<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
SCHEDULE 14D-1
(AMENDMENT NO. 2)
TENDER OFFER STATEMENT
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
---------------------------
CITIZENS CORPORATION
(Name of Subject Company)
ALLMERICA FINANCIAL CORPORATION
CITIZENS ACQUISITION CORPORATION
(Bidders)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
01-174533 10 9
(CUSIP Number of Class of Securities)
JOHN F. KELLY, ESQ.
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
(508) 855-1000
(Name of Person Authorized to Receive
Notices on Behalf of Bidders)
Copy to:
LAUREN I. NORTON, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 951-7000
CALCULATION OF FILING FEE
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Transaction Value* Amount of Filing Fee
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$195,938,925.00 $39,187.79
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</TABLE>
* For purposes of calculating the fee only. This amount assumes the purchase
of 5,892,900 shares of common stock, par value $.01 per share, of Citizens
Corporation at $33.25 net in cash per share, which represents all
outstanding shares at October 30, 1998 not owned directly or indirectly by
the persons filing this statement. The amount of the filing fee calculated
in accordance with Rule 0-11 equals 1/50th of 1% of the value of the shares
to be purchased.
[X] 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>
Amount Previously Paid: $34,178.82 Filing Parties: Allmerica Financial Corporation and
Citizens Acquisition Corporation
Form or Registration No.: Schedule 14D-1 Date Filed: November 2, 1998
</TABLE>
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<PAGE>
INTRODUCTION
Allmerica Financial Corporation ("AFC") and Citizens Acquisition
Corporation (the "Purchaser") hereby amend and supplement their Rule 13e-3
Transaction Statement (the "Schedule 13E-3") originally filed on November 2,
1998 and as amended, with respect to the offer to purchase all of the
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
Citizens Corporation, a Delaware corporation ("Citizens") that AFC does not
already own. The Purchaser has increased the price at which it is offering to
purchase the Shares from $29.00 per Share to $33.25 per Share, net to the seller
in cash, without interest (as so amended, the "Offer Price") upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 2,
1998 (the "Offer to Purchase"), the Supplement to the Offer to Purchase dated
November 16, 1998 (the "Supplement") and in the related Letter of Transmittal
and Revised Letter of Transmittal (which collectively constitute the "Offer"),
copies of which are filed as Exhibits (d)(1), (d)(2), (d)(9) and (d)(10) hereto,
respectively. Capitalized terms used herein but not defined are used as defined
in the Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(c) Item 1(c) of the Schedule 14D-1 is amended and supplemented to
incorporate by reference the information set forth in the Supplement under "The
Offer--Price Range of Shares; Dividends."
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) Items 3(a) and 3(b) of Schedule 14D-1 are amended and
supplemented to incorporate by reference the information set forth in the
Supplement under "Special Factors--Background."
ITEM 4. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Items 4(a) and 4(b) of the Schedule 14D-1 are amended and
supplemented to incorporate by reference the information set forth in the
Supplement under "The Amended Offer--Source and Amount of Funds."
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Item 9 of the Schedule 14D-1 is amended and supplemented to incorporate
by reference the information set forth in the Supplement under "The Amended
Offer--Selected Financial Information of AFC." The incorporation by reference
herein of the above referenced financial information does not constitute an
admission that such information is material to a decision by a stockholder of
Citizens whether to sell, tender or hold shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
Item 10 is amended and supplemented to incorporate by reference the
information set forth in the Supplement under "Special Factors--Certain
Litigation," "The Amended Offer--Amended Terms of the Offer," "The Amended
Offer--Selected Financial Information of Citizens," and "The Amended
Offer--Miscellaneous."
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<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is amended and supplemented to add the
following exhibits:
(a)(1) Commitment Letter dated November 9, 1998 among The Chase
Manhattan Bank, AFC and the Purchaser.
(d)(9) Supplement dated November 17, 1998 to the Offer to Purchase.
(d)(10) Revised Letter of Transmittal.
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<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, each of the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Date: November 17, 1998 ALLMERICA FINANCIAL CORPORATION
By: /s/ Edward J. Parry, III
-------------------------------------
Name: Edward J. Parry, III
Title: Vice President, Treasurer and
Chief Financial Officer
CITIZENS ACQUISITION CORPORATION
By: /s/ Edward J. Parry, III
---------------------------------------
Name: Edward J. Parry, III
Title: President and Treasurer
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<PAGE>
EXHIBIT INDEX
EXHIBITS
--------
(a)(1) Commitment Letter dated November 9, 1998 among The Chase Manhattan
Bank, AFC and the Purchaser.
(d)(9) Supplement dated November 17, 1998 to the Offer to Purchase.
(d)(10) Revised Letter of Transmittal.
<PAGE>
November 9, 1998
Allmerica Financial Corporation
440 Lincoln Street
Worcester, Massachusetts 01653
and
Citizens Acquisition Corporation
c/o Allmerica Financial Corporation
Attention: Mr. Edward J. Parry, III
Chief Financial Officer
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase") that Allmerica
-----
Financial Corporation ("Allmerica"), a Delaware corporation, through Citizens
---------
Acquisition Corporation ("Citizens;" collectively with Allmerica, the
--------
"Borrower"), intends to acquire from the public (the "Acquisition") the shares
-------- -----------
of Citizen Corporation, a Delaware Corporation and a subsidiary of the Borrower,
that it does not already own for cash. In that connection, you have requested
that Chase agree to provide financing for the Acquisition in an aggregate amount
of $200,000,000 (the "Facility").
--------
Chase is pleased to advise you of its commitment to provide the Facility
upon the terms and subject to the conditions set forth or referred to in this
commitment letter (the "Commitment Letter") and in the Summary of Terms and
-----------------
Conditions attached hereto as Exhibit A (the "Term Sheet").
----------
As consideration for Chase's commitment hereunder and its agreement to
perform the services described herein, you agree to pay to Chase the
nonrefundable fees set forth in the Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter").
----------
<PAGE>
Chase's commitment hereunder and its agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property or condition (financial or otherwise) of the
Borrower and its subsidiaries, taken as a whole, (b) our not becoming aware
after the date hereof of any information or other matter affecting the Borrower
or its subsidiaries or the transactions contemplated hereby which is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to us prior to the date hereof, (c) there not having occurred a
material disruption of or material adverse change in financial, banking or
capital market conditions, (d) the negotiation, execution and delivery on or
before November 13, 1998 of definitive credit documentation ("Credit
------
Documentation") with respect to the Facility satisfactory to Chase and its
- -------------
counsel and (e) the other conditions set forth or referred to in the Term Sheet.
The terms and conditions of Chase's commitment hereunder and of the Facility are
not limited to those set forth herein and in the Term Sheet. Those matters that
are not covered by the provisions hereof and of the Term Sheet are subject to
the approval and agreement of Chase and the Borrower.
You agree (a) to indemnify and hold harmless Chase, its affiliates and its
officers, directors, employees, advisors, and the agents (each an "indemnified
-----------
person") from and against any and all losses, claims, damages and liabilities to
- ------
which any such indemnified person may become subject arising out of or in
connection with this Commitment Letter, the Facility, the use of the proceeds
thereof, the acquisition or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any indemnified person is a party thereto, and to reimburse each
indemnified person upon demand for any legal or other expenses incurred in
connection with investigating or defending any of the foregoing, provided that
--------
the foregoing indemnity will not, as to any indemnified person, apply to losses,
claims, damages, liabilities or related expenses to the extent they arise from
the willful misconduct or gross negligence of such indemnified person, and (b)
to reimburse Chase and its affiliates on demand for all reasonable out-of-pocket
expenses (including due diligence expenses, syndication expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facility and any related documentation (including this
Commitment Letter, the Term Sheet, the Fee Letter and the Credit Documentation)
or the administration, amendment, modification or waiver thereof; provided that
(i) the reimbursement for fees and charges of counsel (including costs allocated
by Chase's internal legal department) incurred in connection with the Facility
and any related documentation shall be limited to $20,000 and (ii) the
reimbursement for all other out-of-pocket expenses incurred in connection with
the Facility and any related documentation shall be limited to $5,000. No
indemnified person shall be liable for any indirect or consequential damages in
connection with its activities related to the Facility. The obligations to
indemnify each indemnified person and pay such legal and other expenses shall
remain effective until the initial funding under the Credit Documentation and
thereafter the indemnification and expense reimbursement obligations contained
herein shall be superseded by those contained in the Credit Documentation.
