<PAGE> 1
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
ALLIED GROUP, INC.
(NAME OF SUBJECT COMPANY)
NATIONWIDE GROUP ACQUISITION CORPORATION
NATIONWIDE MUTUAL INSURANCE COMPANY
(Bidders)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
019220102
(CUSIP Number of Class of Securities)
W. SIDNEY DRUEN
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
NATIONWIDE MUTUAL INSURANCE COMPANY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
TELEPHONE: (614) 249-7111
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
WITH A COPY TO:
ERIC M. FOGEL, ESQ.
HAROLD W. NATIONS, ESQ.
HOLLEB & COFF
55 E. MONROE STREET, SUITE 4100
CHICAGO, ILLINOIS 60603
TELEPHONE: (312) 807-4600
CALCULATION OF FILING FEE
TRANSACTION VALUATION* $1,439,800,444
AMOUNT OF FILING FEE** $287,960
* For purposes of calculating the filing fee only. This calculation
assumes the purchase of 30,634,052 shares of common stock, no par
value (the "Common Shares"), of ALLIED GROUP, INC. (the "Company") at
$47.00 net per share in cash.
** The amount of the filing fee, calculated in accordance with Rule
0-11(d) of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the aggregate value of cash offered by
Nationwide Group Acquisition Corporation for such number of Common
Shares.
<PAGE> 2
[ ] 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 applicable
Filing Party: Not applicable
Form or Registration No.: Not applicable
Date Filed: Not applicable
CUSIP NO. 019220102
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nationwide Mutual Insurance Company (E.I.N.: 31-4177100)
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
[ ] (a)
[ ] (b)
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
Ohio
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,498,600 Common Shares
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
4.9%
10. TYPE OF REPORTING PERSON
IC
2
<PAGE> 3
CUSIP NO. 019220102
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nationwide Group Acquisition Corporation (E.I.N.: 31-1598405)
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
[ ] (a)
[ ] (b)
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,498,600 Common Shares
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
4.9%
10. TYPE OF REPORTING PERSON
CO
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Allied Group, Inc., an Iowa
corporation (the "Company"). The address of the Company's principal executive
offices is 701 Fifth Avenue, Des Moines, Iowa 50391.
(b) This Tender Offer Statement on Schedule 14D-1 relates to the offer
by Nationwide Group Acquisition Corporation ("Purchaser"), an Ohio corporation
and a wholly owned subsidiary of Nationwide Mutual Insurance Company, an Ohio
corporation ("Parent"), to purchase all outstanding shares of
3
<PAGE> 4
common stock, no par value (the "Common Shares"), of the Company, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated May 19,
1998 ("Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") at a purchase price
of $47.00 per Common Share, net to the tendering shareholder in cash, without
interest thereon. According to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998, as of April 29, 1998, there were issued and
outstanding 30,634,052 Common Shares and 1,827,222 shares of 6-3/4% Series
preferred stock, no par value ("Preferred Shares"), of the Company. The
information set forth under "Introduction" in the Offer to Purchase annexed
hereto as Exhibit (a)(1) is incorporated herein by reference.
(c) The information set forth under "Price Range of Shares; Dividends"
in the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Statement is being filed by Purchaser and Parent. The
information set forth under "Introduction" and "Certain Information Concerning
Purchaser and Parent" in the Offer to Purchase and Schedule I thereto is
incorporated herein by reference.
(e)-(f) During the last five years, neither Purchaser, Parent nor any
persons controlling Purchaser, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I to the Offer to Purchase (i) has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person was or is subject to a judgment, decree or final order enjoining future
violations 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 under "Introduction," "Background of
the Offer; Contacts with the Company," "Purpose of the Offer and the Merger;
Plans for the Company; Certain Considerations," "Certain Information Concerning
the Company" and "Certain Information Concerning Purchaser and Parent" in the
Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under "Introduction" and "Source and
Amount of Funds" in the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE
BIDDER.
(a)-(e) The information set forth under "Introduction," "Background of
the Offer; Contacts with the Company" and "Purpose of the Offer and the Merger;
Plans for the Company; Certain Considerations" in the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth under "Introduction" and "Effect of
the Offer on the Market for the Common Shares; Exchange Listing and Exchange Act
Registration; Margin Regulations" in the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction," and
"Certain Information Concerning Purchaser and Parent" in 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 under "Introduction," "Purpose of the Offer
and the Merger; Plans for the Company; Certain Considerations" and "Certain
Legal Matters; Regulatory Approvals; Certain Litigation" in the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Fees and Expenses" in the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under "Certain Information Concerning
Purchaser and Parent" in the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
5
<PAGE> 6
(b)-(c) The information set forth under "Introduction" and "Certain
Legal Matters; Regulatory Approvals; Certain Litigation" in the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth under "Effect of the Offer on the Market
for the Common Shares; Exchange Listing and Exchange Act Registration; Margin
Regulations" in the Offer to Purchase is incorporated herein by reference.
(e) The information set forth under "Certain Legal Matters; Regulatory
Approvals; Certain Litigation" in the Offer to Purchase is incorporated herein
by reference.
(f) The information set forth in the Offer to Purchase and the Letter
of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated May 19, 1998.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees.
(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(7) Text of Press Release issued on May 18, 1998:
"Nationwide Will Commence Cash Tender Offer for All
the Common Stock of Allied Group, Inc., Proposes
Mutual Merger with Allied Mutual $47 Per Share Price
Represents 69% Premium."
(8) Letter to Allied Mutual Insurance Company from
Nationwide Mutual Insurance Company proposing merger
of Allied Mutual Insurance Company into Nationwide
Mutual Insurance Company.
(9) Letter to Allied Mutual Insurance Company from
Nationwide Mutual Insurance Company announcing offer
to merge and offering to purchase 6-3/4% Series
preferred stock.
(10) Letter to Nationwide Agents.
(11) Letter to TIG/Countrywide Independent Agents.
(12) Letter to Nationwide Enterprise Employees.
(13) Letter to Farmland Employees.
(14) Nationwide Policyholder Questions and Answers.
(15) Answers to Nationwide Agents' Questions.
(16) Answers to TIG/Countrywide Independent Agents'
Questions.
(17) Talking points for Nationwide Customer Service
Representatives.
(18) Talking points for Nationwide Benefit Counselors.
(19) Advertisement entitled "What's In It For You?"
(20) Summary Advertisement.
(21) Text of Press Release issued on May 18, 1998:
"Nationwide Insurance Dedicated to the Des Moines
Market -- Farmland Insurance Another Shining
Example."
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) (1) Complaint filed by Nationwide Mutual Insurance
Company and Nationwide Group Acquisition Corporation
in the United States District Court for the Southern
District of Iowa on May 18, 1998.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: May 19, 1998
NATIONWIDE MUTUAL INSURANCE COMPANY
By: /s/ David A. Diamond
-------------------------------
Name: David A. Diamond
Title: Vice President - Enterprise Controller
NATIONWIDE GROUP ACQUISITION CORPORATION
By: /s/ Mark B. Koogler
-------------------------------
Name: Mark B. Koogler
Title: Vice President - Associate General Counsel
7
<PAGE> 8
EXHIBIT INDEX
(a)(1) Offer to Purchase, dated May 19, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Text of Press Release issued on May 18, 1998:
"Nationwide Will Commence Cash Tender Offer for All the
Common Stock of Allied Group, Inc., Proposes Mutual Merger
with Allied Mutual $47 Per Share Price Represents 69%
Premium."
(a)(8) Letter to Allied Mutual Insurance Company from Nationwide
Mutual Insurance Company proposing merger of Allied Mutual
Insurance Company into Nationwide Mutual Insurance Company.
(a)(9) Letter to Allied Mutual Insurance Company from Nationwide
Mutual Insurance Company announcing offer to merge and
offering to purchase 6-3/4% Series preferred stock.
(a)(10) Letter to Nationwide Agents.
(a)(11) Letter to TIG/Countrywide Independent Agents.
(a)(12) Letter to Nationwide Enterprise Employees.
(a)(13) Letter to Farmland Employees.
(a)(14) Nationwide Policyholder Questions and Answers.
(a)(15) Answers to Nationwide Agents' Questions.
(a)(16) Answers to TIG/Countrywide Independent Agents' Questions.
(a)(17) Talking points for Nationwide Customer Service
Representatives.
(a)(18) Talking points for Nationwide Benefit Counselors.
(a)(19) Advertisement entitled "What's In It For You?"
(a)(20) Summary Advertisement.
(a)(21) Text of Press Release issued on May 18, 1998:
"Nationwide Insurance Dedicated to the Des Moines Market --
Farmland Insurance Another Shining Example."
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint filed by Nationwide Mutual Insurance Company and
Nationwide Group Acquisition Corporation in the United States
District Court for the Southern District of Iowa on May 18,
1998.
8
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ALLIED GROUP, INC.
AT
$47.00 NET PER COMMON SHARE
BY
NATIONWIDE GROUP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
NATIONWIDE MUTUAL INSURANCE COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 16, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF COMMON SHARES WHICH, TOGETHER WITH COMMON SHARES OWNED BY NATIONWIDE
MUTUAL INSURANCE COMPANY ("PARENT") AND NATIONWIDE GROUP ACQUISITION
CORPORATION, A WHOLLY OWNED SUBSIDIARY OF PARENT ("PURCHASER"), CONSTITUTE AT
LEAST 50.1% OF THE VOTING SECURITIES OF ALLIED GROUP, INC. ("COMPANY")
OUTSTANDING ON A FULLY DILUTED BASIS, (2) PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE PROVISIONS OF THE IOWA BUSINESS COMBINATION STATUTE ARE
INAPPLICABLE TO THE PROPOSED MERGER DESCRIBED HEREIN, AND (3) PARENT AND
PURCHASER HAVING OBTAINED ALL INSURANCE REGULATORY APPROVALS NECESSARY FOR THEIR
ACQUISITION OF CONTROL OF THE COMPANY AND ITS INSURANCE SUBSIDIARIES ON TERMS
AND CONDITIONS SATISFACTORY TO PURCHASER, IN ITS SOLE DISCRETION. SEE SECTION
14. THE OFFER IS NOT CONDITIONED UPON PURCHASER OBTAINING FINANCING.
IMPORTANT
PARENT INTENDS TO CONTINUE TO SEEK TO NEGOTIATE WITH THE COMPANY WITH
RESPECT TO THE ACQUISITION OF THE COMPANY. IF SUCH NEGOTIATIONS RESULT IN A
DEFINITIVE MERGER AGREEMENT BETWEEN THE COMPANY AND PARENT, CERTAIN MATERIAL
TERMS OF THE OFFER MAY CHANGE. ACCORDINGLY, SUCH NEGOTIATIONS COULD RESULT IN,
AMONG OTHER THINGS, TERMINATION OF THE OFFER AND SUBMISSION OF A DIFFERENT
ACQUISITION PROPOSAL TO THE COMPANY'S SHAREHOLDERS FOR APPROVAL.
Any shareholder desiring to tender all or any portion of such shareholder's
Common Shares should either (i) complete and sign the Letter of Transmittal (or
a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile thereof) and any other required documents to the
Depositary (as defined herein) and either deliver the certificates for such
Common Shares to the Depositary along with the Letter of Transmittal (or a
facsimile thereof) or deliver such Common Shares pursuant to the procedures for
book-entry transfers set forth in Section 3 prior to the expiration of the Offer
or (ii) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. A
shareholder having Common Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Common Shares.
Any shareholder who desires to tender Common Shares and whose certificates
for such shares are not immediately available, or who cannot comply with the
procedures for book-entry transfers described in this Offer to Purchase on a
timely basis, may tender such Common Shares by following the procedures for
guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials may
be obtained from the Information Agent.
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON
May 19, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................ 1
1. Terms of the Offer; Expiration Date..................... 4
2. Acceptance for Payment and Payment for Common Shares.... 6
3. Procedures for Tendering Common Shares.................. 7
4. Withdrawal Rights....................................... 10
5. Certain Federal Income Tax Consequences................. 10
6. Price Range of Shares; Dividends........................ 11
7. Effect of the Offer on the Market for the Common Shares;
Exchange Listing and Exchange Act Registration; Margin
Regulations............................................. 12
8. Certain Information Concerning the Company.............. 13
9. Certain Information Concerning Purchaser and Parent..... 14
10. Source and Amount of Funds.............................. 16
11. Background of the Offer; Contacts with the Company...... 16
12. Purpose of the Offer and the Merger; Plans for the
Company; Certain Considerations......................... 19
13. Dividends and Distributions............................. 22
14. Conditions of the Offer................................. 23
15. Certain Legal Matters; Regulatory Approvals; Certain
Litigation................................................ 26
16. Fees and Expenses....................................... 29
17. Miscellaneous........................................... 30
SCHEDULE I.................................................. I-1
SCHEDULE II................................................. II-1
</TABLE>
<PAGE> 3
To the Holders of Common Stock
of Allied Group, Inc.:
INTRODUCTION
Nationwide Group Acquisition Corporation ("Purchaser"), an Ohio corporation
and a wholly owned subsidiary of Nationwide Mutual Insurance Company, an Ohio
mutual insurance company ("Parent"), hereby offers to purchase all outstanding
shares of common stock, no par value (the "Common Shares"), of Allied Group,
Inc., an Iowa corporation (the "Company"), at a price of $47.00 per Common
Share, net to the seller in cash, without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer").
Tendering shareholders who have shares registered in their own name and who
tender shares directly to the Depositary will not be obligated to pay brokerage
fees or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Common Shares by Purchaser
pursuant to the Offer. Shareholders who hold their shares through a bank or
broker should check with such institution as to whether or not it charges any
fees applicable to a tender of shares. Purchaser will pay all charges and
expenses of Credit Suisse First Boston Corporation, as Dealer Manager ("Credit
Suisse First Boston" or the "Dealer Manager"), ChaseMellon Shareholder Services,
L.L.C., as Depositary (the "Depositary"), and Georgeson & Company Inc., as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
The purpose of the Offer and the proposed second-step merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
Parent intends to continue to seek to negotiate with the Company with respect to
the acquisition of the Company. If such negotiations result in a definitive
merger agreement between the Company and Parent, certain material terms of the
Offer may change and Parent would not proceed with any solicitation with regard
to the special meeting referred to below. Accordingly, such negotiations could
result in, among other things, termination of the Offer and submission of a
different acquisition proposal to the Company's shareholders for approval.
Parent currently intends, as soon as practicable following consummation of the
Offer, to seek to have the Company consummate a merger with and into Purchaser
with the Company continuing as the surviving corporation (the "Proposed
Merger"), pursuant to which each then remaining Common Share outstanding (other
than Common Shares owned by Parent or any of its wholly owned subsidiaries,
Common Shares held in the treasury of the Company, and Common Shares held by
shareholders who perfect any appraisal rights under the Iowa Business
Corporation Act (the "Iowa Corporation Act")) would be converted into the right
to receive $47.00 net per Common Share in cash.
According to publicly available information, 9,074,082 outstanding Common
Shares are owned of record by State Street Bank and Trust Company, as trustee
(the "ESOP Trustee") under the Company's Employee Stock Ownership Plan (the
"ESOP") and, accordingly, only the ESOP Trustee can effect a valid tender of
such Common Shares. Participants in the ESOP should contact the ESOP Trustee to
instruct it whether to tender their Common Shares. See "Procedures for Tendering
Common Shares -- Common Shares Owned by ESOP." Under applicable law and the
organizational documents of the ESOP, a participant's direction to the ESOP
Trustee is confidential.
In connection with the Offer and during its pendency, or in the event the
Offer is terminated or not consummated, or after the expiration of the Offer and
pending the consummation of the Proposed Merger, in accordance with applicable
law and subject to the terms of any merger agreement that it may enter into with
the Company, Parent (alone or through affiliates) may explore any and all
options which may be available to it. In this regard, and after expiration or
termination of the Offer, Parent may seek to acquire additional Common Shares,
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer or otherwise, upon such terms and at such prices as it may
determine, which, in the case of Common Shares, may be more or less than the
price to be paid per Common Share pursuant to the Offer and could be for cash or
other consideration.
<PAGE> 4
In connection with the Offer and the Proposed Merger, Parent and the
Purchaser intend, if necessary, to solicit proxies or consents to call a special
meeting of shareholders of the Company (the "Special Meeting"). At the Special
Meeting, shareholders would be asked to elect a slate of nominees who support
the Offer and the Proposed Merger (the "Parent Nominees") and to remove all of
the members of the Board of Directors of the Company (the "Company Board").
Under Iowa law and the Company By-Laws (as defined below) (i) a Special Meeting
may be called by the holders of at least 50% of the votes entitled to be cast on
any issue proposed to be considered at the meeting and (ii) the entire Company
Board may be removed without cause upon the affirmative vote of 50% or more of
the outstanding voting shares. Parent expects that, if elected, and subject to
their fiduciary duties under applicable law, the Parent Nominees would cause the
Company Board to: approve the Proposed Merger; satisfy the Business Combination
Condition; and take any other actions necessary to permit the Offer and the
Proposed Merger to be consummated. Such solicitation will be made pursuant to
separate proxy materials complying with the requirements of Section 14(a) of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"). See "Purpose of the Offer and the
Merger; Plans for the Company; Certain Considerations -- The Company Articles
and the Company By-Laws."
The Offer does not constitute a solicitation of proxies for any meeting of
the Company's shareholders. Any such solicitation which Parent or Purchaser
might make would be made only pursuant to separate proxy materials complying
with the requirements of the Exchange Act.
CERTAIN CONDITIONS TO THE OFFER
The Offer is conditioned upon, among other things, the Minimum Condition,
the Business Combination Condition, and the Insurance Regulatory Approval
Condition, each as defined below. The Offer is also subject to certain other
conditions. See Section 14, which sets forth the conditions to consummation of
the Offer, and Section 15, which discusses certain legal matters and regulatory
consents and approvals.
THE MINIMUM CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THERE
BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER A NUMBER OF COMMON SHARES WHICH, TOGETHER WITH COMMON SHARES OWNED BY
PARENT AND PURCHASER, CONSTITUTE AT LEAST 50.1% OF THE VOTING SECURITIES OF THE
COMPANY OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
According to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998 (the "Company 1998 10-Q"), as of April 29, 1998,
there were 30,634,052 Common Shares and 1,827,222 shares of 6- 3/4% Series
Preferred Stock, no par value (the "Preferred Shares"), of the Company issued
and outstanding. Each of the Preferred Shares is entitled to 3.375 votes, which
in the aggregate represents approximately 16.8% of the voting power of the
Company as of April 29, 1998. All of the Preferred Shares are currently held by
Allied Mutual Insurance Company ("Allied Mutual"). See "Purpose of the Offer and
the Merger; Plans for the Company; Certain Considerations -- The Company
Articles and the Company By-Laws." In addition, according to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (the
"Company 1997 10-K"), as of December 31, 1997, there were 997,519 Common Shares
subject to options outstanding under the Company's stock option plans and up to
774,158 additional Common Shares available for issuance pursuant to the Company
stock option plans.
Based on the foregoing, and assuming that (i) no options were granted or
expired after December 31, 1997, (ii) no options were exercised after December
31, 1997, and (iii) no Common Shares were issued or acquired by the Company
after April 29, 1998, there would be 32,405,729 Common Shares outstanding on a
fully diluted basis, and 38,572,603 votes associated with the Common Shares and
Preferred Shares on a fully diluted basis. Parent currently owns an aggregate of
1,498,600 Common Shares (approximately 4.9% of the outstanding Common Shares),
which were recently acquired in open-market transactions. See Schedule II
hereto. Accordingly, Purchaser believes that the Minimum Condition would be
satisfied if an aggregate of 17,826,275 Common Shares are validly tendered
pursuant to the Offer.
2
<PAGE> 5
THE BUSINESS COMBINATION CONDITION. CONSUMMATION OF THE OFFER IS
CONDITIONED UPON PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
PROVISIONS OF SECTION 490.1110 OF THE IOWA CORPORATION ACT (THE "BUSINESS
COMBINATION STATUTE") ARE INAPPLICABLE TO THE PROPOSED MERGER (THE "BUSINESS
COMBINATION CONDITION").
The Proposed Merger, including its timing and details, is subject to, among
other things, the provisions of the Iowa Corporation Act, including the Business
Combination Statute. In general, under the Iowa Corporation Act and the Company
Articles (as defined below), the approval of the Company Board and the
affirmative vote of the holders of a majority of the outstanding Common Shares
and Preferred Shares (including any shares owned by Parent or Purchaser), voting
together as a single class, would be required to approve the Proposed Merger.
Further, the Business Combination Statute generally provides that an Iowa
corporation may not engage in a "Business Combination," defined to encompass a
variety of transactions including mergers, with an "Interested Shareholder,"
defined generally as a person that is the owner of ten percent (10%) or more of
the outstanding voting stock of the corporation, for three years after the
shareholder became an Interested Shareholder, unless (a) the Business
Combination is approved by the corporation's board before the shareholder
becomes an Interested Shareholder, (b) the Interested Shareholder, upon
consummation of the transaction which resulted in the shareholder becoming an
Interested Shareholder, owned at least eighty-five percent (85%) of the voting
shares of the corporation, excluding those shares owned by officers and
directors, or (c) after the shareholder becomes an Interested Shareholder, the
Business Combination is approved by the corporation's board and authorized by
the affirmative vote of at least two-thirds of the voting stock, excluding that
of the Interested Shareholder. See Section 15.
Accordingly, the Business Combination Condition would be satisfied if the
Company Board approves the Proposed Merger prior to Purchaser becoming an
Interested Shareholder, or Purchaser, in its sole discretion, is satisfied that
the Business Combination Statute is otherwise inapplicable to the Proposed
Merger.
On May 18, 1998, Parent and Purchaser filed a complaint against the Company
and its directors in the United States District Court for the Southern District
of Iowa seeking, among other things, an order compelling the Company Board to
approve the Offer and the Proposed Merger for purposes of Section 490.1110 of
the Iowa Corporation Act on the grounds that failure to do so would constitute a
breach of fiduciary duty to the Company's shareholders. Parent and Purchaser
have requested that the Company Board adopt a resolution approving the Offer and
the Proposed Merger for purposes of Section 490.1110 of the Iowa Corporation
Act. However, there can be no assurance that the Company Board will do so. In
the event that the Company Board fails to do so prior to the intended date of
the consummation of the Offer, the Purchaser expects its nominees to the Company
Board, if duly elected at the Special Meeting, and subject to their fiduciary
duties, to take such action as will satisfy the Business Combination Condition.
THE INSURANCE REGULATORY APPROVAL CONDITION. CONSUMMATION OF THE OFFER IS
CONDITIONED UPON PARENT AND PURCHASER HAVING OBTAINED ALL INSURANCE REGULATORY
APPROVALS NECESSARY FOR THEIR ACQUISITION OF CONTROL OF THE COMPANY AND ITS
INSURANCE SUBSIDIARIES ON TERMS AND CONDITIONS SATISFACTORY TO PURCHASER, IN ITS
SOLE DISCRETION (THE "INSURANCE REGULATORY APPROVAL CONDITION").
According to the Company 1997 10-K and other publicly available documents,
the Company, which is domiciled in Iowa, directly or through its subsidiaries,
owns three property-casualty insurance companies domiciled in Iowa and one
excess and surplus lines insurance company domiciled in Arizona. Accordingly,
the acquisition of Common Shares satisfying the Minimum Condition pursuant to
the Offer will require filings with, and approvals of, state insurance
regulatory authorities (the "Insurance Commissions" or "Insurance
Commissioners") under the respective insurance codes (the "Insurance Codes") of
Iowa and Arizona and Ohio pursuant to Section 3925.08(D)(2) of the Ohio Revised
Code.
3
<PAGE> 6
The Insurance Codes of Iowa and Arizona and the rules that have been
promulgated thereunder each contain provisions applicable to the acquisition of
"control" of a domestic insurer, including a presumption of control that arises
from the ownership of ten percent (10%) or more of the voting securities of a
domestic insurer or of a person that controls a domestic insurer. Generally, any
person seeking to acquire voting securities, such as the Common Shares, in an
amount that would result in such person controlling, directly or indirectly, a
domestic insurer must, together with any person ultimately controlling such
person, file with the relevant Insurance Commission certain information
concerning the acquisition of control (generally known as a "Form A") and send a
copy of each Form A to the domestic insurer. On the date of this Offer to
Purchase, Parent and Purchaser made Form A filings, including a copy of this
Offer to Purchase and other related information with respect to the Offer, with
the relevant Insurance Commissions and sent copies thereof to the relevant
domestic insurer.
In both Iowa and Arizona, the Form A filings trigger public hearing
requirements and commence statutory periods within which decisions must be
rendered approving or disapproving the acquisition of control of the Company by
Parent and Purchaser. The periods within which hearings must be commenced or
decisions rendered generally do not begin until the relevant Insurance
Commissioner has deemed the Form A filing complete. The Insurance Commissioner
has discretion to request that additional information be furnished before it
deems the Form A filing complete. The Insurance Codes provide certain statutory
standards for the approval or the disapproval of the acquisition of control of
the Company. However, the Insurance Codes also permit the Insurance
Commissioners discretion in determining whether such standards have been met.
Certain other conditions to consummation of the Offer are described in
Section 14 and Section 15. Purchaser expressly reserves the right in its sole
discretion to waive any one or more of the conditions to the Offer. See Section
14 and Section 15.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Common Shares
which are validly tendered prior to the Expiration Date (as hereinafter defined)
and not properly withdrawn in accordance with Section 4. The term "Expiration
Date" means 12:00 Midnight, New York City time, on Tuesday, June 16, 1998,
unless and until Purchaser, in its sole discretion, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer, as
so extended by Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition, the Business Combination Condition, and the Insurance
Regulatory Approval Condition. If any or all of such conditions are not
satisfied or if any or all of the other events set forth in Section 14 shall
have occurred prior to the Expiration Date, Purchaser reserves the right (but
shall not be obligated) to (i) decline to purchase any of the Common Shares
tendered in the Offer and to terminate the Offer and return all tendered Common
Shares to the tendering shareholders, (ii) waive or reduce the Minimum Condition
or waive or amend any or all other conditions to the Offer to the extent
permitted by applicable law, and, subject to complying with applicable rules and
regulations of the Securities and Exchange Commission ("SEC"), purchase all
Common Shares validly tendered, or (iii) extend the Offer and, subject to the
right of shareholders to withdraw Common Shares until the Expiration Date,
retain the Common Shares which have been tendered during the period or periods
for which the Offer is extended.
Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time and regardless of whether any of the events specified in
Section 14 shall have occurred or shall have been determined by Purchaser to
have occurred (i) to extend for any reason the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and (ii) to amend the Offer
4
<PAGE> 7
in any respect by giving oral or written notice of such amendments to the
Depositary. During any such extension, all Common Shares previously tendered and
not properly withdrawn will remain subject to the Offer, subject to the rights
of a tendering shareholder to withdraw its Common Shares in accordance with the
procedures set forth in Section 4.
Subject to the applicable regulations of the SEC, Purchaser also expressly
reserves the right, in its sole discretion, at any time and from time to time,
(i) to delay acceptance for payment of, or, regardless of whether such Common
Shares were theretofore accepted for payment, payment for, any Common Shares
pending receipt of any regulatory approval specified in Section 15 or in order
to comply in whole or in part with any other applicable law, (ii) to terminate
the Offer and not accept for payment any Common Shares if any of the conditions
referred to in Section 14 has not been satisfied or if any of the events
specified in Section 14 has occurred and (iii) to waive any condition or
otherwise amend the Offer in any respect by giving oral or written notice of
such delay, termination, waiver or amendment to the Depositary and by making a
public announcement thereof.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires Purchaser to pay the consideration offered or return the Common Shares
tendered promptly after the termination or withdrawal of the Offer, and (ii)
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the first sentence of the preceding paragraph), any
Common Shares upon the occurrence of any of the conditions specified in Section
14 without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to shareholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement, other
than by issuing a press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in percentage of securities sought, a minimum ten (10)
business day period is required to allow for adequate dissemination to
shareholders and investor response. As used in this Offer to Purchase, "business
day" has the meaning set forth in Rule 14d-1 under the Exchange Act.
