UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
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[ ] Confidential, for Use of the Commission Only (as permitted by
Rule14c-5(d)(2))
[ ] Definitive Information Statement
First American Capital Corporation
(Name of Registrant As Specified In Its Charter)
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FIRST AMERICAN CAPITAL CORPORATION
1303 SW First American Place
Topeka, Kansas 66604
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on Tuesday, January 23, 2007 at 11:00 a.m.
To Our Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of First American Capital Corporation (the "Company") will be held on
Tuesday, January 23, 2007 at 11:00 a.m. Central Time, at the corporate offices
of First American Capital Corporation, 1303 SW First American Place, Topeka,
Kansas 66605 to approve the following amendments to the Articles of
Incorporation of the Company (the "Amendments") and a reverse stock split of the
Company's Common Stock (the "Common Stock") whereby every three shares of Common
Stock will be reverse split into one share of Common Stock (collectively, with
the Amendments, the "Approvals").
The Amendments will (i) increase the number of shares of Common Stock that the
Company is authorized to issue to 25,000,000 (ii) increase the number of shares
of authorized preferred stock to 1,550,000; and (iii) reduce the par value of
each share of Common Stock from $0.10 to $0.01.
The Company is not asking you to submit a proxy to vote your shares at the
Meeting. At the Record Date (as defined below), 8,000,000 shares of the Common
Stock were issued and outstanding. Each share of Common Stock is entitled to one
vote. Shareholders who are the legal holders of more than fifty percent (50%) of
the voting rights of the Company have executed proxies (the "Proxies") approving
the proposed Amendments. You are welcome to attend the Meeting in person and to
vote your shares. However, the Proxies are sufficient, without any further
action, to provide the requisite approval of the Approvals by the votes of a
majority of the outstanding shares of Common Stock.
You are encouraged to read the attached Information Statement for further
information regarding the action to be taken at the Meeting. This Information
Statement is being furnished to you solely for the purpose of informing
stockholders of the matters described herein in compliance with Regulation 14C
of the Securities and Exchange Act of 1934, as amended. Holders of record of
shares of Common Stock at the close of business on December 11, 2006, the date
set by the Board of Directors of the Company (the "Board") for the determination
of the holders of Common Stock entitled to Notice of and to vote at the Meeting
(the "Record Date"), will be given a copy of this Information Statement.
BY ORDER OF THE BOARD OF DIRECTORS
FIRST AMERICAN CAPITAL CORPORATION
By: /s/ Harland E. Priddle
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Name: Harland E. Priddle
Title: Secretary
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FIRST AMERICAN CAPITAL CORPORATION
1303 SW First American Place
Topeka, Kansas 66604
SHAREHOLDER INFORMATION STATEMENT
***We Are Not Asking for a Proxy and You are Requested Not To Send Us a Proxy***
This Information Statement is first being mailed or furnished to stockholders on
or about January 2, 2007 and the Meeting will be held on Tuesday, January 23,
2007, more than 20 days thereafter. We will pay all costs associated with the
preparation and distribution of this Information Statement, including all
mailing and printing expenses. We will also, upon request, reimburse brokers,
banks and similar organizations for reasonable out-of-pocket expenses incurred
in forwarding this Information Statement to their clients.
Approval of Amendments to Articles of Incorporation
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Summary of Transactions with Brooke Corporation
On October 6, 2006, the Company entered into a definitive Stock Purchase and
Sale Agreement (the "Agreement") to sell shares of Common Stock that equate to
approximately 55% of the shares to be outstanding on a fully diluted basis
thereafter to Brooke Corporation ("Brooke") of Overland Park, Kansas, for
$3,000,000 in cash and execution of a Brokerage Agreement (the "Brokerage
Agreement") pursuant to which, among other things, CJD & Associates, L.L.C.,
Brooke's brokerage subsidiary ("CJD"), will cause all new managing general agent
loan brokerage business to be transacted through First Life Brokerage, Inc., a
subsidiary of the Company ("FLB"). Brooke agrees that if $6,000,000 of pretax
profits are not generated by FLB over a three-year period in accordance with a
specified schedule, then Brooke shall contribute funds to the Company as
additional consideration for the issuance of the shares of the Company's Common
Stock acquired pursuant to the Agreement to the extent the pretax profit goal is
not made under such schedule.