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<PAGE>
This Commitment Letter shall not be assignable by you without the prior
written consent of Chase (any purported assignment without such consent shall be
null and void), is intended to be solely for the benefit of the parties hereto.
This Commitment Letter may be executed in any number of counterparts, each of
which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. This Commitment Letter between you and
Chase and the Fee Letter are the only agreements that have been entered into
among us with respect to the Facility and set forth the entire understanding of
the parties with respect thereto. This Commitment Letter shall be governed by,
and construed in accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), provided, that the foregoing
--------
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
Except to the extent otherwise provided herein, the compensation,
reimbursement, indemnification and confidentiality provisions contained herein
and in the Fee Letter shall remain in full force and effect regardless of
whether the Credit Documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or Chase's commitment
hereunder.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than 5:00 p.m., New York City time, on November 9, 1998. Chase's commitment and
agreements herein will expire at such time in the event Chase has not received
such executed counterparts in accordance with the immediately preceding
sentence. If this Commitment Letter is accepted by you, Chase's commitment
hereunder shall terminate if the Credit Documentation has not been executed and
delivered on or before December 1, 1998 (the "Closing Date").
-3-
<PAGE>
Chase is pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK
By: ____________________________
Name:
Title:
Accepted and agreed to as of
the date first written above by:
ALLMERICA FINANCIAL CORPORATION
By: _____________________________
Name:
Title:
Dated: November __, 1998
CITIZENS ACQUISITION CORPORATION
By: ______________________________
Name:
Title:
Dated: November __, 1998
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<PAGE>
EXHIBIT A
---------
ALLMERICA FINANCIAL CORPORATION
SUMMARY OF TERMS AND CONDITIONS
-------------------------------
November 9, 1998
Capitalized terms used and not defined herein or in Annex I hereto have the
meanings assigned to such terms in the Commitment Letter to which this Summary
of Terms and Conditions is attached.
I. Parties
-------
Borrowers: Allmerica Financial Corporation and Citizens
--------- Acquisition Corporation, as joint and several
obligors (collectively, the "Borrower").
--------
Lender: The Chase Manhattan Bank ("Chase").
------ -----
II. The Facility
------------
Type and Amount: Single draw term loan in an aggregate amount of up to
--------------- $200,000,000 (the "Loan").
----
Availability: The Loan shall be available for drawdown any time
------------ during the period (the "Availability Period")
commencing on the Closing Date and ending on
January 31, 1999 (the "Maturity Date").
-------------
Maturity: Six months from the Closing Date.
--------
Purpose: The proceeds of the Loan shall be used to finance the
------- acquisition from the public of shares of Citizens
Corporation.
III Certain Payment
----------------
Provisions:
----------
Fees and Interest
-----------------
Rates: Appendix II
-----
<PAGE>
Optional Prepayments
--------------------
and Commitment
--------------
Reductions: The Loan may be prepaid in minimums of $5,000,000
----------- and the commitment may be reduced by the Borrower in
minimums of $5,000,000, each without premium or
penalty except for the broken-funding payments
provided in the next sentence. Prepayment of a
Eurodollar Loan or Money Market Loan prior to the
last day of an Interest Period or maturity,
respectively, require broken-funding payments.
IV. Certain Conditions
------------------
Conditions: The availability of the Loan shall be conditioned
---------- upon satisfaction of, among other things, the
following conditions precedent:
(a) The Borrower shall have executed and delivered
satisfactory definitive financing documentation with
respect to the Loan (the "Credit Documentation").
--------------------
(b) Chase shall have received all fees required to be
paid, and all expenses for which invoices have been
presented, on or before the Closing Date.
(c) The Lender shall have received an opinion from
counsel to the Borrower with respect to the Loan and
the Credit Documentation.
-2-
<PAGE>
(d) The representations and warranties (including,
without limitation, the material adverse change and
material litigation representations) contained in the
Credit Documentation shall be accurate on the Closing
Date and on the date of drawdown of the Loan.
(e) No default or event of default shall exist on the
Closing Date and at the time of the drawdown of the
Loan.
V. Certain Documentation
---------------------
Matters: The Credit Documentation shall contain
------- representations, warranties, covenants, events of
default, yield protection provisions, assignment and
participation provisions, indemnification and
expenses provisions and governing law and
jurisdiction provisions substantially the same as
those contained in the Borrower's Credit Agreement
dated as of May 29, 1998 with Chase, as
administrative agent and Fleet National Bank, as co-
agent, and the Lenders party thereto.
-3-
<PAGE>
Annex I
-------
Interest and Certain Fees
-------------------------
Interest Rate Options: The Borrower may elect that the Loan bear
--------------------- interest at a rate per annum equal to:
the Base Rate or;
the Eurodollar Rate plus the Eurodollar
borrowing margin; or
a short term money market rate offered by the
Lender in its sole discretion ("Money Market
------------
Rate") and accepted by the Borrower.
----
As used herein:
"Base Rate" means the higher of (i) the rate of
---------
interest publicly announced by Chase as its prime
rate in effect at its principal office in New York
City (the "Prime Rate") and (ii) the federal funds
----------
rate from time to time plus 0.5%.
----
"Eurodollar Rate" will be established by reference
---------------
to the display screen designated as Page 3750 on
the Telerate Service at 11:00 a.m., London time,
on the date that is two business days prior to the
date of the Loan. If the Telerate Service is not
available on such business day Chase will be
selected as reference bank to establish the
Eurodollar Rate.
The Base Rate and Money Market Rate may be elected
on one business day notice and the Eurodollar rate
may be elected on 3 business days' notice.
Interest Periods; Maturity: Interest for any Eurodollar Loan shall be
-------------------------- determined for periods ("Interest Periods") of
----------------
one, two, three or six months (as selected by the
Borrower). The maturity of any Money Market Loan
shall be as offered by the Lender and accepted by
the Borrower at the time such loan is made.
Interest Payment Dates: In the case of the Loan bearing interest based
---------------------- upon the Base Rate ("Base Rate Loan"), quarterly
--------------
in arrears.
<PAGE>
In the case of the Loan bearing interest based
upon the Eurodollar Rate ("Eurodollar Loan"), on
---------------
the last day of each relevant interest period and,
in the case of any interest period longer than
three months, on each successive date three months
after the first day of such Interest Period.
In the case of the Loan bearing interest upon a
Money Market Rate ("Money Market Loan"), on the
-----------------
maturity date therefor.
Default Rate: At any time when the Borrower is in default in the
------------ payment of any amount due under the Credit
Documentation, the principal of the Loan shall
bear interest at 2% above the rate otherwise
applicable thereto. Overdue interest, fees and
other amounts shall bear interest at 2% above the
rate applicable to a Base Rate Loan.
Rate and Fee Basis: All per annum rates shall be calculated on the
------------------ basis of a year of 360 days (or 365/366 days, in
the case of a Base Rate Loan the interest rate
payable on which is then based on the Prime Rate)
for actual days elapsed.
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<PAGE>
SUPPLEMENT TO OFFER TO PURCHASE DATED NOVEMBER 2, 1998
CITIZENS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
ALLMERICA FINANCIAL CORPORATION
HAS INCREASED ITS OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
CITIZENS CORPORATION
TO
$33.25 NET PER SHARE
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THIS OFFER AND YOUR RIGHT TO WITHDRAW YOUR TENDER WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 2, 1998, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
Citizens Acquisition Corporation, a subsidiary of Allmerica Financial
Corporation, is offering to purchase all of the outstanding shares of common
stock of Citizens Corporation that Allmerica Financial Corporation or its
subsidiaries do not already own.
