PLAINTIFFS SHAREHOLDERS CORPORATION NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT 11:00 AM ON FRIDAY, MARCH 28, 2014

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1 PLAINTIFFS SHAREHOLDERS CORPORATION NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT 11:00 AM ON FRIDAY, MARCH 28, 2014 AT THE OFFICES OF BAKER & HOSTETLER LLP 2300 SUNTRUST CENTER, 200 SOUTH ORANGE AVENUE ORLANDO, FLORIDA and NOTICE OF SETTLEMENT APPROVAL HEARING TO BE HELD AT 9:30 AM ON WEDNESDAY, MAY 14, 2014 IN COURTROOM 10B AT THE SAM GIBBONS U.S COURTHOUSE, 801 NORTH FLORIDA AVENUE TAMPA, FLORIDA YOU ARE RECEIVING THIS NOTICE BECAUSE YOU ARE A SHAREHOLDER OF PLAINTIFFS SHAREHOLDERS CORPORATION PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR PARTICIPATION IS NEEDED TO CONCLUDE PENDING LITIGATION. YOUR RIGHTS WILL BE AFFECTED BY THESE PROCEEDINGS. IT IS IMPORTANT THAT YOU TAKE ACTION BEFORE THE DEADLINES SET IN THIS NOTICE. THIS DOCUMENT SERVES THE FOLLOWING PURPOSES: (1) IT IS A PROXY STATEMENT FOR A SPECIAL MEETING OF STOCKHOLDERS OF PLAINTIFFS SHAREHOLDERS CORPORATION ( PSC ) TO BE HELD AT 11:00 AM ON FRIDAY, MARCH 28, 2014 ; (2) IT IS A NOTICE PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 23.1 ( FRCP 23.1 ) OF A PROPOSED SETTLEMENT OF A LAWSUIT AGAINST SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY ( SOUTHERN LIFE ) BY PSC and CERTAIN SHAREHOLDERS OF PSC (THE BADGER II LITIGATION ); AND (3) IT IS A NOTICE OF A HEARING TO BE HELD BEFORE JUDGE MARY S. SCRIVEN AT 9:30 AM ON WEDNESDAY, MAY 14, 2014, IN THE SAM GIBBONS U.S. COURTHOUSE, 801 NORTH FLORIDA AVENUE, TAMPA, FLORIDA 33602, COURTROOM 10B (THE HEARING ) AT WHICH APPROVAL OF THE PROPOSED SETTLEMENT WILL BE CONSIDERED.

2 The following deadlines relate to your actions in response to this Notice: March 27, 2014 March 28, 2014 at 11:00 am April 30, 2014 May 14, 2014 at 9:30 am If you choose to vote at the special meeting of stockholders by mail, your enclosed proxy card must be received by Baker & Hostetler (at the following address) on or before this date. BAKER & HOSTETLER LLP 200 S ORANGE AVE STE 2300 ORLANDO, FL If you choose to vote at the special meeting of stockholders in person, you must appear at this meeting. If you wish to object to the settlement of the lawsuit, your written objection must be received by Jerry R. Linscott, W. Wayne Drinkwater and the United States District Clerk for the Middle District of Florida on or before this date at the addresses listed on page 22 of this Notice. If you have submitted a timely written objection to the settlement of the lawsuit, and if you wish to participate in the settlement hearing, you must appear at the hearing set for this date. SUMMARY OF THE LITIGATION AND THE SETTLEMENT PSC is a Florida corporation that was formed on April 26, 1995 to own and administer a convertible debenture (the Debenture ) issued by Florida Farm Bureau Holding Corporation ( Florida Holding ) pursuant to a Stipulation of Settlement and Agreement approved in a Final Order and Judgment dated November 19, 1987, (the 1987 Settlement ) in a class action lawsuit captioned Winchester, et al v. Florida Farm Bureau Equities, Inc., et al, Case Number GCA MMP, in the United States District Court for the Northern District of Florida, Gainesville Division (the Winchester Litigation ). PSC issued shares of its common stock to the members of the Winchester Litigation plaintiff class or their heirs, administrators, executors, successors or assigns (the Class Members ), in proportion to the interest of each class member in the Winchester Litigation

3 On October 15, 2004, PSC sold the Debenture to Southern Life for $4.4 million. In 2006 five shareholders of PSC (Eugene Badger, Sid Banack, John Love, Marvin Evans and John Willis (collectively the Derivative Plaintiffs )), made a demand on PSC that PSC bring an action against Southern Life for alleged acts and omissions by Southern Life in connection with its purchase of the Debenture. PSC declined to initiate the action and, as a consequence, the Derivative Plaintiffs, acting for and on behalf of PSC, brought a lawsuit against Southern Life in the United States District Court for the Middle District of Florida, Case Number 6:06-cv-637- ORL-28KRS (the Badger II Litigation or Badger II ). Southern Life has now offered to settle Badger II for a payment of $4,250,000 (the Settlement Fund ). PSC and the Derivative Plaintiffs have agreed to accept the Settlement Fund in exchange for full and complete releases of Southern Life, its related companies, shareholders, officers, directors, and others identified in the Settlement Agreement with Southern Life ( 2013 Settlement ). THIS NOTICE IS ONLY A SUMMARY OF THE 2013 SETTLEMENT. YOU SHOULD REVIEW THE ENTIRE 2013 SETTLEMENT AGREEMENT IN ORDER TO UNDERSTAND ITS TERMS. A copy of the 2013 Settlement Agreement is attached to this Notice as Exhibit A. The 2013 Settlement provides that it will not become final and effective unless it is approved by the holders of a majority of the common stock of PSC. Under Florida law, the holders of a majority of PSC s common stock must vote in favor of the Settlement because the claims being pursued by PSC in Badger II represent substantially all of PSC s assets. PSC has scheduled a special meeting of PSC stockholders for 11:00 a.m. on March 28, 2014, at the offices of Baker & Hostetler LLP, 2300 SunTrust Center, 200 South Orange Avenue, Orlando, Florida At this meeting, PSC s stockholders will consider whether to approve the 2013 Settlement

