SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Schedule 14(a)
of the Securities Exchange Act of 1934
-------------------------------
File by the Registrant X
Filed by a Party other than Registrant ()
Check the Appropriate Box:
x Preliminary Proxy Statement () Confidential, for Use of the
() Definitive Proxy Statement Commission Only (as permitted
() Definitive Additional Materials by Rule 14a-6(e)(2))
() Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
THE SEIBELS BRUCE GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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() Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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4. Proposed maximum aggregate value of transaction:
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() Fee paid previously with preliminary materials.
() Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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4. Date Filed:
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THE SEIBELS BRUCE GROUP, INC.
COLUMBIA, SOUTH CAROLINA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 9, 1997
TO THE SHAREHOLDERS OF THE SEIBELS BRUCE GROUP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of The Seibels Bruce Group, Inc. ("SBIG" or the "Company"), will be
held at the offices of the Company at 1501 Lady Street, Columbia, South Carolina
29201, at 11:00 a.m., on Wednesday, April 9, 1997 for the purpose of considering
and acting upon the following:
1) The election of one (1) Director to hold office until the 1998
Annual Meeting of Shareholders or until his successor shall be
elected and shall qualify, one (1) Director to hold office until the
1999 Annual Meeting of Shareholders or until his successor
shall be elected and shall qualify and four (4) Directors each to
hold office until the 2000 Annual Meeting of Shareholders or
until his successor shall be elected and shall qualify (Proposal 1);
2) The ratification of the Board's appointment of Arthur Andersen
LLP as auditors of the Company's books and records for the
fiscal year ending December 31, 1997 (Proposal 2);
3) The proposal to adopt an amendment to the Company's Articles
of Incorporation to effect a one for four reverse split (the
"Reverse Split") of the Company's common stock, par value
$1.00 per share (the "Common Stock") (Proposal 3);
4) The proposal to adopt an amendment to the Company's Articles
of Incorporation to increase the authorized Common Stock of
the Company from 50,000,000 to 100,000,000 shares (or from
12,500,000 to 25,000,000 if Proposal 3 is approved and
effected) (Proposal 4);
5) The transaction of such other business as may properly and
lawfully come before the Meeting or any adjournment thereof.
All of the foregoing is more fully set forth in the Proxy Statement
accompanying this Notice.
The transfer books of the Company will close as of the end of business
on March 3, 1997 (the "Record Date") for purposes of determining shareholders
who are entitled to notice of and to vote at the Meeting, but will not be closed
for any other purpose.
All shareholders are cordially invited to attend the Meeting in person.
If you cannot attend the Meeting, please take the time to promptly sign, date
and mail the enclosed proxy in the envelope we have provided. If you attend the
Meeting and decide that you want to vote in person, you may revoke your proxy.
The Board of Directors recommends that you vote in favor of the nominees for
directors and the described proposals to be considered at the Meeting.
By Order of the Board of Directors
Priscilla C. Brooks
Corporate Secretary
March 17, 1997
THE ACCOMPANYING PROXY FORM IS SOLICITED BY THE BOARD OF
DIRECTORS AND IS REVOCABLE AT ANY TIME PRIOR TO BEING
EXERCISED. THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS THEREON. IF A CHOICE IS NOT INDICATED,
HOWEVER, THE PROXY WILL BE VOTED IN FAVOR OF THE NOMINEES
FOR DIRECTORS, IN FAVOR OF THE DESCRIBED PROPOSALS TO BE
CONSIDERED AT THE MEETING, AND IN THE BEST JUDGMENT OF THE
PROXIES CONCERNING ALL OTHER PROPOSALS CONSIDERED AT THE
MEETING.
THE SEIBELS BRUCE GROUP, INC.
1501 Lady Street
Columbia, South Carolina 29201
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 9, 1997
General
This Proxy Statement is furnished to the holders of Common Stock, par
value $1.00 per share (the "Common Stock") of The Seibels Bruce Group, Inc.
("SBIG" or the "Company"), in connection with the solicitation of proxies by the
Board of Directors of the Company to be voted at the Annual Meeting of
Shareholders (the "Meeting") to be held at the time and place and for the
purposes specified in the accompanying Notice of Annual Meeting of Shareholders
and at any adjournments thereof. It is anticipated that this Proxy Statement
will be mailed to shareholders commencing on or about March 17, 1997.
When the enclosed proxy is properly executed and returned, the shares
which it represents will be voted at the Meeting in accordance with the
instructions thereon. In the absence of any such instructions, the shares
represented thereby will be voted in favor of the nominees for Directors and the
described proposals to be considered at the Meeting and in the best judgment of
the proxies concerning all other proposals considered at the meeting.
Abstentions and "broker non-votes" are each included in the determination of the
number of shares present and voting, but are not counted as votes for or against
proposals presented to shareholders. Abstentions and "broker non-votes" will
have the same effect as a vote against Proposals 3 and 4. (A "broker non-
vote" occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.)
Any shareholder who executes and delivers a proxy may revoke it prior
to its use by (i) giving written notice of such revocation to the Corporate
Secretary of SBIG at P.O. Box 1, Columbia, South Carolina 29202, the Company's
mailing address; or (ii) executing and delivering to the Corporate Secretary of
SBIG (by mail at P.O. Box 1, Columbia, South Carolina 29202, or by delivery at
1501 Lady Street, Columbia, South Carolina 29201) a proxy bearing a later date;
or (iii) appearing at the Meeting and voting in person.
Annual Report
The Annual Report on Form 10-K of the Company for the fiscal year
ending December 31, 1996, including Financial Statements, is enclosed with this
Proxy Statement. Shareholders may obtain a copy of the Annual Report on Form
10-K without charge upon written request addressed to Priscilla Brooks,
Corporate Secretary, The Seibels Bruce Group, Inc., P.O. Box 1, Columbia, South
Carolina 29202. If the person requesting a copy is not a shareholder of
record, the request must include a representation that he or she is a beneficial
owner of the Company's Common Stock.
Expenses of Solicitation
The cost of soliciting proxies will be borne by the Company. Officers,
directors, employees, and agents of the Company may solicit proxies by
telephone, telegram or personal interview, without additional compensation.
Voting
Only holders of record of issued and outstanding shares of Common
Stock, as of March 3, 1997 (the "Record Date") will be entitled to notice of and
to vote at the Meeting. On the Record Date, there were _________ shares of
Common Stock outstanding. Each share of Common Stock is entitled to one vote,
except with respect to Proposal 1, as described below.
In connection with Proposal 1, the election of Directors, each share-
holder is allowed to cumulate his or her votes and cast as many votes as the
number of shares he or she holds multiplied by the number of Directors to be
elected, the same to be cast for any one candidate or distributed among any two
or more candidates. For shares to be voted cumulatively, a shareholder who has
the right to cumulate his or her votes shall either (1) give written notice of
his or her intention to the President or another officer of the Company not less
than 48 hours before the time fixed for the Meeting, which notice must be
announced in the Meeting before the voting, or (2) announce his or her intention
in the Meeting before the voting for Directors commences; and all shareholders
entitled to vote at the Meeting shall without further notice be entitled to
cumulate their votes. Directors will be elected by a plurality of the votes
cast.
For Proposal 2 to be approved, the affirmative vote of a majority of the
votes cast in person or by proxy at the Meeting is required.
For Proposals 3 and 4 to be approved, the affirmative vote of the
holders of two-thirds of the outstanding shares of Common Stock is required.
Therefore, abstentions and "broker non-votes" will have the same effect as a
vote against Proposals 3 and 4.
Participants in the Company's Dividend Reinvestment and Shareholder
Purchase Plan (the "DRSP Plan") who have shares of Common Stock registered in
their names and who vote those shares on any matter submitted to the Meeting
will have all shares credited to their accounts under the DRSP Plan
automatically added to that number and voted in the same manner. If such
participants do not vote shares registered in their own names, the shares
credited to their account in the DRSP Plan will not be voted. An executed proxy
will be deemed to include any DRSP shares and will be voted with respect to
those shares credited to the participant's account. If a participant desires to
vote DRSP Plan shares in person at the Meeting, a proxy for the shares credited
to his or her account will be furnished upon written request received by the
Company, at the address set forth on the cover of this Proxy Statement, at least
fifteen (15) days prior to the date of the Meeting.
1. ELECTION OF DIRECTORS (PROPOSAL 1)
One of the purposes of the Meeting is to elect a total of six (6)
directors: one (1) Director to serve until the 1998 Annual Meeting of Share-
holders, one (1) Director to serve until the 1999 Annual Meeting of Shareholders
and four (4) Directors to serve until the 2000 Annual Meeting of Shareholders.
Under Article 3, Section 2 of the Company's Bylaws, the Board of
Directors is divided into three classes which shall be as nearly equal in number
as possible, with the members of each class serving for three year terms or
until their successors are elected or qualified.
The shares represented by the proxies solicited hereby will be voted in
favor of the election of the persons named below unless authorization to do so
is withheld in the proxy. In the event any of the nominees should be unavail-
able to serve as a Director, which contingency is not presently anticipated,
it is the intention of the persons named in the proxies to select and cast their
votes for the election of such other person or persons as the Board of Directors
may designate.
