ZIEGLER COMPANIES INC
SC 14D1/A, 1998-12-03
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES
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<PAGE>
 
  AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 2, 1998.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                SCHEDULE 14D-1
 
              TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
                                AMENDMENT NO. 2
 
                               ----------------
 
                            PMC INTERNATIONAL, INC.
                           (NAME OF SUBJECT COMPANY)
 
                               ----------------
 
                          THE ZIEGLER COMPANIES, INC.
                                  ZACQ CORP.
                                   (BIDDERS)
 
                               ----------------
 
                    COMMON STOCK, PAR VALUE $.01 PER SHARE
                    PREFERRED STOCK, NO PAR VALUE PER SHARE
                       (TITLES OF CLASSES OF SECURITIES)
 
                          [COMMON STOCK: 693437-40-2]
                        [PREFERRED STOCK: 693437-20-4]
                   (CUSIP NUMBERS OF CLASSES OF SECURITIES)
 
                               ----------------
 
                           S. CHARLES O'MEARA, ESQ.
                          THE ZIEGLER COMPANIES, INC.
                              215 N. MAIN STREET
                           WEST BEND, WI 53095-3317
                                (414) 334-5521
          (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
           RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
 
                               ----------------
 
                                   COPY TO:
 
                           CONRAD G. GOODKIND, ESQ.
                                QUARLES & BRADY
                           411 EAST WISCONSIN AVENUE
                          MILWAUKEE, WISCONSIN 53202
                                (414) 277-5000
 
                           CALCULATION OF FILING FEE
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- -------------------------------------------------------------------------------
 
    TRANSACTION VALUATION: $10,559,070.90AMOUNT OF FILING FEE(1): $2,111.90
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) The Bidders previously paid the filing fee with the Schedule 14D-1
    previously filed on November 10, 1998.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
   and identify the filing with which the offsetting fee was previously paid.
   Identify the previous filing by registration statement number, or the Form
   or Schedule and the date of its filing.
 
              AMOUNT PREVIOUSLY PAID: NOT APPLICABLEFILING PARTY:
 
               FORM OF REGISTRATION NO.:              DATE FILED:
 
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<PAGE>
 
                                 SCHEDULE 14D-1
 
                                                        CUSIP NO. 693437-20-4
  CUSIP NO. 693437-40-2
 
 
 
- --------------------------------------------------------------------------------
 1 NAME OF REPORTING PERSONS ZACQ CORP.
   OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
 
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 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
                                                                (A)[_]
                                                                (B) [X]
 
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 3 SEC USE ONLY
 
- --------------------------------------------------------------------------------
 4 SOURCE OF FUNDS (SEE INSTRUCTIONS):
  WC (FROM PARENT)
 
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 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
  ITEMS 2(E) OR 2(F)
                                                                   [_]
 
- --------------------------------------------------------------------------------
 6 CITIZENSHIP OR PLACE OF ORGANIZATION
  COLORADO
 
- --------------------------------------------------------------------------------
 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
  -0-
 
- --------------------------------------------------------------------------------
 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
                                                                   [_]
 
- --------------------------------------------------------------------------------
 9 PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
  0%
 
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
  CO
 
- --------------------------------------------------------------------------------
 
                                       2
<PAGE>
 
                                SCHEDULE 14D-1
 
                                                        CUSIP NO. 693437-20-2
  CUSIP NO. 693437-40-2
 
 
 
- -------------------------------------------------------------------------------
 1 NAME OF REPORTING PERSONS: THE ZIEGLER COMPANIES, INC.
   I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON: (ENTITIES ONLY).
 