4 In addition, FRCP 23.1 requires that PSC s shareholders be notified of the 2013 Settlement and be given an opportunity to express any opposition to the 2013 Settlement. A Hearing will be held in Badger II for that purpose, among others, at 9:30 am on May 14, At that Hearing United States District Judge Mary Scriven will consider whether the 2013 Settlement is fair and reasonable in light of the interests of all the parties. If the 2013 Settlement is approved by PSC s shareholders and the district court, the $4,250,000 Settlement Fund will be distributed as follows: (i) $2,300,000 will be paid to the law firm Baker & Hostetler, counsel for the Derivative Plaintiffs and PSC in the litigation with Southern Life, for reimbursement of a portion of the costs and expenses incurred by Baker & Hostetler in connection with the litigation. (ii) $315, will be paid to certain of the Derivative Plaintiffs as reimbursement for legal fees and expenses they incurred in connection with prior litigation they brought on behalf of PSC against Southern Life in 2002 (the Badger I Litigation or Badger I ). Badger I was a significant factor in the offer made by Southern Life in 2004 to purchase the Debenture for $4.4 million. (iii) The remaining $1,634, of the Settlement will be subject to federal and state tax on the gain realized from the 2013 Settlement. After subtracting those tax obligations, the remainder of the Settlement Fund will be distributed to PSC shareholders in accordance with their respective share holdings in PSC. PSC s board of directors recommends that PSC s shareholders approve the 2013 Settlement and that PSC be dissolved upon the completion of the 2013 Settlement and the distribution of the proceeds of the Settlement as described in this Proxy Statement and Notice

5 Your vote is important. The 2013 Settlement will not be consummated unless the holders of a majority of the issued and outstanding shares of common stock of PSC vote in favor of approval of the Settlement. You can vote by mail by completing, signing and mailing the proxy card included with this Proxy Statement in the postage-paid envelope included with this Proxy Statement. Your proxy must be received by March 27, 2014, at the offices of Baker & Hostetler LLP, to be counted. You can also vote by attending the stockholder meeting on March 28, 2014 at the time and place described above. HISTORY OF LITIGATION RELEVANT TO THE 2013 SETTLEMENT THE FOLLOWING DESCRIPTION OF THIS ACTION AND THE SETTLEMENT HAS BEEN PREPARED BY COUNSEL FOR PSC AND THE DERIVATIVE PLAINTIFFS AND IS ONLY A SUMMARY OF EVENTS AND LEGAL PROCEEDINGS THAT OCCURRED OVER MANY YEARS. THIS NOTICE IS NOT AN EXPRESSION BY THE COURT, AND DOES NOT CONSTITUTE JUDICIAL FINDINGS OF FACT OR CONCLUSIONS OF LAW. FURTHER INFORMATION REGARDING THE PROCEEDINGS MAY BE FOUND THROUGH THE CLERK S OFFICE IN THE MIDDLE DISTRICT OF FLORIDA SAM GIBBONS U.S. COURTHOUSE, 801 NORTH FLORIDA AVENUE, TAMPA, FLORIDA The Winchester Litigation and the 1987 Settlement Southern Life is a life insurance company owned in equal parts by ten investment corporations, each of which is located in one of ten southeastern states. The Florida investment corporation is Florida Farm Bureau Holding Corporation ( Florida Holding ). The common stock of each investment corporation is owned by the State Farm Bureau Federation of the state in

6 which the investment corporation is located. The ten investment corporations and their State Farm Bureau owners entered into an agreement known as the Charter Treaty on various dates from 1947 to Among other things, the Charter Treaty (1) prevents each investment corporation from retaining more than $5,700 annually in dividends paid by Southern Life; (2) restricts the investment companies from transferring their Southern Life stock and the State Farm Bureaus from transferring their investment corporation stock; and (3) requires the unanimous approval of the investment corporations and State Farm Bureaus to amend the Charter Treaty, including extending the Treaty beyond its expected 2033 termination date. In 1984, Southern Life acquired the Florida life insurance business from Florida Farm Bureau Equities, Inc. As part of the acquisition, Florida Holding became a 10% shareholder of Southern Life. The majority of Florida Equities stock was then owned by Florida Farm Bureau Federation. Shortly thereafter, several individual shareholders of Florida Equities including Bill Winchester filed a class action against Southern Life, claiming that the class members, who were minority shareholders of Florida Equities, had received inadequate compensation in the transaction. That lawsuit, known as the Winchester Litigation, was settled in In the settlement, the plaintiffs class members received $2 million and the Debenture issued by Florida Holding. The Debenture entitled the plaintiffs class to 27.7% of any dividends that Florida Holding received from Southern Life and, upon termination of the Charter Treaty, to 27.7% of the stock of Florida Holding. In 1995, PSC was formed to hold the debenture. The stock of PSC was issued to the class members in the Winchester Litigation in proportion to the percentage of stock each class member had held in Florida Equities at the time that Southern purchased Florida Equities life insurance business

