
indicated in the box below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price
(not in excess of $37.50 nor less than $34.25 per Share) net to the seller in
cash, without interest thereon (the "Purchase Price"), that it will pay for
Shares properly tendered and not properly withdrawn prior to the Expiration
Date pursuant to the Offer, taking into account the number of Shares so
tendered and the prices (in multiples of $.125) specified by tendering
stockholders. The undersigned understands that the Company will select the
lowest Purchase Price that will allow it to buy 2,000,000 Shares (or such
lesser number of Shares as are properly tendered at prices not in excess of
$37.50 nor less than $34.25 per share) pursuant to the Offer. The undersigned
understands that all Shares properly tendered prior to the Expiration Date at
prices at or below the Purchase Price and not properly withdrawn will be
purchased at the Purchase Price, upon the terms and subject to the conditions
of the Offer, including its proration provisions, and that the Company will
return all other Shares not purchased pursuant to the Offer, including Shares
tendered at prices greater than the Purchase Price and not properly withdrawn
prior to the Expiration Date and Shares not purchased because of proration.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any
such event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated under the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions"
below.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate net Purchase Price for such of the Shares
tendered hereby as are purchased will be issued to the order of the
undersigned and mailed to the address indicated above, unless otherwise
indicated under the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" below. The undersigned acknowledges
that the Company has no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of its registered
holder(s) thereof, or to order the registration or transfer of any Shares
tendered by book-entry transfer, if the Company does not purchase any of such
Shares.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND (SEE INSTRUCTIONS 1, 6, 7 AND
10.) 10.)
To be completed ONLY if certif- To be completed ONLY if
icate(s) for Shares not tendered certificate(s) for Shares not
or not purchased and/or any check tendered or not purchased and/or
for the Purchase Price are to be any check for the Purchase Price
issued in the name of someone are to be mailed or sent to
other than the undersigned, or if someone other than the
Shares tendered hereby and deliv- undersigned, or to the
ered by book-entry transfer which undersigned at an address other
are not purchased are to be re- than that designated above.
turned by credit to an account at
the Book-Entry Transfer Facility
other than that designated above.
Mail:[_] Check
[_] Share Certificate(s)
to:
Issue:[_] Check Name: ____________________________
[_] Share Certificate(s) to: (PLEASE PRINT)
Address: _________________________
Name: ____________________________ __________________________________
(PLEASE PRINT) (INCLUDE ZIP CODE)
Address: _________________________ ----------------------------------
__________________________________ (TAXPAYER IDENTIFICATION OR
(INCLUDE ZIP CODE) SOCIAL SECURITY NUMBER)
__________________________________ (SEE SUBSTITUTE FORM W-9 ON
(TAX IDENTIFICATION OR SOCIAL REVERSE SIDE)
SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)
[_]Credit Shares delivered by
book-entry transfer and not
purchased to the account set
forth below:
Account Number: __________________
5
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5.)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF
NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
(Stockholders who desire to tender Shares at more than one price must complete
a separate Letter of Transmittal for each price at which Shares are tendered.)
<TABLE>
<S> <C> <C> <C>
[_] $34.25 [_] $35.125 [_] $36.00 [_] $36.875
[_] $34.375 [_] $35.25 [_] $36.125 [_] $37.00
[_] $34.50 [_] $35.375 [_] $36.25 [_] $37.125
[_] $34.625 [_] $35.50 [_] $36.375 [_] $37.25
[_] $34.75 [_] $35.625 [_] $36.50 [_] $37.375
[_] $34.875 [_] $35.75 [_] $36.625 [_] $37.50
[_] $35.00 [_] $35.875 [_] $36.75
</TABLE>
ODD LOTS
(SEE INSTRUCTION 8.)
To be completed ONLY if Shares are being tendered by or on behalf of a
person owning, beneficially or of record an aggregate of fewer than 100
Shares. The undersigned either (check one box):
[_]is the beneficial or record owner of an aggregate of fewer than 100
Shares, all of which are being tendered; or
[_]is a broker, dealer, commercial bank, trust company, or other nominee
that (a) is tendering for the beneficial owner(s) thereof, Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of fewer than 100 Shares
and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[_]at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need
not indicate the price per Share above); or
[_]at the price per Share indicated above under "Price (In Dollars) Per
Share At Which Shares Are Being Tendered."
6
<PAGE>
IMPORTANT
STOCKHOLDERS SIGN HERE
(Please Complete and Return the Attached Substitute Form W-9.)
(Must be signed by the registered holder(s) exactly as such holder(s)
name(s) appear(s) on certificate(s) for Shares or on a security position
listing or by person(s) authorized to become the registered holder(s)
thereof by certificates and documents transmitted with this Letter of
Transmittal. 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 set forth full title and
see Instruction 6.)
Signature(s) of Owner(s): ___________________________________________________
Dated:
Name(s): ____________________________________________________________________
(Please Print)
Capacity (full title): ______________________________________________________
Address: ____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: _____________________________________________
Taxpayer Identification or
Social Security Number: _____________________________________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6.)
Authorized Signature: _______________________________________________________
Name: _______________________________________________________________________
(Please Print)
Title: ______________________________________________________________________
Name of Firm: _______________________________________________________________
Address: ____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: _____________________________________________
Dated: ______________________________________________________________________
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes hereof, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of such Shares) tendered hereby exactly as the name of such
registered holder appears on the certificate(s) for such Shares tendered with
this Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which is an
"eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each of the foregoing
constituting an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures on
this Letter of Transmittal. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for Shares are delivered with it to the Depositary (or such certificates will
be delivered pursuant to a Notice of Guaranteed Delivery previously sent to
the Depositary) or if a tender for Shares is being made concurrently pursuant
to the procedure for tender by book-entry transfer set forth in Section 3 of
the Offer to Purchase. Certificates for all physically tendered Shares or
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of Shares tendered electronically, together in
each case with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile hereof), and any other documents required by
this Letter of Transmittal, should be mailed or delivered to the Depositary at
the appropriate address set forth herein and must be delivered to the
Depositary on or before the Expiration Date. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on
a timely basis pursuant to the procedures for book-entry transfer, must, in
any such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile thereof) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant
to such procedure, certificates for all physically tendered Shares or book-
entry confirmations, as the case may be, as well as this properly completed
and duly executed Letter of Transmittal (or manually signed facsimile hereof)
and all other documents required by this Letter of Transmittal, must be
received by the Depositary within three (3) New York Stock Exchange trading
days after receipt by the Depositary of such Notice of Guaranteed Delivery,
all as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth therein.
