SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
FILED BY THE REGISTRANT ( )
FILED BY A PARTY OTHER THAN THE REGISTRANT (X)
CHECK THE APPROPRIATE BOX:
( ) PRELIMINARY PROXY STATEMENT
( ) CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))]
(X) DEFINITIVE PROXY STATEMENT
( ) DEFINITIVE ADDITIONAL MATERIALS
( ) SOLICITING MATERIAL PURSUANT TO RULE 14A-12
FIRST AMERICAN CAPITAL CORPORATION
------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FIRST AMERICAN COMMITTEE FOR PROTECTION OF SHAREHOLDER VALUE, ATTN: MARK A.
OLIVER, SPOKESPERSON, 400 EAST ANDERSON LANE, AUSTIN, TEXAS 78752, phone (512)
536-9783; with a copy to: Reid A. Godbolt, Esq., Jones & Keller, P.C. 1625
Broadway, Suite 1600, Denver, CO 80202, phone (303) 573-1600.
------------------------------------------------------------------------
(NAME OF PERSON(s) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
(X) NO FEE REQUIRED
( ) FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(i)(1) AND 0-11
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE
AMOUNT ON WHICH THE FILING FEE IS CALCULATED AND STATE HOW IT
WAS DETERMINED):
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
( ) FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
( ) CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
ANNUAL MEETING OF SHAREHOLDERS OF
FIRST AMERICAN CAPITAL CORPORATION
JUNE 2, 2003
PROXY STATEMENT OF
THE FIRST AMERICAN COMMITTEE FOR
PROTECTION OF SHAREHOLDER VALUE
----------
This proxy statement and the WHITE proxy card enclosed herewith are being
furnished to the shareholders of First American Capital Corporation ("First
American" or the "Company") in connection with the solicitation of proxies by
the FIRST AMERICAN COMMITTEE FOR PROTECTION OF SHAREHOLDER VALUE (the
"Shareholder Protection Committee") for voting at the 2003 annual meeting of
shareholders of First American, and at any adjournments, postponements or
reschedulings thereof (the "2003 Annual Shareholders' Meeting").
The Shareholder Protection Committee is soliciting proxies to take the following
actions at the 2003 Annual Shareholders' Meeting:
(1) to elect Rickie D. Meyer, Michael N. Fink, Danny N. Biggs,
Dean F. Ferrell, Roger K. Viola, Harold E. Riley, Rick D.
Riley and Mark A. Oliver to the Board of Directors of First
American, each to serve until the 2004 annual meeting of
shareholders of First American and until their respective
successors are duly elected;
(2) to ratify and approve the appointment of Kerber, Eck &
Braeckel LLP as independent auditors for the next fiscal year;
and
(3) to transact any other business that is properly brought before
the 2003 Annual Shareholders' Meeting.
The 2003 Annual Shareholders' Meeting is scheduled to be held on Monday, June 2,
2003 at 11:00 a.m. Central Daylight Time at the Holiday Inn West, located at 605
S.W. Fairlawn, Topeka, Kansas 66606. First American has set April 30, 2003 as
the record date for determining shareholders entitled to receive notice of and
to vote at the 2003 Annual Shareholders' Meeting.
Information concerning the Shareholder Protection Committee, its nominees and
other persons who are participants in this proxy solicitation is provided in
this proxy statement under the headings "The Shareholder Protection Committee's
Nominees," "Information Regarding the Participants" and in Annex A.
*****
THE VOTING OF THE PROXIES WE SOLICIT FROM YOU PURSUANT TO THIS PROXY STATEMENT
WILL BE SUBJECT TO THE PRIOR NON-OBJECTION OR APPROVAL OF THE KANSAS
COMMISSIONER OF INSURANCE. ANY FAILURE TO OBTAIN SUCH NON-OBJECTION OR APPROVAL
WILL SUBJECT YOU TO THE RISK THAT PROXIES YOU GRANT US MAY NOT BE COUNTED AT THE
2003 ANNUAL SHAREHOLDERS' MEETING. SEE "BACKGROUND OF THIS SOLICITATION" FOR
MORE INFORMATION.
A PROXY MAY BE GIVEN BY ANY PERSON WHO OWNS SHARES OF FIRST AMERICAN COMMON
STOCK ON APRIL 30, 2003, THE RECORD DATE FOR THE 2003 ANNUAL SHAREHOLDERS'
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE 2003 ANNUAL SHAREHOLDERS' MEETING
YOU ARE URGED TO SIGN AND DATE THE ENCLOSED WHITE PROXY CARD ONLY AND RETURN IT
IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOUR LATEST-DATED PROXY IS THE ONE THAT
COUNTS. YOU MAY RETURN THE WHITE PROXY CARD EVEN IF YOU HAVE ALREADY DELIVERED A
PROXY. WE URGE YOU NOT TO RETURN ANY PROXY SENT TO YOU BY REPRESENTATIVES OF THE
COMPANY.
IF YOU HAVE ANY QUESTIONS ABOUT THE SHAREHOLDER PROTECTION COMMITTEE'S
SOLICITATION, OR NEED ANY ASSISTANCE IN VOTING YOUR SHARES, PLEASE CONTACT
OUR PROXY SOLICITOR, GEORGESON SHAREHOLDER COMMUNICATIONS, INC., TOLL-FREE, AT
1-800-732-6168.
The date of this proxy statement is May 9, 2003. This proxy statement and the
WHITE proxy card included herewith are being mailed or given to shareholders of
First American on or about May 12, 2003.
INTRODUCTION
At the 2003 Annual Shareholders' Meeting, eight persons will be elected as
directors of First American to hold office until the 2004 annual meeting of
shareholders and until their successors have been elected and qualified or until
their earlier death, resignation or removal.
The Shareholder Protection Committee has provided notice to First American of
its intent to nominate for election eight members to the Board of Directors at
the 2003 Annual Shareholders' Meeting, and is soliciting your proxy in support
of the election of Rickie D. Meyer, Michael N. Fink, Danny N. Biggs, Dean F.
Ferrell, Roger K. Viola, Harold E. Riley, Rick D. Riley and Mark A. Oliver. We
believe our nominees are highly qualified individuals based on their extensive
business and professional experience. For more information regarding our
nominees, see "The Shareholder Protection Committee's Nominees." Our nominees
collectively own 14.0% of the Company's outstanding common stock, or 658,230
shares.
THE SHAREHOLDER PROTECTION COMMITTEE IS CONCERNED BY WHAT IT BELIEVES TO BE THE
LACK OF DIRECTION AND MANAGEMENT OF FIRST AMERICAN WITHOUT SIGNIFICANT
EXPERIENCE IN MARKETING AND MANAGING LIFE INSURANCE COMPANIES, PLUS THE TOTAL
LACK OF MARKET LIQUIDITY FOR FIRST AMERICAN'S COMMON STOCK. WE HAVE DECIDED TO
SEEK THE ELECTION OF OUR SLATE OF DIRECTORS IN AN ATTEMPT TO PROVIDE QUALIFIED
MANAGEMENT, LIQUIDITY AND GREATER MARKET VALUE FOR FIRST AMERICAN SHAREHOLDERS.
YOUR VOTE IS VERY IMPORTANT, SO PLEASE SIGN, DATE AND MAIL THE ENCLOSED WHITE
PROXY CARD AT YOUR EARLIEST CONVENIENCE.
================================================================================
IF YOU HAVE QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL:
(GEORGESON SHAREHOLDER LOGO)
17 STATE STREET, 10TH FLOOR
NEW YORK, NY 10004
(800) 732-6168 (TOLL FREE)
BANKS AND BROKERAGE FIRMS PLEASE CALL:
(212) 440-9800
================================================================================
* * * * * *
2
WHY THE SLATE OF DIRECTORS NOMINATED
BY FIRST AMERICAN MUST NOT BE ELECTED
In our view, it is time to elect a new Board of Directors and strengthen the
management team of First American. The reasons for Board and management change
are numerous:
o First American is a small life insurance holding company whose capital
should not be further eroded. According to the audited financial statements
of the Company as of December 31, 2002, the Company had only $400,000 of
cash, $11,545,000 of investments and total assets of $18,747,000.
o In our opinion, the nominees of the current Board and present management of
First American do not have the necessary experience in marketing and
managing that is needed to direct development of a small life insurance
holding company. While the First American nominees may have general
business experience, we believe that actual experience in managing and
operating life insurance companies is critical to First American's success.
