<PAGE> 1
[/R]
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 1, 1996
[/R]
Registration No. 33-63275
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-4
AMENDMENT NO. 3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
CITIZENS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
COLORADO 6311 84-0755371
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
</TABLE>
400 EAST ANDERSON LANE
AUSTIN, TEXAS 78752
(512) 837-7100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------
HAROLD E. RILEY, CHAIRMAN OF THE BOARD
400 EAST ANDERSON LANE
AUSTIN, TEXAS 78752
(512) 837-7100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
COPIES TO:
REID A. GODBOLT, ESQ. FRANK G. NEWMAN
JONES & KELLER, P.C. NEWMAN & DAVENPORT, P.C.
1625 BROADWAY, SUITE 1600 2050 ALLIANZ FINANCIAL CENTRE LB135
DENVER, COLORADO 80202 2323 BRYAN STREET
(303) 573-1600 DALLAS, TEXAS 75201
(214) 754-0025
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Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this
Registration Statement
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
Title of each class of Proposed maximum Proposed Amount of
securities to be Amount to offering price maximum aggregate registration
registered be registered per share offering price fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, 171,391(1) $9.00(2) $1,542,519(2) $532
No Par Value shares
=================================================================================================================
</TABLE>
(1) Represents the maximum number of shares of the Registrant's Class A
Common Stock to be issued in connection with the Merger described
herein.
(2) Estimated pursuant to Rule 457(f)(1) and (2) solely for the purpose of
calculating the registration fee based on the market value of the
securities to be received by the Registrant as determined on October
4, 1995.
================================================================================
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 or until the Registration Statement shall become
effective on such date as the commission, acting pursuant to said Section 8(a),
may determine.
--------------
<PAGE> 2
CITIZENS, INC.
Cross-Reference Sheet
For
Registration Statement on Form S-4 and Prospectus-Proxy Statement
<TABLE>
<CAPTION>
Form S-4
Item No. Item Caption Heading in Prospectus
- --------- ------------ ---------------------
<S> <C> <C>
1 Forepart of Registration Statement Outside Front Cover
and Outside Front Cover Page of
Prospectus
2 Inside Front and Outside Back Cover Inside Front Cover
Pages of Prospectus
3 Risk Factors, Ratio of Earnings to Summary; Risk Factors; Proposed
Fixed Charges and Other Information Merger and Exchange
4 Terms of the Transaction Summary; Proposed Merger and Exchange; Information Concerning
Investors and Central; Comparison of Rights of
Securityholders
5 Pro Forma Financial Information Comparative Per Share Data; Selected Summary Financial
Information - Pro Forma Condensed Consolidated Financial
Statements
6 Material Contacts with the Company Summary; Proposed Merger and
Being Acquired Exchange - Background and Reasons for the Merger and Exchange
7 Additional Information Required for Not applicable
Reoffering by Persons and Parties
Deemed to be Underwriters
8 Interests of Named Experts and Not applicable
Counsel
9 Disclosure of Commission Position Not applicable
on Indemnification for Securities Act
Liabilities
10 Information with Respect to S-3 Incorporation of Certain Documents
Registrants by Reference; Risk Factors
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
11 Incorporation of Certain Information Incorporation of Certain Documents
by Reference by Reference
12 Information with Respect to S-2 or Not applicable
and S-3 Registrant
13 Incorporation of Certain Information Not applicable
by Reference
14 Information with Respect to Summary; Comparative Per Share
Registrants Other Than S-2 Data; Selected Summary Financial
or S-3 Registrants Information - Pro Forma Condensed Consolidated Financial
Statements; The Special Meetings; Proposed Merger and
Exchange; Information Concerning Investors and Central;
Management's Discussion of Financial Condition and Results of
Operations; Financial Statements
15 Information with Respect to S-3 Not applicable
Companies
16 Information with Respect to S-2 or Not applicable
S-3 Companies
17 Information with Respect to Summary; Comparative Per Share
Companies Other than S-2 or Data; Selected Summary Financial
S-3 Companies Information - Pro Forma Condensed Consolidated Financial
Statements; The Special Meetings; Proposed Merger and
Exchange; Information Concerning Investors and Central;
Management's Discussion of Financial Condition and Results of
Operations; Financial Statements
18 Information if Proxies, Consents Summary; The Special Meetings;
or Authorizations are to be Solicited Information Concerning Directors and Executive Officers
19 Information if Proxies, Consents Not applicable
or Authorizations Are Not To Be
Solicited or in an Exchange Offer
</TABLE>
iii
<PAGE> 4
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 109 of Title Seven of the Colorado Revised Statutes enables a
Colorado corporation to indemnify its officers, directors, employees and agents
against liabilities, damages, costs and expenses for which they are liable if:
(i) in their Official Capacities (as defined by this statute) if they acted in
good faith and had no reasonable basis to believe their conduct was not in the
best interest of the Registrant; (ii) in all other cases, that their conduct
was at least not opposed to the Registrant's best interests; and (iii) in the
case of any criminal proceeding, they had no reasonable cause to believe their
conduct was unlawful.