7 2. The Badger Litigation In part because of the restrictions imposed by the Charter Treaty, Southern Life paid no more than $57,000 in dividends annually ($5,700 to each of the 10 investment companies). In 2002, four PSC shareholders, Eugene Badger, Sid Banack, Sam Love and Marvin Evans, made a demand on PSC to bring legal action to force Southern Life to increase its dividends. Increased dividends would require Florida Holding to pay a larger dividend to PSC. PSC did not initiate action against Southern Life based on this demand. As a result, the four shareholders listed above commenced an action on behalf of PSC requesting that Southern Life be required to increase its dividends, and that the Charter Treaty be terminated so that the investment corporations could retain any increased dividends. This was the Badger I Litigation. In August of 2004, while Badger I was ongoing, Southern Life offered to purchase the Debenture from PSC. The offer was made in part to obtain the approval of Florida Farm Bureau Federation and Florida Holding of a proposal to extend the termination date of the Charter Treaty. Southern Life s offer to purchase the Debenture was also based in part on a desire to end Badger I, which a purchase of the Debenture would accomplish. The purchase offer also was motivated by Southern Life s desire to ensure that Southern Life was controlled by Farm Bureau entities. On October 15, 2004, after the holders of a majority of the stock of PSC approved the sale of the Debenture to Southern Life, Southern Life bought the Debenture for $4.4 million. In 2006, certain shareholders of PSC, Eugene Badger, Sid Banack, John Love (whose father, Sam, had died prior to the purchase of the Debenture by Southern Life in 2004), Marvin Evans and John Willis, made a demand on PSC s board of directors to file suit against Southern Life for alleged misrepresentations and statements that were allegedly misleading by omission in connection with Southern Life s purchase of the Debenture from PSC. PSC s board of

8 directors did not initiate the requested litigation. As a result, those shareholders (the Derivative Plaintiffs ) brought suit in the United States District Court for the Middle District of Florida against Southern Life, alleging (1) that Southern Life made misrepresentations and statements that were misleading by omission in connection with its purchase of the Debenture; (2) that Southern Life engaged in common law fraud in connection with its purchase of the Debenture; and (3) that Southern Life had a special relationship with PSC that required it to disclose to PSC and its shareholders all facts relevant to a determination of the value of the Debenture. This suit is Badger II. The Derivative Plaintiffs retained the law firm Baker & Hostetler, LLP ( B&H ) to represent them in both Badger I and Badger II. In Badger I, the Derivative Plaintiffs hired B&H on an hourly basis and agreed to pay all of the costs of that Litigation. Badger I was dismissed after Southern Life purchased the Debenture because the relief sought in that litigation to force Southern to pay additional dividends would not have resulted in additional dividend payments to PSC, as PSC no longer owned the Debenture that would have entitled PSC to dividend payments. In 2009 Badger II went to trial. At the conclusion of the trial the jury returned a verdict in favor of the Derivative Plaintiffs, for the benefit of PSC, in the amount of $31.7 million. Several months later the presiding judge in Badger II entered an order awarding prejudgment interest on the judgment. This additional award increased the final judgment to $45,409,575. The fee agreement that the Derivative Plaintiffs had with B&H for Badger II was a contingent fee, pursuant to which B&H would receive a fee equal to 25% of the recovery if the case was settled before trial, 33 1/3% of the recovery if the case went to trial, and 40% of the recovery if the case was appealed after trial. B&H agreed to pay the costs and expenses of Badger II with reimbursement of those costs being made from any recovery. Under the agreement, costs were to be deducted from the amount recovered before B&H s percentage fee was calculated

9 Southern Life appealed the judgment against it in Badger II to the United States Court of Appeals for the Eleventh Circuit. One of the instructions given to the jury at the trial of Badger II had instructed the jury that Southern Life had a duty to disclose certain material facts to PSC s shareholders in connection with the purchase of the Debenture. On appeal, the Eleventh Circuit held that Southern Life had no such duty of disclosure to PSC s shareholders under the circumstances of the case. The Eleventh Circuit also found that PSC had full knowledge of several of the alleged omissions of fact about which it had complained, and could not base a claim on the omission of information that it already knew. Finally, the Eleventh Circuit found that the verdict form submitted to the jury in Badger II did not conform to controlling law. Accordingly, the Eleventh Circuit reversed the judgment of the district court and sent the case back to the Middle District of Florida for further proceedings. Thereafter, Southern Life sought an award of costs in the amount of $152, for the expenses Southern Life incurred in its successful appeal of the jury verdict in Badger II. 3. PSC Initiates an Arbitration Proceeding Against Southern Life When Southern Life and PSC agreed to a sale of the Debenture in 2004, they entered into a written Asset Purchase Agreement ( APA ) with respect to that transaction. In the APA Southern Life agreed that it would not make any statement to PSC in connection with its purchase of the Debenture that contains an untrue statement of material fact or that omits to state a material fact necessary to make any statements by it not misleading. In connection with Southern Life s offer to purchase the Debenture it presented to PSC a valuation created at Southern Life s request by the Tillinghast division of Towers, Perrin, Forster & Crosby, Inc. (the Tillinghast Report ). Using discount rates ranging from 12% to 16%, the Tillinghast Report estimated the value of the Debenture as ranging between $2.0 and $5.6 million, with $3.3 million stated as the value based on an assumed discount rate of 14%. PSC retained an