For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their tender.
8
<PAGE>
3. Inadequate Space. If the space provided in the box entitled "Description
of Shares Tendered" above is inadequate, the certificate numbers and/or the
number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced
by any certificate are to be tendered, fill in the number of Shares that are
to be tendered in the column entitled "Number of Shares Tendered" in the box
entitled "Description of Shares Tendered" above. In such case, if any tendered
Shares are purchased, a new certificate for the remainder of the Shares
(including any Shares not purchased) evidenced by the old certificate(s) will
be issued and sent to the registered holder(s) thereof, unless otherwise
specified in either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" in this Letter of Transmittal, as
soon as practicable after the Expiration Date. Unless otherwise indicated, all
Shares represented by the certificate(s) set forth above and delivered to the
Depositary will be deemed to have been tendered.
5. Indication of Price at Which Shares are Being Tendered. For Shares to be
properly tendered, the stockholder MUST check the box indicating the price per
Share at which such holder is tendering Shares under "Price (In Dollars) Per
Share at Which Shares Are Being Tendered" in this Letter of Transmittal. ONLY
ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS
CHECKED, THERE IS NO PROPER TENDER OF SHARES. A stockholder wishing to tender
a portion(s) of such holder's Shares at different prices must complete a
separate Letter of Transmittal for each price at which such holder wishes to
tender each such portion of such holder's Shares. The same Shares cannot be
tendered (unless previously properly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. Signatures on Letter Of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares tendered hereby are registered in the names of two or more
joint holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles hereof) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, no endorsement(s) of certificate(s) representing
such Shares or separate stock power(s) are required unless payment is to be
made or the certificate(s) for Shares not tendered or not purchased are to be
issued to a person other than the registered holder(s) thereof. SIGNATURE(S)
ON SUCH CERTIFICATE(S) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this
Letter of Transmittal is signed by a person other than the registered
holder(s) of the certificate(s) listed, or if payment is to be made or
certificate(s) for Shares not tendered or not purchased are to be issued to a
person other than the registered holder(s) thereof, such certificate(s) must
be endorsed or accompanied by appropriate stock power(s), in either case
signed exactly as the name(s) of the registered holder(s) appears on the
certificate(s), and the signature(s) on such certificate(s) or stock power(s)
must be guaranteed by an Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, such person should so indicate when signing this
Letter of Transmittal and must submit proper evidence satisfactory to the
Company of their authority so to act.
7. Stock Transfer Taxes. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter
of Transmittal. The Company will pay any stock transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, either
(a) payment of the Purchase Price for Shares tendered hereby and accepted for
purchase is to be made to any person other than the registered holder(s); or
(b) Shares not tendered or not accepted for purchase are to be registered in
the name(s) of any person(s) other than the registered holder(s); or
(c) certificate(s) representing tendered Shares are registered in the name(s)
of any person(s) other than the person(s) signing this Letter of Transmittal,
then the Depositary will deduct from such Purchase Price the amount of any
stock transfer taxes
9
<PAGE>
(whether imposed on the registered holder(s), such other person(s) or
otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption therefrom
is submitted.
8. Odd Lots. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase fewer than all Shares tendered before the Expiration
Date and not properly withdrawn, the Shares purchased first will consist of
all Shares properly tendered by any stockholder who owned, beneficially or of
record an aggregate of fewer than 100 Shares, and who tenders all of such
holder's Shares at or below the Purchase Price (an "Odd Lot Holder"). This
preference will not be available unless the section captioned "Odd Lots" is
completed.
9. Order of Purchase in Event of Proration. As described in Section 1 of the
Offer to Purchase, stockholders may designate the order in which their Shares
are to be purchased in the event of proration. The order of purchase may have
an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 13 of the Offer to Purchase.
10. Special Payment and Delivery Instructions. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of
a person other than the signer of this Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing this Letter of Transmittal or to the signer at a different address,
the box entitled "Special Payment Instructions" and/or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal should be
completed as applicable and signatures must be guaranteed as described in
Instruction 1.
11. Irregularities. All questions as to the number of Shares to be accepted,
the price to be paid therefor and the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Company in its sole discretion, which determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders of Shares it determines not to be in proper form or
the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right
to waive any of the conditions of the Offer or any defect or irregularity in
any tender with respect to any particular Shares or any particular
stockholder, and the Company's interpretation of the terms of the Offer
(including these Instructions) will be final and binding on all parties. No
tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured by the tendering stockholder or waived by the
Company. Unless waived, any defects or irregularities in connection with
tenders must be cured within such time as the Company shall determine. None of
the Company, the Dealer Manager (as defined in the Offer to Purchase), the
Depositary, the Information Agent (as defined in the Offer to Purchase) or any
other person is or will be obligated to give notice of any defects or
irregularities in tenders and none of them will incur any liability for
failure to give any such notice.
12. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from, the Information
Agent or the Dealer Manager at their addresses and telephone numbers set forth
on the back cover of the Offer to Purchase or from brokers, dealers,
commercial banks or trust companies.
13. Tax Identification Number and Backup Withholding. Federal income tax law
generally requires that a stockholder whose tendered Shares are accepted for
purchase, or such stockholder's assignee (in either case, the "Payee"),
provide the Depositary with such Payee's correct Taxpayer Identification
Number ("TIN"), which, in the case of a Payee who is an individual, is such
Payee's social security number. If the Depositary is not provided with the
correct TIN or an adequate basis for an exemption, such Payee may be subject
to penalties imposed by the Internal Revenue Service and backup withholding in
an amount equal to 31% of the gross proceeds received pursuant to the Offer.
If withholding results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each Payee must provide such Payee's correct
TIN by completing the Substitute Form W-9 set forth herein, certifying that
the TIN provided is correct (or that such Payee is awaiting a TIN) and that
(i) the Payee is exempt from backup withholding, (ii) the Payee has not been
notified by the
10
<PAGE>
Internal Revenue Service that such Payee is subject to backup withholding as a
result of a failure to report all interest or dividends, or (iii) the Internal
Revenue Service has notified the Payee that such Payee is no longer subject to
backup withholding.
