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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 5, 1999
REGISTRATION NO. 333-85837
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAPITAL HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-1588902
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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5520 MONROE STREET
SYLVANIA, OHIO 43560
(419) 885-7379
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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JOHN S. SZUCH, CHAIRMAN AND CEO
CAPITAL HOLDINGS, INC.
5520 MONROE STREET
SYLVANIA, OHIO 43560
(419) 885-7379
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES OF COMMUNICATIONS TO:
MARTIN D. WERNER, ESQ.
WERNER & BLANK CO., L.P.A.
7205 WEST CENTRAL AVENUE
TOLEDO, OHIO 43617
PHONE: (419) 841-8051
FAX: (419) 841-8380
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this registration statement
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEES
- ---------------------------- ------------------------ ----------------------------- ------------------ ---------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED OFFERING PRICE PER SHARE (1) OFFERING PRICE AMOUNT OF REGISTRATION FEE
- ---------------------------- ------------------------ ----------------------------- ------------------ ---------------------------
Subscription Rights (2) $0 $0 $0
- ---------------------------- ------------------------ ----------------------------- ------------------ ---------------------------
Common Stock, no par value. 900,000 $26.00 $23,400,000 $6,600
- ---------------------------- ------------------------ ----------------------------- ------------------ ---------------------------
Total......................
- ---------------------------- ------------------------ ----------------------------- ------------------ ---------------------------
(1) Estimated solely for the purpose of computing the registration fee based
upon the average of the high and low prices of the common stock, no par value of
Capital Holdings as reported on the Over-the-Counter Electronic Bulletin Board
on August 16, 1999, in accordance with Rule 457(c) of the General Rules and
Regulations under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(g), no separate fee is required for the rights since
they are being registered in the same registration statement as the common stock
underlying the rights.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Prospectus
CAPITAL HOLDINGS, INC. [LOGO]
Up to 900,000 Shares of Common Stock
$27.00 per share
---------------------
We are offering up to 900,000 shares of common stock in this rights
offering to stockholders who owned common stock as of September 30, 1999. This
is called the rights offering and is made with the following conditions:
- You will receive, at no cost, a right to buy 0.14 share of common
stock for every share of common stock that you owned on September
30, 1999 at a price of $27.00 per share.
- We will not issue fractional rights, and we will not pay cash in
place of rights or fractional shares. Your subscription rights are
not transferable and the rights will not be listed for trading on
any stock exchange.
- The subscription rights are exercisable beginning on the date of
this prospectus and continuing until 5:00 p.m., Eastern time, on
November 15, 1999. If you want to participate in the rights
offering, you must submit your subscription documents to us before
that deadline or to your broker or bank at least 10 days before
that deadline.
We may offer any unsubscribed shares to the general public at the same
price of $27.00 per share. This is called the community offering. If you want to
participate in the community offering, you must submit your subscription
documents to us before December 1, 1999 or later, if we extend the date, or to
your broker or bank at least 10 days before that deadline.
Both the rights offering and the community offering are subject to the
following further conditions:
- We reserve the right to cancel the rights offering and the
community offering at any time before the expiration date.
- Subscriptions are irrevocable once we receive them, unless we amend
this offering.
- There is no minimum number of shares that we must sell in order to
complete the rights offering or the community offering.
- Stockholders who do not participate in the rights offering will
continue to own the same number of shares, but may own a smaller
percentage of the total shares outstanding to the extent that other
stockholders participate in the rights offering or stock is sold in
the community offering.
We are selling these shares to raise additional capital to contribute
to our bank subsidiary and fund its growth.
Our common stock is quoted on the Over-The-Counter Electronic Bulletin
Board under the symbol "CLHD."
INVESTING IN OUR SECURITIES INVOLVES RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 8.
NONE OF THE SECURITIES OFFERED BY THIS PROSPECTUS ARE DEPOSITS OR
ACCOUNTS. THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 7, 1999
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The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................4
RISK FACTORS...................................................................8
USE OF PROCEEDS...............................................................11
WHERE YOU CAN FIND MORE INFORMATION...........................................11
SELECTED CONSOLIDATED FINANCIAL DATA..........................................12
THE OFFERING..................................................................13
FEDERAL INCOME TAX CONSIDERATIONS.............................................17
PLAN OF DISTRIBUTION..........................................................18
LEGAL MATTERS.................................................................18
EXPERTS.......................................................................18
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PROSPECTUS SUMMARY
This section summarizes the information contained in this prospectus.
You should read the following summary together with the information set forth
under the heading "Risk Factors."
We use the term "we" or "CHI" to refer to Capital Holdings, Inc., a
business corporation organized under Ohio law. We use the term "the Bank" to
refer to Capital Bank, N.A., a commercial bank organized under the laws of the
United States.
CAPITAL HOLDINGS, INC.
We are a one-bank holding company. We were formed in July 1988 to own
and organize our wholly owned subsidiary, the Bank. We are a full-service
commercial bank providing the following services to our customers:
- savings accounts and checking accounts;
- money market accounts;
- certificates of deposits;
- sweep accounts;
- personal line credit services;
- credit cards; and
- commercial, residential and real estate loans and other banking
services.
Our continued commitment to customer satisfaction has resulted in our
ninth straight year of growth and profitability, fueled by a strong loan
portfolio, excellent overhead control and advances in technology. For the year
ended December 31, 1998, we ranked among the top six percent of all banks in the
country in total assets. Since 1989, we have focused our business primarily on:
- corporate, executive and professional customers;
- pursuing a deposit gathering strategy of offering money market
checking and savings accounts;
- serving small to mid-sized businesses, professionals and their
families; and
- offering certificates of deposits at attractive rates to mid-sized
to large depositors with an emphasis on minimizing the operating
costs of obtaining these deposits.
We have experienced significant asset growth and achieved continuing
profitability:
- Total assets increased to $802 million for the year ended December
31, 1998 from $670 million for the same period in 1997 and $560
million for the same period in 1996. At June 30, 1999, our total
assets increased 11.07% from December 31, 1998 to $890 million.