Pursuant to the Stock Purchase Agreement dated as of December 22, 1993
(the "Alissa Purchase Agreement") between the Company and Abdullatif Ali Alissa
Est. and Saad A. Alissa (the "Alissa Group"), the Alissa Group is entitled to
designate up to four (4) persons, who are reasonably acceptable to the Company,
to be included in the slate of nominees recommended by the Board of Directors to
the shareholders for election as directors. The Alissa Group previously
designated Mr. William M. Barilka, Mr. Fred S. Clark, Dr. Albert H. Cox, Jr.
and Mr. Kenneth W. Pavia, each of whom were elected at previous meetings of
shareholders. Mr. William M. Barilka, Dr. Albert H. Cox, Jr. and Mr. Kenneth W.
Pavia continue to hold office. Mr. Fred S. Clark, with a term expiring at the
Meeting, is being recommended to the shareholders to be elected to a one (1)
year term expiring in 1998.
Pursuant to the Stock Purchase Agreement dated as of January 29, 1996
(the "Powers Purchase Agreement") between the Company and Charles H.
Powers, Walker S. Powers and Rex W. and Jane P. Huggins (the "Powers
Group"), the Powers Group is entitled to designate two (2) persons, who are
reasonably acceptable to the Company, to be included in the slate of nominees
recommended by the Board of Directors to the shareholders for election as
directors. On January 30, 1996, the Board of Directors appointed Mr. Charles H.
Powers and Mr. Walker S. Powers to fill two (2) vacancies on the Board of
Directors. The Powers Group has designated Mr. Charles H. Powers and Mr.
Walker S. Powers to serve as the two (2) directors who may be designated by the
Powers Group to serve on the Board of Directors. Mr. Charles H. Powers is being
recommended to the shareholders to be elected to a three (3) year term expiring
in 2000. Mr. Walker S. Powers is being recommended to the shareholders to be
elected to a two (2) year term expiring in 1999.
Pursuant to the Stock Purchase Agreement dated March 28, 1996 (the
"Avent Purchase Agreement") between the Company and Fred C. Avent, Frank H.
Avent, and PepsiCo Bottling Company of Florence, South Carolina (the "Avent
Group"), the Avent Group is entitled to designate one (1) person, who is
reasonably acceptable to the Company, to be included in the slate of nominees
recommended by the Board of Directors to the shareholders for election as
directors. On January 30, 1996, the Board of Directors appointed Mr. Frank H.
Avent to fill one (1) vacancy on the Board of Directors. The Avent Group has
designated Mr. Frank H. Avent to serve as the director who may be designated by
the Avent Group to serve on the Board of Directors. Mr. Frank H. Avent is being
recommended to the shareholders to be elected to a three (3) year term expiring
in 2000.
At the Special Shareholders' Meeting held June 14, 1996, the
shareholders approved fixing the number of directors of the Company at eighteen
(18). This was done in an effort to accommodate the additional seats which
would be generated by the Powers Group and the Avent Group pursuant to the Stock
Purchase Agreements between the Company and the Powers Group and the Avent
Group. However, with the decision of the Alissa Group at this time to limit its
designated nominees for the upcoming annual meeting of shareholders for election
to the Board to the four individuals listed above, it is the consensus of the
Board of Directors that the number of filled seats which is currently ten (10)
be increased to thirteen (13) to accommodate the three (3) additional directors
designated by the Powers Group and the Avent Group. Pursuant to the Company's
Articles and Bylaws, vacancies on the Board may be filled in the future at the
discretion of the Board.
All nominees for election to the Board of Directors are considered and
recommended by a Nominating Committee of the Board of Directors. (See
"Committees of the Board of Directors.") The full Board of Directors considers
the recommendations of that Committee and recommends the nominees to the
shareholders. The Company has no procedure whereby nominations are solicited
or accepted from shareholders, but the Nominating Committee will consider
nominees whose names and business experience are submitted in writing by
shareholders to the Corporate Secretary of the Company.
The affirmative vote of a plurality of votes cast is required to elect
directors. The Board of Directors recommends a vote FOR each of the
nominees listed below.
The following information is set forth with respect to the six (6)
nominees for election to be Directors as well as the other members of the Board
of Directors.
Name, Age and Principal Employment
for Past Five Years Director Since
________________________________ _____________
Nominees for Election to Hold Office until the 1998 Annual Meeting of
Shareholders:
Fred S. Clark, Esquire, 60, Attorney at Law, 1996
is currently a Director of the Company and is a
Partner in the Law Firm of Clark and Clark (the
"Firm"), Savannah, Georgia. He has been a partner
in the Firm for the past five (5) years.
Directors Continuing in Office until the 1998 Annual Meeting of
Shareholders:
William M. Barilka, 48, is currently a 1994
Director of the Company. He has served since 1991
as Chief Financial Officer of AGGAD Investment
Company, Riyadh, Saudi Arabia. From 1986 to
1991, Mr. Barilka was employed by the National
Commercial Bank, Riyadh, Saudi Arabia, in a variety
of corporate finance positions.
Albert H. Cox, Jr., 64, is currently a 1994
Director of the Company. He is a Consulting
Economist, formerly serving as Chief Economist of
Feltman & Co., an Atlanta based investment banking
firm from 1995 through 1996. From 1985 to 1993,
he held various executive positions, including Board
Member and Senior Economic Advisor, with BIL
Management, Inc., a subsidiary of the Bank in
Liechtenstein. Prior to 1985, he held a number of
positions with Merrill Lynch & Co.
Claude E. McCain, 72, is currently a 1995
Director of the Company. He is also Chairman of
H.C. McCain Agency, Inc., President of McCain
Realty, Inc. and President of Insurance Finance
Company, Inc. He was formerly a member of the
South Carolina State Insurance Commission for 15
years, 10 of which he served as Chairman. Mr.
McCain has been in the insurance business since
1946.
Kenneth W. Pavia, 54, is currently a Director 1995
of the Company. He is General Partner of Balboa
Investments, a position he has held since 1992. He
also holds the office of Chairman of FHI, Inc., a
securities holding company and Fiduciary Leasco,
Inc., a position held since 1985.
1995
Nominees for Election to Hold Office until the 1999 Annual Meeting of
Shareholders:
Walker S. Powers, 42 , is currently a Director 1997
of the Company and has been a member of the
management of SADISCO since 1975. Mr. Powers
served as SADISCO's President from 1993 through
1994.
Directors Continuing in Office until the 1999 Annual Meeting of
Shareholders:
Ernst N. Csiszar, 46, is currently a Director 1995
and since June, 1995 has held the office of President
and since January, 1996 has held the office of Chief
Executive Officer of the Company and all of its
subsidiaries. He also continues to serve as a visiting
professor at the School of Business, University of
South Carolina, a position he has held since 1988.
John P. Seibels, 54, is currently a Director 1969(1)
of the Company. He also holds a directorship with
Policy Management Systems, Corp. Mr. Seibels has
been an investor based in Columbia, South Carolina
since March 1963.
John A. Weitzel, 51, is currently a Director 1995
and since September, 1995 has held the office of Chief
Financial Officer of the Company and all of its
subsidiaries. From April, 1985 to November, 1994, he
served as Chief Financial Officer of Milwaukee
Insurance Group, Inc. From March through August,
1995, Mr. Weitzel acted as a consultant to the
Company.
Nominees for Election to Hold Office until the 2000 Annual Meeting of
Shareholders:
Charles H. Powers, 70, is currently a Director 1997
of the Company and is the owner and operator of
SADISCO Corporation, an automobile salvage
company based in Florence, South Carolina
("SADISCO"). He is also a Vice President
and Treasurer of Holland Grills, in Apex, North
Carolina, and President of PC Inc., in Myrtle Beach,
South Carolina.
Frank H. Avent, 56, is currently a Director 1997
of the Company. He is the President and General
Manager of Pepsi Cola Bottling Company of
Florence, South Carolina, a position he has held since
1963.
George R.P. Walker, Jr., 64, is currently a 1969(1)
Director of the Company and has been the owner and
operator of Middlefield Farm (Hanoverian horse
farm), Blythewood, South Carolina, for more than the
past five years.
John C. West, 74, is currently Chairman of the 1994
Board of Directors of the Company. He was the
Governor of the State of South Carolina from 1971 to
1975, and currently serves as Professor at the
University of South Carolina and as a practicing
attorney. Mr. West also serves as a member of the
Board of Directors of Donaldson, Lufkin & Jenrette,
Inc.
(1) Each present director of the Company with election dates prior to
October 1978 (when the Company became the parent of the South Carolina
Insurance Company ("SCIC"), the Company's principal subsidiary) was formerly
a Director of SCIC and the information set forth as to periods prior
to 1978 reflects positions with SCIC and the year such Director was first
elected to the SCIC Board of Directors.
Committees of the Board of Directors
The Board of Directors of the Company has five standing committees: Executive,
Audit, Compensation, Investment and Nominating.
The Executive Committee is currently composed of John C. West
(Chairman), Ernst N. Csiszar, Claude E. McCain, Charles H. Powers, John P.
Seibels, and George R.P. Walker, Jr. The Executive Committee exercises the same
powers as the Board of Directors, except as otherwise limited by specific
prohibitions in South Carolina statutes. The Committee's function is to act in
the place of the Board on any matters which require Board action and occur
between meetings of the Board. The Executive Committee met two
(2) times during 1996.
