AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 2001
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
DONEGAL GROUP INC.
------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2424711
- ----------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1195 River Road
Marietta, Pennsylvania 17547
(717) 426-1931
-----------------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Donald H. Nikolaus, President
Donegal Group Inc.
1195 River Road
Marietta, Pennsylvania 17547
(717) 426-1931
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
Copy to:
Kathleen M. Shay, Esquire
Duane, Morris & Heckscher LLP
One Liberty Place
Philadelphia, PA 19103-7396
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [X]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Section 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit offering price registration fee
---------------- ---------- -------- -------------- ----------------
Class A
Common Stock,
$.01 par value 1,000,000 $10.825(1) $10,825,000 $2,707(2)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based on
$10.825, the average of the high and low sales prices of the Class A
Common Stock of the Registrant on the Nasdaq National Market on April
25, 2001.
(2) Pursuant to Rule 457(p) under the Securities Act of 1933, the
Registrant hereby offsets against the full amount of the filing fee
payable in connection with this Registration Statement $2,707.00 paid
by the Registrant in connection with its Form S-3 Registration
Statement, Registration No. 333-36585, filed on September 26, 1997,
under which the offering has terminated and 762,014 shares remain
unsold. Subject to the provisions of Rule 457(p), the remainder of the
filing fee associated with the unsold shares after the offset claimed
herein, $1,911.00, will be carried forward by the Registrant to future
registration statements filed on or before September 26, 2002.
PROSPECTUS
- ----------
[LOGO]
DONEGAL GROUP INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
This Prospectus relates to 1,000,000 shares of Class A Common Stock of
Donegal Group Inc. being offered hereby to the stockholders of the Company in
connection with the Company's Dividend Reinvestment and Stock Purchase Plan (the
"Plan"). The Plan provides stockholders with a convenient and economical method
of increasing their equity ownership in the Company by investing cash dividends
and voluntary cash payments in shares of the Company's Class A Common Stock,
without paying any brokerage commissions and most transaction fees.
The Plan permits dividends on the Company's Class A Common Stock and Class
B Common Stock to be reinvested to purchase shares of Class A Common Stock
beginning on any dividend payment date (usually February 15, May 15, August 15
and November 15). Stockholders may also make voluntary cash payments at any time
of not less than $25 per payment or more than $12,000 in a calendar year to
purchase shares of Class A Common Stock. Voluntary cash payments will be
invested in Class A Common Stock beginning on the 15th day of each month. No
shares of Class B Common Stock may be purchased through the Plan. A stockholder
may make voluntary cash payments whether or not the stockholder authorizes the
reinvestment of dividends. Shares of Class A Common Stock issued under the Plan
will be either shares purchased on the open market or shares purchased from the
Company.
Amounts are invested at a price equal to (a) in the case of shares
purchased on the open market, the weighted average price of the shares of Class
A Common Stock purchased for the respective investment date, or (b) in the case
of shares purchased from the Company, the average of the closing prices of those
shares on the Nasdaq National Market for the five trading days preceding the
investment date. No brokerage commissions will be charged on shares of Class A
Common Stock purchased from the Company. Any brokerage commissions resulting
from open market purchases will be paid by the Company.
Stockholders electing to participate in the Plan may also deposit
certificates representing shares of Class A Common Stock and Class B Common
Stock for credit to their accounts through the Plan for safekeeping purposes and
sell shares of Class A Common Stock and Class B Common Stock credited to their
accounts through the Plan.
Stockholders who elect not to reinvest their dividends will continue to
receive cash dividends, as and when declared.
This Prospectus sets forth the provisions of the Plan, and, therefore, it
is recommended that participants in the Plan retain this Prospectus for future
reference. The Plan is administered by EquiServe at the expense of the Company.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is April 30, 2001.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "SEC") by the Company are hereby incorporated in and made a part of this
Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 2000; and
(b) The description of the Company's Class A Common Stock set forth in the
Company's Post-Effective Amendment to Form 8-A/A Registration Statement filed
with the SEC pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on April 12, 2001.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on request, a copy of
any or all documents incorporated herein by reference, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
therein. Requests should be directed to:
Ralph G. Spontak
Senior Vice President and Chief Financial Officer
Donegal Group Inc.
