<PAGE>
Exhibit (a)(1)(K)
Supplement to the Offer to Purchase Dated August 31, 2000
Meridian Insurance Group Acquisition Corporation
a wholly owned subsidiary of
American Union Insurance Company
50% owned by Gregory M. Shepard and 50% owned by Tracy M. Shepard
Has Amended Its Offer to Purchase for Cash, Shares of Common Stock
of
Meridian Insurance Group, Inc.
to
Reduce the Number of Shares of Common Stock that It Seeks to Acquire to
2,985,769
Representing 50.1% of the Shares of Common Stock Outstanding or Issuable under
the Company's Stock Option Plans Excluding the Shares of Common Stock Already
Owned by Gregory M. Shepard
to
Eliminate and Add Certain Conditions of the Offer
and to
Increase the Price of Its Offer
to
$25.00 Net Per Share
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, OCTOBER 20, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of common shares which, together with common shares owned by Gregory
Mark Shepard, American Union Insurance Company ("Parent") and Meridian
Insurance Group Acquisition Corporation, a wholly owned subsidiary of Parent
("Purchaser"), constitute at least 50.1% of the voting securities of Meridian
Insurance Group, Inc. (the "Company") outstanding or issuable under the
Company's stock option plans, (2) the Company's redemption of its preferred
share purchase rights, and (3) Parent, Gregory M. Shepard, Tracy M. Shepard
and Purchaser having obtained all insurance regulatory approvals necessary for
their acquisition of control of the Company and its insurance subsidiaries and
affiliates on terms and conditions reasonably satisfactory to Purchaser.
A Summary of the principal amended terms of the Offer appears on pages (i),
(ii) and (iii). You should read this entire document carefully before deciding
whether to tender your shares.
IMPORTANT
Parent intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Parent, certain material
terms of the Offer may change. Accordingly, such negotiations could result in,
among other things, termination of the Offer and submission of a different
acquisition proposal to the Company's shareholders for approval.
If you wish to tender all or any part of your Common Shares, you should
either (i) complete and sign the Amended Letter of Transmittal (PINK) which
accompanies this Supplement (or a facsimile thereof) in accordance with the
instructions in the Amended Letter of Transmittal, have your signature thereon
guaranteed if required by Instruction 1 to the Amended Letter of Transmittal,
mail or deliver the Amended Letter of Transmittal (or such facsimile thereof)
and any other required documents to the Depositary (as defined herein) and
either deliver the certificates for such Common Shares to the Depositary along
with the Amended Letter of Transmittal (or such facsimile thereof) or deliver
such Common Shares pursuant to the procedures for book-entry transfers set
forth in Section 3 of the Offer to Purchase dated August 31, 2000 (the "Offer
to Purchase") prior to the expiration of the Offer or (ii) request your
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for you. If you have Common Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, you must
contact such broker, dealer, commercial bank, trust company or other nominee
if you desire to tender your Common Shares.
If you desire to tender Common Shares and your certificates for such shares
are not immediately available, or you cannot comply with the procedures for
book-entry transfers described in the Offer to Purchase on a timely basis, you
may tender such Common Shares by following the procedures for guaranteed
delivery set forth in Section 3 of the Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Supplement and the Offer to Purchase. Additional copies of this Supplement and
the Offer to Purchase, the Amended Letter of Transmittal or other tender offer
materials may be obtained from the Information Agent.
September 18, 2000
<PAGE>
AMENDED SUMMARY TERM SHEET
This Amended Summary Term Sheet is a brief summary of the material amended
provisions of the offer being made by Meridian Insurance Group Acquisition
Corporation, a wholly owned subsidiary of American Union Insurance Company
which is, in turn, owned 50% by Gregory M. Shepard and 50% by Tracy M.
Shepard, and, together with the Summary Term Sheet contained in the Offer to
Purchase dated August 31, 2000 (the "Offer to Purchase"), is meant to help you
understand the offer. Except as otherwise set forth in this Amended Summary
Term Sheet, all terms and conditions set forth in the Summary Term Sheet
contained in the Offer to Purchase remain applicable in all respects to the
Offer. This Amended Summary Term Sheet is not meant to be a substitute for the
information contained in the remainder of this Supplement and in the Offer to
Purchase, and the information contained in this Amended Summary Term Sheet is
qualified in its entirety by the fuller descriptions and explanations
contained in the later pages of this Supplement and in the Offer to Purchase.
You are urged to carefully read the entire Supplement together with the Offer
to Purchase and the Amended Letter of Transmittal prior to making any decision
regarding whether to tender your shares.
Q. What is Meridian Insurance Group Acquisition seeking to purchase, at what
price, and do I have to pay any brokerage or similar fees to tender?
A. Meridian Insurance Group Acquisition is offering to purchase approximately
2,985,769 of the outstanding shares of common stock of Meridian Insurance
Group, representing 50.1% of the shares outstanding or issuable under the
Meridian Insurance Group's stock option plans (excluding the shares already
owned by Gregory M. Shepard), at a price of $25.00 per share, net to the
seller in cash, without interest. If you are the record owner of your
shares, you will not have to pay any brokerage or similar fees. However, if
you own your shares through a broker or other nominee, your broker or
nominee may charge you a fee to tender. You should consult your broker or
nominee to determine whether any charges will apply. See "Introduction" and
Section 9.
Q. How long do I have to decide whether to tender into the offer?
A. You have until 5:00 P.M., New York City time, on October 20, 2000. Under
certain circumstances, the offer may be extended. If the offer is extended,
we will issue a press release announcing the extension on or before the
first business morning following the date the Offer was scheduled to
expire. See Section 1 of this Supplement.
Q. What are the most important conditions to the offer?
A. The most important conditions to the offer are the following:
. That Meridian Insurance Group shareholders validly tender and do not
withdraw before the expiration of the offer enough shares of common stock
of Meridian Insurance Group that, when added to the shares already owned
by Gregory M. Shepard, the Chairman of the Board of Directors and
President of American Union Insurance Company, Meridian Insurance Group
Acquisition and Gregory M. Shepard will own at least 50.1% of the shares
of Meridian Insurance Group outstanding or issuable under Meridian
Insurance Group's stock option plans.
. That Meridian Insurance Group's board of directors redeem the preferred
share purchase rights at the redemption price of $0.005 per right.
. That Meridian Insurance Group Acquisition, American Union Insurance
Company, Gregory M. Shepard and Tracy M. Shepard obtain all insurance
regulatory approvals necessary to acquire control of Meridian Insurance
Group and its insurance subsidiaries and affiliates, on terms and
conditions reasonably satisfactory to Meridian Insurance Group
Acquisition.
. That the applicable Hart-Scott-Rodino pre-merger notification waiting
period has expired.
A fuller discussion of the conditions to consummation of the Offer may be
found in the Introduction, and Sections 14 and 15 of this Supplement.
i
<PAGE>
Q. Does Meridian Insurance Group Acquisition have the financial resources to
make the payment?
A. Meridian Insurance Group Acquisition estimates that the total amount of
funds required to purchase 2,985,769 shares of Meridian Insurance Group
pursuant to the offer and to pay all related costs and expenses, will be
approximately $74.9 million. Meridian Insurance Group Acquisition plans to
obtain all funds needed for the offer through a capital contribution from
American Union Insurance Company. American Union Insurance Company plans to
obtain such funds from its assets and capital contributions from Gregory M.
Shepard and Tracy M. Shepard. See Section 10 of this Supplement.