If you desire to tender all or any portion of your shares, you should
either:
. request your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you, or
. complete and sign the enclosed Letter of Transmittal, and mail or deliver
it, together with any other required documents, to the Depositary and
tender your shares to the Depositary by either:
-- delivering your share certificates with the Letter of Transmittal, or
-- arranging for your shares to be transferred by book-entry to the
Depositary's account at DTC, as described on page 22 of the Offer
to Purchase.
If your shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee (in "street name") you must contact such
person to tender your shares.
You may direct any questions and requests for assistance to the Information
Agent or the Dealer Managers at their addresses and telephone numbers shown on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
THIS OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THIS OFFER A NUMBER OF
SHARES OF COMMON STOCK OF CITIZENS CORPORATION WHICH, WHEN ADDED TO THE SHARES
ALREADY OWNED BY ALLMERICA FINANCIAL CORPORATION OR ITS SUBSIDIARIES,
CONSTITUTES AT LEAST 90% OF THE TOTAL SHARES OF COMMON STOCK OF CITIZENS
CORPORATION OUTSTANDING. SEE "THE OFFER--CONDITIONS OF THE OFFER."
If you desire to tender your shares but cannot before the offer expires
because:
. your certificates are not immediately available,
. you are unable to deliver all of the documents required by the Letter of
Transmittal prior to the expiration of the offer, or
. you cannot complete the procedure for book-entry transfer on a timely
basis,
then you may tender your shares by following the procedures for guaranteed
delivery as described on pages 22-23 of the Offer to Purchase.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
----------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
----------------
THE DATE OF THIS SUPPLEMENT IS NOVEMBER 17, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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INTRODUCTION................................................................ 3
SPECIAL FACTORS............................................................. 3
Background................................................................ 3
Fairness of the Transaction............................................... 4
Certain Litigation........................................................ 6
THE AMENDED OFFER........................................................... 6
Amended Terms of the Offer................................................ 6
Procedure for Tendering Shares............................................ 7
Price Range of Shares; Dividends.......................................... 8
Selected Financial Information of AFC..................................... 8
Selected Financial Information of Citizens................................ 10
Source and Amount of Funds................................................ 11
Miscellaneous............................................................. 11
</TABLE>
2
<PAGE>
TO THE HOLDERS OF COMMON STOCK
OF CITIZENS CORPORATION:
INTRODUCTION
The following information amends and supplements the Offer to Purchase dated
November 2, 1998 (the "Offer to Purchase") of Citizens Acquisition Corporation
(the "Purchaser"), a Delaware corporation and wholly owned subsidiary of
Allmerica Financial Corporation, a Delaware corporation ("AFC"). The Purchaser
has increased the price at which it is offering to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Citizens
Corporation, a Delaware corporation (the "Company"), that AFC and its
subsidiaries do not already own, from $29.00 per Share to $33.25 per Share (as
so amended, the "Offer Price"), net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, this Supplement and in the Letter of Transmittal and the revised
Letter of Transmittal (which, together with any amendments or supplements
hereto or thereto, collectively constitute the "Offer").
Except as otherwise set forth in this Supplement or the revised Letter of
Transmittal, the terms and conditions previously set forth in the Offer to
Purchase and the related Letter of Transmittal remain applicable in all
respects to the Offer and this Supplement should be read in conjunction with
the Offer to Purchase. Capitalized terms used herein and otherwise not defined
are used as defined in the Offer to Purchase. Procedures for tendering Shares
are set forth under the headings "The Offer--Procedures for Tendering Shares"
in the Offer to Purchase and under the heading "The Amended Offer--Procedures
for Tendering Shares" in this Supplement.
The Citizens Special Committee on behalf of Citizens has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
with the Commission recommending that the Unaffiliated Stockholders accept the
Offer and tender their shares. In arriving at its recommendation, the Citizens
Special Committee indicates that it considered, among other factors, the
opinion of Merrill Lynch & Co. ("Merrill Lynch"), the independent financial
advisor to the Citizens Special Committee, to the effect that the Offer Price
of $33.25 per Share is fair to the Unaffiliated Stockholders from a financial
point of view.
SPECIAL FACTORS
BACKGROUND
Following the commencement of the Offer, the Citizens Special Committee
selected Merrill Lynch as its independent financial advisor and Cleary,
Gottlieb, Steen & Hamilton ("Cleary Gottlieb") as its legal counsel.
On November 8, 1998, a representative of Merrill Lynch contacted AFC
management to communicate the view of the Citizens Special Committee that the
original $29.00 offer price was not fair to the Unaffiliated Stockholders.
Merrill Lynch also communicated the Citizens Special Committee's request that
the Offer be conditioned on the tender of a majority of the shares held by the
Unaffiliated Stockholders. AFC indicated that in light of ongoing negotiations
with the Citizens Special Committee it was unwilling at the time to condition
the Offer on the tender of a majority of the shares held by the Unaffiliated
Stockholders.
On November 9, November 10 and November 11, 1998, representatives of Merrill
Lynch, Goldman Sachs and AFC exchanged information and reviewed and discussed
certain of their respective valuation analyses and underlying assumptions. On
November 11, 1998, members of AFC management and representatives of Goldman
Sachs met to review the status of negotiations and discuss how best to proceed.
AFC instructed Goldman Sachs to communicate that AFC would be
3
<PAGE>
willing to consider increasing the Offer to $30.25 per Share if the Citizens
Special Committee was prepared to find that such price was fair to the
Unaffiliated Stockholders.
On November 12, 1998, Merrill Lynch informed Goldman Sachs that the Citizens
Special Committee was of the view that if an offer of $30.25 per Share were to
be made, it would be unfair to the Unaffiliated Stockholders. On November 13,
1998, AFC management met and again reviewed the valuation information that was
previously provided by Goldman Sachs to the AFC Board on October 27, 1998, as
well as the views regarding the valuation of Citizens that Merrill Lynch had
expressed during negotiations. AFC management instructed Goldman Sachs to
indicate to Merrill Lynch that AFC would consider raising the Offer Price to
$32.00 per Share, but only if the Citizens Special Committee would be in a
position to make a determination that such price was fair to the Unaffiliated
Stockholders.
On November 14, 1998, Goldman Sachs presented AFC's proposal to Merrill
Lynch. Later on November 14, 1998, Merrill Lynch communicated to Goldman Sachs
that the Citizens Special Committee indicated that it would find a $32.00 offer
price, if offered, to be inadequate.
Throughout November 15 and November 16, 1998, the advisors for the Citizens
Special Committee and AFC continued to discuss the terms of the Offer. AFC
reviewed the substance of these discussions with its advisors and considered
the existence of the lawsuits filed by certain of the Unaffiliated
Stockholders. On November 16, 1998, these discussions and considerations
resulted in an agreement between the Citizens Special Committee and AFC and the
Purchaser pursuant to which AFC and the Purchaser agreed to amend the Offer to
increase the Offer Price to $33.25 per Share and the Citizens Special Committee
agreed to recommend acceptance of the Offer, as so amended, to the Unaffiliated
Stockholders.
Later on November 16, 1998, AFC and the Citizens Special Committe on behalf
of Citizens issued a joint press release amending the Offer and announcing the
Citizens Special Committee's agreement to recommend the Offer as so amended to
the Unaffiliated Stockholders.
FAIRNESS OF THE TRANSACTION
AFC and the Purchaser believe that the Transaction, including the Offer Price
and the Merger Price, is fair to the Unaffiliated Stockholders. In making its
determination, AFC and the Purchaser considered a number of factors. In
particular, AFC and the Purchaser considered the arms-length, good faith
negotiations between AFC and the Citizens Special Committee. The fact that
Merrill Lynch was prepared to issue a fairness opinion to the effect that the
$33.25 per Share Offer Price is fair to the Unaffiliated Stockholders from a
financial point of view, that the Citizens Special Committee indicated it would
find that the Offer is fair to and in the best interests of the Unaffiliated
Stockholders, and that the Citizens Special Committee unanimously agreed to
recommend that the Unaffiliated Stockholders accept the Offer. The other
factors considered by AFC and the Purchaser in determining that the Offer is
fair included the following:
. The current and historical trading prices of the Shares and the fact that
the $33.25 per Share price to be paid in the Offer and the Merger
represents a premium of approximately 20.6% over the closing price of the
Shares on October 26, 1998, the last trading day before the public
announcement of the Transaction (as reported on the NYSE Composite Tape)
and a premium of 22.4% and 24.4% over the average of the closing prices
of the Shares for the 30 and 60 day periods, respectively, immediately
prior to such public announcement; the fact that while the high closing
sales prices of Citizens' common stock for the first and second quarters
of 1998 were $34 and $34 5/8, respectively, and were in excess of the
Offer Price, the average closing sales prices of Citizens' common stock
for the first and second quarters of 1998 were $30.42 and $32.47,
respectively.