1195 River Road
Marietta, Pennsylvania 17547
(888) 877-0600
-2-
THE COMPANY
We are a regional insurance holding company offering property and casualty
insurance through our wholly owned subsidiaries and through a pooling agreement
with our affiliate, Donegal Mutual Insurance Company, known as the Mutual
Company. We offer full lines of personal and commercial products, including
business owners, commercial multi-peril, automobile, homeowners, boatowners,
workers' compensation and other coverages.
We were formed by the Mutual Company in August 1986 and were a wholly owned
subsidiary of the Mutual Company until November 1986, when we sold a portion of
our shares of capital stock in a public offering. The Mutual Company continues
to own a majority of our outstanding shares of Class A Common Stock and Class B
Common Stock, may reinvest all of the dividends received on its shares of Class
A Common Stock and Class B Common Stock under the Plan and may make voluntary
cash purchases from time to time.
Our principal executive offices are located at 1195 River Road, Marietta,
Pennsylvania 17547, and our telephone number is (888) 877-0600.
THE PLAN
The Plan provides our stockholders with a convenient and economical method
of investing cash dividends in shares of Class A Common Stock and making
voluntary cash purchases of Class A Common Stock without paying any brokerage
commissions and most transaction fees.
Each participant in the Plan may have the cash dividends that we pay on the
participant's shares of Class A Common Stock and Class B Common Stock
automatically reinvested in shares of Class A Common Stock and may make
voluntary cash payments of not less than $25 per transaction or more than
$12,000 in any calendar year to purchase shares of Class A Common Stock. No
shares of Class B Common Stock may be purchased under the Plan. A participant
may make voluntary cash payments whether or not the participant has authorized
the reinvestment of cash dividends. Stockholders electing to participate in the
Plan may also deposit certificates representing shares of Class A Common Stock
and Class B Common Stock for credit to their accounts through the Plan for
safekeeping purposes and sell shares of Class A Common Stock and Class B Common
Stock credited to their accounts through the Plan. Holders of Class A Common
Stock and Class B Common Stock who do not elect to reinvest their dividends will
continue to receive cash dividends by check as and when such dividends are
declared and paid.
As explained below, the cash dividends and any voluntary cash payments of a
participant will be applied by EquiServe, as agent, (see the answer to question
3) to the purchase of shares of Class A Common Stock at a purchase price
determined in the manner set forth in the answer to question 12. We will pay
most expenses incurred in connection with such purchases, including any
brokerage commissions incurred as a result of purchases of shares of Class A
Common Stock in the open market. Charges will be incurred by a participant upon
the sale of book-entry shares credited to the participant's account. See the
answers to questions 8 and 23.
In conjunction with the Plan, the Company has reserved 1,000,000 shares of
Class A Common Stock offered by this Prospectus.
-3-
DESCRIPTION OF THE PLAN
The following is a description in question-and-answer form of the
provisions of the Plan.
PURPOSE
1. What are the purposes of the Plan?
The purposes of the Plan are to (i) provide our stockholders with a simple
and convenient method of investing cash dividends in shares of Class A Common
Stock and making voluntary cash purchases of shares of Class A Common Stock
without payment of any brokerage commissions or most transaction fees and (ii)
provide the Company with additional funds for general corporate purposes, when
shares are purchased directly from the Company. No shares of Class B Common
Stock may be purchased under the Plan.
ADVANTAGES TO PARTICIPANTS
2. What are the advantages of the Plan to participants?
Participants may reinvest the dividends paid on their Class A Common Stock
and Class B Common Stock to purchase shares of Class A Common Stock and may make
voluntary cash purchases of shares of Class A Common Stock without paying any
brokerage commissions or most transaction fees. See the answer to question 8. A
participant's funds are fully invested in Class A Common Stock through the
purchase of whole shares and fractional shares. Quarterly statements of account
provide participants who reinvest with a record of each transaction. See the
answer to question 19.