Accordingly, if, prior to the Expiration Date, Purchaser decreases the number of
Common Shares being sought, or increases or decreases the consideration offered
pursuant to the Offer, and if the Offer is scheduled to expire at any time
earlier than the period ending on the tenth business day from the date that
notice of such increase or decrease is first published, sent or given to holders
of Common Shares, the Offer will be extended at least until the expiration of
such ten (10) business day period.
Pursuant to Rule 14d-5 under the Exchange Act and Section 490.1602 of the
Iowa Corporation Act, requests are being made to the Company for the use of the
Company's shareholder lists and security position listings for the purpose of
disseminating the Offer to holders of Common Shares. Upon compliance by the
Company with such request, this Offer to Purchase and the Letter of Transmittal
will be mailed to record holders of Common Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists for
subsequent transmittal to beneficial owners of Common Shares.
5
<PAGE> 8
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR COMMON SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will purchase, by accepting for payment, and will pay
for, all Common Shares which are validly tendered prior to the Expiration Date
(and not properly withdrawn in accordance with Section 4) promptly after the
later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of
the regulatory conditions set forth in Section 14. Purchaser expressly reserves
the right, in its discretion, to delay acceptance for payment of, or, subject to
applicable rules of the SEC, payment for, Common Shares in order to comply in
whole or in part with any applicable law. Purchaser understands that, in
accordance with the applicable rules of the SEC, any delay in accepting Common
Shares, regardless of cause, may not exceed a reasonable length of time.
Accordingly, if it appears at the time that the Offer is scheduled to expire
that any regulatory approvals specified in Section 14 hereof are not likely to
be obtained within a reasonable length of time thereafter, Purchaser will either
extend or terminate the Offer.
In all cases, payment for Common Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the certificates
evidencing Common Shares (the "Common Share Certificates"), or timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Common Shares, if such procedure is available, into the Depositary's account at
The Depository Trust Company or Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility" and, collectively, "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3, (ii) the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed, or,
in the case of a book-entry transfer, an Agent's Message (as defined below) and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Shares that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Common Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Common Shares for payment. Payment
for Common Shares accepted pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting payments to such tendering shareholders. Under no circumstances
will interest on the purchase price for Common Shares be paid by Purchaser,
regardless of any delay in making such payment. Upon the deposit of funds with
the Depositary for the purpose of making payments to tendering shareholders,
Purchaser's obligation to make such payment shall be satisfied and tendering
shareholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Common Shares
pursuant to the Offer. Purchaser will pay any stock transfer taxes incident to
the transfer to it of validly tendered Common Shares, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, as well as any charges
and expenses of the Depositary and the Information Agent.
If any tendered Common Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer because of an invalid tender
or otherwise, Common Share Certificates evidencing unpurchased Common Shares
will be returned, without expense to the tendering shareholder (or, in the case
of Common Shares tendered by book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility pursuant to the procedure set forth in Section
3, such Common Shares will be credited to an account maintained at such
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Common Share pursuant to the Offer, Purchaser will pay such
increased consideration for all such Common Shares purchased
6
<PAGE> 9
pursuant to the Offer, whether or not such Common Shares were tendered prior to
such increase in consideration.
Purchaser reserves the right to transfer or assign, in whole at any time,
or in part from time to time, to Parent or one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase all or any portion of the
Common Shares tendered pursuant to the Offer, provided that any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering shareholders to receive payment
for Common Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURES FOR TENDERING COMMON SHARES.
Valid Tender of Common Shares. In order for Common Shares to be validly
tendered pursuant to the Offer, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (in the case of any book-entry transfer) and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (i) the Common Share Certificates evidencing tendered
Common Shares must be received by the Depositary at one of such addresses or
Common Shares must be tendered pursuant to the procedure for book-entry transfer
described below and a Book-Entry Confirmation must be received by the
Depositary, in each case prior to the Expiration Date, or (ii) the tendering
shareholder must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF COMMON SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE SOLE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Common Shares at each Book-Entry Transfer Facility for purposes of the
Offer within two (2) business days after the date of this Offer to Purchase, and
any financial institution that is a participant in either of the Book-Entry
Transfer Facilities' systems may make book-entry delivery of Common Shares by
causing a Book-Entry Transfer Facility to transfer such Common Shares into the
Depositary's account at a Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Common Shares may be effected through book-entry transfer at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry delivery of Common Shares,
and any other required documents must, in any case, be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date or the tendering
shareholder must comply with the guaranteed delivery procedures described below.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Signature Guarantee. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution"), unless the Common Shares are tendered (i) by a
registered holder of Common Shares who has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a Common Share Certificate is registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or a
Common Share Certificate not accepted for payment or not tendered is to be
returned, to a person other than the registered holder(s), then the Common Share
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of
7
<PAGE> 10
the registered holder(s) appear on the Common Share Certificate, with the
signature(s) on such Common Share Certificate or stock powers guaranteed as
described above. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Common Shares
pursuant to the Offer and such shareholder's Common Share Certificates are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Common Shares may
nevertheless be tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) in the case of a guarantee of Common Shares, the Common Share
Certificates for all tendered Common Shares, in proper form for transfer,
or a Book-Entry Confirmation, together with a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature guarantee (or, in the case of a book-entry transfer,
an Agent's Message) and any other documents required by such Letter of
Transmittal, are received by the Depositary within three (3) New York Stock
Exchange, Inc. ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery. A trading day is any day on which securities
are traded on the NYSE.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
IN ALL CASES, COMMON SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A FACSIMILE
THEREOF) IS RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision hereof, payment for Common Shares
purchased pursuant to the Offer will, in all cases, be made only after timely
receipt by the Depositary of (i) the Common Share Certificates, evidencing such
Common Shares, or a Book-Entry Confirmation of the delivery of such Common
Shares, if available, (ii) a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) (or in the case of a
book-entry transfer, an Agent's Message) and (iii) any other documents required
by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Common Shares pursuant to any of the procedures described above will be
determined by Purchaser in its sole discretion, whose determination will be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of any Common Shares determined by it not to be in
proper form or if the acceptance for payment of, or payment for, such Shares
may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, to waive any of the conditions of
the Offer or any defect or irregularity in any tender with respect to Common
Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Common
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. None of Parent, Purchaser, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Common Shares tendered
by such
8
<PAGE> 11
shareholder and accepted for payment by Purchaser (and any and all noncash
dividends, distributions, rights, other Common Shares, or other securities
issued or issuable in respect of such Common Shares on or after the date of this
Offer to Purchase). All such proxies shall be considered coupled with an
interest in the tendered Common Shares. This appointment will be effective if,
when, and only to the extent that, Purchaser accepts such Common Shares for
payment pursuant to the Offer. Upon such acceptance for payment, all prior
proxies given by such shareholder with respect to such Common Shares and other
securities will, without further action, be revoked, and no subsequent proxies
may be given. The designees of Purchaser will, with respect to the Common Shares
and other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such shareholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's shareholders, by written consent or otherwise, and
Purchaser reserves the right to require that, in order for Common Shares or
other securities to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Common Shares, Purchaser must be able to exercise
full voting rights with respect to such Common Shares.
To prevent backup Federal income tax withholding with respect to payment to
certain shareholders of the purchase price for Common Shares purchased pursuant
to the Offer, each such shareholder must provide the Depositary with such
shareholder's correct Taxpayer Identification Number and certify that such
shareholder is not subject to backup Federal income tax withholding by
completing the substitute Form W-9 in the Letter of Transmittal. If backup
withholding applies with respect to a shareholder, the Depositary is required to
withhold thirty-one percent (31%) of any payments made to such shareholder. See
Instruction 10 of the Letter of Transmittal.
Common Shares Owned by ESOP. According to documents filed by the Company
with the SEC, 9,074,082 Common Shares are owned of record by the ESOP Trustee.
At the Offer Price, the 9,074,082 Common Shares held in the ESOP have a value of
$426,481,854.
Pursuant to the organizational documents of the ESOP, the ESOP Trustee is
required to request instructions from each ESOP participant as to whether the
Common Shares allocated to such participant's account should be tendered in
response to the Offer. The ESOP Trustee must then tender or not tender such
Common Shares in accordance with such instructions. Subject to applicable law,
the organizational documents of the ESOP also provide that the ESOP Trustee may
not tender allocated Common Shares as to which no instructions are received.
With regard to unallocated Common Shares, the organizational documents of
the ESOP provide that such unallocated Common Shares must be tendered or not
tendered in the same proportion as allocated Common Shares. However, the United
States Department of Labor, which has the responsibility for administering
ERISA, the law governing the operation of the ESOP, has taken the position that
a trustee of an ESOP must exercise independent, prudent judgment in deciding
whether to tender unallocated shares held by an ESOP, even if plan documents
provide for tendering unallocated shares in proportion to the instructions
concerning allocated shares. Although there can be no assurance as to what
position the ESOP Trustee will adopt, if the ESOP Trustee adopts the position of
the United States Department of Labor and determines that it is prudent to
tender the unallocated Common Shares, then such unallocated Common Shares shall
be so tendered.
ESOP participants should contact the ESOP Trustee to instruct it whether to
tender their Common Shares. Under applicable law and the organizational
documents of the ESOP, a participant's direction to the ESOP Trustee is
confidential.
Purchaser's acceptance for payment of Common Shares tendered pursuant to
the Offer will constitute a binding agreement between the tendering shareholder
and Purchaser upon the terms and subject to the conditions of the Offer.
9
<PAGE> 12
4. WITHDRAWAL RIGHTS.
Tenders of Common Shares made pursuant to the Offer are irrevocable except
that such Common Shares may be withdrawn at any time prior to the Expiration
Date and, unless theretofore accepted for payment by Purchaser pursuant to the
Offer, may also be withdrawn at any time after Friday, July 17, 1998.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Common Shares or is unable to accept Common Shares for payment pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered
Common Shares, and such Common Shares may not be withdrawn except to the extent
that tendering shareholders are entitled to withdrawal rights as described in
this Section 4. Any such delay will be by an extension of the Offer to the
extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Common Shares to be withdrawn, the number of Common Shares to be
withdrawn, and the name of the registered holder, if different from that of the
person who tendered such Common Shares. If Common Share Certificates evidencing
Common Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Common Share
Certificates, the serial numbers shown on such Common Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Common Shares have
been tendered for the account of an Eligible Institution. If Common Shares have
been tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Common Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Parent, Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Common Shares properly withdrawn will thereafter be deemed not to have
been validly tendered for purposes of the Offer. However, withdrawn Common
Shares may be retendered at any time prior to the Expiration Date by following
the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a summary of the material Federal income tax
consequences of the Offer and the Proposed Merger to holders of Common Shares
who hold their Common Shares as capital assets. This summary is based upon laws,
regulations, rulings and decisions in effect on the date hereof, all of which
are subject to change, retroactively or prospectively, and to possibly differing
interpretations. The discussion set forth below is for general information only
and may not apply to certain categories of holders of Common Shares subject to
special treatment under the Internal Revenue Code of 1986, as amended (the
"Code"), including, but not limited to, broker-dealers, banks, tax-exempt
organizations, insurance companies, holders who are not United States persons
(as defined in Section 7701(a)(30) of the Code) and holders who acquired such
Common Shares pursuant to the exercise of employee stock options or otherwise as
compensation. In addition, the discussion does not address the state, local or
foreign tax consequences of the Offer and the Proposed Merger.
EACH HOLDER OF COMMON SHARES IS URGED TO CONSULT SUCH HOLDER'S TAX ADVISOR
WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
OFFER AND THE PROPOSED MERGER.
10
<PAGE> 13
General Tax Consequences of the Offer and the Proposed Merger. The receipt
of cash for Common Shares pursuant to the Offer or the Proposed Merger will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign and other tax laws. For
federal income tax purposes, each selling shareholder would generally recognize
gain or loss equal to the difference between the amount of cash received and
such shareholder's adjusted tax basis for the sold Common Shares. Such gain or
loss will be capital gain or loss (assuming the Common Shares are held as a
capital asset) and any such capital gain or loss will be long term if, as of the
date of sale, the Common Shares were held for more than one year or will be
short term if, as of such date, the Common Shares were held for one year or
less.
The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of
twenty-eight percent (28%) on net capital gain (generally, the excess of net
long-term capital gain over net short-term capital loss). Noncorporate taxpayers
are now generally taxed at a maximum rate of twenty percent (20%) on net capital
gain attributable to the sale of property held for more than eighteen months,
and a maximum rate of twenty-eight percent (28%) on net capital gain
attributable to the sale of property held for more than one year but not more
than eighteen months. The 1997 Act did not affect the treatment of short-term
capital gain or loss (generally, gain or loss attributable to capital assets
held for one year or less) and did not affect the taxation of capital gains in
the hands of corporate taxpayers.
Backup Withholding. Unless a shareholder of the Company complies with
certain reporting or certification procedures or is an "exempt recipient" (i.e.,
in general, corporations and certain other entities) under applicable provisions
of the Code and Treasury Regulations promulgated thereunder, such shareholder
may be subject to withholding tax of thirty-one percent (31%) with respect to
the cash payments received pursuant to the Offer and/or the Proposed Merger.
Shareholders should consult their brokers or the Depositary to ensure compliance
with such procedures. A foreign shareholder of the Company should consult its
tax advisor with respect to the application of withholding rules to it with
respect to the cash payments received pursuant to the Offer and/or the Proposed
Merger.
6. PRICE RANGE OF SHARES; DIVIDENDS.
According to the Company 1997 10-K, the Common Shares have been listed and
principally traded on the NYSE, and quoted under the symbol "GRP," according to
published financial sources. The following table sets forth, for the quarters
indicated, the high and low sales prices per Common Share on the NYSE and the
amount of cash dividends paid per Common Share, as reported in the Company 1997
10-K for periods in 1996 and 1997, and as reported by published financial
sources with respect to periods in 1998:
<TABLE>
<CAPTION>
CASH
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
1996:
First Quarter............................................. 19 2/3 15 9/16 0.09 3/4
Second Quarter............................................ 19 1/3 15 49/64 0.09 3/4
Third Quarter............................................. 19 7/32 14 57/64 0.09 3/4
Fourth Quarter............................................ 22 5/32 16 57/64 0.10
1997:
First Quarter............................................. 25 3/4 20 2/3 0.11 1/3
Second Quarter............................................ 27 1/2 22 5/32 0.11 1/3
Third Quarter............................................. 35 51/64 25 5/32 0.11 1/3
Fourth Quarter............................................ 33 53/64 26 1/4 0.12
1998:
First Quarter............................................. 32 3/4 26 0.13
Second Quarter (through May 15)........................... 34 7/16 26 0.13
</TABLE>
11
<PAGE> 14
The above prices have been restated for the November 28, 1997 3-for-2 stock
split and rounded to the nearest 1/64.
On May 15, 1998, the most recent practicable trading day prior to the
announcement date of the Offer, the reported closing sales price of the Common
Shares on the NYSE Composite Tape was $27 3/4 per Common Share. On Monday, May
18, 1998, the date on which Parent announced the intention to commence the Offer
and the last trading day before commencement of the Offer, the last reported
closing price on the NYSE Composite Tape was $42 5/16 per Common Share.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON
SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON SHARES; EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
The purchase of Common Shares pursuant to the Offer will reduce the number
of Common Shares that might otherwise trade publicly and could reduce the number
of holders of Common Shares, which could adversely affect the liquidity and
market value of the remaining Common Shares held by the public. Following
consummation of the Offer, a large percentage of the outstanding Common Shares
will be owned by Purchaser.
According to the NYSE's published guidelines, the NYSE would consider
delisting the Common Shares if, among other things, the number of record holders
of at least 100 Common Shares should fall below 1,200, the number of publicly
held Common Shares (exclusive of holdings of officers, directors and their
families and other concentrated holdings of ten percent (10%) or more (the "NYSE
Excluded Holdings")) should fall below 600,000 or the aggregate market value of
publicly held Common Shares (exclusive of NYSE Excluded Holdings) should fall
below $5,000,000. If, as a result of the purchase of Common Shares pursuant to
the Offer or otherwise, the Common Shares no longer meet the requirements of the
NYSE for continued listing and the listing of the Common Shares is discontinued,
the market for the Common Shares could be adversely affected.
If the NYSE were to delist the Common Shares, it is possible that the
Common Shares would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or through the Nasdaq or other sources. The extent of the public
market therefor and the availability of such quotations would depend, however,
upon such factors as the number of shareholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Common Shares on the part of securities firms, the possible
termination of registration under the Exchange Act as described below and other
factors. Purchaser cannot predict whether the reduction in the number of Common
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Common Shares or whether
it would cause future market prices to be higher or lower than the Offer Price.
The Common Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the SEC if the
Common Shares are not listed on a national securities exchange and there are
fewer than 300 record holders of the Common Shares. In such case, the Common
Shares would no longer continue to be "margin securities." The termination of
registration of the Common Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to holders of
Common Shares and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement in connection with shareholders'
meetings pursuant to Section 14(a), and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer applicable
to the Common Shares. In addition, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability to
dispose of such securities pursuant to Rule 144 promulgated under the Securities
Act.
The Common Shares are currently "margin securities," as such term is
defined under the rules of the Board of Governors of the Federal Reserve System,
which has the effect, among other things, of allowing
12
<PAGE> 15
brokers to extend credit on the collateral of such securities. It is likely that
the Common Shares will continue to be "margin securities" following consummation
of the Offer.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or based upon the Company
1997 10-K and other publicly available documents and records on file with the
SEC and other public sources. None of Parent, Purchaser, the Dealer Manager, the
Depositary or the Information Agent assumes any responsibility for the accuracy
or completeness of the information concerning the Company contained in such
documents and records or for any failure by the Company to disclose events which
may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Parent, Purchaser, the Dealer Manager, the
Depositary or the Information Agent.
According to information filed by the Company with the SEC, the Company is
an Iowa corporation whose principal executive offices are located at 701 Fifth
Avenue, Des Moines, Iowa 50391. As of December 31, 1997, the Company had 2,646
employees according to the 1997 Annual Report.
The Company, through its subsidiaries, provides property-casualty and
excess and surplus lines insurance products exclusively in the United States and
primarily in the central and western states.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the Company
1997 10-K, the Company 1998 10-Q and other documents filed by the Company with
the SEC. More comprehensive financial information is included in, and the
financial information that follows is qualified in its entirety by reference to,
the Company 1997 10-K, the Company 1998 10-Q and such other documents filed by
the Company with the SEC. The Company 1997 10-K, the Company 1998 10-Q and such
other documents may be examined at and copies may be obtained from the offices
of the SEC or the NYSE in the manner set forth below.
ALLIED GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31, AT OR FOR THE
-------------------------------------- THREE MONTHS ENDED
1995 1996 1997 MARCH 31, 1998
---------- ---------- ---------- ------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues........................... $ 552,765 $ 596,354 $ 664,682 $ 173,725
Net income............................... 52,377 51,084 65,436 17,923
Earnings per share (diluted)(1).......... 1.54 1.51 2.01 .55
Dividends per Common Share(1)............ .30 .39 .46 .13
BALANCE SHEET DATA:
Total investments........................ 772,299 819,645 908,244 932,151
Total assets............................. 1,010,598 1,077,659 1,201,233 1,287,063
Loss and loss adjusting expenses......... 341,864 362,191 378,026 382,641
Total liabilities........................ 659,012 707,068 771,149 839,648
Total stockholders' equity............... 351,586 370,591 430,084 447,415
</TABLE>
- ---------------
(1) Adjusted to reflect the November 28, 1997 3-for-2 stock split.
13
<PAGE> 16
The Company is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the SEC
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities, any material interests of such persons in transactions
with the Company and other matters is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the SEC.
These reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC located in Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be
available for inspection and copying at prescribed rates at the following
regional offices of the SEC: Seven World Trade Center, New York, New York 10048;
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may also be obtained by mail, upon payment of the SEC's customary fees,
from the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The SEC also maintains an Internet web site at http://www.sec.gov that
contains reports, proxy statements and other information. Reports, proxy
statements and other information concerning the Company should also be available
for inspection at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser. Purchaser is a newly incorporated Ohio corporation organized in
connection with the Offer and the Proposed Merger and has not carried on any
activities other than in connection with the Offer and the Proposed Merger. The
principal offices of Purchaser are located at One Nationwide Plaza, Columbus,
Ohio 43215. The Purchaser is a wholly owned subsidiary of Parent. Until
immediately prior to the time that Purchaser will purchase Common Shares
pursuant to the Offer, it is not expected that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Proposed Merger. Because Purchaser is newly formed and has
minimal assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent. Parent is an Ohio mutual insurance company with its principal
executive offices located at One Nationwide Plaza, Columbus, Ohio 43215. Parent
is the controlling company of the Nationwide Insurance Enterprise, an insurance
and financial services organization (the "Enterprise"). In 1997, Parent had $5.1
billion of net written premium. Parent is a party to the Nationwide Intercompany
Pooling Agreement (the "Nationwide Pooling Agreement") with 12 other property
and casualty insurance companies within the Enterprise which provides that
Parent shares in a specified percentage of the combined underwriting results and
dividends to policyowners incurred by such companies (the "Nationwide Pool").
The insurance companies comprising the Nationwide Pool were the sixth largest
property and casualty insurance group and were the fourth largest automobile
insurance group in the United States, with approximately $8.4 billion in total
net written premium at December 31, 1997 and approximately a 3.3% market share.
The principal lines of business of the Pool based on net written premium for the
year ended December 31, 1997 were personal auto (approximately 53.9%),
commercial operations (approximately 29.4%) and homeowners (approximately
12.9%).
Parent was originally chartered in the State of Ohio in 1925 as the Farm
Bureau Mutual Automobile Insurance Company and it adopted its present name in
1955. At December 31, 1997, the Enterprise employed approximately 28,000
employees and Parent had more than 4,300 exclusive career agents who market the
Enterprise's core property and casualty products, individual life insurance and
annuity products as well as other financial services.
As an Ohio mutual insurance company, Parent is not subject to the
information and reporting requirements of the Exchange Act and is not required
to file reports and other information with the SEC relating to its business,
financial condition and other matters. However, Parent reports financial and
other information to the Ohio Department of Insurance on at least an annual
basis and is subject to periodic reviews by that Department. Information should
be on file and available for inspection at the offices of the Ohio Department of
Insurance, 2100 Stella Court, Columbus, Ohio 43266-0566.
Set forth below are certain supplemental financial highlights relating to
Parent. Additional financial information is included in other documents filed by
Parent with the Ohio Department of Insurance. The
14
<PAGE> 17
financial information summary set forth below is qualified in its entirety by
reference to such other documents which have been filed with the Department,
including the financial information and related notes contained therein, which
are incorporated herein by reference. These documents may be inspected at and
copies may be obtained from the offices of the Department in the manner set
forth above.
NATIONWIDE MUTUAL INSURANCE COMPANY (1)
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31, AT OR FOR THE
----------------------------------------- THREE MONTHS ENDED
1995 1996 1997 MARCH 31, 1998
----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues................... $4,518,290 $4,923,700 $4,992,363 $1,274,857
Net income....................... 75,664 153,021 1,627,008 147,260
BALANCE SHEET DATA:
Investments...................... 11,751,662 12,204,878 15,639,331 16,253,582
Total assets..................... 13,217,223 13,771,825 17,200,711 17,886,518
Policy and claim liabilities..... 8,084,377 8,207,715 8,120,629 8,086,505
Total liabilities................ 8,978,862 9,134,962 9,121,280 8,999,356
Policyholders' surplus........... 4,238,361 4,636,863 8,079,430 8,867,161
</TABLE>
- ---------------
(1) Financial information presented in accordance with statutory accounting
principles for Nationwide Mutual Insurance Company. Such financial
information is prepared in accordance with accounting principles prescribed
or permitted by the National Association of Insurance Commissioners and the
Ohio Department of Insurance and differs from financial information prepared
under generally accepted accounting principles ("GAAP").
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Purchaser and Parent are set forth in Schedule I hereto.
During the past 60 days, Parent effected transactions in the equity
securities of the Company as set forth in Schedule II hereto. Except as set
forth in this Offer to Purchase (including Schedule II hereto), none of Parent
or Purchaser or, to the best knowledge of Parent or Purchaser, any of the
persons listed in Schedule I hereto, or any associate or majority-owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and none of Parent or Purchaser or, to the best knowledge of Parent or
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent or Purchaser, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, none of Parent or Purchaser or, to the best
knowledge of Parent or Purchaser, any of the persons listed in Schedule I hereto
has had any transactions with the Company, or any of its executive officers,
directors or affiliates that would require reporting under the rules of the SEC.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Parent or Purchaser, or their respective
subsidiaries, or, to the best knowledge of Parent or Purchaser, any of the
persons listed in Schedule I hereto, on the one hand, and the Company or its
executive officers,
15
<PAGE> 18
directors or affiliates, on the other hand, concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors, or a sale or other transfer of a material amount of assets that would
require reporting under the rules of the SEC.
10. SOURCE AND AMOUNT OF FUNDS.
Purchaser estimates that the total amount of funds required to purchase
Common Shares pursuant to the Offer and to pay all related costs and expenses,
will be approximately $1.5 billion. See also Section 16. Purchaser plans to
obtain all funds needed for the Offer through a capital contribution from
Parent. Parent plans to obtain such funds entirely from existing cash accounts.
Parent has in excess of $7.0 billion available for such purpose.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
During the summer of 1997, representatives of Parent tentatively identified
the Company as a possible acquisition candidate. Parent enlisted the assistance
of Credit Suisse First Boston in connection with its analysis of the Company as
a possible acquisition candidate. That analysis continued over several months.
On January 26, 1998, Dimon R. McFerson, Chairman and Chief Executive
Officer - Nationwide Insurance Enterprise, telephoned John E. Evans, Chairman of
the Company, to express Parent's interest in a possible transaction with the
Company, Allied Mutual and Allied Life Financial Corporation (collectively,
"Allied"). On January 28, 1998, Parent's representatives met with
representatives of the Company in Des Moines, Iowa to discuss Parent's interest
in acquiring the business and assets of Allied via a statutory merger. Mr. Evans
and Douglas L. Andersen, President and Chief Executive Officer of the Company,
expressed interest in a possible transaction, but indicated several concerns
associated with obtaining regulatory approvals from the Iowa Insurance
Commission. After the January 28, 1998 meeting, Parent forwarded a draft
confidentiality agreement to Mr. Andersen to facilitate further discussions.
On February 10, 1998, at the request of Allied, Parent sent a letter
enclosing draft merger agreements to Allied contemplating a transaction whereby
Parent's wholly owned subsidiaries would acquire Allied Group, Inc. and Allied
Life Financial Corporation and Parent would merge with Allied Mutual Insurance
Company. The letter stated that Parent was prepared to immediately conduct due
diligence and to finalize the draft merger agreements. The draft merger
agreements provided for the purchase of all outstanding shares of the Company
for $47 per share and the purchase of all outstanding shares of Allied Life
Financial Corporation for $30 per share, subject to the satisfaction of certain
conditions. On February 10, 1998, Mr. Andersen forwarded to Parent Allied's own
draft confidentiality agreement.