4
<PAGE>
. The information and analyses previously presented by Goldman Sachs, AFC's
financial advisor, to the AFC Board on October 27, 1998, including
Goldman Sachs' historical stock trading analysis, selected companies
analysis, various discounted cash flow analyses and selected transaction
analysis. See "Financial Analysis by AFC's Financial Advisor" in the
Offer to Purchase.
. That the Offer Price and the Merger Price represent a premium of
approximately 26.9% over the book value per Share of $26.21 as of June
30, 1998 and a premium of approximately 27% over the book value per Share
of $26.11 as of September 30, 1998.
. That the Offer Price and the Merger Price represent a premium of
approximately 22.9% over the most recent price paid by Citizens for its
purchase of Shares. See "Transactions Concerning the Shares" in the Offer
to Purchase.
. That the terms of the Transaction, including the structural features of
the Offer which provide for a prompt cash tender offer for all
outstanding Shares held by the Unaffiliated Stockholders to be followed,
if certain conditions are satisfied, by a merger for the same
consideration, enable the Unaffiliated Stockholders to obtain the
benefits of the Transaction in exchange for their Shares at the earliest
possible time.
. That while the consummation of the Offer is not conditioned on the tender
of a majority of the Shares held by the Unaffiliated Stockholders, (i)
AFC negotiated and came to an agreement with the independent Citizens
Special Committee, (ii) the Citizens Special Committee determined that
the Offer is fair to the Unaffiliated Stockholders and (iii) the Citizens
Special Committee obtained an opinion of its independent financial
advisor, Merrill Lynch, that the Offer Price is fair to the Unaffiliated
Stockholders from a financial point of view.
. That the Transaction structure permits each Unaffiliated Stockholder to
decide whether or not to tender their Shares pursuant to the Offer; that
the Transaction structure also provided the Unaffiliated Stockholders the
opportunity to discuss their views regarding the Offer with the Citizens
Special Committee.
. That the Shares have generally had low trading volume and the Offer will
provide holders with the opportunity for liquidity, without the
transaction costs associated with open-market sales.
. AFC's knowledge of the business, assets, operating results and prospects
of Citizens, the risks involved in achieving those prospects and the
general condition, outlook and trends of the property and casualty
industry; the projections of Citizens management for the year ending
December 31, 1998, 1999 and 2000 which were utilized by Goldman Sachs in
their various analyses of the valuation of Citizens. See "Certain
Projections for Citizens" in the Offer to Purchase.
. That the Unaffiliated Stockholders would not have the opportunity to
participate in any future earnings of Citizens, but that they would
receive a fair price for their Shares.
. The fact that the plaintiffs in the shareholder litigation brought in
connection with the Offer had indicated that the payment of the increased
Offer Price of $33.25 was sufficient to settle such lawsuits. See
"Certain Litigation."
. That AFC has no present intention of selling its Shares to a third party
and no third party has made an offer for the Shares.
. That the Unaffiliated Stockholders may exercise rights of appraisal under
the DGCL in connection with the Merger.
AFC and the Purchaser did not find it practicable to, and therefore did not,
quantify or otherwise assign relative weights to the individual factors
considered in reaching their conclusion as to fairness. Furthermore, while AFC
and the Purchaser considered the positive and negative implications of each of
the foregoing factors, on balance, AFC and the Purchaser viewed each of these
factors favorably.
5
<PAGE>
AFC and the Purchaser determined the liquidation value of Citizens to be less
than the Offer Price and given that AFC had no intention of liquidating
Citizens, AFC and the Purchaser did not find the liquidation value of Citizens
to be material to the determination of the Offer Price.
AFC and the Purchaser determined the initial Offer Price after considering
many factors, including the current and historical trading prices of the
Shares, the information and analyses presented by Goldman Sachs and the premium
over book value represented by the initial Offer. The initial Offer Price was
determined without negotiations with or input by Citizens or the Citizens
Special Committee. The $33.25 Offer Price was determined through extensive
arms-length negotiations between AFC and the Citizens Special Committee. In
determining to seek to acquire the Shares at this time, AFC and the Purchaser
considered the initiatives of the new senior management of AFC's property and
casualty business to further integrate AFC's various property and casualty
businesses, which it believed could be better accomplished with Citizens as a
wholly owned subisidary.
In considering the procedural fairness of the transaction to the Unaffiliated
Shareholders, AFC evaluated seeking to reach an agreement with a special
committee of the Citizens Board prior to commencing the Offer. However, AFC
decided to first announce promptly its Offer, in order to allow the
Unaffiliated Stockholders to independently assess the merit of the Offer, and
then negotiate with the Special Committee on behalf of the Unaffiliated
Stockholders. AFC believed that this process would provide the Unaffiliated
Stockholders with the most information about the Offer, as well as the
opportunity to communicate their views directly to the Citizens Special
Committee, while still affording them the protection offered by negotiations
with the Citizens Special Committee. The AFC Board did not consider any
transaction structure other than a tender offer as a means of acquiring the
Shares.
Citizens has filed a Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") with the Commission recommending acceptance of AFC's
amended Offer of $33.25.
CERTAIN LITIGATION
Since the filing by AFC and the Purchaser of the Schedule 14D-1 on November
2, 1998, an additional lawsuit has been commenced by an Unaffiliated
Stockholder in the Delaware Court of Chancery; Hunter v. O'Brien, et al, Civil
Action No. 16772. On November 16, 1998, the parties to each of the Delaware
actions described in the Offer to Purchase and the parties to the action
described above (the "Actions") executed an Memorandum of Understanding (an
"MOU") memorializing an agreement-in-principle to settle such Actions. Under
the terms of the MOU, the parties to the Actions have agreed to use their best
efforts to execute and present a formal Stipulation of Settlement to the
Delaware Chancery Court as soon as practicable. In the event that the Delaware
Chancery Court approves the proposed settlement, it is anticipated that the
Delaware Actions will be dismissed with prejudice as to the individual
plaintiffs and the class of Unaffiliated Stockholders. The consideration for
the plaintiffs' agreement to such settlement is the right of such plaintiffs to
receive, along with each other Unaffiliated Shareholder, the Offer Price (the
amount of which had been increased by AFC and the Purchaser during negotiations
with the Special Committee from the Offer Price initially proposed by AFC at
the time the Actions were instituted).
THE AMENDED OFFER
AMENDED TERMS OF THE OFFER
The price to be paid for Shares purchased pursuant to the Offer has been
increased from $29.00 to $33.25 per Share, net to the seller in cash, without
interest thereon. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), after the Expiration Date, Purchaser will
promptly accept for payment and will pay for all Shares validly tendered prior
to the Expiration Date and not
6
<PAGE>
properly withdrawn in accordance with the section entitled "The Tender Offer--
Withdrawal Rights" of the Offer to Purchase. All stockholders whose Shares are
tendered and purchased pursuant to the Offer (including those Shares tendered
prior to the date hereof) will receive the increased price.
THE EXPIRATION DATE OF THE OFFER HAS NOT BEEN EXTENDED AND THE OFFER WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 2, 1998,
unless and until Purchaser extends the period of time during which the Offer is
open, in which event the term "Expiration Date" shall refer to the latest time
and date at which the Offer, as so extended by Purchaser, shall expire. Shares
tendered pursuant to the Offer may be withdrawn in the manner set forth in the
section entitled "The Tender Offer--Withdrawal Rights" of the Offer to Purchase
at any time unless theretofore accepted for payment as provided in the Offer.
