SCHEDULE 14 C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement
[X] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2)
ACAP CORPORATION
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g)
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, schedule or registration statement no.:
3) Filing party:
4) Date filed:<PAGE>
ACAP CORPORATION
10555 Richmond Avenue
Houston, Texas 77042
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NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On August 26, 1996
---------------------------------------------------------------
To Our Stockholders:
The Annual Meeting of Stockholders of Acap Corporation (the "Company") will
be held Monday, August 26, 1996, at 8:00 a.m., local time, at the offices
of the Company, 10555 Richmond Avenue, Houston, Texas.
The purposes of the meeting are:
1. To elect a Board of Directors to serve for the ensuing year;
2. To consider and act upon such other matters as may properly come
before the meeting or any adjournment thereof.
Holders of the Company's Common Stock of record at the close of business on
July 22, 1996, are entitled to receive notice of and to vote at the
meeting.
The accompanying Information Statement is furnished on behalf of the Board
of Directors of the Company to provide notice of the Company's Annual
Meeting of Stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
For the Board of Directors
Paul L. Clancy
` Secretary
August 5, 1996<PAGE>
TABLE OF CONTENTS
General Information . . . . . . . . . . . . . . . . . . . . . . . . . 1
Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . 1
Meetings and Committees . . . . . . . . . . . . . . . . . . . . . . . 2
Security Ownership of Certain Owners . . . . . . . . . . . . . . . . 3
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . 4
Security Ownership of Management . . . . . . . . . . . . . . . . . . 5
Beneficial Ownership Reporting . . . . . . . . . . . . . . . . . . . 7
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 8
Certain Relationships and Related Transactions . . . . . . . . . . . 9
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . 9
Quorum for Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 9
Submission of Stockholder Proposals . . . . . . . . . . . . . . . . . 9<PAGE>
ACAP CORPORATION
10555 Richmond Avenue
Houston, Texas 77042
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY
GENERAL INFORMATION
--------------------
This Information Statement is furnished on behalf of the Board of Directors
of Acap Corporation (the "Company") to provide notice of the Company's
Annual Meeting of Stockholders to be held Monday, August 26, 1996, at 8:00
a.m., local time, at the offices of the Company, 10555 Richmond Avenue,
Houston, Texas. This Information Statement is first being sent or given to
stockholders of the Company on or about August 5, 1996.
VOTING
-------
The common stock, $.10 par value (the "Common Stock"), of the Company is
the only outstanding class of voting securities of the Company. Only
stockholders of record at the close of business on July 22, 1996, the
record date, are entitled to vote at the Annual Meeting. As of the record
date, there were 8,516 shares of Common Stock outstanding (excluding shares
held by the Company's subsidiary, which are not voted) and approximately
610 holders of the Common Stock. Each share of the Company's Common Stock
is entitled to one vote.
The shares owned by Fortune National Corporation, the majority stockholder
of the Company, will be voted for the election of directors recommended by
the Board of Directors.
ELECTION OF DIRECTORS
-------------------------------------------
A Board of Directors consisting of three members will be elected at the
Annual Meeting, each member to serve until the next Annual Meeting and
until a successor shall be elected and shall qualify. If, for any reason
not known at present, any nominee is not available for election, Fortune
National Corporation will vote for such substitute persons, if any, as
shall be designated by the Board of Directors.
The affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting is required to elect a director.
Brief statements setting forth the age (at July 22, 1996), the business
experience during the past five years, the year in which first elected a
director, which includes any period during which such nominee served as a
director of American Capitol Insurance Company ("American Capitol") prior
to the Company's formation, and other information concerning each nominee
appear below. All such nominees are members of the present Board of
Directors. In addition, all such nominees serve as directors of Fortune
National Corporation ("Fortune"), which is subject to the reporting
provisions of the federal securities laws. Fortune is a majority-owned
subsidiary of InsCap Corporation ("InsCap"), the Company is a majority-
owned subsidiary of Fortune and American Capitol is a wholly-owned
subsidiary of the Company.
