EXHIBIT 99.2
SETTLEMENT AGREEMENT AND LIMITED RELEASE
THIS SETTLEMENT AGREEMENT AND LIMITED RELEASE (hereinafter, the
"Settlement Agreement"), effective upon execution by all parties hereto, is made
and entered into by and between FIRST AMERICAN CAPITAL CORPORATION ("FACC"),
CITIZENS, INC. ("Citizens"), XXXXXX X. XXXXX ("XXXXX"), XXXX X. XXXXXX
("XXXXXX"), XXXXXX X. XXXXX ("Xxxxx") and XXXXXXX X. XXXX ("Xxxx").
WHEREAS, on or about March 31, 2003, the Board of Directors of FACC
established April 30, 2003 as the "Record Date" for determining which of its
shareholders are entitled to vote at the Annual Meeting of Shareholders
scheduled for June 2, 2003; and
WHEREAS, in March, 2003, Xxxxx and Xxxx and their respective spouses
issued irrevocable proxies which gave Xxxxx and/or Xxxxxx the right to vote
their shares of common stock in FACC until February 13, 2004; and
WHEREAS, on March 31, 2003, the Board of Directors of FACC approved a
management slate of nominees for election to the Board of Directors at the
Annual Meeting on June 2, 2003; and
WHEREAS, on or about April 16, 2003, Xxxxx, Xxxxxx and Citizens filed a
draft Form A Statement with the Kansas Insurance Department ("the Department")
relating to FACC's insurance subsidiary, First Life American Corporation, and
subsequently filed a fully executed Form A Statement with the Department which,
upon completion, resulted in formal initiation of the administrative proceedings
styled In the Matter of the Proposed Acquisition of the Control of First Life
America Corporation by Xxxxxx X. Xxxxx, Xxxx X. Xxxxxx and Citizens, Inc.,
Docket No. 3166-M, pending before the Kansas Commissioner of Insurance ("the
Form A Proceedings"); and
WHEREAS, on or about April 22, 2003, Riley, Oliver, Citizens, Xxxxx and
Xxxx participated in the formation of a group known as the "First American
Committee for Protection of Shareholder Value" (the "Committee") to nominate an
alternate slate of directors to stand for election to the Board of Directors of
FACC at the Annual Shareholders Meeting scheduled for June 2, 2003; and
WHEREAS, Meyer, Fink, Xxxxxx, Xxxxx and Citizens have engaged in a
proxy contest with incumbent management of FACC in connection with the election
of the Board of Directors of FACC at the Annual Shareholders Meeting on June 2,
2003; and
WHEREAS, on or about May 30, 2003, Xxxxx and Xxxx filed a Verified
Petition in the District Court of Shawnee County, Kansas, Case Number 03 C 863
(the "Litigation") seeking declaratory and injunctive relief against FACC
regarding the use of proxies at the Annual Meeting of Shareholders; and
WHEREAS, on or about May 31, 2003, the District Court of Shawnee
County, Kansas entered a Temporary Restraining Order in the Litigation
permitting the Annual Shareholders Meeting to be held on June 2, 2003, directing
Xxxxx and Xxxx to submit proxies on behalf of the Committee to the Court
Reporter of Division 7 no later than 11:00 a.m., June 2, 2003, and restraining
FACC from certifying the results of the election of directors until further
order of the Court; and
WHEREAS, on or about July 21, 2003, FACC filed its Answer and
Counterclaims against Xxxxx and Xxxx in the Litigation; and
WHEREAS, the parties hereto desire to settle and resolve some of the
claims that they have against each other, reserving some matters for future
resolution and/or litigation, in accordance with the terms and conditions
specified herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, it is hereby agreed by the
parties as follows:
1. Upon execution of this Settlement Agreement, Xxxxx and Xxxx and FACC
shall immediately cause the STIPULATION AND ORDER FOR DISSOLUTION OF TEMPORARY
RESTRAINING ORDER AND DISMISSAL OF ACTION, which is annexed as Exhibit A to this
Settlement Agreement ("Stipulation and Order") and fully incorporated herein, to
be submitted to the District Court of Shawnee County, Kansas for approval and
entry on the Docket, and Xxxxx and Xxxx and FACC hereby authorize their
respective counsel to take any other reasonable steps which may be necessary to
obtain judicial approval of the action set forth in such Stipulation and Order
to dispose of the Litigation;
2. Xxxxx, Xxxx and Citizens agree to take all necessary action in order
for the Committee to be dissolved or cease to exist and Meyer, Fink, Xxxxx,
Xxxxxx and Citizens agree not to take any action that would prevent or delay the
management slate of nominees being certified as the Board of Directors of FACC
elected at the June 2, 2003 Annual Meeting;
3. Upon execution of this Settlement Agreement by all signatories
hereto, Xxxxx and Xxxxxx shall revoke the irrevocable proxies delivered to them
on or about March 19, 2003 from Xxxxxxx X. Xxxx, Xxxxxxxx X. Xxxx, Xxxxxx X.
