As filed with the Commission on August 28, 1996
Registration No. 333-_____
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
__________________________
MERIDIAN INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1689161
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2955 North Meridian Street 46206-1980
Post Office Box 1980 (Zip Code)
Indianapolis, Indiana
(Address of Principal Executive Offices)
____________
MERIDIAN INSURANCE GROUP, INC.
1996 EMPLOYEE INCENTIVE STOCK PLAN
(Full title of the plan)
J. Mark McKinzie
Meridian Insurance Group, Inc.
2955 North Meridian Street
Post Office Box 1980
Indianapolis, Indiana 46206-1980
(Name and address of agent for service)
(317) 931-7000
(Telephone number, including area code, of agent for service)
Copies to:
Tibor D. Klopfer
Baker & Daniels
300 North Meridian Street
Suite 2700
Indianapolis, Indiana 46204
_______________
CALCULATION OF REGISTRATION FEE
_________________________________________________________________
Title of Amount to be Proposed Proposed Amount of
Securities Registered* Maximum Maximum Registration
to be Offering Aggregate Fee*
Registered Price Offering
Per Share* Price*
_________________________________________________________________
Common Shares, 750,000
without par Shares $14.125 $10,593,750 $3,653
value
_________________________________________________________________
*Calculated pursuant to Rule 457(c) and (h) based upon the
average of the high and low prices for the Common Shares, as
reported on the Nasdaq National Market System on August 23, 1996.
_________________________________________________________________
FORM S-8
Registration Statement Under
The Securities Act of 1933
MERIDIAN INSURANCE GROUP, INC.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 0-11413), and the information set
forth under the caption "Description of Registrant's Securities
to be Registered" in the Company's Registration Statement on
Form 8-A filed pursuant to Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act") (File No. 0-11413),
including any amendments or reports filed for the purpose of
updating such description, are incorporated herein by reference.
All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year for which audited
financial statements are contained in the annual report described
above are incorporated herein by reference. All documents filed
by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of
the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby
shall be deemed to be incorporated by reference herein and to be
a part hereof from the date of filing of such documents with the
Commission. The Company will promptly provide without charge to
each person to whom a prospectus is delivered, a copy of any or
all information that has been incorporated herein by reference
(not including exhibits to the information that is incorporated
by reference unless such exhibits are specifically incorporated
by reference into such information), upon the written or oral
request of such person directed to the Secretary of the Company
at its principal offices, 2955 North Meridian Street, P.O.
Box 1980, Indianapolis, Indiana 46206.
Item 6. Indemnification of Directors and Officers.
Chapter 37 of the Indiana Business Corporation Law empowers
a corporation to indemnify any individual who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal,
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or, while a director of a
corporation, is or was serving at the request of the corporation
as a director, officer, partner, member, manager, trustee,
employee or agent of another foreign or domestic corporation,
partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise, whether for profit or
not, against reasonable expenses (including counsel fees),
judgments, fines (including any excise tax assessed with respect
to an employee benefit plan), penalties and amounts paid in
settlement incurred by him in connection with such action, suit
or proceeding (i) if he acted in good faith, and (ii) in the case
of conduct in his official capacity with the corporation, if he
reasonably believed his conduct was in the best interests of the
corporation or, in all other cases, if he reasonably believed his
conduct was at least not opposed to the best interests of the
corporation (or with respect to an employee benefit plan, if he
reasonably believed his conduct was in the interests of the
participants in and beneficiaries of the plan), and (iii) with
respect to any criminal action or proceeding, if he had
reasonable cause to believe his conduct was lawful or no
reasonable cause to believe his conduct was unlawful.
Chapter 37 further provides that a corporation shall, unless
limited by its articles of incorporation, indemnify a director or
officer who was wholly successful, on the merits or otherwise, in
the defense of any action, suit or proceeding to which he was a
party because he is or was a director or officer of the
corporation against reasonable expenses incurred by him in
connection therewith. Chapter 37 expressly states that the
indemnification thereby provided does not exclude any other
rights to indemnification to which a person may be entitled.
Chapter 37 empowers a corporation to purchase and maintain
insurance on behalf of an individual who is or was a director,
officer, employee or agent of the corporation, or who, while a
director, officer, employee or agent of the corporation, is or
was serving at the request of the corporation as a director,
officer, partner, member, manager, trustee, employee or agent of
another foreign or domestic corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or
other enterprise, against liability asserted against or incurred
by the individual in that capacity or arising from the
individual's status as a director, officer, employee or agent,
whether or not the corporation would have power to indemnify the
individual against the same liability under Chapter 37. Finally,
Chapter 37 empowers a corporation, under certain circumstances,
to advance to an individual expenses incurred in connection with
an action, suit or proceeding prior to the final disposition
thereof; and empowers a court of competent jurisdiction, in
certain cases, to order indemnification of a director or officer
irrespective of whether the director or officer met the standards
of conduct set forth above.
Reference is made to Section 7.01 of Article VII of the
Restated Articles of Incorporation of the registrant concerning
indemnification of directors and officers.
The registrant has obtained directors' and officers'
liability insurance, the effect of which is to indemnify the
directors and officers of the registrant against certain losses
caused by an error, misstatement or misleading statement,
wrongful act, omission, neglect or breach of duty by them or any
matter claimed against them in their capacities as directors and
officers.