Q. How do I accept the offer and tender my shares?
A. To tender your shares, you must completely fill out the enclosed Amended
Letter of Transmittal (PINK) and deliver it, along with your share
certificates, to the depositary identified in the Amended Letter of
Transmittal prior to the expiration of the offer. If your shares are held
in street name (i.e., through a broker, dealer or other nominee), they can
be tendered by your nominee through The Depository Trust Company. If you
cannot deliver all necessary documents to The Depository Trust Company in
time, you might be able to complete and deliver to the depositary, in lieu
of the missing documents, the enclosed Notice of Guaranteed Delivery,
provided you are able to fully comply with its terms. See Section 3 of the
Offer to Purchase.
Q. If I accept the offer, when will I get paid?
A. Provided the conditions to the offer are satisfied and Meridian Insurance
Group Acquisition consummates the offer and accepts your shares for
payment, you will receive a check equal to the number of shares accepted
multiplied by $25.00 as promptly as practicable following the expiration of
the offer. Meridian Insurance Group Acquisition expects that checks will be
mailed out promptly following expiration of the offer. See Section 2 of
this Supplement.
Q. What will happen if more than 2,985,769 shares are tendered?
A. If more than 2,985,769 shares are validly tendered and not properly
withdrawn prior to the Expiration Date, Meridian Insurance Group
Acquisition will accept for payment and pay for an aggregate of 2,985,769
shares so tendered, pro rata according to the number of shares validly
tendered by each shareholder and not properly withdrawn on or prior to the
Expiration Date, with appropriate adjustments to avoid tenders of
fractional shares.
Q. What does the board of directors of Meridian Insurance Group think of this
offer?
A. Meridian Insurance Group's board of directors, on September 11, 2000,
issued a statement that its board of directors recommends that the
shareholders reject the initial offer of $20 per share and not tender any
shares. Meridian Insurance Group's board of directors has not approved the
revised offer as reflected in this Supplement or otherwise commented on it
as of the date of mailing of this Supplement. Within ten business days
after the date of this revised offer, Meridian Insurance Group is required
by law to publish, send or give you (and file with the Commission) a
statement as to whether it recommends acceptance or rejection of this
revised offer, that it has no opinion with respect to this revised offer or
that it is unable to take a position with respect to this revised offer.
Q. What will happen to Meridian Insurance Group?
A. Meridian Insurance Group will continue to exist and operate for the
foreseeable future.
You should be aware that, if the offer is consummated, the number of
shareholders of Meridian Insurance Group may be so small that Meridian
Insurance Group shares may not be eligible for trading on the NASDAQ or any
other national securities exchange. Also, depending on the remaining number
of shareholders, Meridian Insurance Group may cease to comply with the
rules and regulations promulgated by the Commission governing publicly-held
companies. See Section 7 of the Offer to Purchase.
ii
<PAGE>
Q. If I do not tender my shares but the tender offer is successful, what will
happen to my shares?
A. If you do not tender but the tender is successful, your shares will remain
outstanding. Neither American Union, Meridian Insurance Group Acquisition,
Gregory M. Shepard nor Tracy M. Shepard has any present plans or proposals
which relate to or would result in an extraordinary corporate transaction,
such as a merger, reorganization or liquidation, involving Meridian
Insurance Group or any of its subsidiaries or affiliates, a sale or
transfer of a material amount of assets of the Meridian Insurance Group or
any of its subsidiaries or affiliates or any material change in Meridian
Insurance Group's capitalization or dividend policy or any other material
changes in the Meridian Insurance Group's corporate structure or business.
However, you should be aware that, if the offer is consummated, the number
of shareholders of Meridian Insurance Group may be so small that Meridian
Insurance Group shares may not be eligible for trading on the NASDAQ or any
other national securities exchange. Also, depending on the remaining number
of shareholders, Meridian Insurance Group may cease to comply with the
rules and regulations promulgated by the Commission governing publicly-held
companies. See Section 7 of the Offer to Purchase.
Q. Are dissenters' rights available in the Offer?
A. Dissenters' rights are not available in the offer.
Q. Who can I call with questions?
A. You can call ChaseMellon Shareholder Services, L.L.C., Meridian Insurance
Group Acquisition's Information Agent, at (888) 451-6741 (toll-free) with
any questions you may have.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF THE OFFER...................................................... i
INTRODUCTION.............................................................. 1
1. Terms of the Offer; Expiration Date................................. 4
2. Acceptance for Payment and Payment for Common Shares................ 5
3. Procedures for Accepting the Offer and Tendering Common Shares...... 7
4. Withdrawal Rights................................................... 7
9. Certain Information Concerning Purchaser, the Shepards and Parent... 7
10. Source and Amount of Funds.......................................... 7
11. Background of the Offer Since August 31, 2000; Contacts with the
Company................................................................ 7
12. Purpose of the Offer; Plans for the Company; Certain Considerations. 8
14. Conditions of the Offer............................................. 9
15. Certain Legal Matters; Regulatory Approvals; Certain Litigation..... 12
16. Fees and Expenses................................................... 14
17. Miscellaneous....................................................... 15
</TABLE>
<PAGE>
To the Holders of Common Stock of Meridian Insurance Group, Inc.:
INTRODUCTION
The following information amends and supplements the Offer to Purchase
dated August 31, 2000 (the "Offer to Purchase") of Meridian Insurance Group
Acquisition Corporation ("Purchaser"), an Illinois corporation and a wholly
owned subsidiary of American Union Insurance Company, an Illinois stock
insurance company ("Parent"). Parent is owned 50% by Gregory M. Shepard and
50% by Tracy M. Shepard (together the "Shepards") Pursuant to this Supplement,
Purchaser is now offering to purchase 2,985,769 shares of common stock, no par
value (the "Common Shares"), of Meridian Insurance Group, Inc., an Indiana
corporation (the "Company"), or such greater or lesser number of Common Shares
that, together with the Common Shares owned by Parent, Purchaser and Gregory
M. Shepard, the Chairman of the Board and President of Parent, would
constitute 50.1% of the outstanding Common Shares on a fully diluted basis
(such number of Common Shares being the "Minimum Number") at a price of $25.00
per Common Share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase, as amended and supplemented by this Supplement, and in the
related Amended Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer").
Except as otherwise set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all
respects to the Offer, and this Supplement should be read in conjunction with
the Offer to Purchase. Unless the context requires otherwise, terms not
defined herein have the meaning ascribed to them in the Offer to Purchase.
Tendering shareholders who have shares registered in their own name and who
tender shares directly to the Depositary will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Amended Letter of Transmittal, stock transfer taxes on the purchase of Common
Shares by Purchaser pursuant to the Offer. However, if you do not complete and
sign the Substitute Form W-9 that is included in the Amended Letter of
Transmittal, you may be subject to a required backup federal income tax
withholding of 31% of the purchase price payable to you pursuant to the Offer.
Shareholders who hold their shares through a bank or broker should check with
such institution as to whether or not it charges any fees applicable to a
tender of shares. Purchaser will pay all charges and expenses of ChaseMellon
Shareholder Services, L.L.C. as Depositary (the "Depositary"), and as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16 of the Offer to Purchase.
The purpose of the Offer is to enable Parent to acquire control of the
Company. Parent intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Parent, certain material
terms of the Offer may change. Accordingly, such negotiations could result in,
among other things, termination of the Offer and submission of a different
acquisition proposal to the Company's shareholders for approval.