WE ARE OF THE OPINION THAT EXPERIENCED INSURANCE COMPANY MANAGEMENT IS
NECESSARY TO ASSURE THE COMPANY'S SUCCESS AND PROTECT SHAREHOLDER VALUE.
o First American common stock does not trade in any market. In other words,
there is no market for your shares. The only known purchases and sales the
Shareholder Protection Committee is aware of were privately negotiated
sales in September 2002 at less than book value. The highest sales price
was $1.91 per share as disclosed in First American's Form 10-QSB for the
Quarter Ended September 30, 2002. The Shareholder Protection Committee will
seek to develop liquidity for the First American common stock as well as
maximize shareholder value.
o In late 2002 and early 2003, a divided First American board refused to
proceed with a bona fide proposal by Citizens, Inc. (a New York Stock
Exchange listed financial services company, employer of several of the
nominees of the Shareholder Protection Committee and a participant in the
Shareholder Protection Committee's solicitation) to be presented to the
First American shareholders. Under that proposed agreement, subject to
shareholder approval, First American would have been acquired by Citizens,
and First American shareholders would have received $3.50 per share in the
form of Class A common stock of Citizens, which trades on the New York
Stock Exchange. Citizens withdrew from these negotiations due to lack of
agreement with the First American Board, and Citizens is not currently
proceeding to acquire First American because Citizens would need to
complete a detailed review and study of First American. Should Citizens at
a later date acquire First American via an exchange of shares, First
American would continue as a Kansas company. HOWEVER, THERE CAN BE NO
ASSURANCE AT THIS TIME THAT CITIZENS WILL PROPOSE ANOTHER ACQUISITION
AGREEMENT WITH RESPECT TO FIRST AMERICAN, EVEN IF THE SHAREHOLDER
PROTECTION COMMITTEE NOMINEES ARE ELECTED.
o In our view, it is not in the best interests of the First American
shareholders for its Board to miss out on opportunities such as occurred
with Citizens, particularly because First American has limited capital and
its shareholders currently have no liquidity for their stock.
o Shareholders were denied by the present Board (on a divided basis) an
opportunity to evaluate and consider an exchange of their First American
shares for publicly traded shares of Citizens, Inc., a New York Stock
Exchange listed company. This simply should not have occurred. We believe
that First American shareholders have the right and should be allowed the
opportunity to decide for themselves whether to vote on an important
acquisition proposal of this nature with significant potential value.
3
o As evidenced by all of its recent filings with the Securities and Exchange
Commission, First American is losing money, and its stock continues to be
without a market. It is the belief of the Shareholder Protection Committee
that the current Board's course of action seems to be to simply protect
itself and current management.
o It is our opinion, based upon the substantial experience of our nominees in
managing and operating life insurance companies, First American, as a small
insurance holding company, has avenues of growth available to it: First,
the Company can continue selling new life insurance products, which
generally depletes capital before the Company becomes profitable, because
new policies are very expensive to put on the books of the Company. Second,
the Company can attempt to acquire other life insurance companies or blocks
of business. Any acquisitions the Company would consider pursuing at this
point would be difficult, because the Company has limited capital (cash)
and its stock does not trade publicly. Or, third, the Company could join
forces with another company. The Shareholder Protection Committee Board
nominees will seek to manage the Company in the best interest of all
shareholders. Most of the Shareholder Protection Committee nominees are
highly experienced life insurance professionals.
THE SHAREHOLDER PROTECTION COMMITTEE'S NOMINEES
The Shareholder Protection Committee has put together a slate of highly
qualified nominees whom we believe have the expertise necessary to enhance share
value for the shareholders of First American, the true owners of the Company.
Their records and experience which follow speak to their qualifications.
The Shareholder Protection Committee nominees are not part of current management
or their nominees and are committed to exploring alternatives to increase
shareholder value. If elected, our nominees will act in the best interest of
First American's shareholders and will carry out their fiduciary duties as
directors of First American diligently and promptly.
Certain Information About Our Nominees. Set forth below are the name,
age, business address, present principal occupation, employment history and
directorships of publicly held companies of each of our nominees for at least
the past five years. This information has been furnished to us by the respective
nominees. Each of our nominees has consented to serve as a director of the
Company. None of the entities referenced below is a parent or subsidiary of the
Company.
<Table>
<Caption>
Name and Principal Business Present Principal Occupation and Minimum Five Year
Address Age Prior Business Experience
- --------------------------- --- --------------------------------------------------
Rickie D. Meyer 52 Marketing Consultant, Citizens, Inc.
900 S.W. Robinson, #1905 from March 2003 to present. Mr. Meyer
Topeka, Kansas 66606 is one of the founders of First
American, and has been a Director of
First American since its inception in
July 1996. Further, he was the
Company's President from its inception
until February 27, 2003. He has more
than 20 years of experience in the
insurance industry, primarily in sales
management. From May 1982 to October
1984, he was a life insurance agent,
District Director and Executive Sales
Director with Liberty American
Assurance Company in Lincoln,
Nebraska. In October 1984, he
transferred to an affiliated company
to become Agency Director. In 1985, he
left Liberty American to become an
organizer and Zone Sales Director
</Table>
4
<Table>
for United Trust, Inc. in Springfield,
Illinois. In January 1988, he
transferred to Columbus, Ohio to
assist in the organization of United
Income, Inc. and served as Zone Sales
Manager. While with United Income, he
was promoted to Training Director in
1991 and to Agency Director in 1993.
Mr. Meyer left the United Companies in
January 1996 to form First American.
Michael N. Fink 46 Senior Vice President of Corporate
3385 Executive Drive, Suite 308 Development of Citizens, Inc. from
Lexington, Kentucky 40505 February 2003 to present. Mr. Fink is
one of the founders of First American,
and has been a director of First
American since its inception in July
1996. He has 21 years of experience in
the insurance industry, primarily in
sales management. From 1981 to 1984,
he was an agent, District Director,
and Regional Director with Liberty
American Assurance Company in Lincoln,
Nebraska. In 1984, he transferred to
an affiliated company, Future Security
Life, in Austin, Texas, where he
served as Regional Director and Agency
Director until 1988. In March 1988, he
became affiliated with United Income,
Inc. and United Security Assurance
Company as Agency Director and
Assistant to the President. In June
1993, Mr. Fink left the United
Companies and became President of
First Alliance Corporation, an
insurance holding company and its life
insurance and venture capital
companies until First Alliance was
acquired by Citizens in February 2003.
Danny N. Biggs 65 Director of the First American since
2601 Canterbury its inception in July 1996, and one of
Great Bend, Kansas 67530 its original investors. He is a
Consultant (formerly Vice-President,
Partner, General Superintendent and
Director for over five years) of
Pickrell Drilling Company, Inc.,
Mobile Drilling Company, Inc., Central
Dirt Service, Inc. and Pickrell
Acquisitions, Inc. and also a Partner
in Kelly Petroleum. Mr. Biggs is a
past President of the Kansas
Independent Oil & Gas Association
("KIOGA") and is currently a member
and director of KIOGA and director and
president of Kansas Oil & Gas Hall of
Fame & Museum Foundation. He is a
member of the Great Bend Chamber of
Commerce, American Petroleum
Institute, Interstate Oil & Gas
Compact Commission Crude Oil Policy
Committee, Association of Energy
Service Companies and the Independent
Petroleum Association of America. He
served as Chairman of the Mid-America
Oil & Gas Technology Exposition,
Vision 2000 Area Relations/Image
Committee, KIOGA Membership Committee
and general Chairman of the 1992 KIOGA
Convention. Mr. Biggs was recently
inducted into the Kansas Oil & Gas
Hall of Fame.
</Table>
5
<Table>
Dean F. Ferrell 55 Owner and operator of Ferrell
2420 N.W. Button Road Construction Company of Topeka, Inc.,
Topeka, Kansas 66618 and a construction contractor, since
May 1976.
Roger K. Viola 57 Attorney-at-Law. He was Senior Vice
3445 S.W. Alameda Drive President, General Counsel and
Topeka, Kansas 66614 Secretary from January 1985 through
December 2002 for the Security Benefit
Group of Companies. He was Chief Legal
Counsel, Department of Administration,
for the State of Kansas, from January
2003 through April 2003.