10 actuarial consultant to review the Tillinghast Report. That consultant determined that the discount rates used in the Tillinghast report should be modified slightly. Using the PSC consultant s modified discount rates resulted in a valuation range of the Debenture from $4.3 million to $4.9 million. PSC used the information received from its consultant to negotiate the price for the sale of the Debenture to Southern Life at $4.4 million, which was the amount Southern Life paid for the Debenture. After the jury verdict in Badger II, PSC retained B&H to bring an arbitration proceeding (the Arbitration ) against Southern Life. In the Arbitration, PSC claimed that Southern Life had omitted information about the value of the Debenture from the disclosures it made to PSC in connection with the Debenture sale. The APA required any claims for breach of that contract to be filed in an arbitration proceeding under the rules of the American Arbitration Association. The Derivative Plaintiffs did not include the breach of contract claim in Badger II because including those claims would have required the lawsuit to be pursued in arbitration. In the Arbitration, PSC alleged that the following were omitted from the information given to it by Southern Life: First, that contemporaneously with the negotiations to purchase the Debenture from PSC, Southern Life was negotiating with the Alabama Farmers Federation to resolve a contractual undertaking between those companies. PSC claimed that in those negotiations, Southern Life used a discount rate of 4.9% rather than the 14% discount rate used in the Tillinghast Report. Under PSC s theory, had a 4.9% discount rate been applied in the Tillinghast Report, the Debenture would have been valued at more than $37 million. PSC claimed that Southern Life s failure to reveal its use of a 4.9% discount rate in its discussions with the Alabama Farmers Federation was misleading

11 Second, that Southern Life was interested in extending the Charter Treaty, and that it wished to purchase the Debenture in part because the Charter Treaty could not be extended unless Southern Life purchased the Debenture. During the time that Southern Life was discussing the purchase of the Debenture from PSC, Southern Life was also having discussions with the Texas Farm Bureau Federation regarding the Texas Federation s willingness to permit an extension of the Charter Treaty. PSC claimed that the Texas Federation would agree to a Charter Treaty Extension only if Southern Life paid its shareholders increased royalty payments totaling as much as $82 million over a period of 30 years. PSC claimed that Southern Life failed to disclose the potential $82 million royalty payments to it and that this alleged failure was misleading. Third, that Southern Life failed to disclose to PSC the reasons it wanted to purchase the Debenture, and the business importance of the Debenture purchase to Southern Life. After hearing testimony and other evidence for six days, and after consideration of legal briefs submitted by the parties, the three arbitrators appointed to conduct the Arbitration entered an award on August 27, 2013, in favor of Southern Life and against PSC. The arbitrators written arbitration award made the following findings and conclusions, among others: Neither the Tillinghast Report nor oral statements made by Southern Life in connection with the purchase of the Debenture were false or misleading. Southern Life owed PSC no duty to disclose material facts concerning the purchase or value of the Debenture. The omissions about which PSC complained were not material to the Tillinghast Report

12 The Tillinghast Report did not value the Debenture based on its strategic value to Southern Life, but rather on its intrinsic characteristics. The fact that Southern Life was a willing buyer of the Debenture did not change or eliminate the intrinsic characteristics of the Debenture. The alleged omissions from the Tillinghast Report the 4.9% discount rate used by Southern Life in its negotiations with the Alabama Federation; the apparent refusal of the Texas Federation to agree to the Charter Treaty extension unless Southern Life agreed to $82 million in additional royalty payments; and Southern Life s desire to extend the Charter Treaty were not material to the valuation because the Tillinghast Report did not consider Southern Life s motivation as affecting the Debenture s value. PSC s claim that extension of the Charter Treaty in 2004 was essential to the success of Southern Life was not supported by the evidence, which showed that Southern Life had ample time to extend the Charter Treaty before its expected expiration in After the Arbitration award was issued, Southern Life filed a motion in Badger II requesting the district court to enter an order confirming the award. A district court may deny confirmation only if an arbitration award is made in violation of the Federal Arbitration Act. An incorrect finding of fact or conclusion of law by an arbitration panel is not grounds for a district court to deny a request to confirm an arbitration award. PSC filed a response to Southern Life s motion to confirm the arbitration award and also filed a motion to vacate the arbitration award in which it argues (1) that the arbitration panel decided an issue not presented to it that PSC s shareholders had no standing to assert claims that Southern Life breached its contract with PSC; and (2) failed to decide an issue that was presented to it that Southern Life breached the APA by providing the Tillinghast Report

