<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ 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:
Common stock, par value $1.00 per share
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
202,163
- --------------------------------------------------------------------------------
(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):
$6.25
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$1,263,518.75
- --------------------------------------------------------------------------------
(5) Total fee paid:
$253.00
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/X/ 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:
$253.00
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Schedule 13E-3
- --------------------------------------------------------------------------------
(3) Filing Party:
Bankers Fidelity Life Insurance Company and Atlantic American Corporation
- --------------------------------------------------------------------------------
(4) Date Filed:
January 10, 1996 (concurrently herewith)
- --------------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPIES
BANKERS FIDELITY LIFE INSURANCE COMPANY
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
______________, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of the
Shareholders (the "Special Meeting") of Bankers Fidelity Life Insurance Company
(the "Company") to be held at the Company's offices, 4370 Peachtree Road, N.E.,
Atlanta, Georgia, on March ___, 1996, at ____ a.m., Atlanta time. A Notice of
Special Meeting, a Proxy Statement and a Proxy containing information about the
matters to be acted upon at the Special Meeting, as well as copies of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1995, are enclosed herewith.
At the Special Meeting you will be asked to consider and vote upon a
proposal to approve an Agreement of Merger, dated January 5, 1996 (the "Merger
Agreement"), by and among the Company, Atlantic American Corporation, a Georgia
corporation ("AAC"), and BF Acquisition Corporation, a Georgia corporation and
a wholly-owned subsidiary of AAC ("BFAC"), pursuant to which BFAC will be
merged with and into the Company (the "Merger"). As a result of the Merger,
the Company will become a wholly-owned subsidiary of AAC. If the Merger
Agreement is approved and the Merger becomes effective, each holder of common
stock, $1.00 par value, of the Company (the "Common Stock") (other than those
shares held by BFAC or by persons who properly perfect their dissenters' rights
under Georgia law) will have the right to receive $6.25 in cash, without
interest, for each share of Common Stock held at the time of the Merger. The
Merger and certain related matters are described in detail in the accompanying
Proxy Statement.
The Board of Directors of the Company has fixed __________, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Special Meeting and any adjournment or postponement thereof.
The affirmative vote of holders of a majority of the shares of Common Stock
outstanding as of the record date and entitled to vote will be necessary to
approve and adopt the Merger Agreement and the transactions contemplated
thereby. Management of AAC has indicated that it intends to cause BFAC to vote
the approximately 93% of the outstanding shares of Common Stock it owns in
favor of the Merger Agreement. Approval of the Merger Agreement is therefore
<PAGE> 3
assured. Pursuant to Georgia law, the Company's shareholders will be entitled
to dissenters' rights in connection with the Merger, as more fully described in
the accompanying Proxy Statement.
Shareholders are urged to review carefully the information contained
in the accompanying Proxy Statement prior to making any voting decision in
connection with their Common Stock.
It is very important that your views be represented whether or not you
are able to attend the Special Meeting. Accordingly, please complete, sign and
date your proxy card and return it to us in the enclosed postage-paid return
envelope as soon as possible. Failure to return your proxy card or to vote in
person at the Special Meeting will have the effect of a vote against the
Merger. Returning your completed proxy card will not limit your right to vote
in person if you attend the Special Meeting.
Sincerely,
J. Mack Robinson
Chairman of the Board
Atlanta, Georgia
______________, 1996
<PAGE> 4
BANKERS FIDELITY LIFE INSURANCE COMPANY
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH ____, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of the
Shareholders (the "Special Meeting") of Bankers Fidelity Life Insurance Company
(the "Company") will be held at the Company's offices, 4370 Peachtree Road,
N.E., Atlanta, Georgia, on __________, March ___, 1996, at ______ a.m., Atlanta
time, for the following purposes:
1. To consider and vote upon a proposal to approve an
Agreement of Merger, dated January 5, 1996 (the "Merger Agreement"),
by and among the Company, Atlantic American Corporation, a Georgia
corporation ("AAC"), and BF Acquisition Corporation, a newly-formed
Georgia corporation ("BFAC") that is wholly-owned by AAC, pursuant to
which, among other things, (a) BFAC will be merged (the "Merger") with
and into the Company with the Company being the surviving corporation
(the "Surviving Corporation"), (b) each outstanding share of the
common stock of the Company (the "Common Stock") (other than Common
Stock held by (i) the Company as treasury shares, (ii) by BFAC, or
(iii) by persons who perfect their dissenters' rights under Georgia
law) will be converted into the right to receive $6.25 in cash,
without interest, (c) each outstanding share of Common Stock held by
BFAC or held by the Company as treasury shares will be cancelled
without consideration, and (d) each outstanding share of BFAC common
stock will be converted into the right to receive one share of common
stock of the Surviving Corporation; and
2. To transact such other business, if any, as may
properly be brought before the Special Meeting.
A copy of the Merger Agreement is included as Annex A to the
accompanying Proxy Statement. Only holders of record of shares of Common Stock
at the close of business on __________, 1996, the record date for the Special
Meeting (the "Record Date"), are entitled to notice of and to vote at the
Special Meeting and any adjournment or postponement thereof.
Prior to the formation of BFAC, AAC directly owned
approximately 93% of the outstanding shares of Common Stock. In connection
with the formation of BFAC, AAC contributed all of such Common Stock to BFAC,
and as a result thereof BFAC presently
<PAGE> 5
owns approximately 93% of the outstanding shares of Common Stock. Management
of AAC has indicated that it intends to cause BFAC to vote such shares in favor
of the Merger Agreement. Approval of the Merger Agreement is therefore
assured. Following the Merger, all of the common stock of the Surviving
Corporation will be held by AAC.
If the Merger is consummated, holders of Common Stock who do
not vote in favor of the Merger Agreement and who perfect their statutory
dissenters' rights under Article 13 of the Georgia Business Corporation Code
(the "GBCC") will have the right to seek appraisal of their shares of Common
Stock. See "The Merger -- Dissenters' Rights" in the accompanying Proxy
Statement for a statement of the rights of such shareholders and a description
of the procedures required to be followed by shareholders to obtain appraisal
of their shares of Common Stock. A copy of Article 13 of the GBCC is included
as Annex C to the accompanying Proxy Statement.
To be assured that your interest will be represented,
regardless of whether you plan to attend in person, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed
postage-paid return envelope. This action will not limit any right to vote in
person if you wish to attend the Special Meeting. Your proxy may be revoked at
any time following the procedures set forth in the accompanying Proxy
Statement.
By Order of the Board of Directors,
Janie L. Ryan
Assistant Secretary
Atlanta, Georgia
_______________, 1996
<PAGE> 6
BANKERS FIDELITY LIFE INSURANCE COMPANY
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
_______________
PROXY STATEMENT
For the Special Meeting of Shareholders
To Be Held On March ___, 1996
______________
This proxy statement ("Proxy Statement") and the accompanying form of
proxy are being furnished on or about _____, 1996 to the holders of the common
stock, $1.00 par value (the "Common Stock"), of Bankers Fidelity Life Insurance
Company, a Georgia corporation ("Bankers" or the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company (the
"Bankers Board") for use at the special meeting of the shareholders of the
Company to be held at the Company's offices, 4370 Peachtree Road, N. E.,
Atlanta, Georgia 30319, on ___________, March ___, 1996 at ___________ a.m.,
Atlanta time, and at any adjournment or postponement thereof (the "Special
Meeting").
The Special Meeting has been called to consider and vote upon a
proposal to approve an Agreement of Merger, dated January 5, 1996 (the "Merger
Agreement"), by and among the Company, Atlantic American Corporation, a Georgia
corporation ("AAC"), and BF Acquisition Corporation, a newly-formed Georgia
corporation ("BFAC") that is wholly-owned by AAC.
The Merger Agreement provides for the merger of BFAC with and into the
Company (the "Merger"), with the Company being the surviving corporation (the
"Surviving Corporation"). Pursuant to the Merger Agreement, (i) each
outstanding share of Common Stock (other than shares held by the Company as
treasury shares, by BFAC or by shareholders who do not vote in favor of the
Merger Agreement and who perfect their dissenters' rights under Article 13 of
the Georgia Business Corporation Code (the "GBCC")) will be converted into the
right to receive $6.25 per share in cash, without interest (the "Merger
Consideration"), (ii) each outstanding share of Common Stock held by BFAC or
held by the Company as treasury shares will be cancelled without consideration
and (iii) each outstanding share of BFAC common stock, par value $1.00 per
share (the "BFAC Shares"), will be converted into the right to receive one
share of common stock of the Surviving Corporation. A copy of the Merger
Agreement is included as Annex A to this Proxy Statement.
BFAC was organized by AAC for the sole purpose of enabling AAC, which
prior to the formation of BFAC directly owned
<PAGE> 7
approximately 93% of the outstanding shares of Common Stock, to effect the
Merger and, as a result, acquire the entire equity interest in the Company. In
connection with the formation of BFAC, AAC contributed all of the shares of
Common Stock owned by AAC to BFAC, and as a result thereof BFAC presently owns
approximately 93% of the outstanding Common Stock. As a result of the Merger,
shareholders of the Company other than AAC will no longer have any continuing
interest in the Company.
Approximately 70.19% of the outstanding voting securities of AAC are
owned beneficially or of record by Mr. J. Mack Robinson, the Chairman of the
Company, or by his wife and other affiliates of Mr. Robinson. Mr. Robinson
also serves as Chairman of the Board of AAC, and his son-in-law, Hilton H.
Howell, Jr., serves as Executive Vice President and a director of the Company
and as President and Chief Executive Officer and directr of AAC. In addition,
three other members of the Bankers Board serve as officers or directors of AAC
or certain other subsidiaries of AAC. See "The Merger - Interests of Certain
Persons in the Merger."
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
The date of this Proxy Statement is __________, 1996.
2
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recommendations of the Special Committee and the
Bankers Board, and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Rights to Terminate and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Purpose of the Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Voting Rights, Vote Required for Approval and Proxy
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
INCORPORATION OF DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Purpose and Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Recommendation of the Special Committee and the Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Terms of the Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
The Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Certain Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
3
<PAGE> 9
<TABLE>
<S> <C>
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ABSENCE OF PUBLIC MARKET FOR COMMON STOCK; DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Trading of the Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
OTHER MATTERS THAT MAY COME BEFORE THE MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
ANNEX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
ANNEX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
ANNEX C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
4
<PAGE> 10
SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Proxy Statement or incorporated herein
by reference. Shareholders are urged to review the entire Proxy Statement, the
Schedule and Annexes hereto and the documents incorporated herein by reference.
Capitalized terms used and not otherwise defined in this Summary have the
meanings given to them elsewhere in this Proxy Statement.
INTRODUCTION
THE PARTIES
The Company. Bankers, a 93%-owned subsidiary of AAC, is an insurance
company that offers medicare supplement and other accident and health
insurance, as well as life insurance. During 1994 and the first nine months of
1995, accident and health insurance (which includes medicare supplement)
accounted for approximately 63.6% and 63.6%, respectively, of the Company's
total net premiums written, and life insurance accounted for approximately
36.4% and 36.4%, respectively, of such premiums. Medicare supplement insurance
accounted for 51.2% of the Company's total net premiums written in 1994, and
51.1% during the first nine months of 1995. While the Company is licensed to
do business in 22 states, approximately 68% of the Company's net premiums
written in 1994, and approximately 70% during the first nine months of 1995,
were derived from the states of Missouri, Nebraska, North Carolina, Texas and
West Virginia.
Accident and health insurance lines include medicare supplement,
medical surgical, cancer, hospital indemnity, convalescent care, disability,
and accident expense insurance. The Company also offers ordinary life
(traditional whole life and term) insurance. The Company's accident and health
and life insurance is sold by approximately 1,300 independent agents.
Prior to 1983, the Company wrote primarily ordinary life insurance.
As a result of an evaluation of additional product lines following the
Company's determination that it was not well positioned to achieve significant
growth in sales of life insurance, the Company introduced a medicare supplement
policy in May 1983 and, until 1988, focused a majority of its resources on
marketing such insurance. Beginning in 1986 and continuing through 1992, the
Company began to broaden its product base by introducing convalescent care and
new cancer benefits policies, as well as short-term disability, accident
expense and hospital/surgical policies. As legislative changes have reduced
the attractiveness of writing medicare supplement insurance, the
5
<PAGE> 11
Company has placed greater emphasis on offering a wide range of products to
many age groups, rather than focusing solely on the senior citizen market. In
1990, the Company began updating its life portfolio, and beginning in 1991
implemented several programs to penetrate niche markets where these products
have greater appeal and where less competition exists. Continued emphasis will
be placed on life sales at all ages. An expanded senior life portfolio, a new
cancer plan, an innovative new transitional disability product combined with an
updated hospital/surgical product will continue the Company's plans for a more
diversified portfolio.
In 1990 the Company implemented several new life products with
supporting life programs to penetrate niche markets where these products would
have greater appeal and where less competition exists. In 1992, the Company
introduced the "Debt Management Program," designed to allow insureds to
accumulate funds for the future repayment of college tuition debt. The
program's major components consist of a "10-Pay Whole Life Policy" with an
"Annuity Rider." This program updated the outdated student loan program which
had begun in 1986, and revitalized sales in this promising area. The Company
introduced a new life product for the senior market to enhance a portfolio of
products that are sold exclusively in that market. The senior market life
products portfolio was revised in 1993 with the introduction of the "Senior
Security Life" program. The revised program is comprised of whole life with
both standard and preferred underwriting and joint whole life providing
replacement of lost social security income. In 1995, new policy riders
providing for the waiver of premiums for skilled nursing facility confinement
and acceleration of benefits, up to 25% of the original face amount, for
terminal illness were added. These enhancements have allowed the Company to
remain on the cutting edge of senior market sales. The life products have
preferred and standard rates for males and females. Sales in this market have
increased substantially in 1995 and the Company expects to see continued future
growth in this market. The Company has also experienced increased sales in
other life products that are being sold along with the new senior life
products. Renewed emphasis on life sales has produced an increase in life
sales in 1992, 1993, 1994 and 1995.
The Company also started updating its current supplemental health
products in 1993. The Company introduced four new or updated health products
in 1994. The first product introduced was a short-term care product that
provides nursing home coverage for 90, 180, 270 or 360 days. This product
enhances the senior portfolio and was designed to target the individuals who
cannot afford long-term care insurance. The second product introduced was a
new cancer product to be sold on an individual basis and in the payroll market.
The benefits were designed to be flexible in order to be able to adjust
benefits for the market need. The
6
<PAGE> 12
third product introduced was on an individual basis and in the payroll market.
This product was designed to be flexible so benefits could be adjusted
depending on the market need. The fourth product introduced in 1994 was a dual
disability product. This product provides disability benefits if the insured
becomes disabled before age 65, and benefits for nursing facility coverage
after age 65. The Company believes this is the first product to be introduced
with those benefits. The Company expects to market this product on an
individual and payroll basis. This series of new products is part of the
Company's plans for a more diversified portfolio and assist the Company in
competing in niche markets. They are also intended to allow greater expansion
of sales in the list bill (billing for more than one insured) and payroll
deduction markets. In order to increase product revenues, the Company will
continue to place emphasis on the entire product line and not rely on any one
individual product. In 1995, the Company introduced a new "List Bill Product"
which will pay a limited doctor benefit for a limited amount of time plus a
flat $500 or $1,000 for deductible and copayments. This product is for the
list bill payroll deduction market and has been designed to enhance existing
small group voluntary products area. Also in 1995, the Company introduced a
low premium medicare product to be sold jointly with our preferred senior life
products.