Participants may also deposit Class A Common Stock certificates and Class B
Common Stock certificates, at no cost, for credit to their accounts through the
Plan for safekeeping and to facilitate the transfer or sale of shares of Class A
Common Stock and Class B Common Stock through the Plan in a convenient and
efficient manner. See the answer to question 17. A participant may direct
EquiServe to transfer, at no cost, all or a portion of the shares of Class A
Common Stock and Class B Common Stock credited to a participant's account
(including those shares deposited into the Plan for safekeeping). See the answer
to question 16. A participant may direct EquiServe to sell shares of Class A
Common Stock and Class B Common Stock credited to the participant's account. See
the answer to question 18.
ADMINISTRATION
3. Who administers the Plan for participants?
EquiServe administers the Plan and purchases shares of Class A Common Stock
as agent for the Plan participants. The shares of Class A Common Stock acquired
by EquiServe will be either purchased from us or purchased on the open market,
as we determine in our sole discretion. In purchasing shares on the open market,
EquiServe will have, consistent with applicable securities laws and regulations,
absolute discretion to determine the volume, timing and price of such purchases.
If you decide to participate in the Plan, EquiServe will keep a continuous
record of your participation in the Plan and send you a statement of your
account under the Plan after each purchase affecting your account. Shares
purchased through the Plan will be credited in book-entry form to your account.
You may deposit your Class A Common Stock certificates and Class B Common Stock
certificates for conversion to book-entry shares, which will be credited to your
account. This will relieve you of the responsibility for the safekeeping of
multiple certificates for shares purchased and protect you against loss, theft
or destruction of stock certificates.
-4-
EquiServe may be contacted as follows:
CORRESPONDENCE
All correspondence and inquiries relating to the Plan should be mailed to:
EquiServe
P.O. Box 2598
Jersey City, NJ 07303-2598
Please be sure to include a reference to Donegal Group Inc. in your
correspondence, your stockholder account number(s) and taxpayer identification
number (social security number) and a day-time telephone number where you may be
contacted during normal working hours to facilitate a prompt response.
TELEPHONE
Stockholder customer service, including sale of shares: 1-800-317-4445.
Outside the United States and Canada: 1-201-324-0313.
An automated voice response system is available 24 hours a day, 7 days a
week. Customer Service Representatives are available 8:30 a.m. - 7:00 p.m.,
Eastern time, each business day.
TDD: 1-201-222-4955 a telecommunications device for the hearing impaired is
available.
Foreign language translation service for over 140 languages is available to
support the needs of the Company's stockholder base.
INTERNET
You can obtain information about your account over the Internet. To gain
access, you will require a password that is sent to you by mail. You may also
request your password by calling EquiServe at 1-877-THEWEB7 (1-877-843-9327).
Messages forwarded on the Internet will be responded to promptly. EquiServe's
Internet address is www.equiserve.com.
PARTICIPATION
4. Who is eligible to participate in the Plan?
Any registered holder of the Company's Class A Common Stock or Class B
Common Stock is eligible to participate in the Plan, provided that (i) the
stockholder completes an enrollment authorization form, as described in the
answer to question 6 below, and (ii) in the case of citizens or residents of a
country other than the United States, its territories and possessions,
participation would not violate local laws applicable to the Company, the Plan
and the participant. Dividends paid on Class A Common Stock and Class B Common
Stock will be reinvested only in shares of Class A Common Stock. No shares of
Class B Common Stock may be purchased under the Plan.