Xxxxx, Xxxxx X. Xxxxx and the Xxxxx X. Xxxxx Revocable Living Trust by
prominently marking each of the proxies "REVOKED AND TERMINATED," executing an
original copy of the Certificate (the form of which is annexed hereto as Exhibit
B to this Settlement Agreement) for each proxy, delivering the applicable
original Certificate and providing copies thereof to FACC, original, marked
proxy, as provided in such Certificate, to each of Xxxxx, Xxxx and Xxxxx X.
Xxxxx, respectively, and delivering copies of the Certificates and marked
proxies to each of the parties hereto;
4. Citizens, Xxxxx and Xxxxxx will withdraw or dismiss their Form A
Statement, and any amendments thereto, filed with the Kansas Insurance
Department and seek dismissal of the Form A Proceedings, and FACC will not
object to such withdrawal or dismissal;
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5. For a period of two years from the date of this Settlement
Agreement, Citizens and Xxxxx and Xxxxxx, agree not to, directly or indirectly,
acquire, agree to acquire, attempt to acquire, or assist in the acquisition of
beneficial ownership of (or the power to vote or direct the vote of) any capital
stock or other security of FACC, without the prior approval of the Board of
Directors of FACC (which may be withheld in its sole discretion), and Citizens
agrees to cause its corporate affiliates to refrain, directly or indirectly,
from acquiring, agreeing to acquire, attempting to acquire, or assisting in the
acquisition of beneficial ownership of (or the power to vote or direct the vote
of) any capital stock or other security of FACC without the prior approval of
the Board of Directors of FACC (which may be withheld in its sole discretion);
6. FACC hereby RELEASES, ACQUITS AND FOREVER DISCHARGES Citizens,
Xxxxx, and Xxxxxx and their respective officers, directors, parent companies,
subsidiaries, affiliates, employees, agents, representatives, successors and
assigns, except Xxxxx and Xxxx, from any and all claims, counterclaims, rights,
demands, costs, damages, losses, liabilities, attorneys' fees, actions and
causes of action whatsoever, whether known or unknown, liquidated, unliquidated,
fixed, contingent, material, immaterial, disputed, undisputed, legal or
equitable, which FACC has or may have against Citizens, Xxxxx and Xxxxxx , and
their respective officers, directors, parent companies, subsidiaries,
affiliates, employees, agents, representatives, successors and assigns, except
Xxxxx and Xxxx, arising out of any act, omission, transaction or occurrence that
is the subject matter of any claim, cause of action or counterclaim in the
Litigation, or that is the subject matter of any issue in the Form A Proceeding,
and from any claim or cause of action alleging any violation of the Kansas
Insurance Holding Companies Act (K.S.A. Section 40-3301, et seq.) or any other
state or federal securities law or regulation relating to the election of the
Board of Directors of FACC at the Annual Shareholders Meeting on June 2, 2003
and solicitation of proxies and/or ballots relating thereto;
7. Citizens, Xxxxx, and Xxxxxx hereby RELEASE, ACQUIT AND FOREVER
DISCHARGE FACC, and its officers, directors, parent companies, subsidiaries,
affiliates, employees, agents, representatives, successors and assigns, from any
and all claims, counterclaims, rights, demands, costs, damages, losses,
liabilities, attorneys' fees, actions and causes of action whatsoever, whether
known or unknown, liquidated, unliquidated, fixed, contingent, material,
immaterial, disputed, undisputed, legal or equitable, which Citizens, Xxxxx, and
Xxxxxx have or may have against FACC and its respective officers, directors,
parent companies, subsidiaries, affiliates, employees, agents, representatives,
successors and assigns arising out of any act, omission, transaction or
occurrence that is the subject matter of any claim, cause of action or
counterclaim in the Litigation or that is the subject matter of any issue in the
Form A Proceeding, and from any claim or cause of action alleging any violation
of the Kansas Insurance Holding Companies Act (K.S.A. Section 40-3301, et seq.)