Item 8. Exhibits
The list of Exhibits is incorporated herein by reference to
the Index to Exhibits at page 8.
Item 9. 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 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;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933 (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.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in 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.
The undersigned registrant hereby undertakes to 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis, State of Indiana, on
August 27, 1996.
MERIDIAN INSURANCE GROUP, INC.
By:/s/ Norma J. Oman
Norma J. Oman,
President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the
following persons in the capacities and on the dates indicated.
Each person whose signature appears below hereby constitutes
Norma J. Oman and Steven R. Hazelbaker, and each of them singly,
such person's true and lawful attorneys, with full power to them
and each of them to sign for such person and in such person's
name and capacity indicated below, any and all amendments to this
registration statement, hereby ratifying and confirming such
person's signature as it may be signed by said attorneys to any
and all amendments.
Signature Title Date
/s/ Norma J. Oman President, Chief August 27, 1996
Norma J. Oman Executive Officer
and Director (Principal
Executive Officer)
/s/ Steven R. Hazelbaker Vice President, Chief August 27, 1996
Steven R. Hazelbaker Financial Officer &
Treasurer(Principal
Financial and
Accounting Officer)
/s/ Joseph D. Barnette, Jr. Director August 27, 1996
Joseph D. Barnette, Jr.
/s/ John T. Hackett Director August 27, 1996
John T. Hackett
/s/ Ramon L. Humke Director August 27, 1996
Ramon L. Humke
/s/ Sarah W. Rowland_ Director August 27, 1996
Sarah W. Rowland
/s/ Van P. Smith Director August 27, 1996
Van P. Smith
/s/ Harold C. McCarthy_ Director August 27, 1996
Harold C. McCarthy
/s/ Thomas H. Sams Director August 27, 1996
Thomas H. Sams
/S/ David M. Kirr Director August 27, 1996
David M. Kirr
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit Page Number
This Filing
_____________________________________________________________________
4(C) 1996 Employee Incentive Stock Plan
5 Opinion of Baker & Daniels as to the legality of
the securities being registered
23 (A) Written Consent of Coopers & Lybrand, L.L.P.
23 (B) Written Consent of Baker & Daniels (contained in
their opinion filed as Exhibit 5)
MERIDIAN INSURANCE GROUP INC.
1996 EMPLOYEE INCENTIVE STOCK PLAN
ARTICLE I
Purpose and Effective Date
1.1. Purpose. The purpose of the Plan is to provide financial
incentives for selected Key Employees of the Meridian Group,
thereby promoting the long-term growth and financial success of
the Meridian Group by (i) attracting and retaining
employees of outstanding ability, (ii) strengthening the
Meridian Group's capability to develop, maintain, and direct a
competent management team, (iii) providing an effective means
for selected Key Employees to acquire and maintain ownership
of Meridian Stock, (iv) motivating Key Employees to achieve
long-range performance goals and objectives, and (v) providing
incentive compensation opportunities competitive with those
of other major corporations.
1.2. Effective Date and Expiration of Plan. The Plan shall be
effective May 8, 1996. Unless earlier terminated by the
Board pursuant to Section 7.3 the Plan shall terminate on the
tenth anniversary of its Effective Date. No Award shall be made
pursuant to the Plan after its termination date, but Awards made
prior to the termination date may extend beyond that date.
ARTICLE II
Definitions
The following words and phrases, as used in the Plan, shall have
these meanings:
2.1 "Award" means individually or collectively, any Option,
Tandem SAR, SAR, or Stock or Restricted Stock Award.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means a committee of not less than three persons
appointed by the Board from the Compensation Committee of the
Board or from the Executive Committee of the Board, each of whom
shall be a Disinterested Person.
2.5 "Company" means Meridian Insurance Group, Inc. and its
successors and assigns.
2.6 "Disinterested Person" means any person who, at the time
discretion under the Plan is exercised, meets the definition of
a "disinterested person" in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, and then
applicable to the Company.
2.7 "Effective Date" means May 8, 1996.
2.8 "Fair Market Value" means, as of any specified date, an
amount equal to the mean between the reported high and low bid
prices of Meridian Stock on the specified date on the National
Association of Securities Dealers, Inc. Automated Quotation
System or any system then in use, or, if no such quotation is
available, the fair market value on the specified date of
the share of such stock as determined by the Board in good
faith, and at such time as the shares are traded on the National
Market System the price for purposes of this paragraph shall be
the last reported sales price on the specified date.
2.9 "Incentive Stock Option" means an option within the meaning
of Section 422(b) of the Code.
2.10 "Key Employee" means an employee of one of the Companies in
the Meridian Group who occupies a responsible executive,
managerial, insurance professional, or administrative
position and who has the capacity to contribute to the
success of the Meridian Group.
2.11 "Meridian Group" means the Company and each of its'
subsidiaries and Meridian Mutual Insurance Company, on and
after the Effective Date.
2.12 "Meridian Stock" means common shares of the Company.
2.13 "Nonqualified Stock Option" means an Option granted under
the Plan other than an Incentive Stock Option.
2.14 "Option" means both a Nonqualified Stock Option and an
Incentive Stock Option to purchase Meridian Stock.