The transactions will be effected pursuant to the Agreements in two steps. On
December 8, 2006, the Company and Brooke closed on the first set of transactions
pursuant to the Agreement (the "Closing") and Brooke acquired for a price of
$2,552,132 and execution of the Brokerage Agreement, 3,742,943 shares of Common
Stock, representing approximately 46.8% of the Company's authorized and issued
Common Stock (the "Initial Shares"), and a warrant (the "Warrant") to purchase
an additional 1,643,460 shares of Common Stock to be authorized for issuance
pursuant to the Amendments, which, when exercised, will increase Brooke's
aggregate ownership to approximately 55% of the shares of Common Stock on a
fully diluted basis. The Warrant is exercisable at a price of $447,818.
Before the Warrant can be exercised, however, the stockholders of the Company
must approve the Amendments. The newly authorized Common Stock will have no
preemptive rights.
Together, Brooke, holding the Initial Shares and voting the shares of the Board
pursuant to the Proxies, will have sufficient voting power to cause a quorum to
be present at the Meeting and to cause the Approvals to be approved. The meeting
and voting process is described more fully below.
The following is a description of additional elements of the transactions to be
implemented pursuant to the Agreement.
The MGA Loan Brokerage Business
Prior to the Closing, CJD was engaged in the business of consulting with
managing general agents and managing agencies regarding (i) acquisitions of
managing general agencies, (ii) financing of such acquisitions or other
activities or needs of managing general agencies, and (iii) other borrower's
assistance services. Additionally, CJD also was engaged in directing such
managing general agents and managing general agencies to Brooke Credit
Corporation ("BCC") for the purpose of obtaining commercial loans from BCC (the
"MGA Loans") for such acquisitions, activities or needs, as well as providing
collateral preservation services to BCC with respect to the
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MGA Loans, for which CJD received a fee from the borrower that may be funded by
BCC's loan to the borrower and/or compensation from BCC for collateral
preservation services.
Pursuant to the Brokerage Agreement, as of and after Closing, the MGA Loan
Brokerage Business has been and will be transacted through FLB, such that (1)
FLB conducts new MGA Loan Brokerage Business arising after the Closing, (2) FLB
continues to conduct the business of brokering life, health, disability, and
annuity products underwritten by insurance companies other than First Life
America Corporation, a wholly-owned subsidiary of the Company ("FLAC"); and (3)
CJD agrees not to conduct any new MGA Loan Brokerage Business or any Life
Insurance Brokerage Business after the Closing. CJD continues its business as a
wholesale property and casualty insurance broker, specializing in excess and
surplus lines brokerage services pursuant to which CJD assists unaffiliated
insurance agents and franchisees of Brooke Franchise Corporation in finding for
their customers insurance coverage for hard-to-place and niche risks.
Servicing Agreement
As a cost savings measure for the Company, as of and after the Closing, Brooke
has agreed in a Servicing Agreement to provide many administrative and
public-company compliance services to the Company, including, but not limited
to, human resource services, payroll accounting, legal services, accounting, tax
and auditing services, risk management, and corporate marketing services. The
$5,000 monthly cost for these services should provide material cost savings to
the Company. The Servicing Agreement is to terminate December 31, 2007.
Minority Stockholder Protections / Liquidity Opportunities
Brooke has agreed to use commercially reasonable efforts to cause the Company to
obtain a listing of the outstanding shares of Common Stock for trading on the
American Stock Exchange or the Nasdaq Capital Market as soon as is possible,
provided that such shares are eligible to be so listed.