13 to the PSC shareholders without informing those shareholders of the circumstances of the agreements that Southern Life had reached with Alabama and Texas. PSC grounds its motion to vacate the arbitration award on Section 10 of the Federal Arbitration Act, which allows vacation of an arbitration award where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. PSC s counsel in Badger II and the Arbitration has advised PSC s board that, given the strong presumption in federal courts in favor of confirming arbitration awards as well as the arguments raised in Southern Life s response to PSC s motion to vacate, PSC s challenge to the confirmation of the arbitration award likely has less than a 10% possibility of being successful. 4. The Status of the Badger II Litigation After Remand to the Trial Court After reversal of the Badger II judgment and remand of the Badger II Litigation to the district court, PSC filed a second amended complaint in the district court realigning the parties so that PSC is the primary party seeking relief in this litigation. As a result, since 2011 PSC has been the lead plaintiff in Badger II. The Derivative Plaintiffs have remained in Badger II as nominal parties. On January 3, 2013 the trial judge in Badger II, Judge Mary S. Scriven, entered an order scheduling the retrial of that case for a trial term commencing on September 30, However, on August 9, 2013, Judge Scriven, in response to a motion to continue the trial filed by Southern Life, entered an order cancelling the September 2013 trial and in so doing noted Southern Life s assertion that the arbitration award, that had not then been issued, may create important and perhaps dispositive collateral estoppel effects on Badger II

14 The claims that PSC allege as a basis for recovery in Badger II are (i) that Southern Life, in violation of Rule 10b-5 adopted by the U.S. Securities and Exchange Commission, omitted material information about the value of the Debenture by giving the Tillinghast Report to PSC without disclosing the Alabama and Texas issues discussed above (the Omissions ), (ii) that Southern Life engaged in fraud under Florida common law based on those same omissions ( Common Law Fraud Claims ), and (iii) that Southern Life had a special relationship with PSC because, as Southern Life knew, Southern Life had an informational advantage over PSC concerning the value of the Debenture which special relationship imposed a duty on Southern Life to disclose to PSC all information relating to the value of the Debenture ( Special Relationship Claim ). As a result of that special relationship, PSC contends, Southern Life had a duty to inform PSC about all material information affecting the value of the Debenture. This information would include the information about the Texas and Alabama transactions, and that the purchase of the Debenture was essential to an extension of the Charter Treaty which extension was essential to Southern Life s financial success. Controlling federal law provides that a party is prohibited from relitigating any issue that (1) is identical to one involved in a prior judicial or arbitral proceeding, (2) was actually litigated in that prior proceeding, (3) was a critical and necessary part of the ruling in the prior proceeding, and (4) has been decided where the party against whom the relitigation of issues is asserted had a full and fair opportunity to litigate those issues in the prior proceeding. This rule against relitigating issues previously decided applies even if the decision in a prior arbitration proceeding is based on an incorrect view of the facts and applicable law. PSC s board of directors has been advised by their legal counsel that the prohibition against relitigation of previously decided issues likely would prevent PSC from pursuing the Omission Claim and the Common Law Fraud Claim (summarized in items (i) and (ii) of the previous paragraph). This is

15 so because those claims depend upon issues that were litigated and decided against PSC in the Arbitration and therefore cannot be relitigated in Badger II. The Special Relationship Claim (outlined in (iii) of the second paragraph above) was not tried in the Arbitration, and thus PSC would likely not be prevented from presenting that legal claim in the Badger II Litigation. However, counsel for PSC has advised that prior testimony of witnesses in the first trial in Badger II and/or the Arbitration makes it highly unlikely that PSC can prevail on that claim in Badger II. Legal counsel for PSC has indicated to PSC s board of directors that, while it is difficult to estimate the likelihood of winning or losing a legal issue in percentage terms, counsel believes that the possibility for PSC to prevail and replicate the result achieved in the first trial of Badger II is less than 10%. SOUTHERN LIFE S OFFER TO SETTLE WITH PSC On September 25, 2013, Wayne Drinkwater, counsel for Southern Life contacted Jerry Linscott, counsel for PSC, and advised that, in spite of the ruling in Southern Life s favor by the Arbitration panel, Southern Life wished to explore the possibility of a settlement that would resolve all legal issues between the parties. Southern Life s initial offer of such a global settlement was $2,200,000. Over the next four weeks numerous offers and counteroffers were exchanged between the parties until, on October 23, 2013, the parties reached preliminary agreement to settle all claims and issues for a payment of $4,250,000, together with a release by Southern Life of its claim for $152, in taxable costs Southern Life incurred in its successful appeal of the Badger II jury verdict. This Agreement was subject to execution of a definitive settlement agreement by Southern Life, PSC, and the Derivative Plaintiffs, and approval of the settlement by the holders of the majority of the common stock of PSC and the district court

16 On October 23, 2013 Mr. Linscott, with the agreement of Mr. Drinkwater, sent a letter to Judge Scriven advising her that Southern Life and PSC had reached preliminary agreement to settle all issues among them and requested that the court not issue rulings on the matters that were pending before her while the parties were taking necessary steps to obtain final approval for completion of the settlement. On October 25, Judge Scriven entered an order directing that the Clerk terminate any pending motions in the case. On December 20, 2013 PSC, Southern Life, PSC and the Derivative Plaintiffs signed the Settlement Agreement, which is conditioned on, among other requirements, approval by the court in Badger II of the form of notice to be sent to PSC s shareholders seeking their approval of the 2013 Settlement, the vote of the holders of a majority of PSC s outstanding common stock in favor of the disposition of PSC s causes of action in Badger II and the Arbitration in the manner provided in the Settlement Agreement, and final approval of the terms of the Settlement by the court in Badger II. See Exhibit A hereto. As described more fully in the 2013 Settlement, Southern Life, PSC, and the Derivative Plaintiffs intend by the 2013 Settlement to resolve all differences and disagreements that could or do exist among them arising out of or related to the APA, the Debenture Transaction, all of the litigation described above, including the Badger I and Badger II cases, the State Court Actions, and the Arbitration; to dismiss with prejudice all such proceedings that are still pending; to release all other claims relating to Florida Holding, Florida Farm Bureau Federation, PSC, the business or financial operations of Southern Life; and to resolve and release all claims of any kind relating to all other transactions, events, conduct or circumstances that may have occurred or existed prior to the date of the final execution of the 2013 Settlement. Included in the claims released are any claims arising out of or related to all payments, whether for dividends or any other purposes, including licenses, sponsorships, or other non-monetary support, made or to be made by Southern Life to the Florida Farm Bureau Federation; Florida Holding; the Farm