The Audit Committee is currently composed of John P. Seibels
(Chairman), William M. Barilka, Albert H. Cox, Jr. and Claude E. McCain, none
of whom is an officer or employee of the Company. The Committee's functions
include recommending independent public accountants to be employed by the
Company, reviewing with the independent public accountants their reports and
audits, and reporting to the full Board of Directors on their findings. The
Audit Committee met three (3) times during 1996.
The Compensation Committee is currently composed of Kenneth W.
Pavia (Chairman), Frank H. Avent, and Charles H. Powers, none of whom is an
officer or employee of the Company. The Committee's functions are to
recommend to the full Board the remuneration arrangements for senior executive
officers and for members of the Board of Directors, the adoption of compensation
plans in which officers and Directors are eligible to participate and the
granting of stock options or other benefits under such plan. The Compensation
Committee met three (3) times in 1996.
The Investment Committee is currently composed of Claude E. McCain
(Chairman), William M. Barilka, Fred S. Clark, Ernst N. Csiszar and Walker S.
Powers. The Committee's functions are to advise the Board of Directors and
officers of the Company with respect to investment of the Company's assets and
to periodically review, evaluate and report on the performance of the
investments of the Company and its subsidiaries. The Investment Committee met
two (2) times in 1996.
The Nominating Committee is currently composed of George R.P. Walker,
Jr. (Chairman), William M. Barilka, Albert H. Cox, Jr. and John C. West.
The Committee's functions include selecting and recommending nominees for
election as new, additional, and replacement Directors and reviewing the
performance of incumbent Directors for nomination for reelection. The
Nominating Committee met one (1) time in 1996.
The Board of Directors met four (4) times in 1996. In 1996, each of the
incumbent Directors attended at least 75% of the meetings of the Board and of
the Committee(s) of which he was a member held during the period for which he
served.
Security Ownership of the Company
The following table sets forth, as of January 30, 1997, information
regarding the beneficial ownership of the Company's Common Stock by the
directors of the Company, and nominees for election, each executive officer
named in the Summary Compensation Table that appears under "Executive
Compensation -- Summary Compensation Table," all directors and executive
officers as a group and each person known to the Company to own 5% or more of
its Common Stock.
<TABLE>
<S> <C> <C>
Name of Beneficial Owner (and
address, with respect to non- Number of Shares of Percent of Shares
directors or non-officers) Common Stock of Common Stock
- - -------------------------------- -------------------- -------------------
Frank H. Avent 2,080,000 (1)
William M. Barilka 145,000 (2) (15)
Fred S. Clark 15,608 (3) (15)
Albert H. Cox, Jr. 16,000 (4) (15)
Ernst N. Csiszar 500,000 (5) (15)
Claude E. McCain 15,064 (4) (15)
Kenneth A. Pavia 5,000 (6) (15)
Charles H. Powers 10,328,206 (7)
Walker S. Powers 2,000,000 (8)
John P. Seibels 611,908 (4,9,10)
George R.P. Walker, Jr. 511,858 (4,9,11)
John A. Weitzel 200,000 (12) (15)
John C. West 514,100 (13) (15)
All Directors, Nominees for Director 16,942,744
and Executive Officers as a Group
Alissa Group 7,226,500
PO Box 192
Alkhobar, Saudi Arabia
(1) Includes 40,000 shares of Common Stock and 40,000 shares of Common Stock
underlying certain options for which Mr. Avent has sole voting power and
1,000,000 shares of Common Stock and 1,000,000 shares of Common Stock
underlying certain options as to which he has shared voting power beneficially
owned (shared voting and dispostive power) by Pepsi Cola Bottling Company of
Florence, South Carolina ("PepsiCo"). Mr. Avent has informed the Company that
he is the President and General Manager of PepsiCo.
(2) Includes 130,000 shares of Common Stock jointly owned by Mr. Barilka with
his wife and 10,000 shares of Common Stock underlying certain options.
(3) Includes 6,100 shares of Common Stock held by Mr. Clark's wife, and 3,840
shares of Common Stock held by his minor son.
(4) Includes 10,000 shares of Common Stock underlying certain options.
(5) Includes 500,000 shares of Common Stock underlying certain options.
(6) Includes 5,000 shares of Common Stock underlying certain options
(7) Includes 5,000,000 shares of Common Stock underlying certain options.
(8) Includes 1,000,000 shares of Common Stock underlying certain options.
(9) Excludes 9,012 shares of Common Stock held by Mr. Seibels' wife, of which
shares he holds neither sole nor shared voting or dispostive power and, there-
fore, disclaims beneficial ownership.
(10) George R.P. Walker, Jr. and John P. Seibels are cousins.
(11) Excludes 45,557 shares of Common Stock held by Mr. Walker's wife, of which
shares he holds neither sole nor shared voting or dispostive power and, there-
fore, disclaims beneficial ownership.
(12) Includes 200,000 shares of Common Stock underlying certain options.
(13) Includes 480,000 shares of Common Stock underlying certain options.
(14) Based on information contained in Statement on Form 4 for December, 1996:
includes 104,800 shares for which Mr. Alissa has sole voting power, and
7,121,700 shares as to which he has shared voting power beneficially owned
(shared voting and dispostive power) by Abdullatif Ali Alissa Est. (the
"Establishment"), Financial Investors Limited ("FIL") and General Investors
Limited ("GIL"). Mr. Alissa has informed the Company that he is the President
of the Establishment; that FIL is wholly owned by the Establishment; and that
GIL is wholly owned by Mr. Alissa. Excludes 185,858 warrants to purchase Common
Stock.
(15) Less than 1%
</TABLE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors
In 1996, the Company paid quarterly to each Director who was not a full-
time employee of the Company a retainer fee of $175 per month plus $656.25 for
each meeting of the Board at which the Director was present, a fee of $175 for
each meeting of a Board Committee which he attended on the same day and in the
same general location as a Board meeting or by telephone, and a fee of $262.50
for attending a Committee meeting otherwise. Employee Directors receive no
compensation for Board services. Pursuant to the Company's 1995 Stock Option
Plan for Non-Employee Directors, on June 17, 1996, each non-employee Director
received a non-statutory stock option to purchase 5,000 shares of Common Stock
as part of their compensation for the year 1996. The exercise price of each
option is $2.6857, which was 100% of the fair market value per share of Common
Stock on the date the option was granted. The Chairman of the Board of
Directors, John C. West, does not receive any additional director compensation
in connection with his position as Chairman of the Board of Directors.
Compensation of Executive Officers
The following table sets forth, for the years ended December 31, 1996,
1995 and 1994, the cash compensation paid by the Company and its subsidiaries,
as well as certain other compensation paid or accrued for those years, to each
of the executive officers of the Company and such subsidiaries whose
compensation was in excess of $100,000 (the "Executive Group"), in all
capacities in which they serve.
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
----------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Restricted Securities
Other Annual Stock Underlying All Other
Name and Principal Position Salary Bonus Compensation Awards Options Compensation
Year ($) ($) ($) ($) (#) ($)
- - ----------------------------------------------------------------------------------------------------------
John C. West 1996 86,954 0 0 0 200,000 0
Chairman of the Board 1995 141,785 0 15,625(1) 0 280,000 0
1994(2) 0 0 0 0 0 0
Ernst N. Csiszar 1996 144,000 0 0 0 200,000 0
President and Chief 1995(2) 119,154 0 0 0 300,000 0
Executive Officer 1994 0 0 0 0 0 0
John A. Weitzel 1996 144,000 0 0 0 100,000 0
Chief Financial Officer 1995(2) 33,231(3) 0 0 0 100,000 174
1994 0 0 0 0 0 0
(1) The amount shown represents the dollar value of the difference between the
price paid by Gov. West for shares upon the exercise of stock options and the
fair market value at the date of exercise.
(2) Gov. West was appointed an officer of the Company for the first time in
1994; Messrs. Csiszar and Weitzel were appointed officers of the Company for the
first time in 1995.
(3)Mr. Weitzel was employed by the Company effective September 30, 1995. The
salary amount stated is for the three-month period from the date of employment
through December 31, 1995. Prior to the date of employment, Mr. Weitzel was a
consultant to the Company during 1995. With respect to his consulting services,
the company paid Mr. Weitzel consulting fees in the amount of $114,000 during
1995.
</TABLE>
Option Grants
During the year ended December 31, 1996, the Company granted a total
of 500,000 stock options to certain members of the Executive Group pursuant to
the Company's 1996 Stock Option Plan for Employees. The following table sets
forth the grants during the year ended December 31, 1996.
<TABLE>
Option Grants During the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C>
Number of Percent of
Securities Total Potential Realizable Value at
Underlying Options Exercise Assumed Rates of Stock Price
Options Granted to Price Expiration Appreciation for Option Terms ($)
Name Granted (#) Employees ($/Share) Date 5% (1) 10% (1)
- - ----------------------------------------------------------------------------------------------------------------------------
John C. West 200,000 13.57% 2.25 12/12/01 124,327 274,730
Chairman
Ernst N. Csiszar 200,000 13.57% 2.25 12/12/01 124,327 274,730
President and Chief
Executive Officer
John A. Weitzel 100,000 6.79% 2.25 12/12/01 62,163 137,365
Chief Financial
Officer
(1) Assumed for illustrative purposes only
</TABLE>
Option Exercises and Year-End Holdings
During the year ended December 31, 1996, no member of the Executive
Group exercised stock options. The following table sets forth certain
information with respect to unexercised stock options held by the Executive
Group as of December 31, 1996.