2.15 "Option Price" means the price at which Meridian Stock may
be purchased under an Option as provided in Section 5.4.
2.16 "Participant" means a Key Employee to whom an Award has been
made under the Plan.
2.17 "Personal Representative" means the person or persons who,
upon the death, disability, or incompetency of a
Participant, shall have acquired, by will or by the laws of
descent and distribution or by other legal proceedings, the
right to exercise an Option or the right to any Restricted
Stock Award theretofore granted or made to such Participant.
2.18 "Plan" means Meridian Insurance Group, Inc. 1996 Employee
Incentive Stock Plan.
2.19 "Reload Option" means an Option described in Section 5.7 of
the Plan.
2.20 "Restricted Stock" means Meridian Stock subject to the terms
and conditions of Sections 6.1 through Section 6.6 of the
Plan.
2.21 "Restricted Stock Award" means an Award granted under
Sections 6.1 through 6.6 of the Plan.
2.22 "Restriction Period" means a period of time determined under
Section 6.2 during which Restricted Stock is subject to the
terms and conditions provided in Section 6.3.
2.23 "SAR" means a stock appreciation right granted under Section
5.10.
2.24 "Stock Award" means an Award in the form of Meridian Stock
as described under Section 6.7 of the Plan.
2.25 "Stock Option Agreement" means an agreement entered into
between a Participant and the Company under Section 5.3.
2.26 "Subsidiary" means a corporation, domestic or foreign, the
majority of the voting stock of which is owned directly or
indirectly by the Company or Meridian Mutual Insurance
Company.
2.27 "Tandem SAR" means a stock appreciation right described in
Section 5.9 of the Plan.
ARTICLE III
Administration
3.1 Committee to Administer. The Plan shall be administered by
the Committee. The Committee shall have full power and
authority to interpret and administer the Plan and to
establish and amend rules and regulations for its
administration.The Committee's decisions shall be final and
conclusive with respect to the interpretation of the Plan and
any Award made under it.
A majority of the members of the Committee shall constitute a
quorum for the conduct of business at any meeting. The
Committee shall act by majority vote of the members present at
a duly convened meeting, which may include a meeting by
conference telephone call held in accordance with applicable law.
Action may be taken without a meeting if written consent
thereto is given in accordance with applicable law.
3.2 Powers of Committee. (a) Subject to the provisions of the
Plan, the Committee shall have authority, in its discretion, to
determine those Key Employees who shall receive an Award, the
time or times when such Award shall be made, and the type of
Award to be granted.
(b) The Committee shall determine the terms,
restrictions, and provisions of the agreement relating to each
Award, including such terms, restrictions, and provisions as
shall be necessary to cause certain options to qualify as
Incentive Stock Options. The Committee may correct any defect
or supply any omission or reconcile any inconsistency in the
Plan or in any agreement relating to an Award, in such manner
and to the extent the Committee shall determine in order to
carry out the purpose of the plan. The Committee may, in its
discretion, accelerate (i) the date on which any Option or SAR
may be exercised, or (ii) the date of termination of the
restrictions applicable to a Restricted Stock Award, if
the Committee determines that to do so will be in the best
interests of the Company and the Participants in the Plan.
ARTICLE IV
Awards
4.1 Awards. Awards shall be subject to the terms and conditions
of the Plan and to such other terms and conditions
consistent with the Plan as the Committee deems appropriate.
Awards under a particular section of the Plan need not be
uniform and Awards under two or more sections may be
combined in one agreement. Any combination of Awards may be
granted at one time and on more than one occasion to the same
Key Employee.
4.2 Eligibility For Awards. An Award may be made to any Key
Employee selected by the Committee. In making this
selection and in determining the form and amount of the
Award, the Committee may give consideration to the functions and
responsibilities of the respective Key Employee, his or her
present and potential contributions to the success of the
Meridian Group, the value of his or her services to the Meridian
Group, and such other factors deemed relevant by the Committee.
4.3 Shares Available Under the Plan. The Meridian Stock to be
offered under the Plan pursuant to Options, Tandem SARs,
Restricted Stock Awards, and Stock Awards may be authorized but
unissued Meridian Stock or Meridian Stock previously issued
and outstanding and reacquired by the Company. Subject to
adjustment under Section 7.2, no more than an aggregate of
750,000 shares of Meridian Stock shall be issuable upon
exercise of Options (including Reload Options) and Tandem SARs
and pursuant to Restricted Stock Awards and Stock Awards granted
under the Plan. SARs with respect to no more than 250,000
shares of Meridian Stock may be granted under Section 5.10 of
the Plan. Any shares of Meridian Stock subject to an Option
which for any reason is canceled or terminated without having
been exercised, or any shares of Restricted Stock which are
forfeited, shall again be available for Awards under the Plan.
Shares subject to an Option canceled upon the exercise of an
SAR shall not again be available for Awards under the Plan.
ARTICLE V
Stock Options and Stock Appreciation Rights
5.1 Award of Stock Options. The Committee may, from time to
time, subject to the provisions of the Plan and such terms and
conditions as the Committee may prescribe, award Incentive
Stock Options and Nonqualified Stock Options to any Key
Employee. Awards of Incentive Stock Options and Nonqualified
Stock Options shall be separate and not in tandem.