R. Wellington Daniels (81): Mr. Daniels has served as a director since
1987 and is a member of the Audit Committee. Before his retirement in
1979, Mr. Daniels served as Director of National Accounts, American
Cyanamid Corporation. Mr. Daniels has also served as a director of InsCap
since 1990.
William F. Guest (64): Mr. Guest has served as a director since 1984 and
is Chairman of the Board. Mr. Guest has served as Chairman of the Board
and President of the Company since 1985. Mr. Guest is the Chairman of the
Board and President of Fortune, the Chairman of the Board and Chief
Executive Officer of each of the Company's life insurance subsidiaries and
is a director and the President of InsCap. Mr. Guest is an attorney and
prior to joining the Company and its affiliates was engaged in the private
practice of law in Houston, Texas for many years.
C. Stratton Hill, Jr., M.D. (67): Dr. Hill has served as a director since
1984 and is a member and the Chairman of the Audit Committee. Dr. Hill is
also the Medical Director of the Company's life insurance subsidiaries.
Dr. Hill is a physician and has been engaged in the practice of medicine in
Houston, Texas for many years.
MEETINGS AND COMMITTEES OF THE BOARD
--------------------------------------
During 1995 the Board of Directors of the Company held four meetings. In
addition, there is one standing committee of the Board of Directors which
has the authority and responsibilities and which met during 1995 as
described below. Each incumbent director attended at least 75% of the
total number of meetings of the Board of Directors and the committee of the
Board of Directors on which he served (during the periods of such service).
Audit Committee. The Audit Committee has the authority and responsibility
to oversee the work of the independent public accountants for the Company
and to meet with such accountants from time to time to determine the
adequacy of the Company's accounting systems and controls and audit
procedures. One meeting of the Audit Committee was held in 1995.
Other Functions. There is no standing nominating committee or compensation
committee of the Board of Directors, nor is there any committee of the
Board of Directors performing similar functions. American Capitol
maintains a standing compensation committee which has the responsibility of
recommending the amount and form of compensation and benefits for officers
and other key employees of American Capitol. The Company does not provide
separate or additional compensation for its officers, all of whom are also
officers of American Capitol, but is obligated to reimburse American
Capitol for services provided to the Company by such persons in accordance
with the terms of an intercompany service agreement.
Director Compensation. Directors who are also officers of the Company do
not receive directors' fees or other amounts in compensation for
participation on the Board of Directors or a committee of the Board of
Directors. All other directors are each paid a fee of $500 plus travel
expenses for each meeting of the Board of Directors attended. In addition,
each director who serves as a member of the Audit Committee of the Board of
Directors is paid a fee of $500 plus travel expenses for each meeting of
such committee attended, unless such meeting is held in conjunction with a
meeting of the Board of Directors held on the same day.
SECURITY OWNERSHIP OF CERTAIN OWNERS
-----------------------------------------
Set forth below is information with respect to each person, entity or group
known to have been the beneficial owner of more than 5% of the Company's
Common Stock, its sole voting class of securities, as of July 22, 1996.
---------------------------------------------------------------------------
Name and Address of Shares Beneficially Percent of
Beneficial Owner Owned (1) Class
---------------------------------------------------------------------------
Fortune National Corporation
10555 Richmond Avenue
Houston, Texas 77042 5,421 63.66%
InsCap Corporation
10555 Richmond Avenue
Houston, Texas 77042 5,421 (2) 63.66%
William F. Guest
10555 Richmond Avenue
Houston, Texas 77042 5,582 (3) 65.29%
(1) Except as otherwise indicated, the beneficial owner of the shares
exercises sole voting and investment powers.
(2) InsCap owns 1,660,263 shares of Fortune's issued and outstanding
Common Stock, and is deemed to be the beneficial owner of 41,800
additional shares of Fortune Common Stock by virtue of 3,800
shares of the Company's Cumulative Exchangeable Preferred Stock,
Series A, $2.50 (Adjustable) (referred to herein as "Series A
Preferred Stock") owned by it which are exchangeable for shares
of Fortune Common Stock at the ratio of 11 to 1. Accordingly,
InsCap beneficially owns a total of 1,702,063 shares, or 64.02%,
of Fortune's issued and outstanding Common Stock, the sole voting
class of securities of Fortune. Therefore, InsCap indirectly is
the beneficial owner of Fortune's shares of Company Common Stock.