- -------------------------------------------------------------------------------
 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
                                                                (A)[_]
                                                                (B) [X]
 
- -------------------------------------------------------------------------------
 3 SEC USE ONLY
 
- -------------------------------------------------------------------------------
 4 SOURCE OF FUNDS
  WC
 
- -------------------------------------------------------------------------------
 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
  ITEMS 2(E) OR 2(F)
                                                                   [_]
 
- -------------------------------------------------------------------------------
 6 CITIZENSHIP OR PLACE OF ORGANIZATION
  WISCONSIN
 
- -------------------------------------------------------------------------------
 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
  0 COMMON SHARES (OPTION TO PURCHASE 4,500,000 COMMON SHARES AND NOTE WHICH
     IS CONVERTIBLE INTO 5,833,333 COMMON SHARES)
  311,818 PREFERRED SHARES 
 
- -------------------------------------------------------------------------------
 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
                                                                   [_]
 
- -------------------------------------------------------------------------------
 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
  0% OF COMMON SHARES (65.72% IF OPTION FULLY EXERCISED AND NOTE FULLY
     CONVERTED)
  69.3% OF PREFERRED SHARES 
 
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
 
- -------------------------------------------------------------------------------
 
 
                                       3
<PAGE>
 
  This Amendment No. 2 to Schedule 14D-1 relates to a tender offer by ZACQ
Corp., a Colorado corporation (the "Offeror") and a wholly-owned subsidiary of
The Ziegler Companies, Inc., a Wisconsin corporation (the "Parent"), for all
outstanding shares (including scrip) of Common Stock, par value $.01 per share
(the "Common Shares") and all outstanding shares of Preferred Stock, no par
value per share (the "Preferred Shares") of PMC International, Inc., a
Colorado corporation (the "Company"), at a purchase price of $0.60 per Common
Share, net to the seller in cash, without interest thereon and $2.50 per
Preferred Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in Offer to Purchase, as
amended, and the related Letter of Transmittal.
 
  In addition, by this Amendment, the Parent and the Offeror distribute a letter
to the shareholders (and scrip holders) of the Company from the Parent and the
Offeror relating to the acquisition by the Parent of 311,818 Preferred Shares.

ITEM 1. SECURITY AND SUBJECT COMPANY
 
  (a) The name of the subject company is PMC International, Inc., a Colorado
corporation (the "Company"). The address of the principal executive offices of
the Company is set forth in Section 8 ("Certain Information Concerning the
Company") of the Offer to Purchase, dated November 9, 1998 (the "Offer to
Purchase"), a copy of which is filed as Exhibit (a)(1) hereto.
 
  (b) This Statement relates to a tender offer by ZACQ Corp., a Colorado
corporation (the "Offeror") and a wholly-owned subsidiary of The Ziegler
Companies, Inc., a Wisconsin corporation ("Parent"), to purchase all
outstanding shares of Common Stock, par value $.01 per share (the "Common
Shares"), and all outstanding shares of Preferred Stock, no par value per
share (the "Preferred Shares") (the Common Shares and Preferred Shares shall
together be known as the "Shares"), of the Company, at a purchase price of
$0.60 per Common Share, net to the seller in cash, and $2.50 per Preferred
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal, a
copy of which is filed as Exhibit (a)(2) hereto. The Offer to Purchase and
Letter of Transmittal (which, together with any supplements or amendments,
collectively constitute the "Offer") are incorporated herein by reference.
Information concerning the number of outstanding Shares is set forth in the
Introduction of the Offer to Purchase and is incorporated herein by reference.
 
  (c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
 
ITEM 2. IDENTITY AND BACKGROUND
 
  (a)-(g) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror") and Schedule I of the
Offer to Purchase is incorporated herein by reference. During the past five
years, neither the Offeror, Parent, nor any of the persons listed in Schedule
I of the Offer to Purchase has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction, and, as a result of such proceeding, was or is subject to a
judgment, decree or final order enjoining further violation of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
 
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
 
  (a)-(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 11 ("Background
of the Offer"), Section 12 ("Purpose of the Offer and the Merger; Plans for
the Company") and Section 13 ("The Merger Agreement") of the Offer to Purchase
is incorporated herein by reference.
 