17 Bureau Federations of Arkansas, Mississippi, Louisiana, South Carolina, Kentucky, Virginia, and North Carolina; and/or the Georgia Farm Bureau Federation Holding Company, whether such payments may have occurred prior to the date of this Settlement Agreement or may occur hereafter. ALLOCATION OF THE SETTLEMENT PROCEEDS follows: As described more fully below, the Settlement Fund of $4,250,000 will be distributed as (i) $2,300,000 of the settlement proceeds will be paid to the law firm Baker & Hostetler, counsel for both the Derivative Plaintiffs and PSC in the litigation with Southern Life, for reimbursement of a portion of the costs and expenses incurred by it in connection with the litigation; and (ii) $315, will be paid to certain of the Derivative Plaintiffs as a reimbursement of legal fees incurred by them in connection with litigation commenced by them on behalf of PSC against Southern Life in Badger I. Badger I was a significant factor in the offer made by Southern Life in 2004 to purchase the Debenture from PSC for $4.4 million; and (iii) The remaining $1,634, will be subject to federal and state tax on the gain realized from the settlement. After subtracting those tax obligations, the remainder will be distributed to PSC shareholders in accordance with their respective share holdings in PSC. NEITHER THE COURT NOR THE PARTIES INVOLVED IN THIS CASE (INCLUDING THEIR COUNSEL) CAN ADVISE YOU ABOUT WHAT, IF ANY, TAX CONSEQUENCES MIGHT ARISE FOR YOU FROM THE SETTLEMENT. YOU ARE ENCOURAGED TO CONSULT

18 WITH YOUR OWN TAX ADVISOR TO DETERMINE WHETHER ANY POTENTIAL FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES COULD ARISE FROM YOUR RECEIPT OF YOUR INDIVIDUAL SHARE OF THE SETTLEMENT FUND. When Badger II was filed in 2006, the plaintiffs in that action were the Derivative Plaintiffs and B&H was their lawyer. B&H entered into a contingent fee contract with the Derivative Plaintiffs which provided that B&H would advance all of the costs and expenses to prosecute that lawsuit and, in return, the Derivative Plaintiffs would repay those expenses to B&H out of any recovery received by PSC in that litigation, and also would pay a contingent fee out of any recovery from 25% to 40% dependent upon whether the recovery occurred prior to trial, after trial or after appeal. The fee agreement provided that the percentage contingent fee would be based on the net recovery after repayment to B&H of the out-of-pocket expenses it had incurred in pursuing the litigation. In 2009, after the first trial in Badger II, PSC retained B&H to prosecute the Arbitration against Southern Life. The statute of limitations on the contract claim would have expired on October 15, 2009 had PSC not initiated the Arbitration prior to that date. PSC entered into a fee agreement with B&H concerning the Arbitration that mirrored the fee agreement with respect to the Badger II Litigation. B&H incurred out of pocket expenses in connection with Badger II and the Arbitration of $2,583, Included in these expenses were payments to experts who were retained to testify in Badger II and the Arbitration of $1,964, Other out of pocket expenses incurred by B&H include fees to the arbitrators ($112,144.31), automated legal research ($107,678.24), and court reporter, deposition and transcript costs ($83,940.60), as well as other necessary expenses. A ledger sheet showing all of the categories of expense incurred by B&H and the amount incurred in each category can be found at

19 In addition to the out-of-pocket expenses paid by B&H, B&H lawyers and paralegals through November 11, 2013, have devoted 25,051 hours to the Badger II Litigation and the Arbitration. At the hourly rates charged by B&H for those lawyers and paralegals for noncontingent fee work at the time the services were rendered, those hours have a value of $8,393,988. Pursuant to the contingent fee contract entered into by PSC and the Derivative Plaintiffs, B&H is entitled to recover its out-of-pocket expenses from any monies received by PSC from Southern Life; B&H is also entitled to a contingent fee of 40% of the amount recovered in excess of those expenses. The amount of the Settlement Fund in excess of B&H s out-ofpocket expenses is $1,666, ($4,250,000 - $2,583, = $1,666,285.05). Applying the contingent fee percentage to that excess would result in an additional $666, to which B&H is contractually entitled, for a total contractual entitlement of $3,250, B&H has advised PSC that it will reduce to $2,300,000 the amount to which it is contractually entitled if the 2013 Settlement is approved. B&H s willingness to reduce by $950, the amount to which it is contractually entitled if the settlement is concluded is based on the low probability that continued prosecution of Badger II and challenge to confirmation of the Arbitration award will be successful. In the opinion of counsel for PSC and the Derivative Plaintiffs, continued litigation likely would produce no recovery. PSC finds this to be a reasonable reduction in B&H s contractual entitlement and does not object to the requested fee and cost distribution to B&H. The 2013 Settlement would not have been possible had the Derivative Plaintiffs not signed the Settlement Agreement. This is so because Southern Life would not have entered into the Settlement without the agreement of the Derivative Plaintiffs. Certain of the Derivative Plaintiffs, Eugene Badger, Sid Banack, John Love s father, Sam Love, and Marvin Evans,

