<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 13E-4 THEREUNDER)
------------------------
INTEGON CAPITAL I
(NAME OF ISSUER)
INTEGON CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
10 3/4% CAPITAL SECURITIES, SERIES B
(TITLE OF CLASS OF SECURITIES)
45811BAC3
(CUSIP NUMBER OF CLASS OF SECURITIES)
BERNARD J. BUSELMEIER
C/O MOTORS INSURANCE CORPORATION
485 WEST MILWAUKEE AVENUE
DETROIT, MICHIGAN 48202
(313) 556-2428
------------------------
(WITH COPIES TO)
EDWIN D. MASON
FOLEY & LARDNER
330 NORTH WABASH AVENUE
SUITE 3300
CHICAGO, ILLINOIS 60611
(312) 755-2532
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVED NOTICES AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
NOVEMBER 12, 1997
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<C> <C>
$134,733,000 $26,230
</TABLE>
* Calculated solely for purposes of determining the filing fee, based upon the
purchase of all of the outstanding Capital Securities at the total
consideration of $1,347.33 per $1,000 liquidation value (including the amount
attributable to any consent payment but excluding any accumulated
distributions).
[ ]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
<TABLE>
<S> <C>
Form or Registration No.:
Amount Previously Paid: -------------------------- -------------------------
Filing Party:
---------------------------------------- Date Filed: -----------------------------------------
</TABLE>
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<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Integon Capital I, a statutory business trust
created under the laws of the State of Delaware (the "Issuer"), and its
principal executive office is located at 500 West Fifth Street, Winston-Salem,
North Carolina 27152.
(b) The securities being sought are 10 3/4% Capital Securities, Series B of
the Issuer (the "Capital Securities"). As of November 10, 1997, the aggregate
liquidation amount of Capital Securities outstanding was $100,000,000. Integon
Corporation (the "Company") is offering to purchase all of the outstanding
Capital Securities for the total consideration of $1,347.33 per $1,000
liquidation amount of Capital Securities tendered (including the amount
attributable to any consent payment but excluding any accumulated
distributions). No Capital Securities are held by any officer, director or
affiliate of the Issuer.
(c) See "Price Ranges of the Capital Securities" in the Offer to Purchase
and Consent Solicitation Statement dated November 12, 1997 (the "Offer to
Purchase"), incorporated herein by reference.
(d) The person filing this statement is the Company, a Delaware corporation
whose principal executive office is located at 500 West Fifth Street,
Winston-Salem, North Carolina 27152. The Company was the sponsor and depositor
of the Issuer and owns all of the outstanding Common Securities of the Issuer.
See "The Company" and "Description of the Trust Securities" in the Offer to
Purchase, which is incorporated herein by reference.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "The Tender Offer and the Consent
Solicitation -- Source and Amount of Funds" in the Offer to Purchase is
incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in "Purpose and Effects of the Tender Offer and
the Consent Solicitation" in the Offer to Purchase is incorporated herein by
reference.
(a) None.
(b) None.
(c) None.
(d) None.
(e) None.
(f) None.
(g) None.
(h) None.
(i) None.
(j) None.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Neither the Issuer nor the Company is aware of any such transaction. The
information set forth in "Transactions and Arrangements Concerning the Capital
Securities" in the Offer to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
None.
<PAGE> 3
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "The Tender Offer and the Consent
Solicitation -- The Dealer Manager" and "The Tender Offer and the Consent
Solicitation -- Fees and Expenses" in the Offer to Purchase is incorporated
herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)(1),(2) See "Selected Consolidated Financial Information" and
"Capitalization" in the Offer to Purchase and the financial statements and notes
related thereto contained in the Company's Form 10-K/A for the year ended
December 31, 1996 dated September 15, 1997 and its Form 10-Q/A for the quarter
ended June 30, 1997 dated September 15, 1997, each of which are incorporated
herein by reference.
(a)(3) The information set forth in "Selected Consolidated Financial
Information" in the Offer to Purchase is incorporated herein by reference.
(a)(4) The information set forth in "Selected Consolidated Financial
Information" in the Offer to Purchase is incorporated herein by reference.
(b)(1),(2),(3) The information set forth in "Selected Consolidated
Financial Information" in the Offer to Purchase is incorporated herein by
reference.
8. ADDITIONAL INFORMATION.
a. None.
b. None, except for compliance with (i) the Securities Exchange Act of
1934, (ii) Rule 13e-4 promulgated thereunder, (iii) applicable requirements of
state securities or "blue sky" laws, and (iv) the Trust Indenture Act of 1939.
c. Not applicable.
d. None.
e. The Offer to Purchase should be read in its entirety and, in its
entirety, is incorporated herein by reference.
9. MATERIALS TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase and Consent Solicitation Statement, dated November
12, 1997.
(a)(2) Form of Consent and Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to DTC Participants.
(a)(5) Form of Letter to Beneficial Holders.
(a)(6) Form of Letter to Holders of Physical Securities.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
2
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in the statement is true, complete and correct.
INTEGON CORPORATION
By: /s/ BERNARD J. BUSELMEIER
------------------------------------
(Signature)
Name: Bernard J. Buselmeier
----------------------------------
Title: Executive Vice President
-----------------------------------
November 12, 1997.
(Date)
3
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
99(a)(1) Offer to Purchase and Consent Solicitation Statement, dated
November 12, 1997.
99(a)(2) Form of Consent and Letter of Transmittal.
99(a)(3) Form of Notice of Guaranteed Delivery.
99(a)(4) Form of Letter to DTC Participants.
99(a)(5) Form of Letter to Beneficial Holders.
99(a)(6) Form of Letter to Holders of Physical Securities.
99(a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(b) Not applicable.
99(c) None.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE
AND CONSENT SOLICITATION STATEMENT
$100,000,000
Integon Corporation
Offer to Purchase for Cash and Solicitation of Consents
------------------------
Integon Corporation, a Delaware corporation ("the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this Offer to
Purchase and Consent Solicitation Statement (the "Offer to Purchase") and in the
accompanying Consent and Letter of Transmittal (the "Letter of Transmittal") to
purchase for cash any and all of the outstanding 10 3/4% Capital Securities,
Series B (the "Capital Securities") of Integon Capital I, a Delaware business
trust (the "Trust"), for the consideration described below. This offer to
purchase, together with the Consent Solicitation (as defined herein), is
referred to as the "Tender Offer." All Capital Securities tendered in the Tender
Offer and not properly withdrawn will be purchased upon the terms and subject to
the conditions of the Tender Offer. The current aggregate liquidation amount of
Capital Securities outstanding and held by persons other than the Company is
$100,000,000.
The Total Consideration for each $1,000 liquidation amount of Capital
Securities tendered and accepted for payment pursuant to the Tender Offer shall
be $1,347.33 which includes Accumulated Distributions (as defined below), up to,
but not including, the Settlement Date (as defined herein). The Tender Offer
Consideration for each $1,000 liquidation amount of Capital Securities tendered
and accepted for payment pursuant to the Tender Offer shall be an amount equal
to the Total Consideration minus the Consent Payment (as defined below).
THE TENDER OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER TERMINATED (AS MAY BE
EXTENDED, THE "EXPIRATION TIME"). THE CONSENT DATE IS TUESDAY, NOVEMBER 25, 1997
OR SUCH LATER DATE AS DESCRIBED BELOW. THE RECORD DATE IS NOVEMBER 14, 1997.
Holders (as defined below) must tender their Capital Securities prior to
the Expiration Time in order to receive the Tender Offer Consideration. Holders
must tender their Capital Securities and provide their Consents to the Proposed
Amendments prior to 5:00 p.m., New York City time (the "Consent Time"), on the
Consent Date in order to receive the Consent Payment.
As indicated above, the Consent Date is Tuesday, November 25, 1997, if on
such date the Company has received duly executed and unrevoked Consents to the
Proposed Amendments from Holders representing a majority in liquidation amount
of Capital Securities then outstanding (the "Minimum Consent"), or such later
date that the Company shall have first received the Minimum Consent as provided
herein. Only Holders of Capital Securities on the Record Date will be entitled
to deliver Consents to the Proposed Amendments. The Capital Securities tendered
in the Tender Offer may be withdrawn at any time prior to the Expiration Time.
Thereafter, such tenders are irrevocable except that they may be withdrawn after
January 9, 1998, unless previously accepted for payment. Consents may be revoked
at any time prior to the Consent Time so long as any Capital Securities tendered
therewith are concurrently withdrawn.
(cover page continues)
------------------------
Any questions or requests for assistance may be directed to Morgan Stanley
& Co. Incorporated, which is acting as Dealer Manager for the Tender Offer and
as Solicitation Agent for the Consent Solicitation ("Morgan Stanley" or the
"Dealer Manager"). Requests for copies of the Tender Offer materials should be
directed to D.F. King & Co., Inc. (the "Information Agent") at the telephone
number set forth on the back cover of this Offer to Purchase. None of the
Company, the Company's Board of Directors, the Trust, the Trustees (as defined
below), the Administrators (as defined below), the Dealer Manager, the
Information Agent or the Depositary (as defined below) makes any recommendation
as to whether or not Holders should tender any or all of their Capital
Securities and provide Consents to the Proposed Amendments.
------------------------
The Dealer Manager for the Tender Offer and the Solicitation Agent for the
Consent Solicitation is
MORGAN STANLEY DEAN WITTER
November 12, 1997
<PAGE> 2
Concurrently with the Tender Offer, the Company is soliciting consents from
registered holders of the Capital Securities (the "Holders") as of the close of
business on Wednesday, November 12, 1997 (the "Record Date") representing at
least a majority in aggregate liquidation amount of the outstanding Capital
Securities to certain amendments to the Junior Subordinated Indenture described
herein (the "Proposed Amendments"). As used herein, "Consent" shall mean (i) in
the case of tendering Holders who were Holders as of the Record Date, such
Holder's consent to the Proposed Amendments and execution of the Supplemental
Indenture (as defined below), and (ii) in the case of tendering Holders who were
not Holders as of the Record Date, such Holder's consent to the Proposed
Amendments and execution of the Supplemental Indenture, accompanied by the
related Proxy (as defined herein). The Proposed Amendments will not become
effective with respect to the remaining Capital Securities not tendered unless
the current majority in aggregate liquidation amount of the Capital Securities
delivers Consents. Holders who tender their Capital Securities for payment
pursuant to the Tender Offer will be required, as a condition to a valid tender,
to have delivered their Consent to the Proposed Amendments and execution of the
Supplemental Indenture. This solicitation of Consents to the Proposed Amendments
is referred to as the "Consent Solicitation."
If the Capital Securities are accepted for payment pursuant to the Tender
Offer and the Proposed Amendments become effective, Holders who validly tender
their Capital Securities pursuant to the Tender Offer and validly deliver their
Consent to the Proposed Amendments and execution of the Supplemental Indenture
prior to the Consent Time will receive the Tender Offer Consideration plus the
Consent Payment (i.e. the Total Consideration), whereas Holders who validly
tender their Capital Securities after the Consent Time will receive only the
Tender Offer Consideration, but will not receive the Consent Payment.
Upon the terms and subject to the conditions set forth in this Offer to
Purchase, the Company hereby offers to pay to each Holder of Capital Securities
who validly consents to the Proposed Amendments prior to the Consent Time a fee
of $20.00 in cash (the "Consent Payment") for each $1,000 liquidation amount of
the Capital Securities for which Consents have been validly delivered and not
validly revoked as of the Consent Time, with such payment to be made on the
Settlement Date if, but only if, the Capital Securities to which such Consents
relate are accepted for payment pursuant to the terms of the Tender Offer and
the Proposed Amendments become effective. If a Holder's Capital Securities are
not properly tendered pursuant to the Tender Offer prior to the Consent Time, or
such Holder's Consents either are not properly delivered, or are revoked and not
properly redelivered, prior to the Consent Time, such Holder will not receive
the Consent Payment, even though the Proposed Amendments will be effective as to
all Capital Securities that are not purchased in the Tender Offer.
Holders who purchase Capital Securities or whose purchase settles or is
registered after the close of business on the Record Date and at or prior to the
Consent Time who wish to tender their Capital Securities in the Tender Offer
must arrange with their seller to receive a duly completed, valid and unrevoked
proxy ("Proxy") (which may be in the form of an irrevocable proxy as set forth
in the Letter of Transmittal) from the Holder on the Record Date of such Capital
Securities. In order to facilitate the receipt of Consents, Capital Securities
shall, during the period which commences November 12, 1997 and which will end at
the Expiration Time, trade in the over-the-counter market "with proxy" providing
the purchaser with the right to vote such acquired Capital Securities in the
Consent Solicitation.
The Capital Securities were issued by the Trust pursuant to the Amended and
Restated Trust Agreement (the "Trust Agreement"), dated as of February 10, 1997,
among the Company, as Depositor, First Union National Bank of North Carolina, as
Property Trustee, First Union Bank of Delaware, as Delaware Trustee, and the
individual administrative trustees of the Trust. The obligations of the Trust
under the Capital Securities are guaranteed by the Company through the Guarantee
(as defined below), and are supported by 10 3/4% Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures") issued by the Company
to the Trust pursuant to the Junior Subordinated Indenture (the "Junior
Subordinated Indenture"), dated as of February 10, 1997, by the Company, as
Issuer, and First Union National Bank of North Carolina, as Trustee (the
"Debenture Trustee").
Pursuant to the terms of this Offer to Purchase, the completion, execution
and delivery of a Letter of Transmittal by a Holder of Capital Securities as of
the Record Date in connection with the tender of such Capital Securities will be
deemed to constitute the Consent of such Holder to the Proposed Amendments and
execution of the Supplemental Indenture, whereas the completion, execution and
delivery of a Letter of Transmittal, along with the delivery of a Proxy, by a
Holder who was not a Holder as of the Record Date will be deemed to constitute
the Consent of such Holder to the Proposed Amendments and execution of the
(cover page continues)
<PAGE> 3
Supplemental Indenture. Holders may not deliver Consents prior to the Consent
Time without tendering their Capital Securities in the Tender Offer, and may not
revoke Consents without withdrawing the previously tendered Capital Securities
to which such Consents related from the Tender Offer. Holders who validly tender
their Capital Securities and thereby deliver their Consents after the Consent
Time will only receive the Tender Offer Consideration, and will not receive the
Consent Payment.
The Holder of Capital Securities validly tendered and accepted for payment
will receive accumulated and unpaid distributions, if any, up to, but not
including, the Settlement Date, upon the terms and subject to the conditions
described herein ("Accumulated Distributions").
Upon the terms and subject to the conditions of the Tender Offer
(including, if the Tender Offer is extended or amended, the terms and conditions
of any such extension or amendment) and applicable law, the Company will pay for
all Capital Securities validly tendered (and not withdrawn) pursuant to the
Tender Offer on the third New York Stock Exchange ("NYSE") trading day following
the Expiration Time, or as soon as possible thereafter (the "Settlement Date").
Such payments will be made in immediately available (same-day) funds.
If the Proposed Amendments become effective, they will apply to all Capital
Securities and each Holder of Capital Securities not properly tendered or not
accepted for payment hereunder will be bound by such Proposed Amendments
regardless of whether such Holder consented to the Proposed Amendments. The
Capital Securities that are not tendered and accepted for payment pursuant to
the Tender Offer will remain obligations of the Trust. Although the Company
intends to execute a supplemental indenture implementing the Proposed Amendments
(the "Supplemental Indenture") prior to the acceptance of the Capital
Securities, the Proposed Amendments therein will not become operative until the
date and time that all Capital Securities underlying the Minimum Consent are
accepted for purchase and payment pursuant thereto. See "The Tender Offer and
the Consent Solicitation -- The Consent Solicitation" below.
The Company has no arrangement or understanding with any broker, dealer,
salesman or other person to solicit tenders of the Capital Securities or
Consents. Regular employees of either the Company or affiliates of the Company
may solicit tenders or consents from Holders, but they will not receive
additional compensation therefor.
NOTWITHSTANDING ANY OTHER PROVISION OF THE TENDER OFFER OR THE CONSENT
SOLICITATION, THE COMPANY'S OBLIGATION TO ACCEPT FOR PAYMENT, AND TO PAY FOR,
CAPITAL SECURITIES VALIDLY TENDERED PURSUANT TO THE TENDER OFFER IS CONDITIONED
UPON (1) THE EXECUTION BY THE TRUSTEES (AS DEFINED BELOW) OF THE SUPPLEMENTAL
INDENTURE IMPLEMENTING THE PROPOSED AMENDMENTS IN THE MANNER SET FORTH BELOW
FOLLOWING RECEIPT OF THE MINIMUM CONSENT TO THE PROPOSED AMENDMENTS FROM
REGISTERED HOLDERS OF NOT LESS THAN A MAJORITY IN THE AGGREGATE LIQUIDATION
AMOUNT OF THE OUTSTANDING CAPITAL SECURITIES (THE "MINIMUM CONSENT CONDITION"),
(2) THERE HAVING BEEN VALIDLY TENDERED (AND NOT WITHDRAWN) PRIOR TO THE
EXPIRATION TIME, AT LEAST A MAJORITY IN AGGREGATE LIQUIDATION AMOUNT OF CAPITAL
SECURITIES OUTSTANDING TOGETHER WITH THE MINIMUM CONSENT (THE "MINIMUM
CONDITION"), AND (3) SATISFACTION OF THE OTHER CONDITIONS TO THE TENDER OFFER,
SET FORTH HEREIN. SEE "THE TENDER OFFER AND THE CONSENT SOLICITATION --
CONDITIONS OF THE TENDER OFFER."
PARTIAL TENDERS OF CAPITAL SECURITIES WILL BE ACCEPTED ONLY IN LIQUIDATION
AMOUNTS OF $100,000 AND INTEGRAL MULTIPLES THEREOF; PROVIDED, HOWEVER, THAT IF A
HOLDER TENDERS LESS THAN ALL OF THE CAPITAL SECURITIES HELD BY IT, THE CAPITAL
SECURITIES RETAINED BY SUCH HOLDER MUST HAVE AN AGGREGATE LIQUIDATION AMOUNT OF
AT LEAST $100,000. HOLDERS OF CAPITAL SECURITIES REGISTERED IN THE NAME OF A
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE ARE URGED TO
CONTACT SUCH REGISTERED HOLDER PROMPTLY IF SUCH HOLDER DESIRES TO TENDER CAPITAL
SECURITIES AND CONSENT TO THE PROPOSED AMENDMENTS.
THE TENDER OFFER AND THE CONSENT SOLICITATION ARE NOT BEING MADE TO (NOR
WILL THE TENDER OF CAPITAL SECURITIES FOR PURCHASE BE ACCEPTED FROM OR ON BEHALF
OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF ANY TENDER
OFFER, INCLUDING THE CONSENT SOLICITATION, WOULD NOT BE IN COMPLIANCE WITH THE
LAWS OF SUCH JURISDICTION.
<PAGE> 4
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<PAGE> 5
IMPORTANT INFORMATION
Any Holder desiring to tender Capital Securities and deliver Consents
should either: (1) in the case of a Holder who holds physical certificates
evidencing such Capital Securities, complete and sign a Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions therein, have such
Holder's signature thereon guaranteed (if required by Instruction 1 of the
Letter of Transmittal) and send or deliver such manually signed Letter of
Transmittal (or a manually signed facsimile thereof), together with certificates
evidencing such Capital Securities and any other required documents to First
Chicago Trust Company of New York, as Depositary (the "Depositary"); or (2) in
the case of a Holder whose Capital Securities are held in book-entry form,
request such Holder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such Holder. A beneficial owner who has
Capital Securities registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such beneficial owner desires to tender
and deliver Consents for Capital Securities so registered. See "The Tender Offer
and the Consent Solicitation -- Procedures for Tendering Capital Securities and
Delivering Consents."
After the Consent Time but prior to the Expiration Time, any Holder who
desires to tender Capital Securities, but who cannot comply with the procedures
set forth herein for tender on a timely basis or whose certificates for Capital
Securities are not immediately available, may tender the Capital Securities by
following the procedures for guaranteed delivery set forth under "The Tender
Offer and the Consent Solicitation - Procedures for Tendering Capital Securities
and Delivering Consents -- Guaranteed Delivery Procedures." HOLDERS SHOULD BE
AWARE THAT THE GUARANTEED DELIVERY PROCEDURES CANNOT BE USED PRIOR TO THE
CONSENT TIME AND THAT USE OF THE GUARANTEED DELIVERY PROCEDURES WILL RESULT IN
HOLDERS BEING INELIGIBLE TO RECEIVE THE CONSENT PAYMENT WITH RESPECT TO THE
CAPITAL SECURITIES SO DELIVERED WHICH MIGHT OTHERWISE BE PAID.
------------------------
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO A TENDER OF CAPITAL SECURITIES AND CONSENT TO THE PROPOSED
AMENDMENTS.
i
<PAGE> 6
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files periodic reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed with the Commission can be inspected and copied (at prescribed
rates) at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington D.C. 20549, and at
certain of its regional offices located at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661 and 13th Floor, Seven World Trade Center, New York, New
York 10048. Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a site on the Internet that
contains reports, proxy statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
site on the Internet is http://www.sec.gov. Such reports, proxy statements and
other information may also be obtained from the Company, upon the oral or
written request of any Holder, at Integon Corporation, 500 West Fifth Street,
Winston-Salem, North Carolina 27152, Attention: Corporate Secretary.
This Offer to Purchase has been included as an exhibit to the Company's
Issuer Tender Offer Statement on Schedule 13E-4 which has been filed with the
Commission pursuant to the Exchange Act. Such document and any amendments
thereto may be examined, and copies may be obtained from the Commission in the
manner set forth above. Copies of the Junior Subordinated Indenture and the
Trust Agreement may be obtained from the Company upon request at the address set
forth above.
No financial statements or other financial information of the Trust are
included herein. The Company considers that such financial statements would not
be material to the Holders because: (i) all of the securities of the Trust other
than the Capital Securities are beneficially owned by the Company; (ii) the
Trust is a special purpose entity, has no operating history or independent
operations, but exists for the sole purpose of, and does not propose to engage
in any activity other than, issuing securities representing trust interests
(including the Capital Securities) in the Trust and investing the proceeds
thereof in, and holding, certain Junior Subordinated Debentures issued by the
Company; and (iii) the obligations of the Trust under the Capital Securities, to
the extent funds are available therefor, are fully and unconditionally
guaranteed by the Company under the Trust Agreement and other related
instruments.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Important information about the business, management and financial
condition of the Company is contained in the periodic reports and other
information the Company files with the Commission. The following documents filed
by the Company with the Commission are incorporated herein by reference and
shall be deemed to be a part hereof: (i) the Company's Form 10-K/A dated
September 15, 1997 for year ended December 31, 1996; (ii) the Company's Form
10-Q/A dated September 15, 1997 (two reports) for quarters ended June 30, 1997
and March 31, 1997; (iii) the Company's Current Reports on Forms 8-K dated
October 21, 1997, October 17, 1997, October 16, 1997, August 14, 1997, August 4,
1997, July 18, 1997, July 7, 1997, July 1, 1997, and June 24, 1997; (iv) the
Company's Registration Statement on Form S-4 (Commission Registration No.
333-22839) dated May 15, 1997; and (v) the Company's Proxy Statement dated
September 16, 1997. Such documents are hereby incorporated herein by reference
thereto. The Company will provide without charge to each person to whom this
Offer to Purchase is delivered, upon the written or oral request of such person,
a copy of any and all documents incorporated by reference herein (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to Corporate Secretary, Integon Corporation, 500 West Fifth Street,
Winston-Salem, North Carolina 27152, telephone number (910) 770-2000. In order
to ensure timely delivery of the documents, any request should be made by
November 19, 1997.
In addition, all documents, reports and information subsequently filed by
the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Offer to Purchase and prior to
ii
<PAGE> 7
the Expiration Time are incorporated herein by reference and shall be deemed to
be a part hereof from the respective date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Offer to
Purchase to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Offer to Purchase.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE TENDER OFFER OTHER THAN THOSE CONTAINED
OR INCORPORATED BY REFERENCE IN THIS OFFER TO PURCHASE, AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS OFFER TO PURCHASE,
THE TENDER OF THE CAPITAL SECURITIES PURSUANT TO THE TENDER OFFER NOR THE
ACCEPTANCE OF ANY CONSENT PURSUANT TO THE CONSENT SOLICITATION SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS
CORRECT AS OF THE TIME SUBSEQUENT TO THE DATE HEREOF.
iii
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TABLE OF CONTENTS
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PAGE
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Important Information....................................... i
Additional Information...................................... ii
Incorporation of Certain Documents by Reference............. ii
Summary..................................................... 1
The Company................................................. 6
The Trust................................................... 6
Purpose and Effects of the Tender Offer and the Consent
Solicitation.............................................. 7
The Tender Offer.......................................... 7
The Consent Solicitation.................................. 7
The Tender Offer and the Consent Solicitation............... 8
Introduction.............................................. 8
Total Consideration, Tender Offer Consideration, Consent
Payment and Accumulated Distributions.................. 9
The Consent Solicitation.................................. 9
Expiration Time, Extensions, Termination and Amendments... 11
Effect of Tender.......................................... 12
Acceptance for Payment, Payment for Capital Securities and
Acceptance of Consents................................. 12
Procedures for Tendering Capital Securities and Delivering
Consents............................................... 13
Withdrawal and Revocation Rights.......................... 18
Conditions of the Tender Offer............................ 18
Source and Amount of Funds................................ 20
The Dealer Manager........................................ 20
The Depositary............................................ 21
Information Agent......................................... 21
Fees and Expenses......................................... 21
Description of the Trust Securities and the Junior
Subordinated Debentures................................... 21
The Trust Securities...................................... 21
The Junior Subordinated Debentures........................ 23
Guarantee of Payments of Capital Securities................. 23
Summary................................................... 23
The Guarantee............................................. 23
The Expense Agreement..................................... 24
Relationship Among and Effect of the Capital Securities,
the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Trust Agreement the
Guarantee and the Expense Agreement.................... 24
The Proposed Amendments..................................... 25
Certain U.S. Federal Income Tax Considerations.............. 26
Tax Considerations for Tendering and Consenting Holders... 27
Tax Considerations for Non-Tendering Holders.............. 27
Reporting and Backup Withholding.......................... 28
Payments to Foreign Holders............................... 28
Certain Considerations...................................... 28
Potential Adverse Effects of the Proposed Amendments on
Non-Tendering Holders.................................. 29
Potential Adverse Effects of the Tender Offer on Market
for Capital Securities................................. 29
Transactions and Arrangements Concerning the Capital
Securities................................................ 29
Price Ranges of the Capital Securities...................... 30
Independent Auditors........................................ 30
Selected Consolidated Financial Information................. 30
Capitalization.............................................. 33
Annex 1 The Proposed Amendments to the Junior Subordinated
Indenture................................................. A-1
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SUMMARY
The Company has announced its offer to purchase for cash any and all of the
Capital Securities and to solicit Consents with respect to the Capital
Securities, upon the terms and subject to the conditions set forth herein.
Morgan Stanley has been designated as the exclusive Dealer Manager and
Solicitation Agent for the Tender Offer and the Consent Solicitation. For your
convenience, the Tender Offer and Consent Solicitation are summarized below. The
following summary is qualified in its entirety by the more detailed information
contained elsewhere in this Offer to Purchase and the Letter of Transmittal and
is not intended to be complete. Holders are urged to read carefully this Offer
to Purchase, the documents incorporated by reference herein and the Letter of
Transmittal in their entirety. Each of the capitalized terms used in this
Summary and not defined herein has the meaning set forth elsewhere in this Offer
to Purchase.
THE TENDER OFFER AND THE CONSENT SOLICITATION
THE COMPANY................... Integon Corporation.
THE TRUST..................... Integon Capital I.
THE TENDER OFFER.............. Offer to purchase any and all of the 10 3/4%
Capital Securities, Series B issued by the
Trust validly tendered and not withdrawn for
the consideration described herein.
HOLDERS ENTITLED TO
PARTICIPATE................... This Offer to Purchase is being sent to all
persons in whose name Capital Securities are
registered on the books of the Trust as of the
close of business on the Record Date and known
purchasers of such persons. Only a record
Holder of Capital Securities on the Record Date
may give Consent to the Proposed Amendments and
execution of the Supplemental Indenture. No
record date is fixed for determining which
Holders are permitted to tender Capital
Securities. Partial tenders of Capital
Securities will be accepted only in liquidation
amounts of $100,000 and integral multiples
thereof; provided, however, that if a Holder
tenders less than all of the Capital Securities
held by it, the Capital Securities retained by
such Holder must have an aggregate liquidation
amount of at least $100,000. Holders who
purchase Capital Securities or whose purchase
settles or is registered after the close of
business on the Record Date and at or prior to
the Consent Time who wish to tender their
Capital Securities in the Tender Offer must
arrange with their Seller to receive a Proxy
from the Holder on the Record Date of such
Capital Securities. A Holder desiring to tender
Capital Securities pursuant to the Tender Offer
must deliver its Consent to the Proposed
Amendments and execution of the Supplemental
Indenture and if the tendering Holder was not
the Holder as of the Record Date, such Holder
must also deliver a Proxy validly executed by
the Holder as of the Record Date. Such Holders
desiring to participate must follow the
procedures set forth herein and in the Letter
of Transmittal. Holders of Capital Securities
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
are urged to contact such person promptly if
they wish to tender Capital Securities pursuant
to the Tender Offer.
PURPOSE AND EFFECTS OF
THE TENDER OFFER AND THE
CONSENT SOLICITATION.......... The purpose of the Tender Offer is to purchase
all of the Capital Securities in order to
improve the Company's future liquidity and
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capital position. By purchasing the Capital
Securities tendered pursuant to the Tender
Offer, the Company will be able to save the
interest expense related to the purchased
Capital Securities. The Company believes that
it will be able to redirect the savings into
new and/or existing business areas.