In 1995, the Company designed and filed two new level term products
for the individual and payroll market which are intended to replace the old
level term product. One product is a standard level term policy, renewable and
convertible; the other provides the option to purchase additional face amounts
at the current rate for their original issue age, during the second to ninth
policy years, in addition to the standard renewable and convertible level term
policy benefits.
These added products will not only continue to assist the Company in
competing in the niche markets, but will also allow greater expansion of sales
in the list bill and payroll deduction markets.
AAC. AAC, a Georgia corporation, is a diversified holding company
which is engaged primarily in the insurance and furniture retailing businesses
through the following subsidiaries: Atlantic American Life Insurance Company,
Bankers, Georgia Casualty & Surety Company, American Southern Insurance
Company, American Safety Insurance Company, Leath Furniture, Inc., Modernage
Furniture, Inc. and Jefferson Home Furniture Company, Inc. Through the
insurance subsidiaries, AAC offers life, accident and health insurance, which
includes medicare supplement and other medical care policies, and property and
casualty insurance. Through its furniture subsidiaries, AAC operates 43 retail
home furnishings stores in seven states.
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BFAC. BFAC, a newly-formed Georgia corporation and a wholly-owned
subsidiary of AAC, has not conducted any prior business. BFAC was organized by
AAC for the sole purpose of enabling AAC, which prior to the formation of BFAC
owned approximately 93% of the outstanding shares of Common Stock, to effect the
Merger and, as a result, acquire the entire equity interest in the Company.
The principal executive offices for each of the Company, AAC and BFAC
are located at 4370 Peachtree Road, N.E., Atlanta, Georgia 30319, and the
telephone number at such address is (404) 266-5500.
THE MEETING
GENERAL
The Special Meeting will be held at ____ a.m., Atlanta time, on
_____________, March ___, 1996, at the Company's offices, located at 4370
Peachtree Road, N.E., Atlanta, Georgia 30319. Only holders of record of
shares of Common Stock at the close of business on __________, 1996 are
entitled to notice of and to vote at the Special Meeting. On that date there
were ________ shares of Common Stock outstanding, with each share entitled to
cast one vote with respect to the Merger at the Special Meeting. See "The
Special Meeting."
REQUIRED VOTE
Pursuant to the GBCC, the affirmative vote of the holders of at least
a majority of the shares of Common Stock outstanding as of the Record Date and
entitled to vote is required to approve the Merger Agreement and the
transactions contemplated thereby. The presence, either in person or by proxy,
of the holders of a majority of the shares of Common Stock outstanding as of
the Record Date and entitled to vote is necessary to constitute a quorum at the
Special Meeting. AAC, through BFAC, holds shares representing approximately
93% of the votes entitled to be cast at the Special Meeting and intends to
cause those shares to be voted in favor of the Merger Agreement. Approval of
the Merger Agreement is therefore assured. See "The Special Meeting -- Voting
Rights, Vote Required for Approval and Proxy Information."
The holders of shares of Common Stock will be entitled to dissenters'
rights under the GBCC. See "The Merger - - Dissenters' Rights."
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THE MERGER
EFFECT OF THE MERGER
Pursuant to the Merger Agreement, at the Effective Time (as defined
hereinbelow) of the Merger, BFAC will be merged with and into the Company, and
BFAC will cease to exist as a corporation. The Company will be the surviving
corporation in the Merger and will thereby become a wholly-owned subsidiary of
AAC. In the Merger, each issued and outstanding share of Common Stock, other
than shares owned by BFAC or owned by shareholders who properly perfect their
dissenters' rights under the GBCC, will be converted into the right to receive,
and become exchangeable for, $6.25 in cash, without interest. Each share of
Common Stock owned by BFAC or held by the Company as treasury shares will be
cancelled without consideration, and each BFAC Share will automatically be
converted into the right to receive one share of common stock of the Surviving
Corporation. A copy of the Merger Agreement is included as Annex A to this
Proxy Statement and is incorporated herein by reference.
EFFECTIVE TIME
After all the conditions set forth in the Merger Agreement have been
satisfied or waived, the Merger will become effective at such time as articles
of merger required under the GBCC (the "Articles of Merger") are filed with the
Secretary of State of the State of Georgia, or at such later time as may be
specified in the Articles of Merger (the "Effective Time"). It is anticipated
that such filing will be made promptly after the approval of the Merger
Agreement at the Special Meeting. See "The Merger -- Terms of the Merger
Agreement -- General."
EXCHANGE OF STOCK CERTIFICATES
From and after the Effective Time, each holder of an outstanding
certificate which immediately prior to the Effective Time represented shares of
Common Stock (the "Certificates"), other than BFAC and those holders who have
properly perfected their dissenters' rights under the GBCC, will cease to have
any rights as a shareholder of the Company and, until surrendered to
____________ (the "Exchange Agent"), each Certificate shall represent for all
purposes only the right to receive the Merger Consideration to which he is
entitled, without interest thereon. As soon as practicable after the Effective
Time, the Exchange Agent will mail transmittal instructions to each former
shareholder of the Company describing the procedure for surrendering the
Certificates for the Merger Consideration. See "The Merger -- Terms of the
Merger Agreement -- Exchange of Certificates."
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BACKGROUND
A special committee of the Bankers Board, consisting solely of
directors of the Company who are not otherwise affiliated with the Company or
AAC (the "Special Committee"), reviewed the terms of the Merger Agreement and
received the opinion of an independent financial advisor that the Merger
Consideration to be paid to the shareholders of the Company other than BFAC
pursuant to the Merger Agreement is fair, from a financial point of view. See
"The Merger -- Background of the Merger."
OPINION OF FINANCIAL ADVISOR
On January 5, 1996, J.C. Bradford & Co. ("J.C. Bradford"), a
nationally recognized investment banking firm, delivered its oral opinion that,
subject to the assumptions set forth therein, the $6.25 per share of Common
Stock to be received by the holders of shares of Common Stock (other than BFAC)
(the "Unaffiliated Shareholders") is fair to such holders, from a financial
point of view. J.C. Bradford has confirmed such opinion in an opinion dated as
of the date of this Proxy Statement. The full text of J.C. Bradford's written
opinion, dated as of the date of this Proxy Statement, which sets forth the
assumptions made, procedures followed, matters considered and limits of its
review, is included as Annex B to this Proxy Statement and is incorporated
herein by reference. Holders of shares of Common Stock are urged to read such
opinion in its entirety. See "The Merger -- Opinion of Financial Advisor."
RECOMMENDATIONS OF THE SPECIAL COMMITTEE AND THE BANKERS BOARD, AND REASONS FOR
THE MERGER
The Special Committee has determined, based in part upon the opinion
of J.C. Bradford, that the Merger and the Merger Consideration are fair to, and
in the best interests of, the Company and the Unaffiliated Shareholders. After
considering the recommendations of the Special Committee, the Bankers Board
unanimously approved and adopted the Merger Agreement and the transactions
contemplated thereby, and recommends that the Company's shareholders vote "FOR"
approval of the Merger Agreement and the transactions contemplated thereby.
See "The Merger -- Recommendation of the Special Committee and the Board of
Directors." Shareholders should be aware that certain executive officers and
directors of the Company are also executive officers or directors of AAC or
other affiliates of AAC. See "The Merger -- Interests of Certain Persons in
the Merger." The recommendations of the Special Committee and the Bankers
Board are based upon their belief that the terms of the Merger Agreement are
fair from a financial point of view to the
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Unaffiliated Shareholders. For a discussion of the reasons for the Merger and
the factors considered by the Special Committee and the Bankers Board in making
their recommendations, see "The Merger - Recommendation of the Special
Committee and the Board of Directors."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Bankers Board with respect to
the Merger Agreement and the transactions contemplated thereby, shareholders
should be aware that certain executive officers and directors of the Company
are also executive officers or directors of AAC or other affiliates of AAC.
AAC indirectly controls approximately 93% of the outstanding shares of Common
Stock through its ownership of BFAC and intends to cause such shares to be
voted in favor of the Merger Agreement and the transactions contemplated
thereby. See "The Merger -- Interests of Certain Persons in the Merger."
CONDITIONS TO THE MERGER
The obligations of the Company and BFAC to consummate the Merger are
subject to the satisfaction of several conditions, including the approval of
the Merger Agreement by the Company's shareholders. See "The Merger -- Terms
of the Merger Agreement -- Conditions to the Merger."
RIGHTS TO TERMINATE AND AMENDMENTS
The Merger Agreement may be terminated at any time prior to the
closing of the transactions contemplated thereby under certain circumstances.
See "The Merger -- Terms of the Merger Agreement -- Amendment and Termination."
Subject to compliance with applicable law, the Merger Agreement may be
amended at any time prior to the Effective Time by a written agreement executed
by AAC, BFAC and the Company. See "The Merger -- Terms of the Merger Agreement
- -- Amendment and Termination."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The receipt of cash for shares of Common Stock pursuant to the Merger
or the exercise of dissenters' rights will be a taxable transaction for federal
income tax purposes. See "The Merger -- Certain Federal Income Tax
Consequences of the Merger."
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SOURCE OF FUNDS
The funds to be used to pay the aggregate Merger Consideration, as
well as all expenses incurred in connection with the Merger, will come from the
Company's working capital, and no funds will be borrowed in order to complete
the Merger. See "The Merger -- Source of Funds."
DISSENTERS' RIGHTS
Holders of shares of Common Stock are entitled to dissenters' rights
under the GBCC in connection with the Merger. See "The Merger -- Dissenters'
Rights" and Article 13 of the GBCC included as Annex C to this Proxy Statement
and incorporated herein by reference.
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THE SPECIAL MEETING
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, the holders of Common Stock will be asked to
consider and vote upon a proposal to approve the Merger Agreement, pursuant to
which, among other things, (i) BFAC will be merged with and into the Company
with the Company being the surviving corporation, (ii) each outstanding share
of Common Stock (other than Common Stock held by BFAC or by shareholders who do
not vote in favor of the Merger Agreement and properly perfect their
dissenters' rights under Article 13 of the GBCC) will be converted into the
right to receive the Merger Consideration, (iii) each outstanding share of
Common Stock held by BFAC or shares held by the Company as treasury shares will
be cancelled without consideration, and (iv) each outstanding BFAC Share will
be converted into the right to receive one share of common stock of the
surviving corporation. A copy of the Merger Agreement is included as Annex A
to this Proxy Statement and is incorporated herein by reference.
Based upon the recommendation of the Special Committee, the Bankers
Board unanimously approved the Merger Agreement and recommends that the
Company's shareholders vote "FOR" approval of the Merger Agreement and the
transactions contemplated thereby. See "The Merger -- Recommendation of the
Special Committee and the Board of Directors." In rendering its recommendation
to the Bankers Board, the Special Committee retained and consulted with a
financial advisor and received an opinion as to the fairness of the Merger
Consideration to the Unaffiliated Shareholders, from a financial point of view.
See "The Merger -- Opinion of Financial Advisor." In considering the
recommendation of the Bankers Board, shareholders should be aware that certain
executive officers and directors of the Company are also executive officers or
directors of AAC or other affiliates of AAC. See "The Merger -- Interests of
Certain Persons in the Merger."
VOTING RIGHTS, VOTE REQUIRED FOR APPROVAL AND PROXY INFORMATION
The Bankers Board has fixed the close of business on ________, 1996 as
the Record Date for the determination of shareholders entitled to notice of and
to vote at the Special Meeting and any adjournment or postponement thereof.
Accordingly, only holders of record of Common Stock at the close of business on
the Record Date are entitled to notice of and to vote at the Special Meeting.
At the close of business on the Record Date, there were _________ shares of
Common Stock outstanding and entitled to vote, held of record by approximately
___ holders.
Each holder of record of Common Stock on the Record Date is entitled
to cast one vote per share of Common Stock in person or by proxy at the Special
Meeting. The presence, either in person
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or by proxy, at the Special Meeting of the holders of a majority of the shares
of Common Stock outstanding as of the Record Date and entitled to vote is
necessary to constitute a quorum at the Special Meeting. Abstentions and
broker non-votes (where a broker or other record holder submits a proxy but
does not have authority to vote a customer's Common Stock) will be considered
present for purposes of establishing a quorum.
The Merger Agreement requires approval of the affirmative vote of
holders of a majority of the outstanding shares of Common Stock on the Record
Date as required by the GBCC ("Statutory Approval"). On the Record Date, BFAC
beneficially owned ___________ shares, or approximately 93%, of the outstanding
shares of Common Stock. Management of AAC has indicated that it intends to
cause BFAC to vote such shares in favor of the proposal to approve the Merger
Agreement, which vote will be sufficient to obtain Statutory Approval without
the approval of any other shareholders of the Company. The Merger Agreement
does not require approval by the holders of a majority of the shares of Common
Stock other than BFAC. Approval of the Merger Agreement is, therefore,
assured.
Holders of shares of Common Stock who do not vote in favor of, or who
abstain from voting on, the Merger Agreement and who comply with the provisions
of Article 13 of the GBCC have the right to receive cash payment for the "fair
value" of their shares of Common Stock. Any shareholder contemplating the
exercise of dissenters' rights should carefully review Article 13 of the GBCC,
a copy of which is included as Annex C to this Proxy Statement and incorporated
herein by reference, particularly the procedural steps required to perfect
dissenters' rights, a description of which is provided under "The Merger --
Dissenters' Rights." A shareholder who fails to comply with such procedural
requirements will lose such holder's rights to dissent and will receive the
Merger Consideration for the shares of Common Stock held by such shareholder.
See "The Merger -- Dissenters' Rights" and Annex C.
Unless otherwise specified, all shares represented by effective
proxies will be voted in favor of approval of the Merger Agreement. Since
Statutory Approval requires the affirmative vote of a majority of the shares of
Common Stock issued and outstanding, both abstentions and broker non-votes have
the effect of a "no" vote. Any shareholder who executes and delivers a proxy
may revoke it at any time prior to its use by: (i) giving written notice of
revocation to the Secretary of the Company, (ii) executing a proxy bearing a
later date, or (iii) appearing at the Special Meeting and voting in person.
The cost of soliciting proxies will be paid by the Company. In
addition to use of the mails, proxies may be solicited in person or by
telephone or telegram by directors, officers and regular employees of the
Company or AAC, who will not receive additional compensation for such services.
Brokerage houses,
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nominees, custodians and fiduciaries will be requested to forward soliciting
material to beneficial owners of stock held of record by them, and the Company
will reimburse such persons for their reasonable expenses in doing so.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "Form 10-K") and the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1995 (the "Form 10-Q"), filed
with the Securities and Exchange Commission (the "Commission") by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are hereby incorporated by reference in this Proxy Statement and copies
are being delivered herewith.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Proxy Statement and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference into this Proxy Statement and to be part hereof from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or was deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement.