5. How does a stockholder become a participant?
Registered holders of either or both Class A Common Stock and Class B
Common Stock may join the Plan at any time after completing and signing the
enrollment authorization form provided by EquiServe and returning it to
EquiServe. A postage-paid envelope is provided for this purpose. Requests for
copies of enrollment authorization forms and this Prospectus can be made in
writing, by telephone or through the Internet to the address, telephone number
and Internet address listed in the answer to question 3. Record holders of Class
A Common Stock and Class B Common Stock should sign their name(s) on the
enrollment authorization form exactly as they appear on their stock
certificates.
-5-
A beneficial owner, i.e., a stockholder whose shares are held in nominee
name by a bank or broker, must (i) become a record holder (i.e., a stockholder
who is registered on the books of the Company) by having such shares transferred
into the stockholder's name or (ii) make arrangements with the broker, bank or
other nominee to participate in the Plan on the stockholder's behalf. In this
case, the beneficial owner's participation with that entity may be on terms and
conditions that differ from the terms and conditions set forth in the Plan, and
the terms and conditions set by that entity will govern and EquiServe will not
have any record of the beneficial owner's transactions or account.
Any person or entity will become a participant only after fulfilling the
above prerequisites for participation and a properly completed enrollment
authorization form has been received and accepted by EquiServe.
Stockholders are cautioned that the Plan does not represent a change in the
Company's dividend policy or a guarantee of future dividends, which will
continue to depend upon the Company's earnings, financial condition and other
factors.
6. What does the enrollment authorization form provide?
The enrollment authorization form specifies the method by which an eligible
stockholder elects to participate in the Plan.
If the "Full Dividend Reinvestment" box is checked, then EquiServe will
invest in shares of Class A Common Stock (a) all of the participant's cash
dividends on both shares of Class A Common Stock and Class B Common Stock
registered in the participant's name in stock certificate form and book-entry
shares credited to the participant's account and (b) any voluntary cash payments
made by the participant.
If the "Partial Dividend Reinvestment" box is checked, the participant must
specify, in the space provided for that purpose, the number of shares of Class A
Common Stock on which cash dividends will be sent to the participant. THE
PARTIAL DIVIDEND REINVESTMENT OPTION IS PERMISSIBLE ONLY FOR PARTICIPANTS WHO
OWN SHARES OF CLASS A COMMON STOCK. The number of shares specified in the space
provided includes shares registered in the participant's name in stock
certificate form and book-entry shares credited to the participant's account.
EquiServe will invest in shares of Class A Common Stock (a) the cash dividends
on the remainder of both the shares registered in the participant's name in
stock certificate form and the book-entry shares credited to the participant's
account and (b) any voluntary cash payments made by the participant.
If the "Voluntary Cash Payments Only (No Dividend Reinvestment)" box is
checked, then we will send directly to the participant cash dividends on both
shares of Class A Common Stock and Class B Common Stock registered in the
participant's name in stock certificate form and book-entry shares credited to
the participant's account, but EquiServe will invest the participant's voluntary
cash payments in shares of Class A Common Stock. Under the Plan, dividends will
be reinvested, paid in cash, or both, as designated on the enrollment
authorization form until a participant specifies otherwise.
7. How may participants change investment options?
Participants may change their investment option at any time by telephoning
EquiServe or by completing and signing a new enrollment authorization form and
returning it to EquiServe. A change in investment option affecting the
reinvestment of cash dividends will be effective on a dividend payment date if
the enrollment authorization form or telephone authorization is received by
EquiServe on or prior to the related dividend record date. If the enrollment
authorization form or telephone authorization is received by EquiServe on or
after the related dividend record date, the change will be effective on the
dividend payment date for the following quarter.
-6-
COSTS
8. Are there any expenses to participants under the Plan?
Except as provided below, we will pay all costs of administration of the
Plan, including most transaction fees and brokerage commissions on purchases of
open market shares. However, if a participant requests EquiServe to sell all or
part of the shares credited to his or her account, the participant will pay a
transaction fee (currently $15), any related brokerage commission (currently
$.12 per share sold) and any other costs due, as discussed in the answer to
question 18. If a participant withdraws all book-entry shares credited to his or
her account, a payment for any fractional share interests in the account will be
paid in cash to the participant in the amount and on the basis described in the
answer to question 23. A participant will also pay a $2 transaction fee for each
investment made through automatic deductions, which will be subtracted from the
participant's purchase amount. In addition, returned checks or failed automatic
deductions will result in a charge of $25 to the participant (see the answer to
question 15).