In addition to the Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, the Purchaser shall not be required to accept for
payment, purchase or pay for any tendered Shares, and may terminate the Offer
as to any Shares not then paid for, if at any time on or prior to the
Expiration Date, any one or more of the events described in the Offer to
Purchase under "The Offer--Conditions to Offer" shall occur.
PROCEDURE FOR TENDERING SHARES
Tendering stockholders may continue to use the original BLUE Letter of
Transmittal previously circulated with the Offer to Purchase or may use the
revised GREEN Letter of Transmittal circulated with this Supplement. Although
the BLUE Letter of Transmittal previously circulated with the Offer to Purchase
refers only to the Offer to Purchase, stockholders using such document to
tender their Shares will nevertheless receive the increased Offer price of
$33.25 per Share for each Share validly tendered (and not properly withdrawn)
and accepted for payment pursuant to the Offer, subject to the conditions of
the Offer. Tendering stockholders may continue to use the YELLOW Notice of
Guaranteed Delivery previously circulated with the Offer to Purchase.
STOCKHOLDERS WHO PREVIOUSLY TENDERED THEIR SHARES PURSUANT TO THE OFFER ARE
NOT REQUIRED TO TAKE ANY FURTHER ACTION IN ORDER TO RECEIVE THE INCREASED PRICE
OF $33.25 PER SHARE, EXCEPT AS MAY BE REQUIRED BY THE PROCEDURE FOR GUARANTEED
DELIVERY IF SUCH PROCEDURE WAS UTILIZED.
See the section entitled "The Tender Offer--Withdrawal Rights" of the Offer
to Purchase for the procedures for withdrawing Shares tendered pursuant to the
Offer.
7
<PAGE>
PRICE RANGE OF SHARES; DIVIDENDS
The common stock of Citizens is traded on the New York Stock Exchange under
the symbol "CZC." The following table sets forth, for the fiscal quarters
indicated, the high and low closing sales prices per Share as reported on the
NYSE Composite Tape and the dividends per Share declared.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
--------- --------- ---------
<S> <C> <C> <C>
1996
First Quarter................................... $20 1/8 $18 1/2 $0.05
Second Quarter.................................. $19 5/8 $18 $0.05
Third Quarter................................... $22 3/8 $18 1/2 $0.05
Fourth Quarter.................................. $22 3/4 $20 1/8 $0.05
1997
First Quarter................................... $25 1/8 $22 $0.05
Second Quarter.................................. $27 13/16 $23 7/8 $0.05
Third Quarter................................... $30 7/16 $27 13/16 $0.05
Fourth Quarter.................................. $31 1/16 $27 13/16 $0.05
1998
First Quarter................................... $34 $26 11/16 $0.05
Second Quarter.................................. $34 5/8 $30 9/16 $0.05
Third Quarter................................... $31 7/16 $23 7/8 $0.05
Fourth Quarter (through November 16)............ $31 $25 7/8 $0.05
</TABLE>
On October 26, 1998, the last full trading day preceding public announcement
of the Offer, the closing price per share of Citizens common stock on the NYSE
Composite Tape was $27 9/16. November 13, 1998, the last full trading day prior
to the announcement of the increased Offer Price, the closing price per share
of Citizens common stock on the NYSE Composite Tape was $30 3/8. November 16,
1998, the most recent practicable date prior to the printing of this
Supplement, the price per share for the last trade of Citizens common stock
before trading of Citizens common stock was halted (prior to the issuance of
the press release announcing the increased Offer Price) was $30 7/16.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES
PRIOR TO DECIDING WHETHER TO TENDER IN RESPONSE TO THE OFFER.
SELECTED FINANCIAL INFORMATION OF AFC
Set forth below is certain consolidated financial information with respect to
AFC and its subsidiaries excerpted from the information contained in the AFC
Annual Report on Form 10-K (the "AFC 10-K") and the AFC Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 (the "AFC 10-Q"). More
comprehensive financial information is included in the AFC 10-K and such AFC
10-Q and other documents filed by AFC with the Commission, and the following
summary is qualified in its entirety by reference to such information. The AFC
10-K and the AFC 10-Q and such other documents are available for inspection and
copies thereof should be obtainable in the manner set forth below under "--
Available Information." Certain prior year amounts have been reclassified to
conform to the current year presentation.
8
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF ALLMERICA FINANCIAL CORPORATION
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED AT OR FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- -----------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues.................... $ 2,564.2 $ 2,543.1 $ 3,395.6 $ 3,285.1 $ 3,263.9
--------- --------- --------- --------- ---------
Income before extraordinary
item....................... $ 135.3 $ 114.3 $ 209.2 $ 181.9 $ 146.0
Extraordinary item-
demutualization
expenses(1)................ -- -- -- -- (12.1)
--------- --------- --------- --------- ---------
Net income.................. $ 135.3 $ 114.3 $ 209.2 $ 181.9 $ 133.9
========= ========= ========= ========= =========
Net income per share
(basic)(2)................. $ 2.26 $ 2.16 $ 3.83 $ 3.63 $ 2.61
========= ========= ========= ========= =========
Net income per share
(diluted)(2)............... $ 2.24 $ 2.16 $ 3.82 $ 3.63 $ 2.61
========= ========= ========= ========= =========
Adjusted Net Income(3)...... $ 149.3 $ 125.3 $ 181.0 $ 137.9 $ 116.4
========= ========= ========= ========= =========
BALANCE SHEET DATA (AT
PERIOD END):
Total assets................ $25,244.6 $21,967.2 $22,549.0 $18,970.3 $17,757.7
Long-term debt.............. 199.5 202.1 202.1 202.2 202.3
Total liabilities........... 22,310.6 19,257.6 19,714.8 16,461.6 15,425.0
Minority interest:
Mandatorily redeemable pre-
ferred securities of a
subsidiary trust holding
solely junior subordinated
debentures of AFC(4)...... 300.0 300.0 300.0 -- --
Common stock(5)............ 153.7 146.2 152.9 784.0 758.5
--------- --------- --------- --------- ---------
453.7 446.2 452.9 784.0 758.5
Equity...................... 2,480.3 2,263.4 2,381.3 1,724.7 1,574.2
</TABLE>
- --------
(1) Demutualization expenses relate to costs associated with conversion from a
mutual life insurance company to a stock life insurance company. The
demutualization resulted in the issuance of 37.5 million shares of AFC
common stock. Concurrent with the demutualization was an initial public
offering which resulted in issuance of an additional 12.6 million shares
of AFC common stock. The demutualization and initial public offering
occurred during the quarter ended December 31, 1995.
(2) Net income per share for the nine months ended September 30, 1998 and
1997, and for the years ended December 31, 1997 and 1996 are based on a
weighted average of the number of shares outstanding for each period
presented. The net income per share for the year ended December 31, 1995
is unaudited and is pro forma based on a weighted average of the number of
shares that would have been outstanding for the year had the
demutualization transaction and the initial public offering of AFC Common
Stock occurred as of January 1, 1995, and does not represent a projection
or forecast of AFC's consolidated results of operations for any future
period.
All earnings per share amounts for all periods presented have been prepared
in conformity with Statement of Financial Accounting Standards No. 128,
Earnings Per Share. The adoption of the aforementioned standard did not
have a material effect on previously reported earnings per share. The
diluted weighted average shares outstanding applicable to AFC Common Stock
were 60.5 million and 53.0 million for the nine months ended September 30,
1998 and 1997, respectively, and 54.8 million, 50.1 million and 50.1
million for the years ended December 31, 1997, 1996 and 1995, respectively.
The basic weighted average shares outstanding for the nine months ended
September 30, 1998 and 1997 were 60.0 million and 52.9 million,
respectively, and 54.7 million, 50.1 million, and 50.1 million for the
years ended December 31, 1997, 1996 and 1995, respectively.
(3) Adjusted net income represents net income adjusted to eliminate certain
items which management believes are not indicative of overall operating
trends, including net realized gains and losses on the sales of
investments, net gains and losses on disposals of businesses,
extraordinary items, differential earnings tax and certain other items.