At the request of Mr. Evans made during the parties' meeting of January 28,
1998, Parent's representatives met with the Iowa Insurance Commissioner on
February 13, 1998 to express Parent's interest in acquiring Allied and to
discuss the regulatory framework applicable to such an acquisition. Based upon
those discussions, Parent reiterated its continued interest in moving forward
with a possible transaction.
Mr. Andersen in turn told Parent's representatives that Parent's interest
in acquiring Allied would be presented to the respective boards of directors of
Allied. Parent's offer to appear before the respective boards to answer
questions and to more fully explain its proposal was rejected by Mr. Andersen.
To the best of Parent's knowledge, the respective boards of directors of Allied
met on February 18, 1998 and rejected Parent's indication of interest. At this
point Parent and Allied had not yet reached agreement on the terms of a
confidentiality agreement primarily because of Allied's insistence on including
a standstill agreement in such confidentiality agreement. On February 20, 1998,
Mr. Andersen informed Mr. McFerson via telephone that the respective boards of
Allied had rejected Parent's indication of interest and that neither Mr.
Andersen nor anyone else at Allied had the authority to discuss the matter
further.
On February 20, 1998, Parent telefaxed to Allied a letter indicating that
Parent was terminating its attempt to negotiate a modified confidentiality
agreement since Allied had refused to sign the confidentiality agreement
provided by Parent.
16
<PAGE> 19
On May 1, 1998, Mr. McFerson telephoned Mr. Evans to express Parent's
renewed interest in exploring the possibility of a transaction between Parent
and Allied. Mr. Evans said Allied had no interest in pursuing such discussions
and that any further inquiries on the subject should be directed to Mr.
Andersen, but not for at least another 30 days.
Early in the morning on May 18, 1998, Mr. McFerson made a personal visit to
the Company's Des Moines, Iowa offices to attempt to meet with Mr. Andersen and
negotiate an agreement. Upon his arrival, Mr. McFerson was informed that Mr.
Andersen and other executive officers of the Company were out of the country,
but that members of the Company's legal department would meet with him. When Mr.
McFerson explained the purpose of his visit, the Company's in-house lawyers did
not enter into negotiations, but stated that the Company would take appropriate
actions. Mr. McFerson then delivered the following letter:
May 18, 1998
Mr. John E. Evans
Chairman of the Board
Allied Group, Inc.
701 Fifth Avenue
Des Moines, Iowa 50391
Mr. Douglas L. Andersen
President and Chief Executive Officer
Allied Group, Inc.
701 Fifth Avenue
Des Moines, Iowa 50391
Dear John and Doug:
I am writing to give you advance notice that today Nationwide Mutual
Insurance Company will announce a cash tender offer for all the outstanding
shares of common stock of Allied Group, Inc. The offer is for $47 per share,
which represents a premium of 69.4% over Friday's closing price.
So that the purchase of Allied Group benefits the policyholders of Allied
Mutual, as well as your shareholders, we are concurrently offering to merge
Allied Mutual Insurance Company with Nationwide Mutual Insurance Company. This
merger offer is outlined in more detail under separate cover. We are taking
these steps because our efforts to effect a merger with Allied Group through
negotiations with you and your Board have been consistently frustrated. We have
spoken several times on this subject, starting in January, and I have repeatedly
tried to persuade you of the great advantages of a combination of our two
companies.
As you know, we are convinced that there is compelling business logic for
this combination that will be beneficial to the shareholders, employees,
management, agents and policyholders of both organizations. I deeply regret we
have so far been unable to persuade you of this. Let me repeat the reasons:
- Melding the property/casualty operations of the two companies will
provide the scale needed to compete in the increasingly competitive
marketplace.
- Geographically, our present markets complement one another. Nationwide's
property/casualty focus has been primarily east of the Mississippi while
Allied's has been west of the Mississippi. Together, we will have
formidable market coverage.
- Your expertise in distribution through independent agents would add a new
dimension to ours, which now is largely through career agents. You would
augment exponentially an initiative we announced in 1997.
- We greatly admire Allied's excellent operating record. We recognize the
contributions of your management and employees and feel they would
significantly enhance our operations. Nationwide pledges to maintain the
aggregate employment of the current Allied operations and plans to add
400 more jobs in the Des Moines area over the next four years.
- Finally, Allied's regional offices in Denver, Lincoln and Santa Rosa are
also expected to play important roles in a combined Nationwide/Allied
national organization.
17
<PAGE> 20
In effecting the merger, our intention is to make the Allied distribution
system a cornerstone of Nationwide's growth strategy for the independent agency
channel, and to preserve and enhance the role that Allied has played in Des
Moines, the state of Iowa and the four regions where you have focused. Allied's
management and employees will be essential to making this happen. Because we
have been operating in Des Moines since 1982 through our Farmland Insurance
operation, we have a long involvement in, and commitment to, your headquarters
city. I cannot emphasize strongly enough that Des Moines and your people,
including management and employees, will continue to play a vital, expanding
role in our future.
For your policyholders, this transaction means that they will enjoy the
protection provided by Nationwide Mutual's $8.1 billion of policyholder surplus.
Your mutual policyholders will hold full membership rights in Nationwide Mutual.
For your management and employees, there will be the opportunity to reap
the financial rewards of their contribution to Allied's success by tendering the
shares they hold in Allied's Employee Stock Ownership Plan. Currently the
allocated shares are worth approximately $132 million. That value would increase
to reflect the premium for common shares in our offer. In fact, the value of
each employee's ESOP account should triple. This benefit is based on our
calculation of an estimated $183 million surplus, which will be divided among
approximately 2,500 participants. Based upon our interpretation of a recent IRS
technical advice memorandum, each participant will therefore receive an
additional earnings allocation of approximately $38 per share, in addition to
the $47 tender price per share. After payment of the ESOP debt, the average
account balance per participant should approximate $163,000, with the actual
amounts credited to a participant's account dependent on their account balance.
For your agents, there will be the opportunity to place business in a
combined organization of unquestioned financial strength that would provide them
access to the broad array of products and services available through Nationwide.
We regret that we are forced to take our offer directly to your
shareholders, but we believe the benefits of our offer to both of our companies
and their employees, agents, policyholders and communities are compelling. We
are committed to this transaction and will pursue it to a final conclusion.
In light of the attractive terms of our offer, we request that the
Company's Board of Directors take appropriate actions so that the Iowa Business
Combination Law is rendered inapplicable to our proposed merger. We expect that
you will not take any other actions that would adversely affect your
shareholders' ability to receive the benefits of our proposed transaction. It is
our hope that we can proceed to complete a transaction with a minimum of delay.
Consistent with our Board of Directors' action, we stand ready to meet with
you and at your earliest convenience. We are also prepared to discuss your view
as to the proper roles for your officers and managers in the combined company.
Our objective is to promptly conclude a transaction that is supported by you and
the Company's Board of Directors.
Accordingly, we urge the Board of Directors of Allied Group Inc. to meet
its fiduciary obligations to your shareholders by immediately supporting
Nationwide's tender offer for the common shares of Allied Group and commence
negotiations with Nationwide to effect a business combination with Allied Group.
I strongly believe this is a win/win opportunity for all concerned -- Des
Moines, employees, agents, policyholders and shareholders alike. We hope you
will come to share this belief and will let our companies' enormous joint
potential be realized.
Sincerely,
Dimon Richard McFerson
Chairman and Chief Executive Officer
cc: Board of Directors, Allied Group, Inc.
Commissioner, Iowa Insurance Division
Director, Ohio Insurance Department
18
<PAGE> 21
Also on May 18, 1998, Parent submitted via letter a merger proposal to the
Board of Directors of Allied Mutual for the merger of Allied Mutual into Parent.
Under Parent's proposal, Allied's mutual policyholders' interest would be
converted into full rights as policyholders of Parent. These rights include the
right to share in any distribution of Parent's surplus in the event of any
future demutualization. Parent has no present intention to demutualize, adopt a
mutual holding company structure, or engage in any other similar reorganization.
Purchaser also offered to purchase from Allied Mutual all outstanding
Preferred Shares of the Company owned by Allied Mutual for an aggregate purchase
price of $65,000,000 payable in cash. This purchase would be consummated only in
connection with the merger of Allied Mutual into Parent. Upon the merger of
Parent and Allied Mutual, the net cash proceeds to Allied Mutual from such
purchase will be paid to Allied Mutual policyholders.
On May 18, 1998, after Mr. McFerson's visit to the Company's offices,
Parent issued a press release announcing its intention to commence the Offer, to
be followed by the Proposed Merger. Parent also commenced the litigation
described in "Certain Legal Matter; Regulatory Approvals; Certain Litigation --
Complaint by Parent and Purchaser."
On May 19, 1998, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; CERTAIN
CONSIDERATIONS.
General. The purpose of the Offer and the Proposed Merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of the Company. The purpose of the Proposed Merger is
to acquire all Common Shares not beneficially owned by the Purchaser following
consummation of the Offer.
Pursuant to the Proposed Merger, each then outstanding Common Share (other
than Common Shares owned by Parent or any of its wholly owned subsidiaries,
Common Shares held in the treasury of the Company, and if shareholder appraisal
rights are available with respect to Common Shares, Common Shares held by
shareholders who perfect any appraisal rights under the Iowa Corporation Act)
would be converted into the right to receive $47.00 net per Common Share in
cash.
Except in the case of a "short-form" merger as described below, under the
Iowa Corporation Act, the approval of the Company Board and the affirmative vote
of the holders of a majority of the outstanding Common Shares and Preferred
Shares (including any shares owned by Parent or Purchaser), voting together as a
single class, would be required to approve the Proposed Merger. If Purchaser
acquires through the Offer at least a majority of the voting securities of the
Company (which would be the case if the Minimum Condition were satisfied and
Purchaser were to accept for payment Common Shares tendered pursuant to the
Offer), and if the Business Combination Condition and the Insurance Regulatory
Approval Condition were each satisfied, Purchaser would have sufficient voting
power to ensure approval of the Proposed Merger by holders of the Common Shares.
The Iowa Corporation Act also provides that if a parent corporation owns at
least ninety percent (90%) of the outstanding shares of each class of stock of a
subsidiary, the parent company can effect a "short-form" merger with that
subsidiary without a shareholder vote. Accordingly, if Purchaser were to acquire
at least ninety percent (90%) of the outstanding Common Shares and Preferred
Shares, respectively, and if the Business Combination Condition and the
Insurance Regulatory Approval Condition were each satisfied, then Purchaser
could, and intends to, effect the Proposed Merger without any action by any
other shareholder of the Company.
Parent intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Parent, certain material
terms of the Offer may change and Parent would not proceed with any solicitation
with regard to the special meeting referred to below. Accordingly, such
negotiations could result in, among other things, termination of the Offer and
submission of a different acquisition proposal to the Company's shareholders for
approval.
19
<PAGE> 22
In connection with the Offer and the Proposed Merger, Parent and the
Purchaser intend, if necessary, to solicit proxies or consents to call the
Special Meeting. At the Special Meeting, shareholders would be asked to elect
the Parent Nominees and to remove all of the members of the Company Board.
Parent expects that, if elected, and subject to their fiduciary duties under
applicable law, the Parent Nominees would cause the Company Board to: approve
the Proposed Merger; satisfy the Business Combination Condition; and take any
other actions necessary to permit the Offer and the Proposed Merger to be
consummated. Such solicitation will be made pursuant to separate proxy materials
complying with the requirements of Section 14(a) of the Exchange Act. In
addition, in the event the Offer is terminated or not consummated, or after
expiration of the Offer and pending consummation of the Proposed Merger, Parent
may seek to acquire additional Common Shares, through open market purchases,
privately negotiated transactions, a tender offer or exchange offer or
otherwise, upon such terms and at such prices as it may determine, which may be
higher or lower than the Offer Price and could be for cash or other
consideration.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY ANNUAL OR
OTHER MEETING OF THE COMPANY'S SHAREHOLDERS. ANY SUCH SOLICITATION WHICH PARENT
OR PURCHASER MIGHT MAKE WOULD BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS
IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT.
Whether or not the Offer is consummated, Purchaser reserves the right,
subject to applicable legal restrictions, to sell or otherwise dispose of any or
all Common Shares acquired pursuant to the Offer or otherwise. Such transactions
may be effected on terms and at prices as it shall determine, which may be
higher or lower than the Offer Price and could be for cash or other
consideration.
Plans for the Company. In connection with the Offer, Parent and Purchaser
have reviewed, on the basis of publicly available information, various business
strategies that they might consider in the event that the Parent acquires
control of the Company, whether pursuant to the Proposed Merger or otherwise.
Parent and Purchaser intend to expand the Company's business, and utilize the
Company's infrastructure and capabilities to improve the performance of Parent's
existing property/casualty operations. Parent believes the acquisition would
provide immediate benefits from improved geographic distribution of risk,
resulting in more stable underwriting results and lower reinsurance costs. In
addition, Parent intends to capitalize on the Company's independent agency
distribution, agency interface technology and commercial underwriting and
product management expertise. Parent expects to identify significant business
opportunities between the Company's Western Heritage Insurance Company
subsidiary and Scottsdale Insurance Company, Parent's excess/surplus lines
subsidiary, and between the Company's and Parent's agribusiness insurance
operations. Purchaser and Parent believe that, in the aggregate, the proposed
transactions would result in increased growth and investment in the Company and
its operations. Except as indicated in this Offer to Purchase and based upon
publicly available information, neither Parent nor Purchaser has any present
plans or proposals which relate to or would result in an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries, a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries or any material change in the
Company's capitalization or dividend policy or any other material changes in the
Company's corporate structure or business.
Dissenters' Rights and Other Matters. Holders of Common Shares will not
have dissenters' rights as a result of the Offer. Pursuant to Section 490.1302
of the Iowa Corporation Act, shareholders may have dissenters' rights with
respect to the Proposed Merger. In general, shareholders are entitled to dissent
in the event of the consummation of (i) a plan of merger to which the
corporation is a party if either (a) shareholder approval is required for the
merger under the Iowa Corporation Act or the articles of incorporation and the
shareholder is entitled to vote on the merger, or (b) the corporation is a
subsidiary that has merged with its parent; and (ii) a plan of share exchange to
which the corporation is a party as the corporation whose shares will be
acquired if the shareholder is entitled to vote on the plan. Pursuant to Section
490.1325 of the Iowa Corporation Act, holders of Common Shares who have
dissenters' rights, if any, and who comply with the applicable statutory
procedures (and who have not otherwise agreed with the Company as to the value
of their
20
<PAGE> 23
shares) will be entitled to receive the amount that the corporation estimates to
be the fair value of the dissenter's shares, plus accrued interest.
The foregoing summary of Sections 490.1302 and 490.1325 of the Iowa
Corporation Act does not purport to be complete and is qualified in its entirety
by reference to such statutory sections.
The Proposed Merger would have to comply with any applicable Federal law at
the time of its consummation. The SEC has adopted Rule 13e-3 under the Exchange
Act which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Proposed Merger. However, Rule
13e-3 would be inapplicable if (i) the Common Shares are deregistered under the
Exchange Act prior to the Proposed Merger or (ii) the Proposed Merger is
consummated within one year after the purchase of the Common Shares pursuant to
the Offer and the amount paid per Common Share in the Proposed Merger is at
least equal to the amount paid per Common Share in the Offer. If applicable,
Rule 13e-3 requires, among other things, that certain financial information
concerning the fairness of the proposed transaction and the consideration
offered to minority shareholders in such transaction be filed with the SEC and
disclosed to shareholders prior to consummation of the transaction.
The Company Articles and the Company By-Laws. The Company's Restated
Articles of Incorporation dated May 1, 1996, as amended by Articles of Amendment
dated May 13, 1997 (the "Company Articles") and the Company's By-Laws as amended
through December 18, 1997 (the "Company By-Laws") contain several provisions
that may delay a change in control of the Company following the purchase of
Common Shares by Purchaser pursuant to the Offer, including, among others, (i) a
provision that the Company Board shall be classified, with each class elected
for a term of three years and one class elected each year at the Company's
annual meeting of shareholders, (ii) a provision requiring advance notice to the
Company of any shareholder nominations for directors at an annual meeting of
shareholders, (iii) a provision that directors may be removed with or without
cause, but only at a meeting of the shareholders called for that purpose in the
manner prescribed by law, which requires the affirmative vote of holders of
fifty percent (50%) or more of the voting shares, and (iv) a provision that
special meetings of shareholders may be called only by the President of the
Company, the Company Board, or holders of at least fifty percent (50%) of the
votes entitled to be cast on any issue proposed to be considered at the meeting.
Pursuant to Article VIII of the Company Articles and Section 4.2 of the
Company By-Laws, the Company Board is divided into three nearly equal classes of
directors, with each class elected for a term of three years. One class is
elected at the Company's annual meeting of shareholders each year. The number of
the Company's directors is currently limited to between five (5) and thirteen
(13) pursuant to Article 2 of the Company By-Laws, and there are currently ten
(10) directors. Pursuant to Section 4.5 of the Company By-Laws and Section
490.808 of the Iowa Corporation Act, members of the Company Board may be removed
with or without cause, but only by the affirmative vote of the holders of fifty
percent (50%) or more of the outstanding voting shares.
Pursuant to Section 5 of the Certificate of Designations of the 6- 3/4%
Series Preferred Stock of Allied Group, Inc., in the event of any assignment,
transfer, or other disposition of Preferred shares to a person other than Allied
Mutual or an affiliate or successor thereof, the Company has the option to
redeem some or all of such shares in exchange for a cash redemption price.
Pursuant to a Stock Rights Agreement executed on July 5, 1990 between the
Company and Allied Mutual, Allied Mutual is entitled to nominate for election to
the Company Board a number of director nominees that most closely approximates
the same percentage of the total number of the Company Board as is equal to
Allied Mutual's percentage ownership of the total number of shares of the
Company voting stock and the Company agrees to use its best efforts to cover, to
the extent practicable, the election of such nominees to the Company Board. The
Stock Rights Agreement further provides that in the event of a vacancy in the
Company Board in any directorship previously filled by a nominee of Allied
Mutual, the Company agrees to allow a person nominated by Allied Mutual to fill
the vacant directorship. The Stock Rights Agreement also contains certain
registration rights provisions with respect to the Preferred Shares and, unless
earlier terminated, terminates on July 5, 2005.
21
<PAGE> 24
Amendment of the foregoing provisions of the Company Articles requires the
affirmative vote of the holders of at least fifty percent (50%) of the Company's
outstanding voting shares. Amendment of the foregoing provisions of the Company
By-Laws requires a majority vote of the full Company Board or a majority vote of
all shareholders entitled to vote at any meeting of the shareholders of record.
If, following consummation of the Offer, the members of the Company Board
in office at such time were to refuse to approve the Proposed Merger (or any
other transaction or corporate action proposed by Purchaser that required
approval of the Company Board), Purchaser, in order to consummate the Proposed
Merger (or any such other transaction or corporate action), would first have to
replace at least a majority of the Company Board with its own designees. As a
result of the classified board provision contained in the Company Articles, at
least two annual meetings of the Company's shareholders could be required to
enable nominees of Purchaser to comprise a majority of the Company Board unless
members of the Company Board are earlier removed pursuant to Section 4.5 of the
Company By-Laws and Section 490.808 of the Iowa Corporation Act. If the current
Company Board opposes the Offer or the Proposed Merger, Parent may determine,
whether or not the Offer is then pending, to take action necessary to place a
majority of its designees on the Company Board, including without limitation,
seeking to solicit proxies from the shareholders of the Company for use at the
Company's 1999 annual meeting of shareholders for the purpose of electing new
directors designated by Purchaser and removing existing directors, or at the
Special Meeting.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF SUCH PROXIES AT ANY MEETING
OF THE COMPANY'S SHAREHOLDERS. ANY SUCH SOLICITATION WHICH PARENT OR PURCHASER
MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE
WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT.
The foregoing description of the Company Articles and the Company By-Laws
is qualified in its entirety by reference to the full text of the Company
Articles and the Company By-Laws, copies of which have been filed by the Company
as exhibits to documents filed with the SEC and may be obtained in the manner
described in Section 8 (except that copies may not be available at regional
offices of the SEC).
13. DIVIDENDS AND DISTRIBUTIONS.
If, on or after the date of this Offer to Purchase, the Company should (i)
split, combine or otherwise change the Common Shares or its capitalization, (ii)
issue or sell any additional securities of the Company or otherwise cause an
increase in the number of outstanding securities of the Company or (iii) acquire
currently outstanding Common Shares or otherwise cause a reduction in the number
of outstanding Common Shares, then, without prejudice to Purchaser's rights
under Sections 1 and 14, Purchaser, in its sole discretion, may make such
adjustments as it deems appropriate in the purchase price and other terms of the
Offer, including, without limitation, the amount and type of securities offered
to be purchased.
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any dividend on the Common Shares, other than regular quarterly
dividends, or make any distribution (including, without limitation, the issuance
of additional Common Shares pursuant to a stock dividend or stock split, the
issuance of other securities or the issuance of rights for the purchase of any
securities) with respect to the Common Shares that is payable or distributable
to shareholders of record on a date prior to the transfer to the name of
Purchaser or its nominee or transferee on the Company's stock transfer records
of the Common Shares purchased pursuant to the Offer, then, without prejudice to
Purchaser's rights under Sections 1 and 14, (i) the purchase price per Common
Share payable by Purchaser pursuant to the Offer will be reduced by the amount
of any such cash dividend or cash distribution and (ii) any such non-cash
dividend, distribution or right to be received by the tendering shareholders
will be received and held by such tendering shareholders for the account of
Purchaser and will be required to be promptly remitted and transferred by each
such tendering shareholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such non-cash dividend, distribution or right and may
withhold the entire purchase
22
<PAGE> 25
price or deduct from the purchase price the amount of value thereof, as
determined by Purchaser in its sole discretion.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Common Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Common Shares, and may terminate the Offer as to any Common
Shares not then paid for, if, in the sole judgment of Purchaser (1) at or prior
to the expiration of the Offer, any one or more of the Minimum Condition, the
Business Combination Condition, or the Insurance Regulatory Approval Condition
has not been satisfied, (2) the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the purchase of Common Shares pursuant to the Offer shall not have expired or
been terminated, or (3) at any time on or after May 18, 1998 and prior to the
acceptance for payment of Shares, any of the following events shall occur:
(a) there shall have been threatened, instituted or pending any
action, proceeding, application or counterclaim before any court,
governmental regulatory or administrative agency or commission, authority
or tribunal, domestic, foreign or supranational, by any government,
governmental authority or other regulatory or administrative agency or
commission, domestic, foreign or supranational, or by any other person,
domestic or foreign (whether brought by the Company, an affiliate of the
Company or any other person), which (i) challenges or seeks to challenge
the acquisition by Parent or Purchaser or any affiliate of either of them
of the Common Shares, restrains, delays or prohibits or seeks to restrain,
delay or prohibit the making of the Offer or the Proposed Merger,
consummation of the transactions contemplated by the Offer or any other
subsequent business combination, restrains or prohibits or seeks to
restrain or prohibit the performance of any of the contracts or other
arrangements entered into by Purchaser or any of its affiliates in
connection with the acquisition of the Company or obtains or seeks to
obtain any material damages or otherwise directly or indirectly relating to
the transactions contemplated by the Offer, the Proposed Merger or any
other subsequent business combination, (ii) prohibits or limits or seeks to
prohibit or limit Parent's or Purchaser's ownership or operation of all or
any portion of their or the Company's business or assets (including without
limitation the business or assets of their respective affiliates and
subsidiaries) or to compel or seeks to compel Parent or Purchaser to
dispose of or hold separate all or any portion of their own or the
Company's business or assets (including without limitation the business or
assets of their respective affiliates and subsidiaries) or imposes or seeks
to impose any limitation on the ability of Parent, Purchaser or any
affiliate of either of them to conduct its own business or own such assets
as a result of the transactions contemplated by the Offer, Proposed Merger
or any other subsequent business combination, (iii) makes or seeks to make
the acceptance for payment, purchase of, or payment for, some or all of the
Common Shares pursuant to the Offer or the Proposed Merger illegal or
results in a delay in, or restricts, the ability of Parent or Purchaser, or
renders Parent or Purchaser unable, to accept for payment, purchase or pay
for some or all of the Common Shares or to consummate the Proposed Merger,
(iv) imposes or seeks to impose limitations on the ability of Parent or
Purchaser or any affiliate of either of them effectively to acquire or hold
or to exercise full rights of ownership of the Common Shares, including,
without limitation, the right to vote the Common Shares purchased by them
on an equal basis with all other Common Shares on all matters properly
presented to the shareholders of the Company, (v) in the sole judgment of
Parent or Purchaser, might adversely affect the Company or any of its
subsidiaries or affiliates or Parent, Purchaser, or any of their respective
affiliates or subsidiaries, (vi) in the sole judgment of Parent or
Purchaser, might result in a diminution in the value of the Common Shares
or the benefits expected to be derived by Parent or Purchaser as a result
of the transactions contemplated by the Offer, (vii) in the sole judgment
of Parent or Purchaser, imposes or seeks to impose any material condition
to the Offer unacceptable to Parent or Purchaser or
23
<PAGE> 26
(viii) otherwise directly or indirectly relates to the Offer, the Proposed
Merger or any other business combination with the Company;
(b) there shall be any action taken, or any statute, rule, regulation
or order or injunction shall be sought, proposed, enacted, promulgated,
entered, enforced or deemed or become applicable to the Offer, the Proposed
Merger or other subsequent business combination between Purchaser or any
affiliate of Purchaser and the Company or any affiliate of the Company or
any other action shall have been taken, proposed or threatened, by any
government, governmental authority or other regulatory or administrative
agency or commission or court, domestic, foreign or supranational, other
than the routine application of the waiting period provisions of the HSR
Act to the Offer, that, in the sole judgment of Parent or Purchaser, might,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, shareholders, equity,
condition (financial or otherwise), operations, licenses, franchises,
permits, permit applications, results of operations or prospects of the
Company or any of its subsidiaries or affiliates which, in the sole
judgment of Parent or Purchaser, is or may be materially adverse to the
Company or any of its subsidiaries or affiliates, or Parent or Purchaser
shall have become aware of any fact which, in the sole judgment of Parent
or Purchaser, has or may have material adverse significance with respect to
either the value of the Company or any of its subsidiaries or the value of
the Common Shares to Parent or Purchaser;
(d) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (ii) any limitation (whether or not
mandatory) by any governmental authority or agency on, or other event
which, in the sole judgment of Parent or Purchaser, might affect the
extension of credit by banks or other lending institutions, (iii) a
commencement of a war, armed hostilities or other national or international
crisis directly or indirectly involving the United States, (iv) any
significant change in United States or any other currency exchange rates or
any suspension of, or limitation on, the markets therefor (whether or not
mandatory), (v) any significant adverse change in the market price of the
Common Shares or in the securities or financial markets of the United
States, or (vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, in the sole judgment of Parent or Purchaser,
a material acceleration or worsening thereof;
(e) the Company or any subsidiary of the Company shall have, at any
time after May 18, 1998 (i) issued, distributed, pledged, sold or
authorized, proposed or announced the issuance of or sale, distribution or
pledge to any person of (A) any shares of its capital stock (other than
sales or issuances pursuant to options outstanding on May 18, 1998 in
accordance with their terms as disclosed on such date) of any class
(including without limitation the Common Shares) or securities convertible
into any such shares of capital stock, or any rights, warrants or options
to acquire any such shares or convertible securities or any other
securities of the Company, or (B) any other securities in respect of, in
lieu of, or in substitution for, Common Shares outstanding on May 18, 1998,
(ii) purchased, acquired or otherwise caused a reduction in the number of,
or proposed or offered to purchase, acquire or otherwise reduce the number
of, any outstanding Common Shares, or other securities, (iii) declared,
paid or proposed to declare or pay any dividend or distribution on any
Common Shares (other than the regular quarterly dividend on the Common
Shares not in excess of the amount per share, and with record and payment
dates, in accordance with recent practice) or on any Preferred Shares
(other than the regular quarterly dividend on the Preferred Shares not in
excess of the amount per share payable in accordance with the terms of the
Preferred Shares) or on any other security or issued, authorized,
recommended or proposed the issuance or payment of any other distribution
in respect of the Common Shares or the Preferred Shares, whether payable in
cash, securities or other property, (iv) altered or proposed to alter any
material term of any outstanding security, (v) incurred any debt other than
in the ordinary course of business and consistent with past practice or any
debt containing burdensome covenants, (vi) issued, sold, authorized,
announced or proposed the issuance of or sale to any person of any debt
securities or any
24
<PAGE> 27
securities convertible into or exchangeable for debt securities or any
rights, warrants or options entitling the holder thereof to purchase or
otherwise acquire any debt securities or incurred or announced its
intention to incur any debt other than in the ordinary course of business
and consistent with past practice, (vii) split, combined or otherwise
changed, or authorized or proposed the split, combination or other change
of the Common Shares, the Preferred Shares or its capitalization, (viii)
authorized, recommended, proposed or entered into or publicly announced its
intent to enter into any merger, consolidation, liquidation, dissolution,
business combination, acquisition or disposition of a material amount of
assets or securities, any material change in its capitalization, any
waiver, release or relinquishment of any material contract rights or
comparable right of the Company or any of its subsidiaries or any agreement
contemplating any of the foregoing or any comparable event not in the
ordinary course of business, or taken any action to implement any such
transaction previously authorized, recommended, proposed or publicly
announced, (ix) transferred into escrow any amounts required to fund any
existing benefit, employment or severance agreements with any of its
employees or entered into any employment, severance or similar agreement,
arrangement or plan with any of its employees other than in the ordinary
course of business and consistent with past practice or entered into or
amended any agreements, arrangements or plans so as to provide for
increased benefits to the employees as a result of or in connection with
the transactions contemplated by the Offer or any other change in control
of the Company, (x) except as may be required by law, taken any action to
terminate or amend any employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended) of the
Company or any of its subsidiaries, or Parent or Purchaser shall have
become aware of any such action which was not previously disclosed in
publicly available filings, (xi) amended or proposed or authorized any
amendment to the Company Articles or the Company By-Laws or similar
organizational documents, (xii) authorized, recommended, proposed or
entered into any other transaction that in the sole judgment of Parent or
Purchaser could, individually or in the aggregate, adversely affect the
value of the Common Shares to Parent or Purchaser or (xiii) agreed in
writing or otherwise to take any of the foregoing actions or Parent or
Purchaser shall have learned about any such action which has not previously
been publicly disclosed by the Company and also set forth in filings with
the SEC;
(f) the Company and Parent or Purchaser shall have reached an
agreement or understanding that the Offer be terminated or amended or
Parent or Purchaser (or one of their respective affiliates) shall have
entered into a definitive agreement or an agreement in principle to acquire
the Company by merger or similar business combination, or purchase of
Shares or assets of the Company;
(g) Parent or Purchaser shall become aware (i) that any material
contractual right of the Company or any of its subsidiaries or affiliates
shall be impaired or otherwise adversely affected or that any material
amount of indebtedness of the Company or any of its subsidiaries shall
become accelerated or otherwise become due prior to its stated due date, in
either case with or without notice or the lapse of time or both, as a
result of the transactions contemplated by the Offer or the Proposed
Merger, or (ii) of any covenant, term or condition in any of the Company's
or any of its subsidiaries' instruments or agreements that are or may be
materially adverse to the value of the Common Shares in the hands of
Purchaser or any other affiliate of Parent (including, but not limited to,
any event of default that may ensue as a result of the consummation of the
Offer, consummation of the Proposed Merger or any other business
combination or the acquisition of control of the Company); or
(h) Parent or Purchaser shall not have obtained any waiver, consent,
extension, approval, action or non-action from any governmental authority
or agency which in its judgment is necessary to consummate the Offer;
which, in the sole judgment of Parent or Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser or any of their affiliates) giving rise to any such condition, makes
it inadvisable to proceed with the Offer and/or with such acceptance for payment
or payment. Parent and Purchaser have the right to rely on any condition set
forth in this Section 14 being satisfied in determining whether to consummate
the Offer; however, if Parent or Purchaser asserts the satisfaction of any such
condition without relying on the exercise of its reasonable judgment or some
other
25
<PAGE> 28
objective criteria, Parent and Purchaser shall promptly disclose such assertion
and the Expiration Date will be (and, if necessary, will be extended to be) at
least five (5) business days after the date of such disclosure.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser in their sole discretion, regardless
of the circumstances (including any action or omission by Parent or Purchaser)
giving rise to any such conditions or may be waived by Parent or Purchaser in
their sole discretion in whole or in part at any time and from time to time. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Parent or Purchaser concerning any condition or
event described in this Section 14 shall be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS; CERTAIN LITIGATION.