In the event the Offer is terminated or not consummated, Parent or Gregory
M. Shepard may explore any and all options which may be available to them. In
this regard, and after expiration or termination of the Offer, Parent or
Gregory M. Shepard may seek to acquire additional Common Shares, through open
market purchases, privately negotiated transactions, a tender offer or
exchange offer or otherwise, upon such terms and at such prices as they may
determine, which, in the case of Common Shares, may be more or less than the
price to be paid per Common Share pursuant to the Offer and could be for cash
or other consideration.
Certain Conditions to the Offer
The Offer is conditioned upon, among other things, the Rights Redemption
Condition, the Minimum Condition, the Indiana Takeover Act Condition and the
Insurance Regulatory Approval Condition, each as defined below. The Offer is
also subject to certain other conditions. See Section 14 of this Supplement,
which sets forth the conditions to consummation of the Offer, and Section 15
of this Supplement, which discusses certain legal matters and regulatory
consents and approvals. Each of the conditions must be satisfied before the
expiration of the Offer.
1
<PAGE>
The Rights Redemption Condition. Consummation of the Offer is conditioned
upon the preferred share purchase rights (a "Right") being redeemed by the
Company at the redemption price of $0.005 per right prior to the expiration of
the Offer (the "Rights Redemption Condition").
Summary of Rights to Purchase Common Shares. On September 8, 1998, the
Company Board adopted a Shareholder Rights Plan. Under the Plan, a dividend of
one Right was paid to shareholders of record on September 28, 1998 for each
outstanding Common Share. Each Right entitles the holder to purchase one one-
thousandth of a share of Series A Junior Participating Preferred Stock of the
Company at a price of $75.00 per one-thousandth of a Preferred Share. If a
person or group acquires 20% or more of the outstanding Common Shares (thereby
becoming an Acquiring Person), each holder of a Right (except those held by
the Acquiring Person and its affiliates and associates) will generally have
the right to purchase Common Shares having value equal to two times the
purchase price of the Right. In other words, the Rights' holders, other than
the Acquiring Person, may purchase Common Shares or their equivalent at a 50
percent discount. The rights will expire on September 18, 2008, unless the
expiration date is extended by amendment or unless the Rights are earlier
redeemed or exchanged by the Company. Generally, the Rights cannot be bought,
sold or otherwise traded separately from the Common Shares. Certificates for
Common Shares carry a notation that indicates that Rights are attached to the
Shares and that the terms of the Rights Agreement are incorporated therein.
The foregoing description of the Shareholder Rights Plan is qualified in its
entirety by reference to the full text of the Plan. (A full description and
terms of the Rights Plan are set forth in a Rights Agreement dated September
18, 1998 between the Company and Harris Trust and Savings Bank, as Rights
Agent which was filed on Form 8-K with the Securities and Exchange Commission
("SEC") on September 31, 1998.)
The Minimum Condition. Consummation of the Offer is conditioned upon there
being validly tendered and not properly withdrawn prior to the expiration of
the Offer a number of common shares which, together with common shares owned
by Parent, Gregory M. Shepard and Purchaser, constitute at least 50.1% of the
voting securities of the Company outstanding or issuable under the Company's
stock option plans (the "Minimum Condition").
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 (the "Company 2000 10-Q") as of June 30, 2000, there were
7,852,411 Common Shares of the Company issued and outstanding. 3,811,500 of
the Common Shares are currently held by Meridian Mutual Insurance Company
("Meridian Mutual"). According to the Company's definitive proxy statement on
Schedule 14(a) filed with the SEC on April 7, 2000 (the "Company 2000 Proxy
Statement"), as of March 10, 2000, directors and officers of the Company, as a
group, held 430,901 Common Shares. In addition, according to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (the
"Company 1999 10-K"), as of December 31, 1999, there were 575,991 Common
Shares subject to options outstanding under the Company's stock option plans
and up to 766,620 additional Common Shares available for issuance pursuant to
the Company's stock option plans. According to the Company 2000 10-Q, stock
options for 55,976 Common Shares were exercised and 7,758 restricted shares
were granted in the six months ended June 30, 2000. According to a
communication received by Shepard from the Company on July 27, 2000, there
were 518,805 stock options outstanding as of June 30, 2000, and no stock
options had been issued in year 2000 as of July 27, 2000.
Based on the foregoing, there would be 9,130,078 Common Shares outstanding,
assuming the exercise of all outstanding stock options and the issuance of
additional Common Shares available for issuance under the Company's stock
option plans. Gregory M. Shepard currently owns an aggregate of 1,588,400
Common Shares, which were acquired in open-market transactions. Accordingly,
if the above stated assumptions are correct, Purchaser believes that the
Minimum Condition would be satisfied if an aggregate of 2,985,769 Common
Shares are validly tendered pursuant to the Offer. Alternatively, if no
outstanding stock options were exercised or restricted shares were granted
after June 30, 2000, and no Common Shares were issued or acquired by the
Company after June 30, 2000, Purchaser believes that the Minimum Condition
would be satisfied if an aggregate of 2,345,658 Common Shares are validly
tendered pursuant to the Offer.
2
<PAGE>
The Indiana Takeover Act Condition. Consummation of the Offer is
conditioned upon the Indiana Securities Commissioner having not entered an
order prohibiting the purchase of shares tendered or conditioning the purchase
upon changes or modifications to the Offer (the "Indiana Takeover Act
Condition").
The Indiana Takeover Act requires that a takeover offer be made to all
offerees holding the same class of equity securities of the target company on
substantially equivalent terms and that it provide a full and fair disclosure
of all material information concerning the offer. The Indiana Securities
Commissioner is required to hold a hearing to determine that the foregoing
requirements are satisfied. If the Commissioner determines by a preponderance
of the evidence that the requirements are not satisfied, he may by order
prohibit the purchase of shares tendered or condition purchase upon changes or
modifications.
The Insurance Regulatory Approval Condition. Consummation of the Offer is
conditioned upon Parent, Shepard and Purchaser having obtained all insurance
regulatory approvals necessary for their acquisition of control of the Company
and the Company's insurance subsidiaries and affiliates on terms and
conditions reasonably satisfactory to Purchaser (the "Insurance Regulatory
Approval Condition").
According to the Company 1999 10-K and other publicly available documents,
the Company, which is domiciled in Indiana, directly or through its
subsidiaries, owns one property-casualty insurance company domiciled in
Indiana, one in Minnesota and one in Ohio. Accordingly, the acquisition of
Common Shares satisfying the Minimum Condition pursuant to the Offer will
require filings with, and approvals of, state insurance regulatory authorities
(the "Insurance Commissions" or "Insurance Commissioners") under the
respective insurance codes (the "Insurance Codes") of Indiana, Minnesota, and
Ohio and Illinois pursuant to Section 131.12 (a) of the Illinois Revised Code
for informational purposes.
The Insurance Codes of Indiana, Minnesota and Ohio and the rules that have
been promulgated thereunder each contain provisions applicable to the
acquisition of "control" of a domestic insurer, including a presumption of
control that arises from the ownership of ten percent (10%) or more of the
voting securities of a domestic insurer or of a person that controls a
domestic insurer. Generally, any person seeking to acquire voting securities,
such as the Common Shares, in an amount that would result in such person
controlling, directly or indirectly, a domestic insurer must, together with
any person ultimately controlling such person, file with the relevant
Insurance Commission certain information concerning the acquisition of control
(generally known as a "Form A") and send a copy of each Form A to the domestic
insurer. On the date of this Offer to Purchase, Parent, Shepard and Purchaser
made Form A filings, including a copy of this Offer to Purchase and other
related information with respect to the Offer, with the relevant Insurance
Commissions and sent copies thereof to the relevant domestic insurer.