- Net income increased to $7.9 million ($1.30 per share -- diluted)
for the year ended December 31, 1998 from $6.8 million ($1.14 per
share -- diluted) for the same period in 1997 and $5.7 million
($0.98 per share -- diluted) for the same period in 1996. For the
six months ended June 30, 1999, our net income was $4.4 million
($0.70 per share - diluted) as compared to $3.7 million ($0.61 per
share - diluted) for the six months ended June 30, 1998.
- For the year ended December 31, 1998 our loan portfolio grew by
23.3%, or $109.3 million, as compared to December 31, 1997, and
increased by 14.47%, or $83.7 million at June 30, 1999 as compared
to December 31, 1998.
Our principal executive offices are located at 5520 Monroe Street,
Sylvania, Ohio. Our main telephone number is (419) 885-7379 or (800) 366-5580.
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THE OFFERING
The offering............................................... This offering consists of both a rights offering and, to
the extent any shares offered by this prospectus remain
unsubscribed, a community offering.
Offering price............................................. $27.00 per share.
Rights Offering:
Eligible stockholders............................. You are eligible to purchase stock in the rights offering
if you owned shares of our common stock on September 30,
1999.
Subscription rights............................... If you are an eligible stockholder, you will have the
right to purchase a 0.14 share of our common stock for
every share of common stock you owned as of September 30,
1999. There is no minimum amount of shares you must
purchase using your subscription rights.
When determining the number of shares we will issue,
multiply the number of shares you own by 0.14 and round
down to the nearest whole number. For example, if you own
125 shares, you may subscribe for 17 shares (125 shares x
0.14 = 17.5 shares, rounded down to 17 shares, the nearest
whole number).
Non-transferability of rights..................... Your subscription rights are not transferable. Shares
issued upon exercise of your subscription rights will be
issued in the same record holder's name.
Persons wishing to exercise
rights for the benefit of others.................. Brokers, banks, trustees, and other individuals or
entities that hold common stock for the account of others
may, if authorized by the beneficial owner, complete the
subscription agreement and submit it to us with the proper
payment.
Expiration of the rights offering................. The rights offering will expire at November 15, 1999, at
5:00 p.m., Eastern time. After the expiration date, you
will no longer be able to purchase shares through the
exercise of your subscription rights. However, you will be
able to subscribe for shares in the community offering.
Community Offering:
Community offering................................ We may offer to the general public shares that have not
been subscribed for, if any remain. If you wish to
participate in the community offering, you must purchase
at least 400 shares.
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Shares available.................................. We will first fill all subscriptions received in the
rights offering. Any remaining shares may then be offered
to the public in the community offering, including our
current stockholders who want to purchase additional
shares.
Expiration of the community offering.............. The community offering will expire at the earlier of:
- a date determined by the board of
directors; or
- December 1, 1999 unless extended by us
but not later than January 31, 2000.
Subscription Procedures.................................... To subscribe for shares in the offering, you should
carefully complete and sign the subscription agreement. If
you are an existing stockholder please indicate the number
of shares you are purchasing in the rights offering and
indicate any additional shares you wish to purchase in the
community offering.
Forward your completed subscription agreement to our main
office, which address appears below. Be sure to include a
check or money order for the full amount of your
subscription price. Checks and money orders will not be
cashed until we accept your subscription.
If your subscription is not completely filled, we will
send you a check for the difference. No interest will be
paid on returned subscription funds. YOUR SUBSCRIPTION IS
IRREVOCABLE AFTER YOU SUBMIT THE SUBSCRIPTION DOCUMENTS.
Submit subscription agreements............................. Deliver subscription agreements to:
By mail:
Capital Holdings, Inc.
P.O. Box 327
Toledo, Ohio 43691-9978
ATTN: Mr. Stephen J. Kovatch
By hand:
Capital Holdings, Inc.
5520 Monroe Street
Sylvania, Ohio 43560
ATTN: Mr. Stephen J. Kovatch
By overnight courier:
Capital Holdings, Inc.
5520 Monroe Street
Sylvania, Ohio 43560
ATTN: Mr. Stephen J. Kovatch
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Ownership Limits........................................... Federal law prohibits you from directly or indirectly, or
through or in concert with one or more persons, acquiring
"control" of CHI (defined to include ownership, control or
the power to vote 10% or more of a class of CHI voting
securities) unless you provide at least 60 days' prior
written notice to the Federal Reserve Board. A person is
deemed to have acquired shares that he or she has the
right to acquire through the exercise of options, warrants
and rights. Therefore, any subscriptions in this offering
that are subject to such Federal laws may, in our
discretion, be deemed void in their entirety or in part,
and not accepted by us.
Termination................................................ We may cancel the offering at any time, in which case we
will return your subscription payment without interest.
Stock certificates......................................... Certificates representing shares of the common stock will
be delivered to subscribers as soon as practicable after
the completion of the offering. We expect that this may
take two weeks or longer, due to the need to allow checks
to clear.
Risk Factors............................................... An investment in shares of our common stock involves a
high degree of risk. Please see "Risk Factors" beginning on
page 8.
Federal Income Tax Consequences............................ Your receipt or exercise of the subscription rights should
not be treated as a taxable event for United States
federal income tax purposes, but may have other tax
effects.
Questions.................................................. If you have any questions about the rights offering,
including questions about subscription procedures and
requests for additional copies of this prospectus or other
documents, please contact Mr. Stephen J. Kovatch, our
Senior Vice President, at (419) 885-7379 or (800)
366-5580.
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RISK FACTORS
In addition to the other information in this prospectus and the
information we incorporate by reference, you should consider carefully the
following factors in evaluating CHI and our business before purchasing our
common stock.
RISKS RELATED TO THE OFFERING:
IF YOU DO NOT EXERCISE YOUR FULL SUBSCRIPTION RIGHTS, YOUR PERCENTAGE OWNERSHIP
AND VOTING RIGHTS OF CHI WILL DECREASE.
If you choose not to exercise your subscription rights in full, your
relative ownership interests in CHI will be diluted to the extent other
stockholders exercise their subscription rights. Your voting rights and
percentage interest in any of CHI's net earnings may also be diluted if you
don't exercise your rights. We are unable to determine the number of shares, if
any, that will be sold in the offering.