20 engaged B&H to represent them in Badger I, which they pursued on behalf of PSC. The Derivative Plaintiffs in Badger I agreed to and did pay B&H for its handling of Badger I on a time and cost basis. The fees and costs paid by these Derivative Plaintiffs was $315, Certain of the Derivative Plaintiffs stated that they would not sign the Settlement Agreement unless they were repaid such fees and costs. After Southern Life purchased the Debenture from PSC, Badger I was dismissed. This was because PSC s sale of the Debenture eliminated the possibility that PSC could be the beneficiary of any payment of higher dividends by Southern Life because, after Southern Life purchased the Debenture, any increased dividends payable to the Debenture holder would go to Southern Life, not to PSC. In the Arbitration proceeding, officers of Southern Life testified that the pendency of Badger I was a motivating factor in the Debenture purchase. Following execution of the Settlement Agreement, Southern Life transmitted $4,250,000 to B&H, which is holding the money in escrow. Assuming that the Settlement Agreement is approved by the holders of a majority of the shares of common stock of PSC and that the Settlement Agreement s Rule 23.1 approval becomes final, PSC will have available net proceeds from the Settlement Fund of $1,634, after the payment of $2,300,000 to B&H and $315, to the Derivative Plaintiffs. PSC will be required to pay federal and state taxes on those net proceeds before distributing them to the PSC shareholders. It is anticipated that, if the Settlement is approved, after-tax net proceeds will be distributed to the PSC shareholders by September 11, REQUIREMENTS OF FEDERAL RULE OF CIVIL PROCEDURE 23.1 Federal Rule of Civil Procedure 23.1 permits shareholders to bring a derivative action to enforce a right that the corporation could have asserted but has failed to enforce. Before shareholders can bring an action on behalf of the corporation, they must first make a demand

21 on the corporation s board of directors to initiate the desired action. The shareholders can bring the action derivatively only if the corporation s board of directors fails or refuses to bring the action. Badger II was filed as a derivative action against Southern Life pursuant to the provisions of Rule 23.1 by the Derivative Plaintiffs. The Rule provides that a derivative action may be settled, voluntarily dismissed or compromised only with the court s approval and also requires that notice be given to the shareholders in the manner ordered by the court. In October of 2010, after the United States Court of Appeals for the Eleventh Circuit reversed the verdict in favor of PSC, the Derivative Plaintiffs and PSC jointly moved the district court to realign PSC as the plaintiff in Badger II and permit the continued participation of the Derivative Plaintiffs as nominal plaintiffs. On February 3, 2011, Judge Scriven allowed the realignment of PSC as the Plaintiff in Badger II and permitted the Derivative Plaintiffs to be nominal plaintiffs in that action. Although the Derivative Plaintiffs are no longer the lead plaintiffs in Badger II, Southern Life has conditioned its willingness to proceed with the settlement on adherence to the requirements of Rule 23.1, thus requiring that notice of the Settlement be given to PSC s shareholders, which includes notice of a hearing before Judge Scriven at which she will consider if the Settlement Agreement is fair and reasonable in light of the circumstances and the interests of all of the parties. The hearing on the joint motion of Southern Life and PSC to approve the Settlement will be held at 9:30 am on May 14, 2014, at the Sam Gibbons U.S Courthouse, 801 North Florida Avenue, Tampa, Florida in Courtroom 10B

22 Any PSC shareholder who objects to any aspect of the 2013 Settlement may appear in person or by his attorney at the Settlement Hearing and present any evidence or argument that may be proper and relevant; provided, however, that no person other than PSC, the Derivative Plaintiffs, and Southern Life and their counsel shall be heard, and no papers, briefs, pleadings or other documents submitted by any such person shall be received and considered by the Court (unless the Court in its discretion shall thereafter otherwise direct, upon application of such person and for good cause shown), unless no later than ten (10) business days prior to the Settlement Hearing directed herein, (i) written notice of the intention to appear; (ii) a detailed statement of such person s objections to any matter before the Court; and (iii) the grounds therefor or the reasons why such person desires to appear and to be heard, as well as all documents and writings which such person desires the Court to consider, shall be filed by such person with the United States District Court Clerk for the Middle District of Florida, Sam Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, FL and, on or before such filing, shall be served by hand or on both the following counsel of record: Jerry R. Linscott Baker & Hostetler LLP 200 South Orange Avenue, Suite 2300 Orlando, FL JLinscott@bakerlaw.com W. Wayne Drinkwater Bradley Arant Boult Cummings LLP One Jackson Place 188 E. Capitol Street, Suite 400 Jackson, MS wdrinkwater@babc.com ANY PERSON WHO FAILS TO OBJECT IN THE MANNER AND BY THE TIME PRESCRIBED ABOVE SHALL BE DEEMED TO HAVE WAIVED SUCH OBJECTION AND SHALL BE FOREVER BARRED FROM RAISING SUCH OBJECTION HERE OR IN ANY OTHER ACTION OR PROCEEDING