In Indiana, Minnesota and Ohio, the Form A filings trigger public hearing
requirements and commence statutory periods within which decisions must be
rendered approving or disapproving the acquisition of control of the Company
by Parent, the Shepards and Purchaser. The periods within which hearings must
be commenced or decisions rendered generally do not begin until the relevant
Insurance Commissioner has deemed the Form A filing complete. The Insurance
Commissioner has discretion to request that additional information be
furnished before it deems the Form A filing complete. The Insurance Codes
provide certain statutory standards for the approval or the disapproval of the
acquisition of control of the Company. However, the Insurance Codes also
permit the Insurance Commissioners discretion in determining whether such
standards have been met.
Certain other conditions to consummation of the Offer are described in
Section 14 and Section 15 of this Supplement. Purchaser expressly reserves the
right in its sole discretion to waive any one or more of the conditions to the
Offer. See Section 14 and Section 15 of this Supplement.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
3
<PAGE>
1. Terms of the Offer; Expiration Date.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for up to 2,985,769
Common Shares which are validly tendered prior to the Expiration Date (as
hereinafter defined) and not properly withdrawn in accordance with Section 4
of the Offer to Purchase. The term "Expiration Date" means 5:00 P.M., New York
City time, on Friday, October 20, 2000, unless and until Purchaser, in its
sole discretion, shall have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" shall refer to the latest
time and date at which the Offer, as so extended by Purchaser, shall expire.
Upon the Expiration Date, the Purchaser will determine, based on circumstances
then existing, whether there will be a subsequent offering period.
The Offer is conditioned upon, among other things, satisfaction of the
Rights Redemption Condition, the Minimum Condition, the Indiana Takeover Act
Condition, and the Insurance Regulatory Approval Condition. If any or all of
such conditions are not satisfied or if any or all of the other events set
forth in Section 14 of this Supplement shall have occurred prior to the
Expiration Date, Purchaser reserves the right (but shall not be obligated) to
(i) decline to purchase any of the Common Shares tendered in the Offer and to
terminate the Offer and return all tendered Common Shares to the tendering
shareholders, (ii) waive or reduce the Minimum Condition or waive or amend any
or all other conditions to the Offer to the extent permitted by applicable
law, and, subject to complying with applicable rules and regulations of the
SEC, purchase all Common Shares validly tendered, or (iii) extend the Offer
and, subject to the right of shareholders to withdraw Common Shares until the
Expiration Date, retain the Common Shares which have been tendered during the
period or periods for which the Offer is extended.
Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time and regardless of whether any of the events specified in
Section 14 of this Supplement shall have occurred or shall have been
determined by Purchaser to have occurred (i) to extend for any reason the
period of time during which the Offer is open by giving oral or written notice
of such extension to the Depositary and (ii) to amend the Offer in any respect
by giving oral or written notice of such amendments to the Depositary. During
any such extension, all Common Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw its Common Shares in accordance with the
procedures set forth in Section 4 of the Offer to Purchase.
Subject to the applicable regulations of the SEC, Purchaser also expressly
reserves the right, at any time and from time to time, (i) to delay acceptance
for payment of, or, regardless of whether such Common Shares were theretofore
accepted for payment, payment for, any Common Shares pending receipt of any
regulatory approval specified in Section 15 of this Supplement or in order to
comply in whole or in part with any other applicable law, (ii) to terminate
the Offer and not accept for payment any Common Shares if any of the
conditions referred to in Section 14 of this Supplement has not been satisfied
or if any of the events specified in Section 14 of this Supplement has
occurred and (iii) to waive any condition or otherwise amend the Offer in any
respect by giving oral or written notice of such delay, termination, waiver or
amendment to the Depositary and by making a public announcement thereof.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires Purchaser to pay the consideration offered or return the Common
Shares tendered promptly after the termination or withdrawal of the Offer, and
(ii) Purchaser may not delay acceptance for payment of, or payment for (except
as provided in clause (i) of the first sentence of the preceding paragraph),
any Common Shares upon the occurrence of any of the conditions specified in
Section 14 of this Supplement without extending the period of time during
which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Subject
4
<PAGE>
to applicable law (including Rules 14d-4(c), 14d-6(d) and l4e-1 under the
Exchange Act, which require that material changes be promptly disseminated to
shareholders in a manner reasonably designed to inform them of such changes)
and without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser shall have no obligation to publish, advertise
or otherwise communicate any such public announcement, other than by issuing a
press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and l4e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in percentage of securities sought, a minimum ten
(10) business day period is required to allow for adequate dissemination to
shareholders and investor response. As used in this Supplement and the Offer
to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act. Accordingly, if, prior to the Expiration Date, Purchaser
decreases the number of Common Shares being sought, or increases or decreases
the consideration offered pursuant to the Offer, and if the Offer is scheduled
to expire at any time earlier than the period ending on the tenth business day
from the date that notice of such increase or decrease is first published,
sent or given to holders of Common Shares, the Offer will be extended at least
until the expiration of such ten (10) business day period.
Pursuant to Rule 14d-5 under the Exchange Act and Chapter 30 of the Indiana
Corporation Law, this Supplement and the Amended Letter of Transmittal will be
mailed to record holders of Common Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the shareholder lists for subsequent
transmittal to beneficial owners of Common Shares.
Purchaser makes no provisions in connection with the Offer to grant
affiliated or unaffiliated shareholders access to the corporate files of
Parent or Purchaser or to obtain counsel at the expense of Parent or
Purchaser.
2. Acceptance for Payment and Payment for Common Shares.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will purchase, by accepting for payment,
and will pay for, up to 2,985,769 Common Shares which are validly tendered
prior to the Expiration Date (and not properly withdrawn in accordance with
Section 4 of the Offer to Purchase, as amended by this Supplement, promptly
after the later to occur of (i) the Expiration Date and (ii) the satisfaction
or waiver of the regulatory conditions set forth in Section 14 of this
Supplement). Purchaser expressly reserves the right, in its discretion, to
delay acceptance for payment of, or, subject to applicable rules of the SEC,
payment for, Common Shares in order to comply in whole or in part with any
applicable law. Purchaser understands that, in accordance with the applicable
rules of the SEC, any delay in accepting Common Shares, regardless of cause,
may not exceed a reasonable length of time. Accordingly, if it appears at the
time that the Offer is scheduled to expire that any regulatory approvals
specified in Section 14 hereof are not likely to be obtained within a
reasonable length of time thereafter, Purchaser will either extend or
terminate the Offer.
In all cases, payment for Common Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the
certificates evidencing Common Shares (the "Common Share Certificates"), or
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Common Shares, if such procedure is available, into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase,
(ii) the Amended Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by
the Amended Letter
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of Transmittal. The Amended Letter of Transmittal (PINK) replaces the Letter
of Transmittal (BLUE) that was included with the Offer to Purchase. The
execution or agreement to the terms of the Letter of Agreement that was
included with the Offer to Purchase will not constitute a valid acceptance of
the Offer.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Common Shares that such participant has
received and agrees to be bound by the terms of the Amended Letter of
Transmittal and that Purchaser may enforce such agreement against the
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Common Shares validly tendered and not
properly withdrawn if, as and when Purchaser gives oral or written notice to
the Depositary of Purchaser's acceptance of such Common Shares for payment.