THE OFFERING PRICE WAS DETERMINED BY OUR BOARD OF DIRECTORS AND BEARS NO
RELATIONSHIP TO THE VALUE OF OUR ASSETS, FINANCIAL CONDITION OR OTHER
ESTABLISHED CRITERIA FOR VALUE. OUR COMMON STOCK MAY TRADE AT PRICES ABOVE OR
BELOW THIS PRICE.
Our board of directors determined the offering after considering a
number of factors, including:
- book value of our assets;
- past operations;
- cash flow;
- earnings;
- our overall financial condition; and
- our future prospects.
In addition, the board took in account the results of our recent
independent appraisal. The board did not assign weighting to any one factor in
setting the offering price. After the date of this prospectus, our common stock
may trade at prices above or below the offering price.
BECAUSE YOU MAY NOT REVOKE YOUR SUBSCRIPTION EXERCISE, YOU COULD BE COMMITTED TO
BUY SHARES ABOVE THE PREVAILING MARKET PRICE.
The public trading market price of our common stock may decline before
the subscription rights expire. If you exercise your subscription rights and,
afterwards, the public trading market price of our common stock decreases below
$27.00, then you will have committed to buy shares of common stock at a price
above the prevailing market price. Once you have exercised your subscription
rights, you may not revoke your exercise unless we amend the offering. Moreover,
you may be unable to sell your shares of common stock at a price equal to or
greater than the offering price.
BECAUSE WE MAY TERMINATE THE OFFERING AT ANY TIME, YOUR PARTICIPATION IN THE
OFFERING IS NOT ASSURED.
Once you exercise your subscription rights, you may not revoke the
exercise for any reason unless we amend the offering. We may terminate the
offering at any time. If we decide to terminate the offering, we will not have
any obligation with respect to the subscription rights except to return, without
interest, any subscription payments.
RISKS RELATED TO CHI:
WE MAY NOT BE ABLE TO CONTINUE TO GROW THE BANK'S ASSETS AND EARNINGS AS FAST AS
WE HAVE SINCE WE OPENED THE BANK IN 1989 BECAUSE OF OUR LIMITED MARKET AREA.
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The Bank has experienced rapid growth in its assets and earnings since
it opened for business in 1989. In the future it may be more difficult to
continue this rate of growth for a number of reasons, including the fact that
the Bank already serves a significant percentage of its market and further
penetration of the remaining market will be more difficult.
BECAUSE OUR COMMON STOCK TRADES ON THE OVER-THE-COUNTER ELECTRONIC BULLETIN
BOARD, OUR SHARES MAY BE SUBJECT TO EXTREME PRICE FLUCTUATIONS AND YOU MAY HAVE
DIFFICULTY TRADING YOU SHARES.
Persons who purchase our common stock may be unable to readily sell the
common stock. Our common stock trades only on the Over-the-Counter Electronic
Bulletin Board and has been trading with limited volume. We are not currently
listed on the Nasdaq National Market or any national stock exchange.
Furthermore, because our common stock is not listed on the Nasdaq National
Market, trading in our common stock is also limited by SEC rules. There can be
no assurance that we will list our securities on a national securities exchange
at anytime in the future.
BECAUSE WE FACE INTENSE AND SIGNIFICANT COMPETITION FROM MANY LARGE MULTI-BANK
HOLDING COMPANIES, OUR ABILITY TO ATTRACT DEPOSITS, MAKE LOANS OR DEVELOP OTHER
LINES OF BUSINESS MAY BE ADVERSELY AFFECTED.
Our ability to maintain a history of strong financial performance and
return on investment to stockholders will depend in part on our ability to
expand our available financial services. In addition to the challenge of
attracting and retaining customers for traditional banking services, our
competitors now include securities dealers, brokers, mortgage bankers,
investment advisors and finance and insurance companies who seek to offer
one-stop financial services to their customers that may include services that
banks have not been able or allowed to offer to their customers in the past. The
increasingly competitive environment is a result primarily of changes in
regulation, changes in technology and product delivery systems and the
accelerating pace of consolidation among financial services providers. If we
fail to adequately address each of the competitive pressures in the banking
industry, our financial condition and results of operations could be adversely
affected.
BECAUSE WE ARE ENGAGED IN A HEAVILY REGULATED INDUSTRY, ANY CHANGES IN
GOVERNMENTAL LAWS AND REGULATION AND POLICY COULD LIMIT OUR FUTURE GROWTH.
Any changes to federal banking laws and regulations may negatively
impact our ability to expand services and to increase the value of our business.
We are subject to extensive state and federal regulation, supervision, and
legislation that govern almost all aspects of our operations. These laws may
change from time to time and are primarily intended for the protection of
consumers, depositors and the deposit insurance funds. In addition, CHI's
earnings are affected by the monetary policies of the Federal Reserve Board.
These policies, which include regulating the national supply of bank reserves
and bank credit, can have a major effect upon the source and cost of funds and
the rates of return earned on loans and investments. The Federal Reserve
influences the size and distribution of bank reserves through its open market
operations and changes in cash reserve requirements against member bank
deposits. We cannot predict what effect any presently contemplated or future
changes in the laws or regulations or their interpretations would have on us,
but such changes could be materially adverse to our financial performance.
BECAUSE OUR PROFITABILITY IS DIRECTLY RELATED TO INTEREST RATES, ANY CHANGES IN
THESE RATES MAY ADVERSELY AFFECT OUR EARNINGS AND FINANCIAL CONDITION.
Changes in interest rates affect our operating performance and
financial condition in diverse ways. Our profitability depends in substantial
part on our "net interest spread," which is the difference between the rates we
receive on loans and investments and the rates we pay for deposits and other
sources of funds. Our net interest spread will depend on many factors that are
partly or entirely outside our control, including competition, federal economic,
monetary and fiscal policies, and economic conditions generally. Historically,
net interest spreads for other financial institutions have widened and narrowed
in response to these and other factors, which are often collectively referred to
as "interest rate risk."
BECAUSE WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL, ANY LOSS
OF, OR OUR INABILITY TO ATTRACT, THESE PERSONNEL COULD ADVERSELY AFFECT US.