Harold E. Riley 74 Controlling shareholder and Chairman
400 East Anderson Lane of the Board of Citizens, Inc. from
Austin, Texas 78752 1987 to present. Citizens is a company
with a class of equity securities
registered under the Securities
Exchange Act of 1934. The Class A
common stock of Citizens trades in the
New York Stock Exchange under the
symbol "CIA." Mr. Riley has more than
40 years' experience in the life
insurance business, virtually all in
top management positions, and has
directed the building of three life
insurance companies. Mr. Riley has
been directly responsible for the
acquisition of more than 25 life
insurance companies and has designed
marketing programs that have produced
billions of dollars of guaranteed cash
value whole life insurance. He started
Citizens in 1969 (through a
predecessor company) with $2.5 million
of personal funds and has brought it
to over $340 million of assets and
more than $2 billion of insurance in
force. He is listed in several "Who's
Who" publications, including "Who's
Who in Insurance" as well as a member
of the Baylor University Hall of Fame.
Rick D. Riley 49 Vice Chairman and Chief Executive
400 East Anderson Lane Officer of Citizens, Inc. October 2000
Austin, Texas 78752 to present. Citizens is a company with
a class of equity securities
registered under the Securities
Exchange Act of 1934 and its Class A
common stock trades in the New York
Stock Exchange under the symbol "CIA."
He is Chairman of the Board, President
and Chief Executive Officer of
Citizens Insurance Company of America,
a subsidiary of Citizens, from
February 1999 to present. He was Chief
Administrative Officer and Secretary
of Citizens from October 1998 to
February 1999 and served in several
official capacities for Citizens for
several years before then. Mr. Riley
has more than 25 years' experience in
the life insurance industry with
particular expertise in life insurance
operations and data processing
systems. Rick D. Riley is the son of
Harold E. Riley.
</Table>
6
<Table>
Mark A. Oliver 44 President and Vice Chairman of
400 East Anderson Lane Citizens, Inc. and its affiliates from
Austin, Texas 78752 February 1999 to present. He was
President of Citizens and its
affiliates from March 1997 to February
1999. He was Executive Vice President,
Chief Financial Officer, Secretary and
Treasurer of Citizens and its
affiliates from 1990 to 1997. Citizens
is a company with a class of equity
securities registered under the
Securities Exchange Act of 1934 and
its Class A common stock trades in the
New York Stock Exchange under the
symbol "CIA." Mr. Oliver has more than
20 years' experience in the area of
statutory accounting and reporting.
Since joining Citizens in 1984, he has
overseen all accounting and financial
affairs. He coordinates all filings
and reports to the Securities and
Exchange Commission and to various
state regulatory agencies and
functions as the Chief Investment
Officer of all Citizens' companies.
</Table>
As indicated above and in "Background of this Solicitation," Citizens
and the Company have had discussions and negotiations about the possible
acquisition of the Company by Citizens. Shareholders of the Company should be
aware that:
o EVEN IF THE NOMINEES OF THE SHAREHOLDER PROTECTION COMMITTEE
ARE ELECTED, THERE IS NO ASSURANCE AT THIS TIME THAT CITIZENS
WILL PROPOSE AN AGREEMENT TO ACQUIRE FIRST AMERICAN.
o EVEN IF CITIZENS DOES MAKE ANOTHER ACQUISITION PROPOSAL, ITS
VALUE MAY BE AT LESS THAN $3.50 PER SHARE OF COMPANY STOCK,
AND SUCH PROPOSAL WOULD BE SUBJECT TO THE APPROVAL OF THE
KANSAS COMMISSIONER OF INSURANCE.
o EVEN IF THE NOMINEES OF THE SHAREHOLDER PROTECTION COMMITTEE
ARE ELECTED, THERE IS NO ASSURANCE THAT THE FIRST AMERICAN
BOARD WILL RECOMMEND ANY CITIZENS PROPOSAL.
o SHOULD THE NOMINEES OF THE SHAREHOLDER PROTECTION COMMITTEE BE
ELECTED, GIVEN THEIR EXISTING RELATIONSHIP WITH CITIZENS, THEY
WILL HAVE CONFLICTS OF INTEREST IN NEGOTIATING AND APPROVING
ANY PROPOSAL MADE BY CITIZENS, AS FIVE OF THE NOMINEES OF THE
SHAREHOLDER PROTECTION COMMITTEE ARE EMPLOYED BY CITIZENS OR
ARE CONSULTANTS TO CITIZENS. ANY SUCH TRANSACTION WOULD
THEREFORE HAVE TO BE NEGOTIATED BY THE NON-INTERESTED
DIRECTORS OF FIRST AMERICAN AND IN ANY EVENT APPROVED BY THE
FIRST AMERICAN SHAREHOLDERS.
7
Stock Ownership of Our Nominees. The deemed beneficial ownership of
shares of the Company's common stock by each of the nominees of the Shareholder
Protection Committee is as follows:
<Table>
<Caption>
Shared Sole Shared
Sole Voting Voting Dispositive Dispositive Percentage
Nominee Power - Shares Power - Shares Power - Shares Power - Shares Ownership(8)
- ------- -------------- -------------- -------------- -------------- ------------
Rickie D. Meyer (1) (2) -- 658,230 456,000 -- 14.0%
Michael N. Fink (1)(3) -- 658,230 125,000 -- 14.0%
Danny N. Biggs (1) (4) -- 658,230 76,000 -- 14.0%
Dean F. Ferrell (5) -- 658,230 1,230 -- 14.0%
Roger K. Viola (6) -- 658,230 -- -- 14.0%
Harold E. Riley (1) -- 658,230 -- -- 14.0%
Mark A. Oliver (1) -- 658,230 -- -- 14.0%
Rick D. Riley (7) -- 658,230 -- -- 14.0%
</Table>
- ----------
(1) On March 19, 2003, Michael N. Fink, Rickie D. Meyer and Danny N. Biggs
delivered to Harold E. Riley and Mark A. Oliver three proxies which are
irrevocable until February 13, 2004. Under the proxies, Harold E. Riley
and Mark A. Oliver have the right to vote 652,000 shares of common
stock, which constitutes approximately 13.9% of the Company's
outstanding common stock. Each of the three proxies gives either Harold
E. Riley or Mark A. Oliver the right to vote the number of shares of
common stock stated on the proxy until February 13, 2004. Both persons
may also be deemed to have shared voting power with respect to the
additional 6,230 shares held by the other six nominees. Harold E. Riley
and Mark A. Oliver disclaim beneficial ownership of these 6,230 shares.
(2) Mr. Meyer owns of record 456,000 shares of the Company's common stock
as a joint tenant with his spouse, or 9.7% of the Company's outstanding
common stock. He and his wife have granted a proxy to Harold E. Riley
and Mark A. Oliver to vote such shares until February 13, 2004. Mr.
Meyer and his spouse have sole dispositive power with respect to such
shares. All of the nominees of the Shareholder Protection Committtee
may be deemed to share voting power with respect to 658,230 shares of
the Company's common stock. Mr. Meyer disclaims beneficial ownership of
202,230 of such shares, which are the shares not held of record by he
and his spouse.
(3) Mr. Fink owns of record 125,000 shares of the Company's common stock as
a joint tenant with his spouse, or 2.7% of the Company's outstanding
common stock. He and his wife have granted a proxy to Harold E. Riley
and Mark A. Oliver to vote such shares until February 13, 2004. Mr.
Fink and his spouse have sole dispositive power with respect to such
shares. All of the nominees of the Shareholder Protection Committee may
be deemed to share voting power with respect to 658,230 shares of the
Company's common stock. Mr. Fink disclaims beneficial ownership of
533,230 of such shares, which are the shares not held of record by he
and his spouse.
(4) Mr. Biggs owns of record through a trust, of which he is trustee and a
beneficiary, 76,000 shares of the Company's common stock, or 1.6% of
the Company's outstanding common stock. Through his trust he has
granted a proxy to Harold E. Riley and Mark A. Oliver to vote 71,000
shares until February 13, 2004. Mr. Biggs may be deemed to have sole
dispositive power with respect to 76,000 shares of the Company's common
stock. All of the members of the nominees of the Shareholder Protection
Committee may be deemed to share voting power with respect to 658,230
shares of the Company's common stock. Mr. Biggs disclaims beneficial
ownership of 582,230 of such shares, which are the shares not held of
record by him or by his trust.
(5) Mr. Ferrell owns of record 1,230 shares of the Company's common stock,
or less than 1% of the Company's outstanding common stock. Mr. Ferrell
has sole dispositive power with respect to such shares. All of the
members of the nominees of the Shareholder Protection Committee may be
deemed to share voting power with respect to 658,230 shares of the
Company's common stock. Mr. Ferrell disclaims beneficial ownership of
657,000 of such shares, which are the shares not held of record by him.
