<PAGE> 1
As filed with the Securities and Exchange Commission on July 26, 1996
Registration No. 33-_______________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
Registration Statement
Under The Securities Act of 1933
Merchants Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 16-1280763
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Main Street, Buffalo, New York 14202
(716) 849-3333
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
Merchants Group, Inc.
AGENTS STOCK OPTION PROGRAM
Robert M. Zak
Senior Vice President & Chief Operating Officer
Merchants Group, Inc.
250 Main Street
Buffalo, New York 14202
(716) 849-3333
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
With Copy to: James J. Tanous, Esq.
Jaeckle, Fleischmann & Mugel
Twelve Fountain Plaza
Buffalo, New York 14202
(716) 856-0600
Approximate date of commencement of proposed sale to the public:
September 3, 1996.
If the only securities being registered on this Form are be offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box: [X]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Amount to be Proposed Proposed Amount of
Securities to be Registered Registered Maximum Maximum Registration Fee
Offering Price Aggregate
Per Unit Offering Price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.01 par value 22,500 shares $16.38(1) $368,550 $127.09(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Reflects the option exercise price established for Options granted on June 1, 1994.
(2) The registration fee was calculated in accordance with Rule 457(h) under the Securities Act of 1933
(the "Securities Act").
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
2
<PAGE> 3
PROSPECTUS
Merchants Group, Inc.
AGENTS STOCK OPTION PROGRAM
22,500 shares of common stock
par value $.01
The Agents Stock Option Program (the "Plan") described herein
established a plan whereby selected independent insurance agencies of Merchants
Group, Inc.'s subsidiary insurance company received as of June 1, 1994, options
to purchase shares of common stock, $.01 par value, ("Option" or "Options") from
Merchants Group, Inc. (the "Company") under terms set forth in the Plan. As of
the date of this Prospectus, a total of 22,500 Options are outstanding. The
exercise price of $16.38 per share with respect to each Option represents the
average closing price of the Company's common stock as reported on the American
Stock Exchange, Inc. ("American Stock Exchange") for the five trading days prior
to June 1, 1994.
There will be no brokerage commissions or service charges upon the
purchase of shares under the Plan. The Company will bear the costs of
administering the Plan. KeyCorp Shareholder Services, Inc. is the Transfer
Agent for the Company.
The shares of common stock are listed on the American Stock Exchange
under the symbol MGP.
It is recommended that this Prospectus be retained for future
reference.
-----------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------------------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
-----------------------------------------------------
<TABLE>
<CAPTION>
===============================================================================================================
Price to Commissions Proceeds to
public Company (1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit $16.38 0 $16.38
- ---------------------------------------------------------------------------------------------------------------
Total $368,550 0 $368,550
===============================================================================================================
<FN>
(1) Before deducting expenses payable by the Company estimated at $10,000.
</TABLE>
The date of this Prospectus is July 26, 1996
3
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information........................................................................................... 4
Incorporation Of Certain Documents By Reference................................................................. 5
The Company..................................................................................................... 6
Description Of The Plan......................................................................................... 6
Use Of Proceeds................................................................................................. 9
Determination Of Offering Price................................................................................. 9
Experts......................................................................................................... 9
Legal Opinion................................................................................................... 10
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and the Regional Offices
of the Commission at Seven World Trade Center, Suite 1300, New York, New York
10048, and copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Further, the Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The Commission's Web
site can be found at (http://www.sec.gov).
The Company's shares of common stock are listed on the American Stock
Exchange, 86 Trinity Place, New York, New York 10006-1881 and reports, proxy
statements and other information filed by the Company can also be inspected in
the library of such exchange.
This Prospectus, which constitutes a part of a registration statement
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act, omits certain of the information set forth in the
Registration Statement. Reference is hereby made to the Registration Statement
and to the exhibits thereto for further information with respect to the Company
and the securities offered under the Plan. Statements contained herein
concerning the provisions of such documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained upon payment of the prescribed fee or may be
examined without charge at the public reference facilities of the Commission
described above.