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Our success depends upon the continued service of our senior management
team and upon our ability to attract and retain qualified financial services
personnel. Competition for qualified employees is intense. In our experience, it
can take a significant period of time to identify and hire personnel with the
combination of skills and attributes required in carrying out our strategy. If
we lose the services of our key personnel, or are unable to attract additional
qualified personnel, our business, financial condition, results of operations
and cash flows could be materially adversely affected.
BECAUSE OUR ABILITY TO PAY DIVIDENDS IS SUBJECT TO REGULATORY LIMITATIONS, THERE
IS NO ASSURANCE THAT WE WILL CONTINUE TO PAY DIVIDENDS.
Although we have paid dividends on our common stock in the past, there
is no assurance that we may or will continue to pay dividends in the future.
Dividends are subject to determination and declaration by our board of
directors, which takes into account many factors. The declaration of dividends
by us on our common stock is subject to the discretion of our board and to
applicable federal regulatory limitations. We cannot guarantee that dividends
will not be reduced or eliminated in future periods. Our ability to pay
dividends on our common stock depends on our receipt of dividends from the Bank.
The Bank is a national bank and, as such, is subject to restrictions and
limitations in the amount and timing of the dividends it may pay to us.
WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS, ANY OF WHICH MAY DISCOURAGE
TAKEOVER ATTEMPTS AND COULD REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
Provisions of our Articles of Incorporation and Bylaws and Ohio law
could have the effect of discouraging takeover attempts which certain
stockholders might deem to be in their interest. For example, our board of
directors is divided into three classes and each class is elected for a
three-year term. This provision could make it more difficult for our
stockholders to remove members of our board of directors and may also make it
more difficult for a third party to acquire us, even if the acquisition would be
beneficial to you.
THE FAILURE OF OUR COMPUTER SYSTEMS OR THOSE OF OUR KEY VENDORS, SUPPLIERS AND
CUSTOMERS TO BE YEAR 2000 COMPLIANT COULD NEGATIVELY IMPACT OUR BUSINESS.
We are dependent, to a substantial degree, upon the proper functioning
of our computer systems as well as those of our vendors, suppliers and
customers. Most of our information and data is provided electronically and is
dependent on information systems and telecommunications. In addition, most of
our products and services rely on information and data provided by others. If:
- our computer systems or those of our vendors and suppliers cannot
provide accurate information in a timely manner;
- we are unable to accurately and timely process such information;
- our customers are unable to receive and use our products and
services; or
- a general disruption of our telecommunications and utilities occurs
as a result of the Year 2000 problem,
we could suffer financial loss and potential legal liability.
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USE OF PROCEEDS
We plan to use the net proceeds from this offering to further
capitalize Capital Bank, N.A., for working capital and general corporate
purposes.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference facilities at 450 Fifth Street, N.W., Washington D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC and the site address is http:\\www.sec.gov.
The SEC allows us to "incorporate by reference" the information we have
filed with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus. We incorporate by reference all
documents listed below, all filings filed pursuant to the Exchange Act of 1934
after the date of the filing of this registration statement and prior to
effectiveness and any future filings made with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the
rights offering is terminated.
The documents we incorporate by reference are:
(1) Our Annual Report on Form 10-K for the year ended December 31, 1998;
(2) Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
(3) Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
(4) Our Current Report on Form 8-K dated July 27, 1999 and filed with the
Commission on August 4, 1999; and
(5) the description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on April 30, 1993.
You may get copies of any of the incorporated documents (excluding
exhibits, unless the exhibits are specifically incorporated) at no charge to you
by writing Mr. Stephen J. Kovatch, our Senior Vice President, at 5520 Monroe
Street, Sylvania, Ohio 43560 or by calling (419) 885-7379 or (800) 366-5580.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, including the above risk
factors section, contains "forward-looking statements" that involve risks and
uncertainties. "Forward-looking statements" are statements that relate to future
events or our future financial performance. In many cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue," or the negative of such terms and other comparable
terminology.
You should not place undue reliance on these statements, which speak
only as of the date that they were made. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including the risks faced by us described below and
elsewhere in this prospectus. We do not undertake any obligation to publicly
update any revisions to forward-looking statements after completion of this
offering to reflect later events or circumstances or to reflect the occurrence
of unanticipated events.
We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this prospectus, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this prospectus
could have a material adverse effect on our business, operating results and
financial condition.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents our selected consolidated financial data as of
and for each of the years in the period ended December 31, 1998, 1997, 1996,
1995 and 1994. The information has been derived from our consolidated financial
statements, including our audited consolidated financial statements incorporated
in this prospectus by reference to our 1998 Form 10-K, and should be read in
conjunction with the notes to those financial statements. See "WHERE YOU CAN
FIND MORE INFORMATION."
Historical results are not necessarily indicative of results to be expected
for any future period.