The purpose of the Consent Solicitation is (i)
to eliminate or modify certain covenants and
other provisions of the Junior Subordinated
Indenture so that any non-tendered Capital
Securities do not restrict the future financial
and operating flexibility of the Company and
(ii) to reduce the Company resources currently
allocated to reporting and filing the various
documents, reports and information with the
Commission that the Company will not otherwise
be required by law to report and file.
TOTAL CONSIDERATION........... The Total Consideration for each $1,000
liquidation amount of Capital Securities which
are tendered and for which Consents have been
validly delivered and not validly revoked shall
be $1,347.33 which includes Accumulated
Distributions, up to, but not including the
Settlement Date.
CONSENT PAYMENT............... The Consent Payment shall be a fee of $20.00 in
cash for each $1,000 liquidation amount of the
Capital Securities for which Consents have been
validly delivered and not validly revoked. TO
RECEIVE THE CONSENT PAYMENT (IN ADDITION TO THE
TENDER OFFER CONSIDERATION), A HOLDER MUST,
PRIOR TO THE CONSENT TIME, TENDER THE CAPITAL
SECURITIES AND CONSENT TO THE PROPOSED
AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL
INDENTURE AND, IF THE CONSENTING HOLDER WAS NOT
THE HOLDER AS OF THE RECORD DATE, DELIVER A
PROXY, WITH SUCH PAYMENT BEING MADE IF, BUT
ONLY IF, THE CAPITAL SECURITIES TO WHICH SUCH
CONSENTS RELATE ARE ACCEPTED FOR PAYMENT
PURSUANT TO THE TERMS OF THE TENDER OFFER AND
THE PROPOSED AMENDMENTS BECOME EFFECTIVE.
TENDER OFFER CONSIDERATION.... The Tender Offer Consideration for each $1,000
liquidation amount of Capital Securities
tendered shall be an amount equal to the Total
Consideration minus the Consent Payment.
RECORD DATE................... November 14, 1997
CONSENT DATE.................. With respect to the Consent Solicitation, the
Consent Date shall be Tuesday, November 25,
1997 if prior to 5:00 p.m., New York City time,
on such date the Company shall have received
the Minimum Consent to the Proposed Amendments,
or such later date on which the Company shall
have first received the Minimum Consent. The
term "Consent Date" as used herein shall
include any such extension. Although the
Company may execute the Supplemental Indenture
prior to the acceptance of Capital Securities,
the Proposed Amendments contained therein will
not become operative until the date and time
that all Capital Securities underlying the
Minimum Consent are accepted for purchase and
payment is made pursuant thereto.
EXPIRATION TIME............... The Tender Offer expires at 12:00 Midnight, New
York City time, on Wednesday, December 10,
1997, unless extended by the Company in its
sole discretion or earlier terminated. The date
of such
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expiration, as such may be extended pursuant to
the procedures described herein, is referred to
herein as the "Expiration Time." See "The
Tender Offer and the Consent Solicitation --
Expiration Time, Extensions, Termination and
Amendments" below.
THE CONSENT SOLICITATION...... In conjunction with the Tender Offer, the
Company is soliciting Consents to the Proposed
Amendments. The Company is offering to pay to
each Holder who validly consents to the
Proposed Amendments prior to the Consent Time,
on the Consent Date, the Consent Payment. Such
payment will be made on the Settlement Date if,
but only if, the Capital Securities to which it
relates are accepted for payment pursuant to
the terms of the Tender Offer and the Proposed
Amendments become effective. Holders who tender
Capital Securities pursuant to the Tender Offer
will be required, as a condition to a valid
tender, to have delivered their Consent to all
of the Proposed Amendments. THE PROPER TENDER
OF CAPITAL SECURITIES BY HOLDERS PURSUANT TO
THE TENDER OFFER WILL CONSTITUTE THE GIVING OF
A CONSENT TO THE PROPOSED AMENDMENTS AND
EXECUTION OF THE SUPPLEMENTAL INDENTURE. See
"The Tender Offer and the Consent Solicitation
-- The Consent Solicitation" below.
MINIMUM CONSENT............... The duly executed (and not revoked) Consents of
the registered Holders of a majority of the
outstanding aggregate liquidation amount of
Capital Securities will be required for the
Company to amend the Junior Subordinated
Indenture.
THE PROPOSED AMENDMENTS....... For a brief description of the Proposed
Amendments to the Junior Subordinated Indenture
for which Consents are being sought pursuant to
the Consent Solicitation, see "The Proposed
Amendments."
HOW TO TENDER CAPITAL
SECURITIES AND DELIVER
CONSENTS...................... See "The Tender Offer and the Consent
Solicitation -- Procedures for Tendering
Capital Securities and Delivering Consent"
below. For more information, call the
Information Agent or the Dealer Manager or
consult your broker, dealer, commercial bank,
trust company or other nominee for assistance.
WITHDRAWAL AND REVOCATION
RIGHTS........................ Tenders of Capital Securities may be withdrawn
at any time prior to the Expiration Time.
Thereafter, such tenders are irrevocable,
except that they may be withdrawn after January
9, 1998, unless previously accepted for payment
as provided in this Offer to Purchase. Consents
may be revoked at any time prior to the Consent
Time so long as any Capital Securities tendered
therewith are concurrently withdrawn.
Thereafter, such Consents are irrevocable. A
valid withdrawal of tendered Capital Securities
prior to the Consent Time shall be deemed a
revocation of the related Consent. See "The
Tender Offer and the Consent Solicitation --
Withdrawal and Revocation Rights."
CONDITIONS OF THE TENDER
OFFER......................... Notwithstanding any other provision of the
Tender Offer or the Consent Solicitation (or
any extensions or amendments thereof), the
Company will not be required to accept for
payment, or pay for, any Capital Securities
tendered and may terminate the Tender Offer and
may, subject to Rule 14e-1 under the Exchange
Act,
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postpone the acceptance of any Capital
Securities tendered or delay payment for
Capital Securities accepted for payment, if,
among other things:
(1) the Minimum Consent Condition shall not
have been satisfied;
(2) the Minimum Condition shall not have been
satisfied; or
(3) any other condition to the consummation of
the Tender Offer remains unsatisfied.
See "The Tender Offer and the Consent
Solicitation -- Conditions of the Tender
Offer."
CERTAIN TAX CONSIDERATIONS.... Although the tax treatment may vary depending
on each Holder's particular circumstances, the
Company believes that the acceptance of
tendered Capital Securities will be a taxable
transaction for U.S. federal income tax
purposes. In general, a Holder will recognize
gain or loss (subject to the market discount
rules discussed below) on the sale of Capital
Securities pursuant to the Tender Offer in an
amount equal to the difference, if any, between
its adjusted tax basis in the Capital
Securities and the cash received upon such sale
(other than that portion of such amount that is
properly allocable to Accumulated
Distributions, which will be taxed as ordinary
income). Although the matter is not free from
doubt, the Company intends to treat the Consent
Payment for U.S. federal income tax purposes as
additional cash received in exchange for a
Holder's Capital Securities. Holders of Capital
Securities should read carefully "Certain U.S.
Federal Income Tax Considerations" and are
urged to consult their own tax advisors.
CERTAIN CONSEQUENCES TO
HOLDERS NOT TENDERING......... Consummation of the Tender Offer and the
Consent Solicitation may have adverse
consequences for non-tendering Holders of
Capital Securities, including the following:
(i) Holders of Capital Securities after
consummation of the Tender Offer and the
Consent Solicitation will not be entitled to
the benefit of certain of the covenants
presently contained in the Junior Subordinated
Indenture; (ii) the trading market for the
Capital Securities not tendered in response to
the Tender Offer is likely to be significantly
more limited; and (iii) the obligation of the
Company to furnish financial and other
information to the Holders could be materially
lessened or eliminated. See "Certain
Considerations" below.
WAIVERS, EXTENSIONS AND
AMENDMENTS.................... The Company expressly reserves the right in its
sole discretion, subject to applicable law, at
any time and from time to time, to (1) waive
any condition to the Tender Offer and accept
all Capital Securities previously tendered
pursuant to the Tender Offer, (2) extend the
Expiration Time of the Tender Offer and retain
all Capital Securities tendered pursuant
thereto, subject, however, to the withdrawal
rights of Holders as described under "The
Tender Offer and the Consent Solicitation --
Withdrawal and Revocation Rights," or (3) amend
the terms of the Tender Offer. Any amendment
applicable to the Tender Offer will apply to
all Capital
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Securities previously tendered pursuant to the
Tender Offer. See "The Tender Offer and the
Consent Solicitation -- Expiration Time,
Extensions, Termination and Amendments" below.
RECOMMENDATION OF THE COMPANY
AND THE TRUST................. None of the Company, the Company's Board of
Directors and management, the Trust, the
Trustees and Administrators makes any
recommendation to any Holder as to whether to
tender or refrain from tendering Capital
Securities, and if so, the amount of Capital
Securities to tender.
BROKERAGE COMMISSION.......... No brokerage commissions are payable by Holders
to the Dealer Manager, the Information Agent,
the Company, or the Depositary.
DEALER MANAGER AND
SOLICITATION AGENT............ Morgan Stanley & Co. Incorporated
INFORMATION AGENT............. D.F. King & Co., Inc.
DEPOSITARY.................... First Chicago Trust Company of New York
FURTHER INFORMATION........... For further information or additional copies of
this Offer to Purchase and the Letter of
Transmittal, contact the Information Agent or
Dealer Manager as set forth in the back cover
of this Offer to Purchase. Letters of
Transmittal and Capital Securities should not
be sent to the Company, the Trust, the Dealer
Manager or the Information Agent. Such
documents should only be sent to the
Depositary.
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THE COMPANY
The Company, through its wholly owned property and casualty insurance
subsidiaries, specializes in the marketing and underwriting of nonstandard
automobile insurance to individuals. To a lesser extent, the Company also writes
specialty automobile insurance and, in North Carolina, preferred risk automobile
insurance. The Company has been writing insurance for more than 25 years and
currently markets its products in 31 states through approximately 12,500
independent agencies located principally in the eastern United States.
The Company's nonstandard automobile insurance products are designed for
drivers who are unable to obtain coverage from standard market carriers due to
prior driving records, other underwriting criteria or market conditions. These
drivers are normally charged higher premium rates than the rates charged for
preferred or standard risk drivers and generally obtain lower liability limits
than preferred or standard risk policyholders. The Company's specialty
automobile products include business vehicle insurance designed primarily for
trades people and artisans who have small fleets or lightweight single vehicles,
as well as motorcycle insurance.
On October 17, 1997, the Company was acquired through merger with a wholly
owned indirect subsidiary of General Motors Acceptance Corporation ("GMAC"). The
Company is now a direct subsidiary of GMAC Insurance Holdings, Inc., a Delaware
corporation and wholly owned subsidiary of GMAC ("GMACI").
The address of the Company's principal office is 500 West Fifth Street,
Winston-Salem, North Carolina 27152. The Company's principal insurance
subsidiaries are Integon Preferred Insurance Company, Integon National Insurance
Company, Integon Casualty Insurance Company, Integon Indemnity Corporation,
Integon General Insurance Corporation, New South Insurance Company, and Integon
Specialty Insurance Company. In addition, through Salem Underwriters, Inc., the
Company offers premium financing for the Company's insureds in North Carolina.
THE TRUST
The Trust is a statutory business trust created under the laws of the State
of Delaware pursuant to (i) a trust agreement, executed by the Company, as
sponsor for the Trust and as Depositor, one of the Administrators (as defined
below) and the Delaware Trustee (as defined below), and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on January 27, 1997.
Such original trust agreement was amended and restated in its entirety by the
Trust Agreement as of February 10, 1997. The Trust has a term of approximately
31 years, but may terminate earlier as provided in the Trust Agreement.
The Trust exists for the exclusive purposes of: (i) issuing the Series A
Capital Securities (as defined below) and the common securities (the "Common
Securities") representing trust interests in the assets for the Trust; (ii)
purchasing the Series A Junior Subordinated Debentures (as defined below) with
the proceeds from the sale of the Series A Capital Securities and the Common
Securities; (iii) effecting the Exchange Offer (as defined below) pursuant to
which the Trust issued the Capital Securities in exchange for the Series A
Capital Securities and received the Junior Subordinated Debentures in exchange
for the Series A Junior Subordinated Debentures; and (iv) engaging only in those
other activities necessary or incidental thereto.
The business and affairs of the Trust are conducted by two trustees and
individual administrators. The trustees include a Property Trustee, First Union
National Bank of North Carolina (the "Property Trustee"), and a Delaware
Trustee, First Union Bank of Delaware, an affiliate of the Property Trustee (the
"Delaware Trustee," and together with the Property Trustee, the "Trustees"). Any
individual administrative trustees (the "Administrators") are employees or
officers of or are otherwise affiliated with the Company. Unless an event of
default under the Junior Subordinated Indenture (a "Debenture Event of Default")
has occurred and is continuing, the holder of the Common Securities will be
entitled to appoint, remove or replace any Trustee at any time. If a Debenture
Event of Default has occurred and is continuing, the Holders of at least a
majority in liquidation amount of the then outstanding Capital Securities will
be able to appoint, remove or replace either or both of the Trustees. The duties
and obligations of the Trustees are governed by the Trust Agreement.
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The Company will pay all fees and expenses of the Trust related to the
Offer. The address of the Trust's principal executive office is 500 West Fifth
Street, Winston-Salem, North Carolina 27152.
PURPOSE AND EFFECTS OF THE TENDER OFFER
AND THE CONSENT SOLICITATION
THE TENDER OFFER
Pursuant to the terms of the Capital Securities and the Junior Subordinated
Debentures, the Company is paying interest on such instruments at a rate equal
to 10 3/4% per annum. In order to reduce the high interest expense as well as
the related administrative costs of the Trust (which, pursuant to the Trust
Agreement and Expense Agreement (as defined below), the Company is obligated to
pay), the Company desires to purchase all of the outstanding Capital Securities.
To fund the Tender Offer, GMACI, as the direct parent of the Company,
intends to contribute additional capital to the Company in an amount in excess
of the sum of the aggregate cost of the Tender Offer and the fees and expenses
related thereto. GMACI intends to fund such capital contribution through a
combination of a capital contribution to GMACI by GMAC, the direct parent of
GMACI, and loans pursuant to an intercompany credit facility to be entered into
between GMACI and GMAC.
Upon completion of the Tender Offer, the Company will have less debt
outstanding and additional capital on its books. In addition to improving the
capital position of the Company, the interest and administrative costs saved can
be redirected toward the core business operations of the Company, developing new
business areas and/or enhancing the Company's ability to engage in future
strategic acquisitions should market conditions permit.
THE CONSENT SOLICITATION
The purpose of the Consent Solicitation is to provide the Company with
increased flexibility with respect to the operations of its business as well as
reduce the Company's expenses by decreasing the resources used to satisfy
certain currently required reporting obligations of the Company pursuant to the
Junior Subordinated Indenture.
The Proposed Amendments eliminate and modify certain covenants and other
provisions of the Junior Subordinated Indenture so that any non-tendered Capital
Securities do not restrict the future financial and operating flexibility of the
Company. See "The Proposed Amendments" below.
Additionally, the Exchange Act and the regulations thereunder currently
require the Company to file periodically certain information, documents and
other reports with the Commission. This regulatory reporting requirement of the
Company will be suspended at the end of the Company's current fiscal year,
December 31, 1997. Thereafter, the Company would normally, and without violation
of the Exchange Act, be able to cease such reporting under certain rules which
exempt companies from such reporting and filing requirements when such a
company's securities are held by 300 or fewer persons, as are the Company's
securities.
Despite this exemption, the Company will still be required to expend the
resources to prepare and file the information, documents and reports after
December 31, 1997 due to contractual obligations in the Junior Subordinated
Indenture which require the Company to continue such reporting. The Junior
Subordinated Indenture also requires timely delivery of such information,
documents and reports to the Debenture Trustee, and requires continued reporting
even when the Company is not required to do so under the Exchange Act.
The current reporting requirement obligates the Company to expend Company
resources in satisfaction thereof. In an effort to reduce the administrative
costs incurred by the Company, the Company is soliciting the Consents from
Holders as of the Record Date to eliminate the reporting requirements when the
applicable laws do not so require them. The Company believes the saved
administrative expense will be more effectively used if redirected to its
business operations.
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Therefore, the Proposed Amendments revise the reporting requirements of
such information, documents and other reports to require that the Company
prepare and file such information with the Commission, and deliver such
information to the Debenture Trustee, when the Trust Indenture Act, Exchange Act
or any other law requires the same of the Company.
THE TENDER OFFER AND THE CONSENT SOLICITATION
INTRODUCTION
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the accompanying Letter of Transmittal,
to purchase for cash any and all of the outstanding Capital Securities that are
validly tendered and not withdrawn at or prior to the Expiration Time for the
consideration herein described. The Company will accept partial tenders of
Capital Securities in liquidation amounts of $100,000 or integral multiples
thereof; provided, however, that if a Holder tenders less than all of the
Capital Securities held by it, the Capital Securities retained must have an
aggregate liquidation amount of at least $100,000. The Tender Offer will expire
at 12:00 Midnight, New York City time, on Wednesday, December 10, 1997, unless
extended by the Company in its sole discretion, subject to the right of the
Company, in its sole discretion, to the extent that it is legally permitted to
do so, to terminate, withdraw or amend the Tender Offer at any time as described
herein.
Holders of Capital Securities may choose to participate in the Tender Offer
by following the procedures described herein. Holders who tender their Capital
Securities will be required, as a condition to a valid tender, to consent to the
Proposed Amendments and execution of the Supplemental Indenture with respect to
the tendered Capital Securities and, in the case of a tendering Holder who was
not the Holder as of the Record Date, to deliver a validly executed Proxy. The
proper tender of Capital Securities by Holders pursuant to one of the procedures
set forth herein will constitute the delivery of a Consent to the Proposed
Amendments and execution of the Supplemental Indenture. See "-- The Consent
Solicitation."
As of November 10, 1997, the aggregate liquidation amount of Capital
Securities outstanding was $100,000,000. This Offer to Purchase, together with
the Letter of Transmittal, is being sent to all such Holders as of the close of
business on the Record Date and known transferees of such persons. No record
date is fixed for determining which persons are permitted to tender Capital
Securities, although any Holder tendering Capital Securities pursuant to the
Tender Offer who was not the Holder as of the Record Date must deliver a Proxy
of the Holder as of the Record Date in order to tender prior to the Consent
Time. See "-- Procedures for Tendering Capital Securities and Delivering
Consents."
The Company will purchase such amount of the Capital Securities outstanding
as is properly tendered (and not properly withdrawn) at or prior to the
Expiration Time. None of the Company's officers, directors and affiliates holds
any Capital Securities.
NOTWITHSTANDING ANY OTHER PROVISIONS OF THE TENDER OFFER OR THE CONSENT
SOLICITATION (OR ANY EXTENSIONS OR AMENDMENTS THEREOF), THE COMPANY WILL NOT BE
REQUIRED TO ACCEPT FOR PAYMENT, OR PAY FOR, THE CAPITAL SECURITIES TENDERED AND
MAY TERMINATE THE TENDER OFFER AND MAY, SUBJECT TO RULE 14E-1 UNDER THE EXCHANGE
ACT, POSTPONE THE ACCEPTANCE OF THE CAPITAL SECURITIES TENDERED OR DELAY PAYMENT
FOR CAPITAL SECURITIES ACCEPTED FOR PAYMENT IF ANY OF THE CONDITIONS TO THE
CONSUMMATION OF THE TENDER OFFER IS NOT SATISFIED. SEE "-- CONDITIONS OF THE
TENDER OFFER."
If the Company makes a material change in the terms of the Tender Offer or
the information contained in the Tender Offer, or if it waives a material
condition of the Tender Offer, the Company will extend the Tender Offer to the
extent required by the Exchange Act.
NONE OF THE COMPANY, THE COMPANY'S BOARD OF DIRECTORS AND MANAGEMENT, THE
TRUST, THE TRUSTEES AND THE ADMINISTRATORS MAKES ANY RECOMMENDATION TO HOLDERS
OF CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR CAPITAL SECURITIES PURSUANT TO THE TENDER OFFER. IN
ADDITION, NO ONE HAS BEEN
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AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE TENDER
OFFER AND, IF SO, THE AGGREGATE LIQUIDATION AMOUNT OF CAPITAL SECURITIES TO
TENDER.
TOTAL CONSIDERATION, TENDER OFFER CONSIDERATION, CONSENT PAYMENT AND ACCUMULATED
DISTRIBUTIONS
The Total Consideration for each $1,000 liquidation amount of Capital
Securities tendered and accepted for payment pursuant to the Tender Offer shall
be $1,347.33 which includes Accumulated Distributions, up to, but not including,
the Settlement Date. The Tender Offer Consideration for each $1,000 liquidation
amount of Capital Securities tendered and accepted for payment pursuant to the
Tender Offer shall be an amount equal to the Total Consideration minus the
Consent Payment.
Upon the terms and subject to the conditions of the Consent Solicitation
(including, if the Consent Solicitation is extended or amended, the terms of any
such extension or amendment), the Company is soliciting Consents to the Proposed
Amendments and execution of the Supplemental Indenture from Holders, and is
offering to pay each Holder who validly consents to the Proposed Amendments
prior to the Consent Time on the Consent Date, a Consent Payment in the amount
of $20.00 per $1,000 liquidation amount of the Capital Securities for which
Consents have been validly delivered and not validly revoked prior to the
Consent Time, if, but only if, the Capital Securities for which the Consents
relate are accepted for payment pursuant to the terms of the Tender Offer.
The Holder of Capital Securities validly tendered and accepted for payment
will receive Accumulated Distributions thereon from the most recent payment
thereof preceding the Settlement Date to, but not including, the Settlement
Date.
Upon the terms and subject to the conditions of the Tender Offer
(including, if the Tender Offer is extended or amended, the terms and conditions
of any such extension or amendment) and applicable law, the Company will pay for
all Capital Securities validly tendered (and not withdrawn) pursuant to the
Tender Offer on the Settlement Date. Payment for such Capital Securities,
including any Consent Payment and the Accumulated Distributions, will be made in
immediately available (same-day) funds.
THE CONSENT SOLICITATION
In conjunction with the Tender Offer, and upon the terms and subject to the
conditions of the Consent Solicitation (including if the Consent Solicitation is
extended or amended, the terms of such extension or amendment), the Company is
soliciting Consents to the Proposed Amendments and execution of the Supplemental
Indenture. For a description of the Proposed Amendments, see "The Proposed
Amendments" below. Holders (including Holders who acquire Capital Securities
subsequent to the Record Date) will not be able to validly tender their Capital
Securities unless they have delivered a duly completed, valid and unrevoked
Consent indicating their vote for the Proposed Amendments.
HOLDERS WHO PURCHASE CAPITAL SECURITIES OR WHOSE PURCHASE SETTLES OR IS
REGISTERED AFTER THE CLOSE OF BUSINESS ON THE RECORD DATE AND AT OR PRIOR TO THE
CONSENT TIME WHO WISH TO TENDER THEIR CAPITAL SECURITIES IN THE TENDER OFFER
MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED, VALID PROXY (WHICH
MAY BE IN THE FORM OF AN IRREVOCABLE PROXY AS SET FORTH IN THE LETTER OF
TRANSMITTAL) FROM THE HOLDER ON THE RECORD DATE OF SUCH CAPITAL SECURITIES. IN
ORDER TO FACILITATE THE RECEIPT OF CONSENTS, CAPITAL SECURITIES SHALL, DURING
THE PERIOD WHICH COMMENCES NOVEMBER 12, 1997 AND WHICH WILL END AT THE
EXPIRATION TIME, TRADE IN THE OVER-THE-COUNTER MARKET "WITH PROXY" PROVIDING THE
PURCHASER WITH THE RIGHT TO VOTE SUCH ACQUIRED CAPITAL SECURITIES IN THE CONSENT
SOLICITATION.
To amend the Junior Subordinated Indenture, the Holders of at least a
majority of the outstanding aggregate liquidation amount of Capital Securities
as of the Record Date (or through Proxy by Holders as of the Record Date) must
deliver Consents thereto.
The Proposed Amendments will be effected by the execution of the
Supplemental Indenture. Although the Supplemental Indenture may be executed
prior to the acceptance of the Capital Securities in accordance
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<PAGE> 18
with the Tender Offer, the Proposed Amendments contained therein will not become
operative until the Settlement Date. If the Proposed Amendments become
effective, they will apply to all Capital Securities. Each Holder of Capital
Securities which were not tendered or accepted for payment pursuant to the
Tender Offer will be bound by such Proposed Amendments regardless of whether
such Holder consented to the Proposed Amendments. Accordingly, consummation of
the Tender Offer potentially may have adverse consequences on non-tendering
Holders. See "Certain Considerations" and "The Proposed Amendments."
If Capital Securities are accepted for payment pursuant to the Tender Offer
and the Proposed Amendments become effective, Holders who validly tender their
Capital Securities pursuant to the Tender Offer and validly give their Consent
to the Proposed Amendments prior to the Consent Time will receive the Total
Consideration, whereas Holders who validly tender their Capital Securities after
the Consent Time but prior to the Expiration Time will receive only the Tender
Offer Consideration.
If the Company has not received the Minimum Consent by the Consent Time on
the Consent Date, the Company shall issue a press release at such time
indicating that the Consent Date has been extended for a fixed period of time,
during which period of time Holders who validly tender Capital Securities shall
be entitled to receive the Consent Payment (in addition to the Tender Offer
Consideration). If such Consent Date is so extended, the withdrawal rights
provided herein shall also be extended for such fixed period of time.
PURSUANT TO THE TERMS OF THE LETTER OF TRANSMITTAL, THE COMPLETION,
EXECUTION AND DELIVERY THEREOF BY A HOLDER IN CONNECTION WITH THE TENDER OF
CAPITAL SECURITIES (AND DELIVERY OF A PROXY, IF REQUIRED) WILL BE DEEMED TO
CONSTITUTE THE DELIVERY OF A CONSENT BY SUCH TENDERING HOLDER TO THE PROPOSED
AMENDMENTS. HOLDERS MAY NOT DELIVER CONSENTS WITHOUT TENDERING THEIR CAPITAL
SECURITIES IN THE TENDER OFFER AND MAY NOT REVOKE CONSENTS WITHOUT WITHDRAWING
FROM THE TENDER OFFER THE PREVIOUSLY TENDERED CAPITAL SECURITIES TO WHICH SUCH
CONSENTS RELATE.
Tenders of Capital Securities may be validly withdrawn at any time prior to
the Expiration Time. Thereafter, such tenders are irrevocable, except that they
may be withdrawn after Friday, January 9, 1998, unless previously accepted for
payment as provided in this Offer to Purchase. Consents may be validly revoked
at any time prior to the Consent Time, but not thereafter. Thereafter, such
Consents are irrevocable. See "--Withdrawal and Revocation Rights." A valid
withdrawal of tendered Capital Securities prior to the Consent Time will
constitute the concurrent valid revocation of such Holder's related Consent. In
order for a Holder to revoke a Consent, such Holder must withdraw the related
tendered Capital Securities.
The Company reserves the absolute right, in its sole discretion, to waive
any defects or irregularities or conditions of the Consent Solicitation. The
Company's interpretation of the terms and conditions of the Consent Solicitation
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with any Consent must be cured within such time as the Company shall
determine. None of the Company, the Depositary and any other person shall be
under any duty to give notification of defects or irregularities with respect to
Consents nor shall any of them incur liability for failure to give such
notification.
Holders who elect to consent to the Proposed Amendments should so indicate
by marking the appropriate box on, and signing and dating the Consent portion
of, the Letter of Transmittal and mailing or delivering the same to the
Depositary in accordance with the instructions contained therein. In the case of
a consenting and tendering Holder who was not the Holder of the Capital
Securities as of the Record Date, such Holder must also deliver a properly
executed Proxy to the Depositary. If the Consent portion of the Letter of
Transmittal is not appropriately completed, but the Letter of Transmittal is
otherwise completed, signed and dated (and, if applicable, a properly executed
Proxy is delivered therewith), the Holder will be deemed to have consented to
the Proposed Amendments. See "-- Proper Execution and Delivery of Letters of
Transmittal."
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<PAGE> 19
EXPIRATION TIME, EXTENSIONS, TERMINATION AND AMENDMENTS
The Tender Offer will expire at 12:00 Midnight, New York City time, on
Wednesday, December 10, 1997, subject to extension by the Company by notice to
the Depositary as herein provided.
The Company expressly reserves the right, in its sole discretion, subject
to applicable law, at any time and from time to time, to extend the Tender
Offer, in which event the term "Expiration Time" shall mean the time and date on
which the Tender Offer, as so extended, shall expire. The Company shall notify
the Depositary of any extension by oral notice (confirmed in writing) or written
notice and shall issue a public announcement thereof, unless otherwise required
by law or regulation, at or prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Time. During such
extensions, all Capital Securities previously tendered and not withdrawn will
remain subject to the Tender Offer, subject to the rights of a tendering Holder
to withdraw its Capital Securities as set forth herein.
Subject to applicable law, the Company also expressly reserves the right,
in its sole discretion, at any time and from time to time, by giving oral notice
(confirmed in writing) or written notice thereof of such amendment to the
Depositary and by making an announcement thereof either by public announcement
or oral or written notice of the Holders as set forth in the previous paragraph,
to (i) terminate the Tender Offer, refuse to accept for tender any Capital
Securities and return all tendered Capital Securities to tendering Holders
thereof, if any of the conditions set forth below under "-- Conditions of the
Tender Offer" is not satisfied and shall not have been validly waived by the
Company, (ii) waive or modify certain conditions with respect to the Tender
Offer and accept all properly tendered Capital Securities, and (iii) amend the
terms of the Tender Offer in any respect until the Capital Securities are
accepted for payment.
The terms of any extension or amendment of the Tender Offer may vary from
the original Tender Offer depending on such factors as prevailing interest rates
and the liquidation amount of Capital Securities previously tendered or
otherwise purchased. There can be no assurance that the Company will exercise
its right to extend, terminate or amend the Tender Offer. If, prior to the
Expiration Time, the Company amends the terms of the Tender Offer, such
amendment will apply to all Capital Securities tendered pursuant thereto. The
Company does not presently intend to change the consideration currently offered.