If the Payee does not have a TIN, such Payee should (i) consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for instructions on applying for a TIN, (ii) write "Applied For" in
the space provided in Part 1 of the Substitute Form W-9, and (iii) sign and
date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer
Identification Number set forth herein. If the Payee does not provide such
Payee's TIN to the Depositary within sixty (60) days, backup withholding will
begin and continue until such Payee furnishes such Payee's TIN to the
Depositary. Note that writing "Applied For" on the Substitute Form W-9 means
that the Payee has already applied for a TIN or that such Payee intends to
apply for one in the near future.
If Shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to
report.
Exempt Payees (including, among others, all corporations and certain foreign
individuals) are not subject to backup withholding and reporting requirements.
To prevent possible erroneous backup withholding, an exempt Payee should write
"Exempt" in Part 2 of Substitute Form W-9. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions. In order for a nonresident alien or foreign entity to
qualify as exempt, such person must submit a completed IRS Form W-8
Certificate of Foreign Status or a Substitute Form W-8, signed under penalty
of perjury attesting to such exempt status. Such form may be obtained from the
Depositary.
14. Withholding On Non-United States Holder. Even if a Non-United States
Holder (as defined below) has provided the required certification to avoid
backup withholding, the Depositary will withhold United States federal income
taxes equal to 30% of the gross payments payable to a Non-United States Holder
or such holder's agent unless the Depositary determines that a reduced rate of
withholding is available pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively
connected with the conduct of a trade or business within the United States.
For this purpose, a "Non-United States Holder" is any stockholder that for
United States federal income tax purposes is not (i) a citizen or resident of
the United States, (ii) a corporation or partnership created or organized in
or under the laws of the United States or any State or division thereof
(including the District of Columbia), (iii) an estate the income of which is
subject to United States federal income taxation regardless of the source of
such income, or (iv) a trust (a) the administration over which a United States
court can exercise primary supervision and (b) all of the substantial
decisions of which one or more United States persons have the authority to
control. Notwithstanding the foregoing, to the extent provided in United
States Treasury Regulations, certain trusts in existence on August 20, 1996,
and treated as United States persons prior to such date, that elect to
continue to be treated as United States persons also will not be Non-United
States Holders. In order to obtain a reduced rate of withholding pursuant to a
tax treaty, a Non-United States Holder must deliver to the Depositary before
the payment a properly completed and executed IRS Form 1001. In order to
obtain an exemption from withholding on the grounds that the gross proceeds
paid pursuant to the Offer are effectively connected with the conduct of a
trade or business within the United States, a Non-United States Holder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a stockholder's status as a Non-United States Holder
and eligibility for a reduced rate of, or an exemption from, withholding by
reference to outstanding certificates or statements concerning eligibility for
a reduced rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS
Form 4224) unless facts and circumstances indicate that such reliance is not
warranted. A Non-United States Holder may be eligible to obtain a refund of
all or a portion of any tax withheld if such Non-United States Holder meets
those tests described in Section 13 of the Offer to Purchase that would
characterize the exchange as a sale (as opposed to a dividend) or is otherwise
able to establish that no tax or a reduced amount of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
15. Lost, Stolen, Destroyed or Mutilated Certificates. If any certificate(s)
representing Shares has been lost, stolen, destroyed or mutilated, the
stockholder should promptly notify the Depositary by checking the box set
forth above and indicating the number of Shares so lost, stolen, destroyed or
mutilated. Such stockholder will then be instructed by the
11
<PAGE>
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, stolen, destroyed or
mutilated certificates have been followed. Stockholders may contact the
Depositary at (800) 522-6645 (toll free) to expedite such process.
THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED (OR
MANUALLY SIGNED FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING
SHARES BEING TENDERED OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED PRIOR
TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE. STOCKHOLDERS
ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH THIS LETTER OF
TRANSMITTAL.
12
<PAGE>
PAYER: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
PART 1--Taxpayer
Identification Number-for ----------------------
all accounts, enter
taxpayer identification
number in the box at right
and certify by signing and
dating below.
SUBSTITUTE Social Security Number
FORM W-9 OR
DEPARTMENT OF
THE TREASURY ----------------------
INTERNAL Employer Identification
REVENUE Number TIN
SERVICE
NOTE: If the account is in
more than one name, see the
chart in the enclosed
Guidelines to determine
which number to give the
payer.
--------------------------------------------------------
PART 2--For payees exempt from backup withholding,
please write "EXEMPT" here (see the enclosed
Guidelines):
PAYER'S REQUEST --------------------------------------------------------
FOR TAXPAYER PART 3--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 because: (a) I
am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends or (c) the IRS has notified me that I am no
longer subject to backup withholding.
IDENTIFICATION
NUMBER (TIN)
--------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are currently subject to backup withholding
because of underreporting interest or dividends on
your tax return and you have not been notified by the
IRS that you are no longer subject to backup
withholding. (also see instructions in the enclosed
Guidelines.)
Signature _______________________ Date ______________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE
THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON APPLY FOR) A
TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and that I mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
(or I intend to mail or deliver an application in the near future). I
understand that, notwithstanding the information I provided in Part III of
the Substitute Form W-9 above (and the fact that I have completed this
Certificate of Awaiting Taxpayer Identification Number), if I do not
provide a taxpayer identification number to the Depositary within sixty
(60) days, the Depositary is required to withhold 31% of all cash payments
made to me thereafter until I provide a number.
Signature __________________________________________________ Date:
Name (Please Print) ________________________________________________________
Address (Please Print) _____________________________________________________
13
<PAGE>
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 West 33rd Street
14th Floor
New York, NY 10001
(212) 273-8035 (Call Collect)
or
Call Toll-Free (888) 566-9475
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, NY 10172
(212) 892-3763 (Call Collect)
<PAGE>
EXHIBIT 99(a)(3)
SCPIE Holdings Inc.