(3) Mr. Guest owns directly and indirectly 380,514 shares, or 43.23%,
of InsCap's issued and outstanding Common Stock, the sole voting
class of securities of InsCap, and as the controlling stockholder
of InsCap is deemed to be the beneficial owner of the shares of
Fortune Common Stock beneficially owned by InsCap as set forth in
Note (2). In addition to the shares of Company Common Stock
owned indirectly through Fortune and InsCap, Mr. Guest is the
beneficial owner of 127 shares of Company Common Stock through a
trust for which he acts as trustee and is deemed to be the
beneficial owner of 34 additional shares of Company Common Stock
by virtue of options granted to him to purchase same.
EXECUTIVE OFFICERS
--------------------
The By-Laws of the Company provide for the election of executive officers
annually at the meeting of the Board of Directors following the annual
meeting of stockholders. Executive officers serve until their successors
are chosen and qualified or until their death, resignation or removal.
Brief statements setting forth the age (at July 22, 1996), the offices held
and the business experience during the past five years of each executive
officer appear below.
William F. Guest (64): Chairman of the Board and President. For the
biography of Mr. Guest see "Election of Directors."
John D. Cornett (37): Mr. Cornett has served as Executive Vice President
of the Company since 1989 and as Treasurer of the Company since 1985. Mr.
Cornett is the Executive Vice President and Treasurer of Fortune, a
director and the Secretary of InsCap and the President and Chief Operating
Officer of each of the Company's life insurance subsidiaries. Mr. Cornett
is a certified public accountant and, prior to joining the Company and its
affiliates in 1984, Mr. Cornett held positions with American General Life
Insurance Company and Prudential Insurance Company of America.
H. Kathleen Musselwhite (39): Ms. Musselwhite has served as Assistant
Treasurer of the Company since June 1995. Ms. Musselwhite is also the
Assistant Treasurer of Fortune and the Treasurer and Controller of each of
the Company's life insurance subsidiaries. Ms. Musselwhite is a certified
public accountant and, prior to joining the Company and its affiliates in
1995, Ms. Musselwhite served as Assistant Controller of American General
Corporation (1987-June 1995).
Paul L. Clancy (44): Mr. Clancy has served as Secretary of the Company
since 1992. Mr. Clancy is also the Secretary of Fortune and is the
Executive Vice President and Secretary of each of the Company's life
insurance subsidiaries. Prior to joining the Company and its affiliates in
1991, Mr. Clancy served as Vice President of HBJ Insurance Companies,
Orlando, Florida (1987-July 1991). Mr. Clancy has worked in the insurance
industry since 1979 in both administrative and consulting capacities.
SECURITY OWNERSHIP OF MANAGEMENT
-----------------------------------
Set forth below is information with respect to shares of each class of
equity securities of the Company, Fortune and InsCap beneficially owned by
directors of the Company, naming them, and by all directors and officers of
the Company as a group, as of July 22, 1996.
<PAGE>
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Name of Beneficial Owner (1) Amount and Nature of Percent of Class (3)
Beneficial Ownership (2)
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THE COMPANY
Common Stock
-----------------------
William F. Guest 5,582 (4) 65.29%
John D. Cornett 178 (5) 2.08%
All Officers and Directors 5,760 (6) 67.10%
Series A Preferred Stock
-----------------------------------
William F. Guest 12,000 (4) 16.22%
R. Wellington Daniels 2,000 (7) 2.70%
All Officers and Directors 14,000 18.92%
FORTUNE
Common Stock
-----------------------
William F. Guest 1,807,263 (4) 65.39%
R. Wellington Daniels 22,000 (7) *
C. Stratton Hill, Jr., M.D. 4,000 (8) *
John D. Cornett 10,000 (5) *
All Officers and Directors 1,843,263 (6) 65.93%
INSCAP
Common Stock
----------------------
William F. Guest 380,514 (4) 43.23%
R. Wellington Daniels 37,000 4.20%
John D. Cornett 11,000 1.25%
All Officers and Directors 485,124 55.11%
(1) The address of each of the officers and directors is c/o Acap
Corporation, 10555 Richmond Avenue, Houston, Texas 77042.