<TABLE>
Aggregated Option Exercises During the Year
Ended December 31, 1996 and 1996 Year-End Option Values
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares
Acquired Number of Securities
on Value Underlying Unexercised Value of Unexercised In-The
Exercise Realized Options at Year-End Money Options at Year-End
Name (#) ($) (#) Exercisable/Unexercisable ($)Exercisable/Unexercisable
- - ------------------------------------------------------------------------------------------------------------
John C. West 0 N/A 280,000/200,000(1) 140,190/0
Chairman of the Board
Ernst N. Csiszar 0 N/A 300,000/200,000(2) 164,300/0
President and Chief
Executive Officer
John A. Weitzel 0 N/A 100,000/100,000 125,000/0
Chief Financial Officer
(1) The amounts shown for Gov. West include 200,000 option grants authorized
by the Board of Directors during 1995 under the 1996 Plan, subject to share-
holder approval of the 1996 Plan which was received at the Special Shareholders
Meeting on June 14, 1996.
(2)The amounts shown for Mr. Csiszar include 200,000 option grants authorized
by the Board of Directors during 1995 under the 1996 Plan, subject to share-
holder approval of the 1996 Plan which was received at the Special Shareholders
Meeting on June 14, 1996.
</TABLE>
Employment Agreements
The terms of the employment contracts between certain Executive
Officers and the Company expired on December 31, 1996. The contracts
were not renewed with the understanding that any issue relating to
executive compensation would be reviewed by the Compensation
Committee, which would recommend a course of action to the Board of
Directors. Therefore, there are no formal employment agreements between
the Company and any officer.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Company's Board of
Directors is responsible for recommending to the full Board the
remuneration arrangements for senior executive officers and for members
of the Board of Directors, the adoption of compensation plans in which
officers and Directors are eligible to participate and the granting of stock
options or other benefits under such plan. The primary elements of the
Company's executive compensation program have historically consisted of
a base salary, a bonus opportunity and stock options. Base salaries are
determined, and have at times been increased, by evaluating the
responsibilities of the position held and the experience of the executive
officer. Overall compensation is based on the Compensation Committee's
assessment of prevailing market compensation levels.
Base Salary. The Compensation Committee reviewed the salaries
of John C. West, Ernst N. Csiszar and John A. Weitzel (the "Named
Executive Officers"). Following a review of two compensation studies, it
was recommended to the Board that the salaries of the Named Executive
Officers be increased to be consistent with salaries paid to individuals with
similar responsibilities in similar companies. The Board approved the
recommendation and each of the Named Executive Officers received an
increase in his salaries to bring it within the lowest paid among the
individuals contained in the studies. This amounted to a 25% increase for
John C. West and Ernst N. Csiszar and a 15% increase for John A. Weitzel.
The fact that Mr. West and Mr. Csiszar do not participate in any benefits
plans and Mr. Weitzel does, was taken into account in determining the
increases.
Bonus Opportunity. A bonus, if any, is based upon the operations
of the Company and recommendations by the Compensation Committee.
No bonus was paid to any of the Named Executive Officers in 1996.
Stock Options. The Compensation Committee recommended and
the Board approved a grant of options to each of the Named Executive
Officers. The Compensation Committee believes stock option grants to
these officers (and other employees) promote success by aligning employee
financial interests with long-term shareholder value. Stock option grants
are based on various subjective factors primarily relating to the
responsibilities of the individual Named Executive Officers, their expected
future contributions and prior option grants.
The foregoing has been provided by the Company's Compensation
Committee.
John P. Seibels (Chairman) Claude E. McCain
Albert H. Cox, Jr. George R.P. Walker,Jr.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or was
formerly an officer or employee of the Company or any of its subsidiaries.
Investments by the Powers Group and the Avent Group
Pursuant to the Powers Purchase Agreement dated as of January
29, 1996 between the Company and the Powers Group, the Powers Group
acquired from the Company 6.25 million shares of Common Stock and
options to acquire an additional 6.25 million shares of Common Stock. The
consideration furnished to the Company pursuant to the Powers Purchase
Agreement was $6.25 million. The Powers Group, as of January 30, 1997,
owned approximately 27% of the Common Stock of the Company and
pursuant to the Powers Purchase Agreement is entitled to designate two
persons, who are reasonably acceptable to the Company, to be included in
the slate of nominees recommended by the Board of Directors.
Pursuant to the Stock Purchase Agreement dated as of March 28,
1996 between the Company and the Avent Group, the Avent Group
acquired from the Company 1.635 million shares of Common Stock and
options to acquire an additional 1.635 million shares of Common Stock.
The consideration furnished to the Company pursuant to the Avent
Purchase Agreement was $1.635 million. The Avent Group, as of January
30, 1997, owned approximately 7% of the shares of Common Stock of the
Company and pursuant to the Avent Purchase Agreement is entitled to
designate one person, who is reasonably acceptable to the Company, to be
included in the slate of nominees recommended by the Board of Directors.
Stock Performance Chart
The following chart compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock
during the five years through December 1996 with the cumulative total
return on the NASDAQ Stock Market (U.S. companies) Index and the
NASDAQ Fire, Marine and Casualty Insurance Stock Index.
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
The Seibels Bruce Group Inc.
Certain Transactions
In February, 1997, the Company was issued a promissory note by
Michael D. Faoro and Jeanne L. Faoro in exchange for $125,100. Mr.
Faoro is the Company's Group Vice President of Risk Operations.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than ten percent
of the Company's equity securities to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish
the Company with all such forms they file. Based on the Company's
review of the forms it has received and on written representations from
certain reporting persons that no such forms were required for them, the
Company believes that for the fiscal year ended December 31, 1996, the
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were in compliance, with the
exception of John C. West who filed a late Form 4 relating to certain shares
owned by his spouse.
2. RATIFICATION OF SELECTION OF ARTHUR ANDERSEN LLP TO BE INDEPENDENT
ACCOUNTANTS FOR THE COMPANY (PROPOSAL 2)
One of the purposes of the Meeting is to ratify the selection of
independent accountants to audit the books, records, and accounts of the
Company and its subsidiaries for the year ending December 31, 1997.
Arthur Andersen LLP has served as the Company's independent
accountants since December 28, 1992. On January 30, 1997, acting on the
recommendation of the Audit Committee, the Board of Directors adopted
resolutions directing the employment of Arthur Andersen LLP to audit the
books, records, and accounts of the Company for 1997 and the submission
of the selection to the shareholders for ratification. Accordingly, the Board
recommends the adoption of the following resolution:
RESOLVED, that the selection by the Board of Directors of the
firm of Arthur Andersen LLP to audit the books, records, and
accounts of the Company and its subsidiaries for the year ending
December 31, 1997, be ratified.
A representative of Arthur Andersen LLP is expected to be present
at the Meeting and will have the opportunity to make a statement, and will
be available to answer questions from shareholders.
Vote Required and Board Recommendation
The affirmative vote by the holders of a majority of the votes cast
in person or by proxy at the Meeting is required for approval of Proposal 2.
The Board of Directors recommends a vote FOR ratification of the
appointment of independent accountants.
3. APPROVAL OF ONE FOR FOUR REVERSE STOCK SPLIT (PROPOSAL 3)
General
The Company's Board of Directors has approved a resolution
recommending that the Company's shareholders adopt an amendment to the
Company's Articles of Incorporation pursuant to which the Company
would effect a reverse stock split (the "Reverse Split") of one new share of
Common Stock (a "New Share") for each four issued shared of the
Company's outstanding Common Stock (the "Reverse Split Amendment").
If the Reverse Split Amendment is adopted, the Board will have authority,
without further shareholder approval, to determine the exact timing of, and
to effect, the Reverse Split. Following the determination by the Board to
effect the Reverse Split and the filing with the Secretary of State of South
Carolina of Articles of Amendment to the Company's Articles of
Incorporation that set forth the Reverse Split Amendment (the "Effective
Date"), the Board will notify the shareholders that the Reverse Split has
been effected. The full text of the Reverse Split Amendment is set forth in
Appendix A attached to this Proxy Statement, and the following discussions
of the Reverse Split and the Reverse Split Amendment are qualified in their
entirety by reference to Appendix A, which is incorporated herein by
reference as if fully set forth herein.
The Board of Directors has approved the Reverse Split
Amendment in light of its belief that the Company is not of the size to
accommodate the current number of shares outstanding. The Reverse Split
Amendment is intended to improve the potential ability of the Company to
raise capital by issuing additional shares (see the discussion under Proposal
4 relating to the amendment to the Articles of Incorporation to increase the
authorized capital stock of the Company). The Board of Directors believes
that certain securities firms discourage their registered representatives from
recommending the purchase of lower-priced corporate securities.