Notice Of Guaranteed Delivery
for
Tender of Shares of Common Stock
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if certificates evidencing
shares of Common Stock, par value $0.0001 per share (the "Shares"), of SCPIE
Holdings Inc., a Delaware corporation (the "Company"), are not immediately
available, or if the procedure for book-entry transfer set forth in the Offer
to Purchase dated October 14, 1999 (the "Offer to Purchase") and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer") cannot be completed on a timely basis or time
will not permit all required documents, including a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof),
to reach the Depositary prior to the Expiration Date (as defined in the Offer
to Purchase).
This Notice of Guaranteed Delivery, properly completed and duly executed,
may be delivered by hand, mail or facsimile transmission to the Depositary.
See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Mail Drop--Reorg South Hackensack,
Attn: Reorganization Dept. Ridgefield Park, New Jersey 07660 New Jersey 07606
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
Facsimile Transmission:
(201) 296-4293
(For Eligible Institutions Only)
Confirm Receipt of Facsimile by Telephone:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES
TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery form is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. A tender of Shares pursuant to the Offer
will include a tender of the associated preferred stock purchase rights issued
pursuant to the Rights Agreement dated as of May 13, 1997, as amended as of
October 19, 1998 and August 4, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent.
ODD LOTS
To be completed ONLY if Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[_]is the beneficial or record owner of an aggregate of fewer than 100
Shares, all of which are being tendered; or
[_]is a broker, dealer, commercial bank, trust company, or other nominee
that (a) is tendering for the beneficial owner(s) thereof, Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person was the beneficial or record owner of an aggregate of fewer than
100 Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[_]at the Purchase Price (as defined in the Offer to Purchase), as the same
shall be determined by the Company in accordance with the terms of the
Offer (persons checking this box need not indicate the price per Share
below); or
[_]at the price per Share indicated below under "Price (In Dollars) Per
Share At Which Shares Are Being Tendered."
2
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF
NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
(Stockholders who desire to tender Shares at more than one price must complete
a separate Notice of Guaranteed Delivery for each price at which Shares are
tendered.)
<TABLE>
<S> <C> <C> <C>
[_] $34.25 [_] $35.125 [_] $36.00 [_] $36.875
[_] $34.375 [_] $35.25 [_] $36.125 [_] $37.00
[_] $34.50 [_] $35.375 [_] $36.25 [_] $37.125
[_] $34.625 [_] $35.50 [_] $36.375 [_] $37.25
[_] $34.75 [_] $35.625 [_] $36.50 [_] $37.375
[_] $34.875 [_] $35.75 [_] $36.625 [_] $37.50
[_] $35.00 [_] $35.875 [_] $36.75
</TABLE>
Signature(s): __________________________________________________________________
Name(s) of Record Holder(s): ___________________________________________________
Please Type or Print
Certificates Nos. ______________________________________________________________
(if available):
Address: _______________________________________________________________________
- --------------------------------------------------------------------------------
Zip Code
Area Code and Telephone No.: ___________________________________________________
If Shares will be delivered by book-entry transfer, provide the following
information:
Account Number: ________________________________________________________________
Date: __________________________________________________________________________
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR A SIGNATURE GUARANTEE.)
THE UNDERSIGNED, A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS ASSOCIATION
OR OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING OF THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM OR A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS
ASSOCIATION OR OTHER ENTITY WHICH IS AN "ELIGIBLE GUARANTOR INSTITUTION," AS
SUCH TERM IS DEFINED IN RULE 17AD-15 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (EACH OF THE FOREGOING CONSTITUTING AN "ELIGIBLE
INSTITUTION"), GUARANTEES THE DELIVERY TO THE DEPOSITARY OF THE SHARES
TENDERED HEREBY, IN PROPER FORM FOR TRANSFER, OR A CONFIRMATION THAT THE
SHARES TENDERED HEREBY HAVE BEEN DELIVERED PURSUANT TO THE PROCEDURE FOR BOOK-
ENTRY TRANSFER SET FORTH IN THE OFFER TO PURCHASE INTO THE DEPOSITARY'S
ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY, TOGETHER WITH A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) AND ANY OTHER REQUIRED DOCUMENTS, ALL WITHIN THREE (3) NEW
YORK STOCK EXCHANGE TRADING DAYS OF THE DATE HEREOF.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing Shares to the Depositary within the time period set
forth herein. Failure to do so could result in a financial loss to such
Eligible Institution.
Name of Firm: _________________________________________________________________
Address: ______________________________________________________________________
- -------------------------------------------------------------------------------
Zip Code
Area Code and Telephone No.: __________________________________________________
Authorized Signature
Name: _________________________________________________________________________
Please Print
Title: ________________________________________________________________________
Date: _________________________________________________________________________
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS FORM. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL.
4
<PAGE>
EXHIBIT 99(a)(4)
Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York,
NY 10172
SCPIE Holdings Inc.
Offer to Purchase for Cash up to
2,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not in excess of $37.50
nor less than $34.25 per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON Wednesday, November 10, 1999, UNLESS THE
OFFER IS EXTENDED.
October 14, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
SCPIE Holdings Inc., a Delaware corporation (the "Company"), has engaged us
to act as Dealer Manager in connection with its offer to purchase up to
2,000,000 shares (or such lesser number of shares as are properly tendered) of
its Common Stock, par value $0.0001 per share (the "Shares") (including the
associated preferred stock purchase rights (the "Rights") issued pursuant to
the Rights Agreement dated as of May 13, 1997, as amended as of October 19,
1998 and August 4, 1999 between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent), at prices not in excess of $37.50 nor less
than $34.25 per Share, net to the seller in cash, without interest thereon, as
specified by stockholders tendering their Shares, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated October 14, 1999
(the "Offer to Purchase") and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer").
Unless the context otherwise requires, all references to Shares shall include
the associated Rights.