The Registrant's Articles of Incorporation limit the liability of
directors to the full extent provided by Colorado law.
The Registrant's Bylaws provide indemnification to officers,
directors, employees and agents to the fullest extent provided by Colorado law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
Exhibit Number Description of Exhibits
2.2 Plan and Agreement of Merger - American Liberty Financial
Corporation, American Liberty Life Insurance Company,
Citizens, Inc. and Citizens Acquisition, Inc., dated December
8, 1994(e)
2.21 Plan and Agreement of Merger and Exchange - See Appendix A
3.1 Articles of Incorporation, as amended(a)
3.2 Bylaws(e)
5.1 Opinion and consent of Jones & Keller, P.C. as to the legality
of Citizens, Inc. Common Stock(c)
8.1 Opinion re: tax matters(f)
II-I
<PAGE> 5
10.5 Automatic Yearly Renewable Term (NR) Life Reinsurance
Agreement between Citizens Insurance Company of America and
The Centennial Life Insurance Company dated March 1, 1982(b)
10.6 Summary of Coinsurance Agreement between Citizens Insurance
Company of America and Alabama Reassurance Company dated
December 31, 1985(b)
10.7 International Marketing Agreement - Citizens Insurance Company
of America and Negocios Savoy, S.A.(b)
11 Statement re: Computation of per share earnings(d)
22 Subsidiaries of the Registrant(d)
23.1 Consent of Jones & Keller, P.C. re: Opinion as to legality of
Common Stock(c)
23.2 Consent of KPMG Peat Marwick LLP(c)
23.3 Consent of Jones & Keller, P.C. re: Opinion re tax matters(f)
25 Power of Attorney (see signature page)
_______________
(a) Filed with the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 and incorporated by reference.
(b) Filed with the Registrant's Amendment No. 1 to Registration
Statement on Form S-4, Registration No. 33- 4753, filed with
the Commission on or about June 19, 1992.
(c) Filed on January 26, 1996.
(d) Filed with the Registrant's Annual Report on Form 10-K for the
Year Ended December 31, 1994, and incorporated herein by
reference.
(e) Filed with the Registrant's Registration Statement on Form
S-4, Registration No. 33-59039, filed with the Commission on
May 2, 1995.
(f) Filed herwith.
(B) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
See "Financial Statements."
ITEM 22. UNDERTAKINGS
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, as amended (the "1933 Act"), each
filing of The Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of
II-II
<PAGE> 6
1934, as amended), 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.
The Registrant hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by
the other Items of the applicable form.
The Registrant hereby undertakes that every prospectus (i) that is
filed pursuant to the paragraph immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the 1933 Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
part of an amendment to the Registration Statement and will not be used until
such amendment is effective; and that, for purposes of determining any
liability under the 1933 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.
The Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the Effective Time of the Registration Statement through
the date of responding to the request.
The Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired, that was not the subject of and included in the
Registration Statement when it became effective.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") 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 Act 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
II-III
<PAGE> 7
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 Act and will be governed by the final adjudication of such
issue.
The 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 of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the Effective Time 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;
(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.
Provided, however, that paragraphs (1)(i) and (1)(ii), above, do not apply if
the Registration Statement is on Form S-3 or Form S-8, 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 Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(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.
II-IV
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Austin,
State of Texas, on January 31, 1996.
CITIZENS, INC.
By: /s/ Mark A. Oliver
as attorney in fact for
Harold E. Riley
Harold E. Riley, Chairman of
the Board
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers or
directors of the Registrant, by virtue of their signatures to this Registration
Statement appearing below, hereby constitute and appoint Harold E. Riley and
Mark A. Oliver, attorneys-in-fact in their names, place, and stead to execute
any and all amendments to this Registration Statement in the capacities set
forth opposite their names and hereby ratify all that said attorneys-in-fact
may do by virtue hereof.