If the Tender Offer is amended in a manner determined by the Company to
constitute a material change, or if the Company waives a material condition to
the Tender Offer, the Company will promptly disclose such amendment by means of
an amended or supplemented Offer to Purchase and will distribute such amended or
supplemented Offer to Purchase to the registered Holders of the Capital
Securities if and to the extent required by applicable law, and the Company will
extend the Tender Offer to the extent required by the Exchange Act. If the
Company shall decide, in its sole discretion, to decrease the liquidation amount
of Capital Securities being sought in the Tender Offer or increase or decrease
the consideration offered to Holders, the Company will, to the extent required
by applicable law, cause such Tender Offer to be extended, if necessary, so that
the Tender Offer remains open at least until the expiration of ten business days
from the date that such notice is first published, sent or given by the Company.
With respect to any other material change in the terms of the Tender Offer or
the information concerning the Tender Offer, the minimum period during which the
Tender Offer must remain open following such material change depends on the
facts and circumstances including the relative materiality of such terms and
conditions.
Subject to applicable law (including Rules 13-4(d)(2), 13e-4(e)(2),
13e-4(f)(1)(ii) and 14e-1 under the Exchange Act, which require that material
changes be promptly disseminated to Holders in a manner reasonably designed to
inform them of such changes) and without limiting the manner in which the
Company may choose to make any public announcement, the Company shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service. For purposes of this section, "business day" means any day other than
Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 Midnight, New York City time. All Capital Securities
tendered pursuant to the Tender Offer prior to any extension and not
subsequently withdrawn will remain subject to the Tender Offer.
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<PAGE> 20
EFFECT OF TENDER
Tenders of Capital Securities pursuant to one of the procedures described
herein (and subsequent acceptance of such tender) by the Company will constitute
a binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Offer to Purchase, in the Letter
of Transmittal and, if applicable, the Notice of Guaranteed Delivery (as defined
below). The acceptance of the Tender Offer by a tendering Holder will constitute
the agreement by such Holder to deliver good and marketable title to the
tendered Capital Securities free and clear of all liens, charges, adverse
claims, encumbrances, interest and restrictions of any kind.
ACCEPTANCE FOR PAYMENT, PAYMENT FOR CAPITAL SECURITIES AND ACCEPTANCE OF
CONSENTS
Upon the terms and subject to the conditions of the Tender Offer
(including, if the Tender Offer is extended or amended, the terms and conditions
of any such extension or amendment) and applicable law, the Company will
purchase, by accepting for payment, and will pay for, all Capital Securities
validly tendered (and not withdrawn) prior to the Expiration Time no later than
the Settlement Date in immediately available (same-day) funds.
The Company expressly reserves the right, in its sole discretion, to delay
acceptance for payment of Capital Securities tendered pursuant to the Tender
Offer or the payment for the Capital Securities accepted for payment (subject to
Rule 14e-1(c) under the Exchange Act) if any of the conditions of the Tender
Offer shall not have been satisfied or waived or in order to comply, in whole or
in part, with applicable law. In all cases, however, payments will be made in
respect of Capital Securities tendered and accepted for payment pursuant to the
Tender Offer only after timely receipt by the Depositary at its address on the
back cover hereof of (1) certificates for all physically delivered Capital
Securities in proper form for transfer or confirmation of a book-entry transfer
of such Capital Securities into the Depositary's account at DTC (as defined
below) pursuant to the procedures set forth herein, (2) a properly completed and
duly executed Letter of Transmittal or a properly transmitted Agent's Message
(as defined herein), and (3) any other documents required by the Letter of
Transmittal, in each case together with any applicable signature guarantees. IN
NO CIRCUMSTANCES WILL INTEREST ON ANY PAYMENTS BE PAID BY REASON OF ANY DELAY IN
MAKING SUCH PAYMENTS.
For purposes of the Tender Offer, the Company shall be deemed to have
accepted for payment tendered Capital Securities as, if and when, the Company
gives oral or written notice to the Depositary of the Company's acceptance of
such Capital Securities for payment. Upon the terms and subject to the
conditions of the Tender Offer, payment for the Capital Securities so accepted
will be made by deposit of the Total Consideration or the Tender Offer
Consideration therefor with the Depositary. The Depositary will act as agent for
the tendering Holders for the purpose of receiving payment from the Company and
then transmitting payment to or at the direction of such Holders. Partial
tenders of Capital Securities will be accepted only in liquidation amounts equal
to $100,000 or integral multiples thereof; provided, however, that if a Holder
tenders less than all of the Capital Securities held by it, the Capital
Securities retained by such Holder must have an aggregate liquidation amount of
at least $100,000.
For the purposes of the Consent Solicitation, Consents validly received by
the Depositary will be deemed to have been accepted if, as and when (1) the
Company and the Trustees execute the Supplemental Indenture and (2) the Company
has accepted Capital Securities satisfying the Minimum Condition for purchase
and payment pursuant to the Tender Offer.
If any tendered Capital Securities are not accepted for payment for any
reason, or if Capital Securities in a liquidation amount in excess of the
liquidation amount indicated as being tendered on the Letter of Transmittal are
submitted, Capital Securities in a liquidation amount equal to the liquidation
amount not tendered or accepted will be issued, without expense, to the
tendering Holders, as promptly as practicable following the expiration or
termination of the Tender Offer.
The Company reserves the right to transfer or assign, in whole, at any time
or in part from time to time, to one or more of its affiliates, the right to
purchase Capital Securities tendered pursuant to the Tender Offer, but any such
transfer or assignment will not relieve the Company of its obligations under the
Tender Offer or
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<PAGE> 21
prejudice the rights of the tendering Holders to receive payments for Capital
Securities validly tendered and accepted for payment pursuant to the Tender
Offer.
The Company intends initially that all Capital Securities purchased
pursuant to the Tender Offer shall be held by the Company.
Unless an exemption applies under applicable law and regulations, the
Depositary will be required to withhold, and will withhold, 31% of the gross
proceeds payable to a Holder or other payee pursuant to the Tender Offer unless
the Holder or other payee provides such Holder's taxpayer identification number
(social security number or employer identification number) and certifies that
such number is correct. Each Holder tendering Capital Securities (and, if
applicable, each other payee) should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal so as to provide the information
and certification necessary to avoid backup withholding, unless an applicable
exemption exists and is proven in a manner satisfactory to the Company and the
Depositary. In certain instances, the Depositary will be required to withhold,
and will withhold, 30% (or a reduced rate pursuant to a tax treaty) from the
amount payable pursuant to the Tender Offer to a foreign Holder or such Holder's
agent. In order for a foreign person to qualify for an exemption, that Holder
must submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the Depositary.
Backup withholding is not an additional tax; any amounts so withheld may be
credited against the U.S. federal income tax liability of the Holder, or
refunded if the amounts withheld exceed such liability. See "Certain U.S.
Federal Income Tax Considerations" below.
PROCEDURES FOR TENDERING CAPITAL SECURITIES AND DELIVERING CONSENTS
Holders wishing to participate in the Tender Offer must tender Capital
Securities in accordance with the procedures set forth herein and in the Letter
of Transmittal prior to the Expiration Time. HOLDERS WHO DESIRE TO TENDER THEIR
CAPITAL SECURITIES PURSUANT TO THE TENDER OFFER AND RECEIVE PAYMENT THEREFOR ARE
REQUIRED TO DELIVER A CONSENT TO THE PROPOSED AMENDMENTS. THE PROPER TENDER OF
CAPITAL SECURITIES PURSUANT TO ONE OF THE PROCEDURES SET FORTH HEREIN (AND IF
REQUIRED, DELIVERY OF A PROXY) WILL CONSTITUTE THE GIVING OF A CONSENT TO THE
PROPOSED AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL INDENTURE. Any Holder who
desires to tender its Capital Securities pursuant to the Tender Offer and
receive the Total Consideration (which includes the Consent Payment) are
required to deliver its Consent to the Proposed Amendments (and if required,
deliver a Proxy) prior to the Consent Time. Holders may not deliver Consents
without tendering their Capital Securities pursuant to the Tender Offer. No
record date is fixed for determining which persons are permitted to tender
Capital Securities, although any Holder tendering Capital Securities pursuant to
the Tender Offer who was not the Holder as of the Record Date must deliver a
Proxy of the Holder as of the Record Date in order to tender.
GENERALLY, ONLY REGISTERED HOLDERS ARE AUTHORIZED TO TENDER THEIR CAPITAL
SECURITIES AND CONSENT TO THE PROPOSED AMENDMENTS. THE PROCEDURES BY WHICH
CAPITAL SECURITIES MAY BE TENDERED AND CONSENTS GIVEN BY BENEFICIAL OWNERS THAT
ARE NOT REGISTERED HOLDERS WILL DEPEND UPON THE MANNER IN WHICH THE CAPITAL
SECURITIES ARE HELD, AS DESCRIBED BELOW.
THE METHOD OF DELIVERY OF CAPITAL SECURITIES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY (AS DEFINED BELOW) OR ANY ACCEPTANCE OF AN AGENT'S MESSAGE (AS DEFINED
BELOW) TRANSMITTED THROUGH ATOP (AS DEFINED BELOW), IS AT THE ELECTION AND RISK
OF THE HOLDERS AND WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, OR AN OVERNIGHT OR HAND
DELIVERY SERVICE, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
INSURE TIMELY DELIVERY. NO CAPITAL SECURITIES OR LETTERS OF TRANSMITTAL SHOULD
BE SENT TO THE COMPANY OR THE TRUST.
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<PAGE> 22
Tender of Capital Securities Held through a Nominee. Any beneficial owner
of Capital Securities that are held of record by a broker, dealer, commercial
bank, trust company or other nominee who wishes to tender Capital Securities
should contact such Holder promptly and instruct such Holder to tender the
Capital Securities and deliver a Consent on the beneficial owner's behalf
according to one of the procedures described herein. A letter of instructions is
contained in the tender and solicitation materials provided along with this
Offer to Purchase which may be used by a beneficial owner to instruct the Holder
to tender Capital Securities and deliver Consents.
Tender of Capital Securities Held With DTC. Pursuant to the authority
granted by The Depositary Trust Company ("DTC"), any DTC participant that has
Capital Securities credited to its DTC account (and thereby held of record by
DTC's nominee) may directly tender such Capital Securities and deliver Consents
with respect thereto as if it were the Holder thereof (and references herein to
Holders shall include such participants).
Promptly after the date of this Offer to Purchase, the Depositary will make
a request to establish accounts with respect to the Capital Securities at DTC
(the "Book-Entry Transfer Facility") for the purpose of facilitating the
transfer of Capital Securities pursuant to the Tender Offer and the delivery of
Consents pursuant to the Consent Solicitation. Any DTC participant may tender
Capital Securities and deliver Consents with respect thereto by (a) effecting a
book-entry transfer of all Capital Securities to be tendered in the Tender Offer
into the account of First Chicago Trust Company of New York, as Depositary, at
DTC, in accordance with DTC's procedures for such transfer and (b) completing
and signing the Letter of Transmittal in accordance with the instructions set
forth therein and delivering such properly completed and signed Letter of
Transmittal, together with any signature guarantees and other documents required
thereby, to the Depositary at its address set forth on the back cover of this
Offer to Purchase, in each case prior to the Consent Time (in order to receive
the Total Consideration) or the Expiration Time (in order to receive the Tender
Offer Consideration).
Timely book-entry delivery requires receipt of a confirmation of a
book-entry transfer into the Depositary's account at DTC (a "Book-Entry
Confirmation") by the Depositary prior to the Consent Time (in order to receive
the Total Consideration), or the Expiration Time (in order to receive the Tender
Offer Consideration). Only after the Consent Time may the guaranteed delivery
procedures described below be used. In addition, although delivery of Capital
Securities may be effected through book-entry transfer into the Depositary's
account at DTC, an Agent's Message (as defined below) in connection with a
book-entry transfer, together with any required signature guarantees and other
required documents, must, in any case, be delivered or transmitted to and
received by the Depositary at the address set forth on the back cover of this
Offer to Purchase (1) prior to the Consent Time to receive payment of the Total
Consideration, or (2) after the Consent Time but prior to the Expiration Time to
receive payment of the Tender Offer Consideration. Delivery of a Letter of
Transmittal or other documents to DTC will not constitute a valid delivery to
the Depositary.
The Depositary and DTC have confirmed that the Tender Offer is eligible for
the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC participants
may, in lieu of physically completing, signing and delivering to the Depositary
the Letter of Transmittal, electronically transmit their acceptance of the
Tender Offer (and thereby deliver their Consent to the Proposed Amendments and
execution of the Supplemental Indenture) through ATOP by causing DTC to transfer
Capital Securities to the Depositary's DTC Account in accordance with DTC's ATOP
procedures for transfer. DTC will then send an Agent's Message to the
Depositary.
Delivery of tendered Capital Securities by a book-entry transfer must be
made to the Depositary pursuant to the book-entry procedures set forth herein
prior to the Consent Time in order to receive the Total Consideration. HOLDERS
WHO VALIDLY TENDER THEIR CAPITAL SECURITIES PURSUANT TO SUCH PROCEDURES AFTER
THE CONSENT TIME BUT PRIOR TO THE EXPIRATION TIME WILL NOT RECEIVE THE CONSENT
PAYMENT. AFTER THE CONSENT TIME, IF A BOOK-ENTRY TRANSFER OF CAPITAL SECURITIES
CANNOT BE COMPLETED PRIOR TO THE EXPIRATION TIME, THE TENDERING DTC PARTICIPANT
MAY COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES SET FORTH BELOW.
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<PAGE> 23
By executing a Letter of Transmittal as set forth above or providing an
Agent's Message in connection with a book-entry transfer, a tendering Holder
consents to the Proposed Amendments. Such Consent may not be revoked except by a
proper revocation of such Consent and the concurrent withdrawal of the related
Capital Securities. See "-- Withdrawal and Revocation Rights."
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgement from the DTC
participant tendering the Capital Securities, that such DTC participant has
received and agrees to be bound by the terms of the Letter of Transmittal
(including, without limitation, to the extent applicable, the fact that such
participant has consented to the Proposed Amendments and to the terms of the
Letter of Transmittal) and that the Company may enforce such agreement against
such DTC participant.
Tender of Capital Securities Held in Physical Form. A Holder of Capital
Securities held in physical form must comply with the following instructions to
tender Capital Securities in the Tender Offer: (1) complete and sign the Letter
of Transmittal in accordance with the instructions set forth therein, and (2)
deliver the properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), together with any required signature
guarantees and other required documents, and the Capital Securities covered
thereby in physical form suitable for transfer to the Depositary at the address
set forth on the back cover of this Offer to Purchase prior to the Consent Time
or Expiration Time; provided, however, that after the Consent Time but prior to
the Expiration Time, the tendering Holder may instead comply with the guaranteed
delivery procedures set forth below. In order to receive the Consent Payment,
the Capital Securities and the Letter of Transmittal must be received by the
Depository prior to the Consent Time.
If tendered physical Capital Securities are registered in the name of a
person other than the signer of a Letter of Transmittal, then, in order to
validly tender such Capital Securities pursuant to the Tender Offer, such
Capital Securities must be endorsed or accompanied by an appropriate written
instrument or instruments of transfer signed exactly as the name(s) of such
registered Holder(s) appear on the Capital Securities, with the signature(s) on
the Capital Securities or instruments of transfer guaranteed as provided below.
In addition, a tendering Holder who was not the Holder as of the Record Date
must deliver a properly executed Proxy to the Depositary with the Letter of
Transmittal consenting to the Proposed Amendments and execution of the
Supplemental Indenture.
LETTERS OF TRANSMITTAL AND PHYSICAL CAPITAL SECURITIES MUST BE SENT ONLY TO
THE DEPOSITARY. DO NOT SEND LETTERS OF TRANSMITTAL OR CAPITAL SECURITIES TO THE
COMPANY, THE INFORMATION AGENT, DTC OR THE DEALER MANAGER.
If any tendered Capital Securities are not accepted for tender because of
an invalid tender, the occurrence of certain other events set forth herein, the
withdrawal of tendered Capital Securities under circumstances, as described
herein, permitting such withdrawal or otherwise, or if Capital Securities are
submitted for a greater liquidation amount than the Holder thereof desires to
tender, any such unaccepted or non-exchanged Capital Securities will be
returned, without expense, to the tendering Holder thereof or, in the case of
the Capital Securities tendered by book-entry transfer, such Capital Securities
will be credited to an account maintained at DTC from which such Capital
Securities were tendered, as promptly as practicable after the expiration or
termination of the Tender Offer.
Guaranteed Delivery Procedures. If a Holder desires to accept the Tender
Offer and tender Capital Securities after the Consent Time and the Capital
Securities are not immediately available or time will not permit a Letter of
Transmittal or the Capital Securities to reach the Depositary on or prior to the
Expiration Time or the procedures for book-entry transfer cannot be completed on
a timely basis, a tender may
15
<PAGE> 24
nevertheless be made, with the effect that such tender will be deemed to have
been received prior to the Expiration Time, if all of the following conditions
are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery (a "Notice of Guaranteed Delivery"), in the form provided
by the Company herewith, or an Agent's Message with respect to a
guaranteed delivery that is accepted by the Company, is received
by the Depositary prior to the Expiration Time; and
(c) a properly completed and executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature
guarantees, or a properly transmitted Agent's Message, as well as
the certificate(s) representing all tendered Capital Securities in
proper form for transfer or confirmation of a book-entry transfer
of such Capital Securities into the Depositary's account at DTC,
and all other documents required by such Letter of Transmittal are
received by the Depository within two NYSE trading days after the
Expiration Time.
HOLDERS SHOULD BE AWARE THAT, PRIOR TO THE CONSENT TIME, CONSENTS CANNOT BE
DELIVERED USING THE GUARANTEED DELIVERY PROCEDURES AND THAT USE OF THE
GUARANTEED DELIVERY PROCEDURES WILL RESULT IN A HOLDER BEING INELIGIBLE TO
RECEIVE THE CONSENT PAYMENT WITH RESPECT TO THE CAPITAL SECURITIES SO DELIVERED.
The Notice of Guaranteed Delivery may be sent by hand delivery, facsimile
transmission or mail to the Depositary at its address on the back cover of this
Offer to Purchase and must include a guarantee by a Medallion Signature
Guarantor (as defined below) or an Eligible Institution in the form set forth in
the Notice of Guaranteed Delivery. Failure to complete the guaranteed delivery
procedure outlined above will not, of itself, affect the validity of, or affect
a revocation of, any Consent properly executed by a Holder of Capital Securities
who attempted to use the guaranteed delivery procedures.
Unless Capital Securities being tendered by the above-described guaranteed
delivery procedures are deposited with the Depositary within the time period set
forth above (accompanied or preceded by a properly completed Letter of
Transmittal (or an Agent's Message) and any other required documents and
signature guarantees), the Company may, at its option, reject the tender. A form
of Notice of Guaranteed Delivery which may be used by an Eligible Institution
for the purposes of guaranteed delivery is provided with the tender and
solicitation material.
Notwithstanding any other provision hereof, acceptance of tendered Notes
pursuant to the Tender Offer will, in all cases, be made only after timely
receipt by the Depositary of (i) the Capital Securities or a Book-Entry
Confirmation of the delivery of Capital Securities, (ii) a properly completed
and duly executed Letter of Transmittal (or manually signed facsimile thereof)
or, in the case of book-entry transfer, an Agent's Message, and (iii) any other
documents required by the Letter of Transmittal.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY REASON OF ANY DELAY IN
MAKING PAYMENT TO ANY PERSON USING THE GUARANTEED DELIVERY PROCEDURES. PAYMENTS
IN RESPECT OF ANY CAPITAL SECURITIES TENDERED PURSUANT TO THE GUARANTEED
DELIVERY PROCEDURES WILL BE THE SAME AS THAT FOR EQUIVALENT CAPITAL SECURITIES
DELIVERED TO THE DEPOSITARY IN ACCORDANCE WITH THE PROVISIONS HEREOF PRIOR TO
THE EXPIRATION TIME, EVEN IF THE CAPITAL SECURITIES TO BE DELIVERED PURSUANT TO
THE GUARANTEED DELIVERY PROCEDURES ARE NOT DELIVERED TO THE DEPOSITARY IN A
TIMELY MANNER AS DESCRIBED ABOVE AND THEREFORE PAYMENT BY THE DEPOSITARY ON
ACCOUNT OF SUCH CAPITAL SECURITIES IS NOT MADE UNTIL AFTER THE SETTLEMENT DATE.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Capital Securities tendered will be determined by the
Company in its sole discretion, whose determination will be final and binding.
The Company reserves the absolute right to reject any and all tenders of Capital
Securities that are not in proper form or the acceptance of which would, in the
opinion of the Company or counsel for the Company, be unlawful. The Company also
reserves the absolute right to waive certain of the conditions to the Tender
Offer or any irregularities or defects in the tender of Capital Securities. The
Company's interpretation of the terms and conditions of the Tender Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with
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the tenders of Capital Securities must be cured within such time as the Company
shall determine. None of the Company, the Depositary and any other person shall
be under any duty to give notification of defects or irregularities with respect
to tenders of Capital Securities nor shall any of them incur any liability for
failure to give such notification. Tenders of Capital Securities will not be
deemed to have been made until such defects or irregularities have been cured or
waived.
Proper Execution and Delivery of Letters of Transmittal. Letters of
Transmittal must be executed in exactly the same manner as the name appears on
the books and records of the Trust. If any Capital Securities to which a Letter
of Transmittal relates are held by two or more joint Holders, all such Holders
must sign the Letter of Transmittal. If a signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
Holder acting in a fiduciary or representative capacity, such person should so
indicate when signing and, unless waived by the Company, must submit proper
evidence satisfactory to the Company of such person's authority to act. If
Capital Securities are registered in different names, separate Letters of
Transmittal must be executed covering each form of registration.
If a tendering Holder was not the record Holder of the Capital Securities
as of the Record Date, the Letter of Transmittal must be accompanied by a Proxy,
in a form satisfactory to the Company, in its sole discretion, duly executed by
the Holder with the signature guaranteed as set forth below confirming the
transfer of the Capital Securities and the right of the present Holder to
execute the form of Consent.
Except as otherwise provided below, all signatures on Letters of
Transmittal and Notices of Withdrawal (as defined below) must be guaranteed by a
recognized member of the Medallion Signature Guarantee Program (a "Medallion
Signature Guarantor") or an Eligible Institution. Signatures on a Letter of
Transmittal need not be guaranteed if (i) such Letter of Transmittal is signed
by the registered Holder of the Capital Securities tendered therewith or by a
DTC participant whose name appears on a security position listing as the owner
of Capital Securities tendered through DTC and such Holder has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
on the Letter of Transmittal, or (ii) the Capital Securities that are the
subject thereof are tendered for the account of an Eligible Institution. An
Eligible Institution is a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States.
No alternative, conditional, irregular or contingent tenders or Consents
will be accepted. By executing the Letter of Transmittal (or manually signed
facsimile thereof) or transmitting an Agent's Message, the tendering Holders of
Capital Securities waive any right to receive any notice of the acceptance for
payment of the Capital Securities.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Letters of Transmittal will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Letters of
Transmittal determined by the Depositary not to be in proper form or the
acceptance of which, in the opinion of the Company or counsel to the Company,
may be unlawful.
Tendering Holders should indicate in the applicable box in the Letter of
Transmittal the name and address to which payments or substitute certificates
evidencing Capital Securities for amounts not tendered or not accepted for
payment are to be issued or sent, if different from the name and address of the
person signing such Letter of Transmittal. In the case of payment or issuance in
a different name, the employer identification or social security number of the
person named must also be indicated and a Substitute Form W-9 for such recipient
must be completed. If no such instructions are given, such payments, or Capital
Securities not tendered or not accepted, as the case may be, will be returned to
the registered Holder of Capital Securities tendered at the address listed in
the register maintained by the Trustee (or in the case of Capital Securities
tendered by book-entry transfer into the Depositary's account at DTC pursuant to
the procedure set forth under "-- Procedures for Tendering Capital Securities
and Delivering Consents," such Capital Securities will be credited to the
account maintained at DTC from which such Capital Securities were delivered).
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<PAGE> 26
WITHDRAWAL AND REVOCATION RIGHTS
Tenders of Capital Securities may be withdrawn at any time prior to the
Expiration Time. Thereafter, such tenders are irrevocable, except that they may
be withdrawn after January 9, 1998, unless previously accepted for payment as
provided in this Offer to Purchase. Consents may be concurrently revoked at any
time prior to the Consent Time so long as any Capital Securities tendered
therewith are concurrently withdrawn. After the Consent Time, Consents are
irrevocable.
A valid withdrawal of tendered Capital Securities effected prior to the
Consent Time shall be deemed a concurrent revocation of the related Consent. In
order for a Holder to revoke a Consent, such Holder must withdraw the related
tendered Capital Securities.
For a withdrawal to be effective, (1) a written notice (the "Notice of
Withdrawal") must be received by the Depositary at its address set forth on the
back cover of this Offer to Purchase or (2) the appropriate procedures of DTC's
ATOP system must be complied with. Any such Notice of Withdrawal must (a)
specify the name of the person having deposited the Capital Securities to be
withdrawn, (b) identify the Capital Securities to be withdrawn including the
certificate number or numbers (unless the Capital Securities were tendered by
book-entry transfer, in which case the name and number of the account at DTC to
be credited with the withdrawn Capital Securities must be specified) and
liquidation amount of such Capital Securities, (c) be signed by the Holder in
the same manner as the original signature on the Letter of Transmittal by which
such Capital Securities were tendered (including any required signature
guarantees) or be accompanied by a bond power, and a properly competed
irrevocable proxy, in each case in the name of the person withdrawing the tender
and revoking the Consent, in satisfactory form as determined by the Company in
its sole discretion, duly executed by the registered Holder, and (d) specify the
name in which such Capital Securities are to be registered, if different from
the person who tendered such Capital Securities, pursuant to such documents of
transfer. A purported Notice of Withdrawal which lacks any of the required
information will not be an effective withdrawal of a tender previously made.
Withdrawal of Capital Securities (and the concurrent revocation of Consents) can
only be accomplished in accordance with the foregoing procedures.
Any permitted withdrawal of a tender of Capital Securities may not be
rescinded, and any Capital Securities so withdrawn will thereafter be deemed not
validly tendered for purposes of the Tender Offers; provided, however, that
withdrawn Capital Securities may again be tendered by following the procedures
for tendering at or prior to the Consent Time or to the Expiration Time, as the
case may be.
Any Capital Securities that have been tendered for purchase but are
withdrawn will be returned to the Holder thereof without cost to such Holder or,
in the case of Capital Securities tendered by book-entry transfer into the
Depositary's accounts at DTC pursuant to the book-entry transfer procedures
described above, such Capital Securities will be credited to an account
maintained with DTC for the Capital Securities as soon as practicable after
withdrawal.
ALL QUESTIONS AS TO THE VALIDITY (INCLUDING TIME OF RECEIPT) OF NOTICES OF
WITHDRAWAL WILL BE DETERMINED BY THE COMPANY IN ITS SOLE DISCRETION, WHOSE
DETERMINATION WILL BE FINAL AND BINDING. NONE OF THE COMPANY, THE DEPOSITARY,
THE INFORMATION AGENT, THE DEALER MANAGER AND ANY OTHER PERSON WILL BE UNDER ANY
DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF
WITHDRAWAL, OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
CONDITIONS OF THE TENDER OFFER
Notwithstanding any other provisions of the Tender Offer, and in addition
to (and not in limitation of) the Company's rights to extend and amend the
Tender Offer at any time in its sole discretion, the Company shall not be
required to accept for payment and may delay the acceptance or, subject to the
restriction referred to above, the tender of any Capital Securities, and may
terminate the Tender Offer as to any Capital Securities
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<PAGE> 27
not then tendered, if at any time at or prior to the Expiration Date, any of the
following events shall occur or shall be determined by the Company to have
occurred:
(a) the Minimum Consent Condition shall not have been satisfied;
(b) the Minimum Condition shall not have been satisfied;
(c) any action or proceeding is instituted or threatened in any court
or by or before any governmental authority or other regulatory or
administrative agency, domestic or foreign, with respect to the Tender
Offer which, in the sole judgment of the Company, might prohibit, prevent
or otherwise impair the ability of the Company to proceed with the Tender
Offer or have a material adverse effect on the contemplated benefits of the
Tender Offer to the Company, or there shall have occurred any material
adverse developments in any existing action or proceeding with respect to
the Company or any of its subsidiaries or affiliates;
(d) there shall have been proposed (including any proposed or pending
legislature in existence as of the date hereof), adopted or enacted into
law any legislation, rule or regulation, or any action shall have been
taken or proposed that would materially increase the after-tax cost of the
Tender Offer, or the transactions contemplated hereby or that might, in the
sole judgment of the Company, have any of the effects set forth in (c)
above;
(e) there shall have occurred or be likely to occur any change, or
development involving a prospective change, in or affecting the business or
financial affairs of the Company or any of its subsidiaries or affiliates
which, in the sole judgment of the Company, would or might prohibit,
restrict or delay consummation of the Tender Offer or materially impair the
contemplated benefits of the Tender Offer to the Company;
(f) there shall have been proposed, adopted or enacted any law,
statute, rule or regulation which, in the sole judgment of the Company,
might reasonably be expected to prohibit, restrict or delay consummation of
the Tender Offer or materially impair the contemplated benefits of the
Tender Offer to the Company; or
(g) there shall have occurred: (i) any general suspension of,
shortening of hours for, or limitation on prices for, trading in securities
listed on the NYSE, the American Stock Exchange, the Nasdaq National
Market, or in the over-the-counter market (whether or not mandatory); (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of banks or savings and loan associations by federal or state
authorities in the United States whether or not mandatory); (iii) a
commencement of a war, armed hostilities or other international or national
crises directly or indirectly involving the United States; (iv) any
limitation (whether or not mandatory) by any governmental authority on, or
other event having a reasonable likelihood of affecting, the extension of
credit by banks or other lending institutions in the United States; (v) any
significant change in the United States currency exchange rates or a
suspension of, or limitation on, the markets therefor (whether or not
mandatory); (vi) any significant change in the United States securities or
financial markets generally; or (vii) in the case of any of the foregoing
existing at the time of the commencement of the Tender Offer, a material
acceleration or worsening thereof.
