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Exhibit (a)(1)(S)
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
SECURITIES DIVISION
IN THE MATTER OF: CAUSE NO. 00-0208 TO
TENDER OFFER BY MERIDIAN INSURANCE GROUP ACQUISITION
CORPORATION, A WHOLLY OWNED SUBSIDIARY OF AMERICAN
UNION INSURANCE COMPANY, TO ACQUIRE ALL OUTSTANDING
SHARES OF MERIDIAN INSURANCE GROUP, INC.
ADMINISTRATIVE COMPLAINT
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Comes now, the Securities Division, (hereinafter "Division") and for its
Administrative Complaint against Meridian Insurance Group Acquisition
Corporation, a wholly owned subsidiary of American Union Insurance Company
alleges and states the following:
1. Meridian Insurance Group, Inc. (hereinafter "Meridian"), is an Indiana
corporation with its principal place of business at 3955 North
Meridian Street, Indianapolis, Indiana 46202-1908.
2. Meridian has substantial assets in the State of Indiana.
3. Meridian has in excess of seventy-five (75) shareholders of its common
stock. Said common stock is listed on the New York Stock Exchange
under the symbol MIGI.
4. American Union Insurance Company (hereinafter "American Union") is
organized in the State of Illinois with a principal place of business
at 303 East Washington Street, Bloomington, Illinois 61701.
5. Meridian Insurance Group Acquisition Corporation (hereinafter "MIGAC")
is an Illinois corporation and a wholly owned subsidiary of American
Union.
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6. MIGAC was organized for the sole purpose of acquiring Meridian.
7. On August 30, 2000, MIGAC and American Union commenced a tender offer for
all outstanding shares of Meridian by filing the Schedule-TO with the
Securities and Exchange Commission (hereinafter "SEC") and the Division.
8. On or about September 18, 2000, MIGAC and American Union filed an
amendment to Schedule-TO with the SEC and the Division.
9. MIGAC and American Union are offerors pursuant to Ind. Code (S) 23-2-3.1-1
that defines offeror as "a person who makes or in any way participates in
making a takeover offer....."
10. Meridian is a target company pursuant to Ind. Code (S) 23-2-3.1-1, which
defines a target company as "an issuer of securities which is organized
under the laws of this state, has its principal place of business in this
state, and has substantial assets in this state...."
11. Pursuant to Ind. Code (S) 23-2-3.1-2, "[a] person shall not make a takeover
offer unless the offer is in compliance with sections 3, 4, 5.5, 6.5, 7,
and 8 of this chapter."
12. Pursuant to Ind. Code (S) 23-2-3.1-5(a) "[i]f the takeover offer is subject
to any federal law, including the Securities Exchange Act of 1934 (15
U.S.C. 78), the statement must consist of.....document[s] required to be
filed with Securities and Exchange Commission...."
13. Reg. (S)240.14d-100 K, Item 10 Financial Statements, no.4., of the
Securities and Exchange Act of 1934 provides "[i]f the offeror in a third-
party tender offer is a natural person, and such person's financial
information is material.
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disclose the net worth of the offeror. If the offeror's net worth is
derived from material amounts of assets that are not readily marketable or
there are material guarantees and contingencies, disclose the nature and
approximate amount of the individual's net worth that consists of illiquid
assets and the magnitude of any guarantees or contingencies that may
negatively affect the natural person's net worth."
14. The original filing and the amended filing fail "to provide for full and
fair disclosure of all material information concerning takeover offers to
shareholders of Meridian, so that the opportunity of each shareholder to
make an informed and well-reasoned investment decision may be secured"
pursuant to Ind. Code (S) 23-2-3.1-0.5.
15. The original filing and the amended filing fail to adequately disclose or
confirm the offerors source of funding.
16. The Schedule TO/A merely states the net worth of the offerors, Gregory M.
Shepard and Tracy M. Shepard, who, according to the amendment, will
finance approximately Twenty-five percent (25%) of the transaction.
17. The statements that offerors' principal assets are "stock in [American
Union]" and "investment real estate" fail to established that offerors, in
fact, have sufficient net worth and liquidity to finance this takeover.
18. MIGAC and American Union are in violation of Ind. Code (S) 23-2-3.1-2 and
Ind. Code (S) 23-2-3.1-5.
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19. Ind. Code (S) 23-2-3.1-9(a) provides "[t]his chapter shall be administered
by the secretary of state of Indiana by and through the commissioner, who
may exercise all powers granted to him under IC 23-2-1 [Securities
Regulation]."
20. Ind. Code (S) 23-2-3.1-10(a) provides [w]henever it appears to the
commissioner that any person has engaged or is about to engage in any act
or practice constituting a violation of any provision of this chapter or
any regulation or order adopted under this chapter, the commissioner may
investigate and issue orders and notices, including ex parte cease and
desist orders without notice......
21. Ind. Code (S) 23-2-3.1-0.5(a) and (b) provides that
(a) The general assembly find that it is often difficult for
corporate shareholders to obtain sufficient information to
make an informed and timely decision when faced with the
questions of accepting or rejecting a takeover offer.
Moreover, there have emerged a number of practices which
have resulted in shareholders of Indiana corporations losing
the benefits of takeover offers because they lacked the
sophistication and ability to secure those benefits. These
practices have included multiple proration pools, two-step
transactions a similar practices, and have resulted in
relatively small shareholders losing both the advantages of
the takeover offer and their equity positions in the
corporation.
(b) By enacting this chapter, it is the intent and purpose of
the general assembly to provide for full and fair disclosure
of all material information concerning takeover offers to
shareholders of Indiana corporations, so that the
opportunity of each shareholder to make an informed and well-
reasoned investment decision may be secured. It is also the
purpose of the general assembly to protect shareholders of
Indiana corporations from being disadvantaged by those
practices described in subsection (a). Finally, it is the
purpose of the general assembly to provide for adequate
disclosure and that protection in a manner consistent with
the Constitutions of the United States and of Indiana.
22. The actions and conduct by MIGAC and American Union are contrary to and
incongruent with the findings and intent of the General Assembly as
outlined in the Indiana Business Take-Over Act.
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23. Unless MIGAC and American Union cease and desist from further
violations of Ind. Code (S) 23-2-3.1, the shareholders of Meridian
will suffer immediate and irreparable harm. By their failure to make
complete filings required by Ind. Code (S) 23-2-3.1, MIGAC and
American Union deny shareholders of Meridian the forum provided by
Ind. Code (S) 23-2-3.1 for review of the disclosures made by MIGAC and
American Union.
WHEREFORE, the Division prays that MIGAC, American Union, their
officers, employees, and agents be ordered to cease and desist from further
violation of Ind. Code (S) 23-2-3.1, or in the alternative and after an
opportunity to be heard, be ordered to comply with Ind. Code (S) 23-2-3.1 before
proceeding with a takeover offer of shares of Meridan, and for all other just
and proper relief.
Respectfully submitted,
/s/ Kathleen Guymon Blackham
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Kathleen Guymon Blackham
Chief Deputy Commissioner
Securities Division
302 West Washington Street
Room E-111
Indianapolis, IN 46204
(317) 232-6681
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