PURCHASES
9. What is the source of Class A Common Stock purchased under the Plan?
Plan shares will be, at our discretion, either purchased directly from us,
in which event such shares will be either authorized but unissued shares or
shares held in the treasury, or purchased on the open market, or by any
combination of the foregoing.
10. How many shares of Class A Common Stock will be purchased for a
participant?
The number of shares to be purchased for each participant on an investment
date will depend on the amount of the participant's dividends and/or voluntary
cash payments to be invested and the price per share of our Class A Common
Stock. Each participant's account will be credited as of each investment date
with that number of shares, including fractions computed to three decimal
places, equal to the total amount to be invested on behalf of that participant
on that date divided by the purchase price of each share of Class A Common
Stock. The purchase price is as determined as provided in the answer to question
12.
11. How and when will shares of Class A Common Stock be purchased by the Plan?
The Plan permits dividends paid on Class A Common Stock and Class B Common
Stock to be reinvested beginning on any dividend payment date (usually February
15, May 15, August 15 and November 15) and voluntary cash payments to be
invested on the 15th day of each month, or the next trading day if any such date
is not a trading day. Prior to each investment date on which a dividend is paid,
we will pay to EquiServe the total amount of dividends payable on the shares
subject to dividend reinvestment under the Plan. EquiServe will use that amount
to purchase shares of Class A Common Stock for the accounts of participants at
the purchase price set forth in the answer to question 12. If we direct
EquiServe to purchase shares on the open market, it is expected that EquiServe
will normally purchase shares beginning on the investment date and will complete
the purchases within 30 days. However, in purchasing shares on the open market,
EquiServe will have, consistent with applicable securities laws and regulations,
absolute discretion to determine the volume, timing and price of such purchases.
Neither we nor any participant will have any authority or power to direct the
time or price at which shares will be purchased or the selection of the broker
or dealer through or from whom purchases will be made. If we elect to make newly
issued shares or treasury shares available for purchase, EquiServe will purchase
shares of Class A Common Stock from us on the investment date. In the months
that dividends are not paid, shares will be purchased with all voluntary cash
payments then held by EquiServe in the manner described above. Only shares of
Class A Common Stock may be purchased under the Plan, and no shares of Class B
Common Stock may be purchased under the Plan.
-7-
12. What will be the price of shares of Class A Common Stock purchased under
the Plan?
The price per share of Class A Common Stock purchased on the open market
for allocation to the accounts of the Plan participants as of an investment date
will be the weighted average price paid by EquiServe for all open market shares
that were purchased by EquiServe for that investment date.
If we elect to make newly issued shares or treasury shares available for
purchase, the price per share of any shares of Class A Common Stock purchased
from the Company on any investment date on behalf of participants in the Plan
will be the average of the closing prices of the shares of Class A Common Stock
on the Nasdaq National Market for the five trading days preceding the investment
date.
VOLUNTARY CASH PAYMENTS
13. How does the voluntary cash payment option work?
Voluntary cash payments received by EquiServe from a participant prior to
an investment date will be invested each month to purchase shares of Class A
Common Stock. Shares of Class B Common Stock may not be purchased with voluntary
cash payments under the Plan. EquiServe will return voluntary cash payments to a
participant upon telephone or written request from a participant made at least
two business days prior to the investment date.
If a stockholder wishes to participate only through the investment of
voluntary cash payments, the stockholder must check the "Voluntary Cash Payments
Only (No Dividend Reinvestment)" box on the enrollment authorization form.
Interest will not be paid by us or EquiServe on any voluntary cash payments
held pending investment under the Plan. Therefore, it is suggested that any
voluntary cash payment you wish to make be sent so as to reach EquiServe as
close as possible but prior to the investment date. A participant should be
aware of possible delays in the mail if payment is to be made in that manner.