SELECTED FINANCIAL DATA SCHEDULE
(Dollars in thousands except per share amounts)
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As of and for the six As of and for the Year-Ended December 31
months ended June 30
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CONSOLIDATED RESULTS OF OPERATIONS: 1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
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Interest Income $30,944 $26,726 $55,568 $47,593 $39,639 $34,752 $26,330
Interest Expense $17,090 $15,255 31,751 27,026 22,305 19,964 13,188
-----------------------------------------------------------------------------------------------
Net Interest Income $13,854 $11,471 23,817 20,567 17,334 14,788 13,142
Provision for Credit Losses $1,125 $510 1,230 1,005 980 850 993
-----------------------------------------------------------------------------------------------
Net Interest Income After $12,729 $10,961 22,587 19,562 16,354 13,938 12,149
Provision for Credit Losses
Other Income $934 $692 1,681 1,205 874 753 636
Other Expense $7,202 $6,094 12,534 10,752 8,821 7,590 6,860
-----------------------------------------------------------------------------------------------
Income Before Income Taxes $6,460 $5,558 11,734 10,015 8,407 7,101 5,925
Income Taxes $2,100 $1,840 3,805 3,234 2,681 2,256 1,844
-----------------------------------------------------------------------------------------------
Net Income $4,360 $3,718 $7,929 $6,781 $5,726 $4,845 $4,081
CONSOLIDATED BALANCE SHEET DATA:
Total Assets $890,381 $737,418 $801,628 $669,540 $559,726 $483,170 $417,832
Cash and Cash Equivalents $19,030 $26,751 29,263 23,292 13,958 13,048 10,847
Securities Available for Sale $197,028 $178,682 184,583 167,521 159,209 140,627 77,982
Securities Held to Maturity --- --- --- --- --- --- 71,920
Loans, Net of Deferred Loan Fees $662,081 $521,494 578,370 469,036 380,160 324,788 251,184
Allowance for Credit Losses $9,279 $7,423 8,146 6,947 5,942 4,960 4,110
Deposits $719,675 $625,681 663,066 579,661 470,743 407,622 357,533
Shareholders' Equity $58,240 $53,790 58,422 50,547 41,590 36,136 27,565
PER SHARE DATA(1):
Net Income:
Basic 0.72 0.62 1.32 1.19 1.01 .86 .73
Diluted 0.70 0.61 1.30 1.14 .98 .84 .71
Book Value at Period End 9.58 8.96 9.66 8.46 7.31 6.39 4.92
Average Shares Outstanding:
Basic 6,067,814 5,998,974 6,007,458 5,699,712 5,652,834 5,607,051 5,561,568
Diluted 6,247,282 6,080,442 6,110,595 5,927,454 5,842,965 5,783,037 5,730,930
(1) Capital Holdings, Inc. adopted Financial Accounting Standards No. 128,
Earnings Per Share, effective December 31, 1997. Basic per share
amounts are based upon weighted-average number of common shares
outstanding for each period, after giving retroactive effect to a
3-for-1 stock split effective June 30, 1999 and a 6% stock dividend
issued during 1996, 1995 and 1994. Diluted per share amounts are based
upon weighted-average number of common shares outstanding including
dilutive effects of options, warrants and convertible securities for
each period, after giving retroactive effect to a 3-for-1 stock split
effective June 30, 1999 and a 6% stock dividend issued during 1996,
1995 and 1994. All earnings per share amounts for all periods have been
restated to conform to the Statement 128 requirements. Book value at
period end per share amounts are based upon period end shares
outstanding for each period.
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THE OFFERING
THE RIGHTS OFFERING
We are offering our stockholders the right to subscribe for and
purchase up to an aggregate of 900,000 shares of common stock at $27.00 per
share. Only those stockholders who owned common stock on September 30, 1999 will
receive subscription rights to purchase stock in the rights offering.
Each subscription right provides you with the opportunity to purchase
0.14 share of common stock for every share of common stock you owned at the
close of business on September 30, 1999. In determining the number of shares of
common stock a stockholder will have the right to buy, we will round down to the
nearest whole number. We will not issue fractional subscription rights and we
will not pay cash in place of subscription rights or fractional shares.
THE COMMUNITY OFFERING
If there are any shares that are not subscribed for in the rights
offering, we may offer them to the public at $27.00 per share. This offering
will be made on the same terms as the rights offering, except that you will not
need to be a current stockholder in order to participate. You must subscribe for
at least 400 shares. We reserve the right to accept or reject, for any reason,
any subscription for shares tendered to us in the community offering. We may
also determine not to proceed with the community offering even if we have
conducted the rights offering.
If there is an oversubscription of shares in this community offering,
we will allocate the shares among you. We will be taking into account the
following factors:
- the amount of the subscription;
- our business relationship with the subscriber; and
- whether the subscriber is an existing stockholder.
It is our intention to encourage broad ownership of our stock among
persons who live or work in our primary market areas.
If you request and pay for more shares than we allocate to you, we will
refund your overpayment, without interest.
CERTIFICATES FOR SHARES
You will receive certificates representing the shares that you purchase
as soon as practicable after the closing of the offering.
EXPIRATION DATES
RIGHTS OFFERING
The rights offering will expire at 5:00 p.m., Eastern Time, on November
15, 1999. IF YOU DO NOT EXERCISE YOUR SUBSCRIPTION RIGHTS ON OR BEFORE THAT
TIME, YOUR SUBSCRIPTION RIGHTS WILL EXPIRE AND THEREFORE BE NULL AND VOID. ANY
SUBSCRIPTION AGREEMENT RECEIVED AFTER THAT TIME WILL BE TREATED AS A
SUBSCRIPTION IN THE COMMUNITY OFFERING AND WILL BE SUBJECT TO SHARE AVAILABILITY
AND OVERSUBSCRIPTION PROCEDURES IF NECESSARY.
We may reject any subscription agreement submitted in the rights
offering that we receive after 5:00 p.m. on the expiration date, regardless of
when the documents were originally mailed. Stockholders who wish to participate
in the rights offering should submit their subscription agreement to us by the
expiration date, or to their broker or bank at least 10 days before the
expiration date, to allow the broker or bank sufficient time to carry out those
instructions.
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COMMUNITY OFFERING
The community offering will commence at the same time as the rights
offering and will expire at the earlier of:
- a date selected by the board of directors; or
- December 1, 1999 unless extended by us, but no later than January
31, 2000.
DETERMINATION OF OFFERING PRICE
Our board of directors determined the offering price after considering
the following factors:
- the book value of our assets;
- our past operations;
- our cash flow;
- our earnings;
- our overall financial condition; and
- our future prospects.
In addition, the board took in account the results of the most recent
report from our regularly scheduled independent appraisals. The board did not
consider any one factor to be more important than any other in determining the
offering price.
SUBSCRIPTION PROCEDURES
The following procedures should be followed by all persons purchasing
stock in the offering. To participate in the offering, you must submit a
subscription agreement for the appropriate offering, together with full payment
of the offering price for all your desired shares. Those who hold common stock
for the account of others, such as brokers, banks, trustees or depositories,
should notify the beneficial owners of those shares as soon as possible to
ascertain the beneficial owners' intentions and to obtain instructions with
respect to the rights offering.
RIGHTS OFFERING. A subscription agreement exercising rights under the
rights offering must be properly executed and received by us, together with full
payment for these shares, before 5:00 p.m., Eastern time, on November 15, 1999.