4
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
a. Annual Report on Form 10-K for the year ended December 31,
1995 filed by the Company pursuant to Section 13(a) of the
Exchange Act.
b. Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996 filed by the Company pursuant to Section 13(a)
of the Exchange Act.
c. Definitive Proxy Statement dated April 5, 1996 for the
Company's May 8, 1996 Annual Meeting of the Stockholders filed
by the Company pursuant to Section 14(a) of the Exchange Act.
d. The description of the Company's common stock set forth in
response to Item 9 of the Registration Statement on Form S-2
(No. 33-62006) filed by the Company and any amendment to such
registration statement filed for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15 (d) of the Exchange Act prior to the termination of the
offering of Common Stock covered by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all documents incorporated herein by reference, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
therein. Written requests should be directed to:
Merchants Group, Inc.
Attn: Investor Relations Department
250 Main Street
Buffalo, New York 14202
Telephone requests may be directed to the Company at (716) 849-3333.
5
<PAGE> 6
THE COMPANY
The Company, a Delaware corporation, was organized in 1986 and is a
regional insurance holding company with its principal office in Buffalo, New
York. The Company's wholly-owned subsidiary, Merchants Insurance Company of New
Hampshire, Inc. ("MNH"), offers a broad range of property and casualty insurance
products through independent agents to preferred risk individuals and businesses
in the Northeast United States.
The Company is currently authorized to issue 10,000,000 shares of
common stock. As of June 30, 1996, there were 3,189,519 shares issued and
outstanding.
The Company's principal executive offices are located at 250 Main
Street, Buffalo, New York 14202 and its telephone number is (716) 849-3333.
DESCRIPTION OF THE PLAN
The following is a description of the provisions of the Plan offered to
selected independent insurance agencies of MNH.
PURPOSE. The Plan was established to advance the interests of the
Company by providing additional incentives to attract and retain qualified
agents upon whose efforts the success of the Company is dependent.
ADMINISTRATION. The Plan is administered by the Board of Directors of
the Company (the "Board"). Any questions relating to the interpretation of the
Plan or an Option holder's rights under the Plan are conclusively determined by
the Board.
ADOPTION OF THE PLAN. The Board adopted the Plan on March 30, 1994.
SHARES SUBJECT TO THE PLAN. Under the Plan, up to 25,000 shares of
common stock, $.01 par value, were reserved to be issued. On June 1, 1994,
Options on 22,750 shares of common stock were issued. As of June 30, 1996,
Options exist on 22,500 shares.
RECAPITALIZATION OR REORGANIZATION. The existence of an Option does not
affect the right or power of the Board or the stockholders of the Company to
make or authorize the adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting common stock or the rights thereof, the
dissolution or liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
The shares with respect to which Options may be granted are shares of
common stock as presently constituted, but if, and whenever, prior to the
expiration of an Option, the Company shall effect a subdivision or consolidation
of shares of common stock or the
6
<PAGE> 7
payment of a stock dividend on common stock without receipt of consideration by
the Company, the number of shares of common stock with respect to which such
Option may be exercised (1) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (2) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionally increased.
Unless otherwise set forth in the Plan, the issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment shall be made with respect to, the number of shares of common
stock subject to the Option or the exercise price thereof.
ELIGIBILITY REQUIREMENTS. The only participants in the Plan are those
independent insurance agencies of MNH selected by the Board to receive Option
grants on June 1, 1994 (the "Grantee" or "Grantees").
AWARDS GRANTED AND EXERCISE OF AWARDS. The awards granted under the
Plan are stock options. The Options are evidenced by a written document and are
not intended to qualify for special tax treatment under Section 422 (or any
other section) of the Internal Revenue Code of 1986, as amended.
Subject to certain adjustments, the purchase price of the common stock
subject to an Option is $16.38 per share, which is equal to the average closing
price of the stock as reported on the American Stock Exchange for the five
trading days prior to June 1, 1994. Options must be exercised in their
entirety.
EXERCISE PERIOD OF THE OPTIONS. The Options do not become exercisable
until two (2) years after the date of the grant. Options expire five (5) years
after the day prior to the date of the grant and thus, no option may be
exercised after May 31, 1999. No fractional shares of common stock may be issued
upon the exercise of an Option. Further, an Option is not exercisable if, at the
time of exercise, a Grantee fails to be an agent in good standing with the
Company.