14. How are voluntary cash payments made by check or money order?
The option to make cash payments by check or money order is available to
participants each month. Voluntary cash payments by a participant cannot be less
than $25 per payment or more than a total of $12,000 in a calendar year. If
EquiServe receives payments totaling more than $12,000 in a calendar year from a
participant, the amount by which the payments exceed $12,000 will be returned to
the participant.
A voluntary cash payment may be made by a participant when enrolling by
enclosing a check or money order in United States dollars (made payable to
"EquiServe - Donegal") with the enrollment authorization form. Thereafter,
voluntary cash payments may be made through the use of cash payment forms
attached to each participant's statement of account. The same amount of money
need not be sent each month, and there is no obligation to make a voluntary cash
payment each month.
15. How are voluntary cash payments made by automatic monthly deductions?
You may make voluntary cash payments of not less than $25 per payment nor
more than $12,000 in a calendar year by means of a monthly automatic electronic
funds transfer from a predesignated account at a United States bank or financial
institution. If EquiServe receives payments totaling more than $12,000 in a
calendar year from you, the amount by which the payments exceed $12,000 will be
returned to you. A $2 transaction fee will be subtracted from the amount
deducted from your bank account prior to each investment.
To initiate automatic monthly deductions, you must complete and sign an
authorization form for automatic deductions and return it to EquiServe together
with a voided blank check or savings account deposit slip for the account from
which funds are to be drawn. Forms will be processed and will become effective
as promptly as practicable; however, you should allow four to six weeks for your
first investment to be initiated.
-8-
Once automatic monthly deductions are initiated, funds will be drawn from
your designated bank account on the third business day preceding each monthly
investment date.
You may change the amount of your automatic monthly deduction by completing
and submitting to EquiServe a new authorization form for automatic deductions.
If you close or change a bank account, a new authorization form for automatic
deductions must be completed and submitted to EquiServe. To be effective with
respect to a particular investment date, the new authorization form for
automatic deductions must be received by EquiServe at least seven business days
preceding such investment date. You may discontinue automatic deductions by
notifying EquiServe in writing.
Returned checks or failed automatic deductions will result in a charge of
$25 to the participant.
TRANSFERS
16. How may a participant transfer shares credited to his or her account?
If a participant wishes to change the ownership of all or part of the
shares credited to his or her account through gift, private sale or otherwise,
the participant may do so by delivering to EquiServe a written request
accompanied by a properly executed stock power with a medallion guarantee. The
transfer will be effected as soon as practicable following EquiServe's receipt
of the required documentation. No fractional shares of Class A Common Stock
credited to a participant's account may be transferred unless the participant's
entire account is transferred. Requests for account transfers are subject to the
same requirements as for the transfer of securities, including the requirement
of receipt by EquiServe of a properly executed stock power with a medallion
guarantee. Stock power forms are available upon request from EquiServe. Share
transfer forms are also attached to account statements.
Shares transferred will be credited in book-entry form to the transferee's
account. An account will be opened in the name of the transferee if the
transferee is not already a participant, and the transferee will automatically
be enrolled in the Plan. If the transferee is not already a participant, the
account will be enrolled under the full reinvestment option unless the form
specifies differently. If a transfer involving all shares in a participant's
account is received after a record date but before the related dividend payment
date, the transfer will be processed when received and a cash dividend will be
paid to the participant. A participant may return the dividend check as a
voluntary cash payment.
A transferee will be sent a statement showing the transfer of the shares
into the transferee's account. The transferor may request from EquiServe a
non-negotiable gift certificate that may be presented to the transferee.
SAFEKEEPING DEPOSIT OF STOCK CERTIFICATES
17. May a participant deposit his or her Class A Common Stock certificates and
Class B Common Stock certificates with EquiServe for conversion to
book-entry shares?