General. Except as otherwise disclosed herein, based on a review of
publicly available information filed by the Company with the SEC, neither
Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Common
Shares and the indirect acquisition of the capital stock of the Company's
insurance subsidiaries by Parent or Purchaser pursuant to the Offer or the
Proposed Merger, or (ii) any approval or other action by any governmental,
administrative or regulatory agency or authority, domestic, foreign or
supranational, that would be required for the acquisition or ownership of Common
Shares, or the indirect acquisition of the capital stock of the Company's
insurance subsidiaries by Parent or Purchaser as contemplated herein. Should any
such approval or other action be required, Parent and Purchaser currently
contemplate that such approval or action would be sought. While Purchaser does
not currently intend to delay the acceptance for payment of Common Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or action, if needed, would be obtained
or would be obtained without substantial conditions or that adverse consequences
might not result to the business of the Company, Purchaser or Parent or that
certain parts of the businesses of the Company, Purchaser or Parent might not
have to be disposed of in the event that such approvals were not obtained or any
other actions were not taken. Purchaser's obligation under the Offer to accept
for payment and pay for Common Shares is subject to certain conditions. See
Section 14.
State Insurance Approvals. The acquisition of Common Shares pursuant to
the Offer will require filings with, and approvals of, the Insurance Commissions
under the Insurance Codes of Iowa and Arizona, which are the United States
jurisdictions in which the insurance companies owned or otherwise controlled by
the Company are domiciled, and in Ohio pursuant to Section 3925.08(D)(2) of the
Ohio Revised Code. The Insurance Codes of Iowa and Arizona each contain similar
provisions applicable to the acquisition of control of a domestic insurer,
including a presumption of control that arises from the ownership of ten percent
(10%) or more of the voting securities of a domestic insurer or of any person
that controls a domestic insurer.
Generally, a person seeking to acquire voting securities, such as the
Common Shares, in an amount that would result in such person controlling,
directly or indirectly, a domestic insurer must, together with any person
ultimately controlling such person, file a Form A with the relevant Insurance
Commission and send a copy of such Form A to the domestic insurer. Parent and
Purchaser made Form A filings with the relevant Insurance Commissions and sent
copies thereof to the relevant domestic insurers on the date of this Offer to
Purchase. In addition, Parent is evaluating whether the approvals of any other
Insurance Commissioners are required and, if Parent determines that any such
approvals are required, the Insurance Regulatory Condition will be deemed to
include the receipt of such approvals.
In both Iowa and Arizona, the Form A filings trigger public hearing
requirements and statutory periods within which decisions must be rendered
approving or disapproving the acquisition of control. The periods within which
hearings must be commenced or decisions rendered may not begin until the
relevant Insurance Commissioner has deemed the Form A filing complete, and the
Insurance Commissioner has discretion to request that Parent and Purchaser
furnish additional information before such Insurance Commissioner deems the Form
A filing complete. The Iowa and Arizona Insurance Codes both provide that a
public hearing must
26
<PAGE> 29
be commenced within thirty (30) days after the Form A is filed and that the
relevant Insurance Commissioner must make the determination within thirty (30)
days after the conclusion of such hearing.
The Iowa and Arizona Insurance Codes both generally require the relevant
Insurance Commissioner to approve the application for the acquisition of control
unless the Insurance Commissioner determines, after a public hearing, that such
application should be disapproved on one or more prescribed regulatory grounds.
The Iowa and Arizona Insurance Codes also contain provisions providing generally
for judicial review of an Insurance Commissioner's order.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and to the FTC and certain waiting period requirements have been
satisfied. Parent expects to file such information on the date hereof. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Common Shares
pursuant to the Offer may not be consummated until the expiration of a 15-
calendar day waiting period following the filing by Parent, unless the Antitrust
Division and the FTC terminate the waiting period prior thereto. If, within such
15-day period, either the Antitrust Division or the FTC requests additional
information or material from Parent concerning such Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent.
Purchaser will not accept for payment Common Shares tendered pursuant to the
Offer unless and until the waiting period requirements imposed by the HSR Act
with respect to the Offer have been satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of Common
Shares pursuant to the Offer. At any time before or after Purchaser's
acquisition of Common Shares, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Common Shares pursuant
to the Offer or otherwise or seeking divestiture of Common Shares acquired by
Purchaser or divestiture of substantial assets of Parent or its subsidiaries.
Private parties and state attorneys general may also bring legal action under
the antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Offer or other acquisition of Common Shares by Purchaser on
antitrust grounds will not be made or, if such a challenge is made, of the
result. See Section 14 for certain conditions to the Offer, including conditions
with respect to litigation and certain governmental actions.
State Takeover Statutes. Various states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. Mite Corp., the United States Supreme Court held that the Illinois
Business Takeover Act, which involved state securities laws that made the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics
Corp. of America, however, the United States Supreme Court held that a state
may, as a matter of corporate law and, in particular, those laws concerning
corporate governance, constitutionally disqualify a potential acquirer from
voting on the affairs of a target corporation without prior approval of the
remaining shareholders, provided that such laws were applicable only under
certain conditions.
The State of Iowa has a takeover statute, but it does not apply to an offer
in which the target company is an insurance company or insurance holding company
subject to regulation by the Commissioner of Insurance. Accordingly, Parent and
Purchaser have not complied with the Iowa takeover statute.
Except as described in this Offer to Purchase, neither Purchaser nor Parent
has currently complied with any state takeover statute or regulation. Purchaser
reserves the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Proposed Merger, and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the
Proposed Merger is intended as a waiver of
27
<PAGE> 30
such right. If it is asserted that any state takeover statute is applicable to
the Offer or the Proposed Merger and an appropriate court does not determine
that it is inapplicable or invalid as applied to the Offer or the Proposed
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Common Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Proposed Merger. In such
case, Purchaser may not be obliged to accept for payment or pay for any Common
Shares tendered pursuant to the Offer.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. Purchaser does not know whether any of these
laws will, by their terms, apply to the Offer and has not complied with any such
laws. Should any person seek to apply any state takeover law, Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws are applicable,
and an appropriate court does not determine that such law is, or such laws are,
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Common Shares tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer. In such case, Purchaser may not be
obligated to accept for payment any Common Shares tendered. See Section 14.
The Business Combination Statute. Consummation of the Offer is conditioned
upon Purchaser being satisfied, in its sole discretion, that the provisions of
the Business Combination Statute are inapplicable to the acquisition of Common
Shares pursuant to the Offer.
The Business Combination Statute provides, in general, that an Iowa
corporation, such as the Company, may not engage in a "Business Combination,"
defined to encompass a variety of transactions, including a merger, with an
"Interested Shareholder," defined generally as a person that is the owner of ten
percent or more of the outstanding voting stock of the corporation, for three
years after the shareholder became an Interested Shareholder, unless: (a) the
Business Combination is approved by the corporation's board before the
shareholder becomes an Interested Shareholder, (b) the Interested Shareholder,
upon consummation of the transaction which resulted in the shareholder becoming
an Interested Shareholder, owned at least eighty-five percent (85%) of the
voting shares of the corporation, excluding those shares owned by officers and
directors, or (c) after the shareholder becomes an Interested Shareholder, the
Business Combination is approved by the corporation's board and authorized by
the affirmative vote of at least two-thirds of the voting stock, excluding that
of the Interested Shareholder.
The Business Combination Statute also lists several circumstances in which
it does not apply, none of which the Purchaser believes are applicable to the
Proposed Merger.
The foregoing summary of the Business Combination Statute does not purport
to be complete and is qualified in its entirety by reference to the provisions
of the Business Combination Statute.
The Business Combination Condition would be satisfied if the Board approved
the Proposed Merger before the consummation of the Offer or if the Purchaser, in
its sole discretion, were satisfied that the Business Combination Statute was
invalid or its provisions were otherwise inapplicable to the Purchaser in
connection to the Proposed Merger for any reason.
Complaint by Parent and Purchaser. On May 18, 1998, Parent and Purchaser
filed a complaint against the Company and its directors in the United States
District Court for the Southern District of Iowa. In their complaint, Parent and
Purchaser seek an injunction, among other things, prohibiting the individual
defendants who are members of the Company Board from breaching their fiduciary
duties and violating the securities laws of the State of Iowa by entrenching
themselves and their management and by denying the shareholders of the Company
their right to decide for themselves the future of the Company they own.
28
<PAGE> 31
The complaint alleges that the Company Board defendants have breached their
fiduciary duties by rejecting plaintiffs' offer to purchase all of the
outstanding Common Shares of the Company for $47 per Common Share, a substantial
premium over market value (and a price which Company management had previously
called "reasonable" and "generous"), by entering into a certain stock repurchase
program and by entering into a certain Stock Rights Agreement. Parent and
Purchaser claim that these devices have perpetuated the Company Board while at
the same time diluting the voting rights of the shareholders of the Company. The
complaint further alleges a breach of fiduciary duties by the Company Board in
failing to adopt a by-law opting out of the Business Combination Statute.
Parent and Purchaser also allege that certain defendants violated Section
502.407 of the Iowa Code by issuing, on behalf of the Company, on or about May 5
and May 7, 1998, press releases relating to the Company's stock repurchase
program that contained false and misleading information or omissions of material
fact.
Finally, Parent and Purchaser allege that the preferential rights of the
Preferred Shares, coupled with the loss of those rights upon transfer, places a
significant impediment in the way of Parent, Purchaser, or any other third party
attempting to gain control of the Company. Parent and Purchaser allege that by
exploiting the improper characteristics of the preferred stock, the Company
Board has breached its fiduciary duties to the shareholders of the Company.
16. FEES AND EXPENSES.
Except as set forth below, neither Parent nor Purchaser will pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
Common Shares pursuant to the Offer. Parent and Purchaser have engaged Credit
Suisse First Boston as the Dealer Manager in connection with the Offer and as
financial advisor to Parent in connection with its effort to acquire the
Company. Parent has agreed to pay Credit Suisse First Boston (in its capacity as
Dealer Manager and financial advisor) a fee of $6 million (of which a non-
refundable payment of $500,000 will be paid upon the commencement of the Offer)
upon the consummation of an acquisition of the Company by Parent. Parent has
also agreed to reimburse Credit Suisse First Boston (in its capacity as Dealer
Manager and financial advisor) for its reasonable out-of-pocket expenses,
including the reasonable fees and expenses of its legal counsel, incurred in
connection with its engagement, and to indemnify Credit Suisse First Boston and
certain related persons against certain liabilities and expenses in connection
with its engagement, including certain liabilities under the Federal securities
laws. Credit Suisse First Boston has rendered various investment banking and
other advisory services to Parent and its affiliates in the past and is expected
to continue to render such services, for which it has received and will continue
to receive customary compensation from Parent and its affiliates. In the
ordinary course of business, Credit Suisse First Boston and its affiliates may
actively trade or hold the securities of the Company and Parent for their own
account or for the account of customers and, accordingly, may at any time hold a
long or short position in such securities.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may provide advice and
consultation concerning the planning and execution of the Offer; assist in the
preparation and placement of newspaper ads; assist in the distribution of Offer
documents to brokers, banks, nominees, institutional investors, and other
shareholders and investment community accounts; answer collect telephone
inquiries from shareholders and their representatives; and call or otherwise
contact individuals who are registered holders. The Information Agent will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the Federal securities laws.
In addition, ChaseMellon Shareholder Services, L.L.C. has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the Federal securities laws. Brokers, dealers,
29
<PAGE> 32
commercial banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding offering
material to their customers.
17. MISCELLANEOUS.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Common Shares pursuant thereto,
Purchaser will make a good faith effort to comply with such state statute. If,
after such good faith effort, Purchaser cannot comply with any such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Common Shares in such state. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Parent or Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
Parent and Purchaser have filed with the SEC the Schedule 14D-1, together
with exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, furnishing certain additional information with respect to the
Offer. The Schedule 14D-1, and any amendments thereto, may be inspected at, and
copies may be obtained from, the same places and in the same manner as set forth
in Section 8 (except that they may not be available at the regional offices of
the SEC).
NATIONWIDE GROUP ACQUISITION CORPORATION
May 19, 1998
30
<PAGE> 33
SCHEDULE I
DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of Parent. Except as noted, each such person is a
citizen of the United States of America. The business address of each such
person is c/o Nationwide Mutual Insurance Company, One Nationwide Plaza,
Columbus, Ohio 43215.
DIRECTORS
The following individuals serve as directors of Parent as of May 19, 1998:
Arden L. Shisler, Chairman
Lewis J. Alphin
A.I. Bell
Richard D. Crabtree
Keith W. Eckel
Willard J. Engel
Fred C. Finney
Charles L. Fuellgraf, Jr.
Dimon R. McFerson
David O. Miller
Yvonne L. Montgomery
C. Ray Noecker
James F. Patterson
Robert L. Stewart
Nancy C. Thomas
Harold W. Weihl
Arden L. Shisler, Director of Parent since April 1984. Mr. Shisler has
served as Chairman of the Board of Parent since 1992. Mr. Shisler has served as
the President and Chief Executive Officer of K&B Transport, Inc., a trucking
firm in Dalton, Ohio, since January 1992. He is a Director of the National
Cooperative Business Association.
Lewis J. Alphin, Director of Parent since April 1993. Mr. Alphin has been a
farm owner and operator since 1971.
A. I. Bell, Director of Parent since April 1998. Mr. Bell has owned and
operated Bell Farms since March 1974.
Richard D. Crabtree, Director of Parent since April 1996. Mr. Crabtree has
served as President and Chief Operating Officer of Parent since April 1996. Mr.
Crabtree served as Executive Vice President of Property/Casualty Operations of
Parent from April 1995 to April 1996. He served as Senior Vice President of
Property and Casualty Operations of Parent from May 1994 to April 1995. He
served as Senior Vice President of State Operations of Parent from September
1993 to May 1994. He served as a Vice President Regional Manager of Parent from
December 1985 to September 1993.
Keith W. Eckel, Director of Parent since April 1996. Mr. Eckel is a Partner
of Fred W. Eckel Sons and has served as the President of Eckel Farms, Inc. since
May 1968.
Willard J. Engel, Director of Parent since April 1994. Mr. Engel served as
General Manager of the Lyon County Cooperative Oil Co. from March 1975 until his
retirement in September 1997.
Fred C. Finney, Director of Parent since April 1992. Mr. Finney has been
owner and operator of Moreland Fruit Farm and operator of Melrose Orchard since
January 1985.
I-1
<PAGE> 34
Charles L. Fuellgraf, Jr., Director of Parent since April 1969. Mr.
Fuellgraf has served as the Chief Executive Officer of Fuellgraf Electric
Company, an electrical contractor, of Butler, Pennsylvania, and Nashville,
Tennessee, since 1986.
Dimon R. McFerson, Director of Parent since April 1988. Mr. McFerson has
served as the Chairman and Chief Executive Officer - Nationwide Insurance
Enterprise of Parent since April 1996, and was President and Chief Executive
Officer of Parent from December 1992 to April 1996. He served as Director and
Chief Executive Officer from December 1992 to November 1993, Director and
President and Chief Executive Officer - Nationwide Insurance Enterprise from
November 1993 to April 1996, and Director and Chairman and Chief Executive
Officer - Nationwide Insurance Enterprise from April 1996 to present for the
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company.
David O. Miller, Director of Parent since April 1985. Mr. Miller is
President of Owen Potato Farm, Inc. since 1962; a partner with M&M Enterprises
in Licking County, Ohio, since 1974; Chairman of the Board of the Wausau
Insurance Companies since May 1992; and Chairman of the Board of Nationwide Life
Insurance Company since April 1998, and Nationwide Life and Annuity Insurance
Company and a director of the National Cooperative Business Association and
International Cooperative Alliance.
Yvonne L. Montgomery, Director of Parent since April 1998. Ms. Montgomery
has served as Senior Vice President/General Manager of Southern Customer
Operations for U.S. Customer Operations of Xerox Corporation since January 1996.
From March 1995 to January 1996, Ms. Montgomery served as Vice President of
Marketing & Strategy Integration, ACO of Xerox Corporation; from August 1993 to
March 1995, Ms. Montgomery served as Executive Assistant to the Chairman/Chief
Executive Officer of Xerox Corporation; and from January 1991 to August 1993,
Ms. Montgomery served as Vice President - New York Area for Xerox Corporation.
C. Ray Noecker, Director of Parent since April 1994. Mr. Noecker has been
farm owner and operator of Noecker Farms since March 1969.
James F. Patterson, Director of Parent since April 1989. Mr. Patterson is
President of Patterson Farms, Inc. since December 1991, and Vice President of
Pattersons, Inc. since 1964. Mr. Patterson has served as the Chairman of the
Board of Nationwide Mutual Fire Insurance Company since April 1994. He serves as
director of the National Cooperative Business Association.
Robert L. Stewart, Director of Parent since April 1989. Mr. Stewart is the
owner of Sunnydale Farms since 1960 and owner of Sunnydale Mining since 1989. He
has served as Chairman of the Board of the Farmland Insurance Companies since
May 1994 and also serves as a director of the National Cooperative Business
Association.
Nancy C. Thomas, Director of Parent since April 1986. Mrs. Thomas is a farm
owner and operator of Da-Ma-Lor Farms since December 1958. Mrs. Thomas has
served as the Chairman of the Board of Nationwide Property and Casualty
Insurance Company since April 1989.
Harold W. Weihl, Director of Parent since April 1990. Mr. Weihl has been
farm owner and operator of Weihl Farms since April 1950. Mr. Weihl has served as
Chairman of the Board of Nationwide General Insurance Company since April 1996.
I-2
<PAGE> 35
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of Parent:
<TABLE>
<CAPTION>
NAME OFFICE OR POSITION HELD
<S> <C>
Dimon R. McFerson...... Chairman and Chief Executive Officer - Nationwide
Insurance Enterprise
Richard D. Crabtree.... President and Chief Operating Officer
Robert A. Oakley....... Executive Vice President - Chief Financial Officer
Robert J. Woodward,
Jr. ................. Executive Vice President - Chief Investment Officer
James E. Brock......... Senior Vice President - Corporate Development
John R. Cook, Jr....... Senior Vice President - Chief Communications Officer
Thomas L. Crumrine..... Senior Vice President
W. Sidney Druen........ Senior Vice President and General Counsel and Assistant
Secretary
Danny M. Fullerton..... Senior Vice President - Property and Casualty Marketing
Harvey S. Galloway, Senior Vice President - Chief Actuary - Life, Health and
Jr................... Annuities
Richard D. Headley..... Senior Vice President - Chief Information Technology
Officer
David R. Jahn.......... Senior Vice President - Commercial Insurance
Donna A. James......... Senior Vice President - Human Resources
Richard A. Karas....... Senior Vice President - Sales - Financial Services
Edwin P. McCausland,
Jr. ................. Senior Vice President - Fixed Income Securities
James A. Taylor........ Senior Vice President - Property and Casualty Insurance
Richard M. Waggoner.... Senior Vice President - Shared Services
Susan A. Wolken........ Senior Vice President - Life Company Operations
</TABLE>
For biographical information concerning Messrs. McFerson and Crabtree, see
Section 1 above.
Robert A. Oakley has served as Executive Vice President - Chief Financial
Officer of Parent since April 1995. Mr. Oakley served as Senior Vice
President - Chief Financial Officer of Parent from October 1993 to April 1995.
From November 1984 to October 1993, Mr. Oakley served as Vice President and
Corporate Controller of Parent.
Robert J. Woodward, Jr., has served as Executive Vice President - Chief
Investment Officer of Parent since August 1995. From March 1991 to August 1995,
Mr. Woodward served as Senior Vice President - Fixed Income Investments of
Parent.
James E. Brock has served as Senior Vice President - Corporate Development
of Parent since June 1997. Mr. Brock served as Senior Vice President - Life
Company Operations of Parent from April 1996 to June 1997. From November 1990 to
April 1996, Mr. Brock served as Senior Vice President - Investment Product
Operations of Parent.
John R. Cook, Jr., has served as Senior Vice President - Chief
Communications Officer of Parent since May 1997. From July 1989 to May 1997, Mr.
Cook served as Senior Vice President - Chief Communications Officer of USAA.
Thomas L. Crumrine has served as President - Nationwide Agencies (appointed
position) and Senior Vice President of Parent since September 1997. He served as
Senior Vice President - Property and Casualty Insurance of Parent from March
1996 to September 1997. Mr. Crumrine served as Senior Vice President of Claims
of Parent from April 1995 to March 1996, Vice President of Claims of Parent from
April 1994 to April 1995, and Vice President - Property and Casualty Claims
Services of Parent from June 1993 to April 1994.
W. Sidney Druen has served as Senior Vice President and General Counsel and
Assistant Secretary of Parent since September 1994. From October 1989 to
September 1994, Mr. Druen served as Vice President and Deputy General Counsel
and Assistant Secretary of Parent.
Danny M. Fullerton has served as Senior Vice President - Property and
Casualty Marketing of Parent since November 1996. From July 1994 to November
1996, Mr. Fullerton served as Vice President - Agency
I-3
<PAGE> 36
Operations of Parent. From December 1990 to July 1994, Mr. Fullerton served as
Vice President Regional Manager of Parent.
Harvey S. Galloway, Jr., has served as Senior Vice President - Chief
Actuary - Life, Health and Annuities of Parent since April 1993.
Richard D. Headley has served as Senior Vice President - Chief Information
Technology Officer of Parent since October 1997. From January 1975 to October
1997, Mr. Headley served in various positions in BANK ONE Corporation.
David R. Jahn has served as Senior Vice President-Commercial Insurance of
Parent since March 1998. Mr. Jahn served as Vice President-Resource Management
of Parent from March 1996 to March 1998. From November 1993 to March 1996, Mr.
Jahn served as Vice President-Regional Manager of Parent. From August 1992 to
November 1993, Mr. Jahn served as Vice President of Parent and as Senior Vice
President-South Central Division of EMPLOYERS INSURANCE OF WAUSAU A Mutual
Company.
Donna A. James has served as Senior Vice President - Human Resources of
Parent since December 1997. Ms. James served as Vice President - Human Resources
of Parent from July 1996 to December 1997, Vice President and Assistant to the
Chief Executive Officer of Parent from March 1996 to July 1996, Associate Vice
President and Assistant to CEO of Parent from May 1994 to March 1996, and
Administrative Officer and Executive Assistant to the CEO of Parent from April
1993 to May 1994.
Richard A. Karas has served as Senior Vice President of Sales-Financial
Services of Parent since March 1993.