You should also indicate on the same form the number of shares you would like to
purchase in the community offering. You must enclose full payment for all shares
ordered when submitting the subscription agreement. If received late, the entire
number of shares ordered in the subscription agreement will be treated solely as
a subscription in the community offering.
COMMUNITY OFFERING. A subscription agreement for shares in the
community offering must be properly executed and received by us, together with
full payment for these shares, before 5:00 p.m., Eastern time, on December 1,
1999, unless we extend the expiration date.
Payment of the offering price must be made by cashier's check, personal
check or bank draft drawn upon a U.S. bank or money order, in all cases payable
to "Capital Holdings, Inc."
If you wish to pay by uncertified personal check, please note that your
check may take five business days or more to clear and, therefore, we may hold
the processing of your certificates for up to ten business days following the
closing of the offering. You are urged to arrange for payment by certified,
cashier's check or money order.
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Deliver the subscription agreements and payments by mail, hand delivery
or overnight courier, as follows:
By mail: By hand: By overnight courier:
- -------- -------- ------------------
Capital Holdings, Inc. Capital Holdings, Inc. Capital Holdings, Inc.
P.O. Box 327 5520 Monroe Street 5520 Monroe Street
Toledo, Ohio 43691-9978 Sylvania, Ohio 43560 Sylvania, Ohio 43560
Attention: Stephen J. Kovatch Attention: Stephen J. Kovatch Attention: Stephen J. Kovatch
If you are an existing stockholder and do not indicate the number of
shares to be purchased or do not forward full payment of the offering price, you
will be deemed to have exercised your subscription rights only to the extent of
the payment received. If there are any remaining funds from your payment, we
will treat them as your payment toward a subscription in the community offering.
New investors will be deemed to have subscribed for the number of shares for
which payment is delivered.
The delivery method used for the subscription agreement and payment for
the related shares will be at your election and risk. If sent by mail, it is
recommended that your subscription agreement and payment be sent by registered
mail, properly insured, with return receipt requested, and that a sufficient
number of days be allowed to ensure delivery and clearance of payment prior to
the expiration date.
Our answers to all questions concerning the timeliness, validity, form
and eligibility of any subscription will be final and binding. We may, in our
sole discretion, waive any defect or irregularity, permit a defect or
irregularity to be corrected within any time as we may determine, or reject the
purported exercise of any right. Subscriptions are not deemed received or
accepted until all irregularities are waived or cured within the time that we
determine in our discretion. We have no duty to notify you of any defect or
irregularity in connection with the submission of your subscription agreement or
incur any liability for failure to give notification.
If you have any questions concerning the rights offering or these
subscription procedures, or if you would like additional copies of this
prospectus or other documents, please contact: Mr. Stephen J. Kovatch, Senior
Vice President at (419) 885-7379 or (800) 366-5580.
NON-TRANSFERABILITY OF SUBSCRIPTION RIGHTS
Only you may exercise your subscription rights. You may not sell, give
away or otherwise transfer your subscription rights.
NO REVOCATION AFTER EXERCISE OF RIGHTS OR SUBSCRIPTION IN COMMUNITY OFFERING
After you exercise your subscription rights or subscribe for shares in
the community offering, you may not revoke that exercise or subscription unless
we amend the terms of this offering (as described below). You should not
exercise your subscription rights or submit a subscription in the community
offering unless you are certain that you wish to purchase shares of our common
stock.
AMENDMENT AND TERMINATION OF OFFERING
We reserve the right to amend the terms and conditions of this offering
at any time. If we make an amendment that we consider significant, we will:
- mail notice of the amendment to all stockholders who owned shares
of common stock on September 30, 1999;
- extend the expiration date of the offering by at least 14 days; and
- allow you at least 10 days to revoke any prior subscriptions, in
whole or in part.
In all other cases, subscriptions will be irrevocable.
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We also reserve the right to terminate the rights offering at any time,
in our discretion, in which case all subscriptions will be canceled, and we will
return all subscription payments to subscribers. If we terminate the rights
offering, we will also terminate the community offering. We may also determine
not to proceed with the community offering even if we have conducted the rights
offering.
Upon the occurrence of any change in or cancellation of this offering,
we will issue a press release to that effect, and we will file with the SEC a
post-effective amendment to the registration statement covering this prospectus.
SHARES OF COMMON STOCK OUTSTANDING AFTER THE OFFERING
Assuming we issue all of the 900,000 shares of common stock being
offered by this prospectus, we will then have approximately 6,979,771 shares of
common stock issued and outstanding. This would represent a 14.80% increase in
the number of outstanding shares of our common stock. If you are an existing
stockholder and you do not exercise your subscription rights, the percentage of
common stock that you hold could significantly decrease after the offering.
CERTAIN OWNERSHIP LIMITS AND REPORTING REQUIREMENTS
Federal law prohibits you from directly or indirectly, or through or in
concert with one or more persons, acquiring "control" of us (defined to include
ownership, control or the power to vote 10% or more of a class of our voting
securities) unless you provide at least 60 days' prior written notice to the
Federal Reserve Board. A person is deemed to have acquired shares that he or she
has the right to acquire through the exercise of options, warrants and rights.
Therefore, any subscriptions in this offering that are subject to such Federal
laws may, in our discretion, be deemed void in their entirety or in part, and
not accepted by us.
Any person or group that acquires direct or indirect beneficial
ownership of more than 5% of the outstanding shares of our common stock will be
subject to SEC reporting requirements under Section 13(d) or 13(g) of the
Securities Exchange Act of 1934. In addition, any person or group that acquires
direct or indirect beneficial ownership of more than 10% of the outstanding
shares of our common stock will be subject to further SEC reporting requirements
under Section 16(a) of the Exchange Act and may become liable under Section
16(b) of the Exchange Act for reimbursement of any "short-swing profits." Please
consult with your attorney to see if these rules will apply to you.
STATE AND FOREIGN SECURITIES LAWS
This offering is not being made in any state or foreign country in
which it is unlawful to do so, nor are we selling or accepting subscriptions
from holders who are residents of any such state or country. We may delay the
commencement of this offering in certain states or other jurisdictions in order
to comply with the securities law requirements of those states or other
jurisdictions. It is not anticipated that there will be any changes in the terms
of the rights offering. We may decline, in our sole discretion, to make
modifications to the terms of the offering requested by certain states or other
jurisdictions, in which case stockholders who live in those states or
jurisdictions will not be eligible to participate in the offering.