Payment for Common Shares accepted pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payments from
Purchaser and transmitting payments to such tendering shareholders. Upon the
deposit of funds with the Depositary for the purpose of making payments to
tendering shareholders, Purchaser's obligation to make such payment shall be
satisfied and tendering shareholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Common Shares pursuant to the Offer. Purchaser will pay any stock
transfer taxes incident to the transfer to it of validly tendered Common
Shares, except as otherwise provided in Instruction 6 of the Amended Letter of
Transmittal, as well as any charges and expenses of the Depositary and the
Information Agent.
Proration. If more than 2,985,769 Common Shares are validly tendered and
not properly withdrawn prior to the Expiration Date, Purchaser, upon the terms
and subject to the conditions of the Offer, will accept for payment and pay
for an aggregate of 2,985,769 Common Shares so tendered, pro rata according to
the number of Common Shares validly tendered by each shareholder and not
properly withdrawn on or prior to the Expiration Date, with appropriate
adjustments to avoid tenders of factional Common Shares.
Under no circumstance will interest on the purchase price for Common Shares
be paid by Purchaser, regardless of any delay in making such payment.
If any tendered Common Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer because of an invalid
tender, the proration provision or otherwise, Common Share Certificates
evidencing unpurchased Common Shares will be returned, without expense to the
tendering shareholder (or, in the case of Common Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3 of the Offer to Purchase,
such Common Shares will be credited to an account maintained at the Book-Entry
Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Common Share pursuant to the Offer, Purchaser will pay such
increased consideration for all such Common Shares purchased pursuant to the
Offer, whether or not such Common Shares were tendered prior to such increase
in consideration.
Purchaser reserves the right to transfer or assign, in whole at any time,
or in part from time to time, to Parent, Gregory M. Shepard, or Purchaser's
affiliates, the right to purchase all or any portion of the Common Shares
tendered pursuant to the Offer, provided that any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering shareholders to receive payment for
Common Shares validly tendered and accepted for payment pursuant to the Offer.
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3. Procedures for Accepting the Offer and Tendering Common Shares.
Section 3 of the Offer to Purchase is hereby amended by revising all
references therein to "the Letter of Transmittal" to read "the Amended Letter
of Transmittal." Section 3 in all other respects remains applicable to the
Offer.
4. Withdrawal Rights.
The first paragraph of Section 4 of the Offer to Purchase is hereby amended
and restated as follows: "Except as described in this Section 4, tenders of
Common Shares made pursuant to the Offer are irrevocable. You may withdraw
Common Shares that you have previously tendered in the Offer at any time prior
to the Expiration Date if not accepted by Purchaser and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, you may also withdraw
at any time after Monday October 30, 2000." The remainder of Section 4 of the
Offer to Purchase remains applicable in all respects to the Offer except that
any and all references therein to "Shepard" shall be revised to read "the
Shepards."
9. Certain Information Concerning Purchaser, the Shepards and Parent.
The first paragraph of Section 9 of the Offer to Purchase is hereby amended
and restated as follows: "Purchaser, an Illinois corporation formed solely to
make the Offer and a wholly owned subsidiary of Parent, is offering to
purchase 2,985,769 Common Shares of the Company." The second sentence of the
fourth paragraph under the heading Gregory M. Shepard is amended and restated
as follows: "Shepard executed a SEC consent decree on May 11, 2000, and has
been advised by the SEC that the consent decree will be entered by the SEC in
the near future." The remainder of Section 9 of the Offer to Purchase remains
applicable in all respects to the Offer.
10. Source and Amount of Funds.
Purchaser estimates that the total amount of funds required to purchase all
Common Shares pursuant to the Offer and to pay all related costs and expenses,
will be approximately $74.9 million. Purchaser plans to obtain all funds
needed for the Offer through a capital contribution from Parent. Parent will
finance the capital contribution to Purchaser from its assets and from capital
contributions from the Shepards. It is presently expected that the Shepards
will provide through capital contributions approximately 25% of the funds
required to purchase the Common Shares pursuant to the Offer totaling
approximately $18.725 million.
Gregory M. Shepard's net worth immediately prior to the commencement of the
Offer was approximately $56.1 million consisting of assets of $101.6 million
and liabilities of $45.5 million. Gregory M. Shepard's principal assets are
his stock in Parent and the Company and investment real estate. Tracy M.
Shepard's net worth immediately prior to the commencement of the Offer was
approximately $73.8 million consisting of assets of $79 million and
liabilities of $5.2 million. Tracy M. Shepard's principal assets are his stock
in Parent and investment real estate.
For an itemized statement of all expenses incurred or estimated to be
incurred by Purchaser and Parent, see Section 16--"Fees and Expenses" of the
Offer to Purchase.
11. Background of the Offer Since August 31, 2000; Contacts with the Company.
On September 1, 2000, as required by the Indiana Business Takeover Act, the
Indiana Securities Division scheduled a hearing to be held on September 25,
2000, to determine whether the Offer has been made to all offerees holding the
same class of equity securities of the target company on substantially
equivalent terms and whether the tender offer materials provide a full and
fair disclosure of all material information concerning the Offer.
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On September 6, 2000, the Company filed a Certificate of Correction of
Articles of Amendment to the Articles of Incorporation on the stated ground
that Sections 4.05 and 4.06 of the Articles of Incorporation, which provide
for the Company's election to opt out of the Indiana Control Share Acquisition
Statute and the Business Combinations Statute, were inadvertently omitted from
the text of the Articles of Amendment filed with the Indiana Secretary of
State in 1997. Therefore, according to the Company, the Control Share
Acquisition Statute and the Business Combinations Statute do not apply to the
Company.
On September 11, 2000, the Company issued a statement that its board of
directors recommends that the shareholders reject the Purchaser's initial
offer to purchase all of the outstanding shares of Common Stock at $20.00 (see
the Offer to Purchase for the other terms of the initial offer) and not tender
any shares and filed a Schedule 14D-9 with the Commission.
12. Purpose of the Offer; Plans for the Company; Certain Considerations.
General. The purpose of the Offer is to enable Parent to acquire control of
the Company.
Parent intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Parent, certain material
terms of the Offer may change. Accordingly, such negotiations could result in,
among other things, termination of the Offer and submission of a different
acquisition proposal to the Company's shareholders for approval.
In the event the Offer is terminated or not consummated, Parent may seek to
acquire additional Common Shares through open market purchases, privately
negotiated transactions, a tender offer or exchange offer or otherwise, upon
such terms and at such prices as it may determine, which may be higher or
lower than the Offer Price and could be for cash or other consideration.
Whether or not the Offer is consummated, Purchaser reserves the right,
subject to applicable legal restrictions, to sell or otherwise dispose of any
or all Common Shares acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices as it shall determine,
which may be higher or lower than the Offer Price and could be for cash or
other consideration.
Plans for the Company. In connection with the Offer, Parent and Purchaser
have reviewed, on the basis of publicly available information, various
business strategies that they might consider in the event that the Parent
acquires control of the Company. Parent and Purchaser intend to expand the
Company's business, and utilize the Company's infrastructure and capabilities
to improve the performance of the Company's existing property/casualty
operations. Parent intends to capitalize on the Company's independent agency
distribution, agency interface technology and commercial underwriting and
product management expertise to expand the Company's business. Parent expects
to identify significant possible business opportunities between the Company
and Parent's insurance operations. Purchaser and Parent believe that, in the
aggregate, these proposed actions would result in increased growth and
investment in the Company and its operations. Parent intends to aggressively
pursue initiatives focused on launching new products, marketing in new ways,
expanding geographically, seeking selective acquisitions, increasing
productivity and reducing costs, and placing even greater focus on service to
the Company's independent agents and policyholders. Except as indicated in
this Supplement and the Offer to Purchase and based upon publicly available
information, neither Parent, either of the Shepards, nor Purchaser has any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries or affiliates, a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries or affiliates or any material change in the Company's
capitalization or dividend policy or any other material changes in the
Company's corporate structure or business. However, you should be aware that,
if the offer is consummated, the number of shareholders of the Company may be
so small that the Company's shares may not be eligible for trading on the
NASDAQ or any other national securities exchange. Also, depending on the
remaining number of shareholders, the Company may cease to comply with the
rules and regulations promulgated by the Commission governing publicly-held
companies.