The Company will, upon the terms and subject to the conditions of the Offer,
determine the single per Share price, not in excess of $37.50 nor less than
$34.25 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to
the Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest
Purchase Price that will allow it to buy 2,000,000 Shares (or such lesser
number of Shares as are properly tendered at prices not in excess of $37.50
nor less than $34.25 per Share). All Shares properly tendered prior to the
Expiration Date (as defined in the Offer to Purchase) at prices at or below
the Purchase Price and not properly withdrawn, will be purchased at the
Purchase Price, upon the terms and subject to the conditions of the Offer,
including the proration provisions. All Shares acquired in the Offer will be
acquired at the Purchase Price. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned
at the Company's expense to the stockholders who tendered such Shares. The
Company reserves the right, in its sole discretion, to purchase more than
2,000,000 Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 2,000,000 Shares (or such greater number of Shares
as the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares first
from any person (an "Odd Lot Holder") who owned beneficially or of record an
aggregate of fewer than 100 Shares and so certified in the appropriate place
on the Letter of Transmittal (and, if applicable, on a notice of guaranteed
delivery), who
<PAGE>
properly tender all their Shares at or below the Purchase Price, and then on a
pro rata basis from all other stockholders who properly tender Shares at
prices at or below the Purchase Price (and do not properly withdraw such
Shares prior to the Expiration Date).
For your information and for forwarding to those of your clients for whom
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1 The Offer to Purchase dated October 14, 1999;
2. The Letter of Transmittal for your use and for the information of your
clients (together with the accompanying Substitute Form W-9). Facsimile
copies of the Letter of Transmittal (with manual signatures) may be used to
tender Shares;
3. A letter to the stockholders of the Company dated October 14, 1999
from Donald J. Zuk, President and Chief Executive Officer of the Company;
4. The Notice of Guaranteed Delivery to be used to accept the Offer and
tender Shares pursuant to the Offer if none of the procedures for tendering
Shares set forth in the Offer to Purchase can be completed on a timely
basis;
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with an instruction form provided for obtaining such clients'
instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., as Depositary for the Offer (the "Depositary").
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, NOVEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof)
including any required signature guarantees and any other required documents
should be sent to the Depositary together with either certificate(s)
representing tendered Shares or timely confirmation of their book-entry
transfer, in accordance with the instructions set forth in the Offer to
Purchase and the related Letter of Transmittal.
Holders of Shares whose certificate(s) for such Shares are not immediately
available or who cannot deliver such certificate(s) and all other required
documents to the Depositary, or complete the procedures for book-entry
transfer, prior to the Expiration Date must tender their Shares according to
the procedure for guaranteed delivery set forth in Section 3 of the Offer to
Purchase.
No fees or commissions will be payable by the Company nor any officer,
director, stockholder, agent or other representative of the Company to any
broker, dealer or other person for soliciting tenders of Shares pursuant to
the Offer (other than fees paid to Donaldson, Lufkin & Jenrette Securities
Corporation, as Dealer Manager, or ChaseMellon Consulting Services, L.L.C., as
Information Agent, as described in the Offer to Purchase). The Company will,
however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients whose Shares are held by you as a nominee or in a fiduciary capacity.
The Company will pay or cause to be paid any stock transfer taxes applicable
to its purchase of Shares, except as otherwise provided in the Letter of
Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
Donaldson, Lufkin & Jenrette Securities Corporation, as Dealer Manager, 277
Park Avenue, New York, NY 10172, (212) 892-3763 (call collect), or to
ChaseMellon Consulting Services, L.L.C., as Information Agent, 450 West 33rd
Street, 14th Floor, New York, NY 10001, (212) 273-8035 or (888) 566-9475 (toll
free). Requests for additional copies of the enclosed materials may be
directed to the Dealer Manager or the Information Agent at their respective
addresses and telephone numbers set forth above.
Very truly yours,
Donaldson, Lufkin & Jenrette
Securities Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99(a)(5)
SCPIE Holdings Inc.
Offer to Purchase for Cash up to
2,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not in excess of $37.50
nor less than $34.25 per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON Wednesday, November 10, 1999, UNLESS THE
OFFER IS EXTENDED.
October 14, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated October 14,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer")
in connection with the offer by SCPIE Holdings Inc., a Delaware corporation
(the "Company"), to purchase up to 2,000,000 shares (or such lesser number of
shares as are properly tendered) of its Common Stock, par value $0.0001 per
share (the "Shares") including associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement dated as of May 13, 1997, as
amended as of October 19, 1998 and August 4, 1999 between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent), at prices not in
excess of $37.50 nor less than $34.25 per Share, net to the seller in cash,
without interest thereon, as specified by stockholders tendering their Shares,
upon the terms and subject to the conditions of the Offer. Unless the context
otherwise requires, all references to Shares shall include the associated
Rights.
The Company will, upon the terms and subject to the conditions of the Offer,
determine the single per Share price, not in excess of $37.50 nor less than
$34.25 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to
the Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest
Purchase Price that will allow it to buy 2,000,000 Shares (or such lesser
number of Shares as are properly tendered at prices not in excess of $37.50
nor less than $34.25 per Share). All Shares properly tendered prior to the
Expiration Date (as defined in the Offer to Purchase) at prices at or below
the Purchase Price, and not properly withdrawn, will be purchased at the
Purchase Price, upon the terms and subject to the conditions of the Offer,
including the proration provisions. All Shares acquired in the Offer will be
acquired at the Purchase Price. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned
at the Company's expense to the stockholders who tendered such Shares. The
Company reserves the right, in its sole discretion, to purchase more than
2,000,000 Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 2,000,000 Shares (or such greater number of Shares
as the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares first
from any person (an "Odd Lot Holder") who owned beneficially or of record an
aggregate of fewer than 100 Shares and so certified in the appropriate place
on the Letter of Transmittal (and, if applicable, on a notice of guaranteed
delivery), who properly tender all their Shares at or below the Purchase Price
and then on a pro rata basis from all other stockholders who properly tender
Shares at prices at or below the Purchase Price (and do not properly withdraw
such Shares prior to the Expiration Date).
A tender of your Shares can be made only by us as the holder of record
thereof and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
your Shares held by us for your account.
Accordingly, we request instructions as to whether you wish to tender any or
all of the Shares held by us for your account, upon the terms and subject to
the conditions of the Offer.
<PAGE>
Please note the following:
1. Shares may be tendered at prices not in excess of $37.50 nor less than
$34.25 per Share, as indicated in the attached Instruction Form, net to the
seller in cash, without interest thereon.
2. The priority in which Shares shall be purchased in the event of
proration may be designated.
3. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer to Purchase.
4. The Offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Wednesday, November 10, 1999, unless the
Offer is extended.
5. The Offer is for 2,000,000 Shares, constituting approximately 16.6% of
the Shares outstanding as of October 5, 1999.