If any of the foregoing events shall have occurred, the Company may: (i)
delay acceptance for tender of any Capital Securities (regardless of whether
such Capital Securities were previously accepted for tender) pending receipt of
any regulatory approval described above or to comply with any other applicable
law; (ii) terminate the Tender Offer and refuse to accept for payment of any
Capital Securities and return all tendered Capital Securities to tendering
Holders thereof; (iii) extend the Tender Offer and retain all tendered Capital
Securities until the Expiration Date, subject, however, to all withdrawal rights
of the Holders; (iv) waive or modify certain of the unsatisfied conditions with
respect to the Tender Offer and accept all properly tendered Capital Securities
subject to the terms and limitations of the Tender Offer; or (v) amend the terms
of the Tender Offer in any respect. Although the Company has no present
intention of waiving or modifying any of the conditions of the Tender Offer, the
Company expressly reserves the right to waive or modify, to the extent permitted
by law, any of such conditions to which the Company and/or the Holders of
Capital Securities may be exposed or any additional risks which cannot now be
predicted or evaluated.
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<PAGE> 28
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
conditions and may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time. Any determination made by the Company
concerning an event, development or circumstance described or referred to above
will be final and binding on all parties. If the Company waives any material
condition of the Tender Offer, the Company will promptly disclose such waiver
and extend the Tender Offer to the extent required by Rule 13e-4(d)(2),
13e-4(e)(2), 13e-4(f)(1)(ii) and 14e-1 under the Exchange Act.
The minimum period during which the Tender Offer must remain open following
material changes in the terms of the Tender Offer or the information concerning
the Tender Offer depends upon the facts and circumstances, including the
relative materiality of such terms or information. See "-- Expiration Time,
Extensions, Termination and Amendments" above.
SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases all of the outstanding Capital
Securities, aggregating to $100,000,000 in liquidation amount, pursuant to the
Tender Offer at a Total Consideration of $1,347.33 per $1,000 liquidation
amount, the Company expects the maximum aggregate cost of the Tender Offer to be
approximately $134,733,000.
In order to purchase the Capital Securities pursuant to the Tender Offer,
GMACI, as the direct parent of the Company, will make a capital contribution to
the Company in an amount in excess of the sum of the maximum aggregate cost of
the Tender Offer and the fees and expenses related thereto. GMACI intends to
fund such capital contribution to the Company through a combination of a capital
contribution to GMACI by GMAC, the direct parent of GMACI, and loans pursuant to
an intercompany credit facility to be entered into between GMACI and GMAC. The
terms and conditions of the intercompany credit facility are not yet known,
although such facility is expected to have a five year term and interest rate
approximates to GMAC's cost of borrowing.
It is anticipated that the indebtedness incurred by GMACI through the
borrowing described above will be repaid from sources generated internally by
GMACI and by its subsidiaries, including the Company, through dividends to
GMACI, and from other sources. No final decisions have been made concerning the
method by which GMACI plans to repay such indebtedness. Such decisions will be
made based upon GMACI's review from time to time of the advisability of
particular actions, as well as on prevailing rates and financial and other
economic conditions.
THE DEALER MANAGER
The Company has engaged Morgan Stanley to act as exclusive Dealer Manager
and Solicitation Agent in connection with the Tender Offer and the Consent
Solicitation and to provide certain financial advisory services to the Company
in connection therewith. Any Holder who has questions concerning the terms of
the Tender Offer or the Consent Solicitation may contact the Dealer Manager at
the address and telephone number set forth on the back cover of this Offer to
Purchase.
The Company has agreed to pay the Dealer Manager pre-determined
compensation for the Dealer Manager's services and to reimburse the Dealer
Manager for its reasonable out-of-pocket expenses, including reasonable fees and
expenses of its legal counsel. The Company has agreed to indemnify the Dealer
Manager against certain liabilities, including certain liabilities under the
federal securities laws. The Dealer Manager has provided in the past, and
currently is providing, other investment banking and financial advisory services
to GMAC and its affiliates.
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THE DEPOSITARY
First Chicago Trust Company of New York has been appointed as Depositary
for the Tender Offer. Letters of Transmittal and all correspondence in
connection with the Tender Offer should be sent or delivered by each Holder or
such Holder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at the address and telephone numbers set forth on the back cover
of this Offer to Purchase.
Any Holder who has questions concerning tender procedures or whose Capital
Securities have been mutilated, lost, stolen or destroyed should contact the
Depositary at the address and telephone numbers set forth on the back cover of
this Offer to Purchase.
INFORMATION AGENT
D.F. King & Co., Inc. has been appointed as Information Agent for the
Tender Offer and the Consent Solicitation. Requests for assistance or additional
copies of this Offer to Purchase or the Letter of Transmittal may be directed to
the Information Agent at the address and telephone numbers set forth on the back
cover page of this Offer to Purchase. Holders of Capital Securities may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the Tender Offer.
FEES AND EXPENSES
The expenses of soliciting tenders of the Capital Securities in the Tender
Offer and soliciting Consents to the Proposed Amendments in the Consent
Solicitation will be borne by the Company, including payment of the Dealer
Manager's fees and expenses, as described above, and the reasonable and
customary fees of the Depositary and Information Agent and their reasonable
out-of-pocket expenses in connection with their services. The Company will also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
Offer to Purchase and related documents to the beneficial owners of the Capital
Securities and in handling and forwarding tenders for their customers. The fees
and expenses associated with the Tender Offer and the Consent Solicitation are
estimated by the Company to be $774,730.
The Company will also pay any stock transfer taxes with respect to the
transfer and sale of the Capital Securities to it or its order pursuant to the
Tender Offer. If, however, payment is to be made to, or certificates for Capital
Securities not purchased or tendered are to be registered in the name of, any
person other than the registered Holder, or if tendered Capital Securities are
registered in the name of any person other than the person(s) signing the Letter
of Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered Holder or such other person) payable on the account of the transfer
to such person will be deducted from the Tender Offer Consideration unless
evidence satisfactory to the Company of the payment of such taxes or an
exemption therefrom is permitted.
DESCRIPTION OF THE TRUST SECURITIES AND
THE JUNIOR SUBORDINATED DEBENTURES
THE TRUST SECURITIES
This summary of the material terms and provisions of the Capital
Securities, the Common Securities and the Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to all
of the provisions of the Trust Agreement, which is hereby incorporated herein by
reference thereto. The Trust Agreement has been qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Together, the
Capital Securities and the Common Securities are referred to herein as the
"Trust Securities."
On February 10, 1997, the Property Trustee and the Administrators on behalf
of the Trust issued $100,000,000 aggregate liquidation amount of 10 3/4% Capital
Securities, Series A (the "Series A Capital Securities") and $3,093,000
aggregate liquidation amount of the Common Securities. Such securities were
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<PAGE> 30
issued and sold in a transaction not registered under the Securities Act of
1933, as amended (the "Securities Act"), in reliance upon the exemption provided
in Section 4(2) of the Securities Act.
On July 7, 1997, pursuant to an Exchange Offer made by the Company and the
Trust (the "Exchange Offer"), the Trust exchanged the Capital Securities for all
of the outstanding Series A Capital Securities. The Capital Securities exchanged
in the Exchange Offer were registered under the Securities Act pursuant to a
Registration Statement filed with the Commission. The terms of the Capital
Securities are substantially identical to the terms of the former Series A
Capital Securities, except that the Capital Securities (i) have been registered
under the Securities Act and do not contain terms restricting the transfer of
such securities, (ii) are entitled, to the extent applicable, to the benefits of
qualification of the Trust Agreement and Junior Subordinated Indenture under the
Trust Indenture Act and (iii) do not provide for liquidated damages in certain
circumstances under a certain Registration Rights Agreement relating to the
issuance of the Series A Capital Securities.
As of the Record Date, the aggregate liquidation amount outstanding with
respect to the Capital Securities was $100,000,000. Distributions on the Capital
Securities shall accumulate and be payable at a rate of 10 3/4% per annum of the
liquidation amount of the Capital Securities with distributions payable on
February 15 and August 15 of each year. The amount of Distributions shall be
computed on the basis of a 360-day year of twelve 30-day months.
The Stated Maturity of the Capital Securities is February 15, 2027 (the
"Stated Maturity"). The Company may, however, accelerate the Stated Maturity
under certain limited circumstances, including the occurrence of a Tax Event (as
defined in the Junior Subordinated Indenture), but in any event such Stated
Maturity shall not be advanced to a date earlier than August 15, 2016.
In addition to advancing the Stated Maturity, the Company may repay or
redeem the Capital Securities in certain limited circumstances. Upon the
repayment or redemption, in whole or in part, by the Company of the Junior
Subordinated Debentures as set forth below, the proceeds from such repayment or
redemption shall be applied by the Property Trustee to redeem a proportional
amount of the Trust Securities, upon not less than 30 nor more than 60 days'
notice to Holders, at a redemption price equal to the aggregate liquidation
amount of the Trust Securities plus accumulated but unpaid distributions to the
date of redemption plus the related amount of premium, if any, paid by the
Company upon the concurrent redemption of the Junior Subordinated Debentures. If
less than all of the Junior Subordinated Debentures are repaid or redeemed, then
the proceeds from such repayment or redemption shall be allocated pro rata to
the redemption of the Capital Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures
(thereby effecting a related redemption of Capital Securities and Common
Securities as set forth above) prior to the Stated Maturity (i) on or after
February 15, 2007 in whole at any time or in part from time to time or (ii) in
whole, but not in part, at any time within 90 days following the occurrence and
during the continuation of a Tax Event (as defined in the Junior Subordinated
Indenture). No premium will be paid by the Company upon redemption made by
reason of a Tax Event.
The Common Securities rank pari passu, and payments will be made thereon
pro rata with the Capital Securities, except that upon the occurrence and
continuance of an Event of Default under the Trust Agreement, the rights of the
holders of the Common Securities to payment in respect of certain distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the Holders of the Capital Securities. The Common Securities have
an aggregate liquidation amount equal to 3% of the total capital of the Trust,
and all of the Common Securities of the Trust are owned by the Company.
The proceeds to the Trust from the issuance and sale of the Common
Securities and Series A Capital Securities were used to purchase all of the
Series A Junior Subordinated Debentures. No cash consideration was received or
paid in conjunction with the exchange of the Capital Securities for the Series A
Capital Securities pursuant to the Exchange Offer.
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<PAGE> 31
THE JUNIOR SUBORDINATED DEBENTURES
This summary of the material terms and provisions of the Junior
Subordinated Debentures and the Junior Subordinated Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by, reference
to all of the provisions of the Junior Subordinated Indenture, which is hereby
incorporated herein by reference thereto. The Junior Subordinated Indenture has
been qualified under the Trust Indenture Act.
On February 10, 1997, $103,093,000 aggregate principal amount of 10 3/4%
Series A Junior Subordinated Deferrable Interest Debentures (the "Series A
Junior Subordinated Debentures") were issued and sold by the Company to the
Trust in a transaction not registered under the Securities Act, in reliance upon
the exemption provided in Section 4(2) of the Securities Act. In connection with
the Exchange Offer, the Company exchanged the Junior Subordinated Debentures for
the Series A Junior Subordinated Debentures. Pursuant thereto, the Junior
Subordinated Debentures were registered under the Securities Act.
All of the Junior Subordinated Debentures were issued to the Trust and each
Junior Subordinated Debenture is currently held in the name of the Property
Trustee for the benefit of the Holders of the Capital Securities. The Junior
Subordinated Debentures are unsecured and rank junior and are subordinate in
right of payment, to all Senior Indebtedness (as that term is defined in the
Junior Subordinated Indenture, the "Senior Indebtedness") of the Company.
GUARANTEE OF PAYMENTS OF CAPITAL SECURITIES
SUMMARY
The Company has, through the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Guarantee (as defined below), the Trust Agreement,
and the Expense Agreement (as defined below) taken together, fully, irrevocably
and unconditionally guaranteed all of the Trust's obligations under the Capital
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that provides a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Capital Securities.
THE GUARANTEE
Concurrent with the issuance by the Trust of the Series A Capital
Securities, the Company delivered a guarantee for the benefit of the Holders
from time to time of such Series A Capital Securities (the "Original
Guarantee"). In connection with the Exchange Offer, the Original Guarantee was
replaced with a guarantee registered pursuant to the Securities Act (the
"Guarantee"). First Union National Bank of North Carolina acts as trustee under
the Guarantee, and holds the Guarantee for the benefit of the Holders of the
Capital Securities. This summary of the material terms and provisions of the
Guarantee does not purport to be complete and is subject to, and is qualified in
its entirety by the Guarantee, which is hereby incorporated herein by reference
thereto.
The Guarantee is an irrevocable and unconditional guarantee on a
subordinated basis of the Trust's obligations under the Capital Securities, but
applies only to the extent that the Trust has funds sufficient to make such
payments, and is not a guarantee of collection. If the Company does not make
interest payments on the Junior Subordinated Debentures held by the Trust, the
Trust will not be able to pay any amounts payable in respect of the Capital
Securities and will not have funds legally available therefor. The Guarantee
does not cover payment of amounts payable to the Holders of the Capital
Securities when the Trust does not have sufficient funds to pay such amounts.
The Guarantee ranks subordinate and is junior in right of payment to all
Senior Indebtedness of the Company. Because the Company is a holding company,
the right of the Company to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except to the
extent the Company may itself be recognized as a creditor of that subsidiary.
Accordingly, the Company's obligation under the Guarantee is effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and claimants may
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look only to the assets of the Company for payments thereunder. The Guarantee
does not limit the incurrence or issuance of other secured or unsecured debt of
the Company, whether under the Junior Subordinated Indenture or any other
indenture that the Company may enter into in the future or otherwise.
THE EXPENSE AGREEMENT
This summary of the material terms and conditions of the Expense Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by the Expense Agreement, which is hereby incorporated herein by
reference thereto.
Pursuant to an Agreement as to Expenses and Liabilities entered into by the
Company under the Trust Agreement (the "Expense Agreement"), the Company
irrevocably and unconditionally guarantees to each person or entity to whom the
Trust becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to the
Holders of the Capital Securities and the Common Securities the amounts due such
Holders pursuant to the terms of the Capital Securities or such other similar
interests, as the case may be. The Expense Agreement constitutes an unsecured
obligation of the Company and ranks subordinate and junior in right of payment
to all Senior Indebtedness of the Company in the same manner as the Guarantee
and the Junior Subordinated Debentures.
RELATIONSHIP AMONG AND EFFECT OF THE CAPITAL SECURITIES, THE JUNIOR SUBORDINATED
DEBENTURES, THE JUNIOR SUBORDINATED INDENTURE, THE TRUST AGREEMENT THE GUARANTEE
AND THE EXPENSE AGREEMENT
Taken together, the Company's obligations under the Junior Subordinated
Debentures, the Junior Subordinated Indenture, the Trust Agreement, the Expense
Agreement and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that provides a
full, irrevocable and unconditional guarantee of the Trust's obligations in
respect of the Capital Securities. If and to the extent that the Company does
not make payments on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to pay distributions or other amounts due on the Capital
Securities. The Guarantee does not cover payment of amounts payable with respect
to the Capital Securities when the Trust does not have sufficient funds to pay
such amounts. In such event, the remedy of a Holder of the Capital Securities is
to institute a legal proceeding directly against the Company for enforcement of
payment of such distributions to such Holder. The obligations of the Company
under the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness of the Company.
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover distributions and other
payments due on the Capital Securities, primarily because: (i) the aggregate
principal amount of the Junior Subordinated Debentures is equal to the sum of
the aggregate liquidation amount of the Trust Securities; (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the distribution rate, distribution dates and other payment dates for the
Capital Securities; (iii) the Company shall pay for all and any costs, expenses
and liabilities of the Trust except the Trust's obligations to Holders of its
Capital Securities; and (iv) the Trust Agreement further provides that the Trust
will not engage in any activity that is not consistent with the limited purposes
of the Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder with, and to the extent the Company has theretofore
made, or is concurrently on the date of such payment making, a payment under the
Guarantee.
24
<PAGE> 33
THE PROPOSED AMENDMENTS
It is a condition to participation in the Tender Offer that each Holder of
Capital Securities delivers its Consent to the Proposed Amendments. The Proposed
Amendments are being presented as a single unified proposal.
Although the Supplemental Indenture will be executed prior to acceptance of
the Capital Securities under the Tender Offer, the Proposed Amendments set forth
in the Supplemental Indenture will not become operative until after the receipt
of the Minimum Consent and upon acceptance for payment, and payment for, all
Capital Securities relating to such Consents. If the Proposed Amendments become
operative, the Holders of Capital Securities that remain outstanding after
consummation of the Tender Offer will be bound by the Supplemental Indenture
regardless of whether they consented to the Proposed Amendments. See "Certain
Considerations."
The following sets forth a brief description of the Proposed Amendments to
the Junior Subordinated Indenture for which Consents are being sought pursuant
to the Consent Solicitation. The summary of provisions of the Junior
Subordinated Indenture set forth below is qualified in its entirety by reference
to the text of the Proposed Amendments, and to the full and complete terms
contained in the proposed Supplemental Indenture. Capitalized terms appearing
below in the amendment to the Junior Subordinated Indenture have the meanings
assigned to the terms in such Junior Subordinated Indenture.
The Proposed Amendments would eliminate the following covenants from the
Junior Subordinated Indenture as follows:
1. The covenant entitled "Additional Covenants" (Section 10.7 of the
Junior Subordinated Indenture). Such elimination would permit the Company
and any Subsidiary of the Company, at any time, to (i) declare or pay
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock,
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or (iii)
make guarantee payments with respect to any guarantee by the Company of
debt securities of any Subsidiary of the Company.
2. The covenant entitled "Limitation on Indebtedness" (Section 10.8 of
the Junior Subordinated Indenture). Such elimination would permit the
Company and any Subsidiary of the Company to incur Debt without limitation.
The Proposed Amendments would amend the following provisions of the Junior
Subordinated Indenture as follows:
1. The provision entitled "Deferrals of Interest Payment Dates" and
the corresponding provisions appearing on the face of the Initial Security
and the Registered Security (Sections 3.11, 2.1 and 2.2B of the Junior
Subordinated Indenture). Such amendments would permit the Company to (i)
declare dividends or distributions on, or redeem, purchase, acquire or make
a liquidation payment with respect to, the Company's capital stock, (ii)
make any payment of principal of or interest or premium on or repay,
repurchase or redeem any debt securities of the Company or (iii) make any
guarantee of the debt securities of any Subsidiary of the Company during
any Extension Period.
2. The provision entitled "Reports by Company" (Section 7.4 of the
Junior Subordinated Indenture). Such amendment would require the Company to
furnish reports, financial or otherwise to the Trustee, Holders and the
Commission only as required by the Trust Indenture Act or any written
interpretation thereof or pronouncement relating thereto or published or
distributed by the Commission.
The Proposed Amendments would delete those definitions from the Junior
Subordinated Indenture where references to such definitions would be eliminated
as a result of the foregoing, and add or amend those definitions as set forth in
the Proposed Amendments.
The foregoing summary does not purport to be comprehensive or definitive,
and is qualified in its entirety by reference to the more complete description
of the Proposed Amendments attached as Annex I to this Offer
25
<PAGE> 34
to Purchase. Holders should consider the effect of the Proposed Amendments on
their position as such Holders if their Capital Securities are not purchased
pursuant to the Tender Offer. See "Certain Considerations."
THE PROPOSED AMENDMENTS CONSTITUTE A SINGLE PROPOSAL AND A TENDERING HOLDER
MUST CONSENT TO THE PROPOSED AMENDMENTS AS AN ENTIRETY AND MAY NOT CONSENT
SELECTIVELY WITH RESPECT TO CERTAIN OF THE PROPOSED AMENDMENTS.
The elimination and modification affected by the Supplemental Indenture of
the covenants and other provisions set forth in the Junior Subordinated
Indenture will not become operative unless and until the Capital Securities
under such Junior Subordinated Indenture are accepted for purchase by the
Company.
If the Proposed Amendments become effective, they will apply to all Capital
Securities and each Holder of such Capital Securities that are not properly
tendered and accepted for payment hereunder will be bound by such Proposed
Amendments regardless of whether such Holder consented to the Proposed
Amendments. The Capital Securities that are not tendered and accepted for
payment pursuant to the Tender Offer will remain obligations of the Trust.
Pursuant to the terms of the Junior Subordinated Indenture, the Proposed
Amendments require the written consent of the Holders as of the Record Date of
at least a majority in aggregate liquidation amount of the outstanding Capital
Securities, excluding for such purposes any Capital Securities owned at the time
by the Company or any of its affiliates.
The valid tender by a Holder pursuant to the Tender Offer (and if required,
delivery of a Proxy therewith) will be deemed to constitute the delivery of a
Consent by such Holder to the Proposed Amendments.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain anticipated U.S. federal
income tax considerations generally applicable to the Tender Offer and the
Consent Solicitation under current law. The general summary set forth below is
based upon current laws, regulations, rulings and judicial decisions, all of
which are subject to change, possibly with retroactive effect. The discussion
below does not address all aspects of U.S. federal income taxation that may be
relevant to particular Holders in the context of their specific investment
circumstances or certain types of Holders subject to special treatment under
such laws (e.g., financial institutions and tax-exempt organizations). In
addition, the discussion does not address any aspects of foreign, state, local
or other tax laws, or any U.S. tax considerations (e.g., estate or gift tax)
other than U.S. federal income tax considerations that may be applicable to
particular Holders. Further, the summary below assumes that Holders hold their
Capital Securities as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"). For purposes of this discussion, a "U.S. Holder" is a
Holder of Capital Securities who or which is (i) a citizen or individual
resident of the U.S. for income tax purposes, (ii) a corporation or partnership
created or organized in or under the laws of the U.S. or any political
subdivision thereof, (iii) an estate, the income of which is includible in its
gross income for federal income tax purposes without regard to its source or
(iv) a trust, if a court within the U.S. is able to exercise primary supervision
over the administration of the trust and one or more U.S. trustees have the
authority to control all substantial decisions of the trust.
EACH HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR IN DETERMINING THE
FEDERAL, STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE PARTICULAR HOLDER OF
CAPITAL SECURITIES PURSUANT TO THE TENDER OFFER AND THE CONSENT SOLICITATION OR
ANY CHANGES IN APPLICABLE TAX LAWS SUBSEQUENT TO THE DATE HEREOF AND ANY
PROPOSED LEGISLATION.
26
<PAGE> 35
TAX CONSIDERATIONS FOR TENDERING AND CONSENTING HOLDERS
In general, a U.S. Holder will recognize gain or loss on the sale of
Capital Securities pursuant to the Tender Offer in an amount equal to the
difference, if any, between its adjusted tax basis in the Capital Securities and
the cash received by the U.S. Holder upon such sale (other than with respect to
Accumulated Distributions, which if not yet included in income, will be treated
as ordinary income). A U.S. Holder's adjusted tax basis in the Capital
Securities generally will be the amount paid by such U.S. Holder for the Capital
Securities plus any accrued original issue discount ("OID") (and, in the case of
Capital Securities received in the Exchange Offer, generally would be the amount
paid by such U.S. Holder for the Series A Capital Securities exchanged
therefore). If applicable, a Holder's tax basis in the Capital Securities also
would be increased by any market discount previously included in income by the
Holder pursuant to an election to include market discount in income as it
accrues and would be reduced by the accrual of any amortizable bond premium
which the Holder has previously deducted from gross income on an annual basis.
Subject to the "market discount" rules discussed below, such gain or loss
generally will be capital gain or loss and will be long-term capital gain or
loss if the U.S. Holder's holding period for the Capital Securities (which, in
the case of Capital Securities received in the Exchange Offer, would include the
holding period of the Series A Capital Securities exchanged therefor) exceeds
twelve months at the time of sale.
A U.S. Holder (other than a U.S. Holder who made the election described
below) who purchased Capital Securities with "market discount" (generally
defined as the amount by which the stated redemption price at maturity of the
Capital Securities exceeds the U.S. Holder's purchase price) subject to a
statutory de minimis exception will be required to treat any gain recognized on
the sale of the Capital Securities (including Capital Securities received in the
Exchange Offer in exchange for a Series A Capital Securities with market
discount) pursuant to the Tender Offer as ordinary income to the extent of the
market discount that accrued (on a straight line basis or at the election of the
Holder on a constant interest basis) during the holding period of such Capital
Securities (which, in the case of Capital Securities received in the Exchange
Offer, would include the holding period of the Series A Capital Securities
exchanged therefor). A U.S. Holder who has elected under applicable provisions
of the Code to include market discount in income as such discount accrues will
not, however, be required to treat any gain recognized as ordinary income under
these rules. Each U.S. Holder should consult its tax advisor with respect to the
possible application of the market discount rules to such U.S. Holder.
Although the matter is not free from doubt, the Company intends to treat
the Consent Payment for U.S. federal income tax purposes as additional cash
received in exchange for a Holder's Capital Securities. If the Consent Payment
was treated as a separate fee for consenting to the Proposed Amendments, the
U.S. federal income tax consequences are unclear.
TAX CONSIDERATIONS FOR NON-TENDERING HOLDERS
A U.S. Holder who does not participate in the Tender Offer should not
recognize any income, gain or loss for U.S. federal income tax purposes as a
result of the Proposed Amendments. The Internal Revenue Service (the "IRS")
could assert, however, that, as a result of the modifications to the Capital
Securities pursuant to the Proposed Amendments, a Holder who retains its Capital
Securities should be treated as having exchanged, within the meaning of Section
1001 of the Code, its Capital Securities for new Capital Securities (the "New
Capital Securities") in a taxable transaction.
In such an exchange, such Holder would realize taxable gain or loss equal
to the difference between the amount deemed realized by such Holder in the
deemed exchange and its tax basis in the Capital Securities deemed to have been
surrendered. A Holder's amount deemed realized would likely be the issue price
of the New Capital Securities, which would likely be the liquidation amount of
the New Capital Securities. If the Capital Securities are "publicly traded"
within the meaning of the applicable Treasury Regulations, however, the issue
price of the New Capital Securities (and a Holder's amount deemed realized)
would be the fair market value of the Capital Securities at the time the
exchange is deemed to occur. Nevertheless, the exchange would probably
constitute a tax-free recapitalization, in which a Holder would recognize no
loss and would recognize gain only to the extent, if any, of the fair market
value of the excess of the "principal amount"
27
<PAGE> 36
(within the meaning of Section 354 of the Code) of the New Capital Securities
over the "principal amount" of the Capital Securities. If the exchange did not
constitute a tax-free recapitalization, a Holder would recognize all of the
realized gain or loss, and all or a portion of any recognized gain could be
subject to ordinary income treatment if the Holder acquired its Capital
Securities at a market discount.
If the Proposed Amendments constitute an exchange for U.S. federal income
tax purposes, the Capital Securities are "publicly traded" and the New Capital
Securities have an issue price (i.e., fair market value) that is less than their
liquidation amount, the New Capital Securities would generally have OID for U.S.
federal income tax purposes. Accordingly, each Holder of New Capital Securities
would generally be required to include OID in income as it accrues under a
constant yield method in advance of cash payments attributable to such income
(regardless of whether the Holder is a cash or accrual basis taxpayer).
REPORTING AND BACKUP WITHHOLDING
The payment of either the Total Consideration or the Tender Offer
Consideration generally will constitute reportable payments for U.S. federal
income tax purposes.
The receipt of the Tender Offer Consideration, any Consent Payment and any
Accumulated Distributions by a Holder who tenders its Capital Securities may be
subject to backup withholding at the rate of 31% with respect to such payments
unless such Holder (1) is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or (2) provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under these rules will be credited
against the Holder's U.S. federal income tax liability. A Holder who does not
provide its correct taxpayer identification number may be subject to penalties
imposed by the IRS.
PAYMENTS TO FOREIGN HOLDERS
For purposes of this paragraph, a "Foreign Holder" is any corporation,
individual, partnership, estate or trust that is not a U.S. Holder for United
States federal income tax purposes. Under present U.S. income tax laws, payments
of either the Total Consideration or the Tender Offer Consideration by the
Company or any of its paying agents to any Foreign Holder of Capital Securities
are generally subject to a 30% federal withholding tax absent qualification for
an exception or reduced rate. Unless the Foreign Holder provides evidence of the
application of an exception or reduced rate, 30% generally will be withheld from
payments of income to Foreign Holders. As necessary, a properly executed
statement claiming such reduced rate or exception should be delivered to the
Depositary. A form of such statement can be obtained from the Depositary. A
Foreign Holder may be eligible to claim a refund of such tax or a portion of
such tax if such Foreign Holder is entitled to a reduced rate of withholding and
the Company withheld at a higher rate. Foreign Holders are urged to consult
their tax advisors regarding the application of United States federal income tax
withholding, including eligibility for a withholding tax reduction or exemption
and the refund procedure.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. HOLDERS SHOULD CONSULT THEIR TAX
ADVISORS AS TO THE PARTICULAR TAX CONSIDERATIONS TO THEM OF THE TENDER OFFER AND
THE CONSENT SOLICITATION, INCLUDING THE EFFECT OF ANY FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER LAWS.
CERTAIN CONSIDERATIONS
The following considerations, in addition to the other information
described herein or incorporated herein by reference, should be carefully
considered by each Holder of Capital Securities before deciding whether to
participate in the Tender Offer. Holders should also see "Certain U.S. Federal
Income Tax Considerations" for a general discussion of certain tax issues that
should be considered and "The Proposed Amendments" set
28
<PAGE> 37
forth herein for a description of the Proposed Amendments in considering the
consequences of the adoption thereof.