                                       4
<PAGE>
 
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
 
  (a)-(b) The information set forth in the Introduction and Section 10 ("Source
and Amount of Funds") of the Offer to Purchase is incorporated herein by
reference.
 
  (c) Not applicable.
 
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
 
  Introductory Paragraph: (a)-(e) The information set forth in the
Introduction, Section 11 ("Background of the Offer"), Section 12 ("Purpose of
the Offer and the Merger; Plans for the Company") and Section 13 ("The Merger
Agreement") of the Offer to Purchase is incorporated herein by reference.
 
  (f)-(g) The information set forth in Section 7 ("Effect of the Offer on
Market for Common Shares, Price Quotations and Registration Under the Exchange
Act") of the Offer to Purchase is incorporated herein by reference.
 
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
 
  (a) The information contained in Items 7 and 9 of the cover pages hereto is
incorporated herein by reference. The information set forth in the
Introduction, Section 9 ("Certain Information Concerning the Parent and the
Offeror") and Schedule I of the Offer to Purchase also is incorporated herein
by reference.
 
  (b) The information contained in Section 9 ("Certain Information Concerning
the Parent and the Offeror"), Section 12 ("Purpose of the Offer and the Merger;
Plans for the Company"), Section 13 ("The Merger Agreement") and Schedule I of
the Offer to Purchase is incorporated herein by reference.
 
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
     TO THE SUBJECT COMPANY'S SECURITIES
 
  The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 11 ("Background of
the Offer"), Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company"), Section 13 ("The Merger Agreement"), and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
 
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
 
  The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
 
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
 
  The information set forth in Section 9 ("Certain Information Concerning the
Parent and the Offeror") of the Offer to Purchase is incorporated herein by
reference.
 
  The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a holder of Common Shares or Preferred Shares of the Company
whether to sell, tender or hold securities being sought in the Offer.
 
ITEM 10. ADDITIONAL INFORMATION
 
  (a) The information set forth in Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 10 ("Source and
Amount of Funds"), Section 11 ("Background of the Offer"), and Section 13 ("The
Merger Agreement") of the Offer to Purchase is incorporated herein by
reference.
 
  (b)-(c) The information set forth in Section 16 ("Certain Regulatory and
Legal Matters") of the Offer to Purchase is incorporated herein by reference.
 
  (d) The information set forth in Section 7 ("Effect of the Offer on Market
for Common Shares, Price Quotations and Regulation Under the Exchange Act"),
Section 10 ("Source and Amount of Funds"), and Section 16 ("Certain Regulatory
and Legal Matters") of the Offer to Purchase is incorporated herein by
reference.
 
  (e) Not applicable.
 
  (f) Reference is hereby made to the Offer to Purchase and the related Letter
of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), and are incorporated herein by reference in their entirety.
 