The information relating to the Company contained in this Proxy
Statement should be read together with the information in the documents
incorporated by reference.
This Proxy Statement incorporates documents by reference which may not
be presented herein or delivered herewith. Any such documents (other than
exhibits to such documents unless such exhibits are specifically incorporated
by reference) can be obtained without charge by any person, including any
beneficial owner, to whom this Proxy Statement is delivered upon written or
oral request directed to Bankers Fidelity Life Insurance Company at its
principal executive offices at 4370 Peachtree Road, N.E., Atlanta, Georgia
30319, Attention: Assistant Secretary, telephone (404) 266-5500. In order to
ensure timely delivery of the documents, any such request should be made by
_______________, 1996.
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AVAILABLE INFORMATION
The Company and AAC have filed with the Commission a Statement on
Schedule 13E-3 (the "Schedule 13E-3") pursuant to Rule 13e-3 under the Exchange
Act, furnishing certain additional information with respect to the proposed
Merger.
As permitted by the rules and regulations of the Commission, this
Proxy Statement omits certain information contained in the Schedule 13E-3 and
the exhibits thereto. In addition, the Company is subject to the informational
requirements of the Exchange Act, and in accordance therewith files reports,
proxy statements and other information with the Commission. The Schedule
13E-3, as well as other reports, proxy statements and other information filed
by the Company, can be inspected and copied at the Commission's Public
Reference Room, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C., and at the public reference facilities maintained by the Commission at
its regional offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois, and 7 World Trade Center, Suite 1300, New York, New
York. Copies of such materials can be obtained from the Commission at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549.
Statements contained in this Proxy Statement as to the contents of any
contract or other document referred to herein are not necessarily complete, and
in each instance reference is made to the full text of such contract or other
document included as an Annex hereto or filed as an exhibit to the Schedule
13E-3, each such statement being qualified in all respects by such references.
THE MERGER
GENERAL
The following information with respect to the Merger, insofar as it
relates to matters contained in the Merger Agreement, is qualified in its
entirety by reference to the complete text thereof, a copy of which is included
as Annex A to this Proxy Statement and which is incorporated herein by
reference.
PURPOSE AND EFFECTS OF THE MERGER
The purpose of the Merger is to enable AAC to acquire the
approximately 7% of the equity interest of the Company that is not already
owned by AAC, while seeking to maximize shareholder value for the Company's
public shareholders, considering that AAC already holds in excess of 90% of the
Company. AAC desires to effect the Merger in order to streamline the ownership
of the
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Company. Operation of the Company as a wholly-owned subsidiary, as opposed to
a publicly-held concern, would permit the Company's management to effect
strategic decisions without regard to their short-term effects on reported
earnings or the interests of the outside shareholders. In addition, as soon as
practicable following the Effective Time, the Company will take such actions as
are necessary to suspend its obligations to file reports, proxy statements and
other information pursuant to Section 15(d) of the Exchange Act. Upon the
effectiveness of such suspension, the Company will no longer be required to
incur the reporting, public information, share transfer and other costs
associated with operating a public company.
Consummation of the Merger will terminate the equity interest in the
Company of the Company's shareholders other than AAC. Accordingly, the
Company's public shareholders will share in neither the potential future
earnings and growth of the Company nor the risks associated with achieving such
earnings and growth following the Merger. AAC will continue to have an equity
interest in the Company and will benefit from the Company's potential earnings
and growth, and will be subject to the risks associated therewith. Assuming
consummation of the Merger, AAC will have 100% of the interest in the Company's
net book value and net income, which were $19,150,000 ($6.41 per share) and
$716,000 respectively, at December 31, 1994 and for the fiscal year ended on
such date, and $23,710,000 ($7.28 per share) and $1,135,000 respectively, at
September 30, 1995 and for the nine months ended on such date.
As there is currently no established public trading market for the
Common Stock, there are only limited opportunities for the Company's
shareholders to realize upon the value of the Common Stock owned by them. The
Merger will enable the Company's public shareholders to receive a cash payment
of $6.25 per share of Common Stock held, or to exercise their dissenters'
rights as described under "Dissenters' Rights," as part of a transaction that
has been determined by the Special Committee and the Bankers Board, as
described under "-- Recommendation of the Special Committee and the Board of
Directors" below, to be fair to such shareholders. The Merger will further
provide for a prompt and effective transfer of ownership of the minority
interest in the Company to AAC. The receipt by any shareholder of the Company
of cash pursuant to the Merger will be a taxable transaction. See "-- Certain
Federal Income Tax Consequences of the Merger."
BACKGROUND OF THE MERGER
AAC acquired a majority of the Company's outstanding Common Stock, and
thereby obtained controlling interest in the Company, pursuant to an exchange
offer for shares of the Common Stock in 1976. Since prior to the time of that
exchange offer, there has been no established public trading market for the
Common Stock. From time to time thereafter, when and if solicited by
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<PAGE> 23
shareholders of the Company, AAC periodically increased its level of ownership
of Common Stock by acquiring additional shares of Common Stock, for which there
continued to be no established public trading market, in privately negotiated
transactions with other shareholders of the Company. See "Absence of Public
Market for Common Stock; Dividends." At various times during that period the
Bankers Board reviewed the feasibility of the Company undertaking a transaction
or series of transactions that would result in AAC or the Company acquiring the
remaining publicly-held shares of the Common Stock. The discussions were
always very preliminary in nature, and no specific transactions were ever
discussed or contemplated, because the Bankers Board thought that such a
transaction would not be economically feasible for the Company considering the
costs involved in undertaking such a transaction and the regulatory
requirements that place certain limits on the use of capital by insurance
companies.
During the third quarter of 1995, as a result of the improved
financial condition of the Company, management of AAC (including Mr. Robinson
and Mr. Howell, each of whom serves as an executive officer and director of
both the Company and AAC) determined that it might be beneficial for AAC to
begin to consider methods of eliminating the minority interest in the Company
and accordingly began investigating the feasibility of causing the Company to
acquire the approximately 7% of the issued and outstanding shares of Common
Stock held by the Unaffiliated Shareholders (the "7% Interest").
At the regularly scheduled meeting of the Bankers Board on October 31,
1995, the directors considered various issues relating to the Company's
business plan and objectives. During that meeting, Mr. Howell, in his capacity
as President and Chief Executive Officer of AAC, indicated that AAC was
prepared to explore ways to cause the Company to acquire the 7% Interest, and
proposed that the Bankers Board consider whether the long-term business
objectives of the Company, as well as the interests of the Unaffiliated
Shareholders, would best be served by the Company's ceasing to be a publicly
owned corporation. The Bankers Board indicated that they would welcome a
report from Mr. Howell and Mr. Hancock, in their capacities as executive
officers of both AAC and the Company (see "-- Interests of Certain Persons in
the Merger"), with respect to alternatives that might be available to acquire
the 7% Interest and the feasibility of pursuing any such alternatives.
During November and December 1995, management of the Company and AAC
reviewed the operational flexibility, the long-term cost savings and financial
advantages both to the Company and to AAC, as well as the other efficiencies
that could be achieved, by causing the Company to cease to be a public company
and to become a wholly-owned subsidiary of AAC.
On December 20, 1995, the Bankers Board convened a special meeting at
which Messrs. Howell and Hancock reported on the
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results of their review and then summarized for the Bankers Board the
information that was available on the transactions in the Common Stock during
1995. Mr. Howell then stated that AAC was prepared to propose a transaction by
which the Company would acquire the 7% Interest through the merger of a
newly-formed wholly-owned subsidiary of AAC with and into the Company. As a
result of such a merger, the shares of Common Stock held by the Unaffiliated
Shareholders would be cancelled and such holders would each receive a
to-be-determined amount of cash consideration for each share of Common Stock.
The funds to be used to pay the cash consideration would come from the
Company's working capital. Mr. Howell also advised the Bankers Board that AAC
had no desire or intention to sell its interest in the Company or to vote its
shares of Common Stock in favor of any transaction involving the sale of the
Company and, therefore, the sale of the Company to a third party would not be a
viable alternative.
The Bankers Board then determined that, in view of the fact that five
of the seven members of the Bankers Board also served as officers and/or
directors of AAC or other affiliates of AAC, and that certain other familial,
financial or employment relationships of such directors to AAC might cause
those directors to be deemed to have an interest in such a transaction, any
proposal by which AAC would acquire the entire equity interest in the Company
should be evaluated by members of the Bankers Board who were neither employees
nor officers of AAC, nor had any other affiliations with AAC or its affiliated
entities. Accordingly, at that meeting the Bankers Board appointed as members
of a special committee of the Bankers Board (the "Special Committee"), Messrs.
E.F. Mauldin and F.C. Parker, Jr., each of whom has served as a director of the
Company since before it became a subsidiary of AAC and is not otherwise
affiliated with the Company, the other directors or AAC. The Special Committee
was charged with reviewing, evaluating and negotiating the terms and conditions
of the proposed transaction and, after due investigation and consideration as
deemed necessary by the Special Committee in its sole discretion, to consider
the proposed transaction and to make a recommendation to the full Bankers Board
as to what action should be taken with respect to such a transaction.
The Special Committee was authorized by the Bankers Board to exercise
all the powers and authority of the Bankers Board in discharging their duties
with regard to such a transaction, including, without limitation, the authority
to hire independent legal counsel and financial advisors.
On December 20, 1995, following the meeting of the Bankers Board, the
Special Committee held its first meeting. As its first order of business, the
Special Committee concluded that it should engage independent legal counsel to
assist it in the discharge of its duties and to advise the Special Committee of
procedures that should be followed in evaluating a possible
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transaction with AAC. After deliberation, the Special Committee selected the
law firm of Cashin, Morton & Mullins to serve as counsel to the Special
Committee upon confirmation that such firm had not previously rendered services
to the Company, AAC or their affiliates. Counsel to the Special Committee
thereafter (both by participation in the later stages of such meeting and in
subsequent contacts) advised the Special Committee regarding their fiduciary
duties and the exercise of independent business judgment in evaluating any
proposed transaction and the process of requesting and reviewing information
from the Company. The Special Committee then discussed the need to engage a
financial advisor to conduct a financial analysis of the Company and, in the
event that a transaction is negotiated, to render a fairness opinion with
respect thereto, and to otherwise assist the Special Committee in the discharge
of its duties. The Special Committee thereafter discussed various financial
advisors that might be in a position to perform such services, and determined
that it was important to select a firm that had not previously rendered
financial advisory services to the Company, AAC or their affiliates. On the
basis of those discussions, the Special Committee then determined to select J.
C. Bradford, a nationally recognized investment banking firm. Subject to
written confirmation in a formal engagement letter, the Special Committee
authorized J.C. Bradford to commence an examination of the Company and explore
appropriate valuation methodologies for the purpose of rendering an opinion
regarding whether the consideration to be proposed by AAC would be fair to the
Unaffiliated Shareholders from a financial point of view. J.C. Bradford
thereafter undertook a review of the Company's business, operations and
prospects with a view toward advising the Special Committee as to the fairness,
from a financial point of view, of the transaction to be proposed by AAC. The
scope and nature of that examination is discussed in "-- Opinion of Financial
Advisor" below.
On January 2, 1996, the Special Committee was informed by
representatives of AAC that AAC was prepared to make a firm offer to the
Bankers Board whereby AAC would acquire the entire equity interest in the
Company through the merger of BFAC with and into the Company, in which merger
the Unaffiliated Shareholders would receive $5.00 per share of Common Stock,
payable from the Company's working capital, all on the terms and subject to the
conditions that would be specified in a definitive merger agreement. In
connection with the proposal, counsel for AAC provided to the Special
Committee's legal counsel a draft of the proposed merger agreement. The
Special Committee thereafter requested that J.C. Bradford evaluate such
proposal and report back to the Special Committee. On January 4, the Special
Committee held a telephonic meeting, with participation by its counsel and
representatives from J.C. Bradford, in which J.C. Bradford reviewed for the
Special Committee its preliminary examination of the Company and discussed
various valuation methodologies that would be used in determining the fairness,
from a financial point of view, of the price to be paid to the
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Unaffiliated Shareholders. In addition, the Special Committee, its counsel and
J.C. Bradford reviewed the limited trading history and lack of an established
public market for the Common Stock as well as the information that was
available with respect to the limited number of transactions in the Common
Stock. The Special Committee expressly authorized J.C. Bradford to communicate
directly with AAC, to share information concerning valuation methodologies,
and, in connection therewith, to relay the conclusion of the Special Committee
that, based upon their preliminary review, the Special Committee would be
unable to recommend the proposed transaction at a $5.00 price.
On January 4, counsel to the Special Committee and representatives of
J.C. Bradford subsequently conducted a telephone conference with
representatives of AAC in which J.C. Bradford summarized the type of financial
analyses it was conducting, the valuation methodologies it was using, and
described certain of the types of comparable transactions that it was reviewing
in its analyses and the premiums paid in such transactions. Mr. Howell, on
behalf of AAC, then explained that AAC had presented its initial proposal based
principally upon the facts that $5.00 per share represented a premium over the
average sales price for shares of Common Stock sold in privately negotiated
transactions during 1995, and that the price represented a premium above
statutory book value per share (one of the principal valuation approaches used
in the insurance industry) of the Common Stock as well as a premium over the
average sales price for the twelve transactions in the Common Stock that did
not involve AAC, which were reported to the Company, as transfer agent, during
1995. See "Absence of Public Market for Common Stock; Dividends." Mr. Howell
also indicated that it was the position of management of AAC that certain of
the comparable transactions and other factors referenced by J.C. Bradford were
not as meaningful or applicable to the proposed transaction for the Common
Stock, principally because of the illiquidity of the shares of Common Stock due
to the absence of any established trading market.
Following the discussions with J.C. Bradford, subsequently on January
4, Mr. Howell indicated that AAC was willing to increase its proposal to $6.25
per share, subject to the terms and conditions contained in the draft merger
agreement that had previously been presented to the Special Committee. He
emphasized that such offer represented a multiple of approximately 1.33 times
statutory book value and a premium of $2.25 over the most recent sale of shares
of Common Stock. Mr. Howell also stated that management of AAC was not
prepared to increase its proposal above that amount. Counsel to the Special
Committee agreed to convey the new proposal to the Special Committee as soon as
possible.
On January 5, 1996, the Special Committee met by telephone conference
with its counsel and representatives of J.C. Bradford, to discuss the $6.25 per
share price that had been proposed by
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AAC. During this meeting, the Special Committee's legal counsel reported on
the progress in negotiating the terms of the merger agreement with counsel to
AAC. Thereafter, J.C. Bradford reviewed its financial analyses for the Special
Committee and indicated that, based on various considerations and assumptions,
as described under "-- Opinion of Financial Advisor," J.C. Bradford was
prepared to orally advise the Special Committee that the $6.25 per share in
cash to be received by the Unaffiliated Shareholders in connection with the
proposed Merger was fair, from a financial point of view, to said Unaffiliated
Shareholders. See "-- Opinion of Financial Advisor".