POTENTIAL ADVERSE EFFECTS OF THE PROPOSED AMENDMENTS ON NON-TENDERING HOLDERS
Capital Securities not purchased pursuant to the Tender Offer will remain
outstanding obligations of the Trust. If the Minimum Consent is received and the
Supplemental Indenture is executed and the Proposed Amendments become operative,
certain of the principal restrictive covenants contained in the Junior
Subordinated Indenture will be amended or eliminated, thereby increasing the
Company's financial and operating flexibility. The Junior Subordinated
Indenture, as so amended, will continue to govern the terms of all Capital
Securities issued pursuant thereto that remain outstanding after the
consummation of the Tender Offer. The elimination (or, in certain cases,
amendment) of these restrictive covenants and other provisions would permit the
Company to, among other things, incur indebtedness, pay dividends or make other
restricted payments, and make certain guarantees. In addition, the Company will
not be required to provide currently required disclosure documents to the
Commission or to the Trustees, unless otherwise required by law. As a result,
the changes to the Junior Subordinated Indenture effected by the Supplemental
Indenture may increase the credit risk to non-tendering Holders and may
otherwise adversely affect the interests of non-tendering holders. See "The
Proposed Amendments."
POTENTIAL ADVERSE EFFECTS OF THE TENDER OFFER ON MARKET FOR CAPITAL SECURITIES
The trading market for Capital Securities that are not tendered and
accepted for payment could become more limited due to the reduction in the
amount of Capital Securities outstanding after the Tender Offer, which might
adversely affect the liquidity and market price of such Capital Securities.
While the Capital Securities are currently traded over-the-counter, the market
for the Capital Securities that remain outstanding may be even more limited. As
a result, such Capital Securities may trade at a discount (or a premium)
depending on prevailing interest rates, the market for securities with similar
credit features, the performance of the Company and other factors. Furthermore,
the prices at which any such trading occurs in the Capital Securities could be
extremely volatile if the amount of such Capital Securities outstanding after
the Tender Offer is substantially reduced. There can be no assurance that an
active market in such Capital Securities will exist following consummation of
the Tender Offer and no assurance as the prices at which such Capital Securities
may trade.
Although the Company has no current intention to do so, it reserves the
right in its sole discretion to purchase and make offers for any Capital
Securities that remain outstanding subsequent to the Expiration Time or, as set
forth under "The Tender Offer and the Consent Solicitation -- Expiration Time,
Extensions, Termination and Amendments" below, to terminate the Tender Offer
and, to the extent permitted by applicable law, to purchase Capital Securities
in the open market, in privately negotiated transactions or otherwise. Following
consummation of the Tender Offer, the terms of any such purchases or offers
could differ from the terms of the Tender Offer.
TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE CAPITAL SECURITIES
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, neither the Company
nor, to the Company's knowledge, any of the directors or executive officers of
the Company, any person controlling the Company, nor any associate of any of the
foregoing, has effected any transactions in the Capital Securities during the 40
business days prior to the date hereof.
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Tender Offer or the
Consent Solicitation between the Company and any of its directors or officers,
the Trust, the Trustees and the Administrators and any person with respect to
any securities of the Company or the Trust, including the Capital Securities,
the Common Securities and the Junior Subordinated Debentures.
29
<PAGE> 38
The acquisition of the Company through merger, making the Company a direct
subsidiary of GMACI, effected a change of control of the Company. Pursuant
thereto and as required by the Trust Agreement, each Holder has the right to
require the Trust to repurchase any or all Capital Securities of such Holder at
a cash price equal to 101% of the aggregate liquidation amount of such Capital
Securities plus accumulated and unpaid distributions thereon to, but not
including, the Repurchase Date (as defined in the Trust Agreement), subject to
certain limitations as set forth in the Trust Agreement. Notices of this right
to cause a repurchase were sent to all Holders on or about October 21, 1997, and
such Holders have until thirty days after receipt of such notice to elect their
right to cause such repurchase ("Election Date").
Holders are advised that, although they may exercise the right to cause a
repurchase any time prior to the Election Date, Holders doing so will not be
entitled to participate in the Tender Offer and the Consent Solicitation and
receive the Total Consideration or the Tender Offer Consideration, as the case
may be, to the extent that the right to cause repurchase was elected.
PRICE RANGES OF THE CAPITAL SECURITIES
The Capital Securities are not regularly traded on an established market.
In addition, the trading volume of the Capital Securities has been very limited
and there is currently no market for the Capital Securities. Accordingly, sales
prices and trading volume are difficult to determine.
INDEPENDENT AUDITORS
The financial statements and the related financial statement schedules
incorporated in this Offer to Purchase by reference from the Company's Form
10-K/A, dated September 15, 1997, for the year ended December 31, 1996, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected historical consolidated financial
and other data for the Company as of, and for each of the three years in the
period ended, December 31, 1996, and as of, and for the six-month periods ended
June 30, 1997 and 1996. Such data have been derived from, and should be read in
conjunction with, the audited consolidated financial statements and other
financial information contained in the Company's Form 10-K/A dated September 15,
1997 for the year ended December 31, 1996 and the unaudited consolidated interim
financial statements contained in the Company's Form 10-Q/A dated September 15,
1997 for the quarter ended June 30, 1997, including, in both cases, the notes
thereto, incorporated by reference into the document. See "Additional
Information" and "Incorporation of Certain Information by Reference."
The following table also sets forth selected pro forma consolidated
financial data of the Company as of, and for the periods ending, June 30, 1997
and 1996 and December 31, 1996, which give effect to (1) capital contributions
made by the Company's parent necessary to effect the Tender Offer and (2) the
Tender Offer, assuming 100% of the Capital Securities are purchased, as if such
events had occurred as of June 30, 1997 (in the case of balance sheet data) and
as of December 31, 1996 (in the case of statement of operations data, and other
data). The following table does not give effect to the concurrent tender offers
(the "Senior Notes Tender Offers") by the Company for $75,000,000 of the
Company's 8% Senior Notes due 1999 and $75,000,000 of the Company's 9 1/2%
Senior Notes due 2001 and the anticipated capital contributions that may be made
by the Company's parent necessary to effect the Senior Notes Tender Offers.
The Company is unable to predict the exact aggregate amount of the Capital
Securities that may be tendered and accepted for payment in the Tender Offer.
The Company believes that the assumptions made with respect to such events
provide a reasonable basis on which to present the pro forma financial data. The
unaudited pro forma consolidated financial and other data are provided for
informational purposes only and should not be construed to be indicative of the
Company's consolidated financial position or results of
30
<PAGE> 39
operations had such event been consummated on the dates assumed. The Company's
actual consolidated financial position and results of operations in future
periods will be affected by various factors, many of which are beyond its
control. The pro forma statements do not, therefore, project the Company's
financial position or results of operations for any future date or period. The
unaudited pro forma consolidated financial and other data and accompanying notes
should be read in conjunction with the consolidated financial statements and
accompanying notes incorporated herein by reference.
<TABLE>
<CAPTION>
ACTUAL
-----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------------- ------------------------------------
1997(4) 1996 1996 1995 1994(2)
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Direct premiums
written............................. $ 471,942 $ 458,926 $ 935,011 $ 797,373 $ 545,483
Net premiums written.................. 388,463 392,073 797,989 620,447 363,467
Total revenues........................ 421,025 370,096 783,411 627,458 369,587
Income (loss) from continuing
operations.......................... (36,788) 11,682 170 36,619 22,538
Net income (loss)..................... (36,788) 11,682 170 33,995 23,188
Net income (loss) available to common
stockholders........................ (39,573) 8,897 (5,400) 28,425 22,306
PER SHARE
Income (loss) from continuing
operations.......................... $ (2.51) $ .56 $ (.34) $ 1.86 $ 1.38
Net income (loss)..................... (2.51) .56 (.34) 1.73 1.42
Weighted average shares outstanding... 15,745 15,863 15,850 19,635 15,750
Dividends paid........................ $ .18 $ .18 $ .36 $ .36 $ .36
GAAP COMBINED RATIO
Loss ratio............................ 90.1% 76.7% 80.0% 73.4% 70.4%
Expense ratio......................... 25.3 20.9 22.4 21.6 22.0
---------- ---------- ---------- ---------- ----------
Combined ratio........................ 115.4% 97.6% 102.4% 95.0% 92.4%
---------- ---------- ---------- ---------- ----------
SELECTED INSURANCE COMPANY STATUTORY
DATA(1)
Loss ratio............................ 90.0% 75.5% 79.4% 73.2% 70.8%
Expense ratio......................... 24.2 21.5 22.1 21.5 21.7
---------- ---------- ---------- ---------- ----------
Combined ratio........................ 114.2% 97.0% 101.5% 94.7% 92.5%
---------- ---------- ---------- ---------- ----------
Statutory net income (loss)........... $ (22,730) $ 11,909 $ 6,882 $ 41,814 $ 37,883(2)
Statutory surplus..................... 273,714(5) 246,099 245,919 226,832 198,589
Net premiums written to statutory
surplus............................. 2.9x 2.9x 3.2x 2.7x 2.6x(3)
<CAPTION>
PRO FORMA
---------------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED
------------------------ DECEMBER 31,
1997 1996 1996
---------- -------- ------------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<S> <C> <C> <C>
OPERATING RESULTS
Direct premiums
written............................. $ 471,942 $458,926 $935,011
Net premiums written.................. 388,463 392,073 797,989
Total revenues........................ 421,025 370,096 783,411
Income (loss) from continuing
operations.......................... (34,051) 11,682 170
Net income (loss)..................... (34,051) 11,682 170
Net income (loss) available to common
stockholders........................ (36,836) 8,897 (5,400)
PER SHARE
Income (loss) from continuing
operations.......................... $ (2.34) $ .56 $ (.34)
Net income (loss)..................... (2.34) .56 (.34)
Weighted average shares outstanding... 15,745 15,863 15,850
Dividends paid........................ $ .18 $ .18 $ .36
GAAP COMBINED RATIO
Loss ratio............................ 90.1% 76.7% 80.0%
Expense ratio......................... 25.3 20.9 22.4
---------- -------- --------
Combined ratio........................ 115.4% 97.6% 102.4%
---------- -------- --------
SELECTED INSURANCE COMPANY STATUTORY
DATA(1)
Loss ratio............................ 90.0% 75.5% 79.4%
Expense ratio......................... 24.2 21.5 22.1%
---------- -------- --------
Combined ratio........................ 114.2% 97.0% 101.5%
---------- -------- --------
Statutory net income (loss)........... $ (22,730) $11,909 $ 6,882
Statutory surplus..................... 273,714(5) 246,099 245,919
Net premiums written to statutory
surplus............................. 2.9x 2.9x 3.2x
</TABLE>
31
<PAGE> 40
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Cash and invested
assets.............................. $ 685,899(3) $ 523,971 $ 567,892 $ 505,104 $ 420,919
Total assets.......................... 1,484,437 1,296,286 1,356,799 1,241,679 1,152,123
Short-term Debt....................... 26,000 21,000 44,000 16,000 21,000
Notes payable......................... 150,714 150,743 150,760 150,807 150,812
Total Liabilities..................... 1,211,185 1,067,268 1,141,408 1,006,832 956,864
Company-Obligated Mandatory Redeemable
Capital Securities of Subsidiary
Trust............................... 100,000 -- -- -- --
Stockholders' equity.................. 173,252 229,018 215,391 234,847 195,259
<CAPTION>
AS OF JUNE 30, 1997
--------------------------------------
ACTUAL ADJUSTMENTS AS ADJUSTED
------ ----------- -----------
<S> <C> <C> <C>
FINANCIAL POSITION
Cash and invested
assets.............................. $ 685,899 $ (4,504) $ 681,395
Total assets.......................... 1,484,437 3,905 1,488,342
Short-term Debt....................... 26,000 -- 26,000
Notes payable......................... 150,714 -- 150,714
Total Liabilities..................... 1,211,185 (4,210) 1,206,975
Company-Obligated Mandatory Redeemable
Capital Securities of Subsidiary
Trust............................... 100,000 (100,000) --
Stockholders' equity.................. 173,252 108,115 281,367
</TABLE>
- ------------
(1) Combined ratio for 1994 is computed including the results of Bankers and
Shippers Insurance Company ("Bankers and Shippers") for the period after the
acquisition date of October 18, 1994.
(2) During October 1994, the Company acquired Bankers and Shippers for $153.2
million and the transaction was accounted for under the purchase method. The
results of operations of Bankers and Shippers are included with the results
of the Company from October 18, 1994. See Note B "Acquisition-Purchase of
Bankers and Shippers" to the financial statements for the year ended
December 31, 1996 included in the Form 10-K/A incorporated by reference for
selected proforma operating results assuming the acquisition occurred on
January 1, 1994. The net premiums written to statutory surplus and statutory
net income includes the results of Bankers and Shippers for the full year
1994.
(3) Gives effect to February 10, 1997 issuance of the Capital Securities.
(4) The financial statements of the Company for the year ended December 31, 1996
and the six months ended June 30, 1997 include the effects of increases in
loss and loss adjustment expenses payable of $12.5 million and $42.0
million, respectively, due to actual loss and loss adjustment expenses in
excess of original expectations.
(5) During the first quarter of 1997, the Company contributed $50.0 million of
capital in the form of certificates of contribution to its insurance
subsidiaries.
32
<PAGE> 41
CAPITALIZATION
The following table sets forth the unaudited historical capitalization of
the Company as of June 30, 1997, and the unaudited pro forma capitalization of
the Company as of June 30, 1997, after giving effect to (1) a capital
contribution made by the Company's parent necessary to effect the Tender Offer
and (2) the Tender Offer, assuming 100% of the Capital Securities are purchased.
See "Selected Consolidated Financial Information." The pro forma information
assumes that 100% of the Capital Securities are accepted for payment pursuant to
the Tender Offer. The following table does not give effect to the Senior Notes
Tender Offers or any capital contributions that may be made by Company's parent
to effect the Senior Notes Tender Offers. The capitalization of the Company
should be read in conjunction with the Company and consolidated subsidiaries
financial statements, and notes thereto, and the Company's "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
included in the Company's Form 10-Q/A dated September 15, 1997 for the quarter
ended June 30, 1997, which is incorporated by reference herein, and "Selected
Consolidated Financial Information" included elsewhere herein. The following
table gives no effect to the Senior Notes Tender Offers and the anticipated
capital contributions that may be made by the Company's parent necessary to
effect the Senior Notes Tender Offers.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)
<S> <C> <C>
Short-Term Debt under Credit Facility....................... $ 26,000 $ 26,000
=========== ========
Notes Payable:
Promissory Note........................................... 814 814
8% Senior Notes due 1999.................................. 74,927 74,927
9 1/2% Senior Notes due 2001.............................. 74,973 74,973
----------- --------
Total Notes Payable......................................... 150,714 150,714
----------- --------
Company-obligated mandatorily redeemable capital securities
of subsidiary trust holding solely Integon Corporation
Junior Subordinated Deferrable Interest Debentures........ $ 100,000 --
Stockholders Equity:
Convertible Preferred Stock, $.01 par value, 1,437,000
shares authorized, issued and outstanding.............. 14 14
Preferred Stock, $.01 par value per share, 562,500 shares
authorized, issued and outstanding -- none............. -- --
Common Stock, $.01 par value per share, 35,000,000 shares
authorized, 17,354,739 shares issued and outstanding... 173 173
Class A Non-Voting Common Stock, $.01 par value per share,
20,000,000 shares authorized........................... -- --
Additional paid-in capital................................ 148,803 279,953
Net unrealized depreciation of securities................. (1,345) (1,345)
Retained earnings......................................... 63,428 40,393
Treasury Stock, at cost 1,567,200 shares.................. (37,821) (37,821)
----------- --------
Total Stockholders' Equity.................................. 173,252 281,367
----------- --------
Total Capitalization................................. $ 423,966 $432,081
=========== ========
</TABLE>
33
<PAGE> 42
ANNEX I
THE PROPOSED AMENDMENTS TO THE
10 3/4% JUNIOR SUBORDINATED INDENTURE
Holders of Capital Securities who desire to accept the Tender Offer in
respect of the 10 3/4% Capital Securities will be deemed to have consented to
certain amendments to the Junior Subordinated Indenture under which the Junior
Subordinated Debentures were issued, which Junior Subordinated Debentures
support such 10 3/4% Capital Securities. The following is a summary of the
Proposed Amendments to certain covenants and other provisions of the Junior
Subordinated Indenture. Capitalized terms used herein without definition have
the same meanings as set forth in the Junior Subordinated Indenture.
If the Proposed Amendments become effective, provisions substantially in
the form of the underlined clauses below will be added to the Junior
Subordinated Indenture and the provisions substantially in the form of the
italicized clauses below will be deleted from the Junior Subordinated Indenture.
In addition, defined terms in the Junior Subordinated Indenture that are no
longer used in such Indenture (as amended by the applicable Proposed Amendments)
will be deleted from the Junior Subordinated Indenture and cross-references to
provisions in the Indenture that have been deleted as a result of the applicable
Proposed Amendments will be revised to reflect such deletions.
The text of the Proposed Amendments described in this Annex I is
illustrative of the text of the Proposed Amendments to the Junior Subordinated
Indenture.
ARTICLE II
SECURITY FORMS
SECTION 2.1. Form of Face of Initial Security.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR, (I) TO A PERSON WHO
THE TRANSFEROR BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (B) BY SUBSEQUENT INVESTORS,
AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS
SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
A-1
<PAGE> 43
[CUSIP ]
INTEGON CORPORATION
__% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
NO. $
INTEGON CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (hereinafter called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to , or registered assigns, the
principal sum of Dollars on ____________,____[; provided that the Company
may, subject to certain conditions set forth in Section 3.14 of the Indenture,
shorten the Stated Maturity of the principal of this Security to a date not
earlier than ____________]. The Company further promises to pay interest on said
principal sum from , or from the most recent
interest payment date (each such date, an "Interest Payment Date") on which
interest has been paid or duly provided for, [monthly] [quarterly]
[semi-annually] [if applicable, insert (subject to deferral as set forth
herein)] in arrears on [insert applicable Interest Payment Dates] of each year,
commencing , , at the rate of % per annum,
until the principal hereof shall have become due and payable, plus Additional
Interest, if any, until the principal hereof is paid or duly provided for or
made available for payment [if applicable, insert and on any overdue principal
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
rate of % per annum, compounded [monthly] [quarterly] [semi-annually]]. The
amount of interest [and Additional Interest, if any] payable for any period
shall be computed on the basis of twelve 30-day months and a 360-day year. The
amount of interest payable for any partial period shall be computed on the basis
of the number of days elapsed in a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Security is not a
Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case the same force and effect as if
made on the date the payment was originally payable. A "Business Day" shall mean
any day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office of the Trustee [if applicable, insert -- or the principal office of the
Property Trustee under the Trust Agreement] is closed for business. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
installment, which shall be the [insert definition of Regular Record Dates]. Any
such interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or self-regulatory organization, all as more fully provided in
said Indenture.
[If applicable, insert -- So long as no Event of Default has occurred and
is continuing, the Company shall have the right at any time during the term of
this Security to defer payment of interest on this Security, at any time or from
time to time, for up to consecutive [monthly] [quarterly]
[semi-annual] interest payment periods with respect to each deferral period
(each an "Extension Period"), during which Extension Periods the Company shall
have the right to make partial payments of interest on any Interest Payment
Date, and at the end of which the Company shall pay all interest then accrued
and unpaid (together with Additional Interest thereon to the extent permitted by
applicable law); provided, however, that no Extension Period shall extend beyond
the Stated Maturity of the principal of this Security. [DELETE: provided,
A-2
<PAGE> 44
further, that during any such Extension Period, the Company shall not, and shall
not permit any Subsidiary of the Company to, (i) declare or pay any dividends or
distributions on or redeem, purchase, acquire or make a liquidation payment with
respect to, any of the Company's capital stock or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company that rank pari passu in all respects with or
junior in interest to this Security or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any Subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
this Security (other than (a) dividends or distributions in the Company's
capital stock, (b) any declaration of a dividend in connection with the
implementation of a Rights Plan or the issuance of stock under any such Rights
Plan in the future, or the redemption or repurchase of any rights distributed
pursuant to a Rights Plan, (c) payments under the Guarantee with respect to this
Security, (d) purchases of Common Stock related to the issuance of Common Stock
or rights or options under any of the Company's benefit plans for its directors,
officers, employees or other persons within the definition of "employee" for
purposes of a registration of shares for an employee benefit plan of the
Company, related to the issuance of Common Stock or rights under a dividend
reinvestment or stock purchase plan, or related to the issuance of Common Stock
(or securities convertible into or exchangeable for Common Stock) as
consideration in an acquisition transaction that was entered into prior to the
commencement of such Extension Period and (e) payments of accrued dividends (and
cash in lieu of fractional shares) upon conversion into Common Stock of any
convertible preferred stock of the Company of any series now or hereinafter
outstanding, in accordance with the terms of such stock).] Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest, provided that no Extension Period shall
exceed consecutive [monthly] [quarterly] [semi-annual] periods or extend
beyond the Stated Maturity of the principal of this Security. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due, the Company may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period except at the end thereof.
The Company shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral [if applicable, insert -- or, with respect to
the Securities issued to a Trust, so long as such Securities are held by such
Trust, prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities would be payable but for such deferral
or (ii) the date the Administrative Trustees are required to give notice to any
securities exchange or other applicable self-regulatory organization or to
holders of such Preferred Securities of the record date or the date such
distributions are payable, but in any event not less than one Business Day prior
to such record date.]]
Payment of principal of (and premium, if any) and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the United States, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; [if applicable, insert -- ; provided, however, that at the option of the
Company] payment of interest may be made (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Securities
Register or (ii) by wire transfer or direct deposit in immediately available
funds at such place and to such account as may be designated in writing by the
relevant Regular Record Date by the Person entitled thereto as specified in the
Securities Register.]
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
A-3
<PAGE> 45
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
INTEGON CORPORATION
By:
------------------------------------
[President or Vice President]
ATTEST:
- ---------------------------------------------------
[Secretary or Assistant Secretary]
SECTION 2.2B Form of Face of Exchange Security and Registered Security.
INTEGON CORPORATION [CUSIP ]
__% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
NO. $
INTEGON CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (hereinafter called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to , or registered assigns, the
principal sum of Dollars on ____________,____________[; provided
that the Company may, subject to certain conditions set forth in Section 3.14 of
the Indenture, shorten the Stated Maturity of the principal of this Security to
a date not earlier than ____________]. The Company further promises to pay
interest on said principal sum from , or from the
most recent interest payment date (each such date, an "Interest Payment Date")
on which interest has been paid or duly provided for, [monthly] [quarterly]
[semi - annually] [if applicable, insert -- (subject to deferral as set forth
herein)] in arrears on [insert applicable Interest Payment Dates] of each year,
commencing , for, at the rate of % per annum, until the
principal hereof shall have become due and payable [if applicable, insert -- ,
plus Additional Interest, if any] until the principal hereof is paid or duly
provided for or made available for payment [if applicable, insert -- and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the rate of % per annum, compounded [monthly] [quarterly]
[semi-annually]]. The amount of interest [plus Additional Interest, if any,]
payable for any period shall be computed on the basis of twelve 30-day months
and a 360-day year. The amount of interest payable for any partial period shall
be computed on the basis of the number of days elapsed in a 360-day year of
twelve 30-day months. In the event that any date on which interest is payable on
this Security is not a Business Day, then a payment of the interest payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the date the payment was originally payable.
A "Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which
A-4
<PAGE> 46
the Corporate Trust Office of the Trustee [if applicable, insert -- or the
principal office of the Property Trustee under the Trust Agreement] is closed
for business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest installment, which shall be the [insert definition of Regular
Record Dates]. Any such interest installment not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or self-regulatory organization, all as more fully provided in
said Indenture.
[If applicable, insert -- So long as no Event of Default has occurred and
is continuing, the Company shall have the right at any time during the term of
this Security to defer payment of interest on this Security, at any time or from
time to time, for up to consecutive [monthly] [quarterly]
[semi-annual] interest payment periods with respect to each deferral period
(each an "Extension Period"), during which Extension Periods the Company shall
have the right to make partial payments of interest on any Interest Payment
Date, and at the end of which the Company shall pay all interest then accrued
and unpaid (together with Additional Interest thereon to the extent permitted by
applicable law); provided, however, that no Extension Period shall extend beyond
the Stated Maturity of the principal of this Security. [DELETE: provided,
further, that during any such Extension Period, the Company shall not, and shall
not permit any Subsidiary of the Company to, (i) declare or pay any dividends or
distributions on or redeem, purchase, acquire or make a liquidation payment with
respect to, any of the Company's capital stock or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company that rank pari passu in all respects with or
junior in interest to this Security or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any Subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
this Security (other than (a) dividends or distributions in the Company's
capital stock, (b) any declaration of a dividend in connection with the
implementation of a Rights Plan or the issuance of stock under any such Rights
Plan in the future, or the redemption or repurchase of any rights distributed
pursuant to a Rights Plan, (c) payments under the Guarantee with respect to this
Security, (d) purchase of Common Stock related to the issuance of Common Stock
or rights or options under any of the Company's benefit plans for its directors,
officers, employees or other persons within the definition of "employee" for
purposes of a registration of shares for an employee benefit plan of the
Company, related to the issuance of Common Stock or rights under a dividend
reinvestment and stock purchase plan, or related to the issuance of Common Stock
(or securities convertible into or exchangeable for Common Stock) as
consideration in an acquisition transaction that was entered into prior to the
commencement of such Extension Period and (e) payments of accrued dividends (and
in cash in lieu of fractional shares) upon conversion into Common Stock of any
convertible preferred stock of the Company of any series now or hereinafter
outstanding, in accordance with the terms of such stock).] Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest, provided that no Extension Period shall exceed
consecutive [months] [quarters] [semi-annual periods] or extend
beyond the Stated Maturity of the principal of this Security. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due, the Company may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period except at the end thereof.
The Company shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral [if applicable, insert -- or, with respect to
the Securities issued to a Trust, so long as such Securities are held by such
Trust, prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities would be payable but for such deferral
or (ii) the date the
A-5
<PAGE> 47
Administrative Trustees are required to give notice to any securities exchange
or other applicable self-regulatory organization or to holders of such Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date]].
Payment of principal of (and premium, if any) and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the United States, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; [if applicable, insert -- ; provided, however, that at the option of the
Company payment of interest may be made (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Securities
Register or (ii) by wire transfer or direct deposit in immediately available
funds at such place and to such account as may be designated in writing by the
relevant Regular Record Date by the Person entitled thereto as specified in the
Securities Register.]
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
References is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
INTEGON CORPORATION
By:
------------------------------------
[President or Vice President]
ATTEST:
- ---------------------------------------------------
[Secretary or Assistant Secretary]
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of February 10, 1997
[ADD: , as amended by that certain First Supplemental Junior Subordinated
Indenture dated as of December , 1997] (herein called the "Indenture"),
between the Company and First Union National Bank of North Carolina, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the
A-6
<PAGE> 48
Trustee, the Company and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof [, limited in
aggregate principal amount to $ .
All terms used in this Security that are defined in the Indenture [if
applicable, insert -- or in the Amended and Restated Trust Agreement, dated as
of , as amended (the "Trust Agreement") among Integon
Corporation, as Depositor, and the Trustees named therein,] shall have the
meanings assigned to them in the Indenture [if applicable, insert -- or the
Trust Agreement, as the case may be].
[If applicable, insert -- The Company may at any time, at its option, and
subject to the terms and conditions of Article XII of the Indenture, redeem this
Security in whole at any time or in part from time to time [if applicable,
insert -- on or after at the following redemption prices
(expressed in percentages of principal amount thereof), together with accrued
and unpaid interest, including Additional Interest, if any, up to but excluding
the Redemption Date, if the redemption occurs during the relevant 12-month
period beginning of the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
---- ---------------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a redemption price equal to 100% of the principal amount
thereof] [if applicable, insert -- on or after in any year commencing at a
redemption price equal to % of the principal amount thereof] [if applicable,
insert -- including Additional Interest, if any] to but excluding the Redemption
Date.]
[If applicable, insert -- Upon the occurrence and during the continuation
of a Tax Event [if applicable, insert description of other conditions], the
Company may, at its option, at any time within 90 days of the occurrence of such
Tax Event, redeem this Security, in whole but not in part, subject to the
provisions of Section 12.7 and the other provisions of Article XII of the
Indenture, at a redemption price equal to 100% of the principal amount thereof
plus accrued and unpaid interest, including Additional Interest, if any, to but
excluding the Redemption Date.]
[If applicable, insert -- So long as no Event of Default has occurred and
is continuing, if (i) the Trust is the Holder of all of the outstanding
Securities of this series, and (ii) a Tax Event has occurred and is continuing
in respect of such Securities, the Company shall pay to the Trust (or its
permitted successor under the Trust Agreement) for so long as the Trust (or its
permitted successor) is the registered holder of all of the Outstanding
Securities of such series, together with any payment of principal of (or
premium, if any) or interest (including any Additional Interest) on such
Securities, such additional sums as may be necessary in order that the amount of
Distributions (including any Additional Amounts (as defined in the Trust
Agreement)) then payable by the Trust in respect of the Preferred Securities and
Common Securities in accordance with the terms thereof shall not be reduced as a
result of any Additional Taxes arising from such Tax Events.]
[If applicable, insert -- Upon the occurrence of a Change of Control, the
Holder of this Security will have the right, subject to certain conditions
specified in the Indenture, to require the Company to repurchase in whole or in
part this Security in the Indenture, to require the Company to repurchase in
whole or in part this Security at a repurchase price equal to % of the
aggregate principal amount of this Security, plus accrued and unpaid interest,
including Additional Interest, if any, to but excluding the Repurchase Date, as
provided in, and subject to the terms of, the Indenture.]