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 date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Mark A. Oliver as attorney Chairman of the Board January 31, 1996
in fact for Harold E. Riley
Harold E. Riley
/s/ Mark A. Oliver as attorney Vice Chairman, Chief Executive January 31, 1996
in fact for Randall Riley Officer and Director
Randall Riley
/s/ Mark A. Oliver as attorney Vice Chairman, Chief Actuary January 31, 1996
in fact for T. Roby Dollar and Assistant Secretary
T. Roby Dollar
/s/ Mark A. Oliver as attorney President, Chief Administrative January 31, 1996
in fact for Rick D. Riley Officer and Director
Rick D. Riley
/s/ Mark A. Oliver Executive Vice President, January 31, 1996
Mark A. Oliver Secretary/Treasurer and
Chief Financial Officer
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
/s/ Mark A. Oliver as Vice President and Controller January 31, 1996
attorney in fact for
Stephen Curtis
Stephen Curtis
Flay F. Baugh Director
/s/ Mark A. Oliver as Director January 31, 1996
attorney in fact for
Joe R. Reneau
Joe R. Reneau, M.D.
/s/ Mark A. Oliver as Director January 31, 1996
attorney in fact for
Steven F. Shelton
Steven F. Shelton
Ralph M. Smith, Th.D. Director
/s/ Mark A. Oliver as Director January 31, 1996
attorney in fact for
Timothy T. Timmerman
Timothy T. Timmerman
</TABLE>
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
8.1 Opinion re: tax matters Filed herewith
23.3 Consent of Jones & Keller, P.C.
re: Opinion re tax matters Filed herewith
25 Power of Attorney (see Signature
Pages)
</TABLE>
<PAGE> 1
EXHIBIT 8.1
JONES & KELLER
[Letterhead]
January 31, 1996
Citizens, Inc.
Post Office Box 149151
Austin, Texas 78714-9151
Citizens Acquisition, Inc.
Post Office Box 149151
Austin, Texas 78714-9151
Insurance Investors & Holding Co.
Central Investors Life Insurance Company
2512 North Knoxville Avenue
Peoria, Illinois 61604
Gentlemen:
Our opinions as expressed below are based solely upon: (1) the
information contained in the Registration Statement on Form S-4 as filed with
the Securities and Exchange Commission on January __, 1996 (hereafter
"Registration Statement"); (2) relevant information provided by the principals
and disclosed under the facts section of this letter; (3) the Internal Revenue
Code of 1986, as amended (hereinafter "IRC"), the regulations promulgated
thereunder, and the current administrative positions of the Internal Revenue
Service ("IRS") contained in published Revenue Rulings and Revenue Procedures;
and (4) existing judicial decisions. Any or all of the above are subject to
change or modification by subsequent legislative, regulatory, administrative or
judicial decisions which could adversely affect our opinions.
GENERAL QUALIFICATIONS, EXCEPTIONS AND LIMITATIONS: This letter is
subject to a number of general qualifications, exceptions and limitations (the
"General Qualifications") which are generally accepted in the legal community
as consistent with sound legal opinion practice, including the following
enumerated General Qualifications, which are or may be material to the opinions
expressed in this letter.
Definitions: The following definitions apply only to the immediately
following, enumerated, General Qualifications and do not apply and are not used
elsewhere in this letter. Other capitalized terms used below have the meanings
set forth in the Form S-4. Certain Federal statutes are referred to below by
their common names or acronyms.
"Client" means Citizens, which is a party to the Transaction and for
which we are providing legal representation.
"Corporate Party" means any one, two or all of Citizens, Investors or
Central.
"Opinion Recipient" means the addressee or addressees of this letter
and other persons who foreseeably may receive or rely on this letter or its
contents.
"Transaction" means the Merger and Exchange and all other transactions
incidental to and in furtherance of the Merger and Exchange.
"Transaction Documents" mean the contractual documents setting forth
the principal terms of the Transaction addressed by this letter and other
contracts ancillary to the Transaction as well as any documents required to be
filed with any government regulatory agency in connection with the Transaction.
The enumerated General Qualifications, lettered (a) through (h), are
as follows:
(a) We have relied upon information provided by a Corporate Party,
including its directors, officers, employees, and agents, public officials and
others, however communicated, including information available on documents, as
we have deemed appropriate, without investigation or analysis of underlying
data supporting such information, except for such investigation or analysis as
may be specifically set forth and described herein.