                                       5
<PAGE>
 
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
 
<TABLE>
     <C>     <S>
     (a)(1)  Offer to Purchase, dated November 9, 1998.*
     (a)(2)  Form of Letter of Transmittal, dated November 9, 1998.*
     (a)(3)  Form of Notice of Guaranteed Delivery.*
     (a)(4)  Form of Letter for use by Brokers, Dealers, Commercial Banks,
              Trust Companies and Other Nominees.*
     (a)(5)  Form of Letter to Clients from Brokers, Dealers, Commercial Banks,
              Trust Companies and Other Nominees.*
     (a)(6)  Form of Guidelines for Certification of Taxpayer Identification
              Number on Substitute Form W-9.*
     (a)(7)  Text of Joint Press Release, dated November 3, 1998.*
     (a)(8)  Letter to Shareholders (and scrip holders) of PMC International,
              Inc. from PMC International, Inc., The Ziegler Companies, Inc.
              and ZACQ Corp., dated November 23, 1998.**
     (a)(9)  Letter to Shareholders (and scrip holders) of PMC International,
              Inc., from The Ziegler Companies, Inc. and ZACQ Corp., dated 
              December 3, 1998.
     (b)(1)  Not Applicable.
     (c)(1)  Agreement and Plan of Merger, dated as of November 3, 1998, among
              The Ziegler Companies, Inc., ZACQ Corp. and PMC International,
              Inc.*
     (c)(2)  Preferred Stock Option Agreement, dated as of October 15, 1998,
              between The Ziegler Companies, Inc. and PMC International, Inc.*
     (c)(3)  Convertible Promissory Note, dated October 15, 1998, under which
              PMC International, Inc. promises to pay $500,000.00 to the order
              of The Ziegler Companies, Inc.*
     (c)(4)  Credit Agreement, dated November 3, 1998, between PMC
              International, Inc. and The Ziegler Companies, Inc.*
     (c)(5)  Option for Common Stock, dated November 3, 1998, between PMC
              International, Inc. and The Ziegler Companies, Inc.*
     (c)(6)  Guaranty, dated October 15, 1998, by PMC Investment Services,
              Inc.*
     (c)(7)  Guaranty, dated October 15, 1998, by Portfolio Technology
              Services, Inc.*
     (c)(8)  Guaranty, dated October 15, 1998, by Portfolio Management
              Consultants, Inc.*
     (c)(9)  General Business Security Agreement, dated October 15, 1998, by
              PMC International, Inc.*
     (c)(10) General Business Security Agreement, dated October 15, 1998, by
              PMC Investment Services, Inc.*
     (c)(11) General Business Security Agreement, dated October 15, 1998, by
              Portfolio Technology Services, Inc.*
     (c)(12) General Business Security Agreement, dated October 15, 1998, by
              Portfolio Management Consultants, Inc.*
     (c)(13) Employment Agreement dated November 3, 1998, between Scott A.
              MacKillop and PMC International, Inc.*
     (c)(14) Shareholder Tender Agreements (including list of persons executing
              such agreements and the number of Common Shares).*
     (c)(15) First Amendment to Stock Purchase Agreement, dated November 3,
              1998, among PMC International, Inc. and the former ADAM
              Shareholders.*
     (d)     Not Applicable.
     (e)     Not Applicable.
     (f)     Not Applicable.
</TABLE>
- --------
 *Previously Filed with Schedule 14D-1 on November 10, 1998.
**Previously Filed with Amendment No. 1 to Schedule 14D-1 on November 23, 1998. 

                                       6
<PAGE>
 
                                   SIGNATURES
 
  After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
 
                                          ZACQ Corp.
 
                                             /s/ S. Charles O'Meara
                                          BY: _________________________________
                                             Name: S. Charles O'Meara
                                             Title: Secretary
 
                                          The Ziegler Companies, Inc.
 
                                             /s/ S. Charles O'Meara
                                          BY: _________________________________
                                             Name: S. Charles O'Meara
                                             Title: Senior Vice President and
                                                  General Counsel
 