6. The Board of Directors of the Company has approved the Offer. However,
neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their
Shares. Each stockholder must make the decision whether to tender such
stockholder's Shares and, if so, how many Shares to tender and at the price
or prices at which such Shares should be tendered.
7. Tendering stockholders will not be obligated to pay any brokerage fees
or commissions or solicitation fees to the Dealer Manager, Depositary,
Information Agent or the Company or, except as set forth in the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
If (i) you owned beneficially or of record an aggregate of fewer than 100
Shares; (ii) you instruct us to tender on your behalf all such Shares at or
below the Purchase Price prior to the Expiration Date; and (iii) you complete
the section entitled "Odd Lots" in the attached Instruction Form, the Company,
upon the terms and subject to the conditions of the Offer, will accept all
such Shares for purchase before proration, if any, of the purchase of other
Shares properly tendered at or below the Purchase Price.
If you wish to tender portions of your Shares at different prices, you must
complete a separate Instruction Form for each price at which you wish to
tender each such portion of your Shares. We must submit separate Letters of
Transmittal on your behalf for each such price you will accept for each such
portion tendered.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is
enclosed. If you authorize us to tender your Shares, all such Shares will be
tendered unless otherwise indicated on the attached Instruction Form.
PLEASE FORWARD YOUR INSTRUCTION FORM TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
As described in the Offer to Purchase, if more than 2,000,000 Shares (or
such greater number of Shares as the Company may elect to purchase) have been
properly tendered at or below the Purchase Price and not properly withdrawn
prior to the Expiration Date, the Company will purchase tendered Shares on the
basis set forth below:
1. first, all Shares tendered and not withdrawn prior to the Expiration
Date by any Odd Lot Holder who:
(a) tenders all Shares owned beneficially or of record by such Odd
Lot Holder at a price at or below the Purchase Price (tenders of less
than all Shares owned by such Odd Lot Holder will not qualify for this
preference); and
(b) completes the section captioned "Odd Lots" on the Letter of
Transmittal and if applicable on the Notice of Guaranteed Delivery; and
2. second, after purchase of all of the foregoing Shares, all other
Shares properly tendered at prices at or below the Purchase Price and not
properly withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares) as
described in the Offer to Purchase.
2
<PAGE>
The Offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all record holders of
Shares. 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 of the Offer or acceptance thereof would not be in compliance with the
securities laws of such jurisdiction.
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF SCPIE HOLDINGS INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated October 14, 1999 (the "Offer to Purchase") and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer") in connection with the offer by SCPIE
Holdings Inc., a Delaware corporation (the "Company"), to purchase up to
2,000,000 shares (or such lesser number of shares as are properly tendered) of
its Common Stock, par value $.0001 per share (the "Shares") (including
associated preferred stock purchase rights (the "Rights") issued pursuant to
the Rights Agreement dated as of May 13, 1997, as amended as of October 19,
1998 and August 4, 1999 between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent), at prices not in excess of $37.50 nor less
than $34.25 per Share, net to the seller in cash, without interest thereon, as
specified by stockholders tendering their Shares, upon the terms and subject
to the conditions of the Offer. Unless the context otherwise requires, all
references to Shares shall include the Rights.
This will instruct you to tender to the Company, on (our) (my) behalf, the
number of Shares indicated below (or if no number is indicated below, all
Shares) which are beneficially owned by (us) (me) and registered in your name,
upon terms and subject to the conditions of Offer.
NUMBER OF SHARES TO BE TENDERED: SHARES*
ODD LOTS
[_] By checking this box the undersigned represents that the undersigned owns
beneficially or of record an aggregate of fewer than 100 Shares and is
tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[_] at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[_] at the price per Share indicated below under "Price (In Dollars) Per Share
At Which Shares Are Being Tendered."
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING
TENDERED
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS
CHECKED, THERE IS NO PROPER TENDER OF SHARES.
(Stockholders who desire to tender Shares at more than one price must complete
a separate Instruction Form for each price at which Shares are tendered.)
<TABLE>
<S> <C> <C> <C>
[_] $34.25 [_] $35.125 [_] $36.00 [_] $36.875
[_] $34.375 [_] $35.25 [_] $36.125 [_] $37.00
[_] $34.50 [_] $35.375 [_] $36.25 [_] $37.125
[_] $34.625 [_] $35.50 [_] $36.375 [_] $37.25
[_] $34.75 [_] $35.625 [_] $36.50 [_] $37.375
[_] $34.875 [_] $35.75 [_] $36.625 [_] $37.50
[_] $35.00 [_] $35.875 [_] $36.75
</TABLE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
SIGN HERE:
Signature(s): _________________________________________________________
Print Name(s): ________________________________________________________
Address(es): __________________________________________________________
Area Code and Telephone Number: _______________________________________
Taxpayer Identification or Social Security Number: ____________________
4
<PAGE>
EXHIBIT 99(a)(6)
[LOGO OF SCPIE HOLDINGS INC.]
October 14, 1999
To Our Stockholders:
SCPIE Holdings Inc. (the "Company") is offering to purchase up to 2,000,000
shares of its common stock (the "Shares") (including associated preferred
stock purchase rights (the "Rights") issued pursuant to the Rights Agreement
dated as of May 13, 1997, as amended as of October 19, 1998 and August 4, 1999
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent) from existing stockholders. The price will not be in excess of $37.50
nor less than $34.25 per Share. The Company is conducting the offer through a
procedure commonly referred to as a "Dutch Auction." This procedure allows you
to select the price within the specified price range at which you are willing
to sell your Shares to the Company. The actual purchase price will be
determined by the Company in accordance with the terms of the offer. A tender
of Shares will include a tender of the associated Rights. No separate
consideration will be paid for the Rights. Unless the context otherwise
requires, all references to Shares shall include the associated Rights.
Any stockholder whose Shares are properly tendered directly to ChaseMellon
Shareholder Services, L.L.C., the Depositary for the offer, and purchased
pursuant to the offer will receive the net purchase price in cash, without
interest, and will not incur the usual transaction costs associated with open
market sales. Stockholders who own fewer that 100 shares should note that the
offer represents an opportunity for them to sell their shares without having
to pay brokerage commissions or odd lot discounts.