(b) This letter assumes that each document submitted to us for review
in conjunction with the preparation of this letter, including the Transaction
Documents, is accurate and complete, each such document that is an original is
authentic, each such document that is a copy conforms to an authentic original,
and all signatures on each such document are genuine.
(c) This letter assumes that all parties to the Transaction have full
power and authority to enter into and execute the Transaction Documents, that
the Transaction Documents are valid and binding obligations of the parties,
that there is no failure of condition or breach of the Transaction Documents or
any other circumstances which would prevent the Transaction from being
consummated, and that the Transaction will be consummated as set forth in the
Transaction Documents as presently constituted.
(d) This letter assumes that none of the following events shall occur
until after the full, complete and permanent consummation of the Transaction:
i) the entry of a decree, judgment or order by a court of
competent jurisdiction adjudging a Corporate Party as bankrupt or
insolvent, or approving a properly filed petition seeking
reorganization of a Corporate Party under any bankruptcy or similar
law;
ii) the entry of a decree or order of a court of competent
jurisdiction for the appointment of a receiver, liquidator, trustee or
assignee in bankruptcy or insolvency of a Corporate Party or of its
property or for the winding up or liquidation of its affairs;
iii) the institution by a Corporate Party of proceedings for a
voluntary bankruptcy, or consent by a Corporate Party to the filing of
a bankruptcy proceeding against it, or consent by a Corporate Party to
the filing of any such petition, or the filing by a Corporate Party of
a petition or answer or consent seeking reorganization under any
bankruptcy or similar law, or the consent by a Corporate Party to the
filing of any such petition, or the consent by a Corporate Party to the
appointment of a custodian, receiver, liquidator, trustee or assignee
in bankruptcy or insolvency of such Corporate Party or any of its
assets or property, or a general assignment by a Corporate Party for
the benefit of creditors; or
iv) the admission by a Corporate Party in writing of its
inability to pay its debts generally as they become due, or the
insolvency or failure of a Corporate Party generally to pay its debts
as they become due.
(e) The Opinion Recipient may not rely on the opinions herein for any
legal or other analysis beyond that set forth in this letter.
(f) The opinions expressed in this letter apply only to the specific
legal issues explicitly addressed herein, and such opinions do not address any
other matters. This letter is intended to set forth only the expressly stated
opinions contained herein, and this letter does not include, nor is it
intended to express, any implied opinions.
(g) This letter speaks only as of its date. We have no obligation and
do not undertake to advise any Opinion Recipient (or any third party) of
changes of law or fact that occur after the date of this letter, even though
the change may affect the legal analysis, a legal conclusion or an
informational confirmation in this letter.
(h) This letter applies only to the specific legal issues addressed.
In addition, and not by way of limitation, this letter does not address any of
the following legal issues (items (i) through (xviii), the "Excluded Issues")
except for and to the extent that any of the Excluded Issues are specifically
addressed elsewhere in this letter:
(i) Federal securities laws and regulations administered by the
Securities and Exchange Commission, state "Blue Sky" laws and
regulations, and laws and regulations relating to commodity (and other)
futures and indices and other similar instruments;
(ii) Federal Reserve Board margin regulations;
(iii) pension and employee benefit laws and regulations (e.g.
ERISA);
(iv) Federal and state antitrust and unfair competition laws.
(v) Federal and state laws and regulations concerning filing and
notice requirements (e.g. Hart-Scott-Rodino and Exon-Florio), other
than requirements applicable to charter-related documents such as a
certificate of merger;
(vi) compliance with fiduciary duty requirements;
(vii) Local Law, defined as the statutes and ordinances, the
administrative decisions, and the rules and regulations of counties,
towns, municipalities and special political subdivisions (whether
created or enabled through legislative action at the Federal, state or
regional level -- e.g., water agencies, joint power districts, the
Maine Turnpike Authority, The Southern California Rapid Transit
District, the Port Authority of New York and New Jersey), and judicial
decisions to the extent that they deal with any of the foregoing;
(viii) the characterization of a Transaction as one involving the
creation of a lien on real property or a security interest in personal
property, the characterization of a contract as one in a form
sufficient to create a lien or a security interest, and the creation,
attachment, perfection, priority or enforcement of a lien on real
property or a security interest in personal property;
(ix) fraudulent transfer and fraudulent conveyance laws;
(x) Federal and state environmental laws and regulations;
(xi) Federal and state land use and subdivision laws and
regulations;
(xii) Federal and state tax laws and regulations;
(xiii) Federal patent, copyright and trademark, state trademark,
and other Federal and state intellectual property laws and regulations;
(xiv) Federal and state racketeering laws and regulations (e.g.