In the event of redemption [or repurchase] of this Security in part only, a
new Security or Securities of this series for the unredeemed [or non
repurchased] portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
A-7
<PAGE> 49
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
[If applicable, insert description of covenants]
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of all series to be affected by such supplemental indenture [if the
Securities of this series are issued to a Trust, insert -- ; provided that so
long as any of the Preferred Securities issued by the Trust remain outstanding
no such amendment shall be made that adversely affects the holders of such
Preferred Securities in any material respect]. The Indenture also contains
provisions permitting Holders of specified percentages in principal amount of
the Securities of all series at the time Outstanding, on behalf of the Holders
of all Securities of such series, [if the Securities of this series are issued
to a Trust, insert -- and the holders of specified percentages in Liquidation
Amount of Preferred Securities issued by the Trust, on behalf of all holders of
Preferred Securities issued by the Trust,] to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
[If the Security is not a Discount Security, -- As provided in and subject
to the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of this series may declare the
principal amount of all the Securities of this series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders) [if the Securities of this series are issued to a Trust, insert -
provided that, if upon an Event of Default, the Trustee or the Holders of not
less than 25% in the principal amount of the Outstanding Securities of this
series fails to declare the principal of all the Securities of this series to be
immediately due and payable, the holders of at least 25% in aggregate
Liquidation Amount of the Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee]; and upon any such
declaration the principal amount of and the accrued interest (including any
Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security, -- As provided in and subject to
the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than such portion
of the principal amount as may be specified in the terms of this series may
declare an amount of principal of the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders) [if the Securities of this series issued are to a Trust,
insert -- provided that, if upon an Event of Default, the Trustee or the Holders
of the requisite principal amount of the Outstanding Securities of this series
fails to declare the principal of all the Securities of this series to be
immediately due and payable, the holders of at least 25% in aggregate
Liquidation Amount of the Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee. Such amount shall
be equal to - insert formula for determining the amount.] Upon any such
declaration, such amount of the principal of and the accrued interest (including
any Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture. Upon payment (i) of the
amount of principal so declared due and payable and (ii) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on this Security shall terminate.]
A-8
<PAGE> 50
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration or
transfer or exchange, but Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of such series of a different authorized denomination, as
requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
[If applicable, insert certification for transfers of Transfer Restricted
Securities]
ARTICLE III
THE SECURITIES
SECTION 3.11. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time during
the term of such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (each, an "Extension Period") during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Company shall
pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities of
such series to the extent permitted by applicable law) to the Persons in whose
names that Securities are registered at the close of business on the Regular
Record Date with respect to the Interest Payment Date at the end of such
Extension Period; provided, however, that no Extension Period shall extend
beyond the Stated Maturity of the principal of the Securities of such series.
[DELETE: provided, further, that during any such Extension Period, the
Company shall not, and shall not permit any Subsidiary to, (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, (ii)
make any payments of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the
A-9
<PAGE> 51
Company that rank pari passu in all respects with or junior in interest to the
securities of such series or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company if such guarantee rants pari passu with or junior in interest to the
securities of such series (other than (a) dividends or distributions in the
Company's capital stock, (b) any declaration of a dividend in connection with
the implementation of a Rights Plan or the issuance of stock under any such
Rights Plan in the future, or the redemption or repurchase of any rights
distributed pursuant to a Rights Plan, (c) payments under the Guarantee with
respect to such Security, (d) purchases of Common Stock related to the issuance
of Common Stock or rights or options under any of the Company's benefit plans
for its directors, officers, employees or other persons within the definition of
"employee" for purposes of a registration of shares for an employee benefit plan
of the Company, related to the issuance of Common Stock or rights under a
dividend reinvestment or stock purchase plan, or related to the issuance of
Common Stock (or securities convertible into or exchangeable for Common Stock)
as consideration in an acquisition transaction that was entered into prior to
the commencement of such Extension Period and (e) payments of accrued dividends
(and cash in lieu of fractional shares) upon conversion into Common Stock of any
convertible preferred stock of the Company of any series now or hereinafter
outstanding, in accordance with the terms of such stock).]
Prior to the termination of any such Extension Period, the Company may
further defer the payment of interest, provided that no Extension Period shall
exceed the period or periods specified in such Securities or extend beyond the
Stated Maturity of the principal of such Securities. Upon termination of any
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due, the Company may elect to begin a new Extension
Period, subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Company shall give
the Holders of the Securities of such series and the Trustee written notice of
its election to begin any such Extension Period at least one Business Day prior
to the next succeeding Interest Payment Date on which interest on Securities of
such series would be payable but for such deferral or, with respect to the
Securities of a series issued to a Trust, so long as such Securities are held by
such Trust, prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities of such Trust would be payable but for
such deferral or (ii) the date the Administrative Trustees of such Trust are
required to give notice to any securities exchange or other applicable
self-regulatory organization or to holders of such Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date.
The Trustee shall promptly give notice, in the name and at the expense of
the Company, of the Company's election to begin any such Extension Period to the
holders of the Outstanding Preferred Securities.
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.4 Reports by Company.
[ADD: So long as any of the Securities are outstanding, the Company shall
not have any obligation to furnish any report, financial or otherwise, to the
Trustee, Holders, or the Commission, except as may be required by the Trust
Indenture Act or any written interpretation thereof or pronouncement relating
thereto, published or distributed by the Commission.]
[DELETE: The Company shall file with the Trustee and with the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of Trust Indenture Act Section
314(a). Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Company's compliance with
A-10
<PAGE> 52
any of its covenants hereunder (as to which the Trustee is entitled to reply
exclusively on Officers' Certificates).]
ARTICLE X
COVENANTS
SECTION 10.7. Additional Covenants.
[DELETE: The Company covenants and agrees with each Holder of Securities of
each series that it shall not, and it shall not permit any Subsidiary of the
Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock, or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in
interests to the Securities of such series or (iii) make any guarantee payments
with respect to any guarantee by the Company of debt securities of any
Subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Securities of such series (other than (a) dividends or
distributions in the Company's capital stock, (b) any declaration of a dividend
in connection with the implementation of a Rights Plan or the issuance of stock
under any such Rights Plan in the future, or the redemption or repurchase of any
rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee
with respect to the Preferred Securities relating to Securities of such Series,
(d) purchases of Common Stock related to the issuance of Common Stock or rights
or options under any of the Company's benefit plans for its directors, officers,
employees or other persons within the definition of "employee" for purposes of a
registration of shares for an employee benefit plan of the Company, related to
the issuance of Common Stock or rights under a dividend reinvestment or stock
purchase plan, or related to the issuance of Common Stock (or securities
convertible into or exchangeable for Common Stock) as consideration in an
acquisition transaction), (e) payments of accrued dividends (and cash in lieu of
fractional shares) upon conversion into Common Stock of any convertible
preferred stock of the Company of any series now or hereinafter outstanding in
accordance with the terms of such stock), if at such time (x) there shall have
occurred any event of which the Company has actual knowledge that (A) with the
giving of notice or the lapse of time or both, would constitute an Event of
Default with respect to the Securities of such series and (B) in respect of
which the Company shall not have taken reasonable steps to cure, (y) if the
Securities of such series are held by a Trust, the Company shall be in default
with respect to its payment of any obligations under the Guarantee relating to
the Preferred Securities issued by such Trust or (z) the Company shall have
given notice of its election to begin an Extension Period with respect to the
Securities of such series as provided herein and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be
continuing.]
The Company [DELETE: also] covenants with each Holder of Securities of a
series issued to a Trust (i) to maintain directly or indirectly 100% ownership
of the Common Securities of such Trust; provided, however, that any permitted
successor of the Company hereunder may succeed to the Company's ownership of
such Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate
such Trust, except (a) in connection with a distribution of the Securities of
such series to the holders of the Trust Securities of such Trust in liquidation
of such Trust or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement and (iii) to use its
reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause such Trust to remain classified as a grantor trust and not
be taxable as a corporation for United States federal income tax purposes.
SECTION 10.8 Limitation on Indebtedness.
[ADD: Intentionally omitted.]
[DELETE: If specified as contemplated by Section 2.1 or 3.1 with respect to
the Securities of a particular series, unless and until the Company reaches
Investment Grade Status, the Company and its Subsidiaries will not be permitted
to Incur any Debt unless, immediately after giving effect to the Incurrence of
such Debt and the receipt and application of the proceeds thereof, the
Consolidated Cash Flow Ratio for the four full fiscal quarters for which
quarterly or annual financial statements are available next preceding the
Incurrence of such
A-11
<PAGE> 53
Debt, calculated on a pro forma basis as if such Debt had been Incurred at the
beginning of such four full fiscal quarters, would be greater than 1.5 to 1 for
the period ending on the first anniversary of the date of issuance of such
Securities; 1.75 to 1 for the period from the first anniversary of the date of
issuance of such Securities, and 2.0 to 1 thereafter; provided, however, that
notwithstanding the foregoing limitations, the company may Incur Debt (x) of up
to $75,000,000 under its Credit Facility or any renewal, extension, refinancing
or refunding thereof and (y) of up to an amount equal to the aggregate principal
amount of the Senior Notes to the extent Incurred in connection with the
refunding or refinancing thereof, plus the amount of any premium required to be
paid in connection therewith and the reasonable expenses incurred in connection
therewith. For purposes of the foregoing, the consolidated Cash Flow Ratio for
any period from January 1, 1997 to December 31, 1997, shall be calculated on an
annualized basis as follows: (i) at any time prior to the Company's financial
statements for the second fiscal quarter of 1997 being available, by annualizing
the Company's first 1997 fiscal quarter; (ii) at any time after the Company's
financial statements for the second fiscal quarter of 1997 are available and
prior to the Company's financial statements for the third fiscal quarter of 1997
being available, by annualizing the Company's first and second 1997 fiscal
quarters; (iii) at any time thereafter and prior to the Company's 1997 results
being available, by annualizing the Company's first three 1997 fiscal quarters,
and (iv) with respect to any Person acquired by the Company or a Subsidiary of
the Company during such period, the Consolidated Cash Flow Ratio shall be
calculated utilizing financial information with respect to such Person for the
four full fiscal quarters for which quarterly or annual financial statements are
available next preceding the Incurrence of such Debt.]
A-12
<PAGE> 54
Any questions regarding the terms of the Tender Offer and the Consent
Solicitation may be directed to the Dealer Manager.
The Dealer Manager for the Tender Offer and the Solicitation Agent for the
Consent Solicitation is
MORGAN STANLEY DEAN WITTER
Liability Management Group
1585 Broadway, Second Floor
New York, New York 10036
Call Toll-free: (800) 624-1808
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and address listed
below. A Holder may also contact such Holder's broker, dealer, commercial bank
or trust company or nominee for assistance concerning the Tender Offer.
The Information Agent for the Tender Offer is
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Toll-free: (800) 290-6427
Banks and brokers may call collect: (212) 269-5550
The Depositary for the Tender Offer is
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand Delivery:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2569 c/o The Depository Trust Company
Suite 4660 55 Water Street
Jersey City, NJ 07303-2569 DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
By Overnight Courier:
First Chicago Trust Company of New York
Tenders & Exchanges
14 Wall Street
8th Floor
Suite 4680-INT
New York, NY 10005
<TABLE>
<C> <C>
Facsimile Transmission For Confirmation and/or
(For Eligible Institutions Only) Information Call
201-222-4720 --------------------------
or 800-438-0052
201-222-4721
</TABLE>
<PAGE> 1
CONSENT AND LETTER OF TRANSMITTAL
TO TENDER AND TO GIVE CONSENT IN RESPECT OF
10 3/4% CAPITAL SECURITIES, SERIES B
OF
INTEGON CAPITAL I
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT
DATED NOVEMBER 12, 1997
OF
INTEGON CORPORATION
THE TENDER OFFER (AS DEFINED BELOW) WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER TERMINATED (AS
MAY BE SO EXTENDED, THE "EXPIRATION TIME"). THE CONSENT DATE IS TUESDAY,
NOVEMBER 25, 1997 OR SUCH LATER DATE AS DESCRIBED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW). THE RECORD DATE IS NOVEMBER 14, 1997.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, DEPOSITARY
By Mail:
---------
First Chicago Trust Company of New York
Tenders & Exchanges
P.O. Box 2569
Suite 4660
Jersey City, NJ 07303-2569
By Hand:
----------
First Chicago Trust Company of New York
Tender & Exchanges
c/o The Depositary Trust Company
55 Water Street
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
By Overnight Courier:
-----------------------
First Chicago Trust Company of New York
Tenders & Exchanges
14 Wall Street
8th Floor
Suite 4680-INT
New York, NY 10005
By Facsimile for Eligible Institutions Only:
---------------------------------------------
(201) 222-4720
or
(201) 222-4721
For Confirmation and/or Information Call:
----------------------------------------------
(800) 438-0052
Any questions or requests for assistance may be directed to D.F. King &
Co., Inc., who is acting as Information Agent for the Tender Offer and the
Consent Solicitation, toll-free at (800) 290-6427. Banks and brokers may call
collect at (212) 269-5550.
DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL (THE "LETTER OF
TRANSMITTAL") TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
HOLDERS (AS DEFINED IN THE OFFER TO PURCHASE) WHO WISH TO BE ELIGIBLE TO
RECEIVE THE TENDER OFFER CONSIDERATION (AS DEFINED IN THE OFFER TO PURCHASE)
PURSUANT TO THE TENDER OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
CAPITAL SECURITIES AND VALIDLY DELIVER (AND NOT REVOKE) THEIR CONSENTS (AS
DEFINED IN THE OFFER TO PURCHASE) TO THE DEPOSITARY PRIOR TO THE EXPIRATION
TIME. HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE THE CONSENT PAYMENT (AS DEFINED
IN THE OFFER TO PURCHASE) TOGETHER WITH THE TENDER OFFER CONSIDERATION MUST
VALIDLY TENDER (AND NOT WITHDRAW) THEIR CAPITAL SECURITIES AND VALIDLY DELIVER
(AND NOT REVOKE) THEIR CONSENTS (AND IN THE CASE OF TENDERING HOLDERS WHO WERE
NOT HOLDERS AS OF THE RECORD DATE, VALIDLY DELIVER A PROXY (AS DEFINED IN THE
OFFER TO PURCHASE)) PRIOR TO THE CONSENT TIME ON THE CONSENT DATE.
This Letter of Transmittal is to be used to accept a Tender Offer (as
defined in the Offer to Purchase and Consent Solicitation Statement, dated
November 12, 1997 (the "Offer to Purchase")), of Integon Corporation, a Delaware
corporation (the "Company"), if (i) certificates representing any of the 10 3/4%
Capital Securities, Series B issued by Integon Capital I, a Delaware business
trust (the "Capital Securities"), are to be physically delivered to First
Chicago Trust Company of New York, as depositary (the "Depositary"), (ii) the
Capital Securities are to be tendered by effecting a book-entry transfer into
the Depositary's account at The Depositary Trust Company ("DTC") or (iii) a
tender of Capital Securities is to be made according to the guaranteed delivery
procedures described in the Offer to Purchase under the heading "The Tender
Offer and the Consent Solicitation -- Procedures for Tendering Capital
Securities and Delivering Consents -- Guaranteed Delivery Procedures;" and, in
each case, instructions are not being transmitted through DTC's Automated Tender
Offer Program ("ATOP").
Holders of Capital Securities that are tendering by book-entry transfer to
the Depositary's account at DTC can tender Capital Securities and deliver
Consents through ATOP, for which the Tender Offer will be eligible. DTC
participants that are accepting the Tender Offer may transmit their acceptance
to DTC, which will verify the acceptance and execute a book-entry delivery to
the Depositary's account at DTC. DTC will then send an Agent's Message (as
defined in the Offer to Purchase) to the Depositary for its acceptance. Delivery
of the Agent's Message by DTC will satisfy the terms of the Tender Offer and the
Consent Solicitation as to execution and delivery of a Letter of Transmittal by
the DTC participant identified in the Agent's Message.
In conjunction with the Tender Offer, the Company is soliciting consents
("Consents") from Holders of Capital Securities on the Record Date for the
Proposed Amendments (as defined in the Offer to Purchase) to the Junior
Subordinated Indenture (as defined in the Offer to Purchase). The Supplemental
Indenture effecting the Proposed Amendments to the Junior Subordinated Indenture
is referred to herein as the "Supplemental Indenture."
HOLDERS WHO TENDER CAPITAL SECURITIES ARE REQUIRED TO CONSENT TO THE
PROPOSED AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL INDENTURE. THE COMPLETION,
EXECUTION AND DELIVERY OF THIS LETTER OF TRANSMITTAL BY A HOLDER OF CAPITAL
SECURITIES ON THE RECORD DATE WILL CONSTITUTE A CONSENT TO THE PROPOSED
AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL INDENTURE. HOLDERS WHO TENDER
CAPITAL SECURITIES AND WHO WERE NOT HOLDERS OF SUCH CAPITAL SECURITIES AS OF THE
RECORD DATE MUST DELIVER TO THE DEPOSITARY A PROXY PRIOR TO THE CONSENT TIME OR
THE EXPIRATION TIME, AS THE CASE MAY BE, IN ORDER FOR SUCH TENDER TO BE VALID.
Holders who purchase Capital Securities or whose purchase settles or is
registered after the close of business on the Record Date and, at or prior to
the Consent Time who wish to tender their Capital Securities in the Tender
Offer, must arrange with their seller to receive a duly completed, valid and
unrevoked Proxy from the Holder on the Record Date of such Capital Securities.
In order to facilitate the receipt of Consents, Capital Securities shall, during
the period which commences November 12, 1997 and which will end at the
2
<PAGE> 3
Expiration Time, trade in the over-the-counter market "with proxy" providing the
purchaser with the right to vote such acquired Capital Securities in the Consent
Solicitation.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
If, after the Consent Time, but prior to the Expiration Time, a Holder
desires to tender Capital Securities pursuant to the Tender Offer and time will
not permit this Letter of Transmittal, certificates representing such Capital
Securities and all other required documents to reach the Depositary, or the
procedures for book-entry transfer cannot be completed prior to the Expiration
Time, then such Holder must tender such Capital Securities and deliver Consent
according to the guaranteed delivery procedures set forth under the caption "The
Tender Offer and the Consent Solicitation -- Procedures for Tendering Capital
Securities and Delivering Consents -- Guaranteed Delivery Procedures" in the
Offer to Purchase. See Instruction 2 on page 13 of this Letter of Transmittal.
Upon the terms and subject to conditions of the Tender Offer, the Company
will accept for payment all Capital Securities properly tendered (and not
withdrawn) pursuant to the Tender Offer prior to the Expiration Time. The
consideration for the Capital Securities tendered and accepted for payment
pursuant to the Tender Offer will be paid on the third New York Stock Exchange
("NYSE") trading day after the Expiration Time or as soon as possible thereafter
(the "Settlement Date"). Payment will be made in immediately available
(same-day) funds.
Holders who wish to consent to the Proposed Amendments and execution of the
Supplemental Indenture and tender their Capital Securities must, at a minimum,
complete columns (1) through (3) in the table on page 5 below entitled
"Description of Capital Securities Tendered and in Respect of Which Consent is
Given" and properly complete each of the boxes on pages 10 and 11 (and, if such
tendering Holder was not the Holder as of the Record Date, deliver a Proxy
herewith). IF ONLY THOSE COLUMNS ARE COMPLETED, THE HOLDER WILL BE DEEMED TO
HAVE CONSENTED TO THE PROPOSED AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL
INDENTURE IN RESPECT OF, AND TO HAVE TENDERED, ALL CAPITAL SECURITIES LISTED IN
THE TABLE. If a Holder wishes to tender less than all of such Capital
Securities, column (4) on page 5 must be completed in full. Partial tenders of
Capital Securities will be accepted only in liquidation amounts of $100,000 and
integral multiples thereof; provided, however, that if a Holder tenders less
than all of the Capital Securities held by it, the Capital Securities retained
by such Holder must have an aggregate liquidation amount of at least $100,000.
See Instruction 4 on page 14 of this Letter of Transmittal.
3
<PAGE> 4
PLEASE COMPLETE THE FOLLOWING BOX.
[ ] CHECK HERE IF TENDERED CAPITAL SECURITIES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED CAPITAL SECURITIES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER (INCLUDING THROUGH ATOP) TO THE DEPOSITARY'S ACCOUNT AT DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
- -------------------------------------------------------------------------------
DTC Account No.:
- --------------------------------------------------------------------------------
Date Tendered:
- -------------------------------------------------------------------------------,
1997
Transaction Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Holder(s):
- --------------------------------------------------------------------------------
Window Ticket Number (if any):
- -----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------, 1997
Name of Eligible Institution that Guaranteed Delivery:
- -------------------------------------------------------
If delivery is by book-entry transfer, complete the following:
DTC Account No.:
- --------------------------------------------------------------------------------
Date Sent:
- -------------------------------------------------------------------------------,
1997
4
<PAGE> 5
List below the Capital Securities to which this Letter of Transmittal
relates. If the space provided is inadequate, list the certificate numbers and
liquidation amounts on a separate signed schedule and affix the schedule to this
Letter of Transmittal. See Instruction 4 on page 14 if tendering less than all
of the Capital Securities held.
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF HOLDER(S) OR NAME OF
DTC PARTICIPANT AND PARTICIPANT'S DTC ACCOUNT NUMBER DESCRIPTION OF CAPITAL SECURITIES TENDERED
IN WHICH CAPITAL SECURITIES ARE HELD AND IN RESPECT OF WHICH CONSENT IS GIVEN*
(PLEASE FILL IN, IF BLANK) (ATTACHED ADDITIONAL SIGNED SCHEDULE IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
- -----------------------------------------------------------------------------------------------------------------------------
LIQUIDATION AMOUNT
TENDERED AND
TOTAL LIQUIDATION IN RESPECT OF
CERTIFICATE AMOUNT OF WHICH CONSENT IS GIVEN
NUMBER(S)** CAPITAL SECURITIES*** (IF LESS THAN ALL)***
=============================================================================================================================
=============================================================================================================================
=============================================================================================================================
=============================================================================================================================
TOTAL LIQUIDATION AMOUNT OF CAPITAL SECURITIES
- -----------------------------------------------------------------------------------------------------------------------------
* Holder(s) who were not Holder(s) as of the Record Date must deliver a Proxy herewith.
** Need not be completed by Holder(s) tendering by book-entry transfer or in accordance with DTC's ATOP procedures for
transfer.
*** You must consent to the Proposed Amendments and execution of the Supplemental Indenture in respect of all of the
Capital Securities tendered by you; completion of column (3) will constitute a Consent to the Proposed Amendments and
execution of the Supplemental Indenture, unless less than all such Capital Securities listed in column (3) are tendered
as specified in column (4), in which case Consents only with respect to such lesser amount of such Capital Securities
tendered shall be given.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
All capitalized terms used herein and not defined herein have the meaning
ascribed to them in the Offer to Purchase.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company the liquidation amount of
Capital Securities indicated in the table above entitled "Description of Capital
Securities Tendered and in Respect of Which Consent is Given," upon the terms
and subject to the conditions set forth in the Offer to Purchase (receipt of
which is hereby acknowledged) and in this Letter of Transmittal, and, hereby
consents with respect to the proposed amendments described in the Offer to
Purchase (the "Proposed Amendments") and execution by the Company and the
Debenture Trustee (as defined in the Offer to Purchase) of the Supplemental
Indenture. The terms and conditions set forth in the Offer to Purchase and this
Letter of Transmittal together constitute the Company's offer (the "Tender
Offer") to purchase for cash any and all of the outstanding Capital Securities
for the consideration set forth in the Offer to Purchase. Upon the terms and
subject to the conditions of the Tender Offer (including, if the Tender Offer is
extended or amended, the terms and conditions of any such extension or
amendment) and applicable law, the Company will pay for any and all Capital
Securities validly tendered (and not withdrawn) pursuant to the Tender Offer on
the third New York Stock Exchange (the "NYSE") trading day following the
Expiration Time, or as soon as possible thereafter (the "Settlement Date").
Payment for any such Capital Securities will be made in immediately available
(same-day) funds for the Tender Offer Consideration and if applicable, any
Consent Payment.
Subject to, and effective upon acceptance for payment of the Capital
Securities tendered hereby in accordance with the terms and subject to the
conditions of the Tender Offer, the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to, and any and all claims in respect of or arising or having arisen as a
result of the undersigned's status as a Holder of, all Capital Securities
tendered hereby, and also consents to the Proposed Amendments with respect to
such Capital Securities. The undersigned hereby irrevocably constitutes and
appoints the Depositary as the true and lawful agent and attorney-in-fact of the
undersigned (with full knowledge that the Depositary also acts as agent of the
Company) with respect to such Capital Securities, with full powers of
substitution and revocation (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Capital Securities or transfer ownership of such Capital Securities on the
account books maintained by DTC, in either such case together with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Company, (b) present such Capital Securities for transfer of ownership on the
books to the Trust, (c) to the extent applicable, deliver to the Debenture
Trustee the Consent contained herein as evidence of the undersigned's Consent to
the Proposed Amendments and execution of the Supplemental Indenture and as a
confirmation that the Consent has been received, (d) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Capital Securities
and (e) accept payment of the Tender Offer Consideration (and, if applicable,
the Consent Payment) on behalf of the undersigned in respect of the Capital
Securities tendered hereby, all in accordance with the terms of the Tender
Offer.
If the undersigned is not the Holder of the Capital Securities listed in
the box labeled "Description of Capital Securities Tendered and in Respect of
Which Consent is Given," under the column heading "Liquidation Amount Tendered
and in Respect of Which Consent is Given," then in order validly to consent, the
undersigned will have to deliver a properly completed irrevocable Proxy, as
provided herein, that authorizes the undersigned (or the undersigned's legal
representative or attorney-in-fact) to deliver Consents in respect of such
Capital Securities on behalf of the Holder thereof, and such Proxy must be
delivered with this Letter of Transmittal.
The undersigned understands that tenders of Capital Securities may be
withdrawn at any time prior to the Expiration Time. Thereafter, such tenders are
irrevocable except that they may be withdrawn after Friday, January 9, 1998,
unless previously accepted for payment as provided in the Offer to Purchase.
Consents may be revoked at any time prior to the Consent Time so long as any
Capital Securities tendered therewith are
6
<PAGE> 7
concurrently withdrawn. Such withdrawals may be made by written, telegraphic or
facsimile notice of withdrawal, or a properly transmitted "Request Message"
through ATOP, received by the Depositary. A valid withdrawal of tendered Capital
Securities prior to the Consent Time will constitute the concurrent valid
revocation of the related Consent. In order for a Holder to revoke a Consent,
such Holder must withdraw the related tendered Capital Securities. In the event
of a termination of the Tender Offer, the Capital Securities tendered pursuant
to the Tender Offer will be returned to the tendering Holders promptly (or, in
the case of Capital Securities tendered by book-entry transfer, such Capital
Securities will be credited to the account maintained at DTC from which such
Capital Securities were delivered). If the Company makes a material change in
the terms of the Tender Offer or the Consent Solicitation or the information
concerning the Tender Offer or the Consent Solicitation, the Company will
disseminate additional Tender Offer and Consent Solicitation materials and
extend the Tender Offer and, if applicable, the Consent Solicitation, to the
extent required by applicable law. If the Consent Solicitation is amended prior
to the Consent Time in a manner determined by the Company to constitute a
material adverse change to the Holders, the Company promptly will disclose such
amendment and, if necessary, extend the Consent Solicitation for a period deemed
by the Company to be adequate to permit Holders to withdraw their Capital
Securities and revoke their Consent.
The undersigned agrees and acknowledges that, if the undersigned is a
Holder of the Capital Securities on the Record Date or holds a Proxy from such
Holder on the Record Date authorizing the undersigned to deliver their Consent
with respect to such Capital Securities, by the execution and delivery hereof,
the undersigned makes and provides the written Consent to the Proposed
Amendments and execution of the Supplemental Indenture (with respect to the
liquidation amount of Capital Securities indicated in the table above entitled
"Description of Capital Securities Tendered and in Respect of Which Consent is
Given" (or, if nothing is indicated therein, with respect to the liquidation
amount of Capital Securities with respect to which the undersigned's Consent is
deemed given in connection with a tender of Capital Securities)) as permitted by
the Junior Subordinated Indenture. The undersigned understands that the Consent
provided hereby shall remain in full force and effect unless and until such
Consent is revoked in accordance with the procedures set forth in the Offer to
Purchase and this Letter of Transmittal. The undersigned understands that after
the Consent Time no Consents may be revoked. The undersigned understands that
the Proposed Amendments effected by the Supplemental Indenture will not become
operative unless and until the Depositary certifies to the Trustees that the
Minimum Consent (as defined in the Offer to Purchase) has been received. The
undersigned also understands that notwithstanding any other provision of the
Tender Offer or the Consent Solicitation, the Company's obligation to accept for
payment, and to pay for, Capital Securities validly tendered pursuant to the
Tender Offer or any Consent Payment is conditioned upon (1) receipt of the
Minimum Consent Condition (as defined in the Offer to Purchase), (2) receipt of
the Minimum Condition (as defined in the Offer to Purchase) and (3) satisfaction
of the other conditions of the Tender Offer.
The undersigned hereby represents and warrants that: (a) the undersigned
(i) has full power and authority to tender the Capital Securities hereby and to
sell, assign and transfer all right, title and interest in and to such Capital
Securities and (ii) either has full power and authority to deliver the Consent
or is delivering a duly executed Proxy from a person or entity having such power
and authority; and (b) the Company will acquire good, indefeasible and
unencumbered title to such Capital Securities, free and clear of all liens,
restrictions, charges, claims and encumbrances and not subject to an adverse
claim, when the same are acquired by the Company. The undersigned, upon request,
will execute and deliver any additional documents deemed by the Depositary or
the Company to be necessary or desirable to complete the sale, assignment and
transfer of Capital Securities tendered hereby or to perfect the undersigned's
Consent to the Proposed Amendments and execution of the Supplemental Indenture.