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Dissenters' Rights and Other Matters. Holders of Common Shares will not
have dissenters' rights as a result of the Offer.
14. Conditions of the Offer.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Common Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Common Shares, and may terminate the Offer as to any Common
Shares not then paid for, if (i) at or prior to the expiration of the Offer,
any one or more of the Minimum Condition, Rights Redemption Condition, the
Indiana Takeover Act Condition, or the Insurance Regulatory Approval Condition
has not been satisfied, (ii) the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the purchase of Common Shares pursuant to the Offer shall not have expired or
been terminated, or (iii) at any time on or after August 30, 2000, and prior
to the expiration of the Offer, any of the following events shall occur:
(a) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim before any court, governmental
regulatory or administrative agency or commission, authority or tribunal,
domestic, foreign or supranational, by any government, governmental
authority or other regulatory or administrative agency or commission,
domestic, foreign or supranational, or by any other person, domestic or
foreign (whether brought by the Company, an affiliate of the Company or any
other person), which (i) challenges or seeks to challenge the acquisition
by Parent or Purchaser or any affiliate of either of them of the Common
Shares, restrains, delays or prohibits or seeks to restrain, delay or
prohibit the making of the Offer, consummation of the transactions
contemplated by the Offer or any subsequent business combination, restrains
or prohibits or seeks to restrain or prohibit the performance of any of the
contracts or other arrangements entered into by Purchaser or any of its
affiliates in connection with the acquisition of the Company or obtains or
seeks to obtain any material damages or otherwise directly or indirectly
relating to the transactions contemplated by the Offer or any subsequent
business combination, (ii) prohibits or limits or seeks to prohibit or
limit Parent's or Purchaser's ownership or operation of all or any portion
of their or the Company's business or assets (including without limitation
the business or assets of their respective affiliates and subsidiaries) or
to compel or seeks to compel Parent or Purchaser to dispose of or hold
separate all or any portion of their own or the Company's business or
assets (including without limitation the business or assets of their
respective affiliates and subsidiaries) or imposes or seeks to impose any
limitation on the ability of Parent, Purchaser or any affiliate of either
of them to conduct its own business or own such assets as a result of the
transactions contemplated by the Offer or any subsequent business
combination, (iii) makes or seeks to make the acceptance for payment,
purchase of, or payment for, some or all of the Common Shares pursuant to
the Offer illegal or results in a delay in, or restricts, the ability of
Parent or Purchaser, or renders Parent or Purchaser unable, to accept for
payment, purchase or pay for some or all of the Common Shares, (iv) imposes
or seeks to impose limitations on the ability of Parent or Purchaser or any
affiliate of either of them effectively to acquire or hold or to exercise
full rights of ownership of the Common Shares, including, without
limitation, the right to vote the Common Shares purchased by them on an
equal basis with all other Common Shares on all matters properly presented
to the shareholders of the Company, (v) may adversely affect the Company or
any of its subsidiaries or affiliates or Parent, Purchaser, or any of their
respective affiliates or subsidiaries, (vi) may result in a diminution in
the value of the Common Shares or the benefits expected to be derived by
Parent or Purchaser as a result of the transactions contemplated by the
Offer, (vii) imposes or seeks to impose any material condition to the Offer
unacceptable to Parent or Purchaser or (viii) otherwise directly or
indirectly relates to the Offer or any business combination with the
Company;
(b) there shall be any action taken, or any statute, rule, regulation or
order or injunction shall be sought, proposed, enacted, promulgated,
entered, enforced or deemed or become applicable to the Offer or any
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subsequent business combination between Purchaser or any affiliate of
Purchaser and the Company or any affiliate of the Company or any other
action shall have been taken, proposed or threatened, by any government,
governmental authority or other regulatory or administrative agency or
commission or court, domestic, foreign or supranational, other than the
routine application of the waiting period provisions of the HSR Act to the
Offer, that may, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (vii) of paragraph (a) above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, shareholders, equity,
condition (financial or otherwise), operations, licenses, franchises,
permits, permit applications, results of operations or prospects of the
Company or any of its subsidiaries or affiliates which is or may be
materially adverse to the Company or any of its subsidiaries or affiliates,
or Parent or Purchaser shall have become aware of any fact which has or may
have material adverse significance with respect to either the value of the
Company or any of its subsidiaries or the value of the Common Shares to
Parent or Purchaser;
(d) there shall have occurred (i) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States
(whether or not mandatory), (ii) any limitation (whether or not mandatory)
by any governmental authority or agency on, or other event which may affect
the extension of credit by banks or other lending institutions, (iii) a
commencement of a war, armed hostilities or other national or international
crisis directly or indirectly involving the United States, (iv) any
significant change in United States or any other currency exchange rates or
any suspension of, or limitation on, the markets therefor (whether or not
mandatory), (v) any significant adverse change in the market price of the
Common Shares or in the securities or financial markets of the United
States, or (vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening
thereof;
(e) the Company or any subsidiary of the Company shall have, at any time
after August 30, 2000 (i) issued, distributed, pledged, sold or authorized,
proposed or announced the issuance of or sale, distribution or pledge to
any person of (A) any shares of its capital stock (other than sales or
issuances pursuant to options outstanding on August 30, 2000 in accordance
with their terms as disclosed on such date) of any class (including without
limitation the Common Shares) or securities convertible into any such
shares of capital stock, or any rights, warrants or options to acquire any
such shares or convertible securities or any other securities of the
Company, or (B) any other securities in respect of, in lieu of, or in
substitution for, Common Shares outstanding on August 30, 2000, (ii)
purchased, acquired or otherwise caused a reduction in the number of, or
proposed or offered to purchase, acquire or otherwise reduce the number of,
any outstanding Common Shares, or other securities, (iii) declared, paid or
proposed to declare or pay any dividend or distribution on any Common
Shares (other than the regular quarterly dividend on the Common Shares not
in excess of the amount per share, and with record and payment dates, in
accordance with recent practice) or on any other security or issued,
authorized, recommended or proposed the issuance or payment of any other
distribution in respect of the Common Shares, whether payable in cash,
securities or other property, (iv) altered or proposed to alter any
material term of any outstanding security, (v) incurred any debt other than
in the ordinary course of business and consistent with past practice or any
debt containing burdensome covenants, (vi) issued, sold, authorized,
announced or proposed the issuance of or sale to any person of any debt
securities or any securities convertible into or exchangeable for debt
securities or any rights, warrants or options entitling the holder thereof
to purchase or otherwise acquire any debt securities or incurred or
announced its intention to incur any debt other than in the ordinary course
of business and consistent with past practice, (vii) split, combined or
otherwise changed, or authorized or proposed the split, combination or
other change of the Common Shares, (viii) authorized, recommended, proposed
or entered into or publicly announced its intent to enter into any merger,
consolidation, liquidation, dissolution, business combination, acquisition
or disposition of a material amount of assets or securities, any material
change in its capitalization, any waiver, release or relinquishment of any
material contract rights or comparable right of the Company or any of its
subsidiaries or any agreement contemplating any of the foregoing or any
comparable event not in the ordinary course of business, or taken any
action to implement any such transaction previously authorized,