RICO);
(xv) Federal and state health and safety laws and regulations
(e.g., OSHA);
(xvi) Federal and state labor laws and regulations;
(xvii) Federal and state laws, regulations and policies
concerning (A) national and local emergency, (B) possible judicial
deference to acts of sovereign states, and (C) criminal and civil
forfeiture laws; and
(xviii) other Federal and State statutes of general application
to the extent they provide for criminal prosecution (e.g., mail fraud
and wire fraud statutes).
"Merger and Exchange" refers to the transactions set forth in the Plan
and Agreement of Merger ("Merger Agreement") dated November 28, 1994, as
amended on January 25, 1996 between Citizens, Inc. ("Citizens"), Citizens
Acquisition, Inc. ("Acquisition"), Insurance Investors & Holding Co.
("Investors") and Central Investors Life Insurance Company of Illinois
("Central"). The words "Merger" and "Exchange," used separately, respectively
refer to (i) the Merger of Investors into Acquisition, and (ii) the Exchange of
Central Common Stock for Citizens Class A Common Stock. Capitalized terms
herein have the same meaning as in the Merger Agreement. Central is a
subsidiary of Investors. Acquisition is a subsidiary of Citizens. The Class A
Common
1
<PAGE> 2
Stock of Investors is herein referred to as "Investors Class A Common Stock";
the Class B Common Stock of Investors is herein referred to as "Investors Class
B Common Stock"; and both are sometimes herein referred to as "Investors
Stock". Central Common Stock is sometimes herein referred to as "Central
Stock".
Shareholders residing or conducting business in foreign countries,
states or municipalities having tax laws could be required to pay tax with
respect to transactions in that country, state or municipality. We do not
express any opinion as to foreign, state or local tax consequence.
The consequences described in this summary are not applicable to
nonresident aliens, to foreign corporations, to debtors under the jurisdiction
of a court in a case under Title 11 of the United States Code or in a
receivership, foreclosure, or similar proceeding, to investment companies
within the meaning of IRC Section 351(e), to shareholders who are dealers in
securities, to shareholders who are subject to alternative minimum taxes, to
shareholders who do not hold their common stock as capital assets, to
shareholders who are financial institutions, or to shareholders who acquired
their shares in connection with stock option or stock purchase plans or in
other compensatory transactions.
The principal reasons for the Merger and the Exchange can be
summarized as follows:
(1) to create a combined entity with greater financial
strength and an enhanced competitive position as compared to the
separate entities;
(2) to achieve improved capitalization and economies of
scale;
(3) to consolidate the ownership and operation of the
assets of the separate entities into an affiliated group of
corporations having greater and more diversified reserves, properties
and products;
(4) to provide greater liquidity and diversity to
Investors and Central shareholders; and
(5) to promote more efficient operation of Central by
eliminating minority shareholder interests.
This letter is conditioned on the continued accuracy of the factual
information, assumptions and representations contained in the Registration
Statement and the factual information and representations to be made by
Citizens, Acquisition, Investors, Central and certain shareholders of
Investors and Central, to Jones & Keller P.C., as follows:
(1) that Citizens, Investors and Central, in arriving at
the method used to determine the number of shares of Citizens Common
Stock to be received by each
2
<PAGE> 3
Investors and Central shareholder, attempted in good faith to value
the Investors Class A Common Stock, Investors Class B Common Stock and
Central Common Stock to be transferred and to value the Citizens
Common Stock to be exchanged for such Investors Class A Common Stock,
Investors Class B Common Stock and Central Common Stock in an effort
to ensure that each shareholder receiving Citizens Common Stock
pursuant to the Merger and Exchange received a number of shares of
such stock approximately equal in value to the Investors Class A
Common Stock, Investors Class B Common Stock and Central Common Stock
exchanged therefor;
(2) that, with respect to any persons who own one percent
or more of the value of Investors Stock there is no plan or intention,
and to the best of the knowledge of Investors management, there is no
plan or intention on the part of remaining shareholders of Investors
to sell, exchange or otherwise dispose of Citizens Common Stock
received in the Merger which would reduce Investors shareholders
ownership of Citizens Common Stock to a number of shares having a
value less than 50 percent of the value of all of the formerly
outstanding Investors Stock as of the effective date of the Merger,
and there is no binding contract or obligation to sell such stock to
persons who are not parties to this Merger. For these purposes,
shares of Investors Stock exchanged for cash or other property,
surrendered by dissenters, or exchanged for cash in lieu of fractional
shares of Citizens Stock, will be treated as outstanding Investors
Stock on the effective date of the Merger. Moreover, shares of
Investors Stock and shares of Citizens Common Stock held by Investors
shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger will be considered;
(3) that following the Merger, Investors will hold at
least 90 percent of the Fair Market Value of its Net Assets and at
least 70 percent of the Fair Market Value of its Gross Assets and at