(2) Except as otherwise indicated, the beneficial owner of the shares
exercises sole voting and investment powers.
(3) Percentages are calculated on the basis of the amount of outstanding
securities plus, for each person or group, any securities that person
or group has the right to acquire within 60 days pursuant to option,
conversion privileges or other rights. An asterisk signifies less
than 1%.
(4) The Company Common Stock shown as owned by Mr. Guest includes 127
shares owned indirectly by him through a trust for which he acts as
trustee, 34 shares attributed to him by virtue of options granted to
him to purchase same, and 5,421 shares owned indirectly by him through
InsCap, the Company's ultimate parent, of which company Mr. Guest is
deemed to be the controlling stockholder. The Series A Preferred
Stock of the Company shown as owned by Mr. Guest includes 7,300 shares
owned directly by him, 900 shares indirectly owned by him through a
trust for which Mr. Guest acts as trustee, and 3,800 shares owned
indirectly by him through InsCap. The Fortune Common Stock shown as
owned by Mr. Guest includes 90,200 shares issuable in exchange for
7,300 shares of the Company's Series A Preferred Stock directly owned
by him and 900 shares indirectly owned by him through a trust for
which Mr. Guest acts as trustee, 15,000 shares attributable to him by
virtue of options granted to him to purchase same, and 1,660,263 owned
indirectly by him through InsCap, Fortune's parent, and 41,800 shares
issuable to InsCap in exchange for 3,800 shares of the Company's
Series A Preferred Stock owned by InsCap. Mr. Guest has pledged
304,861 of his InsCap shares to a bank in Houston as security for a
loan.
(5) Of the shares of Company Common Stock and Fortune Common Stock shown
as owned by Mr. Cornett, 34 shares of Company Common Stock and 10,000
shares of Fortune Common Stock are attributed to him by virtue of
options granted to him to purchase same.
(6) The shares of Company Common Stock and Fortune Common Stock shown as
owned by all officers and directors of the Company include 68 shares
of Company Common Stock and 25,000 shares of Fortune Common Stock the
beneficial ownership of which is attributed to officers of the Company
by virtue of options granted to such officers to purchase such shares.
Also included are 90,200 shares of Fortune Common Stock attributable
to Mr. Guest which are issuable in exchange for 8,200 shares of the
Company's Preferred Stock owned by him directly and indirectly, and
22,000 shares of Fortune Common Stock attributable to Mr. Daniels
which are issuable in exchange for 2,000 shares of the Company's
Series A Preferred Stock owned by him indirectly, all as set forth in
Notes (4) and (7).
(7) The 2,000 shares of the Company's Series A Preferred Stock and the
22,000 shares of Fortune Common Stock issuable in exchange for such
shares shown as owned by Mr. Daniels are owned by Mr. Daniels' wife.
(8) All such shares of Fortune Common Stock are owned by Dr. Hill's
children.
BENEFICIAL OWNERSHIP REPORTING
------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and beneficial owners of more than 10% of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission ("SEC") and the National Association of Securities Dealers,
Inc. Officers, directors and greater than 10% stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely upon a review of such forms furnished to the Company during or
with respect to its fiscal year ended December 31, 1995 by the persons and
entities filing same, the Company believes that during its fiscal year
ended December 31, 1995 all beneficial ownership reports required to be
filed pursuant to Section 16(a) by directors and officers of the Company
and by beneficial owners of more than 10% of the Company's outstanding
Common Stock have been filed on a timely basis.