Additionally, the policies and practices of a number of brokerage houses
tend to discourage individual brokers within those firms from dealing in
lower-priced stocks. Some of these policies and practices relate to the
payment of brokers' commissions and to time-consuming procedures that
operate to make the handling of lower-priced stocks economically
unattractive to brokers. The structure of trading commissions also tends to
have an adverse impact upon holders of lower-priced stocks since the
brokerage commission payable on the sale of a lower-priced stock generally
represents a higher percentage of the sales price than the commission on a
relatively higher-priced stock. Consequently, the Board of Directors
believes that this limits the marketability of the Common Stock, at its
current per share price. For instance, the Board of Directors believes that
the low per share market price of the Common Stock impairs the
marketability and acceptance of the Common Stock to institutional
investors and other members of the investing public and creates a negative
impression with respect to the Company. Theoretically, the number of
shares outstanding should not, by itself, affect the marketability of such
shares, the type of investor who acquires them or the Company's reputation
in the financial community. In practice, however, many investors and
market makers consider low-priced stock as unduly speculative in nature
and, as a matter of policy avoid investment and trading in such stocks. The
foregoing factors may adversely affect not only the pricing of the Common
Stock but also the liquidity of the Common Stock and the Company's
ability to raise additional capital through the sale of equity securities.
The Board of Directors is hopeful that the decrease in the number
of shares of Common Stock outstanding as a consequence of the proposed
Reverse Split and the anticipated increase in the price per share will
encourage greater interest in the Common Stock by the financial
community and the investing public and possibly promote greater liquidity
for the Company's shareholders with respect to those shares presently held
by them. However, the possibility does exist that such liquidity may be
adversely affected by the reduced number of shares which would be
outstanding if the proposed Reverse Split is effected.
The Board of Directors is hopeful that the proposed Reverse Split
will result in a price level for the shares of Common Stock that will mitigate
the present reluctance, policies and practices of brokerage firms and
investors referred to above and diminish the adverse impact of trading
commissions on the potential market for the shares. However, there can be
no assurance that the proposed Reverse Split will achieve any of these
desired results, nor can there by any assurance that the price per share of the
Common Stock immediately after the proposed Reverse Split will increase
proportionately with the Reverse Split, or that any increase can be sustained
for any period of time, or that the market price of the Common Stock will
exceed or remain in excess of the current market price.
The Board of Directors of the Company is not aware of any
present efforts by any persons to accumulate Common Stock or to obtain
control of the Company, and the proposed Reverse Split is not intended to
be an anti-takeover device. The Board of Directors has recommended the
Reverse Split Amendment to enhance the Company's image and corporate
flexibility and to price the stock in a price range more acceptable to the
brokerage community and to investors generally.
Effects of the Reverse Split on Common Stock
The Articles of Incorporation presently authorize the Company to
issue 50,000,000 shares of Common Stock and 5,000,000 shares of Special
Stock. If approved by the shareholders, the principal effect of the Reverse
Split will be to decrease the number of shares of Common Stock issued
from approximately _________ shares to approximately ________ shares
of Common Stock based on the number of shares outstanding on the Record
Date. The total number of shares of Common Stock held by each
shareholder would be reclassified automatically into the number of whole
New Shares equal to the number of shares of Common Stock owned
immediately prior to the Reverse Split divided by four, provided that
pursuant to the Articles of Incorporation, no fractional shares will be issued.
See "Exchange of Shares; No Fractional Shares." Additionally, the number
of shares of Common Stock the Company will be authorized to issue will be
decreased from 50,000,000 to 12,500,000 (or from 100,000,000 to
25,000,000 if the shareholders also adopt Proposal 4, the Common Stock
Increase Amendment).
The following table illustrates the principal effect of the Reverse
Split on the Common Stock based on Common Stock authorized, issued
and outstanding and for issuance upon the exercise of various outstanding
warrants and options of the Company as of the Record Date.
Prior to Reverse Split After 1-for-4 Reverse Split
---------------------- --------------------------
Common Stock Authorized (1)
Issued
Outstanding
Reserved for Issuance
Available for Future Issuance
(1)Assuming the shareholders adopt Proposal 4, the Common Stock Increase
Amendment, and giving effect thereto, such number of shares of Common Stock
will be 25,000,000.
Effect on Market for Common Stock
On ______, 1997, the last sale price of the Common Stock on The
Nasdaq National Market was $___ per share. By decreasing the number of
shares of Common Stock outstanding without altering the aggregate
economic interest in the Company represented by such shares, the Board of
Directors believes that the market price will be increased. However, there
can be no assurance that the market price of the Common Stock will be so
increased.
Effect on Outstanding Options and Warrants of the Company
As of the Record Date, the Company had outstanding employee
stock options to purchase an aggregate _______ shares of Common Stock
with exercise prices per share that ranged from $____ to $____ and
warrants to purchase ______ shares of Common Stock with exercise prices
per share that ranged from $_____ to $_____. Upon the effectiveness of
the Reverse Split, these options and warrants provide for a proportional
downward adjustment to the number of shares subject to outstanding
options and warrants and a corresponding upward adjustment in the per
share exercise prices to reflect the Reverse Split.
Effect on Legal Ability to Pay Dividends
The holders of shares of Common Stock are entitled to receive
distributions of cash or other property, if any, that may be declared from
time to time by the Board of Directors in its discretion from funds legally
available therefor, subject to the dividend priority of the holders of
preferred stock of the Company. Thus, although the Reverse Split will have
the effect of increasing the Company's capital in excess of par value by
approximately $_________, the Reverse Split and its impact on capital in
excess of par value will not affect potential distributions to the Company's
shareholders. The Company, however, has not paid cash dividends on the
Common Stock since 1992 and has no plans to pay cash dividends in the
foreseeable future. The ability of the Company to declare and pay cash
dividends, as well as to pay any debt service, is dependent upon the ability
of the South Carolina Insurance Company ("SCIC"), the Company's
principal subsidiary, to declare and pay dividends to the Company. SCIC is
regulated as to its payment of dividends by the South Carolina Insurance
Holding Company Regulatory Act. Additionally, the current policy of the
Board of Directors is to retain all available earnings for use in the operation
and growth of the Company's business. Any future cash dividends will
depend upon the Company's earnings, capital requirements, financial
condition and other relevant factors.
Certain Federal Income Tax Consequences
A summary of certain United States federal income tax
consequences of the Reverse Split as contemplated in the Reverse Split
Amendment is set forth below. The summary is based on the Internal
Revenue Code of 1986, as amended, Treasury Regulations, judicial
authority and administrative rulings and practice currently in effect, all of
which are subject to change, which change could be retroactive and thereby
modify the tax consequences discussed herein. The Company has neither
received nor requested any ruling from the Internal Revenue Service (the
"Service") or any opinion of counsel with respect to these matters.
Accordingly, no assurance can be given as to the interpretation that the
Service or the courts may make with respect to these matters. In addition,
the United States federal income tax consequences to any particular
taxpayer may be affected by matters not discussed below. For example,
certain types of holders of Common Stock (including financial institutions,
dealers in securities, insurance companies, personal holding companies, tax-
exempt organizations, individual retirement accounts and foreign taxpayers)
may be subject to special rules that are not addressed herein. This Proxy
Statement does not address any tax consequences other than the United
States federal income tax consequences that may affect a holder of
Common Stock as described herein.
Except as described below with respect to cash received in lieu of
fractional share interests, the receipt of New Shares in the Reverse Split
should not result in any taxable gain or loss for United States federal
income tax purposes to holders of common stock. If the shareholders approve
the Reverse Split Amendment, the tax basis of the New Shares received as a
result of the Reverse Split (including any fractional share interests to which a
shareholder is entitled) will be equal, in the aggregate, to the tax basis of
the shares exchanged for the New Shares. For tax purposes, the holding period
of the shares immediately prior to the Effective Date of the Reverse Split
will be included in the holding period of the New Shares received as a
result of the Reverse Split (including any fractional share interests to which
a shareholder is entitled). A shareholder who receives cash in lieu of a
fractional New Share generally will recognize capital gain or loss in an
amount equal to the difference between the amount of cash received and the
adjusted basis of the fractional share treated as surrendered for cash.
EACH SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISORS WITH RESPECT TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO HIM OR HER OF THE
TRANSACTIONS CONTEMPLATED BY THE PROPOSED REVERSE SPLIT AMENDMENT.
Exchange of Shares; No Fractional Shares
No fractional shares of Common Stock will be issue in connection
with the proposed Reverse Split. Assuming the approval of the Reverse
Split Amendment, a shareholder who would otherwise be entitled to receive
a fractional share of Common Stock will receive, in lieu thereof, cash for
the resulting fractional share interest in an amount equal to the product of
(a) the number of shares of the Common Stock held by such holder
immediately prior to the Effective Time which have not been classified into
a whole New Share, multiplied by (b) the arithmetic average of the closing
bid and closing asked prices of the Common Stock regular way as reported
on The Nasdaq National Market for the thirty (30) trading days immediately
preceding the third trading day prior to the Effective Date.
The Company will appoint American Stock Transfer & Trust
Company (the "Exchange Agent") as Exchange Agent to act for the holders
of the Common Stock in connection with the Reverse Split Amendment.
The Company will deposit with the Exchange Agent, as soon as
practicable after the Effective Date, cash in an amount equal to the
value of the estimated aggregate number of fractional shares that will
result from the Reverse Split. Any portion of the cash deposited with
the Exchange Agent to pay fractional share interests that is held by the
Exchange Agent six months after the Effective Date will be returned to
the Company on demand. The funds required to purchase the
fractional shares are available and will be paid from the Company's
current cash reserves. The Company's shareholder list indicates that a
portion of the outstanding Common Stock is registered in the names of
clearing agencies and broker nominees. It is, therefore, not possible to
predict with certainty the number of fractional shares and the total amount
that the Company will be required to pay for fractional share interests.
However, it is not anticipated that the funds necessary to effect the
cancellation of fractional shares will be material.