Until the earlier of the date of listing of the Common Stock of the Company on
an exchange or the date that is 3 years after the date on which the Warrant is
exercised, a committee (the "Committee") comprised of at least 3 members of the
Board that are "independent" (as that term is defined in the stock exchange
listing rules) will be granted certain authority and powers set forth in the
Charter of the Independent Directors Committee. The Committee will have the
authority to approve or disapprove any amendments or waivers to many of the
ancillary documents to the Agreement, certain transactions with Brooke, certain
major corporate transactions, and several other types of significant
transactions or corporate actions. The purpose of these provisions is to give
certain protections to the minority shareholders of the Company during the
post-Closing period, until the stock is listed or for 3 years. These protections
are in addition to those provided by state law fiduciary duties.
Pursuant to the Agreement, Brooke has agreed that, until the date that is 3
years after the Closing, Brooke will not to sell any shares of Common Stock that
would result in Brooke holding less than a majority of the then-outstanding
shares without prior notice to and approval by the Committee. Brooke also may
not cause the Company to file a registration statement under the Securities Act
of 1933, as amended, covering resales of any shares of Common Stock held by
Brooke or its affiliates in an underwritten secondary offering of those shares
unless it offers to include in such registration statement a proportionate
amount of shares of the Common Stock of other stockholders of the Company in any
such offering.
In addition, within 3 months after the Closing, the Company will commence a
modified "Dutch auction" style tender offer for outstanding shares of Common
Stock on substantially the terms provided in the exhibit to the Agreement titled
"Dutch Auction Tender Offer." Pursuant to the Dutch Auction Tender Offer, the
Company will offer to repurchase any shares of the Common Stock that its holders
(other than Brooke) tender to the Company at a price determined as set forth in
the Dutch Auction Tender Offer until a maximum aggregate of at least $500,000
has been paid by the Company for such repurchases (less the amount that legal
fees reasonably incurred by the Company directly in connection with the Dutch
Auction Tender Offer exceed $50,000). The Dutch Auction Tender Offer will be
consummated within 30 days after the commencement thereof or longer if an
extension of time is requested by Brooke and is approved by the Committee.
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Reverse Stock Split
Pursuant to the Approvals, a reverse stock split of the Common Stock will be
effected, whereby every 3 shares of Common Stock outstanding will be converted
into ownership of 1 share of Common Stock, and fractional shares will be cashed
out at the equivalent of $1.72 per whole share. Shareholders may, but are not
required, to submit existing stock certificates to effectuate the reverse split.
Upon sale or transfer of the Common Stock, new certificates will be issued
reflecting the updated number of shares and the par value resulting from the
Amendments. Prior to issuance of new certificates, each existing certificate
will represent ownership of the total whole number of shares owned prior to the
approval of the Amendments and divided by 3. For example, a certificate
representing ownership of 1,000 shares of Common Stock prior to the
effectiveness of the Merger will represent ownership of 333 shares of Common
Stock after the split is effected. Cash will be paid for the resulting
fractional share.
Voting Procedures
At the Meeting, Brooke will vote the Initial Shares in favor of the Approvals.
At the Closing, Brooke executed and delivered to the Company an irrevocable
proxy, coupled with an interest, to Harland Priddle, who is to vote the Initial
Shares in favor of the Approvals in the event that Brooke breaches its duty to
vote the shares as agreed by the parties. At the Closing, each member of the
Board of Directors of the Company executed and delivered to Brooke's designee an
irrevocable proxy ("Director Proxy") to vote the shares they hold in favor of
the Approvals. Brooke and the directors who have executed the Director Proxies
are restricted from selling or otherwise disposing of or alienating its or his
interest in the shares of the Company prior to the shareholder approval of the
Approvals.
One share of Common Stock is entitled to one vote and all shareholders as of the
Record Date may attend the Meeting to vote their shares and/or any shares for
which they hold a valid proxy. However, shareholders who are the legal holders
of more than fifty percent (50%) of the voting rights of the Company, as of the
record date, have already executed Proxies to vote in favor of the Approvals.
While you are welcome to attend the meeting and vote your shares, the Proxies
are sufficient, without any further action, to provide the necessary stockholder
approval of the action at the Meeting. The Amendments will become effective upon
the filing thereof with the Kansas Secretary of State after the approval thereof
by the shareholders at the Meeting.
Voting Securities and Principal Holders Thereof
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At the Record Date, 8,000,000 shares of Common Stock were issued and
outstanding. Each share of Common Stock is entitled to one vote.