The terms and conditions of the offer are explained in detail in the
enclosed Offer to Purchase and the related Letter of Transmittal. I encourage
you to read these materials carefully before making any decision with respect
to the offer. The instructions on how to tender Shares are also explained in
detail in the accompanying materials.
Neither the Company nor the Board of Directors of the Company makes any
recommendation to stockholders as to whether to tender or refrain from
tendering their Shares. Each stockholder must make the decision whether to
tender such stockholder's Shares and, if so, how many Shares to tender and the
price or prices at which such Shares should be tendered. The Company has been
advised that none of its directors or executive officers intends to tender any
Shares pursuant to the offer.
The offer will expire at 12:00 Midnight, New York City time, on Wednesday,
November 10, 1999, unless extended by the Company. If you have any questions
regarding the offer or need assistance in tendering your Shares, please
contact ChaseMellon Consulting Services, L.L.C., the Information Agent for the
offer, at (888) 566-9475 or Donaldson, Lufkin & Jenrette, the Dealer Manager
for the offer, at (212) 892-3763 (call collect).
Sincerely,
/s/ DONALD J. ZUK
Donald J. Zuk
President and Chief Executive
Officer
<PAGE>
EXHIBIT 99(a)(7)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
- ---------------------------------------------
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of:
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of other
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------
</TABLE>
<TABLE>
-----
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of:
-----
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the
identification
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title)(5)
10. Corporate account The organization
11. Religious, charitable, The corporation
or educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
-----
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note:If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card,
or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number. As soon as you receive your TIN, complete another W-9,
include your TIN, sign and date the form, and send it to the Depository.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust. A common trust fund operated by a bank un-
der section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount renewed is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852) of the Code.
. Payments described in section 6049(b)(5) of the Code to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 EN-
CLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTI-
TUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER IDENTIFICA-
TION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE FORM
AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE
Section 6109 requires most recipients of dividends, interest, or other
payments to give taxpayer identification numbers to payers who must report the
payments to IRS. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. Payers must be given the numbers
whether or not recipients are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to
a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit 99 (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated October
14, 1999 and the related Letter of Transmittal, and any amendments or
supplements thereto, which are being mailed to all holders of Shares. The
Company is not aware of any jurisdiction where the making of the Offer is not in
compliance with applicable law. If the Company becomes aware of any jurisdiction
where the making of the Offer or the acceptance of Shares pursuant thereto is
not in compliance with applicable law, the Company will make a good faith effort
to comply with the applicable law. If, after such good faith effort, the Company
cannot comply with the applicable law, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such
jurisdiction. 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 the Company by Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ" or the "Dealer Manager") or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
SCPIE HOLDINGS INC.
UP TO 2,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED
STOCK PURCHASE RIGHTS) AT A PURCHASE
PRICE NOT IN EXCESS OF $37.50 NOR LESS
THAN $34.25 PER SHARE IN CASH
SCPIE Holdings Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender up to 2,000,000 shares of its Common Stock, par value
$0.0001 per share (the "Shares") (including the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement dated as
of May 13, 1997, as amended as of October 19, 1998 and August 4, 1999 between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent), to
the Company at prices not in excess of $37.50 nor less than $34.25 per Share,
net to the seller in cash, without interest thereon, as specified by
stockholders tendering their Shares, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 14, 1999 and in the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"). Unless the context otherwise requires,
all references to Shares shall include the associated Rights.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, NOVEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE
OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH IN THE OFFER TO
PURCHASE.
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NEITHER
THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. EACH STOCKHOLDER
MUST MAKE THE DECISION WHETHER TO TENDER SUCH STOCKHOLDER'S SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SUCH SHARES SHOULD BE
TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE
OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
The Company will, upon the terms and subject to the conditions of the Offer,
determine the single per Share price, not in excess of $37.50 nor less than
$34.25 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to the
Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest purchase
price that will allow it to buy 2,000,000 Shares (or such lesser number of
Shares as are properly tendered at prices not in excess of $37.50 nor less than
$34.25 per Share). All Shares properly tendered prior to the Expiration Date (as
defined below) at prices at or below the Purchase Price and not properly
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
the conditions of the Offer, including the proration provisions. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES,
REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. All Shares acquired in the Offer
will be acquired at the Purchase Price. The term "Expiration Date" means 12:00
Midnight, New York City time, on Wednesday, November 10, 1999, unless and until
the Company, in its sole discretion, shall have extended the period of time
during which the Offer will remain open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Offer, as so extended
by the Company, shall expire. The Company reserves the right, in its sole
discretion, to purchase more than 2,000,000 Shares pursuant to the Offer. For
purposes of the Offer, the Company will be deemed to have accepted for payment
(and therefore purchased) Shares properly tendered at or below the Purchase
Price and not properly withdrawn (subject to the proration provisions of the
Offer) only when, as and if the Company gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of its acceptance of
such Shares for payment pursuant to the Offer. 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 a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal.
The Company's Board of Directors believes that the Company's financial condition
and outlook and current market conditions, including recent trading prices of
the Company's Common Stock, make this an attractive time to repurchase a portion
of the outstanding shares. In the view of the Company's Board of Directors, the
Offer is an attractive use of the Company's financial resources and will result
in a more efficient capital structure for the Company. Accordingly, the Offer
is consistent with the Company's long term corporate goal of increasing
stockholder value. After the Offer is completed, the Company believes that its
financial condition, access to capital and outlook for continued favorable cash
generation will allow it to continue to reinvest in its core business.
Accordingly, the Company is providing stockholders with the opportunity to
determine the price or
<PAGE>
prices (not greater than $37.50 nor less than $34.25 per Share) at which they
are willing to sell their Shares, subject to the terms and conditions of the
Offer, and without the usual transaction costs associated with open market
sales. The Offer also allows stockholders to sell a portion of their Shares
while retaining a continuing equity position in the Company if they so desire.