or any other state or federal securities law or regulation relating to the
election of the Board of Directors of FACC at the Annual Shareholders Meeting on
June 2, 2003 and solicitation of proxies and/or ballots relating thereto;
8. FACC and Xxxxx hereby mutually RELEASE, ACQUIT AND FOREVER DISCHARGE
the other party, including their respective officers, directors, parent
companies, subsidiaries, affiliates, employees, agents, representatives, heirs,
executors, successors and assigns, from any claim, cause of action or
counterclaim that alleges any violation of the Kansas
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Insurance Holding Companies Act (K.S.A. Section 40-3301, et seq.) or any other
state or federal securities law or regulation relating to the election of the
Board of Directors of FACC at the Annual Shareholders Meeting on June 2, 2003
and solicitation of proxies and/or ballots relating thereto; that arises out of
any act, omission, transaction or occurrence that is the subject of any claim or
cause of action asserted in the Verified Petition in the Litigation, Count IV of
Defendant's Counterclaims in the Litigation, and as much of Count V of
Defendant's Counterclaims in the Litigation as involves any alleged impropriety
in the solicitation of proxies; however, it is expressly understood and agreed
that FACC and Xxxxx each specifically retain and do not release any other claim,
cause of action or counterclaim including, but not limited to, any claims
related to any alleged inducement or solicitation of agents to discontinue,
terminate, cease or reduce their business activities as independent agents of
First Life American Corporation and/or to terminate their business relationship
with First Life American Corporation, regardless of whether such alleged
activities were part of, or occurred in conjunction with, any solicitation of
proxies and/or ballots;
9. FACC and Xxxx hereby mutually RELEASE, ACQUIT AND FOREVER DISCHARGE
the other party, including their respective officers, directors, parent
companies, subsidiaries, affiliates, employees, agents, representatives, heirs,
executors, successors and assigns, from any claim, cause of action or
counterclaim that alleges any violation of the Kansas Insurance Holding
Companies Act (K.S.A. Section 40-3301, et seq.) or any other state or federal
securities law or regulation relating to the election of the Board of Directors
of FACC at the Annual Shareholders Meeting on June 2, 2003 and solicitation of
proxies and/or ballots relating thereto; that arises out of any act, omission,
transaction or occurrence that is the subject of any claim or cause of action
asserted in the Verified Petition in the Litigation, Count IV of Defendant's
Counterclaims in the Litigation, and as much of Count V of Defendant's
Counterclaims in the Litigation as involves any alleged impropriety in the
solicitation of proxies; however, it is expressly understood and agreed that
FACC and Xxxx each specifically retain and do not release any other claim, cause
of action or counterclaim including, but not limited to, any claims related to
any alleged inducement or solicitation of agents to discontinue, terminate,
cease or reduce their business activities as independent agents of First Life
American Corporation and/or to terminate their business relationship with First
Life American Corporation, regardless of whether such alleged activities were
part of, or occurred in conjunction with, any solicitation of proxies and/or
ballots;
10. This Settlement Agreement, along with the documents referred to
herein, constitute the entire agreement among the parties to this Settlement
Agreement with regard to the subject matter hereof. The Settlement Agreement may
not be modified or amended except in writing, signed by all signatories hereto,
or their successors in interest.
11. Each party is entering into this Settlement Agreement voluntarily,
without duress, with the consultation and advice of his and its legal counsel,
and with full understanding of its terms.
12. This Settlement Agreement represents a compromise of disputed
claims and is not to be deemed or construed to be an admission of liability or
wrongdoing by any party hereto.
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13. This Settlement Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective spouses, heirs, executors,
successors and assigns.
14. This Settlement Agreement shall be governed by, and interpreted and
construed in accordance with, Kansas law;
15. This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same document.
16. FACC and Citizens each warrant and represent that this Settlement
Agreement has been executed by or on behalf of such party by an authorized
signatory with full authority and power to bind the party to the terms and
conditions of this Settlement Agreement;
17. The parties acknowledge that the terms of this Settlement Agreement
may be publicly disclosed by or on behalf of FACC, Riley, Oliver, Citizens,
Xxxxx, Xxxx and the Committee, and the Settlement Agreement, in whole or in
part, may be included in filings with the Securities and Exchange Commission by
or on behalf of FACC, Riley, Oliver, Citizens, Xxxxx, Xxxx or the Committee.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Settlement Agreement to be duly executed as set forth below.
[Signature page and acknowledgments follow.]