As of the Record Date, approximately ____ persons were holders
of record of Common Stock. The Company does not anticipate that the
Reverse Split and the payment of cash in lieu of fractional shares will result
in a significant reduction in the number of holders of record of the Common
Stock. The Company does not presently intend to seek, either before or
after the Reverse Split, any change in the Company's status as a reporting
company for federal securities law purposes.
On or after the Effective Date, the Company will mail to each
shareholder a letter of transmittal. A shareholder will be able to receive his
or her New Shares and, if applicable, cash in lieu of a fractional New Share
only by transmittal to the Exchange Agent of such shareholder's stock
certificate(s) for shares of Common Stock that were issued prior to the
Effective Date, together with the properly executed and completed letter of
transmittal and such evidence of ownership of such shares as the Company
may require. Shareholders will not receive certificates for New Shares
unless and until the certificates representing their shares of Common Stock
that were issued prior to the Effective Date are surrendered. Shareholders
should not forward their certificates to the Exchange Agent until the letter
of transmittal is received and should surrender their certificates only with
such letter of transmittal. A payment in lieu of a fractional New Share will
be made to a shareholder promptly after receipt of a properly completed
letter of transmittal and stock certificate(s) for all of his or her shares of
Common Stock outstanding prior to the Effective Date.
There will be no service charges payable by the shareholders of the
Company in connection with the exchange of their certificates or in
connection with the payment of cash in lieu of the issuance of fractional
New Shares. These costs will be borne by the Company.
As a result of the redemption of fractional shares, the percentage
interest of each shareholder may be somewhat altered by the adoption of the
Reverse Split Amendment.
In the event of the failure of the Company's shareholders to
approve the adoption of the Reverse Split Amendment, fractional shares
outstanding will remain outstanding.
Vote Required and Board Recommendation
The affirmative vote by the holders of two-thirds of the
outstanding shares of Common Stock of the Company is needed for the
adoption of the Reverse Split Amendment. The Board of Directors
recommends a vote FOR this proposal.
DISSENTERS RIGHTS UNDER SOUTH CAROLINA LAW
Chapter 13 of Title 33 of the South Carolina Code ("Chapter 13"),
attached hereto as Appendix B, provides that if an amendment to the
Articles of Incorporation of a company reduces the number of shares to a
fraction which is to be cashed out, each such shareholder of the stock of the
company has the right to dissent to such amendment, to have the "fair
value" of his or her fractional shares determined by the court of Common
Pleas located in Richland County, South Carolina, and to receive payment
of the "fair value" of such fractional shares. The procedures set forth in
Chapter 13 must be substantially complied with. Failure to follow any of
such procedures may result in a termination or waiver of appraisal rights
under Chapter 13.
Under Chapter 13, a shareholder of the Company electing to
exercise dissenters' rights must both:
(i) Give to the Company, before the taking of the
vote at the Meeting on the Reverse Split Amendment, a written
notice of the shareholder's intent to demand payment for such
shareholder's shares of Common Stock of the Company if the
transaction with respect to which the shareholder wishes to
exercise dissenters' rights (the Reverse Split Amendment) is
consummated. This written notice is in addition to and separate
from any proxy or vote against the proposal relating to the Reverse
Split Amendment. Neither a vote against the proposal relating to
the Reverse Split Amendment nor a proxy directing such vote shall
satisfy the requirement that a written notice of intent to demand
payment be given to the Company before the vote on the proposal
relating to the transaction with respect to which a shareholder
wishes to exercise dissenters' rights. Such written notice of intent
to demand payment should be given either in person to the
Corporate Secretary of the Company at the Meeting before the
vote on the Reverse Split Amendment, or in person or by mail
(certified mail, return receipt requested, is the recommended form
of transmittal) to the Corporate Secretary, at The Seibels Bruce
Group, Inc., 1501 Lady Street, Columbia, South Carolina 29201,
prior to the Meeting. A notice of intent to demand payment shall
be deemed "given" at the earliest of the following: when received
or five days after its deposit in the United States mail, as evidenced
by the postmark, if mailed postage paid and correctly addressed; or
on the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, and the receipt is signed by
or on behalf of the addressee; AND
(ii) Not vote in favor of the Reverse Split Amendment. A
failure to vote against the Reverse Split Amendment will not
constitute a waiver of dissenters' rights. Chapter 13 provides
that a vote cast in favor of an action with respect to which a
shareholder wishes to exercise dissenters' rights by the holder
of a proxy solicited by the Company will not disqualify a
shareholder from demanding payment for his or her shares under
Chapter 13.
A shareholder who fails to satisfy the requirements described in
clauses (i) and (ii) above shall not be entitled to payment for his or her
shares of the Company's Common Stock under Chapter 13.
A beneficial shareholder of the Company's Common Stock may
assert dissenters' rights as to shares beneficially owned by him or her only
if he or she dissents with respect to all shares of which he or she is the
beneficial shareholder or over which he or she has power to direct the vote.
With respect to shares held in nominee name, the beneficial owner of such
shares may assert dissenters' rights directly by giving to the Company the
required notice of intent to demand payment or indirectly by causing the
nominee to give to the Company the required notice of intent to demand
payment. A beneficial shareholder who directly asserts dissenters' rights to
shares held on his or her behalf must notify the Company in writing of the
name and address of the record holder of the shares, if known to him. If a
record shareholder asserts dissenters' rights as to shares beneficially owned
by another, such nominee must notify the Company in writing of the name
and address of the beneficial owner and should notify the Company of the
number of shares held of record by such nominee as to which the assertion
of dissenters' rights applies. A record shareholder may assert dissenters'
rights as to fewer than all the shares registered in his or her name only if he
or she dissents with respect to all shares beneficially owned by any one
person.
No later than ten days after the consummation of the transaction
with respect to which a shareholder has asserted dissenters' rights, the
Company is required to, and will, send a notice to each shareholder of the
Company who has satisfied the foregoing conditions. The notice shall (i)
state where the payment demand must be sent and where certificates for
shares must be deposited; (ii) supply a form for demanding payment that
includes the date of the first announcement of the terms of the transaction
with respect to which the shareholder has asserted dissenters' rights, and
that requires that the person asserting dissenters' rights certify whether or
not he or she, or, if he or she is a nominee asserting dissenters' rights on
behalf of a beneficial shareholder, the beneficial shareholder, acquired
beneficial ownership of the shares before that date; (iii) set a date by which
the Company must receive the payment demand, which date shall not be
fewer than thirty nor more than sixty days after the date of sending of such
notice and set a date by which certificates for shares must be deposited,
which date shall not be earlier than twenty days after the demand note; and
(iv) be accompanied by a copy of Chapter 13.
A shareholder who receives such notice must demand payment,
certify whether he or she (or the beneficial shareholder on whose behalf he
or she is asserting dissenters' rights) acquired beneficial ownership of the
shares before the date of the first announcement of the terms of the Reverse
Split Amendment, and deposit his or her certificates in accordance with the
terms of the notice. If sixty days have passed from the date set for
demanding payment and the Company has not taken the action with respect
to which dissenters' rights have been asserted, the Company is required to
return any deposited certificates. If after returning deposited certificates
the Company takes the action with respect to which dissenters' rights have been
asserted, it must send a new dissenters' notice and repeat the payment
demand procedure. A shareholder who does not comply substantially with
the requirements that he or she demand payment and deposit his or her
certificates where required, each by the date set in the dissenters' notice,
will not be entitled to payment for his or her shares under Chapter 13.
Except as hereinafter described, as soon as the corporate action
with respect to which dissenters' rights have been asserted is taken or upon
receipt by the Company of a payment demand, the Company shall pay each
dissenter who has substantially complied with the foregoing requirements
the amount which the Company estimates is the fair value of the dissenters'
shares, plus accrued interest. The payment shall be accompanied by the
following: (a) certain financial information with respect to the Company,
(b) a statement of the Company's estimate of fair value of the shares and an
explanation of how the fair value was calculated, (c) an explanation of how
the interest was calculated, (d) a statement of the dissenters' right to
demand additional payment, and (e) a copy of Chapter 13. Instead of
making such payment, the Company may offer to make such payment to,
but not make payment until acceptance of the offer by, a dissenter as to any
shares of which he or she (or the beneficial owner on whose behalf he or
she is asserting dissenters' rights) was not the beneficial owner on the date
of the first announcement of the terms of the transaction with respect to
which the shareholder has asserted dissenters' rights, unless the beneficial
ownership of the shares devolved upon him or her by operation of law from
a person who was the beneficial owner on the date of the first amendment.
Within thirty days after the Company has made or offered payment
for the dissenters' shares, the dissenter may notify the Company in writing
of his or her own estimate of the fair value of his or her shares and amount
of interest due and demand payment of his or her estimate (less any
payment previously made by the Company) or reject the Company's offer
and demand payment of the fair value of his or her shares and interest due.
The dissenter may make such notification if (i) the dissenter believes that
the amount paid or offered to be paid is less than the fair value of his or her
shares or that the interest due is calculated incorrectly; (ii) the Company
failed to make or offer payment for shares as required above within sixty
days after the date set for demanding payment or (iii) the Company, having
failed to take action with respect to which dissenters' rights have been
asserted, does not return the deposited certificates within sixty days from
the date set for demanding payment. A dissenter waives his or her right to
demand additional payment unless he or she notifies the Company of his or
her demand within thirty days after the Company has made or offered to
make payment for his or her shares.