NO RECOMMENDATIONS
We are not making any recommendation as to whether or not you should
exercise your subscription rights. You should make your decision based on your
own assessment of your best interests.
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FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the material federal income tax consequences
of the rights offering. This summary is based on current law, which is subject
to change at any time, possibly with retroactive effect. This summary is not a
complete discussion of all federal income tax consequences of the rights
offering, and, in particular, may not address federal income tax consequences
applicable to stockholders subject to special treatment under federal income tax
law. In addition, this summary does not address the tax consequences of the
rights offering under applicable state, local or foreign tax laws. This
discussion assumes that your shares of CHI stock and the subscription rights and
shares issued to you pursuant to the rights offering constitute capital assets.
Receipt and exercise of the subscription rights distributed pursuant to
the rights offering is intended to be nontaxable to stockholders, and the
following summary assumes you will qualify for such nontaxable treatment. We
have not sought, nor do we intend to seek, any ruling from the IRS or an opinion
of counsel related to the tax matters described below. This discussion is
included for your general information only. You should consult your tax advisor
to determine the tax consequences to you of the rights offering in light of your
particular circumstances, including any state, local and foreign tax
consequences.
TAXATION OF STOCKHOLDERS
GAIN OR LOSS
IT IS CHI'S INTENT THAT THE RIGHTS OFFERING WILL QUALIFY AS NONTAXABLE.
YOU SHOULD NOT RECOGNIZE ANY GAIN OR OTHER INCOME UPON RECEIPT OF A SUBSCRIPTION
RIGHT, ANY LOSS UPON THE EXPIRATION OF A SUBSCRIPTION RIGHT, OR ANY GAIN OR LOSS
ON THE EXERCISE OF A SUBSCRIPTION RIGHT.
If, contrary to CHI's intent, the rights offering does not qualify as
nontaxable, you would be treated as receiving a taxable distribution equal to
the fair market value of the subscription rights on their distribution date. The
distribution would be taxed as a dividend to the extent made out of our current
or accumulated earnings and profits; and any excess would be treated first as a
return of your basis (investment) in your CHI stock and then as a capital gain.
Expiration of the subscription rights would result in a capital loss. You
generally will not recognize gain or loss on the exercise of a subscription
right.
TAX BASIS
YOUR TAX BASIS FOR ALL SHARES YOU PURCHASE IN THE RIGHTS OFFERING AND
THE COMMUNITY OFFERING WILL DEPEND ON WHETHER YOU EXERCISE THE SUBSCRIPTION
RIGHT OR ALLOW THE SUBSCRIPTION RIGHT TO EXPIRE.
If you exercise a subscription right and if, as CHI intends, the fair
market value of your subscription rights is determined to be less than 15% of
the fair market value of your existing shares of CHI stock, then the tax basis
of each subscription right will be deemed to be zero, unless you elect, by
attaching an election statement to your federal income tax return for 1999, to
allocate tax basis to your subscription rights.
If you exercise a subscription right and if the fair market value of
your subscription rights is determined, contrary to CHI's intent, to be greater
than 15% of the fair market value of your existing shares of CHI stock, or if
you otherwise elect to do so, your tax basis in the subscription right will be
determined by allocating the tax basis of your CHI stock on which the
subscription right is distributed between the CHI stock and the subscription
right, in proportion to their relative fair market values on the date of
distribution of the subscription right.
If you allow a subscription right to expire, it will be treated as
having no tax basis.
If, contrary to CHI's intent, the rights offering does not qualify as
nontaxable, then you would have a tax basis in the rights equal to the fair
market value of the rights on the date of the rights distribution. The tax basis
of
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any share of common stock that you purchase through the rights offering will be
equal to the sum of your tax basis, if any, in the subscription right exercised
and the price paid for the share.
HOLDING PERIOD
YOUR HOLDING PERIOD FOR A SUBSCRIPTION RIGHT SHOULD INCLUDE YOUR
HOLDING PERIOD FOR THE SHARES OF COMMON STOCK UPON WHICH THE SUBSCRIPTION RIGHT
IS ISSUED, AND THE HOLDING PERIOD OF THE SHARES OF COMMON STOCK PURCHASED
THROUGH THE RIGHTS OFFERING SHOULD BEGIN ON THE DATE THAT YOU EXERCISE YOUR
SUBSCRIPTION RIGHTS.
If, contrary to CHI's intent, the rights offering does not qualify as
nontaxable, then your holding period in the rights would begin on the date of
distribution of the rights, and the holding period of the shares of common stock
purchased through the rights offering would begin on the date that you exercise
your subscription rights.
PLAN OF DISTRIBUTION
On or about October 15, 1999, we will commence the rights offering by
distributing the subscription rights and copies of this prospectus, together
with a copy of subscription agreements, to individuals who owned shares of our
common stock on September 30, 1999. If you wish to exercise your subscription
rights and purchase shares of common stock, you should complete the subscription
agreement and return it, with payment for the shares, to us. If you have any
questions, you should contact: Stephen J. Kovatch, at (419) 885-7379 or (800)
366-5580. See "The Offering - Subscription Procedures."
At the same time, we will commence the community offering by
distributing copies of this prospectus and the community offering subscription
agreements to interested investors who are not already our stockholders. Persons
who wish to purchase stock in the community offering must complete the
subscription agreement and return it, with the required payment for the shares,
to us. See "The Offering - Subscription Procedures."
We will hold all subscription agreements received in the offering and
will be responsible for processing refunds, in case of cancellation of the
offering, to stockholders. Our transfer agent, Registrar and Transfer Co., will
be responsible for delivering stock certificates at the conclusion of the
offering. We will pay all fees and expenses of our transfer agent in connection
with the offering. You are responsible for paying any other commissions, fees,
taxes or other expenses incurred in connection with the purchase of stock in
this offering.
LEGAL MATTERS
Werner & Blank Co., L.P.A., will deliver an opinion to us about the
validity of the issuance of shares of our common stock in this offering.