least 90 percent of the Fair Market Value of Acquisition's Net Assets
and at least 70 percent of the Fair Market Value of Acquisition's
Gross Assets held immediately prior to the Merger. Amounts paid by
Investors or Acquisition to dissenters, amounts paid by Investors or
Acquisition to shareholders who receive cash or other property,
amounts used by Investors or Acquisition to pay reorganization
expenses, and all redemptions and distributions (except for regular,
normal dividends) made by Investors will be included as assets of
Investors or Acquisition, respectively, immediately prior to the
Merger;
(4) that prior to the Merger, Citizens will be in control
of Acquisition within the meaning of IRC Section 368(c);
(5) that Investors has no plan or intention to issue
additional shares of its stock that would result in Citizens losing
control of Investors within the meaning of IRC Section 368(c);
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(6) that Central has no plan or intention to issue
additional shares of its stock that would result in Investors losing
control of Central within the meaning of IRC Section 368(c);
(7) that Citizens has no plan or intention to redeem or
otherwise reacquire any Citizens Class A Common Stock to be issued to
Investors shareholders in the Merger;
(8) that Citizens has no plan or intention to liquidate
Investors; to merge Investors with or into another corporation; to
sell or otherwise dispose of the stock of Investors except for
transfers of stock to corporations controlled by Citizens; or to cause
Investors to sell or otherwise dispose of any of its assets or any of
the assets acquired from Acquisition, except for dispositions made in
the ordinary course of business or transfers of assets to a
corporation controlled by Investors;
(9) that Investors has no plan or intention to liquidate
Central; to merge Central into another corporation; to cause Central
to sell or otherwise dispose of any of its assets, except for
dispositions made in the ordinary course of business; or to sell or
otherwise dispose of any of the Central Stock acquired in the
transaction, except for transfers described in Section 368(a)(2)(C) of
the Internal Revenue Code;
(10) that Acquisition will have no liabilities assumed by
Investors, and it will not transfer to Investors any assets subject to
liabilities, in the Merger;
(11) that neither Investors nor Citizens have any plans or
intention to redeem or otherwise reacquire any Citizens Class A Common
Stock to be issued to Central shareholders in the Exchange;
(12) that following the Merger and Exchange, Investors
will continue the historic business of Central or use a significant
portion of Central's historic business assets in a business;
(13) that Citizens, Acquisition, Investors and Central
will assume and pay their respective reorganization expenses, if any,
incurred in connection with the Merger and Exchange;
(14) that there is no corporate indebtedness between
Citizens or Investors or between Acquisition and Investors that was
issued, acquired or will be settled at a discount;
(15) that in the Merger, shares of Investors Stock
representing control of Investors, as defined in IRC Section 368(c),
will be exchanged solely for Citizens voting Common Stock. Shares of
Investors Stock exchanged for cash or other
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property originating with Citizens will be treated as outstanding
Investors Stock on the effective date of the Merger;
(16) that on the effective date of the Merger and
Exchange, Investors and Central will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in Investors or
Central that, if exercised or converted, would affect Citizens
acquisition or retention of control of Investors or Investors
acquisition or retention of control of Central, as defined in IRC
Section 368(c);
(17) that Citizens does not own, nor has it owned during
the past five years, any shares of Investors or Central Stock;
(18) that neither Citizens, Acquisition, Investors nor
Central are investment companies as defined in IRC Section
368(a)(2)(F)(iii) and (iv);
(19) that on the effective date of the Merger, the fair
market value of the assets of Investors will equal or exceed the sum
of its liabilities, plus the amount of liabilities, if any, to which
the assets are subject;
(20) that on the effective date of the Exchange, the fair
market value of the assets of Central will equal or exceed the sum of
its liabilities, plus the amount of liabilities, if any, to which the
assets are subject;
(21) that neither Citizens, Acquisition, Investors nor
Central are under the jurisdiction of a court in a Title 11 or similar
case within the meaning of IRC Section 368(a)(3) (A);
(22) that the Merger and Exchange will be consummated and
qualify as a statutory merger and statutory exchange, respectively, in
full compliance with Illinois law;
(23) that the Investors Stock and Central Stock to be
surrendered by each Investors and Central shareholder will not be
subject to any liability and neither Investors nor Citizens will
assume liabilities with respect to the surrendered Investors Stock or
Central Stock;
(24) that in the event more than 2.5 percent of the
shareholders of Investors dissent to the Merger, Citizens would
exercise its option not to proceed with the Merger (as Citizens is
permitted to do under the Merger Agreement) and the Merger
consequently is not consummated;
(25) that Investors will acquire Central Stock solely in
exchange for Citizens Class A Voting Common Stock at a time when
Citizens is in control of Investors as defined in IRC Section 368(c).