Within sixty days after receiving the demand for additional
payment, if the demand remains unsettled, the Company shall commence a
proceeding in the South Carolina Court of Common Pleas in [Richland
County], South Carolina seeking a determination by the court of the fair
value of the shares and accrued interest. If the Company does not
commence the proceeding within such 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded. All
dissenters whose demands remain unsettled shall be parties to such action.
Each dissenter made a party to the proceeding will be entitled to judgment
for the amount, if any, by which the court finds the fair value of his or her
shares, plus interest, exceeds the amount paid by the Company.
In any judicial appraisal proceeding, the court shall determine all
costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the
costs against the Company, except that the court may assess costs against all
or some of the dissenters, in amounts the court finds equitable, to the extend
the court finds the dissenters acted arbitrarily, vexatiously or not in good
faith in demanding additional payment for their shares. The court also may
assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable: (1) against the Company and
in favor of any or all dissenters if the court finds the Company did not
comply substantially with the operative provisions of Chapter 13, or (2)
against either the Company or a dissenter, in favor of any other party, if the
court finds that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously or not in good faith with respect to the rights
provided by Chapter 13. If the court finds that the services of counsel of
any dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed against
the Company, the court may award to these counsel reasonable fees to be
paid out of the amounts awarded the dissenters who were benefited.
Although the Company believes that the terms of the Reverse Split
Amendment are fair to its shareholders, the Company cannot make any
representation as to the outcome of any determination of fair value made by
the South Carolina Court of Common Pleas, and shareholders should
recognize that such an appraisal could result in a determination of a lower,
higher or equivalent value than the value reflected in the terms of the
Reverse Split Amendment.
Chapter 13 provides that the fair value of a dissenters' shares shall
be the value of the shares immediately before effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action to which the dissenter
objects unless such exclusion would be inequitable. Chapter 13 states that
the value of the shares is to be determined by techniques that are generally
accepted in the financial community. These techniques may include market
value, value based on prior sales, capitalized earnings value and asset value.
Until payment of the fair value of his or her shares under Chapter
13, any shareholder of the Company who has duly demanded payment and
deposited his or her share certificates retains all other rights of a
shareholder.
The foregoing is a summary of the rights of shareholders seeking
appraisal under South Carolina law, does not purport to be a complete
statement thereof, and is qualified in its entirety by reference to the
applicable statutory provisions of the South Carolina Code, which are
attached to this Proxy Statement as Appendix B
4. APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 4)
The Board has determined that an amendment (the "Common
Stock Increase Amendment") to the Company's Articles of Incorporation to
increase the authorized number of shares of Common Stock from
50,000,000 to 100,000,000 (or from 12,500,000 to 25,000,000 if Proposal 3
is approved and effected) is in the best interests of the Company. At the
close of business on the Record Date, ____________ shares of Common
Stock were outstanding. Pursuant to the Powers Purchase Agreement, the
Powers Group has options to purchase 6,250,000 shares of Company
Common Stock (the "Powers Options"). Pursuant to the Avent Purchase
Agreement, the Avent Group has an option to purchase 1,635,000 shares
(the "Avent Option"). In addition, the Company has adopted a number of
stock option plans (the "Option Plans"), which contemplate the issuance of
up to 6,500,000 shares upon the exercise of the options covered thereby or
upon the award of shares to employees. Therefore, ______ shares remained
available for future issuance as of the close of business on the Record Date.
Upon approval by the Company's shareholders of the Reverse Split
Amendment, there would be approximately _______ shares available for
future issuance.
If the Common Stock Increase Amendment is adopted, the Board
will have authority, without further shareholder approval, to determine the
exact timing of and to effect the Common Stock Increase Amendment. In
the event that the Company's shareholders approve the Reverse Split
Amendment, the Common Stock Increase Amendment would be
implemented promptly following consummation of the transaction
contemplated by the Reverse Split Amendment. In the event that the
Company's shareholders do not approve the Reverse Split Amendment, the
Common Stock Increase Amendment would be implemented promptly
following the Meeting.
If approved, the increased number of authorized shares of
Common stock will be available for issuance from time to time for such
purposes and consideration as the Board may approve. No further vote of
the shareholders of the Company will be required, except as provided under
South Carolina law or the rules of any exchange on which the shares may in
the future be traded. The availability of additional shares for issuance,
without the delay and expense of obtaining the approval of shareholders at a
special meeting, will provide the Company additional shares of Common
Stock for issuance in any future merger or acquisition as well as providing
the Company with the means of raising additional capital if future
circumstances so require. The Board of Directors has no present plan or
intention of issuing any additional shares of Common Stock for the purpose
of engaging in any merger or acquisition or of raising additional capital.
The additional shares of Common Stock for which authorization is
sought would be identical to the shares of Common Stock currently
authorized. Holders of Common Stock do not have preemptive rights to
subscribe to additional shares of Common Stock which may be issued by
the Company.
Vote Required and Board Recommendation
The affirmative vote by the holders of two-thirds of the
outstanding shares of Common Stock of the Company is needed for the
adoption of the Common Stock Increase Amendment. The Board of
Directors recommends a vote FOR this proposal.
SHAREHOLDER PROPOSALS
For a shareholder proposal to be presented at the next annual
meeting, it must be received by the Company at its principal executive
offices not later than December 15, 1997, in order to be included in the
proxy statement and proxy form for the 1998 annual meeting. Any such
proposal should be addressed to the Company's Corporate Secretary and
delivered to the Company's principal executive offices at 1501 Lady Street,
Columbia, South Carolina 29201 or mailed to P.O. Box 1, Columbia,
South Carolina 29202.
OTHER BUSINESS
There is no reason to believe that any other business will be
presented at this Meeting; however, if any other business should properly
and lawfully come before the Meeting, the proxies will vote in accordance
with their best judgment.
Priscilla C. Brooks
Corporate Secretary
March 17, 1997
APPENDIX A
Reverse Stock Split Amendment to the Articles of Incorporation
Article 4 of the Company's Articles of Incorporation is amended
to add the following language before the paragraph beginning with the
words "If shares are divided . . .":
"Effective at 11:59 p.m. (the "Effective Time") on the
date of filing of Articles of Amendment with the Secretary of State of
the State of South Carolina setting forth this Amendment (the "Effective
Date"), each four (4) shares of authorized Common Stock issued and
outstanding or held in the treasury of the Corporation immediately prior
to the Effective Time shall automatically be reclassified and changed
into one (1) validly issued, fully paid and nonassessable share of
Common Stock (a "New Share"). Each holder of record of shares of
Common Stock so reclassified and changed shall at the Effective Time
automatically become the record owner of the number of New Shares as
shall result from such reclassification and change. Each such record
holder shall be entitled to receive, upon the surrender of the certificate
or certificates representing the shares of Common Stock so reclassified
and changed at the office of the transfer agent of the Corporation in such
form and accompanied by such documents, if any, as may be prescribed
by the transfer agent of the Corporation, a new certificate or certificates
representing the number of New Shares of which he or she is the record
owner after giving effect to the provisions of this Article 4. The
Corporation shall not issue fractional New Shares. Shareholders entitled
to receive fractional New Shares shall receive cash in lieu of any
fractional shares at a price per share equal to the product of (a) the
number of shares of the Common Stock held by such holder
immediately prior to the Effective Time which have not been classified
into a whole New Share, multiplied by (b) the arithmetic average of the
closing bid and closing asked prices of the Common Stock
regular way as reported on The Nasdaq National Market for the
thirty (30) trading days immediately preceding the third trading day
prior to the Effective Date."
APPENDIX B
CODE OF LAWS OF SOUTH CAROLINA 1976 ANNOTATED
TITLE 33. CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS
CHAPTER 13. DISSENTERS' RIGHTS
ARTICLE 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
Section 33-13-101. Definitions.
In this chapter:
(1) "Corporation" means the issuer of the shares
held by a dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled
to dissent from corporate action under Section 33-13-102 and who
exercises that right when and in the manner required by Sections
33-13-200 through 33-13-280.
(3) "Fair value", with respect to a dissenter's shares,
means the value of the shares immediately before the effectuation
of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate
action to which the dissenter objects, excluding any appreciation
or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. The value of the shares is to be
determined by techniques that are accepted generally in the
financial community.
(4) "Interest" means interest from the effective date
of the corporate action until the date of payment, at the average
rate currently paid by the corporation on its principal bank loans
or, if none, at a rate that is fair and equitable under all the
circumstances.
(5) "Record shareholder" means the person in whose
name shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by a
nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who
is a beneficial owner of shares held by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or
the beneficial shareholder.
Section 33-13-102. Right to dissent.