EXPERTS
The audited consolidated financial statements incorporated by reference
in this registration statement from our annual report on Form 10-K for the year
ended December 31, 1998 have been audited by Ernst & Young LLP and have been
included in reliance on their report given on their authority as experts in
accounting and auditing.
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- - WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION THAT DIFFERS
FROM THE INFORMATION IN THIS PROSPECTUS. IF YOU RECEIVE ANY DIFFERENT
INFORMATION, YOU SHOULD NOT RELY ON IT.
- - THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT CAPITAL HOLDINGS, INC. IS OPERATING UNDER THE SAME
CONDITIONS THAT IT WAS OPERATING UNDER WHEN THIS PROSPECTUS WAS WRITTEN.
DO NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT
AT ANY TIME PAST THE DATE INDICATED.
- - THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES.
- - THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, THE SECURITIES TO WHICH IT RELATES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the fees and expenses (all
but the SEC fees are estimates) in connection with the issuance and distribution
of the shares of common stock being registered hereunder. All such fees and
expenses shall be borne by Capital Holdings, Inc.
SEC Registration Fees $ 6,600
Blue Sky fees and expenses 5,000
Printing and engraving expenses 25,000
Transfer agent and registrar fee and expenses 5,000
Legal fees and expenses 75,000
Accounting fees and expenses 5,000
Miscellaneous 3,400
--------
Total $125,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1701.13(E) of the Ohio Revised Code provides that a corporation
may indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
other than an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful. Section 1701.13(E)(2) further specifies that a corporation may
indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor, by reason of the fact that he is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of (a) any claim, issue, or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless, and only to the extent, that the court of
common pleas or the court in which such action or suit was brought determines,
upon application, that, despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses as the court of common pleas or such other court
shall deem proper, and (b) any action or suit in which the only liability
asserted against a director is pursuant to Section 1701.95 of the Ohio Revised
Code concerning unlawful loans, dividends and distribution of assets.
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In addition, Section 1701.13(E) requires a corporation to pay any
expenses, including attorney's fees, of a director in defending an action, suit,
or proceeding referred to above as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, upon receipt of an undertaking
by or on behalf of the director in which he agrees to both (1) repay such amount
if it is proved by clear and convincing evidence that his action or failure to
act involved an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard for the best
interests of the corporation and (2) reasonably cooperate with the corporation
concerning the action, suit, or proceeding. The indemnification provided by
Section 1701.13(E) shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under the articles of
incorporation or code of regulations of Capital Holdings.
The code of regulations of Capital Holdings provides that Capital
Holdings shall indemnify each director and each officer of Capital Holdings, and
each person employed by Capital Holdings who serves at the written request of
the President of Capital Holdings as a director, trustee, officer, employee or
agent of another corporation, domestic or foreign, nonprofit or for profit, to
the full extent permitted by Ohio law. Capital Holdings may indemnify assistant
officers, employees and others by action of the Board of Directors to the extent
permitted by Ohio law.
Capital Holdings carries directors' and officers' liability insurance
coverage which insures its directors and officers and the directors and officers
of its subsidiaries in certain circumstances.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit Number Description
- -------------- -----------
3.1 Articles of Incorporation of Capital Holdings, Inc.*
3.1.1 Amendment to the Articles of Incorporation
3.2 Code of Regulations of Capital Holdings, Inc.*
5.1 Opinion of Werner & Blank Co., L.P.A.
23.1 Consent of Werner & Blank Co., L.P.A. (included in
Exhibit 5.1)
23.2 Consent of Ernst & Young, LLP
24.1 Power of Attorney (Reference is made to the signature page)
99.1 Letter of Transmittal
99.2 Subscription Agreement for Rights Offering
99.3 Subscription Agreement for Community Offering
- --------------------------------------------------------------------------------
* Incorporated by reference from Capital Holdings, Inc. Form S-1 (File No.
33-46573) Registration Statement, as amended.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of the securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price
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represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the registrant during the
subscription period and the terms of any subsequent reoffering thereof. If any
public offering by the registrant is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(e) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
22
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3, and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sylvania, State of Ohio, on October 4, 1999.
CAPITAL HOLDINGS, INC.
By: /s/ John S. Szuch
-----------------
John S. Szuch
Chairman and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ John S. Szuch October 4, 1999
- ----------------- Chairman of the Board of Directors, --------------------
John S. Szuch Chief Executive Officer and Director
(Principal Executive Officer)
/s/ David L. Mead October 4, 1999
- ---------------------- Senior Vice President and ---------------------
David L. Mead Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Robert A. Sullivan October 4, 1999
- ---------------------- President, Chief Operating Officer, ---------------------
Robert A. Sullivan Secretary and Director
/s/ Bruce K. Lee Executive Vice President and Director October 4, 1999
- ---------------- ---------------------
Bruce K. Lee
Directors*
George A. Isaac, III
W. Geoffrey Lyden, III
James D. Sayre
James M. Appold
David P. Bennett
Yale M. Feniger
Harley J. Kripke
Thomas W. Noe
Michael C. Landin
Ronald R. Langenderfer
Joel A. Levine
Noel S. Romanoff
Scott J. Savage
*for each of the above directors pursuant to power of attorney previously filed.
By: /s/ John S. Szuch October 4, 1999
------------------------------------ ---------------------------------
(pursuant to power of attorney) Date
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
3.1 Articles of Incorporation of Capital Holdings, Inc.*
3.1.1 Amendment to the Articles of Incorporation
3.2 Code of Regulations of Capital Holdings, Inc.*
5.1 Opinion of Werner & Blank Co., L.P.A.
23.1 Consent of Werner & Blank Co., L.P.A. (included in Exhibit 5.1)
23.2 Consent of Ernst & Young, LLP
24.1 Power of Attorney (Reference is made to the signature page)
99.1 Letter of Transmittal
99.2 Subscription Agreement for Rights Offering
99.3 Subscription Agreement for Community Offering
- --------------------------------------------------------------------------------
* Incorporated by reference from Capital Holdings, Inc. Form S-1 (File No.
33-46573) Registration Statement, as amended.
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