At the time of enrollment in the Plan, or at any later time, a participant
may deposit any Class A Common Stock certificates or Class B Common Stock
certificates in his or her possession with EquiServe for credit as book-entry
shares for his or her account. By doing so, a participant will no longer bear
the risk associated with loss, theft or destruction of stock certificates. Also,
these shares are treated in the same manner as shares purchased through the Plan
and may be transferred or sold through the Plan in a convenient and efficient
manner.
To insure against loss resulting from mailing stock certificates to
EquiServe, EquiServe provides mail insurance free of charge for certificates
valued at up to $25,000 in current market value.
To be eligible for certificate mailing insurance, a stockholder must
observe the following guidelines. Certificates must be mailed in brown,
pre-addressed return envelopes supplied by EquiServe. Certificates mailed to
EquiServe must be mailed first class and should not be endorsed. Participants
will promptly receive
-9-
a transaction advice confirming each deposit. Stockholders must notify
EquiServe of any lost certificate claim within 30 calendar days after the date
the certificates were mailed. To submit a claim, an individual investor must be
a current participant or the loss must be incurred in connection with becoming a
participant. In the latter case, the claimant must enroll in the Plan at the
time the insurance claim is processed. The maximum insurance protection provided
to the participant is $25,000, and coverage is available only when the
certificates are sent to EquiServe in accordance with the guidelines described
above.
If a brown pre-addressed envelope provided by EquiServe is not used,
certificates (unendorsed) should be sent to the address listed in the answer to
question 3 by registered mail, return receipt requested, and insured for
possible mail loss for 2% of the market value (minimum of $20); this represents
the replacement cost if the certificates are lost in transit to EquiServe.
Insurance covers the replacement of shares of stock, but in no way protects
against any loss resulting from fluctuations in the value of such shares from
the time the stockholder mails the certificates until the time that the
replacement can be effected.
SELLING SHARES
18. How may shares of Class A Common Stock and Class B Common Stock be sold
through the Plan?
Participants may sell shares credited to their accounts under the Plan in
most cases by calling EquiServe at 1-800-317-4445 or 1-201-324-0313 or through
the Internet access facility at www.equiserve.com. Participants may also mail
their sale request using one of the transaction forms provided with each account
statement. Certificated shares can be deposited in a participant's account and
subsequently sold through the Plan.
EquiServe will make every effort to process a participant's order on the
day it is received, provided that instructions are received before 1 p.m.,
Eastern time on a business day during which EquiServe and the relevant
securities markets are open. The proceeds of the sale, less a transaction fee,
brokerage commission and any other costs of sale, will be sent to the
participant.
Participants have full control of their shares and may transfer or dispose
of them at any time. A participant may choose to sell shares credited in his or
her account through the broker of his or her choice. If a participant chooses to
do so, he or she must call or write EquiServe. A certificate will be issued and
mailed to the participant or his or her broker (if so requested), within two
business days of EquiServe's receipt of the request.
REPORTS TO PARTICIPANTS
19. What kind of reports will be sent to participants in the Plan?
Each participant who reinvests dividends will receive a quarterly statement
showing any dividends reinvested as well as all transactions for the
participant's account during the current calendar year. Statements will also be
provided whenever the participant has deposited or transferred shares of Class A
Common Stock or shares of Class B Common Stock or has made voluntary cash
purchases of shares of Class A Common Stock. Participants should retain these
statements in order to establish the cost basis, for tax purposes, for shares of
Class A Common Stock acquired under the Plan. EquiServe will charge a
participant $5 for a transcript of the history, two years or older, of such
participant's account.
Participants will receive copies of all communications sent to
stockholders. These communications may include quarterly reports, annual
reports, proxy material, consent solicitation material and Internal Revenue
Service information, if appropriate, for reporting dividend income. All notices,
statements and other communications from EquiServe to participants will be
addressed to the latest address of record; therefore, it is important that
participants promptly notify EquiServe in writing, by telephone or through the
Internet of any change of address.
-10-
DIVIDENDS
20. