1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 2001
REGISTRATION NO. 333-58698
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
PRE-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
CITIZENS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------
COLORADO
(STATE OR OTHER JURISDICTION OF INCORPORATION)
84-0755371
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
400 EAST ANDERSON LANE, AUSTIN, TEXAS 78752
(512) 837-7100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------
MARK A. OLIVER, PRESIDENT
400 EAST ANDERSON LANE
AUSTIN, TEXAS 78752
(512) 837-7100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------
COPIES TO:
REID A. GODBOLT, ESQ.
JONES & KELLER, P.C.
WORLD TRADE CENTER
1625 BROADWAY, 16TH FLOOR
DENVER, COLORADO 80202
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2
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS
SOON AS POSSIBLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AS
DETERMINED BY MARKET CONDITIONS AND OTHER FACTORS.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. [X]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH
DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [_]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT OF 1933, PLEASE CHECK THE
FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE
EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [_]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE
462(c) UNDER THE SECURITIES ACT OF 1933, CHECK THE FOLLOWING BOX AND LIST THE
SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [_]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE
434, PLEASE CHECK THE FOLLOWING BOX. [_]
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<Table>
<Caption>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Title of each class of Proposed maximum Proposed Amount of
securities to be Amount to offering price maximum aggregate registration
registered be registered per share offering price fee
- ----------------------------------------------------------------------------------------------------------------------------
Class A Common Stock, 2,000,000(1)
No Par Value shares $ 6.75 $13,500,000(2) $3,375(3)
============================================================================================================================
</Table>
(1) Represents the number of shares of the Registrant's Class A Common
Stock expected to be sold under the Registrant's Stock Investment Plan.
(2) Estimated solely for purposes of calculating the registration fee and
computed in accordance with Rule 457(c) under the Securities Act of
1933 and based upon prices on the American Stock Exchange on April 10,
2001.
(3) Previously paid.
----------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
================================================================================
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PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 30, 2001
[CITIZENS, INC. LOGO] CITIZENS, INC.
STOCK INVESTMENT PLAN
CLASS A COMMON STOCK
NO PAR VALUE
This prospectus describes the Citizens, Inc. Stock Investment Plan,
under which existing and new investors may purchase and hold shares of our Class
A common stock. We expect to offer and sell up to 2,000,000 shares of our Class
A common stock under the plan. The shares will be purchased by the plan
administrator on the open market. We will not issue any shares in conjunction
with the plan.
Our Class A common stock is traded on the American Stock Exchange under
the ticker symbol "CIA." The closing price of our Class A common stock on August
27, 2001 was $9.65 per share.
INVESTING IN OUR CLASS A COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS WHICH WE REFERENCE ON PAGE 4.
WE SPONSOR THE PLAN, AND THE PLAN ADMINISTRATOR ADMINISTERS THE
SERVICES UNDER THE PLAN. THE SECURITIES HELD IN PLAN ACCOUNTS ON BEHALF OF
PARTICIPANTS ARE NOT SUBJECT TO PROTECTION UNDER THE SECURITIES INVESTOR
PROTECTION ACT OF 1970. YOU MUST MAKE INDEPENDENT INVESTMENT DECISIONS WITH
RESPECT TO YOUR PARTICIPATION IN THE PLAN BASED ON YOUR OWN JUDGMENT AND
RESEARCH.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS DETERMINED IF
THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PLAN ACCOUNTS ARE NOT SAVINGS ACCOUNTS, DEPOSIT ACCOUNTS OR OBLIGATIONS
OF A BANK. THUS, PLAN ACCOUNTS ARE NOT INSURED BY THE FDIC, SIPC OR ANY OTHER
GOVERNMENT AGENCY, AND MAY LOSE VALUE. THERE IS NO BANK GUARANTY OF YOUR PLAN
ACCOUNT OR THE SECURITIES IN YOUR ACCOUNT.
You should rely on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell shares of Class A common
stock pursuant to our plan only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of the shares.
The date of this prospectus is August , 2001.
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TABLE OF CONTENTS
<Table>
<Caption>
Page
----
INFORMATION ABOUT CITIZENS, INC.........................................................................................-1-
SUMMARY OF THE PLAN.....................................................................................................-1-
Purpose ......................................................................................................-1-
Participation--How to Join.....................................................................................-1-
Optional Cash Purchases........................................................................................-2-
Funds Fully Invested...........................................................................................-2-
Sale, Withdrawal or Transfer of Shares at Any Time.............................................................-2-
Rights of Holders of Class A Common Stock......................................................................-3-
Plan Administrator.............................................................................................-3-
RISK FACTORS............................................................................................................-4-
FORWARD-LOOKING STATEMENTS..............................................................................................-9-
TERMS AND CONDITIONS OF THE PLAN.......................................................................................-10-
Am I eligible to participate in the plan?.....................................................................-10-
What are my investment options?...............................................................................-11-
How are my shares purchased?..................................................................................-12-
How do I sell my shares out of the plan?......................................................................-12-
May I gift my shares out of the plan?.........................................................................-13-
How do I obtain my stock certificates?........................................................................-13-
What are the trading fees, taxes, fees and other expenses relating to participation in the plan?..............-13-
How is my investment tracked?.................................................................................-13-
How do I withdraw from participation in the plan?.............................................................-14-
What are some of the tax consequences of my participation in the plan?........................................-14-
OTHER PROVISIONS.......................................................................................................-15-
Plan modification or termination..............................................................................-15-
Suspension or termination.....................................................................................-15-
Limitation of liability.......................................................................................-15-
WHERE YOU CAN FIND MORE INFORMATION....................................................................................-15-
LEGAL OPINION..........................................................................................................-16-
EXPERTS ..............................................................................................................-17-
TRANSFER AGENT AND REGISTRAR...........................................................................................-17-
APPENDIX A
CITIZENS, INC. STOCK INVESTMENT PLAN...........................................................................A-1
</Table>
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INFORMATION ABOUT CITIZENS, INC.
We operate primarily as an insurance holding company. We were
incorporated under Colorado law in 1977. We are the parent holding company that
directly or indirectly owns 100% of three life insurance companies, a data
processing company, an aviation services company and a funeral home company.
Our principal executive office is located at 400 East Anderson Lane,
Austin, Texas 78752, and our telephone number there is (512) 837-7100.
SUMMARY OF THE PLAN
The following summary of our Stock Investment Plan includes all
material terms of the plan. However, it may omit certain information that may be
important to you. We have included a copy of the plan in this prospectus as
Appendix A.
You should carefully read this prospectus to find out more about the
plan. You must make any investment decision concerning your participation in the
plan based on your own judgment and research. Your participation in the plan is
entirely voluntary, and you may terminate your participation at any time. You
should keep this prospectus and all account statements for future reference. If
you have any questions about the plan, please contact the plan administrator, as
set forth below under "Plan Administrator."
WE HAVE NOT AUTHORIZED ANY OF OUR PERSONNEL TO ANSWER QUESTIONS OR
RESPOND TO INQUIRIES CONCERNING THE PLAN. YOU MUST INSTEAD CONTACT THE PLAN
ADMINISTRATOR.
PURPOSE
The purpose of the plan is to provide a convenient and economical
means:
o for new investors to make an initial investment in our Class A
common stock;
o for existing investors to purchase additional shares of our
Class A common stock;
o for the actual beneficial owners to have Class A common stock
registered on our records in their names. This is in contrast
to the common practice of registering the shares in the street
name a broker which holds the shares on behalf of an investor;
and
o for investors to have cash dividends on our Class A common
stock automatically reinvested in shares of the Class A common
stock, if we declare any dividends in the future.
PARTICIPATION--HOW TO JOIN
Almost everyone is eligible to enroll in the plan. We may offer the
plan to:
o owners of our insurance policies (issued by our subsidiaries);
o existing holders of Class A common stock;
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o our employees;
o members of our marketing force; or
o persons who are not members of any of the four preceding
groups but independently inquire about the plan. Neither the
plan administrator nor any of our representatives or agents
may solicit persons who are not members of the four preceding
groups to become participants in the plan.
Owners of our insurance policies may elect to have policy benefits,
including dividends, automatically invested in Class A common stock through the
plan. Likewise, our employees and members of our marketing force may elect to
have earned insurance sales commissions automatically invested in Class A common
stock through the plan.
Both persons who already own shares of our Class A common stock and
non-stockholders may enroll by making an initial purchase directly through the
plan. IN ADDITION, EXISTING STOCKHOLDERS CAN ENROLL BY TRANSFERRING SHARES THEY
ALREADY OWN INTO THE PLAN. EXISTING PARTICIPANTS IN THE PLAN CAN ALSO TRANSFER
SHARES THEY OWN INTO THEIR PLAN ACCOUNTS AT NO ADDITIONAL COST. Initial
purchasers must make an initial investment of at least $250. However, this
minimum investment requirement does not apply to persons who own one of our
insurance policies or members of our marketing force whose initial investment is
made through an assignment of policy benefits or commissions.
To receive a plan enrollment form or additional copies of this
prospectus, simply contact the plan administrator as set forth below under "Plan
Administrator."
OPTIONAL CASH PURCHASES
You may buy additional shares by investing a minimum of $25 at any one
time not to exceed $10,000 in any calendar month. You may pay for your optional
cash investments by check, pre-authorized deductions from your bank account or
money order.
FUNDS FULLY INVESTED
The plan administrator fully invests money paid to the plan in our
Class A common stock through the purchase of shares in the open market. The
price paid consists of the market price of the stock plus trading fees and
applicable taxes.
SALE, WITHDRAWAL OR TRANSFER OF SHARES AT ANY TIME
You may sell or withdraw any shares of Class A common stock credited to
your account, including any shares deposited into the plan. The plan
administrator will sell any shares which you desire to sell at the market price,
less a $15 fee payable to the plan administrator, a trading fee of $ .12 per
share, and applicable taxes. The plan administrator will mail a statement to you
for each month in which a transaction takes place. Additionally, you may
transfer or make gifts to others of our Class A common stock by contacting the
plan administrator.
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RIGHTS OF HOLDERS OF CLASS A COMMON STOCK
Upon purchase of shares through the plan, you will have all rights as a
holder of our Class A common stock as provided in our articles of incorporation
and bylaws and under the Colorado law governing business corporations. Under our
articles of incorporation, shares of two classes of common stock - Class A
common stock and Class B common stock - have been issued and are outstanding. As
of March 31, 2001, we had 24,417,118 shares of Class A common stock and 711,040
shares of Class B common stock outstanding.
The voting rights of our Class A common stock and Class B common stock
are equal in all respects except with regard to the election of our directors.