Edwin P. McCausland, Jr., has served as Senior Vice President-Fixed Income
Securities of Parent since April 1998. Mr. McCausland served as Vice
President-Fixed Income Securities of Parent from February 1997 to April 1998.
From May 1989 to February 1997, Mr. McCausland served as Vice President-Managing
Director of Massachusetts Mutual Life Insurance Company.
James A. Taylor has served as Senior Vice President - Property and Casualty
Insurance of Parent since March 1996. Mr. Taylor served as Vice President of
North Carolina, Alabama and Georgia operations of Parent from January 1996 to
March 1996; Vice President of North Carolina operations of Parent from October
1994 to January 1996; Vice President - Regional Manager of Parent from May 1994
to October 1994; Senior Vice President - State Operations and Regional Manager
of Parent from September 1993 to May 1994; and Vice President - Regional
Manager of Parent from January 1989 to September 1993.
Richard M. Waggoner has served as Senior Vice President - Shared Services
of Parent since April 1997. Mr. Waggoner served as Executive Vice
President - Standard/Custom Accounts from April 1996 to April 1997, and
Executive Vice President of Division Operations from November 1993 to April 1996
for the Wausau Insurance Companies. He served as Vice President of Parent from
January 1990 to April 1994 and served in the positions of Director, Vice
Chairman, and President and Chief Operating Officer with Colonial Insurance
Company of Wisconsin between 1990 and 1994.
Susan A. Wolken has served as Senior Vice President - Life Company
Operations of Parent since June 1997. Ms. Wolken served as Senior Vice President
of Enterprise Administration of Parent from July 1996 to June 1997; Senior Vice
President - Human Resources of Parent from April 1995 to July 1996; Vice
President - Human Resources of Parent from September 1993 to April 1995; and
Vice President - Individual Life and Health Operations of Parent from October
1989 to September 1993.
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years for each
director and executive officer of Purchaser. Each such person is a citizen of
the United States of America and the business address of each such person is c/o
Nationwide Group Acquisition Corporation, One Nationwide Plaza, Columbus, Ohio
43215.
I-4
<PAGE> 37
DIRECTORS
The following individuals serve as directors of Purchaser as of May 19,
1998:
Dimon R. McFerson
Richard D. Crabtree
Robert A. Oakley
For biographical information concerning Messrs. McFerson, Crabtree and
Oakley, see Section 1 above.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of Purchaser:
<TABLE>
<CAPTION>
NAME OFFICE OR POSITION HELD
<S> <C>
Dimon R. McFerson.................. Chairman and Chief Executive Officer - Nationwide
Insurance Enterprise
Richard D. Crabtree................ President and Chief Operating Officer
Robert A. Oakley................... Executive Vice President - Chief Financial Officer
W. Sidney Druen.................... Senior Vice President and General Counsel and
Assistant Secretary
Duane M. Campbell.................. Vice President - Treasurer
Dennis W. Click.................... Vice President and Secretary
David A. Diamond................... Vice President - Enterprise Controller
Mark B. Koogler.................... Vice President and Associate General Counsel
</TABLE>
For biographical information concerning Messrs. McFerson, Crabtree, Oakley
and Druen, see Section 1 above.
Duane M. Campbell has served as Vice President - Treasurer of Parent since
August 1996. Mr. Campbell served as Assistant Treasurer of Parent from January
1987 to August 1996.
Dennis W. Click has served as Vice President and Secretary of Parent since
December 1997. Mr. Click served as Vice President and Assistant Secretary of
Parent from August 1994 to December 1997. From August 1989 to August 1994, Mr.
Click served as Associate Vice President and Assistant Secretary of Parent.
David A. Diamond has served as Vice President-Enterprise Controller of
Parent since August 1996. Mr. Diamond served as Vice President-Controller of
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company from October 1993 to August 1996. From April 1991 to October 1993, Mr.
Diamond served as Associate Vice President-Corporate Accounting of Parent.
Mark B. Koogler has served as Vice President-Associate General Counsel of
Parent since September 1997. Mr. Koogler served as Associate Vice
President-Associate General Counsel of Parent from September 1996 to September
1997. From February 1994 to September 1996, Mr. Koogler served as Associate
General Counsel of Parent and from March 1992 to February 1994, Mr. Koogler
served as Assistant General Counsel of Parent.
I-5
<PAGE> 38
SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS
BY PARENT AND THE PURCHASER
The following table sets forth information concerning transactions in
Common Shares during the past 60 days by Parent. All transactions involved
open-market purchases of Common Shares executed on the NYSE.
<TABLE>
<CAPTION>
SHARES
TRANSACTION DATE ACQUIRED PRICE PER SHARE(1)
---------------- -------- ------------------
<S> <C> <C>
March 24, 1998.............................................. 228,000 $32.56
April 16, 1998.............................................. 422,300 $31.23
April 17, 1998.............................................. 89,000 $31.31
April 24, 1998.............................................. 19,500 $31.58
April 27, 1998.............................................. 37,300 $31.60
April 28, 1998.............................................. 100,000 $31.56
-------
Total Shares ............................................... 896,100
</TABLE>
- ---------------
(1) All prices include commissions.
II-1
<PAGE> 39
[This Page Intentionally Left Blank]
<PAGE> 40
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the Common
Shares and any other required documents should be sent by each shareholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier Delivery: By Hand:
Post Office Box 3301 85 Challenger Road -- Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop - Reorg New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reoganization
Department Attn: Reorganization Department
Department
</TABLE>
By Facsimile Transmission:
(201) 329-8936
Confirm by Telephone:
(201) 296-4860
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. Holders
of Common Shares may also contact their broker, dealer, commercial bank or 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, NY 10005
Bankers and Brokers call collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
INTERNET: World Wide Web http://www.georgeson.com
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010
Call Toll Free: (800) 863-6558
<PAGE> 1
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ALLIED GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 19, 1998
BY
NATIONWIDE GROUP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
NATIONWIDE MUTUAL INSURANCE COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 16, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier Delivery: By Hand:
Post Office Box 3301 85 Challenger Road -- Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop - Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
Attn: Reorganization Department
</TABLE>
By Facsimile Transmission:
(201) 329-8936
Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE
THE SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE COMPLETING THIS LETTER OF
TRANSMITTAL.
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED COMMON SHARE CERTIFICATE(S) AND
OWNER(S) (PLEASE FILL IN, IF BLANK, EXACTLY COMMON SHARES TENDERED
AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF COMMON SHARES
COMMON SHARE REPRESENTED BY
CERTIFICATE COMMON SHARE NUMBER OF COMMON
NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED**
==========================================================
==========================================================
==========================================================
TOTAL NUMBER OF
COMMON SHARES
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Common Shares by book-entry transfers.
** Unless otherwise indicated, it will be assumed that all Common Shares evidenced by each Common Share
Certificate delivered to the Depositary are being tendered hereby. See Instruction 4.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by shareholders either if
certificates ("Common Share Certificates") evidencing shares of common stock, no
par value, of Allied Group, Inc. ("Common Shares") are to be forwarded herewith
or, unless an Agent's Message (as defined below) is utilized, if delivery of
Common Shares is to be made by book-entry transfer to the Depositary's account
at The Depository Trust Company or Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedure described in
"Procedures for Tendering Common Shares" of the Offer to Purchase (as defined
below). DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareholders whose Common Share Certificates are not immediately available
or who cannot deliver all documents required hereby to the Depositary prior to
the Expiration Date (as defined in the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Common Shares must do so pursuant to the guaranteed delivery
procedure described in "Procedures for Tendering Common Shares" of the Offer to
Purchase. See Instruction 2.
[ ] CHECK HERE IF TENDERED COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING.
Name of Tendering Institution
-----------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
<TABLE>
<CAPTION>
PHILADELPHIA
THE DEPOSITORY DEPOSITORY
TRUST COMPANY TRUST COMPANY
-------------- -------------
<S> <C> <C>
(CHECK ONE) [ ] [ ]
</TABLE>
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED COMMON SHARES ARE BEING TENDERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING.
Name(s) of Registered Holder(s)
----------------------------------------------------------------------------
Window Ticket No. (if any)
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------------------------------------------------------------
Name of Institution which Guaranteed Delivery
----------------------------------------------------------------------------
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Common Shares tendered hereby. The certificates and number of Common Shares that
the undersigned wishes to tender should be indicated in the appropriate boxes.
[ ] CHECK HERE IF TENDER IS BEING MADE PURSUANT TO LOST, STOLEN, DESTROYED OR
MUTILATED SECURITIES. SEE INSTRUCTION 11.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Nationwide Group Acquisition Corporation
("Purchaser"), an Ohio corporation and a wholly owned subsidiary of Nationwide
Mutual Insurance Company ("Parent"), an Ohio mutual insurance company, the
above-described shares of common stock, no par value (the "Common Shares") of
Allied Group, Inc., an Iowa corporation (the "Company"), pursuant to Purchaser's
offer to purchase all outstanding Common Shares, at a price of $47.00 per 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, dated May 19, 1998 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or in part from time to time, to one or more of its
affiliates, the right to purchase all or any portion of the Common Shares
tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Common Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Common
Shares that are being tendered hereby and all dividends, distributions
(including, without limitation, distributions of additional Common Shares) and
rights declared, paid or distributed in respect of such Common Shares on or
after May 18, 1998 (collectively, "Distributions"), and irrevocably appoints
ChaseMellon Shareholder Services, L.L.C., (the "Depositary") the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Common Shares
and all Distributions, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver Common Share Certificates evidencing such Common Shares and all
Distributions, or transfer ownership of such Common Shares and all Distributions
on the account books maintained by a Book-Entry Transfer Facility, together, in
either case, with all accompanying evidences of transfer and authenticity, to or
upon the order of Purchaser, (ii) present such Common Shares and all
Distributions for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Common Shares and all Distributions, all in accordance with the terms of the
Offer.
If, on or after the date of the Offer to Purchase, the Company should
declare or pay any dividend on the Common Shares, other than regular quarterly
dividends, or make any distribution (including, without limitation, the issuance
of additional Common Shares pursuant to a stock dividend or stock split, the
issuance of other securities or the issuance of rights for the purchase of any
securities) with respect to the Common Shares that is payable or distributable
to shareholders of record on a date prior to the transfer to the name of
Purchaser or its nominee or transferee on the Company's stock transfer records
of the Common Shares purchased pursuant to the Offer, then, without prejudice to
Purchaser's rights under Sections 1 and 14 of the Offer to Purchase, (i) the
purchase price per Common Share payable by Purchaser pursuant to the Offer will
be reduced by the amount of any such cash dividend or cash distribution and (ii)
any such non-cash dividend, distribution or right to be received by the
tendering shareholders will be received and held by such tendering shareholders
for the account of Purchaser and will be required to be promptly remitted and
transferred by each such tendering shareholder to the Depositary for the account
of Purchaser, accompanied by appropriate documentation of transfer. Pending such
remittance and subject to applicable law, Purchaser will be entitled to all
rights and privileges as owner of any such non-cash dividend, distribution or
right and may withhold the entire purchase price or deduct from the purchase
price the amount or value thereof, as determined by Purchaser in its sole
discretion.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints David A. Diamond, W. Sidney Druen and Mark B. Koogler, and each of
them, as the attorneys and proxies of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to the
Common Shares tendered by the undersigned and accepted for payment by Purchaser
(and any and all Distributions). All such proxies shall be considered coupled
with an interest in the tendered Common Shares. This appointment will be
effective if, when, and only to the extent that Purchaser accepts such Common
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior proxies given by the undersigned with respect to such Common Shares,
Distributions and other securities will, without further action, be revoked, and
no subsequent proxies may be given. The individuals named above as proxies will,
with respect to the Common Shares, Distributions and other securities for which
the appointment is effective, be empowered to exercise all voting and other
rights of the undersigned as they, in their sole discretion, may deem proper at
any annual, special, adjourned or postponed meeting of Company
3
<PAGE> 4
shareholders, by written consent or otherwise, and Purchaser reserves the right
to require that, in order for Common Shares, Distributions or other securities
to be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Common Shares, Purchaser or Purchaser's designees must be able
to exercise full voting rights with respect to such Common Shares.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Common Shares
tendered hereby and all Distributions, that the undersigned own(s) the Common
Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended ("Rule 14e-4"), that such tender of
Common Shares complies with Rule 14e-4 and that when such Common Shares are
accepted for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Common
Shares and Distributions will be subject to any adverse claim. The undersigned,
upon request, shall execute and deliver all additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Common Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly to
the Depositary for the account of Purchaser all Distributions in respect of the
Common Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the Common
Shares tendered hereby, or deduct from such purchase price, the amount or value
of such Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, executors, personal and legal representatives, administrators,
trustees in bankruptcy, successors and assigns of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Common Shares pursuant to any
one of the procedures described in "Procedures for Tendering Common Shares" of
the Offer to Purchase and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer. Purchaser's
acceptance for payment of Common Shares tendered pursuant to the Offer will
constitute a binding agreement between the undersigned and Purchaser upon the
terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, Purchaser
may not be required to accept for payment any of the Common Shares tendered
hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price and/or return any
Common Share Certificates evidencing Common Shares not tendered or accepted for
payment, in the name(s) of the registered holder(s) appearing above under
"Description of Common Shares Tendered." Similarly, unless otherwise indicated
in the box entitled "Special Delivery Instructions," please mail the check for
the purchase price of all Common Shares purchased and all Common Share
Certificates evidencing Common Shares not tendered or not purchased (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Common Shares Tendered." In the
event that the boxes entitled "Special Payment Instructions" and "Special
Delivery Instructions" are both completed, please issue the check for the
purchase price and/or return any Common Share Certificates for Common Shares not
purchased or not tendered or accepted for payment in the name(s) of, and mail
such check and/or return such Common Share Certificates to, the person(s) so
indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Common Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the instructions in the
box entitled "Special Payment Instructions," to transfer any Common Shares from
the name of the registered holder(s) thereof if Purchaser does not purchase any
of the Common Shares tendered hereby.
4
<PAGE> 5
- ------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Common
Shares or Common Share Certificates evidencing Common Shares not tendered
or not purchased are to be issued in the name of someone other than the
undersigned, or if the Common Shares delivered by book-entry transfer
which are not purchased are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than that designated
above.
Issue [ ] Check [ ] Common Share Certificate to:
Name
-----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
RECIPIENT'S TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
[ ] Credit unpurchased Common Shares delivered by book-entry transfer to
the Book-Entry Transfer Facility account set forth below:
Check appropriate box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
------------------------------------------------------------
(ACCOUNT NUMBER)
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Common Share Certificates tendered and/or
Common Share Certificates evidencing Common Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Common Shares Tendered."
Mail [ ] Check [ ] Common Share Certificates to:
Name:
-----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
RECIPIENT'S TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- ------------------------------------------------------------
5
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
- ------------------------1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Common
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or other persons acting
in a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
================================================================================
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
- ----------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- ----------------------------------------------------------------
(COMPLETE SUBSTITUTE FORM W-9 INCLUDED
HEREIN)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
================================================================================
(PLEASE TYPE OR PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
================================================================================
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Dated:
- ------------------------, 1998
FOR USE BY FINANCIAL INSTITUTIONS ONLY
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is a
bank, broker, dealer, credit union, savings association or other entity that is
a member in good standing of the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"). No signature
guarantee is required on this Letter of Transmittal (i) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Common Shares)
of Common Shares tendered herewith, unless such holder(s) has (have) completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" herein or (ii) if such Common Shares are
tendered for the account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Common Share Certificates. This
Letter of Transmittal is to be used either if Common Share Certificates are to
be forwarded herewith or if Common Shares are to be delivered by book-entry
transfer pursuant to the procedure set forth in "Procedures for Tendering Common
Shares" of the Offer to Purchase. Common Share Certificates evidencing all
tendered Common Shares, or confirmation of a book-entry transfer of such Common
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities pursuant to the procedures set forth in "Procedures for Tendering
Common Shares" of the Offer to Purchase, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein prior to the
Expiration Date. If Common Share Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery.
Shareholders whose Common Share Certificates are not immediately available,
who cannot deliver their Common Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis may tender
their Common Shares pursuant to the guaranteed delivery procedure described in
"Procedures for Tendering Common Shares" of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, must be
received by the Depositary prior to the Expiration Date; and (iii) the Common
Share Certificates, in proper form for transfer, or a confirmation of a
book-entry transfer of such Common Shares into the Depositary's account at one
of the Book-Entry Transfer Facilities, together with a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three (3) New York Stock
Exchange Inc. trading days after the date of execution of the Notice of
Guaranteed Delivery, all as described in "Procedures for Tendering Common
Shares" of the Offer to Purchase.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation (as defined in the Offer to Purchase), which states that
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering the Common Shares
that such participant has received and agrees to be bound by the terms of this
Letter of Transmittal and that Purchaser may enforce such agreement against the
participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, COMMON SHARE
CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE SOLE OPTION AND RISK OF THE TENDERING
SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE
7
<PAGE> 8
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Common Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile hereof), all tendering shareholders waive any right
to receive any notice of the acceptance of their Common Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Common Shares Tendered" is inadequate, the Common Share Certificate number, the
total number of Common Shares represented by such Common Share Certificates and
the number of Common Shares tendered should be listed on a separate schedule and
attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Common Shares evidenced by any Common Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of shares of Common Shares which are to be tendered in the column
entitled "Number of Common Shares Tendered" in the above "Description of Common
Shares Tendered". In such cases, new Common Share Certificate(s) evidencing the
remainder of the Common Shares that were evidenced by the Common Share
Certificate(s) delivered to the Depositary herewith will be sent to the
person(s) signing this Letter of Transmittal, unless otherwise provided in the
box entitled "Special Delivery Instructions," as soon as practicable after the
expiration or termination of the Offer. All Common Shares evidenced by Common
Share Certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the Common Share Certificate(s) evidencing
such Common Shares without alteration, enlargement or any other change
whatsoever. DO NOT SIGN THE BACK OF THE COMMON SHARE CERTIFICATES.
If any Common Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Common Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Common Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Common Shares tendered hereby, no endorsements of Common Share Certificates or
separate stock powers are required, unless payment is to be made to, or Common
Share Certificates evidencing Common Shares not tendered or not purchased are to
be issued in the name of, a person other than the registered holder(s), in which
case, the Common Share Certificate(s) evidencing the Common Shares tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on such
Common Share Certificate(s). Signatures on such Common Share Certificate(s) and
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Shares tendered hereby, the Common Share
Certificate(s) evidencing the Common Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Common Share
Certificate(s). Signatures on such Common Share Certificate(s) and stock powers
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Common Share Certificates or stock
power is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority so to act
must be submitted.
8
<PAGE> 9
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Common Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price of any Common Shares purchased is to be
made to, or Common Share Certificate(s) evidencing Common Shares not tendered or
not purchased are to be issued in the name of, a person other than the
registered holder(s), the amount of any stock transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise) payable on account of
the transfer to such other person will be deducted from the purchase price of
such Common Shares purchased, unless evidence satisfactory to Purchaser of the
payment of such taxes, or exemption therefrom, is submitted. Except as provided
in this Instruction 6, it will not be necessary for transfer tax stamps to be
affixed to the Common Share Certificates evidencing the Common Shares tendered
hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Common Shares tendered hereby is to be issued, or Common Share
Certificate(s) evidencing Common Shares not tendered or not purchased are to be
issued, in the name of a person other than the person(s) signing this Letter of
Transmittal or if such check or any such Common Share Certificate is to be sent
to someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Common Shares Tendered," the
appropriate boxes on this Letter of Transmittal must be completed. Shareholders
tendering Common Shares by book-entry transfer may request that Common Shares
not purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate in the box entitled "Special Payment
Instructions" hereof. If no such instructions are given, all such Common Shares
not purchased will be returned by crediting the account at the Book-Entry
Transfer Facilities designated herein as the account from which such Common
Shares were delivered.
8. Waiver of Conditions. The conditions of the Offer may be waived, in
whole or in part, by Purchaser, in its sole discretion, at any time and from
time to time, in the case of any Common Shares tendered.
9. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Information Agent or Dealer
Manager at their respective addresses or telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and other
tender offer materials may be obtained from the Information Agent or the Dealer
Manager, and copies will be furnished promptly at Purchaser's expense. No fees
or commissions will be paid to brokers, dealers or other persons (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Common
Shares pursuant to the Offer.
10. Substitute Form W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Common Shares purchased from such shareholder. If the tendering shareholder has
not been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part 1 of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part 1 and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary.
11. Lost, Stolen, Destroyed or Mutilated Common Share Certificates. If any
Common Share Certificates have been lost, destroyed, mutilated or stolen, the
shareholder should promptly notify the Depositary. The shareholder will then be
instructed as to the steps that must be taken in order to replace the Common
Share Certificate(s). This Letter of Transmittal and related documents cannot be
processed until
9
<PAGE> 10
the procedures for replacing lost or destroyed Common Share Certificates have
been followed. In order to facilitate replacement, contact Harris Trust &
Savings Bank at (312) 461-2121.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
COMMON SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Common
Shares are accepted for payment is required by law to provide the Depositary (as
payer) with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service and
payments that are made to such shareholder with respect to Common Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%. In
addition, if a shareholder makes a false statement that results in no imposition
of backup withholding, and there was no reasonable basis for such a statement, a
$500 penalty may also be imposed by the Internal Revenue Service.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions. A shareholder should consult his or her tax advisor as
to such shareholder's qualification for an exemption from backup withholding and
the procedure for obtaining such exemption.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Common Shares purchased pursuant to the Offer, the shareholder
is required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Common
Shares tendered hereby. If the Common Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering shareholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, the shareholder should write "Applied For" in the
space provided for the TIN in Part 1, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part 1 and the Depositary is not provided with a
TIN within 60 days, the Depositary will withhold 31% of all payments of the
purchase price to such shareholder until a TIN is provided to the Depositary.
10
<PAGE> 11
ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- Taxpayer Identification Number -- For -------------------------------
FORM W-9 all accounts, enter your taxpayer Social Security Number
DEPARTMENT OF THE identification number in the box at right. (For OR
TREASURY most individuals, this is your social security
INTERNAL REVENUE SERVICE number. If you do not have a number, see -------------------------------
Obtaining a Number in the enclosed Guidelines Employer Identification Number
PAYER'S REQUEST FOR TAXPAYER for Certification of Taypayer Identification (If awaiting TIN write "Applied For")
IDENTIFICATION NUMBER ("TIN") Number of Substitute Form W-9.) Certify by
signing and dating below. Note: If the account
is in more than one name, see the chart in the
enclosed Guidelines to determine which number
to give the payer.
----------------------------------------------------------------------------------------
PART 2 -- For Payees Exempt From Backup Withholding, see the enclosed Guidelines and
complete as instructed therein.
- -------------------------------------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued
to me), and
(2) I am not subject to backup withholding because I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you
are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
- -------------------------------------------------------------------------------------------------------------------------
Signature Date __________ , 1998
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WRITE "APPLIED FOR" IN
THE SPACE PROVIDED FOR THE TIN IN PART 1 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld.
==============================================================
Signature Date
-------------------------------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
<PAGE> 12
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. Holders
of Common Shares may also contact their broker, dealer, commercial bank or 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, NY 10005
Bankers and Brokers call collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
INTERNET: World Wide Web http://www.georgeson.com
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010
Call Toll Free: (800) 863-6558
May 19, 1998
<PAGE> 1
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ALLIED GROUP, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Common Share Certificates") evidencing shares of common stock, no par value
(the "Common Shares"), of Allied Group, Inc., an Iowa corporation (the
"Company"), are not immediately available, (ii) if Common Share Certificates and
all other required documents cannot be delivered to ChaseMellon Shareholder
Services, L.L.C., as Depositary (the "Depositary"), prior to the Expiration Date
(as defined in "Section 1. Terms of the Offer; Expiration Date" of the Offer to
Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary and must include a guarantee by an
Eligible Institution (as defined in the Offer to Purchase) and a representation
that the shareholder owns the Common Shares, and that the tender of the Common
Shares effected thereby complies with Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, each in the form set forth in this Notice of Guaranteed
Delivery. See "Section 3. Procedures for Tendering Common Shares" of the Offer
to Purchase.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier Delivery: By Hand:
Post Office Box 3301 85 Challenger Road -- Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop - Reorg New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reorganization
Department Attn: Reorganization Department
Department
</TABLE>
By Facsimile Transmission:
(201) 329-8936
Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
THE GUARANTEE INCLUDED HEREIN MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Nationwide Group Acquisition Corporation,
an Ohio corporation and a wholly owned subsidiary of Nationwide Mutual Insurance
Company, an Ohio mutual insurance company, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 19, 1998 (the "Offer to
Purchase") and the related Letter of Transmittal (which, as amended from time to
time, together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Common Shares specified below pursuant to the
guaranteed delivery procedure described in "Section 3. Procedures for Tendering
Common Shares" of the Offer to Purchase.
Number of Shares:
- ----------------------------
Certificate Nos. (If Available):
- ---------------------------------------------------
- ---------------------------------------------------
[ ]Check box if Shares will be
delivered by book-entry transfer
Account No.
- -----------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: ________ , 199_
Name(s) of Holders:
- ---------------------------------------------------
- ---------------------------------------------------
Please Type or Print
- ---------------------------------------------------
Address
- ---------------------------------------------------
Zip Code
- ---------------------------------------------------
Area Code and Telephone No.
<PAGE> 3
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution") hereby (a) represents that the above named
person(s) "own(s)" the Common Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that the tender of Common Shares effected hereby complies with Rule
14e-4, and (c) guarantees delivery to the Depositary, at one of its addresses
set forth above, of Common Share Certificates tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Common Shares into the
account maintained by the Depositary at The Depository Trust Company or
Philadelphia Depository Trust Company, in each case with delivery of a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) with
any required signature guarantees, or an Agent's Message (as defined in "Section
3. Procedures for Tendering Common Shares" of the Offer to Purchase), and any
other documents required by the Letter of Transmittal, within three (3) New York
Stock Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
Common Share Certificates to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
All terms used herein have the meanings set forth in the Offer to Purchase.
(PLEASE PRINT)
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Zip Code)
AUTHORIZED SIGNATURE:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Daytime Area Code and Tel. No.:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND COMMON SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED
DELIVERY. COMMON SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE> 1
Exhibit (a)(4)
[CREDIT SUISSE FIRST BOSTON LOGO] CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue Telephone (212) 325-2000
New York, NY 10010-3829
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ALLIED GROUP, INC.
AT
$47.00 NET PER SHARE
BY
NATIONWIDE GROUP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
NATIONWIDE MUTUAL INSURANCE COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JUNE 16, 1998, UNLESS THE OFFER IS EXTENDED.