8
(6) Mr. Viola does not own of record any shares of the Company's common
stock. All of the nominees of the Shareholder Protection Committee may
be deemed to share voting power with respect to 658,230 shares of the
Company's common stock. Mr. Viola disclaims beneficial ownership of all
of such shares.
(7) Rick D. Riley has no record or beneficial ownership of the shares of
the Company's common stock, other than deemed shared voting power of
658,230 shares of the Company's common stock which may be attributed to
him as a nominee of the Shareholder Protection Committee. He disclaims
beneficial ownership of all such shares.
(8) Calculated based on 4,687,078 shares of common stock outstanding as of
April 22, 2003, as disclosed by the Company in its preliminary proxy
material filed with the SEC on or about April 28, 2003.
All of our nominees are citizens of the United States. None of our nominees is
employed by the Company, although Rickie D. Meyer, Michael N. Fink and Danny N.
Biggs are currently members of the Board of Directors of the Company. Mr. Meyer
also served as the President of the Company from its inception (July 10, 1996)
through February 27, 2003, and Mr. Fink served as Chairman of the Board of the
Company from inception (July 10, 1996) through November 1, 2002.
To the best knowledge of the Shareholder Protection Committee, none of the
Shareholder Protection Committee or any of the persons participating in this
proxy solicitation on behalf of the Shareholder Protection Committee within the
past five years:
o has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors);
o has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws, or
finding any violation with respect to such laws;
o were parties to a civil proceeding which ultimately mandated
activities that were subject to federal securities laws.
Executive Compensation of Two of Our Nominees. The following table sets
forth amounts earned by Messrs. Meyer and Fink, two of the nominees of the
Shareholder Protection Committee, in their capacities as President and Chairman,
respectively, of the Company in the years indicated:
<Table>
<Caption>
Annual Compensation
Other Annual All Other
Name and Principal Position Year Salary($) Bonus($)(1) Compensation($)(2) Compensation($)
- --------------------------- ---- --------- ----------- ------------------ ---------------
Rickie D. Meyer, 2002 105,301 104,651 8,131 --
Director and President 2001 96,271 79,080 5,983 --
2000 93,000 80,309 -- --
Michael N. Fink 2002 64,748 86,199 3,554
Director and Chairman 2001 77,017 63,264 2,792
2000 74,330 64,247 --
</Table>
- ----------
(1) Includes incentive compensation pursuant to the Executive Employment
Agreement, based on premiums produced.
(2) Other Annual Compensation consists of automobile allowances. The
aggregate cost to the Company of such personal benefits did not exceed
the lesser of $50,000 or 10% of the annual salaries received by the
above individuals.
9
Compensation of Directors. As an annual retainer fee for directors who
are not officers of the Company, an attendance fee pool was established. This
pool consists of 1% of the premiums received in each calendar year and is paid
to each board member on a pro-rata basis determined by his attendance of Board
meetings. This fee was payable in cash for 2001 and 2002. In addition, each
non-officer director is paid $750 per regular meeting attended for the Company
and its subsidiaries, $75 per telephonic board meeting, and $250 per committee
meeting. During 2002, there were four regular, two special and two telephonic
Board of Directors meetings. In addition, there were four audit committee, four
investment committee, two evaluation committee and five compensation committee
meetings.
Executive Employment Agreements. The Company had entered into Executive
Employment Agreements with Messrs. Meyer and Fink. The employment agreements for
Messrs. Meyer and Fink were for a term of four years beginning November 1, 1998.
The employment agreement for Mr. Meyer expired on November 1, 2002, but was
renewed for a period of time before it was terminated by the Company on or about
February 27, 2003. On November 1, 2002 the employment agreement for Mr. Fink
expired and was not renewed.
Certain Transactions. The Company contracted with First Alliance
Corporation ("First Alliance") of Lexington, Kentucky to provide accounting
services for the Company's life insurance subsidiary, First Life America
Corporation ("FLAC"). Mr. Fink is a founder and officer of First Alliance. Under
the terms of the service agreement, the Company paid fees based on a percentage
of paid premiums of FLAC. The percentages were 5.5% of first year premiums; 4%
of second year premiums; 3% of third year premiums; 2% of fourth year premiums;
1% of fifth year premiums; 1% for years six through ten for ten pay policies and
..5% in years six through twenty for twenty pay policies. Pursuant to the service
agreement, the Company incurred $288,936, $142,785 and $117,246 of fees during
2002, 2001 and 2000, respectively.
Effective September 30, 2002 the Company acquired 525,000 shares of its common
stock held by First Alliance for an aggregate purchase price of $1,002,750 or
$1.91 per share. In conjunction with the agreement to repurchase the stock, the
Company also acquired 72,500 shares of its common stock held by six individuals
associated with First Alliance (excluding Mr. Fink) for an aggregate purchase
price of $138,475 or $1.91 per share. In a related agreement, the Company and
First Alliance agreed to terminate the service agreement between the parties
through which the Company received administrative, reporting and underwriting
services from First Alliance. Termination of the service agreement occurred by
the Company making a lump-sum payment of $212,000 to First Alliance on September
30, 2002. This amount represented the present value of fees earned by First
Alliance under the agreement which would otherwise have been payable over time.
These agreements effectively severed First Alliance's financial interest in the
Company. First Alliance was acquired by Citizens on February 18, 2003.
In September 2002, Mr. Meyer sold 25,000 shares of common stock held in joint
tenancy with his wife to Mr. Biggs' trust for $47,750 or $1.91 per share, and
12,000 shares to another person for $.10 per share. The Meyers also gifted
12,000 shares of common stock to one of their adult sons and another 12,000
shares to an adult nephew.
Except as set forth in this proxy statement or in the annexes hereto, to the
best knowledge of the Shareholder Protection Committee, none of the Shareholder
Protection Committee, none of the persons participating in this proxy
solicitation on behalf of the Shareholder Protection Committee and, with respect
to items (i), (vii) and (viii) below, no associate (within the meaning of Rule
14a-1 of the Securities Exchange Act of 1934) of the foregoing persons:
(i) owns beneficially, directly or indirectly, any securities of
the Company;
10
(ii) owns beneficially, directly or indirectly, any securities of
any parent or subsidiary of the Company;
(iii) owns any securities of the Company of record but not
beneficially;
(iv) has purchased or sold any securities of the Company within the
past two years;
(v) has incurred indebtedness for the purpose of acquiring or
holding securities of the Company;
(vi) is or has within the past year been a party to any contract,
arrangement or understanding with respect to any securities of
the Company;
(vii) since the beginning of the Company's last fiscal year has been
indebted to the Company or any of its subsidiaries in excess
of $60,000; or
(viii) has any arrangement or understanding with respect to future
employment by the Company or with respect to any future
transactions to which the Company or any of its affiliates
will or may be a party.
Citizens, Inc. has agreed to pay each of the Shareholder Protection Committee
nominees any out-of-pocket expenses and/or losses incurred by such nominee that
arise from investigating or defending any claim brought against him with respect
to actions taken in connection with the solicitation of proxies to which this
proxy statement relates, other than claims resulting from the nominee's bad
faith, willful misconduct or gross negligence.
Each of the Shareholder Protection Committee nominees, if elected, will be
entitled to receive compensation customarily paid by the Company to its
independent directors, which compensation is described in the proxy statement of
the Company with respect to the 2003 Annual Shareholders' Meeting.
In addition, Mr. Meyer was terminated from employment by the Company in early
2003, and he has requested that First American pay him the sum of $250,000
pursuant to the early termination provisions of his employment contract because
he was, among other things, terminated without "cause" as defined in the
contract. First American stated in its 2002 Annual Report on Form 10-KSB that,
"The Company denies any such obligation". Mr. Meyer intends to pursue his claim.
The Shareholder Protection Committee has not reviewed Mr. Meyer's claim and is
not in possession of enough information from First American to make a
determination regarding Mr. Meyer's claim. It is expected that if the nominees
of the Shareholder Protection Committee are elected that Mr. Meyer will be
reinstated as President of the Company at a salary commensurate to the salary he
received prior to his termination.
Also, except as set forth in this proxy statement or in the annexes hereto, to
the best knowledge of the Shareholder Protection Committee, none of the
Shareholder Protection Committee, none of the persons participating in this
proxy solicitation on behalf of the Shareholder Protection Committee and no
associates (within the meaning of Rule 14a-5 of the Securities Exchange Act of
1934) of the foregoing persons, has had or is to have a direct or indirect
material interest in any transaction or proposed transaction with the Company in
which the amount involved exceeds $60,000, since the beginning of the Company's
last fiscal year.