RIGHTS AS A STOCKHOLDER. A Grantee of an Option shall have none of
the rights of a stockholder until the date of issuance of a stock certificate
for the shares. Except as provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
TERMINATION OF OPTIONS. All Options granted under the Plan will expire
on May 31, 1999, provided, however, that an Option will expire immediately if
the Grantee's agency relationship with the Company is terminated for any reason,
or if a Grantee ceases to be an
7
<PAGE> 8
agent in good standing with the Company. Further, any attempts to transfer an
Option will render an Option null and void.
TRANSFERABILITY. An Option may not be transferred to any other person
or entity, whether by operation of law or otherwise. Any attempt to transfer
the Option will cause the Option to become null and void.
FEDERAL INCOME TAX TREATMENT. Grantees recognized no income when
Options were granted, nor did the Company receive any deduction for federal
income tax purposes in the year of grant.
Upon exercise of an Option, a Grantee will be treated as having
received ordinary income at the time of exercise in an amount equal to the
difference between the Option price paid and the then fair market value of the
common stock acquired. The Company is entitled to a deduction at the same time
in a corresponding amount. The Grantee's basis in the common stock acquired upon
exercise of an Option will be equal to the Option price plus the amount of
ordinary income recognized.
Generally, when a Grantee disposes of shares of common stock acquired
under the Plan, any gain or loss recognized will be treated as long-term or
short-term capital gain or loss, depending upon the holding period of the shares
(which begins on the date the Option is exercised).
The foregoing is only a summary of federal income tax consequences and
does not purport to be complete. Because of the complexities of the tax law,
Grantees should consult their own tax advisors for further information.
DELAY IN ISSUANCE OR PURCHASE. All Options awarded under the Plan are
subject to the requirement that if the Board shall determine, in its discretion,
that (1) registration, listing or qualification of the shares of common stock
upon any securities exchange or pursuant to any state or federal law or (2) the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition to or in connection with the granting of such Option or
the issue or purchase of shares of common stock thereunder, the Option may not
be exercised in whole or in part unless such registration, listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board. In connection with the foregoing,
the Company may, if it shall deem it necessary or desirable for any reason
connected with any law or regulation or any governmental authority relating to
the regulation of securities, require the Grantee to represent in writing to the
Company that it is such person's then intention to acquire an Option or common
stock issuable upon the exercise thereof for investment and not with a view
toward the distribution thereof. In such event, no shares of common stock shall
be issued to such person unless and until the Company, in connection with the
foregoing, is satisfied with the accuracy of such representation. The
certificates representing shares of common stock issued by the Company pursuant
to the exercise of an Option may bear a
8
<PAGE> 9
legend describing the restrictions on resale thereof under applicable securities
laws and stop transfer orders with respect to such certificates may be entered
in the Company's stock transfer records.
RESTRICTIONS ON RESALE. Shares acquired under the Plan by an
"affiliate", as the term is defined in Rule 405 under the Securities Act, may be
resold only pursuant to the registration requirements of that Act, Rule 144
adopted by the Commission thereunder, or another applicable exemption therefrom.
Generally, sales of securities, including common stock of the Company, are also
subject to anti-fraud provisions contained in federal and state securities law.
In addition, acquisitions (but not generally including acquisitions
under the Plan) and dispositions of common stock of the Company by an executive
officer, director or affiliate of the Company within any six-month period may
give rise to the right of the Company to recapture any profit from such
transactions pursuant to Section 16(b) of the Exchange Act.
It is advisable for a Grantee to consult with legal counsel concerning
the securities and tax law implications of its exercise of Options and
disposition of shares of common stock under the Plan.
Additional information about the Plan may be obtained from the Investor
Relations Department, Merchants Group, Inc., 250 Main Street, Buffalo, New York
14202 (716) 849-3333.
USE OF PROCEEDS
The proceeds to the Company from sales of common stock pursuant to the
Plan will be used for general corporate purposes, including investment in and
advances to MNH.