recommended, proposed or publicly announced, (ix) transferred
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into escrow any amounts required to fund any existing benefit, employment
or severance agreements with any of its employees or entered into any
employment, severance or similar agreement, arrangement or plan with any of
its employees other than in the ordinary course of business and consistent
with past practice or entered into or amended any agreements, arrangements
or plans so as to provide for increased benefits to the employees as a
result of or in connection with the transactions contemplated by the Offer
or any other change in control of the Company, (x) except as may be
required by law, taken any action to terminate or amend any employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended) of the Company or any of its
subsidiaries, or Parent or Purchaser shall have become aware of any such
action which was not previously disclosed in publicly available filings,
(xi) amended or proposed or authorized any amendment to the Company
Articles or the Company By-laws or similar organizational documents, (xii)
authorized, recommended, proposed or entered into any other transaction
that in the sole judgment of Parent or Purchaser could, individually or in
the aggregate, adversely affect the value of the Common Shares to Parent or
Purchaser or (xiii) agreed in writing or otherwise to take any of the
foregoing actions or Parent or Purchaser shall have learned about any such
action which has not previously been publicly disclosed by the Company and
also set forth in filings with the SEC;
(f) the Company and Parent, either of the Shepards, or Purchaser shall
have reached an agreement or understanding that the Offer be terminated or
amended or Parent, either of the Shepards, or Purchaser (or one of their
respective affiliates) shall have entered into a definitive agreement or an
agreement in principle to acquire the Company by merger or similar business
combination, or purchase of Common Shares or assets of the Company;
(g) Parent, either of the Shepards, or Purchaser shall become aware (i)
that any material contractual right of the Company or any of its
subsidiaries or affiliates shall be impaired or otherwise adversely
affected or that any material amount of indebtedness of the Company or any
of its subsidiaries shall become accelerated or otherwise become due prior
to its stated due date, in either case with or without notice or the lapse
of time or both, as a result of the transactions contemplated by the Offer,
or (ii) of any covenant, term or condition in any of the Company's or any
of its subsidiaries' instruments or agreements that are or may be
materially adverse to the value of the Common Shares in the hands of
Purchaser or any other affiliate of Parent (including, but not limited to,
any event of default that may ensue as a result of the consummation of the
Offer or the consummation of any business combination or any other
acquisition of control of the Company); or
(h) Parent, either of the Shepards, or Purchaser shall not have obtained
any waiver, consent, extension, approval, action or non-action from any
governmental authority or agency which in its judgment is necessary to
consummate the Offer; which, in any such case, and regardless of the
circumstances (including any action or inaction by Parent, either of the
Shepards or Purchaser or any of their affiliates) giving rise to any such
condition, makes it inadvisable to proceed with the Offer. Parent, each of
the Shepards, and Purchaser have the right to rely on any condition set
forth in this Section 14 being satisfied in determining whether to
consummate the Offer; however, if Parent, either of the Shepards, or
Purchaser asserts the satisfaction of any such condition without relying on
the exercise of its reasonable judgment or some other objective criteria,
Parent, each of the Shepards, and Purchaser shall promptly disclose such
assertion and the Expiration Date will be (and, if necessary, will be
extended to be) at least five (5) business days after the date of such
disclosure.
The foregoing conditions are for the sole benefit of Parent, each of the
Shepards, and Purchaser and may be asserted by Parent, either of the Shepards,
or Purchaser regardless of the circumstances (including any action or omission
by Parent, either of the Shepards, or Purchaser) giving rise to any such
conditions or may be waived by Parent, either of the Shepards, or Purchaser in
their sole discretion in whole or in part at any time and from time to time.
The failure by Parent, either of the Shepards, or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Parent,
either of the Shepards, or Purchaser concerning any condition or event
described in this Section 14 shall be final and binding upon all parties.
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15. Certain Legal Matters; Regulatory Approvals; Certain Litigation.
General. Except as otherwise disclosed herein, based on a review of
publicly available information filed by the Company with the SEC, neither
Purchaser, nor either of the Shepards, nor Parent is aware of (i) any license
or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Common Shares and the indirect acquisition of
the capital stock of the Company's insurance subsidiaries by Parent, either of
the Shepards, or Purchaser pursuant to the Offer, or (ii) any approval or
other action by any governmental, administrative or regulatory agency or
authority, domestic, foreign or supranational, that would be required for the
acquisition or ownership of Common Shares, or the indirect acquisition of the
capital stock of the Company's insurance subsidiaries by Parent, either of the
Shepards, or Purchaser as contemplated herein. Should any such approval or
other action be required, Parent, each of the Shepards, and Purchaser
currently contemplate that such approval or action would be sought. While
Purchaser does not currently intend to delay the acceptance for payment of
Common Shares tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or action, if needed,
would be obtained or would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company,
Purchaser or Parent, or to either of the Shepards or that certain parts of the
businesses of the Company, Purchaser or Parent, or either of the Shepards
might not have to be disposed of in the event that such approvals were not
obtained or any other actions were not taken. Purchaser's obligation under the
Offer to accept for payment and pay for Common Shares is subject to certain
conditions. See Section 14 of this Supplement.
State Insurance Approvals. The acquisition of Common Shares pursuant to the
Offer will require filings with, and approvals of, the Insurance Commissions
under the Insurance Codes of Indiana, Minnesota and Ohio, which are the United
States jurisdictions in which the insurance companies owned or otherwise
controlled by the Company are domiciled, and in Illinois pursuant to Section
131.12 (a) of the Illinois Revised Code for informational purposes. The
Insurance Codes of Indiana, Minnesota and Ohio each contain similar provisions
applicable to the acquisition of control of a domestic insurer, including a
presumption of control that arises from the ownership of ten percent (10%) or
more of the voting securities of a domestic insurer or of any person that
controls a domestic insurer.
Generally, a person seeking to acquire voting securities, such as the
Common Shares, in an amount that would result in such person controlling,
directly or indirectly, a domestic insurer must, together with any person
ultimately controlling such person, file a Form A with the relevant Insurance
Commission and send a copy of such Form A to the domestic insurer. Parent,
each of the Shepards, and Purchaser made Form A filings with the relevant
Insurance Commissions and sent copies thereof to the relevant domestic
insurers on the date of this Offer to Purchase. In addition, Parent is
evaluating whether the approvals of any other Insurance Commissioners are
required and, if Parent determines that any such approvals are required, the
Insurance Regulatory Condition will be deemed to include the receipt of such
approvals.
In Indiana, Minnesota and Ohio, the Form A filings trigger public hearing
requirements and statutory periods within which decisions must be rendered
approving or disapproving the acquisition of control. The periods within which
hearings must be commenced or decisions rendered may not begin until the
relevant Insurance Commissioner has deemed the Form A filing complete, and the
Insurance Commissioner has discretion to request that Parent, each of the
Shepards, and Purchaser furnish additional information before such Insurance
Commissioner deems the Form A filing complete. The Indiana and Minnesota
Insurance Codes provide that a public hearing must be commenced within sixty
(60) days and thirty (30) days, respectively, after the Form A is filed and
that the relevant Insurance Commissioner must make the determination within
thirty (30) days after the conclusion of such hearing. The Ohio Insurance
Codes do not provide any deadlines relating to the commencement of a public
hearing or a determination by the relevant Insurance Commissioner.