Except as set forth in this proxy statement or in the annexes hereto, to the
best knowledge of the Shareholder Protection Committee, none of our nominees,
since the beginning of the Company's last fiscal year, has been affiliated with:
o any entity that made or received, or during the Company's
current fiscal year proposes to make or receive, payments to
or from the Company or its subsidiaries for property or
services in excess of 5% of either the Company's or such
entity's consolidated gross revenues for its last full fiscal
year, or
11
o any entity to which the Company or its subsidiaries were
indebted at the end of the Company's last full fiscal year in
an aggregate amount exceeding 5% of the Company's total
consolidated assets at the end of such year.
None of the Shareholder Protection Committee nominees is or during the Company's
last fiscal year has been affiliated with any law firm or investment banking
firm that has performed or proposes to perform services for the Company.
To the best knowledge of the Shareholder Protection Committee, none of the
corporations or organizations in which our nominees have conducted their
principal occupation or employment was a parent, subsidiary or other affiliate
of the Company, and, except as disclosed in this proxy statement or in the
annexes hereto, our nominees do not hold any position or office with the Company
or have any family relationship with any executive officer or director of the
Company or have been involved in any proceedings, legal or otherwise, of the
type required to be disclosed by the rules governing this solicitation.
We have no reason to believe that any of our nominees will be disqualified or
unwilling or unable to serve if elected. The Shareholder Protection Committee
reserves the right to nominate substitute persons if First American makes or
announces any changes to its By-laws or takes or announces any other action that
has, or if consummated would have, the effect of disqualifying any of our
nominees. In addition, if any additional directorships are to be voted upon at
the 2003 Annual Shareholders' Meeting, the Shareholder Protection Committee
reserves the right to nominate additional persons to fill the added positions.
Shares represented by proxies given to us will be voted for any substitute or
additional nominees of the Shareholder Protection Committee. Any such actions by
the Shareholder Protection Committee would only be to the extent permissible in
Rule 14a-4 adopted under the Securities Exchange Act of 1934. As such, if the
Shareholder Protection Committee substitutes or adds nominees to its
solicitation, then it may need to disseminate supplemental solicitation
materials to shareholders of the Company.
BACKGROUND OF THIS SOLICITATION
In late 2002, Citizens and the Company entered into discussions and
negotiations concerning the possible acquisition of the Company by Citizens. The
parties had a meeting on December 4, 2002, at which representatives of Citizens,
Harold E. Riley and Mark A. Oliver, made a presentation to the Company's Board.
On December 18, 2002, two current members of the Board of the Company, Harland
E. Priddle and Kenneth L. Frahm, traveled to Austin, Texas to meet with
management of Citizens. Citizens' representatives provided a draft acquisition
agreement to First American's representatives. The final purchase price offered
by Citizens to be presented to First American shareholders was $3.50 per share
of common stock of First American to be paid in Class A common stock of Citizens
calculated on an average trading price as reported on the New York Stock
Exchange for the 20 days preceding closing. The negotiations were terminated by
Citizens shortly after it was informed by First American's Chairman of the
Board, Harland E. Priddle, that the Company needed a "market check" after any
definitive purchase agreement was entered into, which would allow the Company to
solicit bids for the Company with the Citizens offer in hand. Citizens declined
to participate in such process. In the proposed contract that Citizens
submitted, however, the Board of the Company had a "fiduciary out" clause where
the Company's Board would not be obligated to recommend the Citizens merger
proposal in the event a better proposal was forthcoming between the time
Citizens and the Company reached a definitive agreement and the closing of such
an agreement. In mid-March 2003, Messrs. Meyer and Fink met with management of
Citizens to express concerns about the direction the Company had taken. As a
result of that meeting, Harold E. Riley and Mark A. Oliver acquired 11-month
irrevocable proxies from Messrs. Meyer and Fink and another director of the
12
Company, Danny N. Biggs (all three of these persons are current Board members of
the Company and are nominees of the Shareholder Protection Committee). On March
20, 2003, Harold E. Riley and Mark A. Oliver met with Mr. Priddle to see if
negotiations could recommence, but Citizens was turned down by Mr. Priddle a
couple days later.
On or about April 22, 2003, all of the nominees of the Shareholder
Protection Committee formed a group, the "First American Committee for
Protection of Shareholder Value," to nominate a slate of directors to stand for
election to the Board of the Company at the 2003 Annual Shareholders' Meeting.
On April 24, 2003, the nominees of the Shareholder Protection Committee
and Citizens, Inc. filed a Schedule 13D with the SEC which disclosed the
existence of the Shareholder Protection Committee. Shortly thereafter, the
Shareholder Protection Committee filed preliminary proxy material with the SEC.
Three of the nominees of the Shareholder Protection Committee, Messrs.
Meyer, Fink and Biggs, are current members of the Board of First American but
Messrs. Meyer and Fink were not on the slate chosen by the Company's current
Board. Mr. Biggs was chosen as a nominee for the Company's 2003 slate proposed
to be elected at the 2003 Annual Shareholders' Meeting, but Mr. Biggs withdrew
his name as such a nominee through a letter dated April 14, 2003, which the
Company accepted, with regret, in a letter dated April 17, 2003. In early April,
Harold E. Riley contacted several of the current Board members of the Company to
see if they would be interested in supporting an alternate slate to the Board of
Directors of the Company. On April 22, 2003, Messrs. Meyer and Fink delivered a
letter to the Company informing it of their opposition to the Company's proposed
slate of nominees to the Company's Board.
The Shareholder Protection Committee intends to review the Company's
business affairs and financial position and future prospects, as well as
conditions in the securities markets and general economic and industrial
conditions. Based on such evaluation and review and other factors, the
Shareholder Protection Committee will continue to consider various alternative
courses of action and will in the future take such actions with respect to an
investment in the Company as deemed appropriate in light of the circumstances
existing from time to time. Such actions include seeking representation on the
Board of Directors of the Company such as pursuant to this proxy solicitation,
and may also include making recommendations to members of management concerning
various business strategies and other matters, seeking to acquire control of the
Company through a merger, proxy solicitation, tender offer, exchange offer or
otherwise, or such other actions as the Shareholder Protection Committee may
deem appropriate. Such actions may involve the purchase of common stock of the
Company or, alternatively, may involve the sale of all or a portion of the
common stock held by them to one or more purchasers. In addition, the
Shareholder Protection Committee and Citizens have had and may continue to have
discussions with management of First American. These discussions may involve a
possible transaction between Citizens and the Company, including Citizens
acquiring control of the Company or potentially acquiring the Company. Citizens
continues to maintain an interest in acquiring the Company, but would have to
negotiate price and terms and complete a detailed review of the Company.
Kansas Insurance Department Filing. On or about April 16, 2003, Harold
E. Riley, Mark A. Oliver and Citizens, Inc. filed a Form A statement with the
Kansas Insurance Department relating to the First American's insurance
subsidiary, First Life American Corporation, which disclosed the granting of the
three proxies to Messrs. Harold E. Riley and Mark A. Oliver described above.
Each such person disclaimed "control" of First American, as defined in the
Kansas insurance statutes, because of their inability to elect directors or
affect any management policies of First American. An amendment to the Form A was
filed on or about April 28, 2003, disclosing the formation of the Shareholder
Protection Committee and this proxy solicitation. All filings by the Shareholder
Protection Committee with the
13
SEC have been or will be filed with the Kansas Insurance Department. As of the
date of this proxy statement, comments from the Kansas Insurance Department on
the Form A filing had not yet been received.