Dated: December 3, 1998
 
                                       7
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                                                    PAGE
  -------                                                                  ----
 <C>       <S>                                                             <C>
 (a)(1)    Offer to Purchase, dated November 9, 1998.                        *
 (a)(2)    Form of Letter of Transmittal, dated November 9, 1998.            *
 (a)(3)    Form of Notice of Guaranteed Delivery.                            *
 (a)(4)    Form of Letter for use by Brokers, Dealers, Commercial Banks,
            Trust Companies and Other Nominees.                              *
 (a)(5)    Form of Letter to Clients from Brokers, Dealers, Commercial
            Banks, Trust Companies and Other Nominees.                       *
 (a)(6)    Form of Guidelines for Certification of Taxpayer
            Identification Number on Substitute Form W-9.                    *
 (a)(7)    Text of Joint Press Release, dated November 3, 1998.              *
 (a)(8)    Letter to Shareholders (and scrip holders) of PMC
            International, Inc., from PMC International, Inc., The
            Ziegler Companies, Inc. and ZACQ Corp., dated November 23,
            1998.                                                           **
 (a)(9)    Letter to Shareholders (and scrip holders) of PMC
            International, Inc., from The Ziegler Companies, Inc. and ZACQ 
            Corp., dated December 3, 1998.
 (b)(1)    Not Applicable.
 (c)(1)    Agreement and Plan of Merger, dated as of November 3, 1998,
            among The Ziegler Companies, Inc., ZACQ Corp. and PMC
            International, Inc.                                              *
 (c)(2)    Preferred Stock Option Agreement, dated as of October 15,
            1998, between The Ziegler Companies, Inc. and PMC
            International, Inc.                                              *
 (c)(3)    Convertible Promissory Note, dated October 15, 1998, under
            which PMC International, Inc. promises to pay $500,000.00 to
            the order of The Ziegler Companies, Inc.                         *
 (c)(4)    Credit Agreement, dated November 3, 1998, between PMC
            International, Inc. and The Ziegler Companies, Inc.              *
 (c)(5)    Option for Common Stock, dated November 3, 1998, between PMC
            International, Inc. and The Ziegler Companies, Inc.              *
 (c)(6)    Guaranty, dated October 15, 1998, by PMC Investment Services,
            Inc.                                                             *
 (c)(7)    Guaranty, dated October 15, 1998, by Portfolio Technology
            Services, Inc.                                                   *
 (c)(8)    Guaranty, dated October 15, 1998, by Portfolio Management
            Consultants, Inc.                                                *
 (c)(9)    General Business Security Agreement, dated October 15, 1998,
            by PMC International, Inc.                                       *
 (c)(10)   General Business Security Agreement, dated October 15, 1998,
            by PMC Investment Services, Inc.                                 *
 (c)(11)   General Business Security Agreement, dated October 15, 1998,
            by Portfolio Technology Services, Inc.                           *
 (c)(12)   General Business Security Agreement, dated October 15, 1998,
            by Portfolio Management Consultants, Inc.                        *
 (c)(13)   Employment Agreement dated November 3, 1998, between Scott A.
            MacKillop and PMC International, Inc.                            *
 (c)(14)   Shareholder Tender Agreements (including list of persons
            executing such agreements and the number of Common Shares).      *
 (c)(15)   First Amendment to Stock Purchase Agreement, dated November
            3, 1998, among PMC International, Inc. and the former ADAM
            Shareholders.                                                    *
 (d)       Not Applicable.
 (e)       Not Applicable.
 (f)       Not Applicable.
</TABLE>
- --------
 *Previously filed with Schedule 14D-1 on November 10, 1998.
**Previously filed with Amendment No. 1 to Schedule 14D-1 on November 23, 1998.

                                       8

<PAGE>
 
                                                      SUPPLEMENTAL LETTER NO. 2
 
                                                               DECEMBER 3, 1998
 
To the Holders of Common Stock (including scrip)
 and Preferred Stock of PMC International, Inc.
 
  Pursuant to the Offer to Purchase dated November 9, 1998 (the "Offer to
Purchase"), the Letter of Transmittal, dated November 9, 1998 (the "Letter of
Transmittal"), and the supplemental letter dated November 23, 1998
("Supplemental Letter #1"), ZACQ Corp., a Colorado corporation (the "Offeror")
and a wholly-owned subsidiary of The Ziegler Companies, Inc., a Wisconsin
corporation (the "Parent"), has offered to purchase all outstanding shares
(including scrip) of Common Stock, par value $.01 per share (the "Common
Shares") and all outstanding shares of Preferred Stock, no par value per share
(the "Preferred Shares") (collectively, the Common Shares and the Preferred
Shares are referred to as the "Shares"), of PMC International, Inc., a
Colorado corporation, (the "Company"), at a purchase price of $0.60 per Common
Share, net to the seller in cash, without interest thereon, and $2.50 per
Preferred Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and the
Letter of Transmittal. Shareholders of the Company should carefully consider
the following additional information contained in this supplemental letter in
deciding whether to tender their Shares. This Supplemental Letter #2 (as it
may be supplemented or amended) together with the Offer to Purchase, the
Letter of Transmittal and Supplemental Letter #1 constitute the "Offer."
 