5.2 Period of Option. (a) Unless otherwise provided in the
related Stock Option Agreement, an Option granted under the Plan
shall be exercisable only after twelve months have elapsed
from the date of grant. After the twelve-month waiting
period, the Option may be exercised at any time during the
term of the Option, in whole or in installments, as specified in
the related Stock Option Agreement. Subject to Section 5.6,
the duration of each Option shall not be more than ten years
from the date of grant.
(b) Except as provided in Section 5.6, an Option may not be
exercised by a Participant unless such Participant is then,
and continually (except for sick leave, military service, or
other approved leave of absence) after the grant of the Option
has been, an employee of one of the Companies in the Meridian
Group.
5.3 Stock Option Agreement. Each Option shall be evidenced by a
Stock Option Agreement, in such form and containing such
provisions not inconsistent with the provisions of the Plan as
the Committee from time to time shall approve.
5.4 Option Price, Exercise, and Payment. The Option Price of
Meridian Stock under each Option shall be determined by the
Committee, but the Option price of Meridian Stock under an
Incentive Stock Option shall be a price not less than 100
percent of the Fair Market Value of Meridian Stock at the date
such Incentive Stock Option is granted, as determined by the
Committee. Options may be exercised from time to time by giving
written notice of exercise to the Treasurer of the
Company, specifying the number of shares to be purchased. No
Option may be exercised for less than ten shares unless the
issue of a lesser number is enough to exhaust the Option. The
notice of exercise shall be accompanied by payment in full of
the Option Price in cash or its equivalent, provided, however,
that if the Committee, in its discretion, so provides in
the related Stock Option Agreement, the Option Price may be
paid in whole or in part through the transfer to the Company
of shares of Meridian Stock previously acquired by the
Participant, provided the shares so transferred have been held
by the Participant for a period of more than one year and,
further provided, that no Restricted Stock may be transferred
as payment of the Option Price. In the event such Option Price
is paid, in whole or in part, with shares of Meridian Stock,
the portion of the Option Price so paid shall be equal to the
value, as of the date of exercise of the Option, of such
shares. The value of such shares shall be equal to the number
of such shares multiplied by the average of the high and low
sales prices of Meridian Stock quoted on the National
Association of Securities Dealers, Inc. Automated Quotation
System on the trading day coincident with the date of
exercise of such Option (or the immediately preceding trading
day if the date of exercise is not a trading day). Such
shares must be delivered (along with the portion to be paid in
cash) within three days after the date of exercise. If the
Participant fails to pay the Option Price within such three-day
period, the Committee shall have the right to take whatever
action it deems appropriate, including voiding the exercise of
the Option. The Company shall not issue or transfer
Meridian Stock upon exercise of an Option until the Option Price
is fully paid.
5.5 Limitations on Exercise of Incentive Stock Options. (a)
The aggregate Fair Market value (determined as of the time such
Option is granted) of Meridian Stock with respect to which
Incentive Stock Options are exercisable for the first time by a
Key Employee during any calendar year (under all plans of the
Company, and its Subsidiaries) shall not exceed $100,000.
(b) An Incentive Stock Option shall not be awarded to any Key
Employee who, at the time of award, owns Meridian Stock
possessing more than ten percent of the total combined voting
power of all classes of stock of the Company.
5.6 Termination of Employment. (a) If a Participant shall
cease to be employed by a Company in the Meridian Group for
reasons other than (i) death, (ii) discharge for cause, or
(iii) voluntary action of the Participant without the
written consent of the President of the Company (or the
President's delegate), the Participant may exercise an
Option at any time within three years after such
termination, to the extent of the number of shares covered by
such Option which were purchasable at the date of such
termination; provided, however, that an Option shall be so
exercisable only until the earlier of the expiration of such
three-year period or the expiration date of such Option.
(b) If a Participant shall cease to be employed by a Company in
the Meridian Group either (i) for cause or (ii) by voluntary
action of the Participant without the written consent of the
President of the Company (or the President's delegate), any
Options of such Participant shall expire and any rights
thereunder shall terminate immediately.
(c) Should a Participant die either while in the employ of a
Company in the Meridian group or after termination of such
employment (other than discharge for cause or by voluntary
action of the Participant without the written consent of the
President of the Company or the President's delegate), the
Option rights of such deceased Participant may be exercised by
his or her Personal Representative until the earlier of one
year after the Participant's death or three years after his or
her termination of employment to the extent of the number of
shares covered by such Option which were purchasable at
the date of such death except that an Option shall not be so
exercisable on any date beyond the expiration date of such
Option.
If a Participant who was granted an Incentive Stock Option
should die within thirty days prior to the expiration date of
such Option, if on the date of death the Participant was then
entitled to exercise such Option, and if the Option expires
without being exercised, the Personal Representative of the
Participant shall receive in settlement a cash payment from
the Company of a sum equal to the amount, if any, by which
the Fair Market Value (determined on the expiration date of
the Option) of Meridian Stock subject to the Option exceeds the
Option Price.