23 APPRAISAL RIGHTS If approved, the Settlement will dispose of all or substantially all of the assets of PSC, which consist of the claims asserted in Badger II and the Arbitration. Florida Statute provides that when a corporation disposes of all, or substantially all, of its property the transaction must be approved by the majority of votes entitled to be cast on the transaction. That section also requires that the notice sent to the shareholders must contain a clear and concise statement that, if the transaction is approved, shareholders dissenting therefrom are or may be entitled to a valuation of their shares in an appraisal process as provided for in Florida Statute and that a copy of those Florida Statutes must accompany the notice. Consistent with that requirement, a copy of those statutory provisions are attached as Exhibit B. Florida Statute provides that appraisal rights are not available if the disposition of all, or substantially all, of the company s property is pursuant to court order or for cash pursuant to a plan by which all or substantially all of the net proceeds of the disposition will be distributed to the shareholders within one year of the date of the disposition. Because (i) the disposition and dismissal of the causes of action represented by the Arbitration and Badger II, and which causes of action represent all or substantially all of PSC s assets, will be made only after the judge in Badger II enters an order approving the Settlement, and (ii) the board of directors have adopted a plan to distribute the net proceeds of the Settlement to the PSC shareholders within one year of the effective date of the Settlement, the board of directors of PSC has concluded that PSC shareholders are not entitled to the appraisal rights provided for in Florida PLAN OF DISTRIBUTION OF NET PROCEEDS OF THE SETTLEMENT AND DISSOLUTION OF PSC The action of PSC s board of directors to recommend to PSC s shareholders that the causes of action being pursued in the Arbitration and Badger II be disposed of under the terms

24 of and for the consideration set forth in the Settlement Agreement includes a resolution by the board of directors to adopt a plan to distribute the net proceeds received under the Settlement Agreement to PSC s shareholders not later than one year from the date that PSC receives the cash proceeds from Southern Life under the terms of the Settlement Agreement. That board action also proposes and recommends that after the proceeds received from the Settlement Agreement have been fully and finally distributed to PSC s shareholders that PSC be dissolved. The action that is being submitted to PSC s shareholders for vote combines, in one proposal, the board s recommendation that the shareholders approve (i) the disposition of all or substantially all of PSC s assets as provided in the Settlement Agreement; (ii) the proposal to distribute the net proceeds to be received under the Settlement Agreement to PSC s shareholders within one year after PSC receives those funds; and (iii) the proposal to dissolve PSC s corporate existence after the net proceeds from the Settlement have been fully distributed to PSC s shareholders. The proposal will approve all three described actions if the holders of a majority of PSC s common stock vote in favor of the recommendation. WHERE YOU CAN FIND MORE INFORMATION This Notice does not purport to be a comprehensive description of Badger II or the Arbitration, the allegations or transactions related thereto, the terms of the 2013 Settlement or the Settlement Hearing. PSC has created a website, and has posted on that website a copy of the Settlement Agreement, the Arbitration award, and a summary accounting of the $2,583, of out-of-pocket expenses incurred and paid by B&H in connection with the Arbitration and Badger II. Further information about the Badger II litigation can be found through the clerk s office in the Middle District of Florida at the Sam Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, Florida or by contacting counsel for PSC, Jerry Linscott

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59 Appraisal rights; definitions. The following definitions apply to ss : (1) Affiliate means a person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another person or is a senior executive thereof. For purposes of s (2)(d), a person is deemed to be an affiliate of its senior executives. (2) Beneficial shareholder means a person who is the beneficial owner of shares held in a voting trust or by a nominee on the beneficial owner s behalf. (3) Corporation means the issuer of the shares held by a shareholder demanding appraisal and, for matters covered in ss , includes the surviving entity in a merger. (4) Fair value means the value of the corporation s shares determined: (a) (b) (c) Immediately before the effectuation of the corporate action to which the shareholder objects. Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable to the corporation and its remaining shareholders. For a corporation with 10 or fewer shareholders, without discounting for lack of marketability or minority status. (5) Interest means interest from the effective date of the corporate action until the date of payment, at the rate of interest on judgments in this state on the effective date of the corporate action. (6) Preferred shares means a class or series of shares the holders of which have preference over any other class or series with respect to distributions. (7) Record shareholder means the person in whose name shares are registered in the records of the corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the corporation. (8) Senior executive means the chief executive officer, chief operating officer, chief financial officer, or anyone in charge of a principal business unit or function. (9) Shareholder means both a record shareholder and a beneficial shareholder. History. s. 118, ch ; s. 21, ch ; s. 2, ch Right of shareholders to appraisal. (1) A shareholder of a domestic corporation is entitled to appraisal rights, and to obtain payment of the fair value of that shareholder s shares, in the event of any of the following corporate actions: (a) Consummation of a conversion of such corporation pursuant to s if shareholder approval is required for the conversion and the shareholder is entitled to vote on the conversion under ss and (6), or the consummation of a merger to which such corporation is a party if shareholder approval is required for the merger under s and the shareholder is entitled to vote on the merger or if such corporation is a subsidiary and the merger is governed by s ; (b) Consummation of a share exchange to which the corporation is a party as the corporation whose shares will be acquired if the shareholder is entitled to vote on the exchange, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not exchanged; (c) Consummation of a disposition of assets pursuant to s if the shareholder is entitled to vote on the disposition, including a sale in dissolution but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within 1 year after the date of sale; EXHIBIT B