The Shareholder Protection Committee is in discussions with the Kansas
Insurance Department regarding whether the Department desires any further
information with respect to the Form A. As a result of the discussions, the
Shareholder Protection Committee believes its ability to vote the proxies
solicited by this proxy statement, as well as the ability of Harold E. Riley and
Mark A. Oliver to vote the above referenced three proxies, will be subject to
the prior approval of the Kansas Commissioner of Insurance pursuant to
applicable Kansas insurance laws. The Shareholder Protection Committee also
believes that the Kansas Insurance Department will hold a public hearing on the
Form A statement to determine whether to grant approval of the use of such
proxies. The Shareholder Protection Committee expects that a hearing and
decision of the Kansas Insurance Commissioner would occur before the 2003 Annual
Shareholders' Meeting, and it expects to obtain approval of the Kansas Insurance
Commissioner, because this proxy solicitation is a matter of corporate democracy
that, in the opinion of the Shareholder Protection Committee, will not
jeopardize the interests of the policyholders or shareholders of First
American's life insurance subsidiary in any manner. However, if the Kansas
Insurance Commissioner determines that she cannot or is unable to grant approval
of the use of the proxies solicited hereby, the ability of the Shareholder
Protection Committee to be successful in its objectives described in this proxy
statement would likely be lessened significantly.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
None of our nominees has failed to file reports related to First American that
are required by Section 16(a) of the Securities Exchange Act of 1934, as amended
except Rickie D. Meyer transferred shares of common stock to three persons in
September 2002, and did not timely file Form 4s reflecting such sales and Danny
N. Biggs did not timely file a Form 4 relating to his trust's purchase of shares
from Mr. Meyer and his wife in September 2002. Updated reports have since been
filed.
* * * * * *
WE ARE ASKING YOU TO JOIN FORCES WITH US AND SIGN, DATE AND RETURN THE ENCLOSED
WHITE PROXY CARD TO HELP US PURSUE THE PLAN TO PROTECT SHAREHOLDER VALUE (DO NOT
RETURN ANY PROXY CARD SENT TO YOU BY FIRST AMERICAN).
* * * * * *
WE STRONGLY BELIEVE THAT IT IS IN THE BEST INTEREST OF FIRST AMERICAN
SHAREHOLDERS TO ELECT THE SHAREHOLDER PROTECTION COMMITTEE'S NOMINEES AS BOARD
MEMBERS AT THE 2003 ANNUAL SHAREHOLDERS' MEETING.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WE STRONGLY RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF THE SHAREHOLDER
PROTECTION COMMITTEE'S NOMINEES BY SIGNING, DATING AND RETURNING THE WHITE PROXY
IN THE ENCLOSED POSTAGE PAID ENVELOPE TODAY!
* * * * *
14
PROPOSAL 2 - APPROVAL OF AUDITORS FOR THE COMPANY
The Board of Directors of the Company has selected and appointed
Kerber, Eck & Braeckel LLP as the auditors for the Company for the year 2003,
and the shareholders are being asked to ratify such selection.
According to the Company's Form 10-KSB for the Fiscal Year Ended
December 31, 2002, Kerber, Eck & Braeckel LLP served as the Company's
independent auditors for the fiscal years ended December 31, 2002, 2001 and
2000. In serving its primary function as outside auditors for the Company,
Kerber, Eck & Braeckel LLP performed the following audit services: (i)
examination of the annual financial statements for the Company and its
subsidiaries; and (ii) review of the Company's Form 10-KSB and the Company's
Form 10-QSB's filed with the Securities and Exchange Commission. Auditing fees
paid Kerber, Eck & Braeckel for services outlined above totaled $45,058 and
$39,139 in 2002 and 2001, respectively. The Company did not engage Kerber, Eck &
Braeckel LLP to provide services other than auditing services. The Company's
Audit Committee of the Board of Directors believes the auditing services
rendered by the principal accountant does not jeopardize independence.
It is anticipated that representatives of Kerber, Eck & Braeckel LLP
will not attend the Annual Meeting.
The Shareholder Protection Committee recommends the shareholders vote
"for" the ratification of Kerber, Eck & Braeckel LLP as independent auditors.
VOTING PROCEDURES
HOW DO I VOTE IN PERSON?
If you owned First American common stock on the record date, April 30, 2003, you
may attend the 2003 Annual Shareholders' Meeting and vote in person. If you are
not the record holder of your shares, please refer to the discussion following
the question "What if I am not the record holder of my shares?" If you hold your
shares in the name of a bank or broker, you will not be able to vote in person
at the 2003 Annual Shareholders' Meeting, unless you have previously specially
requested and obtained a "legal proxy" from your bank or broker and present it
at the 2003 Annual Shareholders' Meeting.
HOW DO I VOTE BY PROXY?
To vote by proxy, you should complete, sign and date the enclosed WHITE proxy
card and return it promptly in the enclosed postage-paid envelope.
To be able to vote your shares in accordance with your instructions at the 2003
Annual Shareholders' Meeting, we must receive your proxy as soon as possible but
in any event prior to the meeting.
WHAT IF I AM NOT THE RECORD HOLDER OF MY SHARES?
If your shares are held in the name of a brokerage firm, bank nominee or other
institution ("Custodian"), only it can give a proxy with respect to your shares.
You may have received either a blank, unexecuted proxy card from your Custodian
(which you can complete and send directly to the Shareholder Protection
Committee) or an instruction card (which you can complete and return to the
Custodian to direct its voting of your shares). If your Custodian has not sent
you either a blank, unexecuted proxy
15
card or an instruction card, you may contact the Custodian directly to provide
it with instructions. If you need assistance, please contact our proxy
solicitor, Georgeson Shareholder Communications, Inc., toll-free at
1-800-732-6168.
If your shares are held in the name of a Custodian, and you want to vote in
person at the 2003 Annual Shareholders' Meeting, you may specially request a
document called a "legal proxy" from the Custodian and bring it to the 2003
Annual Shareholders' Meeting. If you need assistance, please contact our proxy
solicitor, Georgeson Shareholder Communications, Inc., toll-free at
1-800-732-6168.
WHAT SHOULD I DO IF I RECEIVE A DIFFERENT COLORED PROXY CARD?
Proxies on any card other than the WHITE proxy card are being solicited by the
Board of Directors of the Company. If you submit a proxy to us by signing and
returning the enclosed WHITE proxy card, do not sign or return the other proxy
card or follow any voting instructions provided by the Company unless you intend
to change your vote, because only your latest-dated proxy will be counted.
If you have already sent a proxy card to the Company, you can revoke it and
provide your support to the Shareholder Protection Committee nominees by
signing, dating and returning the enclosed WHITE proxy card.
WHAT IF I WANT TO REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is voted on your
behalf. You may do so in three ways:
o By delivering a later-dated proxy to either Georgeson Shareholder
Communications, Inc. or the Secretary of First American; or
o By delivering a written notice of revocation to either Georgeson
Shareholder Communications, Inc. or the Secretary of First American; or
o By attending the meeting and voting in person at the 2003 Annual
Shareholders' Meeting.
If you choose to revoke a proxy by giving written notice or a later-dated proxy
to the Secretary of First American, we would appreciate if you would assist us
in representing the interests of shareholders on an informed basis by sending us
a copy of your revocation of proxy or by calling Georgeson Shareholder
Communications, Inc. toll-free at 1-800-732-6168. REMEMBER, YOUR LATEST-DATED
EXECUTED PROXY IS THE ONLY ONE THAT COUNTS.
IF I PLAN TO ATTEND THE 2003 ANNUAL SHAREHOLDERS' MEETING IN PERSON, SHOULD I
STILL SUBMIT A PROXY?
Yes, whether you plan to attend the 2003 Annual Shareholders' Meeting or not, we
urge you to submit your WHITE proxy card. Returning the enclosed WHITE proxy
card will not affect your right to attend the 2003 Annual Shareholders' Meeting
and vote in person.
WHO CAN VOTE?
You are eligible to vote or to execute a proxy only if you owned First American
common stock on the record date for the 2003 Annual Shareholders' Meeting, April
30, 2003. Even if you sell your shares after the record date, you retain the
right to execute a proxy in connection with the 2003 Annual Shareholders'
Meeting. It is important that you grant a proxy regarding shares you held on the
record
16
date, or vote those shares in person, even if you no longer own those shares.
Based upon the preliminary proxy statement filed with the SEC by First American
on or about April 28, 2003, there were 4,687,078 shares of First American common
stock outstanding on April 22, 2003.
HOW MANY VOTES DO I HAVE?
With respect to each matter to be considered at the 2003 Annual Shareholders'
Meeting, each shareholder will have one vote for each share of First American
common stock held by it on the record date. Based on documents publicly filed by
the Company, the Company has no outstanding voting securities other than its
common stock.
HOW WILL MY SHARES BE VOTED?
If you give a proxy on the accompanying WHITE proxy card, your shares will be
voted as you direct. If you submit a proxy to us without instructions, our
representatives will vote your shares in favor of the Shareholder Protection
Committee nominees. Submitting a WHITE proxy card will authorize the Shareholder
Protection Committee's representatives to vote your shares in accordance with
their discretion on matters described in this proxy statement as well as others
that may arise at the 2003 Annual Shareholders' Meeting.