Based upon the presentation and opinion of J.C. Bradford, the factors
described below under "-- Opinion of Financial Advisor," and the other
discussions during the meeting, the Special Committee unanimously adopted
resolutions (i) approving the Merger at a price of $6.25 per share and the
execution by the Company of the merger agreement substantially in the form
proposed by AAC, subject to final negotiations, (ii) that in the Special
Committee's judgment, the proposal was fair and reasonable to the Unaffiliated
Shareholders, and (iii) recommending that the full Bankers Board approve such
proposed merger agreement and the transactions contemplated thereby.
In reaching its conclusion that the Merger Consideration was fair to
the Unaffiliated Shareholders, the Special Committee considered a number of
factors, including (i) the Merger Consideration represents a premium of 25%
over the average price that AAC has paid for shares of Common Stock in
privately negotiated transactions during 1994 and 1995, and a premium of 8%
over the highest price paid by AAC for shares of Common Stock during the past
two years, (ii) the Merger Consideration represents a premium of 34% over the
average sales price for shares of Common Stock sold in the limited number of
negotiated transactions by shareholders other than AAC, (iii) the illiquidity
of the shares of Common Stock due to the absence of an established public
trading market and the view that it is unlikely such a market would develop in
the future, (iv) that the transaction represents an opportunity for the
Unaffiliated Shareholders to realize upon their investment in the Common Stock
that might otherwise not be available, (v) the high level of certainty that the
proposed transaction would be consummated by AAC and the availability of the
funds necessary for the Company to finance the transaction, (vi) the
presentations and opinion of J.C. Bradford that the Merger consideration to be
received by the Unaffiliated Shareholders is fair, from a financial point of
view, to such shareholders, and (vii) the lack of any other available or
foreseeable alternative for the Unaffiliated Shareholders to realize upon the
value of the 7% Interest, particularly taking into account AAC's stated
position that it had no intent or desire to sell its interest in the Company to
a third party. In light of the variety of factors considered in connection
with evaluation of the Merger, the Special Committee
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did not find it practical to, and did not, quantify or otherwise attempt to
assign relative weight to the specific factors considered in reaching its
determination.
Immediately following the Special Committee meeting on January 5, the
Bankers Board convened a special meeting at which the terms of the proposed
transaction were outlined for all of the directors, and the Special Committee
presented its recommendation that the Bankers Board approve the $6.25 per share
price to be paid in connection with the Merger, and the other principal terms
of the Merger Agreement. The full Bankers Board then unanimously approved the
proposal and the terms of the Merger Agreement. See "-- Recommendation of the
Special Committee and the Board of Directors" and "-- Interests of Certain
Persons in the Merger."
On the date of this Proxy Statement, J.C. Bradford delivered a written
opinion, dated the date hereof, as to the fairness, from a financial point of
view, of the consideration to be paid to the Unaffiliated Shareholders pursuant
to the Merger. See "-- Opinion of Financial Advisor."
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS
On January 5, 1996, the Special Committee recommended that the full
Bankers Board approve the Merger Agreement and the transactions contemplated
thereby. See "--Background of the Merger." The Bankers Board, based on the
recommendation of the Special Committee, unanimously approved the Merger
Agreement and the transactions contemplated thereby and recommended that
shareholders vote "FOR" the approval of the Merger Agreement and the
transactions contemplated thereby. Directors of the Company who are also
executive officers or directors of AAC did not participate in the Special
Committee's consideration of the Merger Agreement and the transactions
contemplated thereby because of their interests in the Merger. See "--
Interests of Certain Persons in the Merger." AAC intends to cause BFAC to vote
its shares of Common Stock, representing approximately 93% of the issued and
outstanding shares of Common Stock, in favor of the Merger Agreement. Approval
of the Merger Agreement is, therefore, assured. In reaching its determination,
the Bankers Board considered the following factors: the benefits of the Merger
to the Company, such as enhanced operational flexibility both in terms of
structuring financing arrangements in the future and pursuing potential
business opportunities that may arise in the future, as well as the cost
savings and other efficiencies that could be achieved in ceasing to be a
publicly owned company; the recommendation of the Special Committee; and the
fact that the Unaffiliated Shareholders would have the opportunity to receive
cash for their shares of Common Stock, for which there has been no established
public trading market for many years.
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In view of the variety of factors considered in connection with the
evaluation of the Merger, the Bankers Board did not find it practicable to, and
did not, quantify or otherwise attempt to assign relative weight to the
specific factors considered in reaching its determination.
OPINION OF FINANCIAL ADVISOR
J.C. Bradford was retained by the Special Committee to assist the
Special Committee in evaluating the proposed Merger and to render an opinion as
to the fairness from a financial point of view of the consideration to be
received by the Unaffiliated Shareholders in the Merger. J.C. Bradford is a
nationally recognized investment banking firm engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. J.C. Bradford was selected as the Special Committee's financial
advisor based upon such expertise. No limitations were imposed by the Special
Committee, the Company or AAC upon the scope of J.C. Bradford's investigation
or otherwise with respect to the opinion rendered by J.C. Bradford. J.C.
Bradford relied, with the permission of the Special Committee, on the
statements made by AAC that it would not dispose of its shares of Common Stock
or vote such shares in favor of any transaction involving the sale of the
Company to a third party, and J.C. Bradford was not requested or authorized to
solicit, and did not solicit, interest from any party with respect to an
acquisition of the Company or its assets.
On January 5, 1996, J.C. Bradford delivered its oral opinion to the
Special Committee to the effect that, as of such date, the consideration to be
received by the Unaffiliated Shareholders in the proposed Merger was fair from
a financial point of view. J.C. Bradford subsequently confirmed its oral
opinion by delivery of its written opinion dated as of the date of this Proxy
Statement. J.C. Bradford's opinion is directed only to the fairness from a
financial point of view of the consideration to be received by the Unaffiliated
Shareholders in the Merger and does not constitute a recommendation to any such
shareholder as to whether it should vote in favor of the Merger. The full text
of J.C. Bradford's written opinion, which sets forth the assumptions made,
procedures followed, matters considered and limits of its review, is included
as Annex B and is incorporated by reference herein. The Unaffiliated
Shareholders of the Company are urged to and should read such opinion in its
entirety.
In conducting its analysis and delivering its opinions, J.C. Bradford
considered such financial and other factors as it deemed appropriate and
feasible under the circumstances including, among other things, (i) the Merger
Agreement and drafts of this Proxy
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Statement, (ii) the historical and current financial position and results of
operations of Bankers; (iii) certain internal financial analyses and forecasts
of the Company for the years beginning January 1, 1995 and ending December 31,
1998, prepared for the Company by its senior management; (iv) certain financial
and securities data of certain other companies, the securities of which are
publicly traded and that J.C. Bradford believed to be comparable to the
Company; (v) prices and premiums paid in certain other acquisitions and
transactions that J.C. Bradford believed to be relevant; (vi) price and trading
activity for the Common Stock; and (vii) such other financial studies, analyses
and investigations as J.C. Bradford deemed appropriate for purposes of its
opinion. J.C. Bradford also held discussions with members of the senior
management of the Company regarding the past and current business operations,
financial condition, and future prospects of the Company. In addition, J.C.
Bradford took into account its assessment of general economic, market and
financial conditions and its experience in other transactions as well as its
experience in securities valuation and its knowledge of the insurance industry
generally.
J.C. Bradford's opinions are necessarily based upon general economic,
market, financial and other conditions as they existed on their respective
dates and the information made available to J.C. Bradford through such dates.
J.C. Bradford relied upon the accuracy and completeness of all of the
financial and other information reviewed by it for purposes of its opinions and
did not assume any responsibility for independent verification of such
information. With respect to the internal financial analyses and forecasts
supplied to J.C. Bradford, J.C. Bradford has assumed, and the management of
Bankers has represented, that such analyses and forecasts were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the Company's senior management as to the recent and likely future
performance of the Company. J.C. Bradford has not made an independent
evaluation or appraisal of the assets and liabilities of the Company and has
not been furnished with any such evaluation or appraisal.
In preparing its report to the Special Committee, J.C. Bradford
performed a variety of financial and comparative analyses, including (i)
comparable transaction analysis; (ii) comparable public company analysis; (iii)
comparable acquisition analysis; (iv) discounted cash flow analysis; and (v)
stock trading analysis. The summary of J.C. Bradford's analyses set forth
below does not purport to be a complete description of the analyses underlying
J.C. Bradford's opinion. The preparation of a fairness opinion is a complex
process involving subjective judgments and is not necessarily susceptible to
partial analysis or summary description. In arriving at its opinion, J.C.
Bradford did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, J.C. Bradford believes
that its analyses must be
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considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses and factors, could
create a misleading or incomplete view of the processes underlying such
analyses and its opinion. With respect to the comparable public company
analysis, comparable acquisition analysis and comparable transaction analysis
summarized below, no public company, acquisition or transaction utilized as a
comparison is identical to the Company or the Merger and such analyses
necessarily involve complex considerations and judgments concerning the
differences in financial and operating characteristics of the companies and
other factors that could affect the acquisition or public trading values of the
companies concerned. In performing its analyses, J.C. Bradford made numerous
assumptions with respect to industry performance, general business, economic,
market, and financial conditions, and other matters. The analyses performed by
J.C. Bradford are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses.
The following is a summary of the report presented by J.C. Bradford to
the Special Committee on January 5, 1996.
Comparable Transaction Analysis. J.C. Bradford analyzed certain
information relating to selected transactions involving acquisitions of
remaining interests by majority shareholders. J.C. Bradford considered ten such
transactions since 1990 that involved insurance companies and that J.C.
Bradford considered relevant to the Merger. Using publicly available
information, J.C. Bradford (a) calculated the relationship between the
consideration paid in these transactions and (i) book value (as determined in
accordance with generally accepted accounting principles or "GAAP"); (ii) GAAP
net income; (iii) GAAP pre-tax income; and (iv) capital and surplus (as
determined in accordance with statutory accounting ("STAT")), and (b)
determined the percentage premiums that such consideration represented when
compared to the stock trading price one day, one week and four weeks prior to
the announcement of each such transaction. J.C. Bradford derived average,
adjusted average (excluding high and low) and median multiples or percentages,
as the case may be, from the foregoing analyses and applied or compared such
multiples or percentages, as applicable, to (a) the Company's GAAP (i) book
value as of September 30, 1995, (ii) net income for the twelve months ended
September 30, 1995, and (iii) pre-tax income for the twelve months ended
September 30, 1995, (b) the Company's STAT capital and surplus as of September
30, 1995, and (c) the prevailing prices at which the Common Stock had been
purchased in privately negotiated transactions by AAC or otherwise reported by
the transfer agent since January 1, 1995. Based on this analysis, J.C.
Bradford calculated a range of values for the shares of Common Stock of $4.91
to $9.44 per share.
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J.C. Bradford also considered 56 transactions since 1991, not
restricted to the insurance industry, involving acquisitions of remaining
interests by majority shareholders. Using publicly available information, J.C.
Bradford determined the percentage premium that the consideration paid in these
transactions represented when compared to the stock trading price one day, one
week and four weeks prior to the announcement of such transactions. J.C.
Bradford derived average and median percentages from the foregoing analyses and
applied or compared such percentages, as applicable, to the prevailing prices
at which the Common Stock had been purchased in privately negotiated
transactions by AAC or otherwise reported by the transfer agent since January
1, 1995. Based on this analysis, J.C. Bradford calculated a range of values
for the shares of Common Stock of $6.10 to $6.66. per share.
Comparable Public Company Analysis. J.C. Bradford reviewed and
compared certain actual and estimated financial and operating information of
the Company to the corresponding information of certain selected publicly
traded life and accident and health insurance companies (the "Comparable
Companies"). In performing the comparable public company analysis, J.C.
Bradford divided the Comparable Companies into two groups based on equity
market capitalization of less than and more than $250 million. Using publicly
available information, J.C. Bradford analyzed various relevant financial ratios
of the Comparable Companies. The ratio analysis include the public stock
prices of the Comparable Companies as of January 5, 1996, as a multiple of GAAP
(i) earnings per share for the calendar years ended 1995 and 1996; (ii) book
value per share as of September 30, 1995; and (iii) pre-tax earnings per share
for the twelve months ended September 30, 1995, adjusted to exclude realized
capital gains or losses.
J.C. Bradford derived average, adjusted average (excluding high and
low) and median multiples from the foregoing analysis and applied or compared
such multiples, as applicable, to the Company's GAAP (i) earnings per share for
the calendar years ended 1995 and 1996; (ii) book value per share as of
September 30, 1995; and (iii) pre-tax earnings per share for the twelve months
ended September 30, 1995, adjusted to exclude realized capital gains or losses.
Based on this analysis for the Comparable Companies with equity market
capitalizations of less than $250 million, J.C. Bradford calculated a range of
values for the shares of Common Stock of $1.98 to $7.47 per share. Based on
this analysis for the Comparable Companies with equity market capitalizations
of more than $250 million, J.C. Bradford calculated a range of values for the
shares of Common Stock of $2.38 to $10.97 per share.
Comparable Acquisition Analysis. J.C. Bradford analyzed certain
information relating to selected transactions involving 100% acquisitions of
life and accident and health insurance companies. J.C. Bradford considered 11
such transactions since 1994. Using publicly available information, J.C.
Bradford (a)
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<PAGE> 33
calculated the relationship between the consideration paid in these
transactions and GAAP (i) book value; (ii) net income; and (iii) pre-tax
income, and (b) determined the percentage premium that such consideration
represented when compared to the stock trading price one day, one week and four
weeks prior to the announcement of such transaction. J.C. Bradford derived
average, adjusted average (excluding high and low) and median multiples or
percentages, as the case may be, from the foregoing analysis and applied or
compared such multiples or percentages, as applicable, to (a) the Company's
GAAP (i) book value as of September 30, 1995, (ii) net income for the twelve
months ended September 30, 1995, and (iii) pre-tax income for the twelve months
ended September 30, 1995, and (b) the prevailing prices at which the Common
Stock had been purchased in privately negotiated transactions by AAC or
otherwise reported by the transfer agent since January 1, 1995. Based on this
analysis, J.C. Bradford calculated a range of values for the shares of Common
Stock of $4.57 to $10.99 per share.
Discounted Cash Flow. J.C. Bradford also performed a discounted cash
flow analysis of the Company. In conducting it analysis, J.C. Bradford relied
on certain internal forecasts provided by the Company's senior management to
determine a valuation range for the Company. This analysis assumed that the
Company would pay a cash dividend of $0.35 per share to its shareholders each
year for the next three years, and, at the end of three years, the Company
would be sold for (i) a multiple of trailing GAAP earnings ranging from 8x to
12x (the "Net Income Exit Multiple") and (ii) a multiple of GAAP book value
ranging from 0.75x to 1.25x (the "Book Value Exit Multiple"). These dividends
and sale proceeds, representing cash flows attributable to Common Stock, were
then discounted back to the present at various discount rates ranging from 10%
to 20% (the "Discount Rates"). Based on the ranges of Net Income Exit
Multiples and Book Value Exit Multiples and Discount Rates, J.C. Bradford
calculated a range of values for the shares of Common Stock of $2.84 to $8.34
per share.