For purposes of this representation, Central Stock redeemed for cash
or other property furnished by Investors or Citizens will be
considered as acquired by Investors. Further, no liabilities of
Central or the Central shareholders will be assumed by Investors, nor
will any of the Central Stock be subject to any liabilities;
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(26) that cash payments in lieu of fractional shares are
simply a mathematical rounding-off for the purpose of simplifying
corporate and accounting problems which would have been caused by the
actual issuance of fractional shares, and such payments are not
separately bargained for consideration;
(27) that there will be no dissenters to the Exchange; and
(28) that none of the compensation received by any
shareholder of Central will be separate consideration for, or
allocable to, any of their shares of Central Stock; none of the shares
of Citizens Stock received by any shareholder will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
In rendering an opinion on the federal income tax consequences of the
Merger and the Exchange reasonable steps have been taken to assure that all
material tax issues are considered in light of the facts, and that all of such
issues involving a reasonable possibility of challenge by the IRS are fully and
fairly addressed. A "material tax issue" includes only those tax issues that
could have a significant impact (either beneficial or adverse) on any Investors
or Central shareholder participating in the Merger or Exchange under
circumstances reasonably foreseeable by us.
The opinions expressed below are rendered only with respect to the
specific matters described herein, and we express no opinion with respect to
any other federal income tax aspects of the Merger or Exchange. Should any of
the facts, circumstances, or assumptions specified herein be subsequently
determined incorrect or inaccurate, our conclusions may vary from those set
forth below and such variance could be material. In addition, we do not opine
as to the taxable or nontaxable status of any previous transactions not
considered by us to be part of the Merger and Exchange transaction.
The tax issues that are material to the Merger and the Exchange
concern tax consequences to Investors and its shareholders upon the merger of
Acquisition into and with Investors in exchange for Citizens Common Stock, and
the tax consequences to Central shareholders upon the acquisition of Central
Common Stock in exchange for Citizens Common Stock.
The Merger of Acquisition into Investors will constitute a
reorganization within the meaning of IRC Section 368(a)(1)(A) and IRC Section
368(a)(2)(E) and Citizens, Acquisition, and Investors will each be a "party to a
reorganization" within the meaning of IRC Section 368(b),
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The Exchange, whereby Investors will obtain the Central Common Stock from
minority shareholders in exchange for Citizens Common Stock, will constitute a
reorganization within the meaning of IRC Section 368(a)(1)(B) and Citizens,
Investors and Central will each be a "party to a reorganization" within the
meaning of IRC Section 368(b).
Accordingly, in our opinion, the material tax consequences of the
Merger and Exchange are as follows:
(1) No gain or loss will be recognized by the shareholders of
Investors upon the exchange of their shares of Investors Class A Common Stock
and Investors Class B Common Stock for shares of Citizens Common Stock (except
for cash received in lieu of a fractional share of Citizens Common Stock) or by
the shareholders of Central upon the exchange of shares of Central Common Stock
for shares of Citizens Common Stock (except for cash received in lieu of a
fractional share of Citizens Common Stock). IRC Section 354(a).
(2) The tax basis of the shares of Citizens Common Stock received
by a shareholder of Investors and Central (including any fractional share of
Citizens Common Stock not actually received) will be the same as the basis of
the Investors Stock and Central Stock surrendered by that shareholder in the
Merger and Exchange. IRC Section 358(a), IRC Regulation Section 1.358-1(a).