Unless a proxy specifies otherwise, it will be presumed to relate to all shares
held of record on the record date by the person who submitted it.
WHAT IS A QUORUM AND WHY IS IT NECESSARY?
Conducting business at the 2003 Annual Shareholders' Meeting requires a quorum.
For a quorum to exist, shareholders representing one-third of the votes eligible
to be cast must be present in person or represented by proxy. Abstentions and
broker non-votes are treated as present for purposes of determining whether a
quorum exists.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AND HOW WILL VOTES BE COUNTED?
If a quorum is present, directors will be elected by a plurality of the votes
cast. This means that the eight nominees receiving the highest number of votes
will be elected as directors. Accordingly, abstentions and broker non-votes do
not have the effect of a vote against the election of any nominees. Shareholders
do not have the right to cumulate their votes.
Each proposal other than the election of directors will be adopted if a majority
of the shares represented at the meeting and entitled to vote on the proposal
are voted in its favor. Accordingly, abstentions on each such proposal will have
the same effect as a vote against the proposal. Broker non-votes will not have
the effect of a vote for or against any such proposal.
HOW CAN I RECEIVE MORE INFORMATION?
If you have any questions about giving your proxy or about this solicitation, or
if you require assistance, please call Georgeson Shareholder Communications,
Inc., toll-free at 1-800-732-6168.
OTHER MATTERS TO BE VOTED ON
This proxy solicitation is being made by the Shareholder Protection Committee
and not on behalf of the current Board of Directors or management of the
Company. The Shareholder Protection Committee is
17
not aware of any other matters to be brought before the 2003 Annual
Shareholders' Meeting. Should other matters be brought before the 2003 Annual
Shareholders' Meeting, by having signed and returned the enclosed WHITE proxy
card, you will have authorized the persons named as proxies in the enclosed
WHITE proxy card to vote for you on all such matters at their discretion.
The Shareholder Protection Committee expects that the Company's proxy statement
relating to the 2003 Annual Shareholders' Meeting, once filed, will contains
information regarding (1) securities ownership of certain beneficial owners and
management of the Company; (2) the committees of the Board of Directors; (3) the
meetings of the Board of Directors and all committees thereof; (4) the business
background and employment biographies of the Company's nominees for election to
the Board of Directors; and (5) the compensation and remuneration paid and
payable to the Company's directors and management. The Company's shareholders
are referred to the Company's definitive proxy statement in connection with the
2003 Annual Shareholders' Meeting for this information.
SOLICITATION OF PROXIES
The solicitation to which this proxy statement relates is being made by the
Shareholder Protection Committee, which may solicit proxies in person and by
mail, press release, advertisement, telephone, facsimile, telegraph, electronic
mail, web page publication and other similar means. No person identified above
has or will receive compensation for soliciting proxies.
The Shareholder Protection Committee will ask banks, brokers, custodians,
nominees, other institutional holders and other fiduciaries to forward all
soliciting materials to the beneficial owners of the shares that those
institutions hold of record. The Shareholder Protection Committee will reimburse
those institutions for reasonable expenses that they incur in connection with
forwarding these materials.
The Shareholder Protection Committee has retained Georgeson Shareholder
Communications, Inc. to solicit proxies on its behalf in connection with the
2003 Annual Shareholders' Meeting. Georgeson Shareholder Communications, Inc.
may solicit proxies from individuals, banks, brokers, custodians, nominees,
other institutional holders and other fiduciaries and will employ approximately
40 people in its efforts. The Shareholder Protection Committee has agreed to
reimburse Georgeson Shareholder Communications, Inc. for its reasonable
expenses, to indemnify it against certain losses, costs and expenses, and to pay
it fees not to exceed $30,000. The agreement between the Shareholder Protection
Committee and Georgeson Shareholder Communications, Inc. may be extended for an
additional fee. In addition, the Shareholder Protection committee may retain up
to eight former insurance agents of First American to solicit proxies for the
Shareholder Protection Committee at the rate of $5,000 per agent. The
Shareholder Protection Committee expects that if its nominees are elected to the
Company's Board, these agents will be considered for future status as insurance
agents of the Company and/or Citizens and its insurance subsidiaries, although
no agreements or understandings, oral or written, exist with respect to
retention or compensation.
The entire expense of the proxy solicitation of the Shareholder Protection
Committee is being borne by Citizens, Inc., the employer of several of our
nominees and a participant in this proxy solicitation. The Shareholder
Protection Committee and Citizens may, particularly if the Shareholder
Protection Committee nominees are elected to the Company's Board of Directors,
seek reimbursement of expenses relating to this proxy solicitation from the
Company. They do not intend to seek shareholder approval of any such
reimbursement.
In addition to the costs related to the engagement of Georgeson Shareholder
Communications, Inc., and any engagement of former insurance agents of First
American, costs related to our solicitation of proxies include expenditures for
printing, postage, legal services and other related items. Total expenditures
are
18
expected to be approximately $110,000. Total payment of costs to date in
furtherance of our proxy solicitation is approximately $35,000.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
To be included in First American's proxy statement for the 2004 annual meeting
of First American shareholders (the "2004 Meeting"), a proposal by a shareholder
must generally be received at the Company's principal executive offices not less
than 120 calendar days before the anniversary of the date on which the Company
mails its proxy statement in connection with the 2003 Annual Shareholders'
Meeting. However, if the 2004 Meeting is more than 30 days from the first
anniversary of the 2003 Annual Shareholders' Meeting, the deadline for
submitting a proposal is a reasonable time before the Company begins to print
and mail its proxy materials for the 2004 Meeting.
INFORMATION REGARDING THE PARTICIPANTS
The Shareholder Protection Committee, our nominees and Citizens, Inc. are
participants in this solicitation of proxies for the 2003 Annual Shareholders'
Meeting within the meaning of the federal securities laws. Additional
information related to the members of the Shareholder Protection Committee,
including the beneficial ownership of First American common stock by Citizens,
is set forth on Annex A to this proxy statement and is incorporated into this
proxy statement by reference. Other than as set forth in this proxy statement or
the annexes attached hereto, none of the participants is party to any commercial
dealing with First American or its subsidiaries that is required to be discussed
in this proxy statement by the federal securities laws. Information in this
proxy statement about each participant was provided by that participant.
INFORMATION REGARDING THE COMPANY
The information concerning the Company contained in this proxy statement and the
annexes hereto has been taken from or is based upon documents and records on
file with the SEC and other publicly available information. The Shareholder
Protection Committee has no knowledge that would indicate that statements
relating to the Company contained in this proxy statement in reliance upon
publicly available information are inaccurate or incomplete. The Shareholder
Protection Committee, however, has not had access to the books and records of
the Company and is not in a position to verify, or make any representation with
respect to the accuracy or completeness of, any such information or statements.
Annex B sets forth information obtained from First American's public filings
related to the beneficial ownership of First American common stock and is
incorporated in this proxy statement by reference.
* * * * *
WE ARE ASKING YOU TO VOTE YOUR SHARES IN FAVOR OF THE SHAREHOLDER PROTECTION
COMMITTEE'S NOMINEES BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY
CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
19
Questions or requests for additional copies of this statement should be directed
to:
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If you have questions or need assistance in voting your shares, please call:
(GEORGESON SHAREHOLDER LOGO)
17 State Street, 10th Floor
New York, NY 10004
(800) 732-6168 (Toll Free)
Banks and Brokerage Firms please call:
(212) 440-9800
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Date: May 9, 2003 By: /s/ Rickie D. Meyer
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Rickie D. Meyer, Committee Spokesperson
20
ANNEX A
INFORMATION REGARDING THE SHAREHOLDER PROTECTION COMMITTEE'S
NOMINEES AND OTHERS IN ITS SOLICITATION OF PROXIES
The Shareholder Protection Committee, its nominees and Citizens, Inc. are
participants (the "Participants" and, each, a "Participant") in the solicitation
of proxies in support of electing the Shareholder Protection Committee nominees
to the Board of Directors of First American. These nominees are: Rickie D.