Stock Trading Analysis. J.C. Bradford reviewed and analyzed the
historical trading volume and prices at which the Common Stock had been
purchased in privately negotiated transactions by AAC or otherwise reported by
the transfer agent since January 1, 1995. J.C. Bradford noted that trading
activity was intermittent and that the trading market was relatively illiquid.
J.C. Bradford also noted that the highest traded price was $5.75, which
occurred in May 1995, and the lowest traded price was $4.00, which occurred
throughout the year including in December 1995.
Pursuant to the terms of an engagement letter dated January 2, 1996,
the Company agreed to pay J.C. Bradford a fee of $20,000 for acting as
financial advisor to the Special Committee in connection with the Merger. In
addition, the Company has agreed to reimburse J.C. Bradford for up to $10,000
of its
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reasonable out-of-pocket expenses, including the fees and disbursements of its
counsel, and to indemnify J.C. Bradford and certain related persons against
certain liabilities relating to or arising out of its engagement, including
certain liabilities under the federal securities laws. In the ordinary course
of its business, J.C. Bradford has traded, and may in the future trade,
securities of AAC for its own account and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in such
securities.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Company is a 93%-owned subsidiary of BFAC, which is a wholly-owned
subsidiary of AAC. Approximately 70.19% of the outstanding voting securities
of AAC are owned beneficially or of record by Mr. Robinson, his wife and other
affiliates. See "Security Ownership of Certain Beneficial Owners and
Management."
Since AAC acquired a controlling interest in the Company in 1976, the
Company and AAC have operated under common management. As a result, certain of
the directors of the Company also serve as executive officers or directors of
AAC or other affiliates of AAC. Mr. Robinson, the Company's Chairman, also
serves as Chairman of the Board of AAC. Mr. Howell, the son-in-law of Mr.
Robinson, serves as Executive Vice President and a director of the Company and
as President, Chief Executive Officer and a director of AAC. Dom H. Wyant and
Samuel E. Hudgins both serve as directors of the Company and as directors of
AAC. Mr. Wyant is Of Counsel to the law firm of Jones, Day, Reavis & Pogue,
which acts as general counsel to AAC and its subsidiaries, including in
connection with the Merger. Mr. Hudgins is a party to a consulting agreement
with the Company, which provides for payment of an hourly fee. Mr. Hudgins
also owns 200,000 shares of the common stock, representing approximately 4% of
the outstanding shares, of Leath Furniture, Inc., an 83%-owned subsidiary of
AAC. Eugene Choate, the President and a director of the Company, also serves
as President of Atlantic American Life Insurance Company, a wholly-owned
subsidiary of AAC. None of such persons served on the Special Committee of the
Bankers Board, which, in consultation with its independent advisors, reviewed,
negotiated and approved the terms of the Merger Agreement and unanimously
recommended that the Bankers Board approve the Merger Agreement and the
transactions contemplated thereby. See "-- Recommendation of the Special
Committee and the Board of Directors."
The Company subleases approximately 25,789 square feet of space for
its principal offices from AAC. The Company paid total annual rent to AAC of
$383,000 and $360,365 in 1994 and 1995, respectively, and expects to pay a
comparable amount in 1996. Such amounts consist of base rent and a pro rata
share of all real estate taxes and certain other expenses and insurance costs
with respect to the office building. Delta Life Insurance Company, the owner
of the building, is controlled by
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Mr. Robinson. The terms of the lease are believed by management of the Company
to be comparable to terms which could be obtained by the Company from unrelated
parties for comparable rental property.
For a discussion of other transactions between the Company and AAC (or
certain affiliates of AAC), see Note 7 to the Company's audited financial
statements, included in the Form 10-K delivered herewith and incorporated
herein by reference.
TERMS OF THE MERGER AGREEMENT
General. Pursuant to the Merger Agreement, the Merger will become
effective when both (i) the Merger Agreement has been approved by the
shareholders of Bankers and BFAC and (ii) the Articles of Merger are filed with
the Secretary of State of Georgia, or such later date and time as may be
specified in such Articles of Merger. It is anticipated that the Articles of
Merger will be filed promptly after the approval of the Merger Agreement at the
Special Meeting. Such filing will be made, however, only upon satisfaction or
waiver of all conditions to the Merger contained in the Merger Agreement. AAC,
as sole shareholder of BFAC, has already approved the Merger Agreement.
The Merger Agreement provides that, at the Effective Time, BFAC will
be merged with and into the Company, and BFAC will cease to exist as a
corporation. The Company will be the surviving corporation in the Merger and
will become a wholly-owned subsidiary of AAC.
From and after the Effective Time, each issued and outstanding share
of Common Stock, other than shares of Common Stock owned by BFAC or shares of
Common Stock owned by shareholders who perfect their dissenters' rights under
Article 13 of the GBCC, will be converted into the right to receive, and become
exchangeable for, $6.25 in cash, without interest. Each share of Common Stock
owned by BFAC or held by the Company as treasury shares will be cancelled
without consideration, and each BFAC Share will automatically be converted into
the right to receive one share of common stock of the Surviving Corporation.
The Surviving Corporation. The Merger Agreement provides that the
Articles of Incorporation and the By-Laws of the Company, each as in effect
immediately prior to the Effective Time of the Merger, will become the Articles
of Incorporation and By-Laws of the Surviving Corporation upon the Effective
Time. In addition, the officers and directors of the Company in office
immediately prior to the Effective Time will become the officers and directors
of the Surviving Corporation upon the Effective Time, and will serve until
their successors are elected or appointed.
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Exchange of Certificates. From and after the Effective Time, each
holder of a Certificate, other than BFAC and those holders who properly perfect
their dissenters' rights under the GBCC, will cease to have any right as a
shareholder of Bankers and, until surrendered to the Exchange Agent, each
Certificate shall represent for all purposes only the right to receive the
Merger Consideration to which such holder is entitled, without any interest
thereon. The Company, or an agent designated by it, will act as Exchange Agent
in connection with the Merger. As soon as practicable after the Effective Time,
the Exchange Agent will mail transmittal instructions and a form of letter of
transmittal (which will specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) to each shareholder of the Company, other
than BFAC, to be used in forwarding his or her Certificates for surrender and
exchange for the Merger Consideration. Upon surrender to the Exchange Agent of
a Certificate, together with such letter of transmittal duly executed, and any
other required documents, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration to which he is entitled,
and such Certificate shall forthwith be cancelled. No interest will be paid or
accrued on the cash payable upon the surrender of the Certificates.
If payment is to be made to a person other than the person in whose
name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Company that such tax has been paid or is
not applicable.
Certain Covenants and Agreements. Pursuant to the Merger Agreement,
(i) Bankers has agreed to prepare and file a Rule 13e-3 Transaction Statement
on Schedule 13E-3 and proxy statement on Schedule 14A, all in accordance with
the Exchange Act and the rules and regulations thereunder, (ii) Bankers has
agreed to use its best efforts to obtain the approval by its shareholders of
the Merger Agreement, (iii) Bankers and BFAC have agreed to file the Articles
of Merger upon the satisfaction or waiver of the conditions to the Merger, and
(iv) Bankers, BFAC and AAC have agreed to use their reasonable best efforts to
obtain any governmental waivers or consents necessary to consummate the Merger
and the transactions contemplated thereby.
Conditions to the Merger. The respective obligations of Bankers and
BFAC to effect the Merger are subject to certain conditions, including among
others: (i) the absence of any pending or proposed action, proceeding,
application, claim or counterclaim by any government or governmental authority
or agency that would restrain or prohibit the consummation of the
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Merger or the performance of the Merger Agreement, (ii) approval of the Merger
Agreement and the transactions contemplated thereby by all regulatory
authorities whose approvals are required by law, (iii) approval of the Merger
Agreement and the transactions contemplated thereby by the Bankers
shareholders, (iv) clearance of this Proxy Statement by the Commission, and (v)
the consummation of the transactions contemplated by the Merger Agreement on or
before June 30, 1996.
Amendment and Termination. The Merger Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after the
Special Meeting, unilaterally by either Bankers or BFAC, including, without
limitation, if any condition to the obligation of a party is not satisfied
other than by reason of a breach by that party of its obligations under the
Merger Agreement and it reasonably appears that the condition cannot be
satisfied by June 30, 1996.
In the event of termination of the Merger Agreement by either Bankers
or BFAC, the Merger Agreement will become void and there will be no further
obligation on the part of Bankers, BFAC or AAC or their respective officers and
directors.
Subject to applicable law, the Merger Agreement may be amended by the
written agreement of Bankers, BFAC and AAC.
REGULATORY MATTERS
The Company is subject to regulation by the Insurance Commissioner of
the State of Georgia (the "Insurance Commission") and is therefore required to
comply with certain notice and approval procedures in connection with the
Merger, or obtain an applicable exemption therefrom. The Company intends to
seek an exemption from such procedures from the Insurance Commission. Other
than the foregoing, the Company is not aware of any approval or other action by
any state, federal or foreign governmental, administrative or regulatory agency
that is required for the Merger.
ACCOUNTING TREATMENT
The transactions to be accomplished as a result of the Merger will be
accounted for as a purchase transaction.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a general discussion, based on current law, of
certain of the expected federal income tax consequences applicable to
shareholders of the Company who receive cash in exchange for their shares of
Common Stock pursuant to the Merger or the exercise of dissenters' rights.
This summary discusses only certain tax consequences to United States persons
(i.e., citizens or residents of the United States and domestic corporations)
who hold shares as capital assets. It does not
32
<PAGE> 38
discuss the tax consequences that might be relevant to shareholders who
acquired their shares through the exercise of options or otherwise as
compensation. In addition, it does not discuss the tax consequences that might
be relevant to shareholders entitled to special treatment under the federal
income tax law, such as life insurance companies, tax exempt organizations, S
corporations and taxpayers subject to alternative minimum tax.
The receipt of cash for shares of Common Stock pursuant to the Merger
or the exercise of dissenters' rights will be a taxable transaction for federal
income tax purposes. A shareholder will recognize taxable gain or loss for
federal income tax purposes equal to the difference, if any, between the amount
of cash received and such shareholder's tax basis in the shares of Common Stock
surrendered in exchange therefor. In general, such gain or loss will be
capital gain or loss if such shares of Common Stock are capital assets in the
hands of such shareholder at the time of the exchange and will be long-term
capital gain or loss if, at the time of the exchange, such shareholder's
holding period for the shares of Common Stock is more than one year.
Under the federal income tax backup withholding rules, unless an
exemption applies, the Exchange Agent will be required to withhold, and will
withhold, 31% of all cash payments to which a shareholder or other payee is
entitled pursuant to the Merger, unless the shareholder or other payee provides
a tax identification number (social security number, in the case of an
individual, or employer identification number in the case of other Company
shareholders) and certifies that such number is correct. Each shareholder,
and, if applicable, each other payee, should complete and sign the Substitute
Form W-9 which will be included as part of the letter of transmittal to be
returned to the Exchange Agent in order to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exception exists and is proved in a manner satisfactory to the Exchange Agent.
The exceptions provide that certain shareholders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, however, he or she must submit a signed
statement (i.e., Certificate of Foreign Status on Form W-8), attesting to his
or her exempt status. Any amounts withheld will be allowed as a credit against
the shareholder's federal income tax liability, and, in general, refunded by
the Internal Revenue Service if and to the extent that the amounts withheld
exceed the shareholder's federal income tax liability assuming that the
appropriate procedures are followed.
The consummation of the Merger is not expected to have any material
tax effects on the Company.
33
<PAGE> 39
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE FOR GENERAL
INFORMATION ONLY. EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH SHAREHOLDER OF THE
MERGER (INCLUDING THE APPLICABILITY AND EFFECT OF FOREIGN, STATE, LOCAL AND
OTHER TAX LAWS).
SOURCE OF FUNDS
Assuming consummation of the Merger, based upon the number of shares
of Common Stock outstanding on the Record Date, an aggregate of approximately
$1,264,000 will be required to make cash payments to the Unaffiliated
Shareholders. The Company estimates that additional expenses of approximately
$225,253 will be incurred in connection with the Merger, as follows: (i)
estimated SEC filing fees of $253; (ii) estimated legal and accounting fees and
expenses of $175,000; (iii) estimated financial advisor fees and expenses of
$30,000; (iv) estimated printing and solicitation costs of $15,000; and (v)
miscellaneous other costs estimated at $5,000. The source of funds for the
foregoing expenses will be the Company's working capital, and no funds will be
borrowed in order to complete the Merger.
DISSENTERS' RIGHTS
Set forth below is a summary of the procedures relating to the
exercise of dissenters' rights under the GBCC. The following summary does not
purport to be a complete statement of the provisions of Article 13 of the GBCC
("Article 13") and is qualified in its entirety by reference to Annex C hereto
and to any amendments to such provisions as may be adopted after the date of
this Proxy Statement. The provisions for demanding appraisal are complex and
must be complied with precisely. Any shareholder intending to dissent from the
proposed Merger should consult carefully the text of Annex C and is also
advised to consult legal counsel.
The GBCC provides dissenters' rights for Bankers shareholders
who object to the Merger and meet the requisite statutory requirements
contained in Article 13. Under the GBCC, any Bankers shareholder who (i)
delivers written notice of his intent to demand payment for his shares if the
Merger is consummated and becomes effective, which notice is actually received
by the Company before the vote is taken at the Special Meeting and (ii) does
not vote his shares at the Special Meeting in favor of the proposal to approve
the Merger, shall be entitled, if the Merger is approved and effectuated, to
receive payment of the fair value of such shareholder's shares of Common Stock
upon compliance with the applicable procedural requirements. Such payment
shall be made by the "Surviving Corporation" which, for purposes of this
dissenters' rights summary, shall mean Bankers.
34
<PAGE> 40
Any written notice of a Bankers shareholder's intent to demand
payment for such shareholder's shares of Common Stock if the Merger is
consummated must be received by the Company at: 4370 Peachtree Road, N.E.,
Atlanta, Georgia 30319, Attn: Corporate Secretary, prior to the shareholder
vote at the Special Meeting. A shareholder who votes for the Merger will have
no dissenters' rights. A shareholder who does not satisfy each of the
aforementioned requirements is not entitled to payment for such shareholder's
shares of Common Stock under the dissenters' rights provisions of the GBCC and
will be bound by the terms of the Merger Agreement.
No later than 10 days after the Effective Time, the Surviving
Corporation must send a written dissenters' notice to all shareholders who have
given written notice and did not vote in favor of the Merger as described
above. The dissenters' notice will: (i) state where the payment demand must
be sent and where and when certificates for Common Stock ("Dissenting
Certificates") must be deposited, (ii) set a date by which the Surviving
Corporation must receive the payment demand, which date may not be fewer than
30 nor more than 60 days after the dissenters' notice is mailed, and (iii) be
accompanied by a copy of Article 13. A shareholder who is sent a dissenters'
notice and who wishes to assert dissenters' rights must demand payment and
deposit his Dissenting Certificates in accordance with the terms of the notice.