5.7 Reload Option (a) Concurrently with the award of Options
to a Participant under the Plan the Committee may authorize
Reload Options to purchase for cash or shares a number of
shares of Meridian Stock. The number of Reload Options
shall equal:
(i) the number of shares of Meridian Stock used to exercise
the underlying Options and
(ii) to the extent authorized by the Committee, the
number of shares of Meridian Stock used to satisfy any tax
withholding requirement incident to the exercise of the
underlying Options. The grant of a Reload Option will become
effective upon the exercise of underlying Options or Reload
Options through the use of shares of Meridian Stock held by
the optionee for at least 12 months or such longer period as
determined by the Committee. Notwithstanding the fact that the
underlying option may be an Incentive Stock Option, a
Reload Option may qualify as an "incentive stock option"
subject to Section 422 of the Internal Revenue Code of 1986.
(b) Each Stock Option Agreement shall state whether the
Committee has authorized Reload Options with respect to the
underlying Options. Upon the exercise of an underlying Option
or other Reload Option, the Reload Option will be evidenced by
an amendment to the underlying Stock Option Agreement.
(c) The option price per share of Meridian Stock
deliverable upon the exercise of a Reload Option shall be the
Fair Market Value of a share of Meridian Stock on the date
the grant of the Reload Option becomes effective.
(d) Each Reload Option is fully exercisable six months from the
effective date of grant. The term of each Reload Option
shall be equal to the remaining option term of the underlying
Option.
(e) The Committee may in its discretion limit the number of
Reload exercises available to a Participant, or restrict the
availability of a Reload Option until a specified level of stock
price appreciation occurs in the underlying Options.
5.8 Shareholder Rights and Privileges. A Participant shall have
no rights as a shareholder with respect to any shares of
Meridian Stock covered by an Option until the issuance of a
stock certificate to the Participant representing such
shares.
5.9 Award of Tandem SARs. (a) At any time prior to six months
before an Option's expiration date, the Committee may award to
the Participant a Tandem SAR related to the Option.
(b) The Tandem SAR shall represent the right to receive
payment of an amount equal to the amount, if any, by which
the average of the high and low sales prices of Meridian
Stock quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System on the trading
day immediately preceding the date of exercise of the
Tandem SAR exceeds the Option Price.
(c) Tandem SARs shall be evidenced by either the Stock Option
Agreement or a separate agreement between the Company and the
Participant.
(d) A Tandem SAR shall be exercisable only at the same time and
to the same extent and subject to the same conditions as
the Option related thereto is
exercisable, except that the Committee may prescribe
additional conditions and limitations on the exercise of any
Tandem SAR. A Tandem SAR shall be transferable only when the
related Option is transferable, and under the same conditions.
The exercise of a Tandem SAR shall cancel the related Option.
Tandem SARs may be exercised only when the value of a share
of Meridian Stock subject to the related Option exceeds the
Option Price. Such value shall be determined in the manner
specified in Section 5.9(b).
(e) A Tandem SAR shall be exercisable only by written notice to
the Treasurer of the Company and only to the extent that the
related Option is exercisable. However, a Tandem SAR shall
in no event be exercisable during the first six months of its
term, except in the event of death or disability of the
Participant prior to the expiration of such six-month period.
(f) All Tandem SARs shall automatically be exercised on the
last trading day prior to the expiration of the related Option,
so long as the value of a share of Meridian Stock exceeds
the Option Price, unless prior to such day the holder
instructs the Treasurer otherwise in writing. Such value
shall be determined in the manner specified in Section 5.9(b).
(g) Payment of the amount to which a Participant is entitled
upon the exercise of a Tandem SAR shall be made in cash,
Meridian Stock, or partly in cash and partly in Meridian
Stock, as the Committee shall determine at the time of the
Award. To the extent that payment is made in Meridian Stock, the
shares shall be valued in the manner specified in Section 5.9(b).
(h) Each Tandem SAR shall expire on a date determined by the
Committee at the time of Award, or, if later, upon the
termination of the related Option.
5.10 Stock Appreciation Rights (a) Participants may be awarded
SARs for a period of five years or such shorter period
greater than six months as may be determined by the
Committee (the "Designated Period"). That Designated Period may
vary as among Participants and as among Awards to a
Participant. At the end of the Designated Period with
respect to a Participant, that Participant shall receive an
amount equal to the appreciation in market value of his or her
SARs as determined in Section 5.10(b) of the Plan. That amount
shall be payable in cash, Meridian Stock, or partly in cash and
partly in Meridian Stock (as determined in its sole discretion
by the Committee). The value of any shares of Meridian Stock so
payable shall be measured by the Fair Market Value of
Meridian Stock on the day on which the Designated Period
ends. No fractional shares shall be issued but a
Participant shall be entitled to a cash adjustment for a
fractional share that would otherwise be issued.
(b) The market value of one SAR on a valuation date for
purposes of the Plan shall be considered to be the Fair Market
Value of one share of Meridian Stock on that valuation date.
The market value of SARs held by a Participant on a valuation
date shall be determined by multiplying the number of SARs
held by that Participant by the market value of one SAR on
that valuation date. The appreciation in market value of SARs
for purposes of determining payments to be made to a Participant
shall be measured by determining the market value of SARs
held by that Participant on the day on which the Designated
Period of those SARs ends and subtracting from that the market
value of the same SARs on the date awarded to that
Participant. The measurement of appreciation shall be made
separately with respect to each separate award of SARs.