DETERMINATION OF OFFERING PRICE
The shares to be registered are being offered pursuant to Options
granted in June of 1994. At the time the Options were granted, the average
closing price of the Company's common stock, as reported on the American Stock
Exchange for the five trading days prior to the grant date, was determined to be
$16.38 per share. As of July 25, 1996, the closing price for the Company's
common stock on the American Stock Exchange was $18 5/8, an increase of
approximately $2.25.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 1995 have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
9
<PAGE> 10
LEGAL OPINION
The validity of the issuance of the shares of common stock offered
hereby will be passed upon for the Company by Jaeckle, Fleischmann & Mugel,
Buffalo, New York.
10
<PAGE> 11
MERCHANTS GROUP, INC.
AGENTS STOCK OPTION PROGRAM
22,500
Shares of
Common Stock
PROSPECTUS
Dated: July 26, 1996
No person has been authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. Neither delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof. This Prospectus does
not constitute an offer to sell, or a solicitation of any offer to buy, any of
the securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offering in such jurisdiction.
11
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities covered by this Registration Statement, all of which shall be paid by
the Company, are estimated to be as follows:
Securities and Exchange Commission
registration fee ............................ $ 127.09
Listing Fees for the American Stock Exchange........... 2,000.00
Legal fees............................................. 3,500.00
Accounting fees........................................ 2,000.00
Miscellaneous.......................................... 2,372.91
TOTAL...........................................$10,000.00
Item 15. Indemnification of Directors and officers.
The Company's By-Laws contain provisions permitted by the Delaware
General Corporation Law (the "DGCL") (under which the Company is organized) that
provide that directors and officers will be indemnified by the Company to the
fullest extent permitted by the DGCL for all losses that might be incurred by
them in connection with any action, suit or proceeding in which they may become
involved by reason of their service as a director or officer of the Company. The
Company's Certificate of Incorporation contains provisions permitted by the DGCL
that limit the personal liability of directors of the Company for breaches of
their fiduciary duty, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from
which the director derived any improper personal benefit. The Company's By-Laws
provide for the advancement by the Company to directors and officers of expenses
incurred by them in connection with a proceeding of a type to which the duty of
indemnification applies. The Company's By-Laws authorize the purchase of
directors' and officers' liability insurance to insure its directors and
officers against certain liabilities incurred in their capacity as such.
Item 16. Exhibits.
The Exhibit Index is on Page E-1 of this Registration Statement.
II-1
<PAGE> 13
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities would not exceed
that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (i) and (ii) shall not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE> 14
(5) Deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the Prospectus, to
deliver, or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions of the Company's Certificate of
Incorporation or By-Laws, or otherwise, the registrant has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Buffalo, State of New York, on the 26th day of July
1996.
MERCHANTS GROUP, INC.
BY: /s/ Robert M. Zak
------------------------------
Robert M. Zak
Senior Vice President
Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Robert M. Zak, his true and lawful
attorney-in-fact and agent, with full power of substitution or re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement and the foregoing Power of Attorney have been signed on July 26,
1996 by the following persons on behalf of the Registrant and in the capacities
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- ------------------------------ ------------------
<S> <C> <C>
/s/ Richard E. Garman Director, Chairman of the July 26, 1996
- ---------------------------------- Board
Richard E. Garman
Director, President July 26, 1996
/s/ Brent D. Baird
- ----------------------------------
Brent D. Baird
</TABLE>
II-4
<PAGE> 16
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- ------------------------------ ------------------
<S> <C> <C>
Director, Sr. Vice July 26, 1996
/s/ Robert M. Zak President and Chief
- ---------------------------------- Operating Officer (principal
Robert M. Zak financial and accounting
officer)
/s/ Lawrence P. Castellani Director July 26, 1996
- ----------------------------------
Lawrence P. Castellani
Director July 26, 1996
/s/ Frank J. Colantuono
- ----------------------------------
Frank J. Colantuono
Director July 26, 1996
/s/ Henry P. Semmelhack
- ----------------------------------
Henry P. Semmelhack
</TABLE>
II-5
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits Page Number
- ----------- ----------------------------------------------------------- ----------------
<S> <C> <C>
(4)(A) Restated Certificate of Incorporation - incorporated by
reference to Exhibit (3)(C) to Amendment No. 1 to
the Registrant's Registration Statement (No. 33-9188)
on Form S-1 filed on November 7, 1986.