Prior to the Effective Time, a shareholder exercising dissenters' rights
retains all other rights of a shareholder. From and after the Effective Time,
dissenting shareholders will no longer be entitled to any rights of a Company
shareholder, including, but not limited to, the right to receive notice of
meetings, to vote at any meetings, or to receive dividends, and will only be
entitled to such rights or appraisal as provided by the GBCC. If any such
holder of Common Stock shall have failed to perfect or shall have effectively
withdrawn or lost such right, his shares of Common Stock shall thereupon be
deemed to have been converted into the right to receive cash pursuant to the
Merger Agreement.
Within 10 days of the later of (i) the date the Merger is
consummated or (ii) receipt of a payment demand, the Surviving Corporation must
offer to pay each dissenting shareholder who complied with the requirements of
Article 13 the amount the Surviving Corporation estimates to be the fair value
of such shareholder's shares of Common Stock, plus interest accrued from the
Effective Time to the date of payment. The offer of payment must be
accompanied by certain financial data relating to the Company, a statement of
the Surviving Corporation's estimate of the fair value of the shares, an
explanation of how the interest was calculated, a statement of the dissenting
shareholder's right to demand payment under Article 13 and a copy of Article
13. The Surviving Corporation must pay the amount stated in the offer of
payment to each dissenting shareholder who agrees in writing to accept such
payment in full satisfaction of his demand. If the dissenting shareholder
accepts the Surviving Corporation's offer
35
<PAGE> 41
by written notice to the Surviving Corporation within 30 days after the offer
is made, or is deemed to have accepted such offer by failure to respond within
said 30 days, payment for his shares shall be made within 60 days after the
making of the offer or the consummation of the Merger, whichever is later. If
the Merger is not effected within 60 days after the date set for demanding
payment and depositing Dissenting Certificates, the Surviving Corporation will
return the deposited Dissenting Certificates and, if the Merger is subsequently
effected, the Surviving Corporation will deliver a new notice and repeat the
payment demand procedure.
A dissenting shareholder may notify the Surviving Corporation
in writing of his own estimate of the fair value of such shares and the amount
of any interest due, and demand payment of such estimate if:
(i) the dissenting shareholder believes that the
amount offered by the Surviving Corporation is less than the
fair value of his shares or that any interest due is
incorrectly calculated; or
(ii) the Surviving Corporation, having failed to
take the proposed action, does not return the deposited
Dissenting Certificate within 60 days after the date set for
demanding payment.
A dissenting shareholder waives his right to demand payment
under subparagraphs (i) and (ii) above and is deemed to have accepted the
Surviving Corporation's offer unless he notifies the Surviving Corporation of
his demand in writing within 30 days after the Surviving Corporation offered
payment of his shares.
If a demand for payment remains unsettled, the Surviving
Corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the Surviving Corporation does not commence the
proceeding within the 60 day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
A shareholder of record may assert dissenters' rights as to
fewer than all the shares registered in such shareholder's name only if he
dissents with respect to all shares beneficially owned by any one beneficial
shareholder and notifies the Company in writing of the name and address of each
person on whose behalf he asserts dissenters' rights. The rights of such a
partial dissenting shareholder are determined as if the shares as to which he
dissents and his other shares were registered in the names of different
shareholders.
36
<PAGE> 42
ABSENCE OF PUBLIC MARKET FOR COMMON STOCK; DIVIDENDS
TRADING OF THE COMMON STOCK
There is presently no established public trading market for the Common
Stock. The Company, in its capacity as transfer agent, is aware of a limited
number of privately negotiated transactions involving the Common Stock. During
1995, the Company, as transfer agent, received notice of twelve separate
transactions in which an aggregate of 8,191 shares were purchased at prices
ranging from $4.00 per share to $5.00 per share. The most recent transaction
was reported to the Company on December 12, 1995, and involved the purchase of
92 shares of Common Stock at a price of $4.00 per share. In addition to those
transactions, AAC has from time to time purchased shares directly from
shareholders of the Company who have submitted written offers to AAC and
specified the price at which they were willing to sell such shares. Since
January 1, 1994, AAC has made the following purchases on the dates indicated:
<TABLE>
<CAPTION>
Number of Price per
Date Shares Share
---- ---------- ---------
<S> <C> <C>
1/12/94 294 $5.00
2/11/94 55 5.00
6/1/94 33 5.00
11/7/94 832 5.00
12/7/94 164 5.00
2/7/95 1,803 5.00
2/16/95 1,377 5.00
4/3/95 57 5.00
4/14/95 128 5.00
5/9/95 2,743 5.75
5/19/95 78 5.00
5/31/95 385 5.00
6/27/95 453 5.00
8/01/95 215 5.00
</TABLE>
The average purchase price paid by AAC for each quarterly period since
January 1, 1994 was $5.00 per share, except for the second quarter of 1995 in
which such price was $5.54 per share.
DIVIDENDS
In accordance with the Insurance Code of the State of Georgia,
dividend payments are limited to accumulated statutory earnings of the Company,
which were $6.0 million at September 30, 1995. The Company paid cash dividends
of $.30 per share in 1995 and did not pay cash dividends in 1994.
37
<PAGE> 43
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 5, 1996
regarding the beneficial ownership of Common Stock of the Company and of AAC by
(i) each person known by the Company to own 5% or more of the outstanding
shares of the Company's Common Stock, (ii) each Director of the Company, (iii)
the executive officers of the Company whose total annual compensation exceeded
$100,000, and (iv) by all Directors and executive officers as a group.
<TABLE>
<CAPTION>
Company Common Stock AAC Common Stock
-------------------- ----------------
Name of Beneficial Owner Number of Shares Percent Number of Shares Percent
------------------------ ---------------- ------- ---------------- -------
<S> <C> <C> <C> <C>
Atlantic American 2,784,924 93.2% N/A N/A
Corporation
J. Mack Robinson -- -- 13,733,444 (1) 70.19%
Eugene Choate -- -- 42,190 (2) *
Hilton H. Howell, Jr. -- -- 90,842 (3) *
John W. Hancock -- -- 33,138 (4) *
Samuel E. Hudgins -- -- 3,750 *
E.F. Mauldin -- -- -- --
F.C. Parker, Jr. -- -- -- --
Dom H. Wyant -- -- -- --
Directors and Executive -- -- 14,129,628 (5) 71.64%
Officers as a group
</TABLE>
* Represents less than 1%.
(1) As of January 5, 1996, the only persons who owned of record or were
known to own beneficially as much as 5% of the outstanding voting securities of
AAC were J. Mack Robinson, his wife Harriett J. Robinson, and certain of their
affiliates, who owned an aggregate of approximately 70.19% of the voting
securities of AAC. Mr. J. Mack Robinson beneficially owned 13,733,444 shares
of AAC common stock (70.19% of class), which includes 3,381,202 shares owned by
Gulf Capital Services, Ltd., 4370 Peachtree Road, N.E., Atlanta, Georgia 30319;
936,702 shares owned by Delta Life Insurance Company; and 294,000 shares owned
by Delta Fire & Casualty Company; all of which are companies controlled by Mr.
Robinson; 50,000 shares subject to presently exercisable options held by Mr.
Robinson; and 88,026 shares issuable pursuant to convertible notes and 250,751
shares issuable pursuant to convertible preferred stock which is owned
beneficially by Mr. Robinson, and 828 shares held pursuant to AAC's 401(k)
plan. Also includes all shares held by Mr. Robinson's wife, Harriett J.
Robinson, who beneficially owned 8,044,691 shares of AAC common stock (41.95%
of class), which includes 7,536,793 shares of common stock and 501,500 shares
issuable pursuant to convertible preferred stock held by Mrs. Robinson as
trustee for her children, as to which she disclaims beneficial ownership, and
6,398 shares issuable pursuant to convertible notes.
(2) Includes 27,500 shares subject to presently exercisable options and
1,190 shares held pursuant to AAC's 401(k) plan.
38
<PAGE> 44
(3) Includes 80,000 shares subject to presently exercisable options and
2,917 shares held pursuant to AAC's 401(k) plan. Also includes 1,025 shares
held by Mr. Howell's wife, as to which he disclaims beneficial ownership.
(4) Includes 27,500 shares subject to presently exercisable options and
5,638 shares held pursuant to AAC's 401(k) plan.
(5) Includes 185,000 shares subject to presently exercisable options,
shares issuable upon conversion of convertible securities described in note
(1), and 10,573 shares held pursuant to AAC's 401(k) plan.
39
<PAGE> 45
SELECTED FINANCIAL DATA
The following table sets forth selected historical financial
information for the Company for each of the five years in the five-year period
ended December 31, 1994 and for the nine months ended September 30, 1995 and
1994. The following financial information should be read in conjunction with
the historical financial statements and notes thereto of the Company included
in the Form 10-K delivered herewith and incorporated herein by reference. The
interim unaudited information for the Company for the nine months ended
September 30, 1995 and 1994 reflect, in the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the information provided for such interim periods. The
results of operations for such interim periods are not necessarily indicative
of results that may be expected for any other interim period or for the year as
a whole.
40
<PAGE> 46
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- -----------------
1994 1993 1992 1991 1990 1995 1994
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Insurance premiums . . . . . . . . . . $11,947 $11,219 $11,630 $ 12,646 $14,864 $ 8,193 $ 8,514
Investment income . . . . . . . . . . 2,243 2,180 2,599 2,820 4,031 1,775 1,609
Realized investment gains (losses) . . 206 62 1,640 (2,874) (513) 387 206
------- ------- ------- -------- ------- ------- -------
Total revenue . . . . . . . . . . . 14,396 13,461 15,869 12,592 18,382 10,355 10,329
------- ------- ------- -------- ------- ------- -------
Insurance benefits and losses
incurred . . . . . . . . . . . . . . 7,245 6,753 7,770 7,588 8,403 4,351 5,606
Commissions and underwriting
expenses . . . . . . . . . . . . . . 6,251 5,586 6,181 7,277 9,133 5,087 4,269
Other . . . . . . . . . . . . . . . . - - (320) - 714 - -
------- ------- ------- -------- ------- ------- -------
Total benefits and expenses . . . . 13,496 12,339 13,631 14,865 18,250 9,438 9,875
------- ------- ------- -------- ------- ------- -------
Income (loss) before tax provision,
extraordinary item and cumulative
effect of change in accounting
principle . . . . . . . . . . . . . 900 1,122 2,238 (2,273) 132 917 454
(Provision) credit for income
taxes . . . . . . . . . . . . . . . (184) (291) (646) - - 217 (63)
------- ------- ------- -------- ------- ------- -------
Income (loss) before extraordinary
item and cumulative effect of
change in accounting principle . . . 716 831 1,592 (2,273) 132 1,134 391
Extraordinary item - utilization of
tax operating loss carry forward . . - - 646 - - - -
------- ------- ------- -------- ------- ------- -------
Income (loss) before cumulative
effect of change in accounting
principle . . . . . . . . . . . . . 716 831 2,238 (2,273) 132 1,134 391
Cumulative effect of change
in accounting principle for
income taxes . . . . . . . . . . . . - 6,114 - - - - -
------- ------- ------- -------- ------- ------- -------
Net income (loss) . . . . . . . . $ 716 $ 6,945 $ 2,238 $ (2,273) $ 132 $ 1,134 $ 391
======= ======= ======= ======== ======= ======= =======
Shares of common stock
outstanding . . . . . . . . . . . . 2,987 2,987 2,987 2,987 2,987 2,987 2,987
======= ======= ======= ======== ======= ======= =======
Income (loss) per share before
extraordinary item and cumulative
effect of change in accounting
principle . . . . . . . . . . . . . $ .24 $ .28 $ .53 $ (.76) $ .04 $ .38 $ .13
Extraordinary item . . . . . . . . . . - - .22 - - - -
Cumulative effect of change in
accounting principle for
income taxes . . . . . . . . . . . . - 2.04 - - - - -
------- ------- ------- -------- ------- ------- -------
Net income (loss) per share . . . $ .24 $ 2.32 $ .75 $ (.76) $ .04 $ .38 $ .13
======= ======= ======= ======== ======= ======= =======
Dividends paid per share . . . . . . . - $ .35 $ .30 $ .35 $ .35 $ .35 -
======= ======= ======= ======== ======= ======= =======
BALANCE SHEET DATA:
Total assets . . . . . . . . . . . . . . $43,895 $44,940 $45,202 $ 44,920 $48,830 $47,722 $43,342
======= ======= ======= ======== ======= ======= =======
Liabilities and shareholders' equity:
Total liabilities . . . . . . . . . . $24,745 $24,542 $31,067 $ 32,366 $34,759 $25,979 $23,719
Total shareholders' equity . . . . . . 19,150 20,398 14,135 12,554 14,071 21,743 19,623
------- ------- ------- -------- ------- ------- -------
Total liabilities and shareholders'
equity . . . . . . . . . . . . . . $43,895 $44,940 $45,202 $ 44,920 $48,830 $47,722 $43,342
======= ======= ======= ======== ======= ======= =======
</TABLE>
41
<PAGE> 47
EXPERTS
The financial statements of the Company at December 31, 1994 and for
each of the three years in the period ended December 31, 1994 incorporated by
reference in this Proxy Statement have been audited by Arthur Andersen LLP,
independent auditors, and the information under the caption "Selected Financial
Data" of the Company for each of the five years in the period ended December
31, 1994, appearing in this Proxy Statement has been derived from financial
statements audited by Arthur Andersen LLP, as set forth in their report thereon
incorporated by reference herein. Such financial statements and selected
financial data are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The Bankers Board knows of no matters other than those stated herein
which are to be brought before the Special Meeting, and under the GBCC only
business within the purposes of the Special Meeting as described in the notice
thereof may be conducted at the Special Meeting. However, if any such other
matters should be presented for consideration and voting, it is the intention
of the persons named in the accompanying proxy to vote thereon in accordance
with their judgment.
INDEPENDENT AUDITORS
Representatives of Arthur Andersen LLP, the Company's independent
auditors, are expected to be present at the Special Meeting and will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, shareholders of the
company may present proper proposals for inclusion in the Company's proxy
statement. Assuming consummation of the Merger, no annual meeting will be held
in 1996. In the event that shareholder approval of the Merger is not obtained,
an annual meeting will be held no later than May 31, 1996. Proposals by
shareholders intended to be presented at the 1996 annual meeting must have been
forwarded in writing and received at the principal executive office of the
company not later than December 8, 1995 directed to the attention of the
Secretary, for consideration for inclusion in the Company's proxy statement for
the 1996 annual meeting of shareholders. No such proposals were received by
the Company.
42
<PAGE> 48
SCHEDULE I
CERTAIN INFORMATION CONCERNING
BANKERS AND AAC
The following tables set forth the name, business address, principal
occupation or employment at the present time and during the last five years and
the name, principal business or other organization in which such occupation or
employment is or was conducted, of the executive officers and directors of AAC
and Bankers. Unless otherwise indicated, all occupations, offices or positions
of employment listed opposite an individual's name were held by such individual
in the course of the last five years. Unless otherwise indicated, the business
address of each individual listed below is 4370 Peachtree Road, N.E., Atlanta,
Georgia 30319. All persons listed below are citizens of the United States of
America. None of the persons listed below owns any shares of Common Stock.