(c) The SARs shall be used solely as a device for the
measurement and determination of the amount to be paid to
Participants. The SARs shall not constitute or be treated as
property or as a trust fund of any kind. All amounts at any
time attributable to the SARs shall be and remain the sole
property of the Company and all Participants' rights hereunder
are limited to the rights to receive cash and shares of
Meridian Stock as provided in this Plan.
(d) In the event of an adjustment of shares of Meridian
Stock pursuant to Section 7.2, the number of SARs of a
Participant and the maximum number of SARs and shares of
Meridian Stock provided in Section 4.3 shall be adjusted in
the same manner as shares of Meridian Stock reflected by
those SARs would be adjusted.
5.11 Rules Relating to Exercise. In the case of a Participant
subject to the restrictions of Section 16(b) of the Securities
Exchange Act of 1934, as amended, no Tandem SAR, SAR or other
stock appreciation right (referred to in Rule 16b-3(e) or any
successor rule under the Securities Exchange Act of 1934, as
amended (collectively, a "Stock Appreciation Right") shall be
exercised except in compliance with any applicable requirements
of Rule 16b-3 or any successor rule. If a full or partial
settlement in cash would result, (i) such a Participant may not
exercise a Stock Appreciation Right or any related Option during
the first six months of the term of the Stock Appreciation Right
or Option to be exercised; and (ii) such a Participant may
exercise a Stock Appreciation Right only either: (A) during the
period beginning on the third business day following the date of
release of quarterly or annual summary statements of sales and
earnings of the Company and ending on the twelfth business day
following such date, unless a different period is specified by
Rule 16b-3(e) or any successor rule; (B) pursuant to an
irrevocable election to exercise made at least six months in
advance of the effective date of the election, which election
shall be subject to the consent or disapproval of the Committee;
or (C) pursuant to an election to exercise incident to death,
retirement, disability or termination of employment.
ARTICLE VI
Stock and Restricted Stock Awards
6.1 Award of Restricted Stock. (a) The Committee may make a
Stock Award or Restricted Stock Award or both to any
Participant, subject to this Article VI and to such other
terms and conditions as the Committee may prescribe.
(b) Each certificate for Restricted Stock shall be registered
in the name of the Participant and deposited by him or her,
together with a stock power endorsed in blank, with the Company.
6.2 Restriction Period. At the time of making a Restricted
Stock Award, the Committee shall establish the Restriction
Period applicable to such Award. The Committee may
establish different Restriction Periods from time to time and
each Restricted Stock Award may have a different
Restriction Period, in the discretion of the Committee.
Restriction Periods, when established for each Restricted
Stock Award, shall not be changed except as permitted by
Section 6.3.
6.3 Other Terms and Conditions. Meridian Stock, when awarded
pursuant to a Restricted Stock Award, will be represented by a
stock certificate registered in the name of the
Participant who receives the Restricted Stock Award. Such
certificate shall be deposited with the Company as provided in
Section 6.1(b). The Participant shall be entitled to receive
dividends during the Restriction Period and shall have the
right to vote such Meridian Stock and all other shareholder's
rights, with the exception that (i) the Participant will
not be entitled to delivery of the stock certificate during the
Restriction Period, (ii) the Company will retain custody of
the Meridian Stock during the Restriction Period, and (iii) a
breach of a restriction or a breach of the terms and
conditions established by the Committee pursuant to the
Restricted Stock Award will cause a forfeiture of the
Restricted Stock Award. The Committee may, in addition,
prescribe additional restrictions, terms, or conditions upon or
to the Restricted Stock Award.
6.4 Restricted Stock Award Agreement. Each Restricted Stock
Award shall be evidenced by a Restricted Stock Award
Agreement in such form and containing such terms and
conditions not inconsistent with the provisions of the Plan as
the Committee from time to time shall approve.
6.5 Termination of Employment. The Committee may, in its sole
discretion, establish rules pertaining to the Restricted
Stock Award in the event of termination of employment (by
retirement, disability, death, or otherwise) of a
Participant prior to the expiration of the Restriction
Period.
6.6 Payment for Restricted Stock. Restricted Stock Awards may
be made by the Committee under which the Participant shall not
be required to make any payment for the Meridian Stock or, in
the alternative, under which the Participant, as a condition to
the Restricted Stock Award, shall pay all (or any lesser
amount than all) of the Fair Market Value of the Meridian Stock,
determined as of the date the Restricted Stock Award is
made. If the latter, such purchase price shall be paid in
cash as provided in the Restricted Stock Award Agreement.
6.7 Unrestricted Stock Award. (a) Grant or Right to Receive.
The Committee, in its sole discretion, (a) may offer a
Participant who has earned a cash bonus or other cash
incentive award the right to receive payment of such bonus or
incentive award in the form of Meridian Stock, or (b) may require
a Participant who has earned a cash bonus or other cash
incentive award to take payment of such bonus or incentive
award in the form of Meridian Stock. Such Stock Award of
shares of Meridian Stock shall be valued at the Fair Market
Value of such shares on the date or dates the cash
compensation would otherwise be paid and shall not be subject to
the restrictions set forth in Sections 6.1 - 6.6 of the Plan.