(4)(B) Restated By-Laws incorporated by reference to Exhibit
No. 3D to Amendment No. 1 to the Registrant's
Registration Statement No. 33-9188 on Form S-1 filed
November 7, 1986.
(4)(C)* Form of Stock Option Grant E-2
(5)* Opinion of Jaeckle, Fleishman & Mugel regarding E-4
the legality of shares of common stock being offered
hereby.
(23)(A)* Consent of Price Waterhouse LLP. E-5
(23)(B)* Consent of Jaeckle, Fleishman & Mugel (included in E-5
Exhibit (5)).
(24)* Power of Attorney (contained on signature page). II-4
(28) Statement regarding the Registrant - incorporated by
reference to Exhibit (28) to the Registrant's Annual
Report on Form 10-K for the year ended December
31, 1995.
(28)(A) Schedule P of the 1995 Statutory Annual Statement for
Merchants Insurance Company of New Hamshire,
Inc. - incorporated by reference to Exhibit (28)(a) to
the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
<FN>
*Filed herewith
</TABLE>
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EXHIBIT 4(C)
MERCHANTS GROUP, INC.
OPTION TO PURCHASE SHARES
LOGO OF MERCHANTS GROUP, INC.
SPECIMEN
--------
COMMON STOCK
Incorporated under the laws of the State of Delaware
STOCK OPTION CERTIFICATE
This certifies that SPECIMEN
----------------------------------------------------------
has the option to purchase ____________ shares of the common stock of Merchants
Group, Inc. The exercise price of your option is $16.38 per share of common
stock. Your option first becomes exercisable on June 1, 1996.
Your Stock Option is nontransferable and expires May 31, 1999
Dated June 1, 1994
- -------------------------------- -----------------------------------------
Chief Financial Officer Chairman of the Board
This option is governed by the terms on the reverse side of this document.
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[Reverse Side of Stock Option Certificate]
1. Purpose. The purpose of the Option is to advance the interests of Merchants
Group, Inc. (the "Company") by providing additional incentives to attract and
retain qualified agents upon whose efforts the success of the Company is
dependent.
2. Definitions. For the purposes of this Option, the following terms shall have
the following meanings as indicated:
(a) "Board" shall mean the Board of Directors of
the Company.
(b) "Common Stock" shall mean the shares of common
stock, $ .01 par value, of the Company.
(c) "Agent" shall mean an individual who is an
agent in good standing of Merchants Insurance
Company of New Hampshire, Inc. or Merchants
Mutual Insurance Company.
3. Administration of Agreement. Any question relating to the interpretation of
this Option or the holder's rights hereunder shall be conclusively determined by
the Board.
4. Exercise of Options. The Option shall be exercisable in whole at any time
from the date which is two (2) years from the date of grant through the Option
Term (as hereinafter defined). No fractional shares of Common Stock shall be
issued upon the exercise of an Option.
5. Recapitalization or Reorganization. The existence of this Option shall not
effect in any way the right or power of the Board or the shareholders of the
Company to make or authorize the adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
The shares with respect to which Options may be granted are shares of Common
Stock as presently constituted, but if prior to the expiration of an Option
theretofore granted, the Company shall effect a subdivision or consolidation of
shares of Common Stock or the payment of a stock dividend on Common Stock
without receipt of consideration by the Company, the Board may, at its
discretion, (1) in the event of an increase in the number of outstanding shares,
proportionately increase the number of shares with respect to which this Option
may be exercised and proportionately reduce the purchase price per share, and
(2) in the event of a reduction in the number of outstanding shares,
proportionately decrease the number of shares with respect to which this Option
may be exercised and proportionately increase the purchase price per share.
Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason therefor shall be made with respect to, the number of
shares of Common Stock subject to this Option or the exercise price thereof.