The holders of Class B Common Stock have the exclusive right to elect a simple
majority of the members of our board of directors, and the holders of the Class
A common stock have the exclusive right to elect the remaining directors.
Cumulative voting rights are not allowed in the election of directors. A
majority vote of all outstanding shares of the Class A and Class B common stock,
each voting separately as a class, would be required for approval of
extraordinary corporate transactions, such as our merger with another
corporation or the sale of substantially all of our assets. For other types of
actions, a majority vote of a quorum of shareholders at a meeting, represented
in person or by proxy, is necessary. Our articles of incorporation provide that
one-third of all votes entitled to be cast on a matter by the voting group
constitutes a quorum for voting purposes.
We have not, to date, declared or paid any cash dividends on any of our
common stock, and we have no present plans for doing so. However, if we were to
declare a cash dividend, the dividend per share on the Class A common stock
would be required to be twice the cash dividend per share on the Class B common
stock.
Our shareholders have no preemptive rights to purchase stock in
connection with an issuance of stock by us.
PLAN ADMINISTRATOR
Mellon Bank, N.A. will administer the plan and act as agent for the
participants. Mellon Bank, N.A. will purchase and hold shares of stock for plan
participants, keep records, send statements and perform other duties required by
the plan. Certain administrative support will be provided by Mellon Investor
Services, a registered transfer agent and affiliate of Mellon Bank, N.A.
You may contact the plan administrator as follows:
You may call Mellon Investor Services at 1-877-785-9659.
You may contact the plan administrator via the Internet at
www.melloninvestor.com.
You may write the plan administrator at the following address:
Mellon Investor Services
Investment Plan Services
P.O. Box 3338
South Hackensack, NJ 07606-1938
Please include your daytime telephone number.
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RISK FACTORS
An investment in our Class A common stock involves a high degree of
risk. Before you invest you should consider carefully the risks described below,
together with all of the other information in this prospectus.
YOUR INVESTMENT IN THE PLAN WILL BE SUBJECT TO PRICE RISKS IN CONNECTION WITH
THE TIMING OF THE PLAN'S PURCHASE AND SALE OF CLASS A COMMON STOCK ON YOUR
BEHALF.
You will not be able to control the specific timing or method of a
purchase or sale of shares on your behalf. As a result, you will be subject to
the risks of price fluctuations between the time you make an investment in the
plan or direct the plan to sell shares of stock and the time the purchase or
sale actually takes place. You will also be subject to potentially varying sale
or purchase costs. A purchase or sale of Class A common stock on your behalf
under the plan may take place on any day within five business days after you
make an investment or request a sale. You will have no control as to the
specific days on which this takes place. Your purchase or sale will be
aggregated with those of other plan participants. The number of shares purchased
for you in a purchase, or your sales proceeds in a sale, will be determined
based on the weighted average purchase or sales price for all shares which the
plan purchases or sells over the relevant time period. The plan administrator
may purchase or sell the shares in ordinary brokerage transactions or by other
means, but the particular type of transaction will be beyond your control.
A SUBSTANTIAL NUMBER OF SHARES OF CLASS A COMMON STOCK HAVE BEEN REGISTERED FOR
SALE BY EXISTING SHAREHOLDERS, WHICH COULD DEPRESS THE MARKET PRICE OF THE
STOCK.
Sales of significant amounts of shares of Class A common stock in the
public market could depress the price of the stock. Further, even without actual
sales, the prospect of the offer of significant amounts of shares into the
public market may depress the price of our Class A common stock. There is an
effective registration statement with the SEC permitting the public offer and
sale by certain holders of our Class A common stock, including Harold E. Riley,
our Chairman of the Board. Mr. Riley, as of June 14, 2001, owned 4,374,108
shares of Class A common stock or approximately 18% of our outstanding Class A
common stock.
LOSS OF THE SERVICES OF OUR CHAIRMAN OF THE BOARD WOULD LIKELY HINDER FURTHER
DEVELOPMENT OF OUR OPERATING AND MARKETING PROGRAMS AND OUR STRATEGY FOR
EXPANDING OUR BUSINESS.
We rely heavily on the active participation of our Chairman of the
Board, Harold E. Riley in connection with the development and execution of our
operating and marketing plans and our strategy for expanding our business. For
instance, in the past we have expanded our business significantly through the
acquisition of other insurance companies. Mr. Riley's experience with mergers
and acquisitions has been of considerable value in pursuing these opportunities.
We anticipate that this expertise will continue to be of substantial value in
connection with any future acquisitions of insurance companies. The loss of his
services would likely have a significant adverse effect on us in these respects.
We do not have an employment agreement with Mr. Riley. We have "key man" life
insurance on Mr. Riley totaling $496,000 of which we are the beneficiary.
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PURCHASERS OF OUR CLASS A COMMON STOCK UNDER THE PLAN WILL BE MINORITY
STOCKHOLDERS. THESE MINORITY STOCKHOLDERS WILL NOT CONTROL US, WILL HAVE A
LIMITED ABILITY TO INFLUENCE OUR BUSINESS POLICIES AND CORPORATE ACTIONS, AND
WILL NOT BE ABLE TO ELECT ANY DIRECTORS.
It is difficult for our minority stockholders to elect any of our
directors or otherwise exert influence over our business. Our outstanding Class
B common stock elects a majority of our board of directors. All of the Class B
common stock is owned indirectly by Harold E. Riley, our Chairman of the Board,
through the Harold E. Riley Trust. Additionally, Mr. Riley is the largest Class
A stockholder. Therefore, as a practical matter, Mr. Riley has effective control
over significant corporate transactions. Additionally, cumulative voting of
shares is not permitted by our articles of incorporation. These factors also
would make it more difficult and time consuming for a third party to acquire
control of us or to change our board of directors.
ALMOST 80% OF OUR REVENUES COME FROM LATIN AMERICA. THIS INVOLVES RISKS
ASSOCIATED WITH BUSINESS IN THIRD WORLD COUNTRIES, SUCH AS MIGHT RESULT FROM
POLITICAL OR ECONOMIC INSTABILITY, HUMAN RIGHTS VIOLATIONS OR NEW LEASES OR
REGULATIONS.
There is a risk of loss of a significant portion of sales to Latin
Americans should the above types of events occur in the countries from which we
receive applications. Almost 80% of our revenues come from Latin America. Our
international operations consist of sales of ordinary whole-life insurance
policies in Central and South American countries. These policies have an average
face amount of $70,000 and are marketed by independent marketing firms primarily
to heads of households in the top 3% to 5% income bracket of such countries.
YOU SHOULD NOT ANTICIPATE RECOVERING ANY PORTION OF YOUR INVESTMENT THROUGH CASH
DIVIDENDS, BECAUSE WE HAVE NOT PAID ANY CASH DIVIDENDS AND DO NOT ANTICIPATE
DOING SO IN THE FORESEEABLE FUTURE.
It is highly unlikely that cash dividends on our Class A common stock
will be paid in the foreseeable future. One reason for this that there is little
economic incentive for the Class B stockholders, who elect a majority of the
directors and thus control the board, to decide that cash dividends should be
paid. This is because, under our articles of incorporation, each share of Class
A common stock has a right to receive twice the cash dividends of each share of
Class B common stock. To date we have not paid cash dividends on our Class A
common stock or Class B common stock. It is our policy to retain earnings for
use in the operations and expansion of our business.
POLICY LAPSES IN EXCESS OF THOSE ACTUARIALLY ANTICIPATED WOULD REDUCE OUR
PROFITABILITY.
Our profitability could be reduced if our lapse and surrender rate were
to exceed the assumptions upon which we priced our insurance policies. Policy
sales costs are deferred and recognized over the life of a policy. Excess policy
lapses, however, cause the immediate expensing or amortizing of deferred policy
sales costs.
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WE OPERATE IN A HIGHLY COMPETITIVE, MATURE INDUSTRY, WHICH COULD LIMIT OUR
ABILITY TO INCREASE OR MAINTAIN OUR POSITION IN THE INDUSTRY.
We compete with 1,500 to 2,000 other life insurance companies in the
United States, some of which we also compete with internationally. The life
insurance business is highly competitive. This is in part because it is a mature
industry in the United States which, in recent years, has experienced no growth
in life insurance sales. Competition has also increased because the life
insurance industry is consolidating, with larger, more efficient organizations
emerging from consolidation. Furthermore, mutual insurance companies are
converting to stock ownership, which should give them greater access to capital
markets, resulting in greater competition with respect to corporate finance as
well. Additionally, legislation became effective in 2000 permitting commercial
banks, insurance companies and investment banks to combine. This law permits,
for instance, a commercial bank to acquire or form an insurance company. These
factors have increased competitive pressures in general.
Many life insurance companies have greater financial resources, longer
business histories, and more diversified lines of insurance coverage than we
have. These companies also generally have larger sales forces. We also face
competition from companies operating in foreign countries and marketing in
person as well as with direct mail sales campaigns. Although we may be at a
competitive disadvantage to these entities, we believe that our products are
competitive in the marketplace.
Our international marketing plan stresses making available
dollar-denominated life insurance products to high net worth individuals
residing in Latin American countries. We experience competition primarily from
the following sources with respect to Latin America:
LOCALLY OPERATED COMPANIES WITH LOCAL CURRENCY POLICIES. We
compete with companies formed and operated in the country in which they
sell policies. Generally, these companies are subject to risks of
currency fluctuations, and use mortality tables based on experience of
the local population as a whole. These mortality tables are typically
based on significantly shorter life spans than those we use. As a
result, the economic return of policies issued by locally operated
companies is more uncertain than for U.S. dollar policies, such as we
issue. Also, as a result of the foregoing factors, the statistical cost
of insurance for these companies tends to be higher than ours.
FOREIGN OPERATED COMPANIES WITH LOCAL CURRENCY POLICIES.
Another group of competitors consists of companies which are foreign to
the countries in which they sell policies but use the local currencies
of those countries. Local currency policies entail risks of uncertainty
due to local currency fluctuations as well as the perceived instability
and weakness of local currencies. We have observed that local currency
policies, whether issued by foreign or locally operated companies, tend
to focus on universal life insurance and annuities instead of whole
life insurance as we do.
FOREIGN OPERATED COMPANIES WITH U.S. DOLLAR POLICIES. We also
face direct competition from companies that operate in the same manner
as we do. We compete using our history of performance, our sales force
and our products.
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Our ability to compete is dependent upon, among other things, our
ability:
o to attract and retain agents in the U.S. and marketing firms
in our Central and South American markets;
o to market our insurance and investment products;
o to develop competitive and profitable products; and
o to maintain low unit costs.