(b) Participant Election. With respect to paragraph (a) of this
Section 6.7, the Participant shall communicate his choice of
cash or a Stock Award by an irrevocable written election
delivered to the Company no later than the date or dates
specified by the Committee. With respect to any Participant
who is subject to Section 16 of the Securities Exchange Act of
1934, as amended, such irrevocable election shall become
effective no earlier than six months and one day following
the date of the election; to change an election such
Participant must make a new irrevocable election which
shall be effective six months and one day following the date
of the new irrevocable election.
ARTICLE VII
Miscellaneous Provisions
7.1 Nontransferability. No Award under the Plan shall be
transferable by the Participant otherwise than by will or laws
of descent and distribution or pursuant to a qualified domestic
relations order. All Awards shall be exercisable or received
during the Participant's lifetime only by such Participant or
his Personal Representative. Any transfer contrary to this
Section 7.1 will nullify the Award.
7.2 (a) Recapitalization. The aggregate number of shares of
Meridian Stock which may be the subject of an Award, the
number of shares covered by each outstanding Award, and the
terms thereof relating to the value of Meridian Stock, shall all
be proportionately adjusted for any increase or decrease in the
number of issued shares of Meridian Stock resulting from a
subdivision or consolidation of shares or any other capital
adjustment, the payment of a share dividend, or other
increase or decrease in the shares of Meridian Stock effected
without receipt of consideration by the Company. In the event
that, prior to the delivery by the Company of the Meridian Stock
remaining under any Award, there shall be a capital
reorganization or reclassification of the Company resulting in
a substitution of other shares for common shares, there
shall be substituted for Meridian Stock the number of
substitute shares which would have been issued in exchange for
the common shares then remaining under the Award if such
common shares had been then issued and outstanding.
(b) Merger, Dissolution. If the Company shall enter into any
agreement providing for the merger or consolidation of the
Company with or into any other person, regardless of whether
or not the Company shall be the surviving or resulting
corporation as a consequence of such merger or
consolidation, the Company shall have the right to
terminate all outstanding Agreements entered into pursuant to
Awards and to thereby terminate all rights of the Participants
thereunder on thirty (30) days written notice to each
Participant; provided, however, that if such merger or
consolidation is not consummated within 180 days from the date
of the notice, all Agreements so terminated shall be deemed to
have been continuously in effect since the date of execution
thereof. In the event of a dissolution or liquidation of the
Company, the Company shall give thirty (30) days written notice
thereof to each Participant, and all rights of the
Participants under all outstanding Agreements entered into
pursuant to an Award shall be deemed to be terminated upon such
dissolution or liquidation.
7.3 Amendment, Suspension, and Termination of Plan. (a) The
Board may suspend or terminate the Plan or any portion
thereof at any time, and may amend the Plan from time to time
in such respects as the Board may deem to be in the best
interests of the Company; provided, however, that no such
amendment shall, without stockholder approval, (i) except as
provided in Section 7.2, materially increase the number of
shares of Meridian Stock which may be issued under the Plan
(ii) materially modify the requirements as to eligibility for
participation in the Plan, (iii) materially increase the
benefits accruing to Participants under the Plan. (iv) make
any other change that would disqualify the Plan for purposes
of the exemption provided by Rule 16b3(d)(3) of the
Securities and Exchange Commission, (v) reduce the Option
Price of an Incentive Stock Option below the Fair Market
Value of Meridian Stock on the day an Incentive Stock Option
is awarded, (vi) permit the award of Tandem SARs other than
in tandem with an Option, (vii) permit the exercise of an SAR
during the first six months of its term except as otherwise
provided herein, (viii) permit the exercise of an Option or
Tandem SAR without surrender of the related Tandem SAR or
Option, respectively, or (ix) extend the termination date of
the Plan. No such amendment, suspension, or termination shall
alter or impair any outstanding Award without the consent
of the Participant affected thereby.
(b) With the consent of the Participant affected thereby, the
Committee may amend or modify any outstanding Award in any
manner to the extent that the Committee would have had the
authority under the Plan initially to grant such Award as so
modified or amended, including without limitation, to change the
date or dates as of which such Options, Tandem SARs or SARs may
be exercised or to remove the restrictions on shares of
Restricted Stock.
7.4 Nonuniform Determinations. The Committee's determinations
under the Plan, including without limitation, (i) the
determination of the Key Employees to receive Awards, (ii) the
form, amount, and timing of such Awards, (iii) the terms and
provisions of such Awards and (iv) the agreements
evidencing the same, need not be uniform and may be made by it
selectively among Key Employees who receive, or who are eligible
to receive, Awards under the Plan, whether or not such Key
Employees are similarly situated.
7.5 General Restriction. Each Award under the Plan shall be
subject to the condition that, if at any time the Committee
shall determine that (i) the listing, registration, or
qualification of the shares of Meridian Stock subject or
related thereto upon any securities exchange or under any
state or federal law, (ii) the consent or approval of any
government or regulatory body, or (iii) an agreement by the
Participant with respect thereto, is necessary or desirable, then
such Award shall not become exercisable in whole or in part
unless such listing, registration, qualification, consent,
approval, or agreement shall have been effected or obtained
free of any conditions not acceptable to the Committee.