May 19, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Nationwide Group Acquisition Corporation
("Purchaser"), an Ohio corporation and a wholly owned subsidiary of Nationwide
Mutual Insurance Company, an Ohio mutual insurance company ("Parent"), to act as
Dealer Manager in connection with Purchaser's offer to purchase all outstanding
shares of common stock, no par value (the "Common Shares"), of Allied Group
Inc., an Iowa corporation (the "Company"), at a price of $47.00 per Common
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase dated May
19, 1998 (the "Offer to Purchase") and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") enclosed
herewith. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Common Shares registered in your name or in
the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF COMMON SHARES WHICH, TOGETHER WITH COMMON SHARES OWNED BY PARENT AND
PURCHASER, CONSTITUTE AT LEAST 50.1% OF THE VOTING SECURITIES OF THE COMPANY
OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"); (2) PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF THE IOWA
BUSINESS COMBINATION STATUTE ARE INAPPLICABLE TO THE PROPOSED MERGER DESCRIBED
IN THE OFFER TO PURCHASE (THE "BUSINESS COMBINATION CONDITION"); AND (3) PARENT
AND PURCHASER HAVING OBTAINED ALL INSURANCE REGULATORY APPROVALS NECESSARY FOR
THEIR ACQUISITION OF CONTROL OF THE COMPANY AND ITS INSURANCE SUBSIDIARIES ON
TERMS AND CONDITIONS SATISFACTORY TO PURCHASER IN ITS SOLE DISCRETION (THE
"INSURANCE REGULATORY APPROVAL CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Common Shares registered in your name or in the name of your nominee, or who
hold Common Shares registered in their own names, we are enclosing the following
documents:
1. Offer to Purchase dated May 19, 1998;
2. Letter of Transmittal for your use and for the information of your
clients. Facsimile copies of the Letter of Transmittal may be used to
tender Common Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if a
shareholder's certificates evidencing such shareholder's Common Shares and
all other required documents are not immediately available or cannot be
delivered to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") by
the Expiration Date (as defined in the Offer to Purchase) or if the
procedure for book-entry transfer cannot be completed on a timely basis;
4. A printed form of a letter which may be sent to your clients for
whose accounts you hold Common Shares registered in your name or in the
name of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 16, 1998, UNLESS THE OFFER
IS EXTENDED.
Your attention is invited to the following:
1. The tender price is $47.00 per Common Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer.
2. The Offer is being made for all outstanding Common Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, June 16, 1998, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, the Minimum
Condition, the Business Combination Condition and the Insurance Regulatory
Approval Condition. The Offer is also subject to certain other terms and
conditions set forth in the Offer to Purchase, however, the Offer is not
conditioned upon Purchaser obtaining financing.
5. Except as otherwise provided in Instruction 6 of the Letter of
Transmittal, tendering stockholders will not be obligated to pay stock
transfer taxes with respect to the purchase of Common Shares by Purchaser
pursuant to the Offer. However, backup federal income tax withholding at a
rate of 31% may be required, unless an exemption applies or unless the
required taxpayer identification information is provided. See Instruction
10 of, and "Important Tax Information" in, the Letter of Transmittal.
6. In all cases, payment for Common Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates evidencing such Common Shares (or a confirmation
of a book-entry transfer of such Common Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), a Letter of Transmittal (or facsimile thereof) properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase), and any other documents required by the Letter of
Transmittal. See "Procedures for Tendering Common Shares" of the Offer to
Purchase.
<PAGE> 3
If holders of Common Shares wish to tender, but it is impracticable for
them to forward their certificates evidencing such Common Shares or other
required documents prior to the Expiration Date or, if applicable, to comply
with the book-entry transfer procedures on a timely basis, a tender may be
effected by following the guaranteed delivery procedure described in "Procedures
for Tendering Common Shares" of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the solicitation
of tenders of Common Shares pursuant to the Offer. However, Purchaser will
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any stock transfer taxes payable with respect to the transfer
of Common Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation, the Dealer Manager, or Georgeson &
Company Inc., the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Very truly yours,
Credit Suisse First Boston
Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PARENT, THE PURCHASER, THE COMPANY, THE
DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF
ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ALLIED GROUP, INC.
AT
$47.00 NET PER COMMON SHARE
BY
NATIONWIDE GROUP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
NATIONWIDE MUTUAL INSURANCE COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 16, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated May 19, 1998
(the "Offer to Purchase") and a related Letter of Transmittal in connection with
the offer by Nationwide Group Acquisition Corporation ("Purchaser"), an Ohio
corporation and a wholly owned subsidiary of Nationwide Mutual Insurance
Company, an Ohio mutual insurance company ("Parent"), to purchase all
outstanding shares of common stock, no par value (the "Common Shares"), of
Allied Group Inc., an Iowa corporation (the "Company"), at a price of $47.00 per
Common 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 in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
Shareholders who desire to tender Common Shares pursuant to the Offer and
whose certificates evidencing such Common Shares are not immediately available
or the procedures for book-entry transfer set forth in the Offer to Purchase
cannot be completed on a timely basis or time will not permit all required
documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary")
prior to the Expiration Date (as defined in the Offer to Purchase) may
nevertheless tender their Common Shares according to the guaranteed delivery
procedures set forth in "Section 3. Procedures for Tendering Common Shares" of
the Offer to Purchase.
We are (or our nominee is) the holder of record of Common Shares held by us
for your account. A TENDER OF SUCH COMMON SHARES CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
COMMON SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Common Shares held by us for your account, upon the
terms and subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $47.00 per Common Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer.
2. The Offer is being made for all outstanding Common Shares.
<PAGE> 2
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, June 16, 1998, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer a number of Common Shares which, together with Common Shares owned by
Parent and Purchaser, constitute at least 50.1% of the voting securities of
the Company outstanding on a fully diluted basis, (2) Purchaser being
satisfied, in its sole discretion, that the provisions of the Iowa Business
Combination Statute are inapplicable to the proposed merger described in
the Offer to Purchase, and (3) Parent and Purchaser having obtained all
insurance regulatory approvals necessary for their acquisition of control
of the Company and its insurance subsidiaries on terms and conditions
satisfactory to Purchaser, in its sole discretion. The Offer is also
subject to certain other terms and conditions set forth in the Offer to
Purchase, however, the Offer is not conditioned upon Purchaser obtaining
financing.
5. Except as otherwise provided in Instruction 6 of the Letter of
Transmittal, tendering shareholders will not be obligated to pay stock
transfer taxes with respect to the purchase of Common Shares by Purchaser
pursuant to the Offer. However, backup federal income tax withholding at a
rate of 31% may be required, unless an exemption applies or unless the
required taxpayer identification information is provided. See Instruction
10 of, and "Important Tax Information" in, the Letter of Transmittal.
6. In all cases, payment for Common Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of
certificates evidencing, or a Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to, such Common Shares and a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with all required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase), and any
other documents required by the Letter of Transmittal. See "Section 3.
Procedures for Tendering Common Shares" of the Offer to Purchase.
If you wish to have us tender any or all of your Common Shares, please so
instruct us by completing, executing and returning to us the form contained in
this letter. An envelope in which to return your instructions to us is enclosed.
If you authorize the tender of your Common Shares, all such Common Shares will
be tendered unless otherwise specified in your instructions. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf prior to the expiration of the Offer.
THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL, AS AMENDED FROM TIME TO TIME, AND IS BEING MADE TO ALL HOLDERS OF
COMMON SHARES.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Common Shares pursuant thereto,
Purchaser will make a good faith effort to comply with such state statute. If,
after such good faith effort, Purchaser cannot comply with such state statute,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Common Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by
Credit Suisse First Boston Corporation or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
ALLIED GROUP, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 19, 1998 and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by
Nationwide Group Acquisition Corporation, an Ohio corporation, and a wholly
owned subsidiary of Nationwide Mutual Insurance Company, an Ohio mutual
insurance company, to purchase all outstanding shares of common stock, no par
value (the "Common Shares"), of Allied Group, Inc., an Iowa corporation, at a
price of $47.00 per Common Share, net to the seller in cash, without interest
thereon.
This will instruct you to tender the number of Common Shares indicated
below (or, if no number is indicated below, all Common Shares) that are held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase.
Number of Shares to Be Tendered:
Shares*
Dated: , 199
SIGN HERE
- ---------------------------------------------------
- ---------------------------------------------------
Signature(s)
- ---------------------------------------------------
- ---------------------------------------------------
Please type or print name(s)
- ---------------------------------------------------
- ---------------------------------------------------
Please type or print address
- ---------------------------------------------------
Area Code and Telephone Number
- ---------------------------------------------------
Taxpayer Identification or
Social Security Number
- ------------
* Unless otherwise indicated, it will be assumed that all Common Shares held by
us for your account are to be tendered.
<PAGE> 1
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------- ---------------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, The legal entity (Do
2. Two or more individuals The actual owner or pension trust not furnish the
(joint account) of the account or, identifying number
if combined funds, of the personal rep-
any one of the indi- resentative or trus-
viduals(1) tee unless the legal
3. Husband and wife The actual owner entity itself is not
(joint account) of the account or, designated in the
if joint funds, account title.)(5)
either person(1) 10. Corporate account The corporation
4. Custodian account of a minor The minor(2) 11. Religious, charitable, or The organization
(Uniform Gift to Minors Act) educational organization account
5. Adult and minor The adult or, 12. Partnership account held in the The partnership
(joint account) if the minor is the name of the business
only contributor, 13. Association, club or other The organization
the minor(1) tax-exempt organization
6. Account in the name of The ward, minor, 14. A broker or registered nominee The broker or
guardian or committee for or incompetent nominee
a designated ward, minor, person(3) 15. Account with the Department The public entity
or incompetent person of Agriculture in the name of a
7. a. The usual revocable savings The grantor- public entity (such as a State or local
trust account (grantor is also trustee(1) government, school district, or prison)
trustee) that receives agricultural program
b. So-called trust account that is The actual owner(1) payments
not a legal or valid trust under
State law
8. Sole proprietorship account The owner(4)
- --------------------------------------------------------------- ---------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that are
not subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of any
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE.
<PAGE> 1
Exhibit (a)(7)
CONTACT: John Cook FOR IMMEDIATE RELEASE
Nationwide Insurance
(614) 249-7323
Vince Duffy
Powell Tate
(216) 521-5215
NATIONWIDE WILL COMMENCE CASH TENDER OFFER
FOR ALL THE COMMON STOCK OF ALLIED GROUP, INC.,
PROPOSES MUTUAL MERGER WITH ALLIED MUTUAL
$47 PER SHARE PRICE REPRESENTS 69% PREMIUM
Columbus, Ohio, May 18 -- Nationwide Mutual Insurance Company today
announced a cash tender offer for all the common stock of Allied Group, Inc.
of Des Moines, Iowa. Nationwide's offer will commence tomorrow, Tuesday. The
price of $47 per share, net to the seller in cash, represents a premium of more
than 69 percent above Friday's closing price of $27 3/4 on the New York
Stock Exchange.
Concurrently, Nationwide has submitted a merger proposal to the Board of
Directors of Allied Mutual Insurance Company for the merger of Allied Mutual
into Nationwide Mutual Insurance Company. Under Nationwide's proposal, Allied
Mutual policyholders' interests would be converted into full rights as
policyholders of Nationwide. These rights include the right to share in any
distribution of Nationwide's surplus in the event of any future
demutualization. Neither the consummation of the tender offer nor the mutual
merger is conditioned on the other.
Nationwide has also offered to purchase from Allied Mutual all of the
6 3/4% Series Preferred Stock of Allied Group, Inc. for $65 million. Upon the
merger of Nationwide Mutual and Allied Mutual the net cash proceeds will be
paid to Allied Mutual policyholders as an extraordinary dividend.
<PAGE> 2
Nationwide
2-2-2
Dimon R. McFerson, Chairman and Chief Executive Officer of Nationwide,
said, "Allied and Nationwide make a great fit -- positive for the
policyholders, employees, management and agents of both companies. Allied
policyholders will become part of a combined organization of unquestioned
financial strength that will provide them access to a broader range of products
and services. Allied will provide key elements for Nationwide's continuing
growth -- a diversified distribution network, expanded geographic reach, and
Allied's own outstanding track record in the property and casualty business."
McFerson emphasized that "the transaction will add significantly to
Nationwide's long-term commitment to Des Moines, as the combined companies make
the Allied distribution system a cornerstone of the growth strategy for the
independent agency channel. In fact, we have pledged to maintain the current
level of employment of the Allied operations and plan to add 400 new jobs in
the Des Moines area over the next four years." Des Moines has been the home of
Nationwide's Farmland Insurance operation since 1982. Farmland has
approximately 200 employees in the Des Moines area.
McFerson said he expects that Allied's regional operations in Denver,
Colorado; Lincoln, Nebraska; and Santa Rosa, California would also play
important roles in Nationwide's expansion plans.
The offering documents will disclose that there have been contacts between
representatives of Nationwide and Allied relative to a possible business
combination dating back to January of this year. In a letter to Allied Chairman
John E. Evans and Allied CEO Douglas L. Anderson, alerting them to the upcoming
offer, McFerson said those efforts aimed at negotiation had been "consistently
frustrated." "The compelling business logic" of the transaction moved Nationwide
to act, said McFerson, who stressed
- more -
<PAGE> 3
Nationwide
3-3-3
his hope that the transaction can now be negotiated in a constructive and
businesslike manner.
In his letter, McFerson said "the transaction will provide employees the
opportunity to reap the financial rewards of their contribution to Allied's
success by tendering shares they hold in Allied's Employee Stock Ownership
Plan." Based on the assumptions outlined in his letter, McFerson noted that
"the value of each employee's ESOP account should triple." (See Footnote)
Allied Group's quarterly report for the first quarter of 1998 indicated that as
of April 29, the outstanding stock of Allied Group consisted of 30,634,052
common shares and 1,827,222 preferred shares. Up to 1,771,677 common shares are
issuable under various incentive plans.
The offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the expiration of the offer a
number of common shares which, together with shares owned by Nationwide,
constitute at least 50.1% of the voting securities of Allied Group, Inc. (2)
Nationwide being satisfied, in its sole discretion, that the provisions of the
Iowa Business Combination Statute are inapplicable to the proposed transaction,
and (3) Nationwide having obtained all insurance regulatory approvals necessary
for its acquisition of control of Allied Group, Inc. and its insurance
subsidiaries on terms and conditions satisfactory to Nationwide, in its sole
discretion. The offer is not conditioned upon Nationwide obtaining financing.
Nationwide also said it intends, if necessary, to file with the Securities and
Exchange Commission, preliminary materials to solicit proxies to expedite the
offer.
- more -
<PAGE> 4
Nationwide
4-4-4
The offer and its withdrawal rights will expire at midnight, New York City
time, on June 16, 1998, unless the offer is extended. The offer is being made
through a wholly owned subsidiary of Nationwide.
The dealer manager and financial advisor for the offer is Credit Suisse
First Boston Corporation. Georgeson & Company Inc. is the information agent.
For more information on this transaction call 1-800-223-2064 or visit our web
site at georgeson.com.
The Nationwide Insurance Enterprise, based in Columbus, Ohio, is one of
the country's largest diversified insurance and financial services
organizations and a Fortune 500 company. Nationwide is the country's
fourth-largest auto insurer; fifth-largest homeowners insurer; and Nationwide
Life is the country's fifth-largest life insurer based on premiums and 13th
largest based on assets.
- -------------
Footnote: This benefit is based on our calculation of an estimated
$183 million surplus which will be divided among approximately 2,500
participants. Based upon our interpretation of a recent IRS technical advice
memorandum, each participant will receive an earnings allocation of
approximately $38 per share, in addition to the $47 tender price share. After
payments of the ESOP debt, the average account balance per participant should
approximate $163,000 with the actual amounts credited to a participant's account
dependent on their account balance.
- 30 -
<PAGE> 1
Exhibit (a)(8)
May 18, 1998
Mr. John E. Evans
Chairman of the Board
Allied Mutual Insurance Company
701 Fifth Avenue
Des Moines, Iowa 50391
Mr. Douglas L. Andersen
President and Chief Executive Officer
Allied Mutual Insurance Company
701 Fifth Avenue
Des Moines, Iowa 50391
Dear John and Doug:
I am writing to give you advance notice that today Nationwide will announce an
offer to merge Allied Mutual Insurance Company with Nationwide Mutual Insurance
Company.
We are concurrently offering a cash tender offer for all the outstanding shares
of common stock of Allied Group, Inc. as outlined in more detail under separate
cover.
In addition, Nationwide hereby offers to acquire all of the 6 3/4% Series
Preferred Stock of Allied Group owned by Allied Mutual. The offer is for an
aggregate $65 million, based on our evaluation of the fair market value of such
stock. This offer is contingent upon the consummation of the merger of Allied
Mutual with Nationwide Mutual. Nationwide proposes that immediately prior to the
merger of Allied Mutual and
1
<PAGE> 2
Nationwide Mutual, Allied Mutual policyholders receive a cash dividend of the
net proceeds of Nationwide's purchase of the preferred stock.
We are taking these steps because our efforts to effect a merger with Allied
Group through negotiations with you and your Board have been consistently
frustrated. We have spoken several times on this subject, starting in January,
and I have repeatedly tried to persuade you of the great advantages of a
combination of our two companies.
As you know, we are convinced that there is compelling business logic for this
combination that will be beneficial to the shareholders, employees, management,
agents and policyholders of both organizations. I deeply regret we have so far
been unable to persuade you of this. Let me repeat the reasons:
- - Melding the property/casualty operations of the two companies will provide
the scale needed to compete in the increasingly competitive marketplace.
- - Geographically, our present markets complement one another. Nationwide's
property/casualty focus has been primarily east of the Mississippi while
Allied's has been west of the Mississippi. Together, we will have
formidable market coverage.
- - Your expertise in distribution through independent agents would add a new
dimension to ours, which now is largely through career agents. You would
augment exponentially an initiative we announced in 1997.
- - We greatly admire Allied's excellent operating record. We recognize the
contributions of your management and employees and feel they would
significantly enhance our operations. Nationwide pledges to maintain the
aggregate employment of the current Allied operations and plans to add 400
more jobs in the Des Moines area over the next four years.
2
<PAGE> 3
- - Finally, Allied's regional office in Denver, Lincoln and Santa Rosa are
also expected to play important roles in a combined Nationwide/Allied
national organization.
In effecting the merger, our intention is to make the Allied distribution system
a cornerstone of Nationwide's growth strategy for the independent agency
channel, and to preserve and enhance the role that Allied has played in Des
Moines, the state of Iowa and the four regions where you have focused. Allied's
management and employees will be essential to making this happen. Because we
have been operating in Des Moines since 1982 through our Farmland Insurance
subsidiary, we have a long involvement in, and commitment to, your headquarters
city. I can't emphasize strongly enough that Des Moines and your people,
including management and employees, will continue to play a vital, expanding
role in our future.
For your policyholders, this transaction means that they will enjoy the
protection provided by Nationwide Mutual's $8.1 billion of policyholder surplus
and, your mutual policyholders will hold full membership rights in Nationwide
Mutual.
For your agents, there will be the opportunity to place business in a combined
organization of unquestioned financial strength that ultimately would provide
them access to the broad array of products and services available through
Nationwide.
Accordingly, we urge the Board of Directors of Allied Mutual Insurance Company
to meet its fiduciary obligations to policyholders by immediately beginning
negotiations regarding the merger.
3
<PAGE> 4
I strongly believe this is a win/win opportunity for all concerned - Des Moines,
employees, agents, policyholders and shareholders alike. We hope you will come
to share this belief and will let our companies' enormous joint potential be
realized.
Sincerely,
/s/ Dimon Richard McFerson
Dimon Richard McFerson
Chairman and Chief Executive Officer
cc: Board of Directors, Allied Mutual Insurance Company
Commissioner, Iowa Insurance Division
Director, Ohio Insurance Department
4
<PAGE> 1
Exhibit (a)(9)
May 18, 1998
Mr. John E. Evans
Chairman of the Board
Allied Mutual Insurance Company
701 Fifth Avenue
Des Moines, Iowa 50391
Mr. Douglas L. Andersen
President and Chief Executive Officer
Allied Mutual Insurance Company
701 Fifth Avenue
Des Moines, Iowa 50391
Dear John and Doug:
This letter constitutes an offer by Nationwide Mutual Insurance Company
("Nationwide Mutual") to enter into a merger whereby Allied Mutual Insurance
Company ("Allied Mutual") will merge with and into Nationwide Mutual, with
Nationwide Mutual as the surviving entity.
Nationwide Mutual provided notice to you today (copy attached) that it is
announcing a cash tender offer for all of the outstanding common shares of
Allied Group, Inc. Although the offer of merger described herein is independent
of, and not conditioned upon, Nationwide Mutual's acquisition of Allied Group,
Inc., many of the reasons that Nationwide Mutual considers Allied Group, Inc. an
ideal partner apply to a merger of Allied Mutual with and into Nationwide
Mutual.
<PAGE> 2
Upon the merger, each policyholder of Allied Mutual would become a policyholder
of Nationwide Mutual and Nationwide Mutual would assume all of Allied Mutual's
obligations under the Allied pool. The insurance obligations of Allied Mutual to
its policyholders would in no way be reduced or altered by the merger. In
addition, Nationwide Mutual would assure that the level of policy service to be
provided to former Allied Mutual policyholders would be preserved by the
transaction.
In consideration of Allied Mutual policyholders' approval of the merger,
Nationwide Mutual will grant to each Allied Mutual policyholder a certificate of
membership which would provide that so long as such policyholder's policy
constitutes an obligation of Nationwide Mutual or another company within the
Nationwide Insurance Enterprise, such policyholder would participate in any
demutualization, mutual holding company transaction or similar reorganization
(together, "Restructuring") of Nationwide Mutual on the same basis and in the
same manner that a policyholder of Nationwide Mutual holding a policy in the
same (or if none, similar) line of business would participate in the
Restructuring. Nationwide has no present intention for a Restructuring.
The merger would be conditioned upon insurance regulatory approvals in Iowa,
Ohio and any other states which may assert jurisdiction; the approval of the
Board of Directors of Allied Mutual; policyholder approvals for both Allied
Mutual and Nationwide Mutual, if required; all required clearances under the
Hart-Scott-Rodino Antitrust Improvements Act; and other usual or customary
conditions for transactions of this type.
Finally, assuming that all conditions to the merger have been satisfied or
waived, Nationwide Mutual would purchase from Allied Mutual prior to the merger
100% of the 6 3/4% Series Preferred Stock of Allied Group, Inc. currently held
by Allied Mutual for an aggregate purchase price of $65 million payable in cash.
These proceeds, net of applicable taxes, will be distributed to Allied Mutual's
policyholders as an extraordinary dividend. The allocation of this extraordinary
<PAGE> 3
dividend among Allied Mutual's policyholders would be agreed upon by Allied
Mutual and Nationwide Mutual, subject to the approval of the Iowa Insurance
Division.
We believe that our merger offer, which is non-binding and subject to the
completion of mutually acceptable documentation, presents great benefits for
Allied Mutual and its policyholders and we trust that you will give it serious
consideration. Please provide us with a written response to this offer no later
than June 16, 1998.
Sincerely,
/s/ Dimon Richard McFerson
Dimon Richard McFerson
Chairman and Chief Executive Officer
cc: Board of Directors, Allied Mutual Insurance Company
Commissioner, Iowa Insurance Division
Director, Ohio Insurance Department
<PAGE> 1
Exhibit (a)(10)
May 18, 1998
To: Nationwide Agents
From: Richard D. Crabtree
I want to advise you that this morning Nationwide will announce a cash tender
offer for all of the outstanding shares of common stock of Allied Group, Inc. of
Des Moines, Iowa. We are convinced that there is compelling business logic for
the combination of our two companies.
The specifics of the offer are as follows:
- - Nationwide's offer, which will commence tomorrow, Tuesday, contemplates a
price of $47.00 per common share, or 69 percent above Friday's closing
price of $27 3/4 on the New York Stock Exchange.
- - Nationwide has also informed Allied that it offers to merge Allied Mutual
into Nationwide Mutual Insurance Company.
We are taking these steps because our previous efforts to effect a combination
with Allied Group through negotiations have been consistently frustrated by
Allied. We believe the combination of Nationwide and Allied will be
extraordinarily beneficial to the policyholders, employees, and agents of both
organizations.
The companies of Allied Group focus largely on property and casualty insurance.
They provide insurance protection for cars, homes and other property, as well as
for farms and small to medium-sized businesses. Most of their business is
generated in 21 central and western states through a network of predominantly
independent agents and some (4%) direct response marketing. Allied ranks among
the top one hundred multi-line insurance groups in the country, and they are
one of the fastest growing. In 1996, they recorded premium income of $767.2
million, which is an increase of 10.8% over 1995.
Nationwide considers Allied an ideal partner because they help us achieve key
elements of our year 2002 goals, which include growth, geographic expansion and
the use of multiple distribution channels. We see the following benefits:
- - Geographically, our present markets complement one another. Nationwide
property/casualty focus has been primarily east of the Mississippi while
Allied's has been west of the Mississippi. Together, we will have
formidable market coverage.
- - Combining the property/casualty operations of the two companies will
provide the scale needed to compete in the increasingly competitive
marketplace.
- - Allied's success in small commercial will bolster our ability to service
that market.
- - Finally, the excellent operating record that Allied has achieved over time
will increase the financial stability for Nationwide's policyholders,
employees and agents.
<PAGE> 2
While adding Allied to the Nationwide family will help us increase our scale and
geographic diversification, it does not in any way preclude our continued
commitment to grow the Nationwide exclusive agency channel to $10 billion by
2002. Allied's western geographic complement to our eastern exclusive agent
channel, experience in small commercial and profitable book of business will
just continue to improve the financial strength of our organization benefiting
policyholders, agents and employees.
There have been some controversial legal and regulatory issues concerning
Allied's governance. Nationwide is not party to those issues and we do not feel
they should prevent us from acquiring a company that is so strategically matched
with our business goals.
This offer will be subject to a number of conditions, including regulatory and
shareholder approvals. This process could take some time. We have attached some
questions and answers that will help you answer policyholder questions you may
get about this offer. We will also continue to keep you informed through memos,
Challenger articles and your management team. For the next week, since your
Agency Manager will be in Charlotte, if you have questions, please call
Nationwide Home Office, ext. 7-8901, and leave a voice mail message. We will get
back to you as soon as possible.
We believe that, when completed, this merger will create opportunities and
strengths for Allied Group and Nationwide.
<PAGE> 1
Exhibit (a)(11)
May 18, 1998
To: TIG/Countrywide Independent Agents
From: Richard D. Crabtree
I want to advise you that this morning Nationwide will announce a cash tender
offer for all of the outstanding shares of common stock of Allied Group, Inc. of
Des Moines, Iowa. We are convinced that there is compelling business logic for
the combination of our two companies.
The specifics of the offer are as follows:
- - Nationwide's offer, which will commence tomorrow, Tuesday, contemplates a
price of $47.00 per common share, or 69 percent above Friday's closing
price of $27 3/4 on the New York Stock Exchange.
- - Nationwide has also informed Allied that it offers to merge Allied Mutual
into Nationwide Mutual Insurance Company.
We are taking these steps because our previous efforts to effect a combination
with Allied Group through negotiations have been consistently frustrated by
Allied. We believe the combination of Nationwide and Allied will be
extraordinarily beneficial to the employees, agents and policyholders of both
organizations.
The companies of Allied Group focus largely on property and casualty insurance.
They provide insurance protection for cars, homes and other property, as well as
for farms and small to medium-sized businesses. Most of their business is
generated in 21 central and western states through a network of predominantly
independent agents and some (4%) direct response marketing. Allied ranks among
the top one hundred multi-line insurance groups in the country, and they are
one of the fastest growing. In 1996, they recorded premium income of $767.2
million, which is an increase of 10.8% over 1995.
Nationwide considers Allied an ideal partner because they help us achieve key
elements of our year 2002 goals, which include growth, geographic expansion and
the use of multiple distribution channels. We have talked with you before about
our commitment to multiple distribution channels, and this is further evidence
that we are committed to growing our independent agent channel. We see the
following benefits:
- - Combining the property/casualty operations of TIG/Countrywide, ALLIED and
Nationwide will provide the scale needed to compete in the increasingly
competitive marketplace.
- - By adding Allied's independent agent channel, which is primarily west of
the Mississippi, we will quickly and dramatically increase our geographic
market coverage.
<PAGE> 2
- - This acquisition allows us to increase our expertise in the independent
agent distribution channel and compliment the initiative we began with the
purchase of TIG Countrywide, adding strong brands and competitive
products.
- - Allied's success in small commercial will bolster our ability to service
that market.