The Indiana, Minnesota and Ohio Insurance Codes generally require the
relevant Insurance Commissioner to approve the application for the acquisition
of control unless the Insurance Commissioner determines, after a public
hearing, that such application should be disapproved on one or more prescribed
statutory grounds. The
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Indiana, Minnesota and Ohio Insurance Codes also contain provisions providing
generally for judicial review of an Insurance Commissioner's order.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and to the FTC and certain waiting period requirements
have been satisfied. Parent expects to file such information after the date
hereof. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Common Shares pursuant to the Offer may not be consummated until
the expiration of a 15 calendar day waiting period following the filing by
Parent, unless the Antitrust Division and the FTC terminate the waiting period
prior thereto. If, within such 15-day period, either the Antitrust Division or
the FTC requests additional information or material from Parent concerning
such Offer, the waiting period will be extended and would expire at 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized
by the HSR Act. Thereafter, such waiting period may be extended only by court
order or with the consent of Parent. Purchaser will not accept for payment
Common Shares tendered pursuant to the Offer unless and until the waiting
period requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See Section 14 of this Supplement.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of Common
Shares pursuant to the Offer. At any time before or after Purchaser's
acquisition of Common Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Common Shares
pursuant to the Offer or otherwise or seeking divestiture of Common Shares
acquired by Purchaser or divestiture of substantial assets of Parent or its
affiliates. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the Offer or other acquisition of Common Shares
by Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result. See Section 14 of this Supplement for certain conditions
to the Offer, including conditions with respect to litigation and certain
governmental actions.
State Takeover Statutes. Various states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, shareholders, executive offices or places of business in such
states. In Edgar v. Mite Corp., the United States Supreme Court held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the United States Supreme Court held
that a state may, as a matter of corporate law and, in particular, those laws
concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were
applicable only under certain conditions.
The Indiana Business Takeover Act requires that a takeover offer be made to
all offerees holding the same class of equity securities of the target company
on substantially equivalent terms and that it provide a full and fair
disclosure of all material information concerning the offer. The Indiana
Securities Commissioner is required to hold a hearing to determine that the
foregoing requirements are satisfied. If the Commissioner determines by a
preponderance of the evidence that the requirements are not satisfied, he may
by order prohibit the purchase of shares tendered or condition purchase upon
changes or modifications. Parent, each of the Shepards, and Purchaser filed
the Offer to Purchase and related tender offer materials with the Indiana
Securities Commissioner and sent copies thereof to the Company. On September
1, 2000, as required by the Indiana Business Takeover Act, the Indiana
Securities Division scheduled a hearing to be held on September 25, 2000, to
determine whether the Offer has been made to all offerees holding the same
class of equity securities of the target company on substantially equivalent
terms and whether the tender offer materials provide a full and fair
disclosure of all material information concerning the Offer.
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Except as described in this Supplement and the Offer to Purchase, neither
Purchaser, either of the Shepards, nor Parent has currently complied with any
other state takeover statute or regulation. Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly
applicable to the Offer, and nothing in this Offer to Purchase or any action
taken in connection with the Offer is intended as a waiver of such right. If
it is asserted that any state takeover statute is applicable to the Offer and
an appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, Purchaser might be required to file certain information
with, or to receive approvals from, the relevant state authorities, and
Purchaser might be unable to accept for payment or pay for Common Shares
tendered pursuant to the Offer, or be delayed in consummating the Offer. In
such case, Purchaser may not be obliged to accept for payment or pay for any
Common Shares tendered pursuant to the Offer.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. Purchaser does not know whether any of these
laws will, by their terms, apply to the Offer and has not complied with any
such laws. Should any person seek to apply any state takeover law, Purchaser
will take such action as then appears desirable, which may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover laws
are applicable, and an appropriate court does not determine that such law is,
or such laws are, inapplicable or invalid as applied to the Offer, Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. In addition, if enjoined, Purchaser might be
unable to accept for payment any Common Shares tendered pursuant to the Offer,
or be delayed in continuing or consummating the Offer. In such case, Purchaser
may not be obligated to accept for payment any Common Shares tendered. See
Section 14 of this Supplement.
Complaint by Parent, Shepard and Purchaser. On August 30, 2000, Parent,
Shepard and Purchaser instituted a declaratory judgment action against the
Company Board in the Southern District of Indiana claiming, inter alia, that
the amendments to Article IV of the Company Articles filed with the Secretary
of State of the State of Indiana on July 30, 1997 were ineffective because the
amendments did not in fact remove Sections 4.05 and 4.06 from the Company
Articles. Alternatively, Parent, Shepard and Purchaser claim that if the
amendments of the Company Articles was effective, the amendments were invalid
because shareholder approval of the amendments were fraudulently obtained in
violation of the Indiana Corporation Act and the rules and regulations of the
SEC.
On September 6, 2000, the Company filed a Certificate of Correction of
Articles of Amendment to the Articles of Incorporation on the stated ground
that Sections 4.05 and 4.06 of the Articles of Incorporation, which provide
for the Company's election to opt out of the Indiana Control Share Acquisition
Statute and the Business Combinations Statute, were inadvertently omitted from
the text of the Articles of Amendment filed with the Indiana Secretary of
State in 1997. Therefore, according to the Company, the Control Share
Acquisition Statute and the Business Combinations Statute do not apply to the
Company.
In addition Parent, Shepard and Purchaser also seek an order compelling the
Company Board to approve the Offer for purposes of Chapter 35 of the Indiana
Business Corporation Law on the grounds that failure to do so would constitute
a breach of fiduciary duty to the Company's shareholders and constitute a
violation of the securities laws of the State of Indiana by entrenching
themselves and their management and by denying the shareholders of the Company
the right to decide for themselves the future of the Company they own.
The complaint also alleges that the Company Board defendants have breached
their fiduciary duties by rejecting plaintiffs' offer to purchase all of the
outstanding Common Shares of the Company for $20 per Common Share, a
substantial premium over market value.
16. Fees and Expenses.
Section 16 of the Offer to Purchase is hereby amended by revising all
references therein to "Shepard" to read "either of the Shepards." Section 16
in all other respects remains applicable to the Offer.
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17. Miscellaneous.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Common Shares
pursuant thereto, Purchaser will make a good faith effort to comply with such
state statute. If, after such good faith effort, Purchaser cannot comply with
any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Common Shares in such state. In
any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of Purchaser by one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Parent, Shepard or Purchaser not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
Parent, each of the Shepards and Purchaser have filed with the SEC the
Schedule TO together with exhibits, pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer. The Schedule TO and any amendments
thereto, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 8 (except that they may not be
available at the regional offices of the SEC).
Meridian Insurance Group Acquisition
Corporation
September 18, 2000
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Facsimile copies of the Amended Letter of Transmittal, properly completed
and duly signed, will be accepted. The Letter of Transmittal, certificates for
the Common Shares and any other required documents should be sent by each
shareholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier Delivery: By Hand:
Post Office Box 3301 85 Challenger Road--Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop--Reorg New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reorganization
Department Attn: Reorganization Department
Department
By Facsimile Transmission:
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent at their telephone numbers and location listed below. Additional copies
of the Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be obtained from the Information Agent at its address
and telephone numbers set forth below. Holders of Common Shares may also
contact their broker, dealer, commercial bank or trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
44 Wall Street
7th Floor
New York, New York 10005
FOR FURTHER INFORMATION
CALL TOLL-FREE (888) 451-6741
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