DIRECTORS AND EXECUTIVE OFFICERS OF BANKERS
<TABLE>
<CAPTION>
Present Principal Occupation or Employment and Five-Year Employment
Name and Business Address History
------------------------- -------------------------------------------------------------------
<S> <C>
J. Mack Robinson Mr. Robinson is Chairman of the Board of Directors of Bankers. *
Eugene Choate Mr. Choate is President and a Director of Bankers. *
Hilton H. Howell, Jr. Mr. Howell has served as Executive Vice President and a Director of
Bankers since October 1992. *
Samuel E. Hudgins Mr. Hudgins is a Director of Bankers. *
3100 Cumberland Circle, N.W.
Suite 1525
Atlanta, Georgia 30339
Edward F. Mauldin Mr. Mauldin is a Director of Bankers and Chairman of the Board of
210 South Pine Street Bank Independent, Sheffield, Alabama.
Florence, Alabama 35630
Frank C. Parker, Jr. Mr. Parker is a Director of Bankers and Owner, Parker Apartments,
215 South Main Street Statesboro, Georgia.
Statesboro, Georgia 30459
Dom H. Wyant Mr. Wyant is a Director of Bankers.*
3500 One Peachtree Center
303 Peachtree Street
Atlanta, Georgia 30308
</TABLE>
I-1
<PAGE> 49
<TABLE>
<S> <C>
John W. Hancock Mr. Hancock has served Bankers as Senior Vice President and
Treasurer since September 1993. Prior thereto, he served as Vice
President and Treasurer. *
</TABLE>
* Additional biographical information included below.
DIRECTORS AND EXECUTIVE OFFICERS OF AAC
<TABLE>
<CAPTION>
Present Principal Occupation or Employment and Five-Year Employment
Name and Business Address History
------------------------- -------------------------------------------------------------------
<S> <C>
J. Mack Robinson Mr. Robinson is Chairman of the Board of Directors of AAC. He
served as President and CEO of AAC from September 1988 to May,
1995. He is Chairman of the Board of Atlantic American Life
Insurance Company, Georgia Casualty & Surety Company and Leath
Furniture, Inc., subsidiaries of AAC. In addition, Mr. Robinson is
Chairman of the Board of Bull Run Corporation, a Director of Gray
Communications Systems, Inc., the General Partner of Gulf Capital
Services, Ltd. and the Chairman and President of Delta Life
Insurance Company and Delta Fire & Casualty Insurance Company.
Hilton H. Howell, Jr. Mr. Howell has served as a Director of AAC since October 1992 and
President and CEO of AAC since May, 1995. Prior thereto, he served
as Executive Vice President of AAC since October 1992. In
addition, he has been Executive Vice President of Delta Life
Insurance Company and Delta Fire & Casualty Company since March
1994. Prior thereto, he was Vice President and General Counsel of
Delta Life Insurance Company since November 1991. Prior thereto,
he was an attorney with Liddell, Sapp, Zivley, Hill and LaBoon.
</TABLE>
I-2
<PAGE> 50
<TABLE>
<S> <C>
Samuel E. Hudgins Mr. Hudgins is a Director of AAC and has been a Partner in
Percival, Hudgins & Company, Inc. (and its predecessor), investment
bankers, since April l992 and an independent consultant prior
thereto. He has also served as Vice Chairman and Secretary of
Leath Furniture, Inc. since April 1991. He is a Director of The
Biltmore Funds (12 funds) and The Biltmore Municipal Funds (3
funds) advised by Wachovia Investment Management Group.
D. Raymond Riddle Mr. Riddle is a Director of AAC and has served as the Chairman and
1420 Peachtree Street CEO of National Service Industries, Inc., a diversified holding
Atlanta, Georgia 30309 company, since September l994 and prior thereto, as the President
and CEO of National Service Industries, Inc. since January l993.
Prior thereto, he was President of Wachovia Bank of Georgia, N.A.,
the President of Wachovia Corporation of Georgia and Executive Vice
President of Wachovia Corporation. He is a Director of National
Service Industries, Inc., Atlanta Gas Light Company, Equifax Inc.,
Munich American Reassurance Company, Wachovia Bank of Georgia and
Vista Resources.
Harriett J. Robinson Mrs. Robinson is a Director of AAC.
Robert H. Tharpe Mr. Tharpe is a Director of AAC and is a private investor.
3750 Peachtree Road, N.E.
Atlanta, Georgia 30319
Charles B. West Mr. West is a Director of AAC and is Chairman of West Lumber
1100 Circle 75 Parkway Company, and he also serves in various capacities for a number of
Suite 760 its related businesses.
Atlanta, Georgia 30339
William H. Whaley, M.D. Dr. Whaley has served as a Director of AAC since October 1992 and
3250 Howell Mill Road, N.W. is a physician in private practice.
Suite 305
Atlanta, Georgia 30327
</TABLE>
I-3
<PAGE> 51
<TABLE>
<S> <C>
Dom H. Wyant Mr. Wyant is a Director of AAC and is Of Counsel to the law firm of
3500 One Peachtree Center Jones, Day, Reavis & Pogue. Prior to January l995, he was a
303 Peachtree Street partner in Jones, Day, Reavis & Pogue. Mr. Wyant also serves as a
Atlanta, Georgia 30308 director of Thomaston Mills, Inc.
John W. Hancock Mr. Hancock has served as Senior Vice President and Treasurer of
AAC and Atlantic American Life Insurance Company since November
1993. Prior thereto, he served as Vice President and Treasurer of
AAC and Atlantic American Life Insurance Company.
Eugene Choate Mr. Choate is President of Atlantic American Life Insurance
Company, a wholly-owned subsidiary of AAC.
Ronald D. Phillips Mr. Phillips is President of Leath Furniture, Inc., an 83%-owned
subsidiary of AAC.
</TABLE>
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ANNEX A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement"), made this 5th day of
January, 1995, by and among ATLANTIC AMERICAN CORPORATION, a Georgia
corporation ("Parent"), BF ACQUISITION CORPORATION, a Georgia corporation and a
wholly owned subsidiary of Parent ("BFAC"), and BANKERS FIDELITY LIFE INSURANCE
COMPANY, a Georgia corporation and 93.23% subsidiary of BFAC ("Bankers").
W I T N E S S E T H:
WHEREAS, Parent is the sole shareholder of BFAC, and in connection
with the formation of BFAC transferred to BFAC all of the shares of capital
stock of Bankers that Parent had owned, such that BFAC now owns 93.23% of the
outstanding capital stock of Bankers;
WHEREAS, Parent proposes to acquire the entire equity interest in
Bankers upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Boards of Directors of Bankers and BFAC deem it advisable
and in the best interests of their respective shareholders that BFAC merge with
and into Bankers, and, on or prior to the date hereof, such Boards of Directors
have approved such merger upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
receipt, sufficiency and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I. THE MERGER
1.1 Terms and Effects of the Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and in accordance with
the provisions of Section 14-2-1101 of the Georgia Business Corporation Code
(the "GBCC"), at the Effective Time (as defined hereinbelow) BFAC shall be
merged with and into Bankers (the "Merger"). Following the Merger, Bankers
shall continue as the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of BFAC shall cease. The Merger shall have
the effects set forth in the GBCC.
1.2 Effective Time. The Merger shall become effective when
both (i) this Agreement shall be adopted and approved by the respective
shareholders of Bankers and BFAC in accordance with
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the applicable provisions of the GBCC and (ii) Articles of Merger (the
"Articles of Merger"), executed in accordance with the relevant provisions of
the GBCC, are filed with the Secretary of State of the State of Georgia, or
such later date and time as may be specified in the Articles of Merger (the
time the Merger becomes effective being referred to as the "Effective Time").
Such filing shall be made as soon as practicable after the satisfaction or
waiver of the conditions set forth in Article V hereof.
ARTICLE II. SURVIVING AND PARENT CORPORATIONS
2.1 Articles of Incorporation and Bylaws. The Articles of
Incorporation of Bankers as in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and of the GBCC. The Bylaws of
Bankers as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation, until duly amended in accordance with the
terms thereof and of the GBCC.
2.2 Directors. The directors of Bankers immediately prior
to the Effective Time shall be the directors of the Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the Articles
of Incorporation and Bylaws of the Surviving Corporation, or as otherwise
provided by law.
2.3 Officers. The officers of Bankers immediately prior to
the Effective Time shall be the officers of the Surviving Corporation and shall
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
2.4 Further Action. If, at any time after the Effective
Time, Parent shall consider that any further deeds, assignments, conveyances,
agreements, documents, instruments or assurances in law or any other things are
necessary or desirable to vest, perfect, confirm or record in the Surviving
Corporation the title to any property, rights, privileges, powers and
franchises of BFAC or Bankers by reason of, or as a result of, the Merger, or
otherwise to carry out the provisions of this Agreement, the board of directors
and officers of BFAC or Bankers, as the case may be, last in office shall
execute and deliver, upon Parent's reasonable request, any instruments or
assurances in law, and do all other things necessary or proper to vest,
perfect, confirm or record title to such property, rights, privileges, powers
and franchises in the Surviving Corporation, and otherwise to carry out the
provisions of this Agreement.
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ARTICLE III. CONVERSION OF SHARES
3.1 Conversion of Bankers Shares in the Merger.
(A) Each share of common stock, $1.00 par
value, of Bankers (a "Bankers Share") issued and outstanding immediately prior
to the Effective Time (other than outstanding Bankers Shares held by BFAC and
other than Dissenting Shares (as defined below)), shall, at the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive $6.25 in cash (the "Merger
Consideration"), payable to the holder thereof, without interest thereon, upon
the surrender of the certificate formerly representing such outstanding Bankers
Share.
(B) Each Bankers Share held in the treasury
of Bankers and each outstanding Bankers Share held by BFAC immediately prior to
the Effective Time shall, at the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, be cancelled and retired
and cease to exist.
3.2 Conversion of BFAC Shares in the Merger. Each share of
BFAC common stock, $1.00 par value (a "BFAC Share"), issued and outstanding
immediately prior to the Effective Time shall, at the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into one (1) share of common stock of the Surviving Corporation,
which shares thereafter will constitute all of the issued and outstanding
shares of capital stock of the Surviving Corporation.
3.3 Delivery of Merger Consideration.
3.3.1. Exchange Agent; Surrender of
Certificates and Payment. The Surviving Corporation or an agent designated by
the Surviving Corporation will act as exchange agent in connection with the
Merger (the "Exchange Agent"). Promptly after the Effective Time, the Exchange
Agent shall mail to each record holder (as of the Effective Time) of an
outstanding certificate or certificates that immediately prior to the Effective
Time represented outstanding Bankers Shares to be converted into the right to
receive the Merger Consideration pursuant to Section 3.1(A) hereof, (the
"Certificates"), a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the Certificates
for payment therefor. Upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal duly executed, and any other required
documents, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration, and such Certificate shall
forthwith be cancelled. No interest will be paid or accrued on the cash
payable upon the surrender of the
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Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition
of payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. From and after the Effective Time, each holder
of a Certificate shall cease to have any right as a shareholder of Bankers and,
until surrendered in accordance with the provisions of this Section 3.3, each
Certificate (other than Certificates representing Dissenting Shares) shall
represent for all purposes only the right to receive the Merger Consideration,
without any interest thereon.
3.3.2. Transfers After Effective Time. After
the Effective Time, there shall be no transfers on the stock transfer books of
Bankers of the Bankers Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing
Bankers Shares that were outstanding immediately prior to the Effective Time
are presented to the Surviving Corporation, they shall be cancelled and
exchanged for the Merger Consideration in accordance with the procedures set
forth in this Section 3.3.
3.4 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Bankers Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by shareholders who
have complied with the procedures for appraisal set forth in the GBCC (the
"Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive the Merger Consideration, unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost his, her or
its right to appraisal and payment under the GBCC. If such holder shall have
so failed to perfect or shall have effectively withdrawn or lost such right,
his, her or its outstanding Bankers Shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration, without any interest
thereon.
ARTICLE IV. ADDITIONAL AGREEMENTS
4.1 Proxy Statement. As promptly as practicable, Bankers
shall prepare and file a Rule 13e-3 Transaction Statement on Schedule 13E-3 in
accordance with the Securities Exchange Act of 1934, as amended (together with
the rules and regulations related thereto referred to as the "Exchange Act"),
and Bankers shall prepare a preliminary proxy statement relating to the Merger
(the "Proxy Statement") on Schedule 14A in accordance with the Exchange Act.
Bankers shall use its reasonable best efforts
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to respond to any comments that the Securities and Exchange Commission (the
"SEC") may have to such documents and to cause such documents to be mailed to
Bankers' shareholders at the earliest practicable time.
4.2 Shareholders' Meeting. Bankers shall promptly take
such action as may be appropriate to obtain approval by the holders of the
Bankers Shares of this Agreement and the transactions contemplated hereby, and
shall use its best efforts to obtain such shareholder approval and adoption of
this Agreement and the transactions contemplated hereby as soon as practicable
following the date upon which the Proxy Statement is cleared by the SEC.
4.3 Filing of Articles of Merger. Upon the terms and
subject to the conditions hereof, as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article V hereof, Bankers
and BFAC shall execute and file the Articles of Merger referred to in Section
1.1.2 in the manner required by the GBCC and the parties hereto shall take all
such other and further actions as may be required by law to make the Merger
effective.
4.4 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses.
4.5 Consents and Approvals. The parties shall use their
reasonable best efforts (without requiring the payment of money) to obtain the
waiver, consent and approval of all persons whose waiver, consent or approval
(i) is required in order to consummate the transactions contemplated by this
Agreement (including, but not limited to, any required approvals from the
Office of the Insurance Commissioner of the State of Georgia) or (ii) is
required by any agreement, lease, instrument, arrangement, judgment, decree,
order or license to which Bankers is a party or subject on the Effective Time
and (a) that would prohibit or require the waiver, consent or approval of any
person to such transactions or (b) under which, without such waiver, consent or
approval, such transactions would constitute an occurrence of default under the
provisions thereof, result in the acceleration of any obligation thereunder or
give rise to a right of any party thereto to terminate its obligations
thereunder.
ARTICLE V. CONDITIONS PRECEDENT TO RESPECTIVE
OBLIGATIONS OF THE PARTIES
The obligations of Bankers and BFAC to consummate, or
cause to be consummated, the Merger shall be contingent upon and subject to the
satisfaction, at or before the Effective Time, of each and every one of the
following conditions, any one or more of which may be waived in writing by such
parties.
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5.1 Actions of Governmental Authorities. There shall not
have been instituted or pending any action, proceeding, application, claim or
counterclaim by any government or governmental authority or agency, domestic or
foreign, and neither Bankers nor BFAC shall have been notified by any such
government, governmental authority or agency (or a representative thereof) of
its present intention to commence, or recommend the commencement of, such an
action or proceeding, that restrains or prohibits or seeks to restrain or
prohibit the making or consummation of the Merger or restrains or prohibits or
seeks to restrain or prohibit the performance of this Agreement.
5.2 Legal Approvals. The execution and the delivery of
this Agreement and the consummation of the transactions contemplated hereby
shall have been approved by all regulatory authorities whose approvals are
required by law.