The undersigned understands that Capital Securities properly tendered and
not withdrawn prior to the Expiration Time may be purchased for the
consideration set forth in the Offer to Purchase, upon the terms and subject to
the conditions of the Tender Offer. If any amount of tendered Capital Securities
is not purchased for any reason, or if certificates are submitted that evidence
a greater liquidation amount of Capital Securities than the liquidation amount
to be tendered, such unpurchased Capital Securities or new certificates
evidencing the Capital Securities for untendered amounts, as the case may be,
will be returned, without expense, to the undersigned at the address shown
above, or at such different address as may be indicated
7
<PAGE> 8
herein under "Special Delivery Instructions" (or, in the case of Capital
Securities tendered by book-entry transfer, such Capital Securities will be
credited to the account maintained at DTC from which Capital Securities were
delivered).
The undersigned understands that the procedures described in the Offer to
Purchase under the heading "The Tender Offer and the Consent Solicitation --
Procedures for Tendering Capital Securities and Delivering Consents" and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions described in the
Offer to Purchase. For purposes of the Tender Offer, the undersigned understands
that validly tendered Capital Securities (or defectively tendered Capital
Securities with respect to which the Company has, or has caused to be, waived
such defect) will be deemed to have been accepted by the Company if, as and when
the Company gives oral or written notice thereof to the Depositary. For purposes
of the Consent Solicitation, Consents received by the Depositary will be deemed
to have been accepted if, as and when both (a) the Company and the Trustee have
executed the Supplemental Indenture as of the Consent Time, and (b) the Company
has accepted the Capital Securities for payment pursuant to the Tender Offer.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, executors, administrators, trustees in bankruptcy,
personal and legal representatives, successor and assigns of the undersigned.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the check for the Tender Offer Consideration (and, if applicable, the
Consent Payment) for any Capital Securities purchased and any certificates for
Capital Securities not tendered or not purchased in the name(s) of the
undersigned (and, in the case of Capital Securities tendered by book-entry
transfer, by credit to the DTC account specified above). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the Tender Offer Consideration (and, if applicable, the Consent Payment) for
any Capital Securities purchased and any certificates for Capital Securities not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown above. In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the Tender Offer Consideration (and, if applicable, the Consent
Payment) for any Capital Securities purchased in the name(s) of, and return any
certificates for the Capital Securities not tendered or not purchased to, the
person(s) so indicated at the address so indicated. The undersigned recognizes
that the Company has no obligation under the "Special Issuance Instructions" or
the "Special Delivery Instructions" of this Letter of Transmittal to effect the
transfer of any Capital Securities from the name of the Holder(s) thereof if the
Company does not accept for payment any of the liquidation amount of Capital
Securities so tendered.
8
<PAGE> 9
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if Capital Securities to be issued in the liquidation
amount of Capital Securities not tendered or not purchased, and/or any check for
the Tender Offer Consideration (and, if applicable, any Consent Payment), are to
be issued in the name of someone other than the undersigned. If any of the
Capital Securities are to be issued in the name of someone other than the
undersigned, the assignment block on the back of such Capital Securities must be
properly completed or an appropriate instrument of transfer must be provided
(unless delivered by book-entry transfer).
Issue to:
Name:
- -----------------------------------------------
(Please Print)
Address:
- ---------------------------------------------
- -------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------
(Taxpayer Identification or Social Security Number(s)* of Payee)
* PLEASE ALSO COMPLETE THE SUBSTITUTE FORM W-9
ON THIS LETTER OF TRANSMITTAL.
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if Capital Securities to be issued in the liquidation
amount of Capital Securities not tendered or not purchased, and/or any check for
the applicable Tender Offer Consideration (and, if applicable, any Consent
Payment), are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Send to:
Name:
- -----------------------------------------------
(Please Print)
Address:
- ---------------------------------------------
- -------------------------------------------------------
(Include Zip Code)
9
<PAGE> 10
SIGN HERE
(PLEASE ALSO COMPLETE THE CONSENT AND THE SUBSTITUTE FORM W-9 INCLUDED AS PART
OF THIS LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE OF HOLDER(S) OR AUTHORIZED SIGNATORY
Dated:
- ------------------------------ , 1997
Must be signed by (A) Holder(s) exactly as name(s) appear(s) on
certificates for Capital Securities tendered, or if tendered by a participant in
DTC, exactly as such DTC participant's name appears on the security position
listing as an owner of Capital Securities (B) person(s) authorized to become
Holder(s) of Capital Securities by endorsements and documents transmitted
herewith.
If the signature(s) appearing above is (are) not the Holder(s), then the
Holder(s) must sign the form of consent appearing below. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, please provide the following information and see Instruction 5 on page
14 of this Letter of Transmittal.
BY SIGNING THIS LETTER OF TRANSMITTAL, THE HOLDER HEREBY CONSENTS TO THE
PROPOSED AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL INDENTURE.
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Capacity (full title):
- --------------------------------------------------------------------------------
Daytime Area Code and Telephone Number:
- ---------------------------------------------------------------------
Social Security Number or Employer Identification Number:
- -----------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Name of Firm:
- --------------------------------------------------------------------------------
Authorized Signature:
- --------------------------------------------------------------------------------
Dated:
- ------------------------------ , 1997
10
<PAGE> 11
CONSENT
(SIGN HERE -- THIS CONSENT MUST BE COMPLETED BY HOLDERS
WITH RESPECT TO CAPITAL SECURITIES TENDERED PURSUANT
TO THIS LETTER OF TRANSMITTAL.)
IF THIS LETTER OF TRANSMITTAL IS SIGNED BY A HOLDER OF CAPITAL SECURITIES
WHO IS NOT THE HOLDER, THEN THE HOLDER MUST SIGN THE FOLLOWING CONSENT (OR A
SEPARATE DOCUMENT SUBSTANTIALLY IN THE FORM OF THE FOLLOWING CONSENT WHICH
DOCUMENT MUST BE DELIVERED TO THE DEPOSITARY AT OR BEFORE THE CONSENT TIME) WITH
SUCH SIGNATURE GUARANTEED BY A MEDALLION SIGNATURE GUARANTOR (AS DEFINED IN THE
OFFER TO PURCHASE) OR AN ELIGIBLE INSTITUTION (AS DEFINED IN THE OFFER TO
PURCHASE).
Pursuant to the Tender Offer and the Consent Solicitation, the undersigned
Holder(s) of the Capital Securities tendered pursuant to this Letter of
Transmittal hereby consent(s) to the Proposed Amendments and execution of the
Supplemental Indenture.
- --------------------------------------------------------------------------------
Signature of Holder(s) or Authorized Signatory
Dated: , 1997
Must be signed by Holder(s) exactly as name(s) on the Capital Securities
tendered or on the security position listing. If the signature is by a Holder
other than the Holder as of the Record Date, the Proxy on page 12 must be
completed and signed by the Holder as of the Record Date.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation, agent or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5 on page 14.
Name(s)
- ------------------------------------------------------
(Please Print)
Capacity (full title):
- ------------------------------------------------------
Address(es):
- ------------------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
Daytime Area Code
and Telephone No.:
- ------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Name of Firm:
- ------------------------------------------------------
Dated: , 1997
Authorized
Signature:
- ------------------------------------------------------
11
<PAGE> 12
IF SELLING CAPITAL SECURITIES SUBSEQUENT TO NOVEMBER 14, 1997,
THE HOLDER ON THE RECORD DATE MUST
COMPLETE THE FOLLOWING IRREVOCABLE PROXY
PLEASE SIGN THIS FORM TO IRREVOCABLY TRANSFER A CAPITAL
SECURITIES PROXY TO A SUBSEQUENT HOLDER OF CAPITAL
SECURITIES WHO WAS NOT A HOLDER OF RECORD ON NOVEMBER 14, 1997
IRREVOCABLE PROXY
WITH RESPECT TO 10 3/4% CAPITAL SECURITIES, SERIES B
OF
INTEGON CAPITAL I
THE UNDERSIGNED HEREBY IRREVOCABLY APPOINTS
------------------------------------------------------------------
TYPE OR PRINT NAME OF PURCHASER
as attorney and proxy, with full power of substitution, to vote, consent and
otherwise act for and in the name(s) of the undersigned with respect to the
Capital Securities indicated below which were held of record by the undersigned
on November 14, 1997, in the manner in which the undersigned would be entitled
to vote, consent and otherwise act in respect of such Capital Securities on any
and all matters.
This Proxy shall be effective whether or not the Capital Securities
indicated below are tendered in the Tender Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the Capital
Securities indicated below as to any and all matters. THIS PROXY IS IRREVOCABLE
AND IS COUPLED WITH AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigns of the undersigned.
The undersigned understands that tenders of Capital Securities pursuant to any
of the procedures described in the Offer to Purchase and in this Letter of
Transmittal will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Tender Offer.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
DESCRIPTION OF CAPITAL SECURITIES
<C> <C>
- ---------------------------------------------------------------------------------------------
Certificate Number(s)
(Attach Separately Signed Schedule if Aggregate Liquidation Amount
Necessary) of Capital Securities
=============================================================================================
=============================================================================================
- ---------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Signature of Holder(s) or Authorized Signatory
- --------------------------------------------------------------------------------
Type or Print Name(s)
Date:
- ------------------------------ , 1997
Tax Identification or Social Security No.(s):
- -----------------------------------------------------------------
12
<PAGE> 13
INSTRUCTIONS FORMING PART
OF THE TERMS AND CONDITIONS OF THE TENDER OFFER
1. Signature Guarantees. All signatures on this Letter of Transmittal must
be guaranteed by a recognized member of the Medallion Signature Program (as
defined in the Offer to Purchase) or any Eligible Institution unless the Capital
Securities tendered hereby are (a) tendered by a physical Holder of Capital
Securities, or a DTC participant whose name appears on a security position
listing as the owner of such Capital Securities, who has not completed either
the box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions," or (b) for the account of an Eligible Institution. If
the Holder of the Capital Securities tendered hereby is a person other than the
signer of this Letter of Transmittal, see Instruction 5.
2. Delivery of Letter of Transmittal and Capital Securities. This Letter of
Transmittal is to be used only if (a) Capital Securities tendered hereby are
forwarded herewith, (b) Capital Securities tendered hereby are delivered by
book-entry transfer to the Depositary's account at DTC or (c) Capital Securities
tendered hereby are to be made according to the guaranteed delivery procedures
set forth in the Offer to Purchase under "The Tender Offer and the Consent
Solicitation -- Procedures for Tendering Capital Securities and Delivering
Consents -- Guaranteed Delivery Procedures" and, in each case, instructions are
not being transmitted through ATOP. All physically tendered Capital Securities,
or confirmation of a book-entry transfer into the Depositary's account at DTC of
all Capital Securities delivered electronically, together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) or a properly transmitted Agent's Message, and any other
documents required by this Letter of Transmittal, must be mailed or delivered to
the Depositary at its address set forth on the front page hereof and must be
received by the Depositary at or prior to the Consent Time on the Consent Date
or the Expiration Time, as applicable. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
If, after the Consent Time on the Consent Date, but prior to the Expiration
Time, a Holder desires to tender Capital Securities pursuant to the Tender Offer
and time will not permit this Letter of Transmittal, certificates representing
such Capital Securities and all other required documents to reach the
Depositary, or the procedures for book-entry transfer cannot be completed prior
to the Expiration Time, then such Holder may tender such Capital Securities
pursuant to the guaranteed delivery procedures set forth under the caption "The
Tender Offer and the Consent Solicitation -- Procedures for Tendering Capital
Securities and Delivering Consents -- Guaranteed Delivery Procedures" in the
Offer to Purchase. Pursuant to such procedures:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery (a "Notice of Guaranteed Delivery"), in the form provided
by the Company herewith, or an Agent's Message with respect to
guaranteed delivery that is accepted by the Company, is received
by the Depositary prior to the Expiration Time; and
(c) a properly completed and executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature
guarantees, or a properly transmitted Agent's Message, as well as
the certificate(s) representing all tendered Capital Securities in
proper form for transfer or confirmation of a book-entry transfer
of such Capital Securities into the Depositary's account at DTC,
and all other documents required by this Letter of Transmittal are
received by the Depository within two NYSE trading days after the
Expiration Time.
HOLDERS SHOULD BE AWARE THAT THE GUARANTEED DELIVERY PROCEDURES CANNOT BE
USED PRIOR TO THE CONSENT TIME ON THE CONSENT DATE AND THAT USE OF THE
GUARANTEED DELIVERY PROCEDURES WILL RESULT IN A HOLDER BEING INELIGIBLE TO
RECEIVE THE CONSENT PAYMENT WITH RESPECT TO THE CAPITAL SECURITIES SO DELIVERED
WHICH MIGHT OTHERWISE BE PAID.
THE METHOD OF DELIVERY OF CAPITAL SECURITIES, THIS LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING BOOK-ENTRY DELIVERY THROUGH DTC AND
ANY ACCEPTANCE OF AN AGENT'S MESSAGE DELIVERED THROUGH ATOP, IS AT THE OPTION
AND RISK OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS
13
<PAGE> 14
LETTER OF TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a manually
signed facsimile thereof), waive any right to receive any notice of the
acceptance of their tender.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers of the Capital Securities and the liquidation amount of
Capital Securities tendered should be listed on a separate signed schedule and
attached hereto.
4. Partial Tenders and Consents. (Not applicable to Holders by book-entry
transfer.) Partial tenders of Capital Securities will be accepted only in
liquidation amounts of $100,000 and integral multiples thereof; provided,
however, that if a Holder tenders less than all of the Capital Securities held
by it, the Capital Securities retained by such Holder must have an aggregate
liquidation amount of at least $100,000. The aggregate liquidation amount of all
Capital Securities delivered to the Depositary will be deemed to have been
tendered and Consents given with respect thereto unless otherwise indicated. If
tenders are made with respect to less than the entire liquidation amount of the
Capital Securities delivered herewith, enter the liquidation amount (in integral
multiples of $100,000) of the Capital Securities that are to be tendered and in
respect of which a Consent is given in the column entitled "Liquidation Amount
Tendered and in Respect of Which Consent is Given." In such case, Capital
Securities for the liquidation amount of the nontendered Capital Securities will
be issued and sent to the Holder, unless otherwise specified in "Special
Issuance Instructions" box or the "Special Delivery Instructions" box on page 9
of this Letter of Transmittal.
5. Signatures on Letter of Transmittal, Bond Powers and Endorsements. IF
THIS LETTER OF TRANSMITTAL IS SIGNED BY A PERSON OTHER THAN THE RECORD HOLDER(S)
OF CAPITAL SECURITIES TENDERED HEREBY, THEN, IN ORDER TO VALIDLY TENDER SUCH
CAPITAL SECURITIES PURSUANT TO THE TENDER OFFER, SUCH CAPITAL SECURITIES MUST BE
ENDORSED OR ACCOMPANIED BY AN APPROPRIATE WRITTEN INSTRUMENT OR INSTRUMENTS OF
TRANSFER SIGNED EXACTLY AS THE NAME(S) OF SUCH RECORD HOLDER(S) APPEAR(S) ON THE
CAPITAL SECURITIES, WITH THE SIGNATURE(S) ON SUCH CAPITAL SECURITIES OR TRANSFER
GUARANTEED BY AN ELIGIBLE INSTITUTION, ALONG WITH A PROXY.
If this Letter of Transmittal is signed by the Holder(s) of the Capital
Securities tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the Capital Securities without any change whatsoever.
If any of the tendered Capital Securities are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the tendered Capital Securities are registered in different
names, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations.
If this Letter of Transmittal is signed by the Holder(s) of the Capital
Securities, no endorsements of Capital Securities or separate bond powers are
required unless Capital Securities not tendered are to be issued or returned in
the name of any person other than the Holder(s). Signatures on any such Capital
Securities or bond powers must be guaranteed by an Eligible Institution. See
Instruction 1.
If this Letter of Transmittal, any Consents or any Capital Securities or
bond powers are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation, agent or other person(s), such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Depositary of their authority so to act.
6. Transfer Taxes. Except as set forth in this Instruction 6, the Company
will pay or cause to be paid all transfer taxes, if any, with respect to the
sale and transfer of any Capital Securities to it pursuant to the Tender
14
<PAGE> 15
Offer. If, however, payment of the Tender Offer Consideration (and, if
applicable, any Consent Payment) is to be made to, or Capital Securities not
tendered or not purchased are to be delivered or issued in the name of, any
person other than the undersigned, or if a transfer tax is imposed for any
reason other than the transfer or sale of Capital Securities to the Company
pursuant to the Tender Offer, the amount of any such transfer taxes (whether
imposed on the undersigned, such other person or otherwise) will be deducted
from the payment unless satisfactory evidence of the payment of such taxes, or
exemption therefrom, is submitted.
7. Special Issuance and Delivery Instructions. If Capital Securities
representing the aggregate liquidation amount of Capital Securities not tendered
or not accepted for payment under the Tender Offer and/or checks are to be
issued in the name of a person other than the signer of this Letter of
Transmittal or if such Capital Securities and/or checks are to be sent to
someone other than the signer of this Letter of Transmittal or to the signer at
a different address, the boxes entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on page 9 of this Letter of Transmittal should
be completed, as applicable. All Capital Securities tendered by book-entry
transfer and not accepted for payment will be returned by crediting the account
at DTC designated above as the account for which such Capital Securities were
delivered, unless the appropriate box on this Letter of Transmittal is checked,
in which case the Capital Securities will be returned by crediting the account
indicated in such box.
8. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase or this Letter of Transmittal may be
obtained from the Information Agent at its address set forth below. Holders of
Capital Securities may also contact the Dealer Manager at its telephone number
set forth below or such Holder's broker, dealer, commercial bank or trust
company or other nominee for assistance concerning the Tender Offer.
9. Substitute Form W-9. A tendering Holder (or other payee) is required to
provide the Depositary with a correct taxpayer identification number ("TIN") on
the Substitute Form W-9 that is provided below and to certify that the Holder
(or payee) is not subject to backup withholding. Failure to provide the
information on the form may subject the tendering Holder (or other payee) to a
$50 penalty imposed by the Internal Revenue Service ("IRS") and 31% federal
income tax backup withholding on the payments made to such person.
IMPORTANT: A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR
A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE) TOGETHER WITH CAPITAL SECURITIES (OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE CONSENT TIME WITH RESPECT TO
HOLDERS WISHING TO RECEIVE THE CONSENT PAYMENT TOGETHER WITH THE TENDER OFFER
CONSIDERATION; WHEREAS A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A BOOK-
ENTRY TRANSFER, AN AGENT'S MESSAGE) TOGETHER WITH CAPITAL SECURITIES (OR IN THE
CASE OF A BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL REQUIRED
DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION TIME WITH
RESPECT TO HOLDERS WISHING TO RECEIVE ONLY THE TENDER OFFER CONSIDERATION (I.E.,
NOT THE CONSENT PAYMENT).
IMPORTANT TAX INFORMATION
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR
GENERAL INFORMATION ONLY. EACH HOLDER IS URGED TO CONSULT A TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDERS (INCLUDING THE
APPLICATION AND EFFECT OF FOREIGN, STATE AND LOCAL TAX LAWS) OF THE TENDER
OFFER. CERTAIN HOLDERS (INCLUDING INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS
AND FOREIGN TAXPAYERS) MAY BE SUBJECT TO SPECIAL RULES NOT DISCUSSED BELOW. THE
DISCUSSION DOES NOT CONSIDER THE EFFECT OF ANY FOREIGN, STATE OR LOCAL TAX LAWS.
15
<PAGE> 16
SUBSTITUTE FORM W-9
Under the U.S. federal income tax laws, the Depositary may be required to
withhold 31% of the amount of the Tender Offer Consideration and any Consent
Payment ("Gross Proceeds") paid to certain Holders or other payees pursuant to
the Tender Offer. To prevent backup withholding on any Gross Proceeds paid to
the Holder or other payee with respect to Capital Securities tendered pursuant
to the Tender Offer, the Holder is required to notify the Depositary of the
Holder's current TIN (or the TIN of any other payee) by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN), and that (i) the Holder has not been
notified by the IRS that the Holder is subject to backup withholding as a result
of failure to report all interest or dividends or (ii) the IRS has notified the
Holder that the Holder is no longer subject to backup withholding. In general,
if a Holder of Capital Securities is an individual, the TIN is the Social
Security number of such individual. In addition, if the Depositary is not
provided with the correct TIN, the Holder may be subject to a $50 penalty
imposed by the IRS.
Certain Holders of Capital Securities (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and information reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, that Holder must submit a
statement signed under penalty of perjury attesting as to that status. Forms for
such statement can be obtained from the Depositary. For further information
regarding backup withholding and instructions for completing Substitute Form W-9
(including how to obtain a TIN if you do not have one and how to complete
Substitute Form W-9 if Capital Securities are held in more than one name),
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9."
The payment of Gross Proceeds generally will constitute reportable payments
for U.S. federal income tax purposes.
CONSEQUENCES OF FAILURE TO COMPLETE SUBSTITUTE FORM W-9
Failure to complete the Substitute Form W-9 will not, by itself, cause the
Capital Securities to be deemed invalidly tendered, but may require the
Depositary to withhold 31% of the amount of the Gross Proceeds paid pursuant to
the Tender Offer. Backup withholding is not an additional U.S. federal income
tax. Rather, the U.S. federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, the Holder may claim a refund from the IRS.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary the TIN (e.g., Social
Security number or Employer Identification Number) of the record owner of the
Capital Securities. If the Capital Securities are registered in more than one
name or are not registered in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
16
<PAGE> 17
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <S> <C>
SUBSTITUTE FORM W-9 PART I--PLEASE PROVIDE YOUR -------------------------------
DEPARTMENT OF THE TREASURY TAXPAYER IDENTIFICATION NUMBER Social Security Number
INTERNAL REVENUE SERVICE IN THE BOX AT THE RIGHT AND
PAYER'S REQUEST FOR TAXPAYER CERTIFY BY SIGNING AND DATING OR
IDENTIFICATION NUMBER AND BELOW.
CERTIFICATION ("TIN") (See Guidelines)
------------------------------- -------------------------------
PART II--For Payees exempt from Employer Identification
backup withholding, see Number
"Important Tax Information"
above and Guidelines for
Certification of Taxpayer
Identification Number on
Substitute Form W-9 enclosed
herewith and complete as
instructed therein.
- -----------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATIONS--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or a Taxpayer Identification Number has not been issued to me and either
(a) I have mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue Service Center or
Social Security Administration office or (b) I intend to mail or deliver the
application in the near future. I understand that if I do not provide a
Taxpayer Identification Number to the payer, 31% of all reportable payments
made to me thereafter will be withheld until I provide a number to the payer
and that, if I do not provide my Taxpayer Identification Number within sixty
(60) days, such retained amounts shall be remitted to the IRS as backup
withholding.)
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding or (b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a failure to report all
interest and dividends or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTION -- You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see "Important Tax Information"
above).
Name:
- --------------------------------------------------------------------------------
(Please Print)
Address:
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(Include Zip Code)
Signature: Date: , 1997
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN A
$50 PENALTY IMPOSED BY THE IRS AND BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE TENDER OFFER. PLEASE REVIEW THE "GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR
ADDITIONAL DETAILS.
17
<PAGE> 18
(This page intentionally left blank)
<PAGE> 19
(This page intentionally left blank)
<PAGE> 20
Any questions regarding the terms of the Tender Offer and the Consent
Solicitation may be directed to the Dealer Manager.
The Dealer Manager for the Tender Offer and the Solicitation Agent for the
Consent Solicitation is
MORGAN STANLEY DEAN WITTER
Liability Management Group
1585 Broadway, Second Floor
New York, New York 10036
Call Toll Free: (800) 624-1808
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and address listed
below. A Holder may also contact such Holder's broker, dealer, commercial bank
or trust company or other nominee for assistance concerning the Tender Offer.
The Information Agent for the Tender Offer is
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Toll-free: (800) 290-6427
Banks and Brokers may Call Collect: (212) 269-5550
The Depositary for the Tender Offer is
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail:
---------
First Chicago Trust Company of New York
Tenders & Exchanges
P.O. Box 2569
Suite 4660
Jersey City, NJ 07303-2569
By Hand:
----------
First Chicago Trust Company of New York
Tender & Exchanges
c/o The Depositary Trust Company
55 Water Street
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
By Overnight Courier:
-----------------------
First Chicago Trust Company of New York
Tenders & Exchanges
14 Wall Street
8th Floor
Suite 4680-INT
New York, NY 10005
By Facsimile for Eligible Institutions Only:
---------------------------------------------
(201) 222-4720
or
(201) 222-4721
For Confirmation and/or Information Call:
----------------------------------------------
(800) 438-0052
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
OFFER TO PURCHASE FOR CASH AND SOLICITATION OF CONSENTS
OF
INTEGON CORPORATION
THE TENDER OFFER (AS DEFINED BELOW) WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER TERMINATED (AS
MAY BE SO EXTENDED, THE "EXPIRATION TIME"). THE CONSENT DATE IS TUESDAY,
NOVEMBER 25, 1997 OR SUCH LATER DATE AS DESCRIBED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW). THE RECORD DATE IS NOVEMBER 14, 1997.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, DEPOSITARY
By Mail:
---------
First Chicago Trust Company of New York
Tenders & Exchanges
P.O. Box 2569
Suite 4660
Jersey City, NJ 07303-2569
By Hand:
----------
First Chicago Trust Company of New York
Tender & Exchanges
c/o The Depositary Trust Company
55 Water Street
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
By Overnight Courier:
-----------------------
First Chicago Trust Company of New York
Tenders & Exchanges
14 Wall Street
8th Floor
Suite 4680-INT
New York, NY 10005
By Facsimile for Eligible Institutions only:
--------------------------------------------
(201) 222-4720
(201) 222-4721
For Confirmation and/or Information Call:
----------------------------------------------
(800) 438-0052
Any questions concerning tender procedures may be directed to D.F. King & Co.,
Inc.,
who is acting as Information Agent for the Tender Offer, toll-free at (800)
290-6427.
Banks and brokers may call collect at (212) 269-5550.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
CAPITAL SECURITIES MUST BE RECEIVED BY THE DEPOSITARY WITHIN TWO NEW YORK
STOCK EXCHANGE ("NYSE") TRADING DAYS AFTER THE EXPIRATION TIME.
Delivery of this Notice of Guaranteed Delivery at or prior to 5:00 p.m.,
New York City time, on the Consent Date (i.e., the Consent Time) will NOT effect
timely delivery for purposes of eligibility to receive the Consent Payment.
HOLDERS SHOULD BE AWARE THAT THE GUARANTEED DELIVERY PROCEDURES CANNOT BE
USED PRIOR TO THE CONSENT TIME ON THE CONSENT DATE AND THAT USE OF THE
GUARANTEED DELIVERY PROCEDURES WILL RESULT IN A HOLDER BEING INELIGIBLE TO
RECEIVE THE CONSENT PAYMENT WITH RESPECT TO THE CAPITAL SECURITIES SO DELIVERED
WHICH MIGHT OTHERWISE BE PAID.
<PAGE> 2
This form or one substantially equivalent hereto may be used to accept the
Tender Offer (as defined herein) if certificates for the outstanding 10 3/4%
Capital Securities, Series B issued by Integon Capital I, a Delaware business
trust (the "Capital Securities"), are not immediately available, or cannot be
delivered along with other required documents to the Depositary (as defined
below) or if the procedure for book-entry transfer as set forth in the Offer to
Purchase and Consent Solicitation Statement of Integon Corporation, dated
November 12, 1997 (the "Offer to Purchase"), cannot be completed prior to the
Expiration Time. Such form may be delivered by hand or transmitted by facsimile
transmission or mailed to First Chicago Trust Company of New York, as depositary
(the "Depositary"), and must include a guarantee by a Medallion Signature
Guarantor (as defined in the Offer to Purchase) or an Eligible Institution (as
defined below) in the form set forth at the end of this Notice of Guaranteed
Delivery. See "The Tender Offer and the Consent Solicitation -- Procedures for
Tendering Capital Securities and Delivering Consents -- Guaranteed Delivery
Procedures" in the Offer to Purchase.
This form is not to be used to guarantee signatures. If a signature on the
Consent and Letter of Transmittal (the "Letter of Transmittal") is required to
be guaranteed under the instructions to the Letter of Transmittal, such
signature guarantee must appear in the applicable space provided in the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to Integon Corporation (the "Company"), upon
the terms and subject to the conditions set forth in the Offer to Purchase and
the accompanying Letter of Transmittal relating to the Capital Securities (which
together constitutes the "Tender Offer"), receipt of which is hereby
acknowledged, the liquidation amount of the Capital Securities specified below
pursuant to the guaranteed delivery procedures set forth in the Offer to
Purchase under the caption "The Tender Offer and the Consent Solicitation --
Procedures for Tendering Capital Securities and Delivering Consents --
Guaranteed Delivery Procedures."
The undersigned understands that payment by the Depositary for Capital
Securities tendered and accepted for payment pursuant to the Tender Offer will
be made only after timely receipt by the Depositary of such Capital Securities
(or book-entry confirmation of the transfer of such Capital Securities into the
Depositary's account at DTC) and a Letter of Transmittal (or a manually signed
facsimile thereof) (or a properly transmitted Agent's Message) with respect to
such Capital Securities properly completed and duly executed with any required
signature guarantees and any other documents required by the Letter of
Transmittal.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
PLEASE SIGN AND COMPLETE
Signature(s) of Holder(s) or
Authorized Signatory:
- ----------------------------
- ----------------------------------------------------
Name(s) of Registered Holder(s):
- --------------
- ----------------------------------------------------
- ----------------------------------------------------
Date:
- -------------------------------------- , 1997
Address(es):
- -------------------------------------
- ----------------------------------------------------
Area Code and Telephone No.:
- -----------------
- ----------------------------------------------------
If Capital Securities will be delivered by book-entry transfer to DTC, check the
box: [ ]
2
<PAGE> 3
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificate(s) for Capital Securities or, if tendered
by a participant in DTC, exactly as such DTC participant's name appears on a
security position listing as the owner of the Capital Securities, or by
person(s) authorized to become Holder(s) by endorsements and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, such person must provide the following information:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Capacity:
------------------------------------------------------------------------------
Address(es):
------------------------------------------------------------------------------
(Include Zip Code)
DO NOT SEND CAPITAL SECURITIES WITH THIS FORM. CAPITAL SECURITIES SHOULD BE
SENT TO THE DEPOSITARY TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED
CONSENT AND LETTER OF TRANSMITTAL.