While these items may be significant components in understanding and
assessing AFC's financial performance, management believes adjusted net
income enhances an investor's understanding of AFC's results of operations
by highlighting net income attributable to the normal, recurring
operations of the business. However, adjusted net income should not be
construed as a substitute for net income determined in accordance with
generally accepted accounting principles.
9
<PAGE>
(4) In February 1997, AFC Capital Trust (the "Trust"), a subsidiary business
trust of AFC, issued $300.0 million Series A Capital Securities, which pay
cumulative dividends at a rate of 8.207% semiannually. The Trust exists for
the sole purpose of issuing the Capital Securities and investing the
proceeds thereof in an equivalent amount of 8.207% Junior Subordinated
Deferrable Interest Debentures due 2027 of AFC. Through certain guarantees,
the Subordinated Debentures and the terms of related agreements, AFC has
irrevocably and unconditionally guaranteed the obligations of the Trust
under the Capital Securities.
(5) AFC's interest in APY, through its wholly owned subsidiary SMA Financial
Corp., was represented by ownership of 59.5% and 58.3% at December 31, 1996
and December 31, 1995, respectively. Subsequent to the merger of AFC and
APY on July 16, 1997, minority interest reflects AFC's interest in Citizens
Corporation of 82.5% at September 30, 1997 and December 31, 1997, and 83.2%
at September 30, 1998.
SELECTED FINANCIAL INFORMATION OF CITIZENS
Set forth below is certain selected consolidated financial information with
respect to Citizens and its subsidiaries excerpted from the information
contained in the Citizens' Annual Report on Form 10- K (the "Citizens 10-K")
and Citizens' Quarterly Report on Form 10-Q for the quarter ended September 30,
1998. More comprehensive financial information is included in the Citizens' 10-
K and the Citizens' 10-Q and other documents filed by Citizens with the
Commission, and the following summary is qualified in its entirety by reference
to such information. The Citizens' 10-K and the Citizens' 10-Q and such other
documents are available for inspection and copies thereof should be obtainable
in the manner set forth below under "--Available Information."
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF CITIZENS CORPORATION
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED AT OR FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues................ $ 769.5 $ 741.5 $ 992.4 $ 945.6 $ 906.5
=========== =========== =========== =========== ===========
Net income.............. $ 65.0 $ 62.3 $ 94.2 $ 84.1 $ 74.9
Dividends on Series A
preferred stock....... -- -- -- -- (2.0)
----------- ----------- ----------- ----------- -----------
Net income available to
common shareholders.... $ 65.0 $ 62.3 $ 94.2 $ 84.1 $ 72.9
=========== =========== =========== =========== ===========
Per common share data
(basic and diluted)
Net income available to
common
shareholders(1)....... $ 1.85 $ 1.77 $ 2.67 $ 2.37 $ 2.02
=========== =========== =========== =========== ===========
Adjusted Net Income(2).. $ 43.6 $ 45.7 $ 76.9 $ 75.1 $ 72.5
=========== =========== =========== =========== ===========
BALANCE SHEET DATA (AT
PERIOD END):
Total assets............ $ 2,633.3 $ 2,601.5 $ 2,605.3 $ 2,503.0 $ 2,470.8
Total liabilities....... 1,719.7 1,766.9 1,732.4 1,748.5 1,788.0
Equity.................. 913.6 834.6 872.9 754.5 682.8
ADDITIONAL DATA:
Book value per
share(1)............... $ 26.11 $ 23.64 $ 24.75 $ 21.39 $ 19.04
Ratio of earnings to
fixed charges(3)....... 80.2x 77.9x 63.5x 56.5x 25.3x
Statutory combined
ratios(4)
Citizens............... 103.5 103.5 101.1 100.4 98.6
Property and casualty
industry.............. -- 101.1 101.8 105.8 106.5
Cash dividends declared
per share.............. $ 0.15 $ 0.15 $ 0.20 $ 0.20 $ 0.20
</TABLE>
- --------
(1) All earnings per share amounts for all periods presented have been prepared
in conformity with Statement of Financial Accounting Standards No. 128,
Earnings Per Share. The adoption of the aforementioned standard had no
effect on previously reported earnings per share. The weighted average
shares outstanding applicable to Citizens Common Stock
10
<PAGE>
were 35.2 million and 35.3 million for the nine months ended September 30,
1998 and 1997, respectively. The weighted average shares outstanding
applicable to Citizens Common Stock were 35.3 million, 35.5 million and
36.1 million for the years ended December 31, 1997, 1996 and 1995,
respectively.
(2) Adjusted net income represents net income adjusted to eliminate certain
items which management believes are not indicative of overall operating
trends, including net realized gains and losses on the sales of
investments. While these items may be significant components in
understanding and assessing Citizens' financial performance, management
believes adjusted net income enhances an investor's understanding of
Citizens' results of operations by highlighting net income attributable to
the normal, recurring operations of the business. However, adjusted net
income should not be construed as a substitute for net income determined
in accordance with generally accepted accounting principles.
(3) For purposes of determining the historical ratios of earnings to fixed
charges, earnings consist of earnings before federal income taxes plus
fixed charges. Fixed charges consist of the portion of operating lease
rentals representative of the interest factor. In addition, fixed charges
in 1995 include dividends on preferred stock.
(4) The amounts presented reflect ratios after policyholder dividends.
Industry averages are from A.M. Best. Industry combined ratios after
policyholder dividends are not yet published for the nine months ended
September 30, 1998.
SOURCE AND AMOUNT OF FUNDS
If all outstanding Shares (other than shares owned by the Purchaser and
Shares subject to Options) are purchased pursuant to the Offer, the maximum
amount required by the Purchaser to purchase such Shares will be approximately
$195.9 million. In addition, the Purchaser and AFC expect to incur expenses of
approximately $2 million in connection with the Transaction.
AFC, the Purchaser and The Chase Manhattan Bank ("Chase") have entered into
a commitment letter which provides for a $200 million revolving line of credit
that expires in June 1999. Borrowings under the line of credit will be
unsecured and will bear interest at a rate per annum equal to, at AFC's
option, Chase's base rate or the eurodollar rate plus an applicable margin.
The commitment letter provides that the loan documentation relating to the
revolving line of credit will require AFC to provide Chase certain period
financial reports and comply with certain financial ratios. AFC expects to
enter into definitive documentation with respect to the revolving line of
credit on or prior to December 1, 1998. AFC expects to repay these borrowings
with cash from operations. AFC and the Purchaser intend to pay the purchase
price for the Shares and any related fees and expenses from borrowings under
the Chase line of credit, its working capital and other cash on hand. The
Offer is not conditioned upon the closing of the Chase credit facility or upon
AFC obtaining any other arrangements for the financing of the Offer.
MISCELLANEOUS
The Offer is being made to all holders of Shares, but is not being made in
any jurisdiction where the making of such would not be in compliance with
applicable law. If the Purchaser becomes aware of any state where the making
of the Offer is prohibited by applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after the good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) holders of Shares in such
jurisdiction. In those jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of the Purchaser by Goldman Sachs or one or
more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR AFC NOT CONTAINED HEREIN OR IN
THE OFFER TO PURCHASE AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
11
<PAGE>
Pursuant to Rules 13e-3 and 14d-1 of the General Rules and Regulations under
the Exchange Act, the Purchaser has filed a Schedule 13E-3 and a Schedule 14D-
1, together with exhibits in each case, furnishing additional information with
respect to the Offer and Merger. Such Schedule 13E-3, Schedule 14D-1 and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth with respect to
information concerning Citizens in "Available Information" in the Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
Citizens Acquisition Corporation
November 17, 1998
12
<PAGE>
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of Citizens or his
broker, dealer, commercial bank or other nominee to the Depositary at one of
its addresses set forth below.
The Depository is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand: By Overnight Courier: By Mail:
First Chicago Trust First Chicago Trust Company First Chicago Trust
Company of of New York Company
New York Tenders & Exchanges of New York
Tenders & Exchanges Suite 4680-CIT Tenders & Exchanges
c/o Securities Transfer 14 Wall Street, 8th Floor Suite 4660-CIT
and New York, NY 10005 P.O. Box 2569
Reporting Services Inc. Jersey City, NJ 07303-
100 William Street, 2569
Galleria
New York, NY 10038
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent at its telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or
trust company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road . Carlstadt, New Jersey 07072-2586
Banks and Brokers call (800) 346-7885
All others call Toll Free (888) 296-3503
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000 (Call Collect)
(800) 323-5678 (Toll Free)
<PAGE>
REVISED
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CITIZENS CORPORATION
AT
$33.25 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 2, 1998,
AS SUPPLEMENTED ON NOVEMBER 17, 1998
BY
CITIZENS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
ALLMERICA FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 2, 1998, UNLESS EXTENDED.
- ------------------------------------------------------------------------------
The Letter of Transmittal, certificates for Shares (as defined below) and
any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand: By Overnight Courier: By Mail:
First Chicago Trust Company First Chicago Trust First Chicago Trust
of New York Company Company
Tenders & Exchanges of New York of New York
c/o Securities Transfer and Tenders & Exchanges Tenders & Exchanges
Reporting Services Inc. Suite 4680-CIT Suite 4660-CIT
100 William Street, 14 Wall Street, 8th P.O. Box 2569
Galleria Floor Jersey City, NJ 07303-
New York, NY 10038 New York, NY 10005 2569
----------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined below) are to be forwarded herewith or if
delivery is to be made by book-entry transfer to the Depositary's account at
The Depository Trust Company ("DTC") (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in "THE OFFER--Procedures for Tendering
Shares" in the Offer to Purchase (as defined below) and "THE AMENDED OFFER--
Procedure for Tendering Shares" in the Supplement (as defined below).
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates (as
defined below) and all other documents required hereby to the Depositary prior
to the Expiration Date (as defined in "Terms of the Offer" in the Offer to
Purchase) or who cannot comply with the book-entry transfer procedures on a
timely basis must tender their Shares according to the guaranteed delivery
procedure set forth in
<PAGE>
"THE OFFER--Procedures for Tendering Shares" in the Offer to Purchase and "THE
AMENDED OFFER--Procedure for Tendering Shares" in the Supplement. See
Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ____________________________________________
Account Number: ___________________________________________________________
Transaction Code Number: __________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY SENT TO THE DEPOSITARY PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ___________________________________________
Window Ticket Number (if any): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Institution that Guaranteed Delivery: _____________________________
Account Number (if delivered by Book-Entry Transfer): _____________________
Transaction Code Number: __________________________________________________
<PAGE>
List below the Share Certificates to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers
and/or the number of Shares tendered should be listed on a separate signed
schedule and attached hereto.
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED OF SHARES
NUMBER(S)* BY CERTIFICATES* TENDERED**
-------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
Total Shares:
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
evidenced by each Share Certificate delivered to the Depositary are
being tendered hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Citizens Acquisition Corporation, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
Allmerica Financial Corporation, a Delaware corporation ("AFC"), the above-
described shares of common stock, par value $0.01 per share (the "Shares"), of
Citizens Corporation, a Delaware corporation ("Citizens"), at a price of
$33.25 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
November 2, 1998 (the "Offer to Purchase"), the Supplement thereto dated
November 17, 1998 (the "Supplement"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, as amended or supplemented from time
to time, together with the Offer to Purchase and the Supplement constitute the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or in part from time to time to AFC or one or
more direct or indirect wholly owned subsidiaries of AFC, the right to
purchase Shares tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all of the
Shares that are being tendered hereby and all other Shares or other securities
or property, other than cash dividends, issued or issuable in respect thereof
on or after November 2, 1998 (such other Shares, securities or property other
than the Shares being referred to herein as the "Other Securities") and
irrevocably appoints the Depositary the true and lawful agent and attorney-in-
fact of the undersigned with respect to such Shares and all Other Securities
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver Share Certificates
evidencing such Shares and all Other Securities, or transfer ownership of such
Shares and all Other Securities on the account books maintained by the Book-
Entry Transfer Facility, together, in either case, with all accompanying
evidences of transfer and authenticity, to or
<PAGE>
upon the order of the Purchaser, upon receipt by the Depositary, as the
undersigned's agent, of the purchase price (adjusted, if appropriate, as
provided in the Offer to Purchase and the Supplement), (b) present such Shares
and all Other Securities for transfer on the books of Citizens, and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares and all Other Securities, all in accordance with the terms of
the Offer.
The undersigned hereby irrevocably appoints AFC, the Purchaser, and each of
them or any other designees of AFC or the Purchaser, the attorneys and proxies
of the undersigned, each with full power of substitution, to the full extent
of the undersigned's rights, including to exercise such voting and other
rights as each such attorney and proxy or his (or her) substitute shall, in
his (or her) sole discretion, deem proper, and otherwise act (including
pursuant to written consent), with respect to all of the Shares tendered
hereby which have been accepted for payment by the Purchaser (and any and all
Other Securities issued or issuable in respect thereof on or after November 2,
1998), which the undersigned is entitled to vote at any meeting of
stockholders of Citizens (whether annual or special and whether or not an
adjourned meeting), or written consent in lieu of such meeting, or otherwise.
This proxy and power of attorney is coupled with an interest in the Shares
tendered hereby and is irrevocable and is granted in consideration of, and is
effective upon, the acceptance for payment of such Shares by the Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior proxies and consents granted by the
undersigned with respect to such Shares (and all Shares and other securities
issued in Other Securities in respect of such Shares), and no subsequent proxy
or power of attorney or written consent shall be given (and if given or
executed, shall be deemed not to be effective) with respect thereto by the
undersigned. The Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser is able to exercise full
voting and other rights with respect to such Shares (including voting at any
meeting of stockholders then scheduled or acting by written consent without a
meeting).
By accepting the Offer through the tender of Shares pursuant to the Offer,
the undersigned hereby agrees to release, and hereby releases, all claims with
respect to and in respect of the Shares other than the right to receive
payment for such tendered shares and that, upon payment for the Shares, the
undersigned waives any right to attack, and will be barred from thereafter
attacking, in any legal proceeding the fairness of the consideration paid in
the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Other Securities, and that when such Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that none of such Shares and Other Securities will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver any signature guarantees or additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Other
Securities. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Purchaser all Other Securities in
respect of the Shares tendered hereby, accompanied by appropriate
documentation of transfer, and pending such remittance or appropriate
assurance thereof the Purchaser shall be entitled to all rights and privileges
as owner of such Other Securities and may withhold the entire purchase price
or deduct from the purchase price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated
in the Offer to Purchase and the Supplement, this tender is irrevocable.
<PAGE>
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "THE OFFER--Procedures for Tendering Shares" in
the Offer to Purchase, "THE AMENDED OFFER--Procedure for Tendering Shares" in
the Supplement and in the instructions hereto will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Offer. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase and the Supplement, the
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated herein under "Special Payment Instructions," the
Undersigned authorizes the issuer to issue the check for the purchase price
and/or return any Share Certificates evidencing Shares not tendered or not
accepted for payment in the name(s) of the registered holder(s) appearing
under "Description of Shares Tendered." Similarly, unless otherwise indicated
under "Special Delivery Instructions," the Undersigned authorizes the issuer
to mail the check for the purchase price and/or return any Share Certificates
evidencing Shares not tendered or accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
Special Delivery Instructions and the Special Payment Instructions are
completed, the Undersigned authorizes the issuer to issue the check for the
purchase price and/or return any Share Certificates evidencing Shares not
purchased (together with accompanying documents as appropriate) in the name(s)
of, and deliver said check and/or return such Share Certificates to, the
person or persons so indicated. The undersigned recognizes that the Purchaser
has no obligation pursuant to the Special Payment Instructions to transfer any
Shares from the name of the registered holder(s) thereof if the Purchaser does
not accept for payment any of the Shares so tendered.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7) (INSTRUCTIONS 5 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or Share Shares purchased or Share
Certificates evidencing Shares Certificates evidencing Shares
not tendered or not purchased are not tendered or not purchased are
to be issued in the name of to be mailed to someone other
someone other than the than the undersigned, or to the
undersigned. undersigned at an address other
than that shown under
Issue "Description of Shares Tendered."
[_] Check and/or [_] Mail
Certificate(s)
[_] Check and/or [_]
Certificate(s)
To:
__________________________________ To:
NAME(S) (PLEASE PRINT
__________________________________ __________________________________
__________________________________ NAME(S) (PLEASE PRINT)
ADDRESS
__________________________________ __________________________________
(INCLUDE ZIP CODE)
__________________________________ __________________________________
(TAXPAYER IDENTIFICATION OR ADDRESS
SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9) __________________________________
(INCLUDE ZIP CODE)
<PAGE>
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or any other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5.)
PLEASE PRINT OR TYPE
Name(s) _____________________________________________________________________
-----------------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
Capacity (Full Title) _______________________________________________________
Address _____________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and
Telephone Number (Home) _____________________________________________________
Area Code and
Telephone Number (Business) _________________________________________________
Tax Identification or
Social Security Number ______________________________________________________
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ________________________________________________________
Name ________________________________________________________________________
(PLEASE PRINT OR TYPE)
Full Title __________________________________________________________________
Name of Firm ________________________________________________________________
Address _____________________________________________________________________
ZIP CODE
Area Code and
Telephone Number ____________________________________________________________
Dated: ____________________________ , 1998
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a participant in the Security Transfer Agents Medallion
Program or any other "eligible guarantor institution" as defined in Rule 17Ad-
15 under the Securities Exchange Act of 1934, as amended (each, an "Eligible
Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for the purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal or (ii) such Shares are tendered for the account of
an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders
either if Share Certificates are to be forwarded herewith or if a tender of
Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in "THE OFFER--Procedures for Tendering Shares" in the
Offer to Purchase and "THE AMENDED OFFER--Procedure for Tendering Shares" in
the Supplement. Share Certificates evidencing all physically tendered Shares,
or confirmation ("Book-Entry Confirmation") of any book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility of Shares
delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal, must be received by the Depositary, at one of
the addresses set forth herein prior to the Expiration Date (as defined in
"Terms of the Offer" of the Offer to Purchase). If Share Certificates are
forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who
cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot comply with the
book-entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth in "THE OFFER--
Procedures for Tendering Shares" of the Offer to Purchase and "THE AMENDED
OFFER--Procedure for Tendering Shares" in the Supplement. Pursuant to such
procedure, (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, must be received by the
Depositary prior to the Expiration Date and (iii) the Share Certificates
evidencing all physically tendered Shares (or Book-Entry Confirmation with
respect to such Shares), as well as a properly completed and duly executed
Letter of Transmittal with any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three (3) New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in
"THE OFFER--Procedures for Tendering Shares" in the Offer to Purchase and "THE
AMENDED OFFER--Procedure for Tendering Shares" in the Supplement.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE
SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal, waive any
right to receive any notice of the acceptance of their Shares for payment.
<PAGE>
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any Share Certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such case, new
Share Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Share Certificate(s) will be sent to the registered
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by Share Certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration,
enlargement or any change whatsoever. If any of the Shares tendered hereby are
held of record by two or more persons, all such persons must sign this Letter
of Transmittal.
If any tendered Shares are registered in different names on several Share
Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Share Certificates listed and transmitted hereby, no
endorsements of Share Certificates or separate stock powers are required
unless payment is to be made to or Share Certificates evidencing Shares not
tendered or purchased are to be issued in the name of a person other than the
registered holder(s), in which case the Share Certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on such Share Certificate(s). Signatures on such
certificates and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holder or holders appear on the Share Certificate(s).
Signatures on such Share Certificate(s) or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal or any Share Certificates or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or any person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority so to
act must be submitted.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if Share
Certificates evidencing Shares not tendered or purchased are to be registered
in the name of, any person other than the registered holder(s), or if Share
Certificates evidencing tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s) or
such other person) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER
OF TRANSMITTAL.
<PAGE>
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or if
such check or any such Share Certificate is to be sent and/or any Share
Certificates are to be returned to someone other than the signer above, or to
the signer above but at an address other than that shown in the box entitled
"Description of Shares Tendered" on the first page hereof, the appropriate
boxes on this Letter of Transmittal should be completed.
8. Request for Assistance or Additional Copies. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase, the Supplement,
this Letter of Transmittal and the Notice of Guaranteed Delivery may be
obtained from, the Information Agent or the Dealer Managers at the telephone
numbers and address set forth below. Stockholders may also contact their
broker, dealer, commercial bank or trust company.
9. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase and the Supplement, the Purchaser reserves the right in its sole
discretion to waive in whole or in part at any time or from time to time any
of the specified conditions of the Offer or any defect or irregularity in
tender with regard to any Shares tendered.
10. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's Social Security Number or Employer Identification
Number, on Substitute Form W-9, which is provided under "Important Tax
Information" below, and to certify, under penalties of perjury, whether he or
she is subject to backup withholding of federal income tax. If a tendering
stockholder is subject to backup withholding, he or she must cross out item
(2) of the Certification Box on Substitute Form W-9. Failure to provide the
information on Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price. If
the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he or she should
write "Applied For" in the space provided for the TIN in Part I, sign and date
the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of payments for surrendered Shares thereafter until a TIN is
provided to the Depositary.
11. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder of a Share
Certificate whose certificate(s) has been mutilated, lost, stolen or destroyed
should call the Transfer Agent at 1-800-317-4454.
IMPORTANT: THIS LETTER OF TRANSMITTAL PROPERLY COMPLETED AND DULY EXECUTED,
OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY DELIVERY, TOGETHER WITH
CERTIFICATES (OR 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 ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under federal tax law, a stockholder whose tendered Shares are accepted for
payment is required to provide the Depositary (as payor) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN or an adequate basis for
exemption, the stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such
stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding in an amount equal to 31% of the gross proceeds
resulting from the Offer.
Certain stockholders (including, among others, certain corporations and
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit an IRS Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN)
and that (1) the stockholder is exempt from backup withholding, (2) the
stockholder has not been notified by the Internal Revenue Service that he or
she is subject to backup withholding as a result of failure to report all
interest or dividends, or (3) the Internal Revenue Service has notified the
stockholder that he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the Shares. If
the Shares are in more than one name or are not 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. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
he or she should write "Applied For" in the space provided for the TIN in Part
I, sign and date the Substitute Form W-9 and sign and date the Certificate of
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I
and the Depositary is not provided with a TIN within 60 days, the Depositary
will withhold 31% of all payments of the purchase price until a TIN is
provided to the Depositary.
<PAGE>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
PART I--PLEASE PROVIDE YOUR Social Security or
TIN IN THE BOX AT RIGHT AND Employee Identification
CERTIFY BY SIGNING AND Number
DATING BELOW.
SUBSTITUTE NAME (Please Print)
FORM W-9 ____________________________ (If awaiting TIN
----------------------
DEPARTMENT OF ADDRESS write "applied for")
THE TREASURY ____________________________
INTERNAL
REVENUE
SERVICE
CITY STATE ZIP CODE
--------------------------------------------------------
PAYOR'S REQUEST FOR PART II--For Payees NOT subject to backup
TAXPAYER withholding, see the enclosed Guidelines for
IDENTIFICATION Certification of Taxpayer Identification Number on
NUMBER (TIN) AND Substitute Form W-9 and complete as instructed
CERTIFICATION therein.
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
1. The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
2. I am not subject to backup withholding because
either (a) I am exempt from backup withholding,
(b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to
backup withholding.
--------------------------------------------------------
CERTIFICATION INSTRUCTIONS--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 instructions in the
enclosed Guidelines.)
- -------------------------------------------------------------------------------
Signature: ____________________________ Dated: ______________________, 1998
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU
MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
PART I OF SUBSTITUTE FORM W-9.
<PAGE>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that 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 an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will
be withheld until I provide a number.
Signatures: ____________________________________ Dated: ___________________
<PAGE>
The Information Agent for the Offer is:
[LOGO OF CORPORATE INVESTOR COMMUNICATIONS, INC.]
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000 (Call Collect)
(800) 323-5678 (Toll Free)