TAX LAW CHANGES COULD REDUCE CERTAIN COMPETITIVE ADVANTAGES WHICH OUR LIFE
INSURANCE PRODUCTS MAY HAVE OVER NON-INSURANCE PRODUCTS.
The Internal Revenue Code defers income taxes payable by policyholders
on investment earnings during the accumulation period of certain life insurance
and annuity products. This favorable tax treatment may give certain of our
products a competitive advantage over other non-insurance products. A revision
to the Internal Revenue Code to reduce the tax-deferred status of life insurance
and annuity products, or to increase the tax-deferred status of competing
products, would reduce the ability of all life insurance companies, including
ours, to sell products. Also, depending on grandfathering provisions, the
surrenders of existing annuity contracts and life insurance policies might
increase. In addition, life insurance products are often used to fund estate tax
obligations. Congress enacted legislation in June 2001 under which the estate
tax will be repealed during the year 2010, but in the absence of interim
legislation extending the repeal, it will expire at the end of that year. There
may be interim legislation which will modify or do away with this estate tax
repeal or otherwise modify the estate tax. An elimination of the estate tax
would reduce the demand for certain life insurance products. We cannot predict
what future tax initiatives may be proposed with respect to the estate tax or
other taxes which may affect us.
AS A RESULT OF THE HIGH DEGREE OF REGULATION OF THE INSURANCE INDUSTRY, OUR
ACTIVITIES ARE RESTRICTED. AS A RESULT OF THE REGULATIONS, WE EXPEND SUBSTANTIAL
AMOUNTS OF TIME AND INCUR SUBSTANTIAL EXPENSES IN CONNECTION WITH COMPLYING WITH
APPLICABLE REGULATIONS, AND WE ARE SUBJECT TO RISKS THAT MORE BURDENSOME
REGULATIONS COULD BE IMPOSED ON US.
Our compliance with regulation in the United States is costly and time
consuming. Insurance companies in the U.S. are subject to extensive regulation
in the states where they do business. This regulation primarily protects
policyholders rather than stockholders. The regulations require:
o prior approval of acquisitions of insurance companies;
o certain solvency standards;
o licensing of insurers and their agents;
o investment limitations;
o securities deposits for the benefit of policyholders;
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o approval of policy forms and premium rates;
o triennial examinations; and
o reserves for unearned premiums, losses and other matters.
We are subject to this regulation in each state in the U.S. in which we
are licensed to do business. This regulation involves additional costs and
restricts operations. We are cannot predict the form of any future regulatory
initiatives.
The Colorado Division of Insurance regulates us under the Colorado
Insurance Holding Company Act. Certain "extraordinary" intercorporate transfers
of assets and dividend payments from our life insurance subsidiaries require
prior approval by the Colorado Insurance Commissioner. We also file detailed
annual reports with the Colorado Division of Insurance and all of the states in
which we are licensed. The business and accounts of our life insurance
subsidiaries are subject to examination by the Colorado Division of Insurance.
Our principal insurance subsidiary is qualified to do business as an
insurance company only in the U.S. It does not have any assets or employees in
foreign countries. In the conduct of our business in foreign countries, we
accept only U.S. applications at our main office. In addition, we require
premium payments to be in U.S. dollars, which may include checks drawn on U.S.
banks. We are not currently subject to regulation in the various foreign
countries from which we receive applications for insurance. Although we provide
insurance to foreign citizens, independent marketing firms, rather than our
employees, submit the applications. In this way we avoid "conducting business"
in the foreign countries. However, we are unable to predict if foreign
regulation will be implemented and, if so, the effect of any such regulation on
our business.
FLUCTUATING INTEREST RATES COULD REDUCE OUR PROFITABILITY.
Rapid interest rate changes can result in increases in the lapse rates
of policies in-force and hamper an insurance company's ability to achieve a
profit. We do not issue interest-sensitive or universal life insurance policies
and we have only a small amount of annuity business. We do, however, have an
investment portfolio that would likely be adversely affected in the event of
material increases in interest rates. An insurance company's profitability
depends, in large part, on investing premiums at a higher interest rate than the
returns distributed on existing policies.
OUR INVESTMENTS ARE SUBJECT TO RISKS OF DEFAULT AND REDUCTIONS IN MARKET VALUES,
WHICH WOULD REDUCE OUR PROFITABILITY.
Our invested assets are subject to customary risks of defaults and
changes in market values. Factors that may affect the overall default rate on,
and market value of, our invested assets include interest rate levels, financial
market performance, and general economic conditions.
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THERE IS A RISK THAT WE MAY NOT CONTINUE OUR PAST STRATEGY OF ACQUIRING OTHER
U.S. INSURANCE COMPANIES, AND THAT WE MAY NOT REALIZE ANTICIPATED IMPROVEMENTS
TO OUR PROFITABILITY AS A RESULT OF PAST AND FUTURE ACQUISITIONS.
Over the past several years, we have acquired a number of small U.S.
insurance companies. Our objective in pursuing this acquisition strategy has
been to increase the size of the U.S. segment of our business, improve our
competitive position and increase our earnings, in part by allowing us to
realize certain operating efficiencies associated with economies of scale.
However, there can be no assurance that suitable acquisitions, presenting
opportunities for continued growth and operating efficiencies, will continue to
be available to us, or that we will realize the anticipated financial results
from our acquisitions.
THERE IS A RISK THAT THE REINSURERS WITH WHICH WE DO BUSINESS MIGHT INCREASE
THEIR PREMIUM RATES OR THAT THEY MIGHT NOT HONOR THEIR OBLIGATIONS, LEAVING US
LIABLE FOR THE REINSURED COVERAGE.
We cede a substantial amount of our insurance to other insurance
companies. However, we remain liable with respect to ceded insurance should any
reinsurer fail to meet the obligations assumed by it. The cost of reinsurance
is, in some cases, reflected in our premium rates. Under certain reinsurance
agreements, the reinsurer may increase the rate it charges us for the
reinsurance, though we do not anticipate increases to occur. However, if the
cost of reinsurance were to increase with respect to policies for which we have
guaranteed the rates, we could be adversely affected.
WE ARE SUBJECT TO A RISK OF LOSING CASH BALANCES THAT ARE NOT INSURED.
We maintain cash balances in one bank, Chase Bank, Texas, that are
significantly in excess of Federal Deposit Insurance Corporation coverage. If
this bank were to fail, we would likely lose a substantial amount of our cash.
We monitor the solvency of this bank and we do not believe a material risk of
loss exists because this bank is substantially above the federally mandated
levels of capital and liquidity.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus are not statements of
historical fact and constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act. These statements include language
specifically identified as forward-looking statements within this document. In
addition, statements in future filings by us with the Securities and Exchange
Commission, in press releases, and in oral and written statements made by or
with our approval which are not statements of historical fact constitute
forward-looking statements within the meaning of the Act. Examples of
forward-looking statements, include: (i) projections of revenues, income or
loss, earnings or loss per share, the payment or non-payment of dividends,
capital structure, and other financial items, (ii) statements of plans and
objectives of us or our management or Board of Directors including those
relating to products or services, (iii) statements of future economic
performance and (iv) statements of assumptions underlying those statements.
Words such as "believes", "anticipates", "expects", "intends", "targeted",
"may", "will" and similar expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties which may
cause actual results to differ materially from those in such statements. Factors
that could cause actual results to differ from those discussed in the
forward-looking statements include: (i) the strength of foreign and U.S.
economies in general and the strength of the local economies in which our
operations are conducted; (ii) the effects of
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and changes in trade, monetary and fiscal policies and laws; (iii) inflation,
interest rates, market and monetary fluctuations and volatility; (iv) the timely
development of and acceptance of our new products and services and perceived
overall value of these products and services by existing and potential
customers; (v) changes in consumer spending, borrowing and saving habits; (vi)
concentrations of business from persons residing in third world countries; (vii)
our ability to consummate and integrate acquisitions; (viii) the persistency of
existing and future insurance policies sold by our subsidiaries; (ix) dependence
upon our Chairman of the Board; (x) our ability to control expenses; (xi) the
effect of changes in laws and regulations (including laws and regulations
concerning insurance) with which we and our subsidiaries must comply, (xii) the
effect of changes in accounting policies and practices, as may be adopted by the
regulatory agencies as well as the Financial Accounting Standards Board, (xiii)
changes in our organization and compensation plans; (xiv) the costs and effects
of litigation and of unexpected or adverse outcomes in litigation; and (xv) our
success in managing the risks involved in the above matters.
These forward-looking statements speak only as of the date of this
prospectus. Except for our ongoing obligation to disclose material information
as required by federal securities laws, we undertake no duty to update any
forward-looking statements to reflect events or circumstances occurring after
the date of this prospectus.
TERMS AND CONDITIONS OF THE PLAN
The following discussion sets forth the provisions of the plan which we
believe will be most important to participants and prospective participants in
the plan. However, for a more complete understanding, you should refer to the
copy of the plan which is included at the end of this prospectus as Appendix A.
AM I ELIGIBLE TO PARTICIPATE IN THE PLAN?
The plan may be offered to owners of insurance policies issued by our
subsidiaries, existing holders of Class A common stock, our employees or members
of our marketing force. Copies of this prospectus will be provided to members of
these groups upon their request. We are also permitted, at our option, to
distribute copies of this prospectus to members of these groups without first
receiving a request.
The plan may also be offered to other persons who are not solicited by
the plan administrator or any of our representatives or agents with respect to
the plan, but who make inquiries regarding the plan to us or the plan
administrator. A copy of this prospectus may be delivered to persons who make
these inquiries (who are not members of one of foregoing groups in the preceding
paragraph) only upon their request.
EXCEPT FOR DELIVERY OF COPIES OF THIS PROSPECTUS AND RELATED MATERIALS,
WE HAVE NOT AUTHORIZED ANY OF OUR PERSONNEL TO ANSWER QUESTIONS OR RESPOND TO
INQUIRIES CONCERNING THE PLAN, AND YOU MUST INSTEAD CONTACT THE PLAN
ADMINISTRATOR. Any person who contacts us concerning the plan will be referred
to the plan administrator for responses to the person's questions and inquiries.
If you wish to participate in the plan, you may do so only after
receiving a copy of this prospectus, and you must complete an enrollment form,
return it to the plan administrator and comply with any other applicable
requirements as set forth below and in the copy of the plan included at the end
of this prospectus and as may be communicated to you by the plan administrator.