A shareholder is entitled to dissent from, and obtain payment of the
fair value of, his shares in the event of any of the following corporate
actions:
(1) consummation of a plan of merger to which the
corporation is a party (i) if shareholder approval is required for the
merger by Section 33-11-103 or the articles of incorporation and
the shareholder is entitled to vote on the merger or (ii) if the
corporation is a subsidiary that is merged with its parent under
Section 33-11-104 or 33-11-108 or if the corporation is a parent
that is merged with its subsidiary under Section 33-11-108;
(2) consummation of a plan of share exchange to
which the corporation is a party as the corporation whose shares
are to be acquired, if the shareholder is entitled to vote on the
plan;
(3) consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than in
the usual and regular course of business, if the shareholder is
entitled to vote on the sale or exchange, including a sale in
dissolution, but not including a sale pursuant to court order or a
sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale must be distributed to the shareholders
within one year after the date of sale;
(4) an amendment of the articles of incorporation
that materially and adversely affects rights in respect of a
dissenter's shares because it:
(i) alters or abolishes a preferential right of the shares;
(ii) creates, alters, or abolishes a right in
respect of redemption, including a provision respecting a sinking
fund for the redemption or repurchase, of the shares;
(iii) alters or abolishes a preemptive right of
the holder of the shares to acquire shares or other securities;
(iv) excludes or limits the right of the shares
to vote on any matter, or to cumulate votes, other than a limitation
by dilution through issuance of shares or other securities with
similar voting rights; or
(v) reduces the number of shares owned by
the shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under Section 33-6-104; or
(5) the approval of a control share acquisition under
Article 1 of Chapter 2 of Title 35;
(6) any corporate action to the extent the articles of
incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
Section 33-13-103. Dissent by nominees and beneficial owners.
(a) A record shareholder may assert dissenters'
rights as to fewer than all the shares registered in his name only if
he dissents with respect to all shares beneficially owned by any
one person and notifies the corporation in writing of the name and
address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are
determined as if the shares to which he dissents and his other
shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters'
rights as to shares held on his behalf only if he dissents with
respect to all shares of which he is the beneficial shareholder or
over which he has power to direct the vote. A beneficial
shareholder asserting dissenters' rights to shares held on his behalf
shall notify the corporation in writing of the name and address of
the record shareholder of the shares, if known to him.
ARTICLE 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
Section 33-13-200. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters'
rights under Section 33- 13-102 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights
under Section 33-13-102 is taken without a vote of shareholders,
the corporation shall notify in writing all shareholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenters' notice described in Section 33-13-220.
Section 33-13-210. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters'
rights under Section 33- 13-102 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (1) must give to the corporation before the vote is
taken written notice of his intent to demand payment for his shares
if the proposed action is effectuated and (2) must not vote his
shares in favor of the proposed action. A vote in favor of the
proposed action cast by the holder of a proxy solicited by the
corporation shall not disqualify a shareholder from demanding
payment for his shares under this chapter.
(b) A shareholder who does not satisfy the
requirements of subsection (a) is not entitled to payment for his
shares under this chapter.
Section 33-13-220. Dissenters' notice.
(a) If proposed corporate action creating dissenters'
rights under Section 33- 13-102 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice
to all shareholders who satisfied the requirements of Section 33-
13-210(a).
(b) The dissenters' notice must be delivered no later
than ten days after the corporate action was taken and must:
(1) state where the payment demand must
be sent and where certificates for certificated shares must be
deposited;
(2) inform holders of uncertificated shares
to what extent transfer of the shares is to be restricted after the
payment demand is received;
(3) supply a form for demanding payment
that includes the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action and
requires that the person asserting dissenters' rights certify whether
or not he or, if he is a nominee asserting dissenters' rights on
behalf of a beneficial shareholder, the beneficial shareholder
acquired beneficial ownership of the shares before that date;
(4) set a date by which the corporation
must receive the payment demand, which may not be fewer than
thirty nor more than sixty days after the date the subsection (a)
notice is delivered and set a date by which certificates for
certificated shares must be deposited, which may not be earlier
than twenty days after the demand date; and
(5) be accompanied by a copy of this chapter.
Section 33-13-230. Shareholders' payment demand.
(a) A shareholder sent a dissenters' notice described
in Section 33-13-220 must demand payment, certify whether he
(or the beneficial shareholder on whose behalf he is asserting
dissenters' rights) acquired beneficial ownership of the shares
before the date set forth in the dissenters' notice pursuant to
Section 33-13-220(b)(3), and deposit his certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and
deposits his share certificates under subsection (a) retains all other
rights of a shareholder until these rights are canceled or modified
by the taking of the proposed corporate action.
(c) A shareholder who does not comply substantially with the
requirements that he demand payment and deposit his share certificates where
required, each by the date set in the dissenters' notice, is not entitled to
payment for his shares under this chapter.
Section 33-13-240. Share restrictions.
(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for payment for
them is received until the proposed corporate action is taken or the
restrictions are released under Section 33-13- 260.
(b) The person for whom dissenters' rights are
asserted as to uncertificated shares retains all other rights of a
shareholder until these rights are canceled or modified by the
taking of the proposed corporate action.
Section 33-13-250. Payment.
(a) Except as provided in Section 33-13-270, as
soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall pay each dissenter who
substantially complied with Section 33-13-230 the amount the
corporation estimates to be the fair value of his shares, plus
accrued interest.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the
date of payment, an income statement for that year, a statement of
changes in shareholders' equity for that year, and the latest
available interim financial statements, if any;
(2) a statement of the corporation's
estimate of the fair value of the shares and an explanation of how
the fair value was calculated;
(3) an explanation of how the interest was calculated;
(4) a statement of the dissenter's right to demand additional
payment under Section 33-13-280; and
(5) a copy of this chapter.
Section 33-13-260. Failure to take action.
(a) If the corporation does not take the proposed
action within sixty days after the date set for demanding payment
and depositing share certificates, the corporation, within the same
sixty-day period, shall return the deposited certificates and release
the transfer restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and
releasing transfer restrictions, the corporation takes the proposed
action, it must send a new dissenters' notice under Section 33-13-
220 and repeat the payment demand procedure.
Section 33-13-270. After-acquired shares.
(a) A corporation may elect to withhold payment
required by Section 33-13-250 from a dissenter as to any shares of
which he (or the beneficial owner on whose behalf he is asserting
dissenters' rights) was not the beneficial owner on the date set
forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed
corporate action, unless the beneficial ownership of the shares
devolved upon him by operation of law from a person who was the
beneficial owner on the date of the first announcement.
(b) To the extent the corporation elects to withhold
payment under subsection (a), after taking the proposed corporate
action, it shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to
accept it in full satisfaction of his demand. The corporation shall
send with its offer a statement of its estimate of the fair value of
the shares, an explanation of how the fair value and interest were
calculated, and a statement of the dissenter's right to demand
additional payment under Section 33-13-280.
Section 33-13-280. Procedure if shareholder dissatisfied with
payment or offer.
(a) A dissenter may notify the corporation in writing
of his own estimate of the fair value of his shares and amount of
interest due and demand payment of his estimate (less any
payment under Section 33-13-250) or reject the corporation's offer
under Section 33-13-270 and demand payment of the fair value of
his shares and interest due, if the:
(1) dissenter believes that the amount paid
under Section 33-13-250 or offered under Section 33-13-270 is
less than the fair value of his shares or that the interest due is
calculated incorrectly;
(2) corporation fails to make payment
under Section 33-13-250 or to offer payment under Section 33-13-
270 within sixty days after the date set for demanding payment; or
(3) corporation, having failed to take the
proposed action, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares
within sixty days after the date set for demanding payment.
(b) A dissenter waives his right to demand
additional payment under this section unless he notifies the
corporation of his demand in writing under subsection (a) within
thirty days after the corporation made or offered payment for his
shares.
ARTICLE 3. JUDICIAL APPRAISAL OF SHARES
Section 33-13-300. Court action.
(a) If a demand for additional payment under
Section 33-13-280 remains unsettled, the corporation shall
commence a proceeding within sixty days after receiving the
demand for additional payment and petition the court to determine
the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it
shall pay each dissenter whose demand remains unsettled the
amount demanded.
(b) The corporation shall commence the proceeding
in the circuit court of the county where the corporation's principal
office (or, if none in this State, its registered office) is located. If
the corporation is a foreign corporation without a registered office
in this State, it shall commence the proceeding in the county in this
State where the principal office (or, if none in this State, the
registered office) of the domestic corporation merged with or
whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters
(whether or not residents of this State) whose demands remain
unsettled parties to the proceeding as in an action against their
shares and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by
publication, as provided by law.
(d) The jurisdiction of the court in which the
proceeding is commenced under subsection (b) is plenary and
exclusive. The court may appoint persons as appraisers to receive
evidence and recommend decisions on the question of fair value.
The appraisers have the powers described in the order appointing
them or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is
entitled to judgment for the amount, if any, by which the court
finds the fair value of his shares, plus interest, exceeds the amount
paid by the corporation.
Section 33-13-310. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced
under Section 33-13-300 shall determine all costs of the
proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court shall assess the
costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding payment
under Section 33-13-280.
(b) The court also may assess the fees and expenses
of counsel and experts for the respective parties, in amounts the
court finds equitable:
(1) against the corporation and in favor of
any or all dissenters if the court finds the corporation did not
comply substantially with the requirements of Sections 33-13-200
through 33-13-280; or
(2) against either the corporation or a
dissenter, in favor of any other party, if the court finds that the
party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by this chapter.
(c) If the court finds that the services of counsel for
any dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should not be
assessed against the corporation, the court may award to these
counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
(d) In a proceeding commenced by dissenters to
enforce the liability under Section 33-13-300(a) of a corporation
that has failed to commence an appraisal proceeding within the
sixty-day period, the court shall assess the costs of the proceeding
and the fees and expenses of dissenters' counsel against the
corporation and in favor of the dissenters.