7.6 Securities Act of 1933. Upon issuance of Meridian Stock to
the Participant, or his heirs, the recipient of that stock
shall represent that the shares of stock are taken for
investment and not resale and make those other
representations as may be necessary to qualify the issuance of
the shares as exempt from the Securities Act of 1933 or any
applicable state securities laws or to permit
registration of the shares and shall represent that he or she
shall not dispose of those shares in violation of the
Securities Act of 1933. The Company reserves the right to
place a legend on any stock certificate issued under the Plan
to assure compliance with this paragraph. No shares of Meridian
Stock of the Company shall be required to be distributed
until the Company shall have taken such action, if any, as is
then required to comply with the provisions of the Securities
Act of 1933 or any other then applicable securities law.
7.7 Withholding of Tax. (a) Payment by Participant. Each
Participant shall, no later than the date as of which the
value of an Award or of any Meridian Stock or other amounts
received thereunder first becomes includable in the gross
income of the Participant for federal income tax purposes, pay
to the Company, or make arrangements satisfactory to the
Committee regarding payment of, any federal, state, or local
taxes of any kind required by law to be withheld with
respect to such income. The Company shall have the right to
deduct any such taxes from the salary of the Participant.
(b) Payment in Meridian Stock. A Participant my elect to have
such tax withholding obligation satisfied, in whole or in part,
by (i) authorizing the Company to withhold from shares of
Meridian Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the
withholding is effected) sufficient to cover the amount required
to be withheld, or (ii) transferring to the Company shares of
Meridian Stock owned by the Participant with an aggregate
Fair Market Value (as of the date the withholding is
effected) sufficient to cover the amount required to be
withheld. With respect to any Participant who is subject to
Section 16 of the Securities Exchange Act of 1934, as amended,
the following additional restrictions shall apply:
(A) The election to satisfy tax withholding obligations
relating to an Award in the manner permitted by this Section
7.7 shall be made either (1) during the period beginning on the
third business day following the date of release of quarterly
or annual summary statements of sales and earnings of the
Company and ending on the twelfth business day following such
date, or (2) at least six months prior to the date as of which
the receipt of such an Award first becomes a taxable event
for federal income tax purposes;
(B) Such election shall be irrevocable;
(C) Such election shall be subject to the consent or
disapproval of the Committee; and
(D) The Meridian Stock withheld to satisfy tax
withholding must pertain to an Award which has been held by the
Participant for at least six months from the date of grant of
the Award.
7.8 No Right to Employment. Neither the action of the Company
in establishing the Plan, nor any action taken by it or by the
Board or the Committee under the Plan, nor any provision of the
Plan, shall be construed as giving to any person the right to be
retained in the employ of the Company, Meridian Mutual Insurance
Company, or any Subsidiary of either.
7.9 Insofar as Key Employees who are directors or officers
subject to Section 16 of the Securities Exchange Act of
1934, as amended, are concerned (i) the Plan is intended to
comply with all applicable conditions of Rule 16b-3 and its
successors; (ii) all transactions involving Key Employees who
are directors orofficers are subject to such conditions,
regardless of whether such conditions are expressly set forth in
the Plan; and (iii) any provision of the Plan that is
contrary to a condition of Rule 16b-3 shall not apply to Key
Employees who are directors or officers.
August 23, 1996
Meridian Insurance Group, Inc.
2955 North Meridian Street
Post Office Box 1980
Indianapolis, Indiana 46206-1980
Ladies and Gentlemen:
We have examined the corporate records and proceedings
of Meridian Insurance Group, Inc., an Indiana corporation (the
"Company"), with respect to (a) the corporate existence of the
Company, and (b) the legal sufficiency of all corporate
proceedings of the Company taken in connection with the
authorization, reservation for issuance, validity and
nonassessability of the 750,000 Common Shares, without par value,
of the Company ("Common Shares"), that may be issued under the
Company's 1996 Employee Incentive Stock Plan (the "Plan"),
pursuant to the Company's Registration Statement on Form S-8 (the
"Registration Statement"), in connection with which this opinion
is given.
As to facts relevant to the opinions expressed herein,
we have relied upon certificates, statements or representations
of officers of the Company, public officials and others, without
any independent verification thereof. The law covered by the
opinions expressed herein is limited to the federal law of the
United States and the law of the State of Indiana.
Based upon the foregoing, we are of the opinion that:
1. The Company is existing as a corporation under the laws
of the State of Indiana.
2. When the Registration Statement shall have become
effective and the Common Shares offered pursuant thereto have
been issued and sold in accordance with the terms of the Plan,
such shares will be validly authorized, legally issued, and fully
paid and nonassessable.
We consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving such consent, we do not
admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933 or the
rules or regulations of the Securities and Exchange Commission
thereunder.
Yours very truly,
BAKER & DANIELS
By: /s/ Tibor D. Klopfer
Tibor D. Klopfer
Exhibit 5
Consent of Independent Public Accountants
We consent to the incorporation by reference in Registration
Statement on Form S-8 of Meridian Insurance Group, Inc. of our
report, dated February 16, 1996, on our audits of the
consolidated financial statements and financial statement
schedules of Meridian Insurance Group, Inc. as of December 31,
1995, and 1994 and for each of the three years in the period
ended December 31, 1995, which report is included in the Annual
Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Indianapolis, Indiana
August 27, 1996 (must be dated within three days of actual
filing).