GUARANTEE OF SIGNATURE(S)
Name of Firm:
- --------------------------- Authorized Signature:
- ------------------------------------------
Dated:
- ----------------------------- , 1997
ONLY HOLDERS OF CAPITAL SECURITIES ON THE RECORD DATE MAY CONSENT TO THE
PROPOSED AMENDMENTS AND EXECUTION OF THE SUPPLEMENTAL INDENTURE UNLESS HOLDERS
WHO WERE NOT HOLDERS AS OF THE RECORD DATE DELIVER A PROXY (AS DEFINED IN THE
OFFER TO PURCHASE) CONCURRENTLY WITH THEIR CONSENT.
Pursuant to the Offer to Purchase and the Company's solicitation of
Consents to the Proposed Amendments and execution of the Supplemental Indenture,
the undersigned Holder hereby consents to the Proposed Amendments and the
execution of the Supplemental Indenture.
- --------------------------------------------------------------------------------
Signature of Holder(s) or Authorized Signatory
Dated:
- ---------------------------- , 1997
Must be signed by the Holder(s) exactly as name(s) appear on the Capital
Securities or on a security position listing. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation,
agent or other person acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 5 of the Letter of
Transmittal.
Name(s):
- ------------------------------------------
- ------------------------------------------------------
(Please print)
Capacity (full title):
- -------------------------------
Address(es):
- ---------------------------------------
- ------------------------------------------------------
(Include Zip Code)
Daytime Telephone No.:
- ---------------------------
(Include Area Code)
GUARANTEE OF SIGNATURE(S)
Name of Firm:
- --------------------------- Authorized Signature:
- ------------------------------------------
Dated:
- ---------------------------- , 1997
- --------------------------------------------------------------------------------
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED
3
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR GUARANTEES OF SIGNATURES)
The undersigned, a recognized member of the Medallion Signature Guarantee
Program or any other "eligible guarantor institution," as such term is defined
in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
amended (each an "Eligible Institution"), hereby (i) represents that the above-
named persons are deemed to own the Capital Securities tendered hereby within
the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934,
as amended ("Rule 14e-4"), (ii) represents that such tender of Capital
Securities complies with Rule 14e-4 and (iii) guarantees that the Capital
Securities tendered hereby in proper form for transfer (pursuant to the
procedure set forth in the Offer to Purchase under the caption "The Tender Offer
and the Consent Solicitation -- Procedures for Tendering Capital Securities and
Delivering Consents -- Guaranteed Delivery Procedures"), together with a
properly completed and duly executed Consent and Letter of Transmittal (or a
manually signed facsimile thereof) (or a properly transmitted Agent's Message)
with any required signature guarantee and any other documents required by the
Consent and Letter of Transmittal, will be received by the Depositary at one of
its addresses set forth above within two NYSE trading days after the Expiration
Time.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Consent and Letter of
Transmittal (or a manually signed facsimile thereof) or Agent's Message and
Capital Securities to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
SIGN HERE
- ----------------------------- -----------------------------
Name of Firm Address
- ----------------------------- -----------------------------
Authorized Signature Zip Code
- ----------------------------- -----------------------------
Name (Please Print) Area Code and Telephone No.
Dated: 1997
--------------------------------,
DO NOT SEND CAPITAL SECURITIES WITH THIS FORM. ACTUAL SURRENDER OF CAPITAL
SECURITIES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED
AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF)
OR A DULY EXECUTED AGENT'S MESSAGE AND ANY OTHER REQUIRED DOCUMENTS.
THE CONSENT CONTAINED IN THIS NOTICE OF GUARANTEED DELIVERY WILL BE
EFFECTIVE UPON THE RECEIPT THEREOF BY THE DEPOSITARY REGARDLESS OF WHETHER OR
WHEN THE CERTIFICATES FOR TENDERED NOTES (OR A CONFIRMATION OF BOOK-ENTRY
TRANSFER THEREOF) AND AN EXECUTED LETTER OF TRANSMITTAL OR AN AGENT'S MESSAGE
ARE RECEIVED.
4
<PAGE> 1
LETTER TO DTC PARTICIPANTS
$100,000,000
INTEGON CORPORATION
OFFER TO PURCHASE FOR CASH AND SOLICITATION OF CONSENTS
THE TENDER OFFER (AS DEFINED BELOW) WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER TERMINATED (AS
MAY BE SO EXTENDED, THE "EXPIRATION TIME"). THE CONSENT DATE IS TUESDAY,
NOVEMBER 25, 1997 OR SUCH LATER DATE AS DESCRIBED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW). THE RECORD DATE IS NOVEMBER 14, 1997.
November 12, 1997
TO DTC PARTICIPANTS, INCLUDING BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES AND OTHER NOMINEES:
We have been appointed by Integon Corporation, a Delaware corporation (the
"Company"), to act as Dealer Manager (the "Dealer Manager") in connection with
the offer to purchase for cash (the "Tender Offer"), upon the terms and subject
to the conditions set forth in the Offer to Purchase and Consent Solicitation
Statement dated November 12, 1997 (the "Offer to Purchase") of the Company and
in the accompanying Consent and Letter of Transmittal enclosed herewith (the
"Letter of Transmittal"), any and all of the outstanding 10 3/4% Capital
Securities, Series B issued by Integon Capital I, a Delaware business trust (the
"Capital Securities").
In conjunction with the Tender Offer, the Company is soliciting consents
("Consents") from Holders of Capital Securities on the Record Date for the
Proposed Amendments (as defined in the Offer to Purchase) to the Junior
Subordinated Indenture (as defined in the Offer to Purchase) and execution of
the Supplemental Indenture (as defined in the Offer to Purchase).
The Total Consideration for each $1,000 liquidation amount of Capital
Securities tendered and accepted for payment pursuant to the Tender Offer shall
be $1,347.33 which includes Accumulated Distributions (as defined in the Offer
to Purchase), up to, but not including, the Settlement Date (as defined below).
The Tender Offer Consideration for each $1,000 liquidation amount of Capital
Securities tendered shall be an amount equal to the Total Consideration minus
the Consent Payment (as defined in the Offer to Purchase).
Upon the terms and subject to the conditions of the Tender Offer, payment
will be made for those Capital Securities accepted for payment pursuant to the
Tender Offer in immediately available (same-day) funds on the third New York
Stock Exchange trading day following the Expiration Time, or as soon as possible
thereafter (the "Settlement Date").
For your information and for forwarding to your clients for whom you hold
Capital Securities registered in your name or in the name of your nominee, we
are enclosing the following documents:
1. The Offer to Purchase;
2. The Letter of Transmittal to be used by Holders to tender Capital
Securities and deliver Consents to the Proposed Amendments and execution of the
Supplemental Indenture;
3. A form of letter which may be sent to your clients for whose accounts
you hold Capital Securities in your name or in the name of your nominee with
space provided for obtaining such clients' instructions with regard to the
Tender Offer and the delivery of Consents;
4. A Notice of Guaranteed Delivery to be used only after the Consent Time
on the Consent Date to accept the Tender Offer, if certificates for Capital
Securities cannot be delivered to the Depositary (as defined herein), or if the
procedure for book-entry transfer cannot be completed prior to the Expiration
Time;
<PAGE> 2
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to First Chicago Trust Company of New York,
as depositary (the "Depositary").
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. PLEASE NOTE THAT THE TENDER OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER
TERMINATED.
IMPORTANT: A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR
A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE) TOGETHER WITH THE CAPITAL SECURITIES (OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE CONSENT TIME ON THE CONSENT DATE
WITH RESPECT TO HOLDERS WISHING TO RECEIVE THE TENDER OFFER CONSIDERATION AND
THE CONSENT PAYMENT. A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE) TOGETHER WITH THE CAPITAL SECURITIES
(OR IN THE CASE OF A BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL
OTHER REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
TIME WITH RESPECT TO HOLDERS WISHING TO RECEIVE ONLY THE TENDER OFFER
CONSIDERATION.
Holders of Capital Securities on the Record Date who desire to accept the
Tender Offer must consent to the Proposed Amendments and execution of the
Supplemental Indenture (as defined in the Offer to Purchase). Holders who
purchase Capital Securities or whose purchase settles or is registered after the
close of business on the Record Date and at or prior to the Consent Time on the
Consent Date who wish to tender their Capital Securities in the Tender Offer
must arrange with their seller to receive a duly completed, valid and unrevoked
Proxy (as defined in the Offer to Purchase) (which may be in the form of an
irrevocable assignment of proxy as set forth in the Letter of Transmittal) from
the Holder on the Record Date of such Capital Securities. In order to facilitate
the receipt of Consents, Capital Securities shall, during the period which
commences November 12, 1997 and which will end at the Expiration Time, trade in
the over-the-counter market "with proxy" providing the purchaser with the right
to vote such acquired Capital Securities in the Consent Solicitation.
CONSUMMATION OF THE TENDER OFFER IS CONDITIONED, AMONG OTHER THINGS,
SATISFACTION OF THE MINIMUM CONSENT CONDITION (AS DEFINED IN THE OFFER TO
PURCHASE) AND THE SATISFACTION OF THE MINIMUM CONDITION (AS DEFINED IN THE OFFER
TO PURCHASE).
In order to take advantage of the Tender Offer, a duly executed and
properly completed Letter of Transmittal and any required signature guarantees
should be sent to the Depositary, and certificates representing the tendered
Capital Securities (or confirmation of book-entry transfer) should be delivered
to the Depositary, all in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
Holders of Capital Securities whose certificates for Capital Securities are
not immediately available, or who cannot deliver their certificates and other
required documents to the Depositary or complete the procedures for the
book-entry transfer after the Consent Time on the Consent Date and prior to the
Expiration Time, may nevertheless tender their Capital Securities by following
the guaranteed delivery procedures specified in the section of the Offer to
Purchase captioned "The Tender Offer and the Consent Solicitation -- Procedures
for Tendering Capital Securities and Delivering Consents -- Guaranteed Delivery
Procedures."
The Company will not pay any fees or commissions to any broker or dealer or
other person, other than the Dealer Manager, D.F. King & Co., Inc. (the
"Information Agent") and the Depositary, in connection with the solicitation of
tenders of Capital Securities, pursuant to the Tender Offer. However, the
Company will reimburse brokers, dealers, commercial banks, trust companies, and
other nominees for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
2
<PAGE> 3
The Company will pay or cause to be paid all transfer taxes, if any, with
respect to the sale and transfer of any Capital Securities to it pursuant to the
Tender Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Questions and requests for assistance should be addressed to the Dealer
Manager at its address and telephone number set forth on the back cover of the
Offer to Purchase. Requests for additional copies of the enclosed materials
should be directed to the Information Agent at the telephone number set forth on
the back cover of the Offer to Purchase. Such additional copies will be
furnished promptly at the Company's expense.
Very truly yours,
MORGAN STANLEY DEAN WITTER
------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS IS INTENDED TO
CONSTITUTE YOU OR ANY PERSON THE AGENT OF THE COMPANY, THE TRUST (AS DEFINED IN
THE OFFER TO PURCHASE), MORGAN STANLEY & CO. INCORPORATED, FIRST CHICAGO TRUST
COMPANY OF NEW YORK, D.F. KING & CO., INC. OR ANY OF THEIR AFFILIATES, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT ON THEIR BEHALF OTHER
THAN STATEMENTS EXPRESSLY MADE IN THE OFFER TO PURCHASE OR THE LETTER OF
TRANSMITTAL OR USE ANY DOCUMENTS IN CONNECTION WITH THE TENDER OFFER OTHER THAN
FOR THE PURPOSES DESCRIBED HEREIN.
------------------------------
3
<PAGE> 1
LETTER TO BENEFICIAL HOLDERS
$100,000,000
INTEGON CORPORATION
OFFER TO PURCHASE FOR CASH AND SOLICITATION OF CONSENTS
THE TENDER OFFER (AS DEFINED BELOW) WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER TERMINATED (AS
MAY BE SO EXTENDED, THE "EXPIRATION TIME"). THE CONSENT DATE IS TUESDAY,
NOVEMBER 25, 1997 OR SUCH LATER DATE AS DESCRIBED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW). THE RECORD DATE IS NOVEMBER 14, 1997.
November 12, 1997
To Our Clients:
Enclosed for your consideration are the Offer to Purchase and Consent
Solicitation Statement of Integon Corporation, a Delaware corporation (the
"Company"), dated November 12, 1997 (the "Offer to Purchase") and the
accompanying Consent and Letter of Transmittal (the "Letter of Transmittal") in
connection with the offer by the Company to purchase for cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase and in the
Letter of Transmittal (the "Tender Offer"), any and all of the outstanding
10 3/4% Capital Securities, Series B issued by Integon Capital I, a Delaware
business trust (the "Capital Securities"). In conjunction with the Tender Offer,
the Company is soliciting consents (the "Consent Solicitation") from Holders of
Capital Securities on the Record Date (and in the case of tendering Holders who
were not Holders on the Record Date, a validly delivered Proxy (as defined in
the Offer to Purchase)) to the Proposed Amendments (as defined in the Offer to
Purchase) to the Junior Subordinated Indenture (as defined in the Offer to
Purchase) and execution of the Supplemental Indenture (as defined in the Offer
to Purchase).
The Total Consideration for each $1,000 liquidation amount of Capital
Securities tendered and accepted for payment pursuant to the Tender Offer shall
be $1,347.33 which includes Accumulated Distributions (as defined in the Offer
to Purchase), up to, but not including, the Settlement Date (as defined below).
The Tender Offer Consideration for each $1,000 liquidation amount of Capital
Securities tendered shall be an amount equal to the Total Consideration minus
the Consent Payment.
We are the registered Holder of Capital Securities held for your account. A
tender of such Capital Securities can be made and consent to the Proposed
Amendments to the Junior Subordinated Indenture and execution of the
Supplemental Indenture may be given only by us as the Holder and pursuant to
your instructions.
THE ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER CAPITAL SECURITIES HELD BY US FOR YOUR
ACCOUNT OR TO CONSENT TO THE PROPOSED AMENDMENTS AND EXECUTION OF THE
SUPPLEMENTAL INDENTURE.
We request that you advise us whether you wish us to tender any or all of
the Capital Securities held by us for your account and to consent to the
Proposed Amendments and execution of the Supplemental Indenture upon the terms
and subject to the conditions set forth in the Offer to Purchase and the Letter
of Transmittal.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to execute a Letter of Transmittal, tender your Capital
Securities and deliver your Consent to the Proposed Amendments and execution of
the Supplemental Indenture on your behalf in accordance with the terms of the
Tender Offer. The deadline for Holders to qualify to receive the Consent Payment
together with the Tender Offer Consideration is the Consent Time on the Consent
Date, if on such date the Company has received the Minimum Consent (as defined
in the Offer to Purchase).
<PAGE> 2
Your attention is directed to the following:
1. Upon the terms and subject to the conditions of the Tender Offer,
payment will be made for Capital Securities accepted for payment in immediately
available (same-day) funds on the third New York Stock Exchange trading day
following the Expiration Time, or as soon as possible thereafter (the
"Settlement Date").
2. The Tender Offer will expire at 12:00 Midnight, New York City time, on
Wednesday, December 10, 1997, unless extended or earlier terminated (the
"Expiration Time").
3. Holders of Capital Securities on the Record Date who desire to accept
the Tender Offer must consent to the Proposed Amendments and execution of the
Supplemental Indenture with respect to the tendered Capital Securities.
4. Holders who purchase Capital Securities or whose purchase settles or is
registered after the close of business on the Record Date and at or prior to the
Consent Time on the Consent Date who wish to tender their Capital Securities in
the Tender Offer must arrange with their seller to receive a duly completed,
valid and unrevoked Proxy (as defined in the Offer to Purchase) (which may be in
the form of an irrevocable proxy as set forth in the Letter of Transmittal) from
the Holder on the Record Date of such Capital Securities. In order to facilitate
the receipt of Consents, Capital Securities shall, during the period which
commences November 12, 1997 and which will end at the Expiration Time, trade in
the over-the-counter market "with proxy" providing the purchaser with the right
to vote such acquired Capital Securities in the Consent Solicitation.
5. IF YOU DESIRE TO TENDER ANY CAPITAL SECURITIES PURSUANT TO THE TENDER
OFFER AND RECEIVE THE CONSENT PAYMENT AS WELL AS THE TENDER OFFER CONSIDERATION,
WE MUST RECEIVE YOUR INSTRUCTIONS IN AMPLE TIME TO PERMIT US TO EFFECT A TENDER
OF CAPITAL SECURITIES AND DELIVER THE RELATED CONSENTS AND RELATED PROXY, IF
NECESSARY, ON YOUR BEHALF PRIOR TO THE CONSENT TIME WHICH IS 5:00 P.M., NEW YORK
CITY TIME, ON THE CONSENT DATE WHICH IS TUESDAY, NOVEMBER 25, 1997 UNLESS
EXTENDED OR EARLIER TERMINATED.
6. If you desire to tender any Capital Securities pursuant to the Tender
Offer and receive only the Tender Offer Consideration and not the Consent
Payment, we must receive your instructions in ample time to permit us to effect
a tender of Capital Securities on your behalf prior to the Expiration Time.
7. The Company's obligation to pay the Tender Offer Consideration (and, if
applicable, the Consent Payment) for tendered Capital Securities is subject to,
among other things, the satisfaction of (1) the Minimum Consent Condition (as
defined in the Offer to Purchase), (2) the Minimum Condition (as defined in the
Offer to Purchase), and (3) certain conditions set forth in the Offer to
Purchase under the caption "The Tender Offer and the Consent Solicitation --
Conditions of the Tender Offer."
8. Tenders of Capital Securities may be withdrawn at any time prior to the
Expiration Date. Thereafter, such tenders are irrevocable except that they may
be withdrawn after Friday, January 9, 1998, unless previously accepted for
payment as provided in the Offer to Purchase. Consents may be revoked at any
time prior to the Consent Time so long as any Capital Securities tendered are
concurrently withdrawn.
9. Any transfer taxes with respect to the sale and transfer of any Capital
Securities pursuant to the Tender Offer will be paid by the Company, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Capital Securities and
deliver your Consent to the Proposed Amendments and execution of the
Supplemental Indenture, please so instruct us by completing, detaching and
returning to us the instruction form set forth below. An envelope to return your
instructions is enclosed.
The Tender Offer is not being made to, and Consents are not being solicited
from (nor will tenders of Capital Securities be accepted from or on behalf of),
Holders in any jurisdiction in which the making of the Tender Offer or
acceptance for payment of the Capital Securities would not be in compliance with
the laws of that jurisdiction. However, the Company may, in its sole discretion,
take such action as it may deem necessary to make the Tender Offer and solicit
Consents in any such jurisdiction, and may extend the Tender Offer to, and
solicit Consents from, Holders in that jurisdiction.
2
<PAGE> 3
IMPORTANT: A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR
A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE) TOGETHER WITH THE CAPITAL SECURITIES (OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE DEPOSITORY PRIOR TO THE CONSENT TIME ON THE CONSENT DATE
WITH RESPECT TO HOLDERS WISHING TO RECEIVE THE CONSENT PAYMENT TOGETHER WITH THE
TENDER OFFER CONSIDERATION. A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE) TOGETHER WITH THE CAPITAL SECURITIES
(OR IN THE CASE OF A BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL
OTHER REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
TIME WITH RESPECT TO HOLDERS WISHING TO RECEIVE ONLY THE TENDER OFFER
CONSIDERATION.
LETTER OF INSTRUCTION WITH RESPECT TO THE TENDER OFFER AND CONSENT
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase and Consent Solicitation Statement of the Company dated November 12,
1997, and the related Letter of Transmittal in connection with the Tender Offer
by the Company to purchase the Capital Securities.
This will instruct you to (a) tender the Capital Securities held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and the related Letter of Transmittal, and (b)
with respect to any Capital Securities to which you were the Holder of record on
the Record Date, consent to the Proposed Amendments and execution of the
Supplemental Indenture with respect to the Capital Securities tendered or (c)
with respect to any Capital Securities to which you were not the Holder as of
the Record Date, deliver a Proxy from the Holder as of the Record Date.
SIGN HERE
<TABLE>
<S> <C>
- ----------------------------------------------------- -----------------------------------------------------
Signature Signature
(If more than one account Holder)
- ----------------------------------------------------- -----------------------------------------------------
Name (Please Print) Name (Please Print)
- ----------------------------------------------------- -----------------------------------------------------
Address Telephone No. (including Area Code)
- -----------------------------------------------------
City, State and Zip Code Dated: ---------------------------------------- ,
1997
</TABLE>
Aggregate Liquidation Amount of Capital Securities
to be tendered and as to which Consent is given*:
- ------------------------------------------------------
- ------------
* The tender of Capital Securities by any Holder on the Record Date will
constitute a Consent to the Proposed Amendments and execution of the
Supplemental Indenture pursuant to the terms of the Offer to Purchase and the
Letter of Transmittal. Holders of Capital Securities on the Record Date must
consent to the Proposed Amendments and execution of the Supplemental Indenture
in respect to all of the Capital Securities being tendered. Holders who are
not Holders as of the close on the Record Date must deliver a Proxy herewith.
3
<PAGE> 1
LETTER TO HOLDERS OF PHYSICAL SECURITIES
$100,000,000
INTEGON CORPORATION
OFFER TO PURCHASE FOR CASH AND SOLICITATION OF CONSENTS
THE TENDER OFFER (AS DEFINED BELOW) WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 10, 1997, UNLESS EXTENDED OR EARLIER TERMINATED (AS
MAY BE SO EXTENDED, THE "EXPIRATION TIME"). THE CONSENT DATE IS TUESDAY,
NOVEMBER 25, 1997 OR SUCH LATER DATE AS DESCRIBED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW). THE RECORD DATE IS NOVEMBER 14, 1997.
November 12, 1997
To Holders of Physical Securities:
We have been appointed by Integon Corporation, a Delaware corporation (the
"Company"), to act as Dealer Manager and Solicitation Agent (the "Dealer
Manager") in connection with the offer to purchase (the "Tender Offer") for
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase and Consent Solicitation Statement dated November 12, 1997 (the "Offer
to Purchase") of the Company and in the accompanying Consent and Letter of
Transmittal (the "Letter of Transmittal"), any and all of the outstanding
10 3/4% Capital Securities, Series B issued by Integon Capital I, a Delaware
business trust (the "Capital Securities"). In conjunction with the Tender Offer,
the Company is soliciting consents ("Consents") from Holders of Capital
Securities for the Proposed Amendments (as defined in the Offer to Purchase) to
the Junior Subordinated Indenture (as defined in the Offer to Purchase) and
execution of the Supplemental Indenture (as defined in the Offer to Purchase).
The Total Consideration for each $1,000 liquidation amount of Capital
Securities tendered and accepted for payment pursuant to the Tender Offer shall
be $1,347.33 which includes Accumulated Distributions (as defined in the Offer
to Purchase), up to, but not including, the Settlement Date (as defined below).
The Tender Offer Consideration for each $1,000 liquidation amount of Capital
Securities tendered shall be an amount equal to the Total Consideration minus
the Consent Payment (as defined in the Offer to Purchase).
Upon the terms and subject to the conditions of the Tender Offer, payment
will be made for those Capital Securities accepted for payment pursuant to the
Tender Offer in immediately available (same-day) funds on the third New York
Stock Exchange trading day following the Expiration Time, or as soon as possible
thereafter (the "Settlement Date").
For your information, we are enclosing the following documents:
1. The Offer to Purchase;
2. The Letter of Transmittal to be used by you to tender your Capital
Securities and to deliver your Consent to the Proposed Amendments and execution
of the Supplemental Indenture;
3. A Notice of Guaranteed Delivery to be used only after the Consent Time
on the Consent Date to accept the Tender Offer, if certificates for Capital
Securities cannot be delivered to the Depositary (as defined herein) prior to
the Expiration Time;
4. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
5. A return envelope addressed to First Chicago Trust Company of New York,
as depositary (the "Depositary").
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. PLEASE NOTE THAT THE TENDER OFFER WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 10, 1997,
UNLESS EXTENDED OR EARLIER TERMINATED.
IMPORTANT: A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR
A MANUALLY SIGNED FACSIMILE THEREOF) (OR IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE) TOGETHER WITH THE CAPITAL SECURITIES (OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE CONSENT TIME ON THE CONSENT DATE
WITH RESPECT TO HOLDERS WISHING TO RECEIVE THE CONSENT PAYMENT TOGETHER WITH THE
TENDER OFFER CONSIDERATION. A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL (OR IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE) (OR A
MANUALLY SIGNED FACSIMILE THEREOF) TOGETHER WITH THE CAPITAL SECURITIES (OR IN
THE CASE OF A BOOK-ENTRY TRANSFER, A BOOK-ENTRY CONFIRMATION) AND ALL OTHER
REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
TIME WITH RESPECT TO HOLDERS WISHING TO RECEIVE ONLY THE TENDER OFFER
CONSIDERATION.
LETTERS OF TRANSMITTAL AND CAPITAL SECURITIES MUST BE SENT ONLY TO THE
DEPOSITARY. DO NOT SEND LETTERS OF TRANSMITTAL OR CAPITAL SECURITIES TO THE
COMPANY, D.F. KING & CO., INC. OR MORGAN STANLEY DEAN WITTER. PLEASE REFER TO
THE OFFER TO PURCHASE FOR INSTRUCTIONS REGARDING TENDERING CAPITAL SECURITIES
HELD IN PHYSICAL FORM.
Holders of Capital Securities who desire to accept the Tender Offer must
deliver their Consents to the Proposed Amendments and execution of the
Supplemental Indenture. Holders who purchase Capital Securities or whose
purchase settles or is registered after the close of business on the Record Date
and at or prior to the Consent Time on the Consent Date who wish to tender their
Capital Securities in the Tender Offer must arrange with their seller to receive
a duly completed, valid and unrevoked Proxy (as defined in the Offer to
Purchase) (which may be in the form of an irrevocable proxy as set forth in the
Letter of Transmittal) from the Holder on the Record Date of such Capital
Securities. In order to facilitate the receipt of Consents, Capital Securities
shall, during the period which commences November 12, 1997 and which will end at
the Expiration Time, trade in the over-the-counter market "with proxy" providing
the purchaser with the right to vote such acquired Capital Securities in the
Consent Solicitation.
In order to take advantage of the Tender Offer, a duly executed and
properly completed Letter of Transmittal and any required signature guarantees
should be sent to the Depositary, and certificates representing the tendered
Capital Securities (or confirmation of book-entry transfer) should be delivered
to the Depositary, all in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
Holders of Capital Securities whose certificates for Capital Securities are
not immediately available, or who cannot deliver their certificates and other
required documents to the Depositary or complete the procedures for the
book-entry transfer after the Consent Time on the Consent Date, but prior to the
Expiration Time, may tender their Capital Securities by following the guaranteed
delivery procedures specified in the section of the Offer to Purchase captioned
"The Tender Offer and the Consent Solicitation -- Procedures for Tendering
Capital Securities and Delivering Consents -- Guaranteed Delivery Procedures."
HOLDERS SHOULD BE AWARE THAT THE GUARANTEED DELIVERY PROCEDURES CANNOT BE
USED PRIOR TO THE CONSENT TIME ON THE CONSENT DATE AND THAT USE OF THE
GUARANTEED DELIVERY PROCEDURES WILL RESULT IN A HOLDER BEING INELIGIBLE TO
RECEIVE THE CONSENT PAYMENT WITH RESPECT TO THE CAPITAL SECURITIES SO DELIVERED
WHICH MIGHT OTHERWISE BE PAID.
The Company will pay or cause to be paid all transfer taxes, if any, with
respect to the sale and transfer of any Capital Securities to it pursuant to the
Tender Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
2
<PAGE> 3
Questions and requests for assistance should be addressed to the Dealer
Manager at its address and telephone number set forth on the back cover of the
Offer to Purchase. Requests for additional copies of the enclosed materials
should be directed to D.F. King & Co., Inc. at the telephone number set forth on
the back cover of the Offer to Purchase. Such additional copies will be
furnished promptly at the Company's expense.
Very truly yours,
MORGAN STANLEY DEAN WITTER
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE TAXPAYER IDENTIFICATION NUMBER OF:
- -----------------------------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, the first individual on the account.(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint funds,
either person(1)
4. Custodian account of a minor (Uniform Gift The minor(2)
to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor(1)
6. Account in the name of guardian or committee The ward, minor, or incompetent person(3)
for a designated ward, minor or incompetent
person(3)
7. A. The usual revocable savings trust account The Grantor-trustee
(grantor is also trustee)
or
B. So-called trust account that is not a The actual owner(4)
legal valid trust under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate or pension trust The legal entity (do not furnish the identifying
number of the personal representative or trustee
unless the legal entity itself is not designated in
the account title)(4)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name of the The partnership
business
13. Association, club, or other tax exempt The organization
organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a
State or local government, school district,
or prison) that receives agricultural
program payments
</TABLE>
- -------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You may
use your social security number or employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any agency or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441
of the Code.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to an appropriate nominee.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).
- Payments described in Section 6049(b)(5) of the Code to nonresident
aliens.
- Payments on tax-free covenant bonds under Section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
- Payments made to an appropriate nominee.
Exempt payees described above should file substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see regulations under Sections 6041, 6041A(a), 6045,
and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give correct taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you
fail to furnish your correct taxpayer identification number to a payer,
you are subject to a penalty of $50 for each failure unless your failure
is due to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 20% on any portion
of an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis that results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
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