         CONVERSION OF $500,000 NOTE AND EXERCISE OF PREFERRED OPTION
 
  As described on Page 2 of the Offer to Purchase, the Company borrowed
$500,000 from the Parent, pursuant to a Convertible Promissory Note, dated
October 15, 1998 (the "First Note"), and the Company granted to the Parent the
right to convert, at the Parent's option, the outstanding principal balance of
the First Note at the time of conversion or such lesser amount as selected by
the Parent, in whole or in part, into Preferred Shares at a conversion price
of $2.50 per Preferred Share (the "Preferred Conversion Rights").
Additionally, as also described on page 2 of the Offer to Purchase, the
Company granted to the Parent an option, pursuant to a Stock Option Agreement
dated October 15, 1998 (the "First Stock Option Agreement"), to purchase
111,818 Preferred Shares (the "Preferred Option") at a price per Preferred
Share of $2.50.
 
  Effective December 4, 1998, the Parent exercised (i) the Preferred
Conversion Rights, in whole, by converting the entire $500,000 outstanding
principal balance of the First Note into 200,000 Preferred Shares and (ii) the
Preferred Option by purchasing 111,818 Preferred Shares from the Company at an
aggregate purchase price of $279,545 (or $2.50 per Preferred Share). Pursuant
to such exercises, the Parent beneficially owns 311,818 Preferred Shares, or
approximately 69.3% of the issued and outstanding Preferred Shares after such
exercises. As described on page 1 of the Offer to Purchase, the portion of the
Minimum Condition (as defined in the Offer to Purchase) relating to the
Preferred Shares has been satisfied. The Parent now has sufficient voting
power to approve the merger of the Company on behalf of the class of holders
of Preferred Shares without the affirmative vote of any other holder of
Preferred Shares.
 
  Shareholders of the Company should refer to the Offer to Purchase for a
discussion of the terms and conditions of the Offer, which terms and
conditions have not been changed or amended by this Supplemental Letter #2.
 
  The Offer and withdrawal rights will expire at 5:00 p.m. Eastern Time, on
Thursday, December 10, 1998, unless extended. Any shareholder desiring to
tender Shares (including scrip) must tender such Shares pursuant to the
procedures set forth in Section 3 of the Offer to Purchase.
 
                                          ZACQ Corp.
                                          The Ziegler Companies, Inc.
<PAGE>
 
                       THE DEPOSITARY FOR THE OFFER IS:
 
           FIRSTAR BANK MILWAUKEE, N.A., F/K/A FIRSTAR TRUST COMPANY
 
         By Mail:                  By Hand:            By Overnight Courier:
 
                         FIRSTAR BANK MILWAUKEE, N.A.
 
 Corporate Trust Services  Corporate Trust Services   Corporate Trust Services
  Box 2077 Milwaukee, WI   1555 North River Center    1555 North River Center
          53201                Drive Suite 301            Drive Suite 301
                             Milwaukee, WI 53212        Milwaukee, WI 53212
 
                                      or
 
                     c/o IBJ Schroder Bank & Trust Company
                                  Subcellar 1
                               One State Street
                           New York, New York 10004
 
              Facsimile for Eligible Institutions: (414) 905-5049
 
                      To confirm fax only: (414) 287-3905
 
  Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery
may be directed to the Information Agent at the telephone numbers and location
listed below. Shareholders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
 
                    The Information Agent for the Offer is:
 
                                   GEORGESON
                                & COMPANY INC.
 
                               ----------------
 
                               Wall Street Plaza
                           New York, New York 10005
 
                       Bankers and Brokers call collect:
                                (212) 440-9800
 
                          All Others Call Toll-Free:
                                1-800-223-2064
 
                                       2


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