The following table sets forth information as of the Record Date regarding
beneficial ownership of the Company Common Stock by (i) the only persons or
groups known by the Company to own beneficially more than 5% of the Company
Common Stock outstanding or subject to exercisable warrants; (ii) the directors,
individually; (iii) each nominee, individually; (iv) each executive officer of
the Company, individually; and (v) all officers and directors as a group.
Additionally, the table sets forth in pro forma format the anticipated share
ownership data for those categories of holders assuming approval of the
Amendments and exercise of the Warrant by Brooke. Except as otherwise noted in
the footnotes to the table, the beneficial owners have sole voting and
investment power as to all of the shares beneficially owned by them.
Pro Forma Pro Forma
Shares Percent of Shares Percent of
Name and Address Status of Holder Owned Class Owned Class
Brooke Corporation
10950 Grandview Drive
Suite 600 Beneficial owner
Overland Park, KS 66210 of more than 5% 3,742,943 45.93% 5,386,403 55.00%
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Paul E. Burke, Jr.
2009 Camelback Drive
Lawrence, KS 66047 Director 50,000 * 50,000 *
Edward C. Carter
4100 Wimbledon Drive
Lawrence, KS 66047 Director 85,000 1.04% 85,000 *
Thomas M. Fogt
8200 W 101st Ter
Overland Park, KS 66212 Director 100,200** 1.23% 100,200** 1.02%
Kenneth L. Frahm
Box 849
Colby, KS 67701 Director 40,000 * 40,000 *
John G. Montgomery
P. O. Box 129
Junction City, KS 66441 Director 45,000 * 45,000 *
Harland E. Priddle
8214 South Haven Rd. Director;
Burrton, KS 67020 Officer 40,000 * 40,000 *
John F. Van Engelen
4624 NW Kendall Dr. Director;
Topeka, KS 66618 Officer 51,000*** * 51,000*** *
Gary E. Yager
3521 SW Lincolnshire
Topeka, KS 66614 Director 40,000 * 40,000 *
----------------------------------- ------------------- ---------------- --------------- -------------- --------------
All Directors and Officers as a 451,200 5.54% 451,200 4.61%
Group (8 persons)
* Indicates less than 1% ownership.
** Includes shares issuable pursuant to a warrant to purchase 100,000 shares
of Common Stock at $1.72 per share, which was issued at the Closing
pursuant to the Agreement and is currently exercisable.
*** Includes shares issuable pursuant to a warrant to purchase 50,000 shares of
Common Stock at $1.72 per share, which was issued at the Closing pursuant
to the Agreement and is currently exercisable.
--------------------------------------------------------------------------------
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All current members of the Board of Directors, except Paul E. Burke, Jr. and
John F. Van Engelen (who were designated by Brooke prior to Closing), submitted
written resignations from the Board at the Closing to be effective upon exercise
of the Warrant (the "Resigning Directors"). All Resigning Directors will no
longer be members of the Board of Company after exercise of the Warrant by
Brooke. The Company also entered into an Employment Agreement with John Van
Engelen to serve as President of First Life America Corporation (the "Employment
Agreement"). The Employment Agreement shall run through June 30, 2007, paying
Mr. Van Engelen $144,800 in addition to any unpaid performance based bonus
carried over from Mr. Van Engelen's previous employment agreement with FACC.
Financial and Other Information
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The financial data required pursuant to Item 13 of Regulation 14A is hereby
incorporated by reference to First American Capital Corporation's most recent
10-KSB and 10-QSB reports on file with the SEC. A copy of both reports are
included with this Information Statement. Representatives of the principal
accountant for the Company are not expected to be present at the Meeting and
therefore will not be making a statement nor be available to respond to
questions at the Meeting.
You may access additional information regarding the Company, including all
reports filed with the Securities and Exchange Commission, through the
Securities and Exchange Commission's EDGAR archives at www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
FIRST AMERICAN CAPITAL CORPORATION
By: /s/ Harland E. Priddle
------------------------------
Name: Harland E. Priddle
Title: Secretary