- - Finally, the commitment to service and the excellent operating record that
Allied has achieved over time will increase the financial stability for
each company's policyholders, employees, and agents.
There have been some controversial legal and regulatory issues concerning
Allied's governance. Nationwide is not party to those issues and we do not feel
they should prevent us from acquiring a company that is so strategically matched
with our business goals.
This offer will be subject to a number of conditions, including regulatory and
shareholder approvals. This process could take some time. We have attached some
questions and answers to help you answer policyholder questions that you may get
about this offer. We will continue to keep you informed through memos and your
management team.
We believe that, when completed, this merger will benefit independent agents,
our exclusive agents, employees and policyholders by creating opportunities and
strengths to even further develop our independent agency channel.
<PAGE> 1
Exhibit (a)(12)
May 18, 1998
To: Nationwide Enterprise Employees
From: Dimon R. McFerson
I want to advise you that this morning Nationwide will announce a cash tender
offer for all of the outstanding shares of common stock of Allied Group, Inc. of
Des Moines, Iowa. We are convinced that there is compelling business logic for
the combination of our two companies.
The specifics of the offer are as follows:
- - Nationwide's offer, which will commence tomorrow, Tuesday, contemplates a
price of $47.00 per common share, or 69 percent above Friday's closing
price of $27 3/4 on the New York Stock Exchange.
- - Nationwide has also informed Allied that it offers to merge Allied Mutual
into Nationwide Mutual Insurance Company.
We are taking these steps because our previous efforts to effect a combination
with Allied Group through negotiations have been consistently frustrated by
Allied. We believe the combination of Nationwide and Allied will be
extraordinarily beneficial to the employees, agents and policyholders of both
organizations.
The companies of Allied Group focus largely on property and casualty insurance.
They provide insurance protection for cars, homes and other property, as well as
for farms and small to medium-sized businesses. Most of their business is
generated in 21 central and western states through a network of predominantly
independent agents and some (4%) direct response marketing. Allied ranks among
the top one hundred multi-line insurance groups in the country, and they are
one of the fastest growing. In 1996, they recorded premium income of $767.2
million, which is an increase of 10.8% over 1995.
Nationwide considers Allied an ideal partner because they help us achieve key
elements of our year 2002 goals, which include growth, geographic expansion and
the use of multiple distribution channels. We see the following benefits:
- - Combining the property/casualty operations of the two companies will
provide the scale needed to compete in the increasingly competitive
marketplace.
- - Geographically, our present markets complement one another. Nationwide's
property/casualty focus has been primarily east of the Mississippi while
Allied's has been west of the Mississippi. Together, we will have
formidable market coverage.
- - This acquisition allows us to increase our expertise in the independent
agent distribution channel and complement the initiative we began with the
purchase of TIG Countrywide.
- - Allied's success in small commercial will bolster our ability to service
that market.
- - Finally, the excellent operating record that Allied has achieved over time
will increase the financial stability for Nationwide's employees, agents
and policyholders.
<PAGE> 2
While adding Allied to the Nationwide family will help us increase our scale and
geographic diversification, it does not in any way preclude our continued
commitment to grow the Nationwide exclusive agency channel to $10 billion by
2002. Allied's western geographic complement to our current exclusive and
independent agents channels, experience in small commercial and profitable book
of business will just continue to improve the financial strength of our
organization benefiting agents, independent agents, employees and policyholders.
There have been some controversial legal and regulatory issues concerning
Allied's governance. Nationwide is not party to those issues and we do not feel
they should prevent us from acquiring a company that is so strategically matched
with our business goals.
This offer will be subject to a number of conditions including regulatory and
shareholder approval. This process could take some time. We will also continue
to keep you informed through memos, publication articles and your management
team. If you have questions about this transaction, you can also send them to
XPress by e-mail or written card.
We believe that, when completed, this merger will create opportunities and
strengths for Allied Group and Nationwide agents, independent agents, employees
and policyholders.
If you are a manager who has employees without electronic mail, please copy this
for them immediately. Thank you.
<PAGE> 1
Exhibit (a)(13)
May 18, 1998
To: Farmland Employees
From: Dimon R. McFerson
I want to advise you that this morning Nationwide will announce a cash tender
offer for all of the outstanding shares of common stock of Allied Group, Inc. of
Des Moines, Iowa. We are convinced that there is compelling business logic for
the combination of our two companies.
The specifics of the offer are as follows:
- - Nationwide's offer, which will commence tomorrow, Tuesday, contemplates a
price of $47.00 per common share, or 69 percent above Friday's closing
price of $27 3/4 on the New York Stock Exchange.
- - Nationwide has also informed Allied that it offers to merge Allied Mutual
into Nationwide Mutual Insurance Company.
We are taking these steps because our previous efforts to effect a combination
with Allied Group through negotiations have been consistently frustrated by
Allied. We believe the combination of Nationwide and Allied will be
extraordinarily beneficial to the employees, agents and policyholders of both
organizations.
We feel that this acquisition just further emphasizes our commitment to the Des
Moines community--a commitment that began with our acquisition of Farmland in
1982. Your community will continue to play a vital role in Nationwide's future
as evidenced by our plan to not only guarantee the current level of employees in
Des Moines, but to add 400 jobs in Des Moines in the next four years.
The companies of Allied Group focus largely on property and casualty insurance.
They provide insurance protection for cars, homes and other property, as well as
for farms and small to medium-sized businesses. Most of their business is
generated in 21 central and western states through a network of predominantly
independent agents and some (4%) direct response marketing. Allied ranks among
the top one hundred multi-line insurance groups in the country, and they are
one of the fastest growing. In 1996, they recorded premium income of $767.2
million, which is an increase of 10.8% over 1995.
Nationwide considers Allied an ideal partner because they help us achieve key
elements of our year 2002 goals, which include growth, geographic expansion and
the use of multiple distribution channels. We see the following benefits:
- - Combining the property/casualty operations of the two companies will
provide the scale needed to compete in the increasingly competitive
marketplace.
<PAGE> 2
- - Geographically, our present markets complement one another. Nationwide
property/casualty focus has been primarily east of the Mississippi while
Allied's has been west of the Mississippi. Together, we will have
formidable market coverage.
- - This acquisition allows us to increase our expertise in the independent
agent distribution channel and complement the initiative we began with the
purchase of TIG Countrywide.
- - Allied's success in small commercial will bolster our ability to service
that market.
- - Finally, the excellent operating record that Allied has achieved over time
will increase the financial stability for Nationwide's employees, agents
and policyholders.
While adding Allied to the Nationwide family will help us increase our scale and
geographic diversification, it does not in any way preclude our continued
commitment to grow the Nationwide exclusive agency channel to $10 billion by
2002. Allied's western geographic complement to our current exclusive and
independent agents channels, experience in small commercial and profitable book
of business will just continue to improve the financial strength of our
organization benefiting agents, independent agents, employees and policyholders.
There have been some controversial legal and regulatory issues concerning
Allied's governance. Nationwide is not party to those issues and we do not feel
they should prevent us from acquiring a company that is so strategically matched
with our business goals.
This offer will be subject to a number of conditions, including regulatory and
shareholder approvals. This process could take some time. We will continue to
keep you informed through memos, publication articles and your management team.
We believe that, when completed, this merger will create opportunities and
strengths for Allied Group and Nationwide agents, independent agents, employees,
policyholders and the Des Moines community.
<PAGE> 1
Exhibit (a)(14)
ALLIED GROUP
NATIONWIDE POLICYHOLDER QUESTIONS AND ANSWERS
(Distributed to Agents)
WHY ARE YOU ACQUIRING ALLIED GROUP?
We're acquiring them because we think there is compelling business logic to this
combination that will be beneficial to the policyholders, employees and agents
of both organizations. Combining the property/casualty operations of the two
companies will give us the scale needed to compete in the future; our markets
complement one another, they have expertise in distribution through independent
agents while ours is through exclusive agents. Finally, Allied has an excellent
operating record and they would significantly enhance our business.
WHY IS THIS GOOD FOR ME AS A POLICYHOLDER?
Purchasing Allied Group will significantly add to Nationwide's already
financially strong position in the marketplace. It will provide us with a
broader geographic presence, decrease our coastal exposure, and give us much
broader scale in the Property/Casualty business. All of these help us improve
our competitive position in the marketplace and therefore provide you with
excellent value for your dollars.
GIVEN ALLIED'S BATTLES WITH CONSUMER ACTIVISTS, SHOULDN'T NATIONWIDE'S
POLICYHOLDERS BE WARY OF THIS TRANSACTION?
No. While there have been some legal and regulatory issues over Allied's
governance, Nationwide is not party to those issues and we do not feel they
should prevent us from acquiring a company that is so strategically matched with
our business goals.
DO YOU ANTICIPATE OPPOSITION CONSUMER ACTIVIST GROUPS?
No. Of course, we can't predict what vigorous industry critics might say, but we
are very confident that our proposal will be perceived by consumer advocates as
good for the policyholders, shareholders and employees of both companies.
Everyone wins!
<PAGE> 1
Exhibit (a)(15)
ALLIED GROUP ACQUISITION
ANSWERS TO NATIONWIDE AGENTS' QUESTIONS
(Distributed to P/C Officers and Agency Managers)
WHAT DOES ALLIED'S PORTFOLIO LOOK LIKE?
Allied Property/Casualty business is 67% personal lines and 33% commercial lines
for small business. Their premium volume for 1997 is estimated at $884 million.
They have received an A+ rating from A.M. Best.
IN WHAT STATES IS THERE OVERLAP WITH ALLIED INDEPENDENT AGENTS AND OUR EXCLUSIVE
AGENTS?
Most of Allied's business is generated in 21 central and western states. The
only states where there is even minimal overlap are Illinois, Indiana, Ohio and
Tennessee.
WHAT HAPPENS IN THE RARE INSTANCE WHERE NATIONWIDE EXCLUSIVE AGENTS AND ALLIED
AGENTS ARE COMPETING IN THE SAME MARKET?
Our intent is to market in a way that allows our multiple distribution channels
to complement each other. We do, however, have a going forward process for
settling any distribution channel conflicts. We will attempt to minimize the
exclusive agent and independent agent conflicts.
I SAW ON THE ALLIED GROUP WEBSITE THAT THEY ALSO HAVE EXCLUSIVE AGENTS. DO THEY?
While the large majority of Allied's business is done through independent
agents, they do have a small group of what they refer to as AIDCO agents.
According to Allied, this is a process that gives agents everything they need to
compete like a direct personal lines writer within the independent agency
system. This is what they refer to in their web site as their exclusive agency
group.
DOES THIS ACQUISITION PROVIDE ANY BENEFITS TO THE NATIONWIDE EXCLUSIVE AGENT?
This acquisition is part of an aggressive growth strategy that will benefit
exclusive agents in the long term. Expanding our independent agency channel will
allow Nationwide to expand quickly in the central and western states where for
the most part we have very minimal if any market share. New territories mean
better geographic balance and more stabilized earnings. Larger market share
means improved operating scale for greater expense efficiencies. This will help
keep rates down, especially in smaller states. Allied is also a very efficiently
run, profitable operation with valuable expertise in small commercial business.
GIVEN ALLIED'S BATTLES WITH CONSUMER ADVOCATES, SHOULDN'T NATIONWIDE BE WARY OF
THIS TRANSACTION?
No. There have been some legal and regulatory issues over Allied's governance.
However, Nationwide is not party to those issues and we do not feel they should
subvert us from acquiring a company that is so strategically matched with our
business and goals.
<PAGE> 1
Exhibit (a)(16)
ALLIED GROUP ACQUISITION
ANSWERS TO TIG/COUNTRYWIDE INDEPENDENT AGENTS' QUESTIONS
(Distributed to TIG/Countrywide and TIG/Countrywide Sales Management)
WHAT DOES ALLIED'S PORTFOLIO LOOK LIKE?
Allied Property/Casualty business is 67% personal lines and 33% commercial lines
for small business. Their premium volume for 1997 is estimated at $884 million.
They have received an A+ rating from A.M. Best.
IN WHAT STATES IS THERE OVERLAP WITH ALLIED INDEPENDENT AGENTS AND
TIG/COUNTRYWIDE INDEPENDENT AGENTS?
Most of Allied's business is generated in 21 central and western states. The
only states where there appears to be overlap is California, Indiana & Illinois.
WHAT HAPPENS IN THE RARE INSTANCES WHERE TIG/COUNTRYWIDE AND ALLIED INDEPENDENT
AGENTS ARE COMPETING IN THE SAME MARKET?
Our intent is to market in a way that allows our multiple distribution channels
to complement each other. The only area where Allied and TIG/Countrywide have
common concentrations of agents is potentially California. We do, however, have
a going forward process for settling any distribution channel conflicts.
DOES THIS ACQUISITION PROVIDE ANY BENEFITS TO INDEPENDENT AGENTS?
This acquisition is part of an aggressive growth strategy, which just further
emphasizes our commitment to grow the independent agent channel. Expanding our
independent agency channel will allow Nationwide to expand quickly in the
midwestern and western states where for the most part we have minimal market
share. New territories mean better geographic balance and more stabilized
earnings. Larger market share means improved operating scale for greater expense
efficiencies. This will allow Nationwide to invest in the independent channel.
This will help keep rates down, especially in smaller states Allied is also a
very efficiently run, profitable operation.
GIVEN ALLIED'S BATTLES WITH CONSUMER ADVOCATES, SHOULDN'T NATIONWIDE BE WARY OF
THIS TRANSACTION?
No. There have been some legal and regulatory issues over Allied's governance.
However, Nationwide is not party to those issues and we do not feel they should
subvert us from acquiring a company that is so strategically matched with our
business and goals.
DO YOU ANTICIPATE OPPOSITION FROM CONSUMER ADVOCATES?
No. Of course, we can't predict what vigorous industry critics might say, but we
are very confident that our proposal will be perceived as consumer advocates as
good for the policyholders, shareholders and employees of both companies.
Everyone wins!
<PAGE> 1
Exhibit (a)(17)
ALLIED GROUP
TALKING POINTS FOR NATIONWIDE CUSTOMER SERVICE REPRESENTATIVES
- - Nationwide has announced a cash tender offer for all of the outstanding
common shares of Allied Group of Des Moines, Iowa.
- - Allied is an extraordinary strategic fit to help us reach our growth and
profit objectives and strengthen our competitive position in the
marketplace.
- - As a policyholder, this will not affect the product or services that you
are offered. It will simply make you a customer of an insurance company
that is even more financially strong than we are today.
- - If you would like additional information about this acquisition, I can
take your name, number and questions and have someone get back to you.
<PAGE> 1
Exhibit (a)(18)
ALLIED GROUP
TALKING POINTS FOR NATIONWIDE BENEFITS COUNSELORS
- - Nationwide has announced a cash tender offer for all of the outstanding
common shares of Allied Group of Des Moines, Iowa.
- - Allied is an extraordinary strategic fit to help us reach our growth and
profit objectives and strengthen our competitive position in the
marketplace.
- - There are a number of things that have to occur before this offer is
closed. This could take several months.
- - Prior to closing the deal, we are not legally allowed to talk with you
about your personal situation and what the benefits mean to you
individually. However, we are looking forward to working with you as soon
as closing occurs, to help you make the best benefits choices for you and
your family.
- - If you are an Allied employee and have specific questions about the
acquisition, please call 1-800-223-2064. This is our third party agency
who is answering questions on our behalf during this transition period.
<PAGE> 1
Exhibit (a)(19)
To the Employees, Shareholders, Agents and Policyholders of ALLIED:
WHAT'S IN IT
FOR YOU?
On May 18th, Nationwide Mutual Insurance Company announced a cash tender offer
for all the outstanding common shares of ALLIED Group, Inc. at $47 a share. We
are also offering to merge ALLIED Mutual Insurance Company with Nationwide
Mutual Insurance Company and to purchase from ALLIED Mutual the ALLIED Group
preferred stock for $65 million. This is a great, growth-oriented business
combination that is positive for the employees, shareholders, policyholders
and agents of both companies.
What does this mean for you?
If you are an ALLIED employee:
- And are a participant in the ALLIED Employee Stock Ownership Plan (ESOP),
the value of your account should triple.*
- You will become part of a larger, more diverse company, with even greater
career opportunities.
- You will benefit from Nationwide's pledge to maintain the current level
of ALLIED employment and intention to add 400 jobs in the Des Moines area
over the next four years.
- ALLIED's regional offices in Denver, Lincoln and Santa Rosa are also
expected to play important roles in a combined Nationwide/ALLIED national
organization.
If you are a holder of ALLIED common stock:
- You can receive $47 per share in cash, a premium of 69% over the closing
price of ALLIED stock last Friday.
If you are an ALLIED policyholder:
- You will become part of a combined national company of unquestioned
financial strength with a broader range of products and services.
- ALLIED Mutual policyholders will hold full membership rights in
Nationwide Mutual.
- ALLIED Mutual policyholders will also receive an extraordinary cash
dividend, paid from the proceeds of Nationwide's purchase of the
preferred.
If you are an ALLIED agent:
- Nationwide will make the ALLIED independent agent network an important
new engine of growth for the combined companies, augmenting Nationwide's
fine career agents.
What can you do to assure you get the benefit of the Nationwide proposal? As a
shareholder or ESOP participant you can tender your shares to Nationwide. As an
ALLIED Mutual policyholder you can follow developments closely, so you'll be
well informed when it is time to cast your vote for a merger with Nationwide. As
an ALLIED agent you can help by letting management know of your support for the
proposal.
Nationwide Is On Your Side
[NATIONWIDE INSURANCE LOGO]
- --------------------------------------------------------------------------------
If you have questions or would like more information contact GEORGESON & COMPANY
INC., the information agent at 1-800-223-2064 or visit our website at
georgeson.com.
- --------------------------------------------------------------------------------
* This benefit is based on our calculation of an estimated $183 million surplus
which will be divided among approximately 2,500 participants. Based upon our
interpretation of a recent IRS technical advice memorandum, each participant
will receive an earnings allocation of approximately $38 per share, in addition
to the $47 tender price per share. After payment of the ESOP debt, the average
account balance per participant should approximate $163,000, with the actual
amounts credited to a participant's account, dependent on their account balance.
Call or visit the website address above.
<PAGE> 1
Exhibit (a)(20)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Common Shares. The Offer (as defined below) is made solely by the Offer
to Purchase, dated May 19, 1998, and the related Letter of Transmittal and is
being made to all holders of Common Shares. The Offer is not being made to (nor
will tenders be accepted from or on behalf of) holders of Common Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In those jurisdictions
where securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser (as defined below) by Credit Suisse First Boston Corporation ("Credit
Suisse First Boston" or the "Dealer Manager") or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ALLIED GROUP, INC.
AT
$47.00 NET PER COMMON SHARE
BY
NATIONWIDE GROUP
ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
NATIONWIDE MUTUAL
INSURANCE COMPANY
Nationwide Group Acquisition Corporation, an Ohio corporation (the "Purchaser")
and a wholly owned subsidiary of Nationwide Mutual Insurance Company, an Ohio
mutual insurance company (the "Parent"), hereby offers to purchase all
outstanding shares of Common Stock, no par value (the "Common Shares"), of
Allied Group, Inc., an Iowa corporation (the "Company"), at a purchase price of
$47.00 per Common Share, net to the seller in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 19, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, JUNE 16, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF COMMON SHARES WHICH, TOGETHER WITH COMMON SHARES OWNED BY PARENT AND
PURCHASER, CONSTITUTE AT LEAST 50.1% OF THE VOTING SECURITIES OF THE COMPANY
OUTSTANDING ON A FULLY DILUTED BASIS, (2) PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE PROVISIONS OF THE IOWA BUSINESS COMBINATION STATUTE (AS
DEFINED IN THE OFFER TO PURCHASE) ARE INAPPLICABLE TO THE PROPOSED MERGER
DESCRIBED IN THE OFFER TO PURCHASE, AND (3) PARENT AND PURCHASER HAVING OBTAINED
ALL INSURANCE REGULATORY APPROVALS NECESSARY FOR THEIR ACQUISITION OF CONTROL OF
THE COMPANY AND ITS INSURANCE SUBSIDIARIES ON TERMS AND CONDITIONS SATISFACTORY
TO PURCHASER, IN ITS SOLE DISCRETION. THE OFFER IS NOT CONDITIONED UPON
PURCHASER OBTAINING FINANCING.
The purpose of the Offer and the proposed second-step merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
Parent intends to continue to seek to negotiate with the Company with respect to
the acquisition of the Company. If such negotiations result in a definitive
merger agreement between the Company and Parent, certain material terms of the
Offer may change and Parent would not proceed with any solicitation with regard
to the Special Meeting (as defined in the Offer to Purchase). Accordingly, such
negotiations could result in, among other things, termination of the Offer and
submission of a different acquisition proposal to the Company's shareholders for
approval. Parent currently intends, as soon as practicable following
consummation of the Offer, to seek to have the Company consummate a merger with
and into Purchaser with the Company continuing as the surviving corporation,
pursuant to which each then remaining Common Share outstanding (other than
Common Shares owned by Parent or any of its wholly owned subsidiaries, Common
Shares held in the treasury of the Company, and Common Shares held by
shareholders who perfect any appraisal rights under the Iowa Business
Corporation Act) would be converted into the right to receive $47.00 net per
Common Share in cash.
Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time and regardless of whether any of the events set forth in
Section 14 of the Offer to Purchase shall have occurred or shall have been
determined by Purchaser to have occurred, (i) to extend for any reason the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and the payment for, any Common Shares, by giving oral or written
notice of such extension to ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") and (ii) to amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. Any such extension or
amendment will be followed as promptly as practicable by a public announcement
thereof, such announcement in the case of an extension, to be issued not later
than 9:00 a.m., New York City time, on the next business day after the scheduled
Expiration Date. During any such extension, all Common Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering shareholder to withdraw such shareholder's Common Shares.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Common Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Common Shares for payment pursuant
to the Offer. In all cases, upon the
<PAGE> 2
terms and subject to the conditions of the Offer, payment for Common Shares
purchased pursuant to the Offer will be made by deposit of the aggregate
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering shareholders. Under no circumstances
will interest on the purchase price for Common Shares be paid by Purchaser,
regardless of any delay in making such payment.
In all cases, payment for Common Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
evidencing Common Shares ("Common Share Certificates"), or timely confirmation
of a book-entry transfer of such Common Shares into the Depositary's account at
The Depository Trust Company or Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section
3 of the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal.
If, for any reason whatsoever, acceptance for payment of any Common Shares
tendered pursuant to the Offer is delayed, or if Purchaser is unable to accept
for payment or pay for Common Shares tendered pursuant to the Offer, then,
without prejudice to Purchaser's rights set forth in the Offer to Purchase, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Common
Shares and such Common Shares may not be withdrawn except to the extent that the
tendering shareholder is entitled to and duly exercises withdrawal rights as
described in Section 4 of the Offer to Purchase. Any such delay will be followed
by an extension of the Offer to the extent required by law.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of
Common Shares made pursuant to the Offer are irrevocable except that such Common
Shares may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment and paid for by Purchaser pursuant to the
Offer, may also be withdrawn at any time after Friday, July 17, 1998. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Tuesday, June 16,
1998, or, if Purchaser shall have extended the period of time for which the
Offer is open, at the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. In order for a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase. Any such notice of withdrawal must specify the name of
the person who tendered the Common Shares to be withdrawn, the number of Common
Shares to be withdrawn, and the name of the registered holder, if different from
that of the person who tendered such Common Shares. If Common Share Certificates
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such Common Share Certificates, the
serial numbers shown on such Common Share Certificates must be submitted to the
Depositary and the signature on the notice of withdrawal must be guaranteed by a
firm which is a bank, broker, dealer, credit union, savings association or other
entity that is a member in good standing of the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each an "Eligible
Institution"), unless such Common Shares are tendered (i) by a registered holder
of Common Shares who has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. If Common
Shares have been tendered pursuant to the procedures for book-entry transfer set
forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Common Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Any Common Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
Withdrawn Common Shares may, however, be retendered by repeating one of the
procedures set forth in Section 3 of the Offer to Purchase, at any time prior to
the Expiration Date. Purchaser, in its sole discretion, will determine all
questions as to the form and validity (including time of receipt) of notices of
withdrawal, and such determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is contained in the Offer to Purchase and is
incorporated herein by reference.
Requests are being made to the Company for the use of the Company's
shareholder lists and security position listings for the purpose of
disseminating the Offer to holders of Common Shares. The Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Common Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers as set
forth below. Additional copies of the Offer to Purchase, the Letter of
Transmittal, and other tender offer materials may be obtained from the
Information Agent. Such copies will be furnished promptly at Purchaser's
expense. No fees or commissions will be paid to brokers, dealers or other
persons (other than the Information Agent and the Dealer Manager) for soliciting
tenders of Common Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
Bankers and Brokers call collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
Internet: World Wide Web http: //www.georgeson.com
The Dealer Manager for the Offer is:
[CREDIT SUISSE-FIRST BOSTON LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 863-6558
May 19, 1998
<PAGE> 1
Exhibit (a)(21)
NATIONWIDE INSURANCE DEDICATED
TO THE DES MOINES MARKET
- FARMLAND INSURANCE ANOTHER SHINING EXAMPLE -
DES MOINES, Iowa - May 18, 1998 - Nationwide Insurance Enterprise may not be a
familiar name in Des Moines, but its positive influence has been felt for years:
* Farmland Insurance was acquired by Nationwide in 1982, and has seen
dramatic growth and increased profits since that time. From 1982 to
1997, Farmland's surplus grew from $25 million to $100 million; its
Direct Written Premium grew from $57 million to $170 million; and its
assets skyrocketed from $82 million to $322 million.
* Nationwide also takes tremendous pride in being a deeply involved
corporate citizen in all communities where it serves. For each of the
past five years, Farmland employees have been among the top 10 per
capita contributors to the United Way of Central Iowa. With matching
funds from the Nationwide Foundation, more than $157,000 was raised in
Farmland's 1997 campaign.
* Farmland also sponsors the Des Moines Chapter of the national Susan G.
Komen Breast Cancer Foundation by providing office space and equipment
for day-to-day operations. During 1998, a Farmland employee is serving
as the local chapter president.
* "Nationwide is a very active corporate citizen, giving and serving in
the places where we live and work," said Dimon R. McFerson, Chairman
and CEO of Nationwide, who in June 1997 was awarded the Humanitarian of
the Year Award from the Columbus, Ohio, Chapter of the American Red
Cross. "It's expected, and it's just one way for us to show our
commitment to our communities."
* Farmland's success is due in large part to its quality employees --
which is also an important component to Nationwide's on-going success.
With Allied, Nationwide will maintain the current level of employment
in Des Moines and plans to add 400 new jobs to the Des Moines area in
the next few years.