(3) The holding period of the shares of Citizens Common Stock
received by a shareholder of Investors or Central will include the period
during which such shareholder held the Investors Stock or Central Stock
exchanged therefor, to the extent that the Investors Stock and Central Stock
was held by the shareholder as a capital asset on the date of the consummation
of the Merger and Exchange. IRC Section 1223(1).
(4) Cash received by the Investors shareholders who properly
exercise their dissenters' rights will be treated as having been received in
redemption of the shares so cashed out, and may result in taxable gain or loss,
measured by the difference (if any) between the amount of cash received and
such shareholder's basis in the Investors Stock. Provided the shares were held
as capital assets at the time of the redemption, such gain or loss will
constitute capital gain or loss, and such gain or loss will be long term
capital gain or loss if the holding period for such shares was greater than one
year. It is possible, that for some shareholders, the distribution of cash may
be treated as a dividend taxable as ordinary income. See IRC Sections 302,
301.
(5) Cash payments received by Investors shareholders or Central
shareholders in lieu of fractional shares of Citizens Common Stock will be
treated as if such fractional share of Citizens Common Stock has been issued in
the Merger and Exchange and then redeemed by Citizens. An Investors or Central
shareholder receiving such cash will
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recognize gain or loss, upon such payment, measured by the difference (if any)
between the amount of cash received and the basis in such fractional share.
Provided the fractional share was held as a capital asset at the time of the
redemption, such gain or loss will constitute capital gain or loss, and such
gain or loss will be long term capital gain or loss if the holding period for
such share (taking into account the holding period of the Investors Stock and
Central Stock surrendered, as described in (3) above) was greater than one
year. It is possible that the distribution of cash may be treated as a
dividend taxable as ordinary income if the IRS determines that the distribution
in redemption is essentially equivalent to a dividend. See IRC Sections 356,
302.
(6) No material gain or loss will be recognized by Investors,
Central, Citizens or Acquisition as a result of the Merger or Exchange. IRC
Sections 361 and 1032. The adjusted tax basis of Acquisition properties will
carryover to Investors. IRC Section 362.
(7) Section 382 limits the Net Operating Loss carryover of a
company following an ownership change. Investors and Central, as a group, will
be deemed to have an ownership change. After an ownership change, the amount
of income that a corporation may offset each year by Net Operating Losses that
occurred before the change is generally limited to an amount determined by
multiplying the value of the equity of the corporation immediately prior to
this change by the federal long-term tax exempt rate in effect on the date of
the change. Any unused limitation may be carried forward and added to the next
year's limitation. To the extent Investors and Central also have built-in
losses as defined in IRC Section 382(h) as of the date of the Merger, IRC
Section 382 limits the utilization of such losses after the ownership change.
IRC Section 383 will similarly limit the utilization of excess credits, net
capital losses, and foreign tax credits, if any, after the ownership change.
In addition, IRC Section 384 limits the use of preacquisition losses to offset
built-in gains, if any, after the ownership change. Proposed regulations under
IRC Sections 382 and 1502 implement the above restrictions.
(8) Each shareholder of Investors and Central must file pursuant
to IRS Regulation 1.368-3(b), with his or her income tax return for the year in
which the Merger and Exchange is consummated, a statement which provides
details relating to the property transferred, securities received and
liabilities, if any, assumed in the exchange.
The preceding discussion and opinions are based on our interpretations
of the facts and assumptions, based on the IRC, the regulations thereunder and
judicial and administrative interpretations thereof. They are subject to
change by subsequent regulatory, administrative, legislative, or judicial
actions which could have an effect on the validity of our opinions.
It should be noted that we do not express an opinion on the valuations
of Investors, Central or Citizens assets or stock or the ratio of exchange of
Investors Stock or Central Stock for Citizens Common Stock.
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We believe we have addressed all material tax issues in regards to the
Merger and Exchange. If the Merger and Exchange is transacted as outlined in
the facts given, the material tax issues addressed singularly and in the
aggregate will more likely than not be upheld under challenge by the IRS.
Each Investors and Central shareholder should consult his own
qualified tax advisor to evaluate the tax effects of this exchange based on his
personal facts and circumstances.
Very truly yours,
/s/ JONES & KELLER, P.C.
JONES & KELLER, P.C.
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Exhibit 23.3
We consent to the use of the form of our opinion, Exhibit 8.1,
regarding tax matters, to be filed on February 1, 1996, as part of the
Registration Statement.
Very truly yours,
/s/ Jones & Keller, P.C.
Jones & Keller, P.C.
Denver Colorado
January 31, 1996