EXECUTIVE COMPENSATION
--------------------------
The compensation paid by the Company and its affiliates for each of the
last three completed fiscal years to (i) the Chief Executive Officer
("CEO") and (ii) each of the four most highly compensated executive
officers, other than the CEO, whose total annual salary and bonus exceeded
$100,000, was as follows:
----------------------------------------------------------------------
Name and Principal Year Salary Bonus All Other
Position
----------------------------------------------------------------------
William F. Guest, 1995 $180,000 $18,000 $ -0-
CEO 1994 $180,000 18,000 -0-
1993 $180,000 -0- -0-
John D. Cornett, 1995 $100,000 $10,000 $17,658*
Treasurer 1994 $100,000 10,000 -0-
1993 $100,000 -0- -0-
*The Company advanced Mr. Cornett $17,658 during 1995 toward the payment of
the premium on life insurance on Mr. Cornett's life and for which the
Company is not the beneficiary. The advance will be repaid to the Company
out of the cash value of such policy or the death proceeds from such
policy. The advance is not compensation to Mr. Cornett to the extent that
it is subject to repayment to the Company.
The preceding table excludes club memberships and certain other benefits in
an aggregate amount of less than 10% of the officer's annual salary. At
December 31, 1995, Mr. Guest held unexpired options to purchase 34 shares
of the Company's Common Stock and 15,000 shares of Fortune's Common Stock
and Mr. Cornett held unexpired options to purchase 34 shares of the
Company's Common Stock and 10,000 shares of Fortune's Common Stock. None
of the options had fair market values that exceeded the exercise price of
the option.
In May 1990 American Capitol entered into a supplemental disability income
agreement with Mr. Guest which provides for supplemental cash payments to
Mr. Guest or for his benefit in the event that he becomes disabled while
employed by American Capitol. The amount of such supplemental cash
payments equals the amount of premium with respect to a "key man" life
insurance policy held by American Capitol covering Mr. Guest which would be
waived under the terms of the policy in the event of Mr. Guest's
disability.
In April 1994, American Capitol renewed for a period of three years an
employment agreement with Mr. Cornett pursuant to which Mr. Cornett serves
as President and Chief Operating Officer of American Capitol. The
agreement provides for an annual compensation of $100,000. In the event
Mr. Cornett's employment is terminated during the term of the agreement
other than for cause, the salary payable thereunder, under specified
conditions and subject to certain limitations, will continue for up to 18
months, less any amounts earned by Mr. Cornett from other employment during
such period. In addition, in April 1994, American Capitol renewed a stock
purchase agreement with Mr. Cornett which provides that in the event of a
change of control of American Capitol, Mr. Cornett shall have the right to
sell certain shares of Company Common Stock or Fortune Common Stock owned
by him to American Capitol at a price per share determined by reference to
the consideration involved in the change of control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------
Fortune is the immediate parent of the Company. InsCap, through its
interest in Fortune, is also deemed to be a parent of the Company. See
"Security Ownership of Certain Owners" for the basis of control and the
percentage of voting securities owned.
On March 25, 1996, the Company's Board of Directors approved a transaction
with Fortune whereby Fortune agreed to issue 55,323 shares of previously
unissued shares of common stock for the Company's commitment to pay all of
Fortune's routine expenses through the liquidation of Fortune.
INDEPENDENT AUDITORS
-----------------------
Financial statements of the Company and its consolidated subsidiaries are
included in the Company's Annual Report to Stockholders for 1995. KPMG
Peat Marwick has served as the independent auditors for the Company for the
fiscal year ended December 31, 1995. The Company anticipates that KPMG
Peat Marwick will be selected to serve in such capacity for the fiscal year
ending December 31, 1996, subject to formal approval of such engagement by
the Company's Audit Committee. Representatives of KPMG Peat Marwick are
expected to be present at the Annual Meeting and will have the opportunity
to make a statement if they desire to do so and are also expected to be
available to respond to appropriate questions.
QUORUM FOR MEETING
--------------------
The By-Laws of the Company require, for a quorum, the presence at the
meeting, in person or by proxy, of the holders of a majority of the shares
of capital stock of the Company entitled to vote.
SUBMISSION OF STOCKHOLDER PROPOSALS
---------------------------------------
Any proposal intended to be presented by a stockholder at the Company's
1997 Annual Meeting of Stockholders must be received in writing at the
Company's principal executive offices by December 25, 1996 so that it may
be considered by the Company for inclusion in the proxy statement and form
of proxy or in the information statement relating to that meeting.
By Order of the Board of Directors
Paul L. Clancy
Secretary
August 5, 1996