###
<PAGE> 1
Exhibit (g)(1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF IOWA
CENTRAL DIVISION
Nationwide Mutual Insurance )
Company and Nationwide Group )
Acquisition Corporation, )
)
Plaintiffs, )
)
v. ) Case Number
- ---------- )
Allied Group, Inc., Allied Mutual )
Insurance Company, Douglas L. )
Andersen, John E. Evans, )
Harold S. Evans, James W. )
Callison, Harold S. Carpenter, )
Charles I. Colby, Richard O. )
Jacobson, John P. Taylor, )
William E. Timmons, Donald S. )
Willis, C. Fred Morgan, )
and James D. Kirkpatrick, )
)
Defendants. )
COMPLAINT
---------
Plaintiffs, Nationwide Mutual Insurance Company ("Nationwide") and
Nationwide Group Acquisition Corporation ("Nationwide Acquisition"), by their
undersigned attorneys, allege upon knowledge with respect to themselves and
their own acts, and upon information and belief as to other matters, as follows:
NATURE OF THE ACTION
--------------------
1. Plaintiffs seek an injunction, INTER ALIA, prohibiting those
individual defendants who are members of the board of directors of defendant
Allied Group, Inc. ("Allied Group"), from breaching their fiduciary duties and
violating the securities laws of the state of Iowa by entrenching themselves and
their management and denying the shareholders of Allied Group their right to
decide
<PAGE> 2
for themselves upon the future of the company they own. In particular, Allied
Group's board has caused Allied Group to rebuff Nationwide's offer to purchase
the common shares and the preferred stock of Allied Group at a substantial
premium. Allied Group's board has done so in derogation of its duty to place the
interests of the shareholders above those of the board members. In addition,
plaintiffs seek an injunction that would prohibit those individual defendants
who are members of the Board of Directors of defendant Allied Mutual Insurance
Company ("Allied Mutual"), an affiliate of Allied Group, from engaging in
certain acts in assistance of the Allied Group board's wrongful actions.
PARTIES
-------
2. Plaintiff Nationwide is an Ohio mutual insurance company with its
principal place of business in Columbus, Nationwide owns 4.9% of the stock
of defendant Allied Group. Formed in 1925, Nationwide and its affiliated
entities are engaged in selling a variety of insurance products, including
personal auto and homeowners policies. Nationwide sells these products primarily
through an exclusive career agency force, mainly in the eastern and central
states. In 1997, Nationwide wrote approximately $5 billion of insurance premiums
and had a net income in excess of $1.6 billion. Since 1982, one of Nationwide's
affiliate companies has been Farmland Mutual Insurance Company, located in Des
Moines, Iowa.
3. Plaintiff Nationwide Acquisition is an Ohio corporation with its
principal place of business in Columbus, Ohio. Nationwide
2
<PAGE> 3
Acquisition is a wholly owned subsidiary of Nationwide that was formed for the
purpose of purchasing all of the outstanding voting securities of defendant
Allied Group.
4. Defendant Allied Group is an Iowa corporation with its principal
place of business in Des Moines, Iowa. Allied Group is a regional
property/casualty insurance holding company that specializes in personal lines
of insurance. Allied Group's property/casualty subsidiaries use independent
agents, exclusive agents, and direct response marketing, primarily in the
central and western states.
5. Defendant Allied Mutual is an Iowa mutual insurance association with
its principal place of business in Des Moines, Iowa. At 1997 year end, Allied
Mutual, an affiliated property insurance company of Allied Group, controlled
18.2% of the outstanding voting stock of Allied Group through its ownership of
all of the 6-3/4% Preferred Stock of Allied Group (the "Preferred Stock").
6. Defendant Douglas L. Andersen ("Andersen") is president and CEO of
Allied Group, is a director of Allied Mutual, and is not a citizen of the state
of Ohio.
7. Defendant John E. Evans ("Evans") is a director of Allied Group and
the Chairman of its board, is a director of Allied Mutual, and is not a citizen
of the state of Ohio.
8. Defendant Harold S. Evans, the brother of Evans, is a director of
both Allied Group and Allied Mutual, and is not a citizen of the state of Ohio.
3
<PAGE> 4
9. Defendant James W. Callison is a director of both Allied Group and
Allied Mutual, and is not a citizen of the state of Ohio.
10. Defendant Harold S. Carpenter is a director of Allied Group, and is
not a citizen of the state of Ohio.
11. Defendant Charles I. Colby is a director of Allied Group, and is
not a citizen of the state of Ohio.
12. Defendant Richard O. Jacobson is a director of Allied Group, and is
not a citizen of the state of Ohio.
13. Defendant John P. Taylor is a director of Allied Group, and is not
a citizen of the state of Ohio.
14. Defendant William E. Timmons is a director of Allied Group, and is
not a citizen of the state of Ohio.
15. Defendant Donald S. Willis is a director of Allied Group, and is
not a citizen of the state of Ohio.
16. Defendant C. Fred Morgan is a director of Allied Mutual, and is not
a citizen of the state of Ohio.
17. Defendant James D. Kirkpatrick is a director of Allied Mutual, and
is not a citizen of the state of Ohio.
JURISDICTION AND VENUE
----------------------
18. This court has jurisdiction pursuant to 28 U.S.C. Sections 1332(a)
and 2201. The amount in controversy exceeds $75,000, exclusive of interest and
costs.
19. Venue is proper in this district pursuant to 28 U.S.C. Section
1391(a) and (c).
4
<PAGE> 5
SCHEME OF ALLIED GROUP'S BOARD TO ENTRENCH ITSELF
-------------------------------------------------
20. The individual defendant directors of Allied Group have
participated in a long-standing scheme to entrench themselves at the expense of
Allied Group's shareholders.
21. As part of this scheme, Allied Group and Allied Mutual have certain
interlocking executive officers. Also, at all times relevant, three directors of
Allied Group have been directors of Allied Mutual. Additionally, Douglas L.
Andersen, president of Allied Group, is a director of Allied Mutual. Thus, four
of the six members of Allied Mutual's board are also officers or directors of
Allied Group. Evans has dominated and controlled the actions of the boards of
directors of both Allied Group and Allied Mutual.
22. For the sole purpose of entrenching Allied Group's board, Allied
Group and Allied Mutual entered into a written Stock Rights Agreement dated July
5, 1990 (the "Stock Rights Agreement" or "Agreement"). Pursuant to Article I of
this Agreement, Allied Group agreed to use its best efforts to cause the
election and retention of a number of Allied Mutual nominees as members of
Allied Group's board. Under the Stock Rights Agreement, Allied Mutual may
nominate a number of directors in proportion to that percentage of voting
securities held by Allied Mutual. Allied Mutual is the only shareholder of
Allied Group that receives this special treatment. Absent this Agreement, Allied
Mutual would be in the position of every other shareholder, i.e., without Allied
Group board's guaranteed support for its nominees.
23. As a result of this arrangement and the interlocking
5
<PAGE> 6
boards, the board of Allied Group has perpetuated itself while diluting the
voting rights of the shareholders of Allied Group.
24. Allied Group and Allied Mutual have acted pursuant to the Stock
Rights Agreement and have accordingly placed three of Allied Mutual's candidates
on the board of Allied Group.
ALLIED'S USE OF THE PREFERRED STOCK AS AN ENTRENCHMENT DEVICE
-------------------------------------------------------------
25. As noted above (paragraph 5), Allied Mutual owns all of the
Preferred Stock of Allied Group. The Certificate of Designations -- 6 3/4% of
Series Preferred Stock of Allied Group provides in paragraph 3(c) and 3(d) as
follows:
(c) In the event the Company shall, at any time, declare or pay
any dividend on its common stock or on its voting Preferred
Stock of any series (herein referred to as "voting stock"),
payable in shares of its voting stock, or effect a subdivision
or combination of the outstanding shares of its voting stock
(by reclassification or otherwise than by payment of a
dividend in shares of voting stock) either (i) the Company
shall take all comparable action necessary to preserve the
relative voting power of the holders of the 6 3/4% Preferred
Stock outstanding by subdividing or combining the outstanding
shares of 6 3/4% Preferred Stock, or otherwise; or (ii) each
outstanding share of 6 3/4% Preferred Stock outstanding shall
thereafter have that number of votes which is equal to the
number of votes which the holder of an outstanding share of
voting stock on which such dividend was paid or which was so
subdivided or combined held immediately after the payment of
such dividend or the subdivision or combination of such share.
6
<PAGE> 7
(d) In the event of any assignment, transfer, or other disposition
of shares of 6 3/4% Preferred Stock to any person other than
[Allied] Mutual Insurance Company ("[Allied] Mutual") or an
affiliate or successor corporation to [Allied] Mutual, the
shares of 6 3/4% Preferred Stock so disposed, upon such
disposition and without any further action by the Company or
the holder thereof, shall become non-voting, and no such
person or entity receiving the disposed of shares shall have
any of the voting powers ascribed to shares of 6 3/4%
Preferred Stock hereunder except as may be required by
law. Whenever the 6 3/4% Preferred Stock is non-voting,
pursuant to the preceding sentence, in the event that
Dividends shall remain unpaid for more than six quarterly
periods, the holder shall thereafter, commencing with the
Company, be entitled to elect one director to the board of
directors of the Company, upon notice to the Company
sufficient to permit its compliance with all regulatory
requirements. Certificates representing shares of 6 3/4%
Preferred Stock shall be legended to reflect the provisions
of this Section 3(d).
26. Through Allied Mutual's control of the Preferred Stock and the
interlocking boards of directors of Allied Group and Allied Mutual, the board of
Allied Group wields a virtually unassailable power to control nearly twenty
percent of the voting shares of Allied Group. This power has been granted with
the intention of protecting the interests of the Allied Group board. The
enhanced voting power of the Preferred Stock vanishes upon transfer, at which
time the Preferred Stock becomes non-voting altogether. In effect the Allied
Group board controls a large block of its own voting stock. There is no
legitimate business purpose to the aforesaid voting arrangement, and it serves
only further to
7
<PAGE> 8
entrench the Allied Group board.
ALLIED GROUP'S AMENDMENT TO ITS BY-LAWS
TO LIMIT SHAREHOLDER RIGHTS TO CALL A SPECIAL MEETING
-----------------------------------------------------
27. In furtherance of the scheme to entrench the Allied Group board, on
December 18, 1997, the board amended the Allied Group by-laws to provide that
special meetings of the stockholders may be called only by the holders of at
least fifty percent of all of the votes entitled to be cast on any issue
proposed to be considered at the meeting. Prior to this amendment, a special
meeting of shareholders could be called by the holders of ten percent of such
votes. This amendment prevents minority shareholders from challenging the
already entrenched position of Allied Group's board. There is no legitimate
business purpose to this change in Allied Group's by-laws. It serves only to
entrench Allied Group's board to the detriment of its shareholders, including
Nationwide.
NATIONWIDE'S OFFER TO ALLIED GROUP
----------------------------------
28. In the last half of 1997, Nationwide engaged in an analysis of
Allied Group based upon then available public information. Nationwide concluded
that Allied Group provided a unique opportunity for expanding Nationwide's
property and casualty business both geographically and by use of Allied Group's
distribution system. Consequently, Nationwide concluded that it should initiate
discussions with Allied Group about the possibility of a friendly merger.
8
<PAGE> 9
29. On or about January 26, 1998, Dimon R. McFerson ("McFerson"),
Chairman of Nationwide, contacted Evans to discuss Nationwide's interest in
acquiring all of the outstanding voting securities of Allied Group. A meeting
between McFerson and Evans and certain members of Allied Group's management was
scheduled for later that week.
30. On or about January 28, 1998, McFerson and other members of
Nationwide's management met with Evans and certain members of senior management
of Allied Group in Des Moines, Iowa. At that meeting, Nationwide made an all
cash offer to purchase the common stock of Allied Group for $47 per share,
subject to Nationwide receiving all necessary regulatory approvals and
performing due diligence.
31. Nationwide's offer was non-coercive, fair to Allied Group's
shareholders and represented a substantial premium over the market price for
Allied Group's shares at the time it was made. Evans stated at the January 28
meeting that he thought the price offered was generous; however, he expressed
two concerns. First, he wanted assurance that Nationwide would indemnify the
members of the boards of Allied Group and Allied Mutual for all claims that
could be asserted against them for matters that arose prior to the closing of
the sale. This request would provide no benefit to Allied Group's shareholders,
but was of substantial benefit to the individual Allied board defendants, who
were concerned about pending or potential shareholder and policyholder claims.
Before leaving that meeting, McFerson responded by agreeing, on behalf of
9
<PAGE> 10
Nationwide, to the indemnification requested by Evans. Evans' second concern was
that the Iowa Division of Insurance in the Department of Commerce might not
approve the transaction. Consequently, he wanted some assurance that regulatory
approval would be forthcoming from that agency.
32. In early February 1998, representatives of Nationwide met with
representatives of the Iowa Division of Insurance in the Department of Commerce.
Based upon this meeting, Nationwide satisfied itself that there were no
regulatory obstacles that would prevent the transaction from succeeding.
Nationwide conveyed this information to Allied Group's executives in February
1998. Nationwide would not have devoted any more effort to the acquisition if it
had believed that it would be unable to obtain all necessary regulatory
approvals.
33. Based upon the discussions between the representatives of
Nationwide and Allied Group, on February 10, 1998, Nationwide sent Andersen,
Allied Group's president, a draft merger agreement and other documents
pertaining to the proposed acquisition.
34. On or about February 18, 1998, McFerson spoke with Andersen to
discuss the proposed acquisition. Andersen rejected Nationwide's offer and told
McFerson that although the price offered was reasonable, the Allied Group board
did not authorize any further negotiations.
35. Nationwide, at all times, has planned to operate Allied Group as an
ongoing entity headquartered in Des Moines. Nationwide plans to continue the
business of Allied Group intact. Nationwide
10
<PAGE> 11
plans not only to maintain Allied Group's independent agency distribution
network, but also to expand it for use in Nationwide's business. Nationwide does
not intend to strip Allied Group of its assets or to liquidate it.
36. Nationwide's acquisition of Allied Group on the terms offered would
render a substantial benefit to all of Allied Group's constituencies, as well as
to Allied Mutual's policyholders. It does not pose any threat to the corporate
policy and effectiveness of Allied Group or to the policy or effectiveness of
Allied Mutual.
37. All reasons proffered by the defendants for failure to accept
Nationwide's offer were pretextual. In addition to the substantial premium of
the $47 per share price offered by Nationwide for the Allied Group stock,
payment was to be in cash, not securities. There was no question about
Nationwide's financial ability to make the payment. Given Nationwide's financial
strength and more than 50 years of experience in the insurance industry, there
was no serious reason to believe that Nationwide could not secure all of the
necessary regulatory approvals. The true reason for the rejection of the offer
was the desire of the board of directors of Allied Group to maintain control and
further entrench themselves to the detriment of Allied Group's shareholders.
38. On or about May 4, 1998, McFerson telephoned Evans and advised him
that Nationwide was still interested in acquiring Allied Group. Evans told
McFerson that the time was not right for such an acquisition, that McFerson
should not contact Evans again, but that McFerson should contact Andersen in 30
days.
11
<PAGE> 12
ALLIED GROUP'S FALSE PRESS RELEASES
-----------------------------------
39. On May 5, 1998, Allied Group issued a press release announcing that
its board had approved a stock repurchase program to acquire up to 250,000
shares of Allied Group's shares of common stock over the next twelve months. The
press release stated that "the program is not a request or an offer for or in
response to a tender offer or any other offer for Company shares." This
statement was material, false, and was known to be false at least by Evans and
Allied Group at the time it was made. Allied Group's repurchase program was a
defensive response to Nationwide's offer.
40. On or about May 7, 1998, Allied Group issued a press release
announcing that its board had increased its stock repurchase program to buy
back up to 2 million of Allied Group's shares. In that press release Allied
Group again stated: "The program is not a request or an offer for or in
response to a tender offer or any other offer for company shares." This
statement again was material, false, and was known to be false at least by
Evans and Allied Group at the time it was made. Like the earlier statement, it
constituted a breach of the fiduciary duty of honesty and candor. The decision
of Allied Group's board to increase eight-fold the number of shares in
its repurchase program was made in response to Nationwide's continuing attempts
to purchase the outstanding shares of Allied Group.
41. The initial repurchase program for 250,000 shares represented less
than 1% of Allied Group's then outstanding 30-plus million shares of common
stock. The revised 2 million share
12
<PAGE> 13
repurchase program represented approximately 6.5% of Allied Group's outstanding
common stock. The purpose and effect of Allied Group's stock repurchase program
are to make it more difficult for plaintiffs, or others, to acquire control of
Allied Group or to call a special meeting of Allied Group's shareholders.
42. Since announcing its stock repurchase program, Allied Group has
repurchased substantial blocks of its shares at market prices, and it intends to
continue to do so.
43. Thus, not only has Allied Group and/or its board disseminated false
and misleading information about its stock repurchase program, but it has also
recently repurchased substantial numbers of shares of its own stock at prices
well below the $47 price that Nationwide offered.
NATIONWIDE'S TENDER OFFER
-------------------------
44. On May 18, 1998, Nationwide publicly announced its intention to
commence a tender offer for all of the outstanding shares of common stock of
Allied Group at $47 per share, net to the seller in cash, subject to certain
conditions and regulatory approvals (the "Tender Offer"). The Tender Offer is
not conditioned upon financing. The price offered represents a 69.36% premium
over the market price of the Allied Group shares which closed at 27 3/4 on May
15, 1998. The terms of the Tender Offer are more fully set forth in a Schedule
14D-1 filed with the Securities and Exchange Commission. The contents of
Schedule 14D-1 are
13
<PAGE> 14
incorporated herein by reference, and a copy will be provided to the court after
it is filed with the Securities and Exchange Commission.
45. Nationwide's Tender Offer is not `front-end loaded' or otherwise
coercive in nature. It provides all of Allied Group's shareholders with the
opportunity to realize a substantial premium over the market price of their
stock prior to announcement of the Tender Offer.
46. The Tender Offer does not pose any threat to Allied Group's
corporate policy and effectiveness, to the interests of Allied Group's
shareholders, or to the interests of Allied Mutual or its policyholders.
47. The actions of defendants specified in paragraphs 20 through 43,
Allied Group's repurchase program set forth in paragraphs 39 and 40, and the
false or misleading statements contained in Allied Group's press releases set
out in paragraphs 39 and 40, constitute breaches of fiduciary duties by the
individual defendants who have thereby entrenched themselves at the cost of the
Allied Group shareholders and to the detriment of plaintiffs.
48. As a consequence of this improper entrenchment, Nationwide's first
two offers to purchase the stock of Allied Group at a substantial premium were
rejected to the detriment of plaintiffs and the shareholders of Allied Group.
These offers were rejected without reasonable investigation.
14
<PAGE> 15
COUNT I
-------
(BREACH OF FIDUCIARY DUTY
UNDER THE IOWA BUSINESS COMBINATIONS STATUTE)
49. Plaintiffs repeat and reallege paragraphs 1 through 48 as if they
were set forth in full.
50. Defendant Allied Group has all of the benefits provided by the
anti-takeover protections of Section 490.1110 of the Iowa Code (the "Business
Combinations Statute"). Under that statute, a third-party, such as Nationwide,
that acquires ten percent or more of the outstanding voting stock of an Iowa
corporation, such as Allied Group, cannot merge with Allied Group until three
years following the acquisition of the ten percent of Allied Group's stock,
absent circumstances not present in this case. Three of the exceptions to this
three-year restriction are: (a) pre-approval by the board of the Iowa
corporation of the third party's acquisition of 10% or more of the Iowa
Corporation's stock; (b) the third party owning at least 85% of the voting stock
of the Iowa corporation, "excluding, for purposes of determining the number of
shares outstanding, those shares owned by persons who are directors and
officers" of the Iowa corporation; or (c) the board of the Iowa corporation
adopting a by-law amendment by September 1997 electing not to be governed by the
statute (opting out).
51. The defendants' wrongful conduct, as set forth above, together with
the restriction in the Business Combinations Statute, frustrates and impedes the
ability of Allied Group's shareholders to decide for themselves whether they
wish to receive the benefits
15
<PAGE> 16
of Nationwide's Tender Offer. These devices unreasonably and inequitably hamper
plaintiffs' ability to consummate the Tender Offer. Given the history of this
matter, the Allied Group board defendants cannot be expected, absent an order
from this court, to approve the combination with plaintiffs. The failure of
Allied Group and its board to adopt a by-law amendment opting out of the
Business Combinations Statute and its anticipated failure to approve the Tender
Offer for purposes of the Business Combinations Statute, constitute a breach of
fiduciary duties by the Allied Group board.
52. The 18.2% voting rights in Allied Group controlled by its affiliate
Allied Mutual constitute a block that prevents plaintiffs from obtaining 85% of
the voting stock of Allied Group, which would enable plaintiffs to avoid the
restriction of the Business Combinations Statute. As alleged above (paragraph
26), the 18.2% voting rights in the Preferred Stock is actually controlled by
the board of Allied Group. Under corporation law, including Iowa corporate law,
a corporation and its subsidiaries cannot vote the corporation's own stock.
Under this policy, the Preferred Stock should be treated the same as "shares
owned by persons who are directors and officers" and the 18.2% should not be
counted for purposes of determining whether plaintiffs obtain 85% of Allied
Group stock in the Tender Offer.
53. Defendants' actions are causing plaintiffs irreparable harm, and
plaintiffs' remedies at law are inadequate.
16
<PAGE> 17
WHEREFORE, plaintiffs request that the court enter an order:
A. Granting plaintiffs judgment on Count I of the Complaint;
B. Declaring that the failure of Allied Group's board to "elect[ ] not
to be governed" by the Business Combinations Statute (i.e., not opting out)
constitutes a breach of fiduciary duty because it stifles any attempted tender
offer for Allied Group's stock;
C. Declaring that the failure of Allied Group's board to approve
Nationwide Acquisition's purchase of at least ten percent of the Allied Group
common stock would constitute a breach of fiduciary duty;
D. Preliminarily and permanently enjoining those defendants who are
members of the Allied Group board from failing to approve, pursuant to Section
490.1110(a)(a) of the Iowa Code, Nationwide Acquisition's purchase of at least
ten percent of the outstanding common stock of Allied Group;
E. Declaring that the use of the Preferred Stock by defendants is in
violation of Iowa law and is part of a scheme to entrench the board of Allied
Group in breach of its fiduciary duties;
F. Preliminarily and permanently enjoining those defendants who are
members of the board of Allied Mutual from voting the Preferred Stock of Allied
Group;
G. Granting costs to plaintiffs; and
17
<PAGE> 18
H. Granting plaintiffs such further relief as the court deems just.
COUNT II
--------
(BREACH OF FIDUCIARY DUTIES BY THE INDIVIDUAL DEFENDANTS)
54. Plaintiffs repeat and reallege paragraphs 1 through 48 as if they
were set forth in full.
55. The conduct of the defendants as set forth in paragraphs 20 through
43 above indicate that, without an injunction from this court, defendants will
manipulate or otherwise subvert the process of corporate democracy by amending
the by-laws of Allied Group or taking other actions to frustrate efforts of
plaintiffs to facilitate the Tender Offer.
56. Plaintiffs' remedies at law are inadequate.
WHEREFORE, plaintiffs request that the Court enter an order:
A. Granting plaintiffs judgment on Count II of the Complaint;
B. Declaring that the conduct of the individual defendant members of
the Allied Group board, as set forth in paragraphs 20 through 43, constitutes a
breach of their fiduciary duties;
C. Preliminarily and permanently enjoining Allied Group and its
directors from effectuating its stock repurchase program;
D. Requiring defendants to negotiate with plaintiffs in good faith;
E. Prohibiting the defendants from taking any action in any way to
impair the Tender Offer or to deny Allied Group's
18
<PAGE> 19
shareholders the opportunity to avail themselves of the right to tender their
shares pursuant to the Tender Offer, including but not limited to, amending the
by-laws or articles of incorporation of Allied Group or Allied Mutual,
instituting shareholders' rights plans or other devices commonly known as
"poison pills," adopting blank check preferred share plans, or issuing dual
classes of stock;
F. Granting plaintiffs their costs of this action; and
G. Granting plaintiffs such further relief as the court deems just.
COUNT III
(VIOLATIONS OF THE IOWA SECURITIES LAWS)
57. Plaintiffs repeat and reallege paragraphs 1 through 33 of the
Complaint herein as if they were set forth in full.
58. The false and misleading statements of material fact described in
paragraphs 39 and 40 above, made in connection with Allied Group's May 5 and May
7 press releases, related to Allied Group as a target company as defined in Iowa
Code Section 502.407. Iowa Code Ann. Section 502.407 (West 1991 & Supp. 1998).
59. It was reasonably foreseeable that these statements would induce
other persons to sell securities of Allied Group. Allied Group violated Section
502.407 by issuing the May 5 and May 7 press releases.
60. Pursuant to Section 502.502 of the Iowa Code, Nationwide is a party
aggrieved by Allied Group's violation of Section
19
<PAGE> 20
502.407, because those violations improperly obstructed Nationwide's legitimate
efforts to acquire Allied Group.
WHEREFORE, plaintiffs request that the court enter an order:
A. Granting plaintiffs judgment on Count III;
B. Declaring that the false and misleading statements of material fact
described in paragraphs 39 and 40 above constitute violations of Iowa Code
Section 502.407. Iowa Code Ann. Section 502.407 (West 1991 & Supp. 1998);
C. Preliminarily and permanently enjoining defendants from issuing
false or misleading statements regarding or relating to the Tender Offer;
D. Requiring Allied Group to disseminate an appropriate correction of
its false and misleading statements;
E. Granting plaintiffs their costs of this action and reasonable
attorneys' fees; and
F. Granting plaintiffs such further relief as the court deems just.
COUNT IV
--------
(BREACH OF FIDUCIARY DUTIES
IN CONNECTION WITH THE PREFERRED STOCK)
61. Plaintiffs repeat and reallege paragraphs 1 through 48 of the
Complaint herein as if they were set forth in full.
62. The provisions of the Certificate of Designations set forth in
paragraph 25 endow the Preferred Stock held by Allied Mutual with enhanced
voting power, but only so long as that stock is held by Allied Mutual. The
existence of this class of stock
20
<PAGE> 21
violates Section 490.601 of the Iowa Code, which specifies the characteristics
that a corporation's classes of stock may possess. This section does not allow
for a class of stock that possesses certain voting powers in the hands of one
person but altogether eliminates voting powers in the hands of others.
63. The existence of this Preferred Stock, as currently held by Allied
Mutual, serves no legitimate business purpose. Rather, it functions only to
entrench the board of Allied Group. Specifically, this entrenchment results from
the fact that the Allied Group board controls the Allied Mutual board and thus
controls the voting of Allied Mutual Preferred Stock.
64. The preferential voting rights of the Preferred Stock, coupled with
the loss of those rights upon transfer, places a significant impediment in the
way of plaintiffs or any third party who might attempt to gain control of Allied
Group. By thus exploiting the improper characteristics of the Preferred Stock,
the Allied Group board has breached its fiduciary duties to the shareholders of
Allied Group.
WHEREFORE, plaintiffs request that the Court enter an order:
A. Granting plaintiffs' judgment on Count IV of the Complaint;
B. Declaring that Allied Mutual's possession and voting of the
Preferred Stock while under the control of the Allied Group board constitutes a
breach of the fiduciary duties of the individual defendants as well as a
violation of Section 490.601 of
21
<PAGE> 22
the Iowa Code;
C. Preliminarily and permanently enjoining Allied Mutual from voting
its Preferred Stock;
D. Preventing Allied Group from counting Allied Mutual's Preferred
Stock as a part of Allied Group's outstanding shares on any vote taken by the
Allied Group shareholders;
E. Granting plaintiffs their costs of this action; and
F. Granting plaintiffs such further relief as the court deems just.
NATIONWIDE MUTUAL INSURANCE COMPANY
NATIONWIDE GROUP ACQUISITION CORPORATION
By: /s/ Harold N. Schneebeck
---------------------------------------
One of their attorneys
Harold N. Schneebeck
Brown, Winick, Graves, Gross, Bakerville,
and Schoenbau, P.L.C.
Two Ruan Center, Suite 1100
601 Locust Street
Des Moines, Iowa 50309
(515) 242-2400
OF COUNSEL:
-----------
Michael A. Reiter
Richard S. Rhodes
Holleb & Coff
55 East Monroe Street, Suite 4000
Chicago, Illinois 60603
(312) 807-4600
22