5.3 Shareholder Approval. This Agreement and the Merger
shall have been adopted and approved by the affirmative vote or written consent
of the holders of the outstanding Bankers Shares by the vote or written consent
required by, and in accordance with, the GBCC.
5.4 Clearance of Proxy Statement. The Proxy Statement
shall have been cleared by the SEC for dissemination to the Company's
shareholders.
5.5 Consummation. The consummation of the transactions
contemplated by this Agreement shall have occurred on or before June 30, 1996.
ARTICLE VI. TERMINATION, AMENDMENT AND WAIVER
6.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval by the
stockholders of the Company, unilaterally by Parent or Bankers for any reason,
including, without limitation, if any condition to the obligations of that
party is not satisfied (other than by reason of a breach by that party of its
obligations hereunder), and it reasonably appears that the condition cannot be
satisfied prior to June 30, 1996.
6.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or Bankers, as provided in Section 6.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of either Bankers, Parent, BFAC or their respective officers or
directors (except as set forth in this Section 6.2 and in Section 4.4 which
shall survive such termination). Nothing in this Section 6.2 shall relieve any
party from liability for any breach of this Agreement.
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6.3 Amendment. This Agreement may only be amended by an
instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law.
6.4 Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto and (ii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE VII. GENERAL PROVISIONS
7.1 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand, mailed by
certified mail, return receipt requested, first class postage prepaid, sent by
Federal Express or similar overnight delivery service with receipt
acknowledged, or sent via facsimile to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
7.1.1. If to Parent or BFAC:
Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
Attn: Hilton H. Howell, Jr.
and to:
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Dom H. Wyant, Esq.
7.1.2. If to Bankers:
Bankers Fidelity Life Insurance
Company
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
Attn: Eugene Choate
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and to the Special Committee of the
Board of Directors of Bankers:
c/o Cashin, Morton & Mullins
Two Midtown Plaza, Suite 1900
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: D. Tully Hazell, Esq.
7.1.3. If delivered personally, the date on
which a notice, request, instruction or document is delivered shall be the date
on which such delivery is made and, if delivered by mail or by overnight
delivery service, the date on which such notice, request, instruction or
document is received shall be the date of delivery. In the event any such
notice, request, instruction or document is mailed or shipped by overnight
delivery service to a party in accordance with this Section 7.1 and is returned
to the sender as nondeliverable, then such notice, request, instruction or
document shall be deemed to have been delivered or received on the fifth day
following the deposit of such notice, request, instruction or document in the
United States mails or the delivery to the overnight delivery service.
7.2 Further Assurances. Each party covenants that at any
time, and from time to time, after the Effective Time, it will execute such
additional instruments and take such actions as may be reasonably requested by
the other parties to confirm or perfect or otherwise to carry out the intent
and purposes of this Agreement.
7.3 Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived by any other party to whom such compliance is owed. No waiver of any
provision of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver.
7.4 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, executors, administrators, successors and assigns.
7.5 Headings. The section and other headings in this
Agreement are inserted solely as a matter of convenience and for reference, and
are not a part of this Agreement.
7.6 Entire Agreement. This Agreement and all agreements
referenced specifically in this Agreement and executed as required by this
Agreement constitute the entire agreement among the parties hereto and
supersede and cancel any prior agreements, representations, warranties, or
communications, whether oral or written, among the parties hereto relating to
the transactions contemplated hereby or the subject matter herein.
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Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an agreement in writing signed by
the party against whom or which the enforcement of such change, waiver,
discharge or termination is sought.
7.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
7.8 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.9 Pronouns. All pronouns used herein shall be deemed to
refer to the masculine, feminine or neuter gender as the context requires.
7.10 Time of Essence. Time is of the essence in this
Agreement.
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IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
"BANKERS"
BANKERS FIDELITY LIFE INSURANCE
COMPANY
By:/s/ Eugene Choate
-------------------------------
Title: President
"BFAC"
BF ACQUISITION CORPORATION
By:/s/ Hilton Howell
-------------------------------
Title: President
"PARENT"
ATLANTIC AMERICAN CORPORATION
By:/s/ Hilton Howell
-------------------------------
Title: President and
Chief Executive Officer
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ANNEX B
[Form of Opinion of J.C. Bradford]
_____________, 1996
Special Committee of The Board of Directors
Bankers Fidelity Life Insurance Company
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
Gentlemen:
You have requested our opinion as to the fairness, from a financial
point of view, to the shareholders of Bankers Fidelity Life Insurance Company
("Bankers Fidelity" or the "Company") other than BF Acquisition Corporation
("BFAC") (such shareholders being collectively referred to herein as the
"Unaffiliated Shareholders") of the consideration to be received by such
Unaffiliated Shareholders in the proposed merger (the "Merger") of BFAC with
and into the Company in accordance with the Agreement of Merger, dated January
5, 1996 (the "Merger Agreement") by and among Atlantic American Corporation,
BFAC and the Company. The terms and conditions of the Merger are more fully
set forth in the Merger Agreement. Capitalized terms used but not defined
herein have the meanings ascribed to such terms in the Merger Agreement.
J.C. Bradford & Co., as part of its investment banking business,
engages in the valuation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements, and valuations for estate,
corporate, and other purposes. We have acted as financial advisor to the
Special Committee of the Board of Directors of Bankers Fidelity in connection
with the proposed Merger and will receive a fee from Bankers Fidelity for our
services.
In conducting our analysis and arriving at our opinion, we have
considered such financial and other facts as we deemed appropriate and feasible
under the circumstances including, among other things, the following: (i) the
Merger Agreement and the Proxy Statement of Bankers Fidelity, dated
_____________, 1996, relating to the Merger; (ii) the historical and current
financial position and results of operations of Bankers Fidelity; (iii)
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certain internal financial analyses and forecasts of Bankers Fidelity for the
years beginning January 1, 1995 and ending December 31, 1998, prepared for
Bankers Fidelity by its senior management; (iv) certain financial and
securities data of certain other companies, the securities of which are
publicly traded, that we believed to be comparable to Bankers Fidelity; (v)
prices and premiums paid in certain other acquisitions and transactions that we
believed to be relevant; (vi) reported price and trading activity for the
Common Stock; and (vii) such other financial studies, analyses, and
investigations as we deemed appropriate for purposes of its opinion. We also
have held discussions with members of the senior management of Bankers Fidelity
regarding the past and current business operations, financial condition, and
future prospects of the Company.
We have taken into account our assessment of general economic, market
and financial and other conditions and our experience in other transactions, as
well as our experience in securities valuation and our knowledge of the
insurance industry generally. Our opinion is necessarily based upon the
information made available to us and conditions as they exist and can be
evaluated as of the date hereof.
We have relied upon the accuracy and completeness of all of the
financial and other information reviewed by us for purposes of our opinion and
have not assumed any responsibility for, nor undertaken an independent
verification of, such information. With respect to the internal financial
analyses and forecasts supplied to us, we have assumed that such analyses and
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of Bankers Fidelity's senior management as to
the recent and likely future performance of Bankers Fidelity. Accordingly, we
express no opinion with respect to such analyses or forecasts or the
assumptions on which they are based. We were not asked to consider and our
opinion does not address the relative merits of the proposed Merger as compared
to any alternative business strategies that might exist for Bankers Fidelity or
the effect of any other transactions in which Bankers Fidelity might engage.
Furthermore, we have not made an independent evaluation or appraisal of the
assets and liabilities of the Company and have not been furnished with any such
evaluation or appraisal.
Based upon and subject to the foregoing, and based upon such other
matters as we consider relevant, it is our opinion that, as of the date hereof,
the consideration to be received by the Unaffiliated Shareholders in the
proposed Merger is fair to the Unaffiliated Shareholders from a financial point
of view.
Very truly yours,
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ANNEX C
DISSENTERS' RIGHTS PROVISIONS
OF THE GEORGIA BUSINESS CORPORATION CODE
14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporate action" means the transaction or other
action by the corporation that creates dissenters' rights under Code Section
14-2-1302.
(3) "Corporation" means the issuer of shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under Code Section 14-2-1302 and who exercises
that right when and in the manner required by Code Sections 14-2-1320 through
14-2-1327.
(5) "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.
(6) "Interest" means interest from the effective date of
the corporate action until the date of payment, at a rate that is fair and
equitable under all the circumstances.
(7) "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.
(8) "Shareholder" means the record shareholder or the
beneficial shareholder.
14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation 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:
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(A) If approval of the shareholders of the
corporation is required for the merger by Code Section
14-2-1103 or the articles of incorporation and the shareholder
is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is
merged with its parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares will 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 if a shareholder
vote is required on the sale or exchange pursuant to Code Section
14-2-1202, 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 will 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:
(A) Alters or abolishes a preferential right of
the shares;
(B) 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;
(C) Alters or abolishes a preemptive right of the
holder of the shares to acquire shares or other securities;
(D) 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;
(E) 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 Code Section
14-2-604; or
(F) Cancels, redeems, or repurchases all or part
of the shares of the class; or
(5) Any corporate action taken pursuant to a shareholder
vote to the extent that Article 9 of this chapter, the articles of
incorporation, bylaws, or a
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resolution of the board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his
shares under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there
shall be no right of dissent in favor of the holder of shares of any class or
series which, at the record date fixed to determine the shareholders entitled
to receive notice of and to vote at a meeting at which a plan of merger or
share exchange or a sale or exchange of property or an amendment of the
articles of incorporation is to be acted on, were either listed on a national
securities exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange,
the holders of shares of the class or series are required under the
plan of merger or share exchange to accept for their shares anything
except shares of the surviving corporation or another publicly held
corporation which at the effective date of the merger or share
exchange are either listed on a national securities exchange or held
of record by more than 2,000 shareholders, except for scrip or cash
payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution of the
board of directors approving the transaction provides otherwise.
14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
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 beneficial shareholder 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
Code section are determined as if the shares as to which he dissents and his
other shares were registered in the names of different shareholders.
14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the
meeting notice must state that
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shareholders are or may be entitled to assert dissenters' rights under this
article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code
Section 14-2-1302 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
Code Section 14-2-1322 no later than ten days after the corporate action was
taken.
14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a
record shareholder who wishes to assert dissenters' rights:
(1) Must deliver 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.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters' notice to all shareholders who
satisfied the requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days
after the corporate action was taken and must:
(1) State where the payment demand must be sent and
where and when certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the payment
demand is received;
(3) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than 60
days after the date the notice required in subsection (a) of this Code
section is delivered; and
(4) Be accompanied by a copy of this article.
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14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in
Code Section 14-2-1322 must demand payment and deposit his certificates in
accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his
shares under subsection (a) of this Code section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(c) A record shareholder who does not demand payment or 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 article.
14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under Code
Section 14-2-1326.
(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.
14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days
of the later of the date the proposed corporate action is taken or receipt of a
payment demand, the corporation shall by notice to each dissenter who complied
with Code Section 14-2-1323 offer to pay to such dissenter the amount the
corporation estimates to be the fair value of his or her shares, plus accrued
interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a
fiscal year ending not more than 16 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;
(3) An explanation of how the interest was calculated;
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(4) A statement of the dissenter's right to demand
payment under Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written
notice to the corporation within 30 days after the corporation's offer or is
deemed to have accepted such offer by failure to respond within said 30 days,
payment for his or her shares shall be made within 60 days after the making of
the offer or the taking of the proposed corporate action, whichever is later.
14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60
days after the date set for demanding payment and depositing share
certificates, the corporation 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 Code Section 14-2-1322 and repeat the payment
demand procedure.
14-2-1327. 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 of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under
Code Section 14-2-1325 is less than the fair value of his shares or
that the interest due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within 60 days
after the date set for demanding payment.
(b) A dissenter waives his or her right to demand payment under
this Code section and is deemed to have accepted the corporation's offer unless
he or she notifies the corporation of his or her demand in writing under
subsection (a) of this Code section within 30 days after the corporation
offered payment for his or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set
forth in subsection (a) of Code Section 14-2-1325:
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(1) The shareholder may demand the information required
under subsection (b) of Code Section 14-2-1325, and the corporation
shall provide the information to the shareholder within ten days after
receipt of a written demand for the information; and
(2) The shareholder may at any time, subject to the
limitations period of Code Section 14-2-1332, notify the corporation
of his own estimate of the fair value of his shares and the amount of
interest due and demand payment of his estimate of the fair value of
his shares and interest due.
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains
unsettled, the corporation shall commence a proceeding within 60 days after
receiving the payment demand 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 60 day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be
a nonjury equitable valuation proceeding, in the superior court of the county
where a corporation's registered office is located. If the surviving
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
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall made all dissenters, whether or not
residents of this state, whose demands remain unsettled parties to the
proceeding, which shall have the effect of an action quasi in rem against their
shares. The corporation shall serve a copy of the petition in the proceeding
upon each dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons and complaint, and upon each
nonresident dissenting shareholder either by registered or certified mail or by
publication, or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) of this Code section is plenary and exclusive.
The court may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the
powers described in the order appointing them or in any amendment to it.
Except as otherwise provided in this chapter, Chapter 11 of Title 9, known as
the "Georgia Civil Practice Act," applies to any proceeding with respect to
dissenters' rights under this chapter.
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(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount which the court finds to be the fair value of his
shares, plus interest to the date of judgment.
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code
Section 14-2-1330 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court, but
not including fees and expenses of attorneys and experts for the respective
parties. The court shall assess the costs against the corporation, except that
the court may assess the 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
Code Section 14-2-1327.
(b) The court may also assess the fees and expenses of attorneys
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 substantially
comply with the requirements of Code Sections 14-2-1320 through
14-2-1327; 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 article.
(c) If the court finds that the services of attorneys 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 attorneys reasonable fees to be paid
out of the amounts awarded the dissenters who were benefitted.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be
brought more than three years after the corporate action was taken, regardless
of whether notice of the corporate action and of the right to dissent was given
by the corporation in compliance with the provisions of Code Section 14-2-1320
and Code Section 14-2-1322.
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APPENDIX A
Preliminary Copies
BANKERS FIDELITY LIFE INSURANCE COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF BANKERS FIDELITY LIFE INSURANCE
COMPANY FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MARCH _____, 1996
The undersigned hereby appoints _________________ and _______________,
or either of them, with full power of substitution as proxyholders to represent
and to vote, as designated herein, the Common Stock of the undersigned at the
Special Meeting of shareholders of the Company to be held on March ____, 1996
and any postponement or adjournment thereof.
The Board of Directors Recommends a Vote "For" the Proposal:
To approve the Agreement of Merger dated January 5, 1996:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The shares represented by this proxy card will be voted as directed.
If NO DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE SHARES
WILL BE VOTED FOR THE ABOVE PROPOSAL. IN THEIR DISCRETION, THE PROXYHOLDERS
ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
Signature of Shareholder(s)
--------------------------------------------------
--------------------------------------------------
Dated: , 1996
------------------------------------
IMPORTANT: Sign exactly as your name(s) appears at
left. Give full title of executor, administrator,
trustee, guardian, etc. Joint owners should each
sign personally.