6. General Restrictions. Each Option shall be subject to the requirement that if
at any time the Board shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to such Option upon any
securities exchange or under any state or federal law or the consent or approval
of any governmental regulatory body is necessary or desirable as a condition to
or in connection with the granting of such Option or the issue or purchase of
shares of Common Stock thereunder, such Option may not be exercised unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. In
connection with the foregoing, the Company may, if it shall deem it necessary or
desirable for any reason connected with any law or regulation or any
governmental authority relating to the regulation of securities, require the
Optionee to represent in writing to the Company that it is such person's then
intention to acquire the Option or Common Stock issuable upon the exercise
thereof for investment and not with a view to the distribution thereof. In such
event no shares of Common Stock shall be issued to such person unless and until
the Company, in connection with the foregoing, is satisfied with the accuracy of
such representation. The certificates representing shares of Common Stock issued
by the Company pursuant to the exercise of the Option may bear a legend
describing the restrictions on resale thereof under applicable securities laws
and stop transfer orders with respect to such certificates may be entered in the
Company's stock transfer records.
7. Rights as a Shareholder. The holder of an Option shall have no rights as a
shareholder with respect to any shares of Common Stock covered by the Option
until the date of issuance of a stock certificate for such shares of Common
Stock. Except as otherwise expressly provided herein, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
8. Option Term. The expiration date of this Option shall be five (5) years from
the day prior to the date of grant.
9. Other Compensation. This Option shall be in addition to regular commissions
paid to Agent.
10. Conditions of Exercise. This Option shall not be exercisable if Agent is no
longer an agent in good standing of Merchants Insurance Company of New
Hampshire, Inc. or Merchants Mutual Insurance Company at the time of exercise.
11. Non-Transferable Option. This Option may not be transferred to any other
person or entity in any manner, whether by operation of law or otherwise.
Any such transfer will render this Option null and void.
12. This Option shall be interpreted and enforced in accordance with the
internal laws of the State of Delaware.
NOTICE OF EXERCISE OF OPTION
The undersigned optionee elects to purchase the _____ shares of Common
Stock of Merchants Group, Inc. which the undersigned is entitled to purchase in
accordance with this Option. With this notice the undersigned delivers the
following to Merchants Group, Inc. in full payment of the shares purchased:
Exercise Price ($________ per share) x _____ shares purchased = Total
Purchase Price of $__________
Paid in: $ __________ cash
$ __________ certified bank check payable to Merchants Group, Inc.
Dated:
-------------- -------------------------------
Signature of Optionee
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[JAECKLE, FLEISCHMANN & MUGEL LETTERHEAD]
EXHIBIT 5
July 26, 1996
Merchants Group, Inc.
250 Main Street
Buffalo, New York 14202
RE: REGISTRATION STATEMENT ON FORM S-3 UNDER THE SECURITIES
ACT OF 1933, COVERING THE REGISTRATION OF 22,500 SHARES
OF COMMON STOCK ISSUED OR RESERVED FOR ISSUANCE UNDER
THE AGENTS STOCK OPTION PROGRAM (THE "PROGRAM")
-- OPINION REGARDING LEGALITY
-------------------------------------------------------
Ladies and Gentlemen:
As your counsel we have examined the above-referenced Registration
Statement and we are familiar with the documents referred to therein, as well as
your Certificate of Incorporation, as amended and restated, By-Laws, as amended
and restated, and other relevant documents, and we have made such investigation
with respect to your corporate affairs as we deem necessary in order for us to
render the opinion herein set forth.
We have examined the proceedings heretofore taken and we are informed
as to the procedures proposed to be followed by Merchants Group, Inc. in
connection with the authorization, issuance and sale of the above described
shares of common stock (the "Shares"). In our opinion the Shares to be issued by
Merchants Group, Inc. under and in accordance with the Program will be, when
issued and paid for pursuant to the Program and the Registration Statement and
the Exhibits thereto, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement and the reference to us under the heading "Legal Matters"
in the Prospectus that is a part of the Registration Statement.
Very truly yours,
JAECKLE, FLEISCHMANN & MUGEL
Jaeckle, Fleischmann & Mugel
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Exhibit 23 (A)
--------------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 our report dated
February 20, 1996 appearing on page F-1 of Merchants Group, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
Buffalo, New York
July 26, 1996
PRICE WATERHOUSE LLP
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