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Following are additional features and requirements relating to
participation in the plan:
o Owners of our insurance policies may elect to have policy
benefits, including dividends, automatically invested in Class
A common stock through the plan. Likewise, members of our
marketing force may elect to have commissions automatically
invested in Class A common stock through the plan.
o If you do not currently own any of our stock, you may join the
plan, as set forth above, and by making an initial investment
of at least $250, but not more than $10,000 in any calendar
month. However, if you are one of our policyholders or a
member of our marketing force, and you elect to assign your
policy benefits (including dividends paid on life insurance
policies) or commissions to the plan, this $250 minimum
requirement does not apply. You can get started in the plan by
returning a completed enrollment form to the plan
administrator, along with your check or money order payable to
Mellon Bank, N.A. The plan administrator will arrange for the
purchase of shares for your account but will not pay interest
on amounts held pending investment. Please allow two weeks for
your account to be established, initial shares to be purchased
and a statement to be mailed to you.
o If you already own our stock and the shares are registered in
your name, you may join the plan by returning a completed
enrollment form to the plan administrator. IN ADDITION, YOU
MAY TRANSFER SHARES YOU ALREADY OWN INTO THE PLAN AT NO
ADDITIONAL COST.
o If your shares are held in a brokerage, bank or other
intermediary account, and you wish to participate directly in
the plan, you should direct your broker, bank or trustee to
register some or all of your shares of Class A common stock
directly in your name.
WHAT ARE MY INVESTMENT OPTIONS?
Once enrolled in the plan, you have the following investment options:
o ASSIGNMENT OF POLICY BENEFITS OR COMMISSIONS. Subject to such
terms as we may require, if you are one of our policyholders,
you may assign policy benefits, including dividends on a life
insurance policy, to the plan to be invested in our Class A
common stock. Similarly, if you are a member of our marketing
force, you may assign commission earned upon sale of insurance
policies to the plan for investment in Class A common stock.
o OPTIONAL CASH INVESTMENTS. You may purchase additional shares
of our Class A common stock by using the plan's optional cash
investment feature. You must invest at least $25 at any one
time but not more than $10,000 in a calendar month. We will
not pay interest on amounts held pending investment.
You may make optional cash investments by sending a check or
money order (not cash) to the plan administrator payable to
Mellon Bank, N.A. To facilitate processing of your investment,
please use the transaction stub located on the bottom of your
plan statement. Mail your investment and transaction stub to
the address specified on the statement. A $25 fee will be
assessed for a check that is returned for insufficient funds.
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o DIVIDEND REINVESTMENT. If we declare any cash dividends on our
Class A common stock in the future, you may choose to reinvest
all or a portion of the dividends paid on your shares held in
the plan toward the purchase of additional shares of Class A
common stock. However, historically we have not paid cash
dividends on our Class A common stock and we do not presently
have plans for doing so. You can change your dividend
reinvestment election at any time by notifying the plan
administrator. For a particular dividend to be reinvested,
your notification must be received before the record date for
that dividend.
HOW ARE MY SHARES PURCHASED?
Shares of our Class A common stock purchased under the plan will be
shares purchased by a broker on the open market. The investment price of our
Class A common stock purchased in the open market will be the weighted average
price, including trading fees and applicable taxes, incurred in connection with
the purchase of such shares. In the unlikely event that, due to unusual market
conditions, the broker is unable to invest the funds within 35 days, the plan
administrator will return the funds to you by check. No interest will be paid on
funds held by the plan administrator pending investment. Shares will be
purchased on an investment date, which means each business day on which the plan
administrator determines that sufficient optional cash investments, initial cash
investments, dividends, and assigned benefits and commissions have been received
and not previously invested to warrant investing amounts in our Class A common
stock. However, there will be at least one investment date in any week in which
the plan administrator receives at least one optional cash investment, one
initial cash investment, any assigned benefits or commissions, or any dividends
for investment.
Your account will be credited with that number of shares, including
fractional shares computed to four decimal places, equal to the amount invested
with respect to your plan account, divided by the price per share of such shares
for all purchases for all plan participants during the applicable period.
Unless you request one, certificates for shares of Class A common stock
purchased under the plan will not be issued. The number of shares purchased for
your account under the plan will be shown on your statement of account in book
entry form. This feature protects against loss, theft or destruction of stock
certificates.
HOW DO I SELL MY SHARES OUT OF THE PLAN?
You may sell any number of shares held in your plan account by
notifying the plan administrator by telephone, over the Internet or in writing.
If you have a certificate for any shares which you desire to sell, it will be
necessary for you to deliver the certificate as the plan administrator directs
in order to effect the sale. The shares will be sold on the open market, in
ordinary brokerage transactions. The plan administrator will arrange for sales
to be made as soon as practicable. The sale price will be the weighted average
of the market prices of all shares sold for plan participants during the period,
less a $15 fee payable to the plan administrator, a trading fee of $.12 per
share and applicable taxes. Please note that the plan administrator cannot and
does not guarantee the actual sale date or price, nor can it stop or cancel any
outstanding sales or issuance requests. All requests are final. The plan
administrator will mail a check to you on the settlement date, which is three
business days after your shares have been sold. Please allow an additional five
to seven business days from the settlement date for the post office to deliver
your check.
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MAY I GIFT MY SHARES OUT OF THE PLAN?
You may gift or transfer all or part of your shares to any recipient
you choose by completing and signing a gift/transfer request provided by the
plan administrator. If the recipient is already a participant in the plan, the
shares will be credited to the participant's account. The additional shares in
the participant's account will be subject to whatever election the recipient has
made concerning dividend reinvestment. If the recipient is not a participant, a
new account will be opened in the recipient's name, and you may make a dividend
reinvestment election on behalf of the recipient. However, the recipient at any
time may change the dividend reinvestment election or terminate the recipient's
participation in the plan.
You must have your signature guaranteed by a financial institution
participating in the Medallion Guarantee program. The Medallion Guarantee
program ensures that the individual signing the certificate or transfer
instructions is in fact the registered owner as the name appears on the stock
certificate or stock power.
If you need additional assistance, please contract the plan
administrator.
HOW DO I OBTAIN MY STOCK CERTIFICATES?
Certificates for any number of whole shares credited to your account
under the plan will be issued upon your written request. Unless you request
otherwise, shares for which a certificate is issued to you will continue to be
considered as being held in your plan account. Any remaining shares will
continue to be credited to your account. Certificates for fractions of shares
will not be issued, and you will instead receive a cash payment for the
fractional share based on the market value of the stock less trading fees and
applicable taxes. Your request for issuance of certificates should be sent to
the plan administrator in writing, by telephone or via the Internet.
WHAT ARE THE TRADING FEES, TAXES, FEES AND OTHER EXPENSES RELATING TO
PARTICIPATION IN THE PLAN?
The purchase price of the Class A common stock held for you in the plan
will consist of the average market price of the stock plus any trading fees and
applicable taxes payable by or on behalf of the purchaser. Likewise, the sale
price of your shares will consist of the average market price of the stock less
any service and trading fees and applicable taxes payable by or on behalf of the
seller. However, we will pay all other costs, fees and expenses payable to the
plan administrator in connection with the plan.
HOW IS MY INVESTMENT TRACKED?
The plan administrator will send a statement of account to you at least
once a year, and will send additional statements upon your reasonable written
request. In addition, the plan administrator will send transaction notices to
you when you make an initial or optional cash investment or a deposit, transfer
or withdrawal of shares.
Please retain your plan statements to establish the cost basis of
shares purchased under the plan for income tax and other purposes.
You should notify the plan administrator promptly of any change in
address since all notices, statements and reports will be mailed to your address
of record.
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HOW DO I WITHDRAW FROM PARTICIPATION IN THE PLAN?
You may withdraw from the plan at any time. In order to withdraw from
the plan, you must provide notice instructing the plan administrator to
terminate your account. The plan administrator must receive such notice before
the close of business on the record date for any dividend payment in order to
terminate your account prior to such dividend payment date. To terminate your
account, call, write or submit your request on-line to the plan administrator.
If you have assigned benefits from one of our life insurance policies,
or sales commissions, you must also notify the Company in writing of your desire
to terminate this assignment.
Our shares of Class A common stock are eligible for inclusion in the
Direct Registration System ("DRS") administered by The Depository Trust Company
("DTC"). Under the DRS, the plan administrator will continue to hold your shares
unless you request a certificate for any full shares and a check for any
fractional share. Alternatively, you may request the sale of all or part of any
such shares or have the plan administrator electronically transfer your shares
to your brokerage account. The plan administrator will convert to cash any
fractional shares held in your account at the time of termination at the then
current market price of the Class A common stock, net of any service and trading
fees and applicable taxes.
After you withdraw from the plan, you may rejoin the plan at any time
by filing a new enrollment form with the plan administrator. However, the plan
administrator has the right to reject such Enrollment Form if you repeatedly
join and withdraw from the plan, or for any other reason. The plan
administrator's exercise of such right is intended to minimize unnecessary
administrative expenses and to encourage use of the plan as a long-term
stockholder investment service.
WHAT ARE SOME OF THE TAX CONSEQUENCES OF MY PARTICIPATION IN THE PLAN?
This is a general discussion of the U.S. federal income tax
consequences of the plan. You should consult your own tax advisor with respect
to the tax consequences of participation in the plan (including federal, state,
local and other tax laws and U.S. tax withholding laws) applicable to your
particular situation.
You will not realize gain or loss for U.S. federal income tax purposes
upon a transfer of shares to your plan account or the withdrawal of whole shares
from your account. You will, however, generally realize gain or loss upon the
receipt of cash for a fractional share credited to your account. You will also
realize gain or loss when shares are sold. The amount of gain or loss will be
the difference between the amount that you receive for the shares sold and your
tax basis in the shares (generally, the amount you paid for the shares, plus
brokerage commissions paid). In order to determine the tax basis for shares in
your account, you should retain all account statements.
Cash dividends (if we were to declare any) reinvested under the plan
will be taxable for U.S. federal income tax purposes as having been received by
you even though you have not actually received them in cash. If we were to pay
dividends, they would be reported, whether or not reinvested, to you and the
U.S. Internal Revenue Service shortly after the close of each year.
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If you are a non-resident alien or a non-U.S. corporation, partnership,
or other entity, you are subject to a withholding tax on dividends earned on
your plan shares. You also may be subject to the "backup withholding" provisions
of the Internal Revenue Code with respect to any dividends or proceeds from the
sales of your shares if you fail to furnish a properly completed Form W-9 or its
equivalent or are otherwise subject to backup withholding.
OTHER PROVISIONS
PLAN MODIFICATION OR TERMINATION
We reserve the right to suspend, modify or terminate the plan at any
time. You will receive notice of any such suspension, modification or
termination. We, together with the plan administrator, also reserve the right to
change any administrative procedures of the plan.
SUSPENSION OR TERMINATION
We reserve the right to deny, suspend or terminate participation by a
stockholder who is using the plan for purposes inconsistent with the intended
purpose of the plan. In such event, the plan administrator will notify you in
writing and, unless you elect to terminate your participation in the plan, will
continue to hold your shares, which are already in the plan, on your behalf but
will no longer accept optional cash investments or reinvest your dividends.
LIMITATION OF LIABILITY
The plan provides that neither we nor the plan administrator in
administering the plan nor any independent agent will be liable for any act done
in good faith or for the good faith omission to act in connection with the plan.
This includes, without limitation, any claims of liability:
o for failure to terminate your account upon your death prior to
receiving written notice of such death; or
o relating to purchase or sale prices reflected in your plan
account or the dates of purchases or sales of your plan
shares; or
o for any loss or fluctuation in the market value after purchase
or sale of such shares.
The foregoing does not represent a waiver of any rights you may have
under applicable securities laws.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information that we file at the
Commission's public reference room located at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call the Commission at 1-800-732-0330 for further
information on the operation of such public reference room. You can also request
copies of such documents, upon payment of a duplicating fee, by writing to the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
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20549. Our Commission filings are also available to the public at the website
maintained by the Commission at http://www.sec.gov. You may also inspect our
Commission reports and other information at the American Stock Exchange,
86 Trinity Place, New York, New York 10006-1881.
The Commission allows us to "incorporate by reference" into this
prospectus the information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information we file later with the Commission will automatically
update and supersede such information. The following documents filed with the
Commission are hereby incorporated by reference into this Registration
Statement:
(a) Our Annual Report on Form 10-K for the year ended December 31,
2000, filed on March 29, 2001, which contains audited financial statements for
the most recent fiscal year for which such statements have been filed.
(b) Our Proxy Statement on Schedule 14A filed on April 27, 2001.
(c) Our Quarterly Report on Form 10-Q for the three months ended March
31, 2001, filed on May 15, 2001.
(d) Our Quarterly Report on Form 10-Q for the six months ended June 30,
2001, filed on August 14, 2001.
(e) The description of our common stock contained in our Registration
Statement on Form 8-A declared effective by the SEC on April 14, 1994.
In addition, all documents which we file with the Commission under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 will be
deemed to be incorporated by reference into this prospectus until the plan is
terminated.
This prospectus is part of a registration statement that we filed with
the Commission. Upon written or oral request, we will provide, without charge,
to each person, including beneficial owners of our securities, to whom a copy of
this prospectus is delivered, a copy of any or all of the information
incorporated by reference in this prospectus (other than exhibits to such
documents, unless the exhibits are specifically incorporated by reference in
such documents). Your requests for copies should be directed to the Secretary,
Citizens, Inc., P.O. Box 149151, Austin, TX 78714-9151; telephone (512)
837-7100.
LEGAL OPINION
The legality of the Class A common stock covered by this prospectus has
been passed upon for us by Jones & Keller, P.C., Denver, Colorado.
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EXPERTS
The consolidated financial statements and financial statement schedules
incorporated in this prospectus by reference to our Annual Report on Form 10-K
for the year ended December 31, 2000 have been so incorporated in reliance upon
the report of KPMG LLP, independent accountants, and upon the authority of said
firm as experts in auditing and accounting.
TRANSFER AGENT AND REGISTRAR
Our Transfer Agent and Registrar is Mellon Investor Services LLC, 85
Challenger Road, Ridgefield Park, New Jersey 07660.
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APPENDIX A
CITIZENS, INC. STOCK INVESTMENT PLAN
Citizens, Inc., a Colorado corporation, hereby establishes the
following Stock Investment Plan (the "Plan").
WHEREAS, the Company (as hereinafter defined) wishes to offer
to certain clients and potential investors stock purchase opportunities and
services in an effort to enhance the attractiveness to investors of the
Company's Class A common stock, no par value per share (the "Common Stock"), and
to offer to security holders the ability to maintain registered ownership of
their securities in a manner which facilitates efficient purchases and sales of
securities;
WHEREAS, the Company is not an Affiliate (as hereinafter
defined) of the Administrator, and has been subject to the reporting
requirements of Section 13(a) or 15(d) of the Exchange Act (as defined herein)
for a period of at least 90 days;
WHEREAS, the purposes of the Plan are to provide a convenient
and economical means for new investors and other clients of the Company and its
subsidiaries to make an initial investment in Eligible Securities, and for
existing holders of Eligible Securities to have any dividends automatically
reinvested in shares of Common Stock (as defined herein), and to purchase
additional shares of Eligible Securities, and to facilitate registered ownership
of Eligible Securities;
WHEREAS, the Plan will include an Investor Registration Option
feature enabling an investor to have its share ownership registered directly on
the stock records of the Company while providing investors with a safe,
efficient and inexpensive alternative to certificate-based or nominee ownership;
NOW, THEREFORE; the following Stock Investment Plan is hereby
established:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall, for all purposes of
this Plan, have the following respective meanings:
Account. The term "Account" shall mean, as to any Participant,
the account maintained by the Administrator evidencing (i) the shares (and/or
fraction of a share) of Eligible Securities (a) purchased through the Plan
and/or (b) deposited by such Participant into the Plan pursuant to Section 4.1
hereof, and credited to such Participant and (ii) cash held in the Plan pending
investment in Eligible Securities for such Participant.
Account Shares. The term "Account Shares" shall mean all
shares (and/or fraction of a share) of Eligible Securities credited to the
Account of a Participant by the Administrator, which shall include shares
deposited into the Plan pursuant to Section 4.1 hereof.
Administrator. The term "Administrator" shall mean Mellon
Bank, N.A., a banking corporation organized under the laws of the State of New
York and registered as a transfer agent under the Exchange Act. In connection
with the Plan, the Administrator shall be deemed an agent independent of the
Company who satisfies applicable legal requirements (including, without
limitation, the requirements of Regulation M under the Exchange Act), for
purposes of making open market purchases and sales of Common Stock and other
Eligible Securities under the Plan.
Common Stock. The term "Common Stock" is defined in the
Recitals of this Plan.
Company Share Purchase Price. The term "Company Share Purchase
Price," when used with respect to fractional shares, shall mean the average of
the high and low sales prices of such Eligible Securities on a given trading day
as reported on the American Stock Exchange Composite Tape and published in The
Wall Street Journal. In the absence of actual knowledge of inaccuracy, the
Administrator may rely upon such prices as published in The Wall Street Journal.
In the event no trading is so reported for a trading day, the Company Share
Purchase Price for such shares shall be determined by the average of the high
and low sales prices as so reported and published on the next preceding trading
day on which trading was so reported.
Dividend. The term "Dividend" shall mean cash dividends paid
on Account Shares which the Participant has elected to reinvest in Common Stock
pursuant to Section 2.2 hereof.
A-1
23
Eligible Securities. The term "Eligible Securities" shall mean
the Common Stock of the Company as the Company may from time to time designate,
in its sole discretion, in a written notice to the Administrator.
Enrollment Form. The term "Enrollment Form" shall mean the
documentation that the Administrator and/or Company shall require to be
completed and received prior to the enrollment in the Plan of an investor
(whether or not an existing registered owner of Common Stock) pursuant to
Section 2.1 hereof, or a Participant's changing his or her options under the
Plan pursuant to Section 6.1 hereof, or a Participant's depositing shares of
Common Stock into the Plan pursuant to Section 4.1 hereof. At the time of the
initial enrollment in the Plan, the investor's Enrollment Form shall contain a
certification of its taxpayer identification number.
Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
Gift/Transfer Request Form. The term "Gift/Transfer Request
Form" shall mean the documentation which the Participant completes and submits
to the Administrator prior to such Participant's gift or transfer of Account
Shares pursuant to Section 5.2 hereof.
IRS. The term "IRS" shall mean the Internal Revenue Service.
Investment Date. The term "Investment Date" shall mean each
Business Day on which the Administrator determines that sufficient optional cash
investments pursuant to Section 2.4 hereof and/or initial cash investments
pursuant to Section 2.3 hereof and/or Dividends and/or assigned benefits and
commissions have been received and not previously invested to warrant investing
such optional cash investments and/or initial cash investments and/or assigned
benefits and commissions or reinvesting such Dividends in Common Stock pursuant
to Article III hereof; provided, however, that there shall be at least one
Investment Date during each period beginning on Monday of each week and ending
on Friday of the same week in which the Administrator receives at least one
optional cash investment, one initial cash investment, any assigned benefits or
commissions or any Dividends.
Market Share Purchase Price. The term "Market Share Purchase
Price," when used with respect to shares of Eligible Securities purchased in the
open market, shall mean the weighted average purchase price per share (including
brokerage commissions and applicable taxes) of the aggregate number of shares
purchased in the open market for the relevant period.
Market Share Sales Price. The term "Market Share Sales Price,"
when used with respect to shares of Eligible Securities sold in the open market,
shall mean the weighted average sales price per share (less any brokerage
commissions and applicable taxes) of the aggregate number of shares sold in the
open market for the relevant period.
Maximum Amount. The term "Maximum Amount" is defined in
Section 2.4 hereof.
Non-United States Resident. The term "Non-United States
Resident" shall mean a Person that is a citizen or resident of, or is organized
or incorporated under, or has its principal place of business in, a country
other than the United States, its territories and possessions.
Participant. The term "Participant" is defined in Section 2.1
hereof.
Person. The term "Person" shall mean any individual,
corporation, partnership, limited liability company, joint venture, association,
joint-stock company, trust, estate, unincorporated organization or other entity.
Statement of Account. The term "Statement of Account" shall
mean a written statement prepared by the Administrator and sent to a Participant
pursuant to Section 6.6 hereof, which sets forth all information required by
this Plan or applicable law.
ARTICLE II
PARTICIPATION
Section 2.1. Participation. Any Person (other than the
Company), who (a) is a record holder of Common Stock, (b) is an employee of the
Company or one of its subsidiaries, (c) is an owner of an insurance policy
issued by the Company or one of its subsidiaries, (d) is a contracted marketing
representative of the Company or one of its subsidiaries or (e) makes an
unsolicited inquiry of the Administrator or the Company regarding the Plan, may
elect to participate in the Plan; provided, however, that if such Person is a
Non-United States Resident, he or she may be requested to provide evidence
satisfactory to the Administrator that his or her participation in the Plan
would not violate local laws applicable to the Company, the Plan or such
Non-United States Resident.
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An election by a Person to participate in the Plan shall be
made by (i) either delivering certificates representing ownership of Common
Stock as part of the Plan, or having Common Stock for which the Participant is
not the registered owner transferred to the Plan, pursuant to Section 4.1
hereof, (ii) making an initial cash investment pursuant to Section 2.3 hereof,
(iii) electing to have insurance benefits invested in Common Stock pursuant to
Section 2.2 hereof; (iv) electing to have Dividends on Common Stock, of which
such Person is the registered owner, reinvested in Common Stock pursuant to
Sections 2.3 and 2.4 below hereof; or (v) electing to have earned insurance
commissions invested in Common Stock pursuant to Sections 2.3 and 2.4 below.
Each Person who elects to participate in the Plan and has not previously filed
with the Company a properly completed IRS Form W-9 or W-8, must, at the time of
such election, also complete and return to the Administrator an Enrollment Form.
Any Person who has met any of such requirements and has made and not revoked
such election is herein referred to as a "Participant."
Section 2.2. Reinvestment. If and when the Company pays a cash
dividend a Participant may elect to have all or a portion of any Dividend on his
or her Account Shares invested in shares (and/or a fraction of a share) of
Common Stock to be credited to his or her Account in lieu of receiving such
Dividend directly. If a Participant's reinvestment amount falls below this
level, the Dividends will be paid to the Participant. If a Participant elects to
reinvest only a portion of the Dividends received on his or her Account Shares,
the portion of Dividends not reinvested will be paid to the Participant.
Section 2.3. Initial Investment. A Person not already a
Participant may become a Participant by making an initial payment of at least
$250 but not more than $10,000, by check or money order or electronic funds
transfer payable to the Administrator, to be invested in Common Stock pursuant
to Section 3.2 hereof; provided, however, that payment for such initial cash
investment must be accompanied by a completed Enrollment Form. For persons who
are owners of a policy of insurance issued by the company or one of its
subsidiaries, or a marketing associate for the Company and its subsidiaries
whose "initial" investment is made through an assignment of benefit or
commission, no minimum shall apply. An initial cash investment in shares of
Common Stock may be made in the name of any Person so specified in the
Enrollment Form.
Section 2.4. Optional Cash Investments. A Participant may
elect to make payments at any time or from time to time to the Plan, by check or
money order or electronic funds transfer payable to the Administrator, for
investment in Common Stock pursuant to Section 3.2 hereof; provided, however,
that any Participant who elects to make optional cash investments pursuant to
this Section 2.4 must invest at least $25 for any single investment and may not
invest more than $10,000 in any calendar month (the "Maximum Amount"). For
purposes of determining whether the Maximum Amount has been reached, initial
cash investments pursuant to Section 2.3 shall be counted as optional cash
investments. An optional cash investment in shares of Common Stock may be made
in the name of any Person.
Section 2.5. Registration. All interests in Eligible
Securities held in a Participant's Account must be registered on the records of
the Company in the name of such Participant.
ARTICLE III
DIVIDEND REINVESTMENT, INVESTMENT OF OPTIONAL CASH PAYMENTS, ASSIGNED BENEFITS
OR COMMISSIONS AND INITIAL CASH PAYMENTS AND COMMON STOCK PURCHASES
Section 3.1. Dividend Reinvestment. Dividends (if and when
paid by the Company) as to which reinvestment has been elected by a Participant
shall be paid by the Company to the Administrator or its nominee on behalf of
such Participant. Subject to this Article III, Dividends shall be reinvested in
shares of Common Stock purchased in the open market in the manner provided in
Section 3.3(a) hereof. No interest shall be paid on Dividends held pending
reinvestment pursuant to this Article III.
Section 3.2. Investment of Optional Cash Payments, Assigned
Benefits or Commissions and Initial Cash Payments. Subject to this Article III,
any optional cash investments, assigned benefits or commissions and initial cash
investments received by the Administrator of the Company from a Participant
shall be invested in shares of Common Stock purchased in the open market in the
manner provided in Section 3.3(b) hereof. Optional cash investments, assigned
benefits or commissions and initial cash investments not received by the
Administrator at least one Business Day prior to an Investment Date need not be
invested on such Investment Date; provided, however, that any such optional cash
investments, assigned benefits or commissions and initial cash investments not
invested on such Investment Date shall be invested beginning on the next
succeeding Investment Date. No interest shall be paid on optional cash
investments, assigned benefits, commissions or initial cash investments or
assigned benefits or commissions held pending investment pursuant to this
Article III.
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Section 3.3. Shares Purchased in the Open Market. (a)
Reinvestment of Dividends in shares of Common Stock shall be governed by this
Section 3.3(a). Beginning on each Investment Date, the Administrator shall apply
the amount of any Dividends paid to the Administrator on behalf of the
Participants since the preceding Investment Date on which Dividends were
reinvested plus the amount of any Dividends paid to the Administrator on behalf
of the Participants on such Investment Date to the purchase of shares of Common
Stock in the open market.
(b) Investment of optional cash investments, assigned benefits
or commissions and/or initial cash investments in shares of Common Stock shall
be governed by this Section 3.3(b). Beginning on each Investment Date, the
Administrator shall apply the amount of any optional cash investments, assigned
benefits or commissions and/or initial cash investments received by the
Administrator from such Participant since the preceding Investment Date
(excluding any amounts received from such Participant within one Business Day of
such Investment Date but including any amounts received from such Participant
within one Business Day prior to the preceding Investment Date as set forth in
Section 3.2 hereof), to the purchase of shares of Common Stock in the open
market.
Purchases in the open market pursuant to this Section 3.3 may
begin on the applicable Investment Date and shall be completed (i) in the case
of Dividends being reinvested, no later than 30 days from the date the
Administrator received such Dividends and (ii) in the case of optional cash
investments, assigned benefits or commissions and/or initial cash investments
being invested, no later than 35 days from the date the Administrator received
such investments. Any funds not so invested during the relevant period shall
promptly be paid, without interest, to the relevant Participants.
Open market purchases pursuant to this Section 3.3 may be made
in ordinary brokerage transactions on any securities exchange on which the
Common Stock is traded or in the over-the-counter market, and may be upon such
terms and subject to such conditions with respect to price and delivery to which
the Administrator may agree and that, in the case of optional cash investments,
assigned benefits or commissions or initial cash investments, are not
inconsistent with the relevant Participant's instructions. With regard to open
market purchases of shares of Common Stock pursuant to this Section 3.3, neither
the Company nor any Affiliate of the Company may exercise any direct or indirect
control or influence over the time or price at which shares of Common Stock may
be purchased, the number of shares purchased, the manner in which purchases are
effected, the selection of any broker or dealer who effects purchases (provided
that no such broker or dealer may be an Affiliate of the Company), or the
markets on which such shares are to be purchased (including on any securities
exchange, in the over-the-counter market or in negotiated transactions), except
that the timing of such purchases must be made in accordance with the terms and
conditions of this Plan. For the purpose of making or causing to be made
purchases of shares of Common Stock pursuant to this Section 3.3, the
Administrator shall be entitled to commingle each Participant's funds with those
of all other Participants. The number of shares (and/or fraction of a share
rounded to four decimal places) of Common Stock that shall be credited to a
Participant's Account with respect to an Investment Date to which this Section
3.3 applies shall be equal to (i) the sum of (A) the amount of any Dividends
reinvested on any such Investment Date for such Participant's account and/or (B)
the amount of any optional cash investments, assigned benefits or commissions
and/or initial cash investments received by the Administrator from such
Participant since the preceding Investment Date (excluding any amount received
from such Participant within one Business Day of such Investment Date but
including any amounts received from such Participant within one Business Day
prior to the preceding Investment Date that were not invested on the preceding
Investment Date as set forth in Section 3.2 hereof), less any amounts which the
Participant is obligated to pay pursuant to Section 9.3 divided by (ii) the
Market Share Purchase Price with respect to such Investment Date. Such shares
shall be registered directly on the stock records of the Company in the name of
the Participant.
ARTICLE IV
DEPOSITED COMMON STOCK OR OTHER ELIGIBLE SECURITIES
Section 4.1. Deposited Common Stock. A Participant may elect
to (a) have certificates representing shares of Common Stock of which the
Participant is the record holder deposited into the Plan by completing an
Enrollment Form, if required by Section 2.1 hereof, and delivering such
certificates (and, if required, Enrollment Form) to the Administrator or (b)
have shares of Common Stock of which the Participant is beneficial owner, but
not the record holder, deposited into the Plan by completing an Enrollment Form,
if required by Section 2.1 hereof, and authorizing the Company or the
Administrator to accept such Common Stock to be transferred to the name of such
Participant. Shares of Common Stock so deposited shall be maintained and
registered in the name of the depositing Participant and credited to such
Participant's Account.
Section 4.2. Withdrawal of Common Stock Deposited Pursuant to
Section 4.1. Shares of Common Stock deposited pursuant to Section 4.1 hereof may
be withdrawn from the Plan pursuant to Section 6.2 hereof.
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ARTICLE V
SALE OF ACCOUNT SHARES; GIFT OR TRANSFER OF ACCOUNT SHARES
Section 5.1. Sale of Account Shares. A Participant may
request, at any time, that all or a portion of his or her Account Shares be sold
by notifying the Administrator to that effect. Subject to this Section 5.1, the
Administrator shall make such sales as soon as practicable (in accordance with
stock transfer requirements and federal and state securities laws), but in no
event later than five (5) Business Days, after processing such sale
instructions. As soon as practicable following the receipt of proceeds from such
sale, the Administrator shall pay to such Participant an amount equal to the
difference between (i) the product of (a) the Market Share Sales Price and (b)
the number of his or her Account Shares sold and (ii) any amounts which the
Participant is obligated to pay pursuant to Section 9.3.
Subject to the next sentence, if instructions for the sale of
Account Shares are received by the Administrator on or after the record date but
before the related payment date for any dividend thereon, the sale shall be
processed as described above, and the Administrator shall as soon as practicable
following the receipt of the dividends paid on such Account Shares, pay such
dividends to such Participant. Notwithstanding the foregoing, if the
instructions are to sell all of the Account Shares of such Participant for which
reinvestment of Dividends has been elected, the Administrator shall have the
right not to effect such sale until after the related Dividend has been
reinvested pursuant to the Plan and the shares of Common Stock purchased
therewith are credited to his or her Account.
Open market sales of Account Shares pursuant to this Section
5.1 may be made in ordinary brokerage transactions on any securities exchange on
which such Account Shares are traded or in the over-the-counter market, and may
be on such terms and subject to such conditions with respect to price and
delivery to which the Administrator may agree and that are not inconsistent with
the relevant Participant's instructions. With regard to open market sales of
Account Shares pursuant to this Section 5.1, neither the Company nor any
Affiliate of the Company may exercise any direct or indirect control or
influence over time or price at which Account Shares may be sold, the number of
shares sold, the manner in which sales are effected, the selection of any broker
or dealer who effects sales (provided that no such broker or dealer may be an
Affiliate of the Company), or the markets on which such Account Shares are to be
sold (including on any securities exchange, in the over-the-counter market or in
negotiated transactions), except that the timing of such sales must be made in
accordance with the terms and conditions of the Plan. For the purpose of making
or causing to be made sales of Account Shares pursuant to this Section 5.1, the
Administrator shall be entitled to aggregate sale orders of each Participants'
Account Shares with those of all other Participants.
Section 5.2. Gift or Transfer of Account Shares. A Participant
may, at any time, elect to transfer (whether by gift, private sale or otherwise)
ownership of all or a portion of his or her Account Shares to the Account of
another Participant or establish an Account for a Person not already a
Participant by delivering to the Administrator a completed Gift/Transfer Request
Form to that effect designating the transferee(s), with the signature thereon
guaranteed by a Person that is a member of the Securities Transfer Agents
Medallion Program, Stock Exchanges Medallion Program, American Stock Exchange
Medallion Signature Program or any other signature guarantee program generally
recognized by the securities transfer industry which is acceptable to the
Administrator.
Account Shares (including fractional shares) transferred in
accordance with the preceding paragraph shall be registered directly on the
stock records of the Company in the name of the transferee and shall be credited
to the transferee's Account. If the transferee is already a Participant,
Dividends on such transferred Account Shares shall be reinvested in shares of
Common Stock under the Plan consistent with the reinvestment election level
(i.e., full, partial or none) of the transferee's other Account Shares. If the
transferee is not already a Participant, the Administrator shall automatically
enroll the transferee in the Plan and open an Account in the name of such
transferee. Pursuant to such transfer, the transferor may, at the time the gift
is made, make a dividend reinvestment election on behalf of the transferee. The
transferee may change such reinvestment level after the gift has been made. If
the transferee notifies the Administrator that it does not wish to be a
Participant, such notice shall be deemed a request to terminate participation in
the Plan pursuant to Section 6.3 hereof.
Subject to the next sentence, if a completed Gift/Transfer
Request Form (evidencing a transfer of ownership by gift, private sale or
otherwise) with regard to Account Shares and other required documentation is
received by the Administrator on or after the record date but before the related
payment date for any dividend thereon, the Gift/Transfer Request Form shall be
processed as described above, and the Administrator shall as soon as practicable
following the receipt of the dividends paid on such Account Shares, pay such
dividends to the transferor. Notwithstanding the foregoing, if the Gift/Transfer
Request Form evidences a transfer of all of the Account Shares of such
Participant for which reinvestment of Dividends has been elected, the
Administrator shall have the right not to effect such transfer until after the
related Dividend has been reinvested pursuant to the Plan and the shares of
Common Stock purchased therewith are credited to his or her Account.
Section 5.3. Reinvestment of Dividends on Remaining Account
Shares. If a Participant has elected to have only a portion of the Dividends (in
the event cash dividends are paid) on his or her Account Shares reinvested
pursuant to Section 2.2 hereof,
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and the Participant elects to (i) sell a portion of his or her Account Shares
pursuant to Section 5.1 hereof, (ii) transfer a portion of his or her Account
Shares pursuant to Section 5.2 hereof or (iii) withdraw a portion of his or her
Account Shares pursuant to Section 6.2 hereof, Dividends on the Account Shares
of such Participant which have not been sold, transferred or withdrawn shall be
reinvested consistent with the reinvestment election level in effect immediately
preceding such sale, transfer or withdrawal.
ARTICLE VI
TREATMENT OF ACCOUNTS
Section 6.1. Changing Plan Options. A Participant may elect to
change his or her Plan options, including (i) changing the reinvestment levels
(i.e., full, partial or none) of Dividends on Account Shares for which
reinvestment has been elected and (ii) changing the designation of Account
Shares for which reinvestment has been elected, by delivering to the
Administrator written instructions or a new Enrollment Form to that effect. To
be effective with respect to any Dividend payment, the written instructions or
Enrollment Form with respect to such Account Shares for which reinvestment has
been elected must be received by the Administrator at least two Business Days
prior to the related record date. If the written instructions or Enrollment Form
are not received by the Administrator at least two Business Days prior to the
record date relating to such Dividend, the change shall not become effective
until after such record date. After the Administrator's receipt of effective
option changing instructions, the Company will pay Dividends on Account Shares
as to which the reinvestment election has been revoked to the Participant.
Section 6.2. Right of Withdrawal. A Participant may, at any
time or from time to time, withdraw from the Plan all or any part (other than
fractions) of his or her Account Shares by notifying the Administrator to that
effect. Fractional shares may only be withdrawn in connection with a transfer to
the Account of a Participant or a Person who becomes a Participant in accordance
with Section 5.2 hereof or a termination of participation in the Plan in
accordance with Section 6.3 hereof.
Subject to the next sentence, if completed instructions or a
Gift/Transfer Request Form with regard to the withdrawal of Account Shares is
received by the Administrator on or after the record date but before the related
payment date for any dividend thereon, such withdrawal shall be processed as
described above, and the Administrator shall, as soon as practicable following
receipt of the dividends paid on such Account Shares, pay such dividends to the
Participant. Notwithstanding the foregoing, if such instructions or
Gift/Transfer Request Form are to sell all of the Account Shares of such
Participant for which reinvestment has been elected, the Administrator shall
have the right not to effect such sale until after such Dividend has been
reinvested pursuant to the Plan and the shares of Common Stock purchased
therewith are credited to his or her Account.
Withdrawal of Account Shares shall not affect reinvestment of
Dividends on the Account Shares withdrawn unless (i) the Participant is no
longer the record holder of such Account Shares, (ii) such reinvestment is
changed by the Participant by delivering to the Administrator written
instructions or an Enrollment Form to that effect pursuant to Section 6.1 hereof
or (iii) the Participant has terminated his or her participation in the Plan.
Section 6.3. Right of Termination of Participation. A
Participant may indicate the Participant's desire to terminate his or her
participation in the Plan by notifying the Administrator to that effect. The
Administrator shall treat such request as a withdrawal of all of such
Participant's Account Shares pursuant to Section 6.2 hereof. The Administrator,
in addition to mailing certificates representing all whole Account Shares, if
any, pursuant to Section 6.2 hereof, shall pay to the Participant an amount
equal to the cash value of any fraction of a share credited to his Account. Such
fraction of a share shall be valued at the Company Share Purchase Price for the
trading day immediately preceding the date of receipt of such notification. The
Administrator shall send such certificate and payment to the withdrawing
Participant promptly after its receipt of such notification.
Section 6.4. Stock Splits, Stock Dividends and Rights
Offerings. Any shares or other securities issued by the Company representing
stock splits or other noncash distributions on Account Shares shall be
registered directly in the Participant's name on the stock records of the
Company and credited to such Participant's Account. Stock splits, combinations,
recapitalizations and similar events affecting the Common Stock shall, as to
shares credited to Accounts of Participants, be credited to such Accounts on a
pro rata basis.
In the event of a rights offering, a Participant shall receive
rights based upon the total number of whole shares credited to his or her
Account. If any such rights which have been credited to a Participant's Account
are redeemed by the Company for cash, such cash shall be reinvested to the same
extent as if it were a Dividend.
Section 6.5. Shareholder Materials; Voting Rights. The Company
shall send or forward to each Participant all applicable proxy solicitation
materials, other shareholder materials or consent solicitation materials.
Participants shall have the exclusive right to exercise all voting rights
respecting Account Shares credited to their respective Accounts. A Participant
may vote any of his or her whole or fractional Account Shares of which he or she
is the record holder in person or by proxy. A Participant's proxy card shall
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include his or her whole or fractional Account Shares and shares of Common Stock
which have the right to vote of which he or she is the record holder. Account
Shares shall not be voted unless a Participant or his or her proxy votes them.
Solicitation of the exercise of Participants' voting rights by
the management of the Company or others under a proxy or consent provision
applicable to all holders of Common Stock shall be permitted. Solicitation of
the exercise of Participants' tender or exchange offer rights by management of
the Company or others shall also be permitted.
Section 6.6. Notices to Participants. At least once during
each calendar year, the Administrator shall send to each Participant a Statement
of Account. The Administrator shall send additional Statements of Account to a
Participant upon the reasonable written request therefore by such Participant.
Additionally, the Administrator shall send a transaction notice setting forth
all of the information required by the Company's By-laws and applicable law to a
Participant (and to any transferor, transferee or pledgee interested in the
transaction other than such Participant) within two Business Days after any
Account Shares are transferred to or from such Participant's Account or any
pledge or release of a pledge of Account Shares is registered in such
Participant's Account.
ARTICLE VII
CERTIFICATES AND FRACTIONS OF SHARES
Section 7.1. Certificates. A Participant may, at any time or
from time to time, request to receive a certificate for all or a portion of his
whole Account Shares and upon such request the Administrator shall promptly
(and, in any event, within two Business Days of the receipt of such request)
mail such a certificate to such Participant. Unless otherwise requested by the
Participant, any such shares shall continue to be Account Shares notwithstanding
the issuance of such certificates.
Section 7.2. Fractional Shares. Fractions of shares of Common
Stock or other Eligible Securities shall be credited to Accounts; provided,
however, that no certificate for a fraction of a share shall be distributed to
any Participant at any time.
ARTICLE VIII
CONCERNING THE PLAN
Section 8.1. Suspension, Modification and Termination. The
Company may by written notice to the Administrator and each affected Participant
at any time and from time to time, at its sole option, (a) suspend or terminate
the Plan and (b) modify or amend the Plan to (i) permit dividends on Common
Stock to be reinvested in shares of Common Stock purchased in the open market if
a Participant so desires (including permitting a reinvestment pertaining only to
a portion of the Participant's position, with the balance in cash, or the entire
position), (ii) permit the Company to process payroll deductions for employees
who are Participants, (iii) determine the extent to which the Company would pay
the fees, costs and expenses of the Administrator, (iv) determine whether
Account Shares will be certificated routinely or only on a Participant's request
or (v) increase or decrease the minimum amounts of initial cash investments
pursuant to Section 2.2 or optional cash investments pursuant to Section 2.4 or
to establish a maximum amount therefore. Notwithstanding the foregoing, no such
modification or amendment shall decrease the Account of any Participant or
result in a distribution to the Company of any amount credited to the Account of
any Participant; and provided, further, that no such modification or amendment
shall affect the rights, duties or obligations of the Administrator without its
prior written consent. Upon complete termination of the Plan, the Accounts of
all Participants (or in the case of partial termination of the Plan, the
Accounts of all affected Participants) shall be treated as if each such
Participant had elected to terminate his participation in the Plan pursuant to
Section 6.3 hereof, except that any fraction of a share shall be valued as of
the trading date immediately preceding the date on which the Plan is terminated.
Section 8.2. Rules and Regulations. The Administrator may from
time to time adopt such administrative rules and regulations concerning the Plan
as it deems necessary or desirable for the administration of the Plan. The
Administrator shall have the power and authority to interpret the terms and the
provisions of the Plan and shall interpret and construe the Plan and reconcile
any inconsistency or supply any omitted detail in a manner consistent with the
general terms of the Plan and applicable law.
Section 8.3. Termination of a Participant. If a Participant
does not have at least one whole Account Share, as determined by the
Administrator from time to time, for which reinvestment of Dividends has been
elected, the Participant's participation in the Plan may be terminated by the
Administrator after written notice, to be given reasonably in advance of such
termination, is mailed to such Participant at his or her address of record. Upon
such termination, the Account of such Participant shall be treated as if he or
she had elected to terminate his or her participation in the Plan pursuant to
Section 6.3 hereof, except that any fraction of a share shall be valued at the
Company Share Purchase Price for the trading date immediately preceding the date
on which such Participant's participation is terminated.
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Section 8.4. Cash Pending Investment. Dividends, optional cash
investments and initial cash investments held pending investment in Common Stock
pursuant to the Plan shall be held by the Administrator in a non-interest
bearing account segregated from any other funds or monies of the Company or the
Administrator.
Section 8.5. Notices and Payments. All notices, communications
and other items (including Statements of Account, transaction notices and
certificates) to be given or sent to a Participant may be mailed to such
Participant by first class mail (or at the Administrator's option, by registered
or certified mail), postage prepaid, addressed to such Participant's address of
record. Any payment due to a Participant under the Plan may be made by check
mailed to such Participant in accordance with the preceding sentence.
Section 8.6. Tax Payments. Notwithstanding anything herein to
the contrary, the Administrator shall, to the extent required under applicable
federal law, (i) deduct and withhold federal tax required to be deducted or
withheld, if any, from dividends credited to a Participant's Account (whether or
not reinvested), from the proceeds of the sale of shares or rights or from other
payments made under the Plan and (ii) prepare and file with the IRS and with
Participants information returns reporting payments made under the Plan and
taxes withheld therefrom.
ARTICLE IX
[RESERVED]
ARTICLE X
PROMOTIONAL ACTIVITIES
Section 10.1. Registration Statement and Prospectus. The
Company shall, at its expense, prepare a registration statement to be filed with
the SEC under the Securities Act of 1933 and a prospectus thereof describing in
plain and factual tone and approach the Plan in its generalized form, including
all material features, contractual terms and fee and processing arrangements.
Such prospectus shall include a prominent statement on the cover to the effect
that the services under the Plan are sponsored by the Company and administered
by the Administrator will indicate that the Eligible Securities held in Accounts
for Participants are not subject to protection under the Securities Investor
Protection Act of 1970, as amended, and will inform recipients that they must
make independent investment decisions based on their own judgment and research.
A copy of the Plan may be included as part of the prospectus. The prospectus may
not (a) describe Eligible Securities, (b) encourage any Person to engage in any
particular transactions, whether purchases or sales, (c) include any advice or
recommendations or (d) contain any information not expressly permitted by this
Section 10.1. Along with the prospectus, the Company may distribute to
policyowners, associates, shareholders or employees of the Company a letter
accompanying the prospectus which briefly references the Plan and refers such
shareholders or employees to the prospectus for additional information. The
prospectus may be forwarded to persons who are not members of one of the
above-described groups only upon request.
Section 10.2. Other Promotional Activities. (a) The
Administrator may not place any paid advertisements relating to the Plan. The
Administrator may issue press releases announcing the Plan generally and may
include brief descriptive summaries of transfer agent and Plan services in
industry publications. Any such release or summary may describe briefly and
generally the mix of Plan features, but may not identify the Company. In
addition, the Administrator may make appearances at industry conferences to
discuss transfer agent industry initiatives, including the features available
under the Plan. In providing information under the Plan, the Administrator may
not offer any advice or recommendations regarding participation in the Plan or
suggest that any Person use the Plan or effect any securities transactions. The
Company may make brief reference to the existence of the Plan in annual and
quarterly corporate reports, but will otherwise not communicate about the Plan
except as may become necessary in special circumstances to fulfill the Company's
disclosure responsibilities.
(b) The Administrator may respond to inquiries
concerning the Plan (including inquiries regarding the Company's securities
generally which are not specifically directed at the Plan) including unsolicited
inquiries initiated by Persons who are not, at the time of the inquiry,
shareholders or employees of the Company. In responding to such inquiries, the
Administrator will not identify Eligible Securities except as requested by the
inquiries, and then only as necessary to be responsive to the specific inquiry.
The Administrator may, in response to inquiries it receives regarding its
securities generally which are not specifically directed at the Plan, include
the brochure (or any information contained therein) as part of such response.
The Company shall refer any inquiries it receives regarding the Plan to the
Administrator.
(c) Without limiting any provision of the Plan,
neither the Administrator nor the Company will engage in any "special selling
efforts" within the meaning of Regulation M promulgated under the Exchange Act
through the operation of the Plan or in connection with making information
publicly available about the Plan.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. Controlling Law. This Plan shall be construed,
regulated and administered under the laws of the State of New York without
regard to conflicts of laws principles.
Section 11.2. Acceptance of Terms and Conditions of Plan by
Participants. Each Participant, as a condition of participation herein, for
himself or herself, his or her heirs, executors, administrators, legal
representatives and assigns, approves and agrees to be bound by the provisions
of this Plan and any subsequent amendments hereto, and all actions of the
Company and the Administrator hereunder.
Section 11.3. Company's Role. Except as expressly set forth in
the Plan, and for processing payroll deductions and assigned benefits and
commissions to the extent the Company's employees, policyowners and marketing
representatives participate in the Plan, the Company will have no role in the
administration or the processing of any transaction under the Plan. Without
limiting any other provisions of the Plan, neither the Company nor its
Affiliates may (a) make any bids, purchases, offers or sales for or of Eligible
Securities under the Plan or (b) supply the Administrator or any broker or
dealer executing purchases with Eligible Securities for purchase by Participants
through the Plan. If the Company receives any optional cash investments or
initial cash investments or assigned benefits or commissions which are intended
to be invested pursuant to Article III hereof, it shall transmit the funds so
received promptly (and in any event no later than the opening of business on the
next Business Day if such funds are received before 12:00 noon, local time, and
by noon of the next Business Day if such funds are received later in the day) to
the Administrator.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION, ESTIMATED
<Table>
Securities and Exchange Commission Fee $ 3,060
Printing expense--Registration Statement and Prospectus 5,000
Transfer Agent and Registrar 1,000
Legal Fees 10,000
Accountants' Fees 5,000
Miscellaneous Fees and Expenses 1,040
-------
Total $25,100
=======
</Table>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 109 of Title Seven of the Colorado Revised Statutes
enables a Colorado corporation to indemnify its officers, directors, employees
and agents against liabilities, damages, costs and expenses for which they are
liable if: (i) in their Official Capacities (as defined by this statute) if they
acted in good faith and had no reasonable basis to believe their conduct was not
in the best interest of the Registrant; (ii) in all other cases, that their
conduct was at least not opposed to the Registrant's best interests; and (iii)
in the case of any criminal proceeding, they had no reasonable cause to believe
their conduct was unlawful.
The Registrant's Articles of Incorporation limit the liability
of directors to the full extent provided by Colorado law.
The Registrant's Bylaws provide indemnification to officers,
directors, employees and agents to the fullest extent provided by Colorado law.
ITEM 16. EXHIBITS
5.1 Opinion of Jones & Keller, P.C. regarding the legality
of the Class A common stock being registered(1)
23.1 Consent of KPMG LLP*
23.2 Consent of Jones & Keller, P.C. (See Exhibit 5.1)(1)
24.1 Power of Attorney (see signature page)(1)
- ----------
* Filed herewith.
(1) Previously filed.
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ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
this Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Exchange Act of 1934, as amended, that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
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otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Amendment No. 3
to registration statement to be signed on its behalf by the undersigned,
thereunder duly authorized, in Austin, Texas, on August 30, 2001.
CITIZENS, INC.
By: /s/ HAROLD E. RILEY
--------------------------------------
Harold E. Riley, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 3 to registration statement has been signed by the following
persons in the capacities and on the date indicated.
<Table>
<Caption>
Signatures Title Date
- ---------- ----- ----
/s/ HAROLD E. RILEY Chairman of the Board August 30, 2001
- ---------------------------------------
Harold E. Riley
/s/ MARK A. OLIVER Chief Executive Officer August 30, 2001
- --------------------------------------- and Director
by Mark A. Oliver, attorney-in-fact for
Rick D. Riley
/s/ MARK A. OLIVER President and Director August 30, 2001
- ---------------------------------------
Mark A. Oliver, FLMI
/s/ MARK A. OLIVER Executive Vice President, August 30, 2001
- --------------------------------------- Secretary/Treasurer and CFO
by Mark A. Oliver, attorney-in-fact for
Jeffrey J. Wood, CPA
/s/ MARK A. OLIVER Director August 30, 2001
- ---------------------------------------
by Mark A. Oliver, attorney-in-fact for
Joe R. Reneau, M.D.
/s/ MARK A. OLIVER Director August 30, 2001
- ---------------------------------------
by Mark A. Oliver, attorney-in-fact for
Steven F. Shelton
/s/ MARK A. OLIVER Director August 30, 2001
- ---------------------------------------
by Mark A. Oliver, attorney-in-fact for
Ralph M. Smith. Th.D.
/s/ MARK A. OLIVER Director August 30, 2001
- ---------------------------------------
by Mark A. Oliver, attorney-in-fact for
Timothy T. Timmerman
</Table>
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<Table>
/s/ MARK A. OLIVER Director August 30, 2001
- ---------------------------------------
by Mark A. Oliver, attorney-in-fact for
E. Dean Gage
/s/ MARK A. OLIVER Director August 30, 2001
- ---------------------------------------
by Mark A. Oliver, attorney-in-fact for
Richard C. Scott
</Table>
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EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
23.1 Consent of KPMG LLP
</Table>