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FIRST AMERICAN CAPITAL CORPORATION
By: Xxxxxxx X. Xxxxxxx
--------------------------------
Printed Name: Xxxxxxx X. Xxxxxxx
----------------------
Title: Chairman of the Board
-----------------------------
CITIZENS, INC.
By: Xxxx X. Xxxxxx
--------------------------------
Printed Name: Xxxx X. Xxxxxx
----------------------
Title: President
-----------------------------
Xxxxxx X. Xxxxx
-----------------------------------
XXXXXX X. XXXXX
Xxxx X. Xxxxxx
-----------------------------------
XXXX X. XXXXXX
Xxxxxx X. Xxxxx
-----------------------------------
XXXXXX X. XXXXX
Xxxxxxx X. Xxxx
-----------------------------------
XXXXXXX X. XXXX
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ACKNOWLEDGMENT - FIRST AMERICAN CAPITAL CORPORATION
STATE OF Kansas )
-----------------
) ss.
COUNTY OF Shawnee )
----------------
On this 6th day of August , 2003, before me appeared Xxxxxxx X. Xxxxxxx , to me
personally known, who, being by me duly sworn did say that he/she is the
Chairman of FIRST AMERICAN CAPITAL CORPORATION, a corporation of the State of
Kansas , and that said instrument was signed on behalf of said corporation by
authority of its Board of Directors, and said Xxxxxxx X. Xxxxxxx acknowledged
said instrument to be the free act and deed of said corporation.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal
the day and year first above written.
Xxxxx X. Xxxxxx
----------------------------
NOTARY PUBLIC
My Commission Expires:
4-8-06
---------------------
[SEAL]
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ACKNOWLEDGMENT - CITIZENS, INC.
STATE OF Texas )
-----------------
) ss.
COUNTY OF Xxxxxx )
----------------
On this 8th day of August , 2003, before me appeared Xxxx X. Xxxxxx , to me
personally known, who, being by me duly sworn did say that he/she is the
President of CITIZENS, INC., a corporation of the State of Colorado , and that
said instrument was signed on behalf of said corporation by authority of its
Board of Directors, and said Xxxx X. Xxxxxx acknowledged said instrument to be
the free act and deed of said corporation.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal
the day and year first above written.
Xxx X. Xxxxxx
----------------------------
NOTARY PUBLIC
My Commission Expires:
4-6-04
---------------------
[SEAL]
8
ACKNOWLEDGMENT - XXXXXX X. XXXXX
STATE OF Texas )
-----------------
) ss.
COUNTY OF Xxxxxx )
----------------
On this 8th day of August , 2003, before me personally appeared XXXXXX X. XXXXX,
to me known to be the person described herein and who executed the foregoing
instrument, and acknowledged that he executed the same as his free act and deed.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal
the day and year first above written.
Xxx X. Xxxxxx
----------------------------
NOTARY PUBLIC
My Commission Expires:
4-6-04
---------------------
[SEAL]
9
ACKNOWLEDGMENT - XXXX X. XXXXXX
STATE OF Texas )
-----------------
) ss.
COUNTY OF Xxxxxx )
----------------
On this 8th day of August , 2003, before me personally appeared XXXX X. XXXXXX,
to me known to be the person described herein and who executed the foregoing
instrument, and acknowledged that he executed the same as his free act and deed.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal
the day and year first above written.
Xxx X. Xxxxxx
----------------------------
NOTARY PUBLIC
My Commission Expires:
4-6-04
---------------------
[SEAL]
10
ACKNOWLEDGMENT - XXXXXX X. XXXXX
STATE OF Missouri )
-----------------
) ss.
COUNTY OF Xxxx )
----------------
On this 7 day of August , 2003, before me personally appeared XXXXXX X. XXXXX,
to me known to be the person described herein and who executed the foregoing
instrument, and acknowledged that he executed the same as his free act and deed.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal
the day and year first above written.
Xxxx X. Xxxxxx
----------------------------
NOTARY PUBLIC
My Commission Expires:
11-11-04
---------------------
[SEAL]
11
ACKNOWLEDGMENT - XXXXXXX X. XXXX
STATE OF Kentucky )
-----------------
) ss.
COUNTY OF Fayette )
----------------
On this 8th day of August , 2003, before me personally appeared XXXXXXX X. XXXX,
to me known to be the person described herein and who executed the foregoing
instrument, and acknowledged that he executed the same as his free act and deed.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal
the day and year first above written.
Xxxxx X. Xxxxx
----------------------------
NOTARY PUBLIC
My Commission Expires:
7-28-07
---------------------
[SEAL]
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