Upon the terms and subject to the conditions of the Offer, if more than
2,000,000 Shares (or such greater number of Shares as the Company may elect to
purchase) have been properly tendered at prices at or below the Purchase Price
and not properly withdrawn prior to the Expiration Date, the Company will
purchase properly tendered Shares on the following basis: (a) first, all Shares
properly tendered and not properly withdrawn prior to the Expiration Date by any
Odd Lot Holder (as defined in the Offer to Purchase) who: (1) tenders all Shares
owned beneficially or of record by such Odd Lot Holder at a price at or below
the Purchase Price (partial tenders will not qualify for this preference); and
(2) completes the section entitled "Odd Lots" in the Letter of Transmittal and,
if applicable, in the Notice of Guaranteed Delivery; and (b) second, after the
purchase of all of the foregoing Shares, all other Shares properly tendered at
prices at or below the Purchase Price and not properly withdrawn prior to the
Expiration Date, on a pro rata basis (with appropriate adjustments to avoid
purchases of fractional Shares).
The Company expressly reserves the right, in its sole discretion, at any time
and from time to time, and regardless of whether or not any of the events set
forth in Section 6 of the Offer to Purchase shall have occurred or shall be
deemed by the Company to have occurred, to extend the period of time during
which the Offer is open and thereby delay acceptance for payment of, and payment
for, any Shares by giving oral or written notice of such extension to the
Depositary and making a public announcement thereof. During any such extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer and to the rights of a tendering stockholder to withdraw such
stockholder's Shares.
Tenders of Shares pursuant to the Offer are irrevocable except that such Shares
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Company pursuant to the Offer, may also
be withdrawn at any time after 12:00 Midnight, New York City time, on Thursday,
December 9, 1999. For such withdrawal to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at its address set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the tendering
stockholder, the number of Shares to be withdrawn and the name of the registered
holder of such Shares. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in the Offer to
Purchase), unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for book-
entry transfer set forth in the Offer to Purchase, any notice of withdrawal also
must specify the name and the number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and must otherwise comply with
such Book-Entry Transfer Facility's procedures. All questions as to the form and
validity (including the time of receipt) of any notice of withdrawal will be
determined by the Company, in its sole discretion, whose determination will be
final and binding. None of the Company, the Depositary, the Information Agent,
the Dealer Manager or any other person will be under any duty
<PAGE>
to give notification of any defects or irregularities in any tender or notice of
withdrawal or incur any liability for failure to give any such notification.
The information required to be disclosed by Rule 13e-4(d)(1) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal are being mailed to
record holders of Shares whose names appear on the Company's stockholder 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
stockholder list or, if applicable, 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 WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION WITH RESPECT TO
THE OFFER IS MADE.
Questions and requests for assistance or for copies of the Offer to Purchase and
the related Letter of Transmittal, and other Offer materials, may be directed to
the Dealer Manager or the Information Agent as set forth below, and copies will
be furnished promptly at the Company's expense. No fees or commissions will be
paid to brokers, dealers or other persons (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
ChaseMellon Consulting Services, L.L.C.
450 West 33rd Street
14th Floor
New York, NY 10001
Banks and Brokers call collect: (212) 273-8035
All others call toll-free (888) 566-9475
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, NY 10172
Call Collect: (212)892-3763
October 14, 1999
<PAGE>
EXHIBIT 99(a)(9)
FOR IMMEDIATE RELEASE
SCPIE HOLDINGS ANNOUNCES ISSUER TENDER FOR UP TO 2 MILLION SHARES
Los Angeles, CA -- October 13, 1999 - SCPIE Holdings Inc. (NYSE: SKP) today
announced that it will commence an offer to purchase up to 2,000,000 shares of
its common stock at a price not greater than $37.50 nor less than $34.25 per
share (the "Offer") on Thursday, October 14, 1999. The Company will conduct
the Offer through a procedure commonly referred to as a "Dutch Auction." This
procedure allows stockholders to select the price within the specified range
at which each stockholder is willing to sell all or a portion of his or her
shares to the Company.
Based on the number of shares tendered and the prices specified by the
tendering stockholders, the Company will determine the single per share price
within the range that will allow it to buy 2,000,000 shares (or such lesser
number of shares that are properly tendered at a price between $34.25 and
$37.50). All of the shares that are properly tendered at prices at or below
that purchase price (and not withdrawn) will, subject to possible proration
and provisions relating to the tender of "odd lots," be purchased for cash at
the purchase price selected by the Company. All other shares that have been
tendered and not purchased will be returned to the stockholder.
The Offer is scheduled to expire at 12 midnight, New York City time, on
Wednesday, November 10, 1999, unless extended by the Company. The Offer is
subject to various terms and conditions and is explained in detail in the
Offer to Purchase, Letter of Transmittal, and the Notice of Guaranteed
Delivery that can be obtained either from ChaseMellon Consulting Services,
L.L.C., 450 West 33rd Street, 14th Floor, New York, New York 10001 (telephone:
(212) 273-8035 or (800) 566-9475 [toll free]) or from Patrick Lo, SCPIE
Holdings Inc., 1888 Century Park East, Suite 800, Los Angeles, California
90067 (telephone: (310) 551-5900).
Neither the Company nor its board of directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their shares.
Each stockholder must make the decision whether to tender shares and, if so,
how many shares and at what price or prices shares should be tendered.
Donald J. Zuk, President and Chief Executive Officer of the Company, said
"Through this Dutch Auction, we seek to return excess capital to our
stockholders and improve our capital structure, which is consistent with our
long term goal of increasing stockholder value."
Donaldson Lufkin & Jenrette will serve as the dealer manager for the Offer.
ChaseMellon Consulting Services, L.L.C. will serve as the information agent.
SCPIE Holdings is one of the nation's leading providers of medical
malpractice insurance based on direct premiums written. SCPIE currently
insures more than 13,500 physicians, other providers and oral and
maxillofacial surgeons practicing alone or in medical groups, clinics or other
health care organizations. The Company also insures a variety of other health
care facilities, including hospitals, emergency department facilities,
outpatient surgery and hemodialysis centers, and clinical and pathological
laboratories.
This press release contains forward-looking statements, which involve numerous
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in such forward-looking statements as a result of
certain factors, including those set forth in the Company's filings with the
Securities and Exchange Commission.
Contact:
SCPIE Holdings Inc.
Patrick Lo, 310/557-8711 (investors)
[email protected]
or
Howard Bender, 310/551-5948 (media)
[email protected]
or
Pondel/Wilkinson Group
Cecilia A. Wilkinson, 310/207-9300
[email protected]