Meyer, Michael N. Fink, Danny N. Biggs, Dean F. Ferrell, Roger K. Viola, Harold
E. Riley, Rick D. Riley and Mark A. Oliver.
SECURITY OWNERSHIP
The number of shares of the Company's common stock beneficially owned and
percentage beneficial ownership of each Participant, other than our nominees
whose common stock ownership is set forth in the proxy statement to which this
annex is attached, as of the date of this proxy statement are as follows:
<Table>
<Caption>
Number of Shares Percentage
Name Beneficially Owned (1) Ownership (2)
- --------- ---------------------- -------------
Citizens, Inc. 658,230 14.0%
</Table>
- --------
(1) Citizens, Inc. holds no shares of record but may be deemed to have shared
voting power with respect to the above shares because it is a participant
in the solicitation of proxies by the Shareholder Protection Committee.
Citizens disclaims beneficial ownership of these shares.
(2) Calculated based on 4,687,078 shares of common stock outstanding as of
April 22, 2003, as disclosed by the Company in its preliminary proxy
material filed with the SEC on or about April 28, 2003.
No Participant and no associate of any Participant (within the meaning of the
federal proxy rules) beneficially owns any securities of First American other
than common stock described above or in the proxy statement to which this annex
is attached. No Participant beneficially owns any securities of any parent or
subsidiary of First American. No Participant has record but not beneficial
ownership with respect to any securities of First American.
TRANSACTIONS IN FIRST AMERICAN CAPITAL CORPORATION SECURITIES
Other than the transactions described in the proxy statement, no Participant has
purchased or sold any securities of First American in the past two years.
ARRANGEMENTS, INTERESTS AND TRANSACTIONS
Other than as described above in the proxy statement, no Participant is, or was
within the past year, a party to any contract, arrangement or understanding with
any person with respect to any securities of First American, including, except
as described herein, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies.
1
Other than as described in the proxy statement, no Participant, no associate of
any Participant and no person who is a party to any arrangement or understanding
pursuant to which a Shareholder Protection Committee nominee is proposed to be
elected has any arrangement or understanding with any person with respect to any
future employment by the First American or its affiliates or with respect to any
future transactions to which First American or any of its affiliates will or may
be a party.
In addition to the information disclosed in our proxy statement, Participants
who are Shareholder Protection Committee nominees are expected to receive
customary compensation from First American in exchange for their services as
directors, if elected.
2
ANNEX B
INFORMATION REGARDING THE COMPANY
The mailing address of the principal executive offices of First American is 1303
S.W. First American Place, Topeka, Kansas 66604.
STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In addition to the information in the proxy statement and Annex A, based upon
First American's preliminary proxy material filed with the SEC on or about April
28, 2003, the following table sets forth certain information with respect to the
beneficial ownership of First American common stock as of April 22, 2003 by: (i)
each shareholder known by the Shareholder Protection Committee to be the
beneficial owner of more than 5% of the Company's common stock; (ii) each
director; (iii) the Company's current Chief Executive Officer, each of the
Company's four other most highly compensated executive officers; and (iv) all
directors and executive officers of the Company as a group. Except as otherwise
indicated in the footnotes to the table, the beneficial owners have sole voting
and investment power (subject to community property laws where applicable) as to
all of the shares beneficially owned by them.
<Table>
<Caption>
Name and Address of Amount and Nature of
Beneficial Owner Class of Stock Beneficial Ownership Percent of Class
- ---------------- -------------- -------------------- ----------------
Rickie D. Meyer Common 456,000(1) 9.7%
3513 SW Alameda Dr.
Topeka, Kansas 66614
Danny N. Biggs Common 76,000(1) 1.6%
2601 Canterbury
Great Bend, Kansas 67530
Paul E. Burke, Jr Common 50,000 1.1%
2009 Camelback Drive
Lawrence, Kansas 66047
Edward C. Carter Common 85,000 1.8%
4100 Wimbledon Drive
Lawrence, Kansas 66047
Michael N. Fink Common 125,000(1) 2.7%
2581 Walnut Grove Lane
Lexington, Kentucky 40509
Kenneth L. Frahm Common 40,000 *
Box 849
Colby, Kansas 67701
Stephen J. Irsik, Jr Common 69,000 1.5%
05405 Six Road
Ingalls, Kansas 67853
John G. Montgomery Common 45,000 *
510 Redbud Lane
Junction City, Kansas 66441
</Table>
1
<Table>
Harland E. Priddle Common 40,000 *
8214 South Haven Rd
Burrton, Kansas 67020
Gary E. Yager Common 40,000 *
3521 SW Lincolnshire
Topeka, Kansas 66614
All Directors and Officers Common 1,026,000 21.9%
As a Group (10 persons) (1)
</Table>
- ----------
* Indicates less than 1% ownership.
(1) See "The Shareholder Protection Committee Nominees - Stock Ownership of
Our Nominees" in the proxy statement regarding the deemed shared voting
power and the sole dispositive power attributable to Messrs. Meyer, Biggs
and Fink with respect to shares of common stock of the Company.
2
PROXY SOLICITED ON BEHALF OF
THE FIRST AMERICAN SHAREHOLDER COMMITTEE FOR PROTECTION
OF SHAREHOLDER VALUE
The undersigned shareholder of First American Capital Corporation, a Kansas
corporation (the "Company") as of April 30, 2003 (the "record date"), hereby
appoints Rickie D. Meyer, Michael N. Fink, Harold E. Riley and Mark A. Oliver,
with full power of substitution to act as proxies for the undersigned, and to
vote all shares of common stock of the Company for the benefit of the
undersigned, which the undersigned would be entitled to vote if personally
present at the 2003 Annual Meeting of Shareholders of the Company to be held on
June 2, 2003, and at any and all postponements, adjournments and reschedulings
thereof as indicated in the instructions set forth below with respect to the
exercise of voting power (not disposition of shares) as set forth on this proxy.
THE VOTING OF THE PROXY GRANTED HEREBY WILL BE SUBJECT TO THE PRIOR
NON-OBJECTION OR APPROVAL OF THE KANSAS COMMISSIONER OF INSURANCE. ANY LACK OF
SUCH NON-OBJECTION OR APPROVAL MAY RESULT IN THE NON-VOTING OF THIS PROXY.
IF YOU SIGN, DATE AND RETURN THIS CARD WITHOUT INDICATING YOUR VOTE ON ONE OR
MORE OF THE FOLLOWING PROPOSALS, YOU WILL BE DEEMED TO HAVE VOTED IN FAVOR OF
THE PROPOSALS. IF YOU VOTE OR ABSTAIN WITH RESPECT TO THE FOLLOWING PROPOSALS,
THIS PROXY CARD WILL REVOKE ANY PREVIOUSLY EXECUTED REVOCATION OF PROXY WITH
RESPECT TO SUCH PROPOSALS.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE COMMITTEE FOR PROTECTION OF SHAREHOLDER VALUE STRONGLY RECOMMENDS THAT
SHAREHOLDERS VOTE IN FAVOR OF PROPOSAL NO. 1.
1. Proposal No. 1 -- Election of all eight nominees below as directors:
Rickie D. Meyer, Michael N. Fink, Danny N. Biggs, Dean F. Ferrell,
Roger K. Viola, Harold E. Riley, Rick D. Riley and Mark A. Oliver.
[ ] FOR [ ] AGAINST ABSTAIN [ ]
(Instruction: If you wish to vote for the election of certain of the nominees,
but not all of them, check the "FOR" box above and write the name of each such
person you do not wish elected in the following space: ______________________.
If no box is marked above with respect to this Proposal, the undersigned will be
deemed to vote for such Proposal, except that the undersigned will not be deemed
to vote for the election of any candidate whose name is written in the space
provided above.)
2. Proposal No. 2 - Approval of Kerber, Eck & Braeckel LLP as independent
auditors of First American Capital Corporation.
[ ] FOR [ ] AGAINST ABSTAIN [ ]
3. In their discretion, the proxies appointed hereunder are authorized to
vote upon such other business as may properly come before the meeting.
Dated: , 2003
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Signature:
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Signature (if held jointly):
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Title or Authority:
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Please sign exactly as name appears hereon. If shares are registered in more
than one name, the signature of all such persons should be provided. A
corporation should sign in its full corporate name by a duly authorized officer,
stating his or her title. Trustees, guardians, executors and administrators
should sign in their official capacity, giving their full title as such. If a
partnership, please sign in the partnership name by an authorized person. The
proxy card votes all shares in all capacities.
PLEASE MARK, SIGN AND DATE THIS PROXY BEFORE MAILING IT IN THE ENCLOSED
ENVELOPE.
If you have any questions about this solicitation, or need any assistance in
voting your shares, please contact our proxy solicitor, Georgeson Shareholder
Communication, Inc., toll-free, at 1-800-732-6168.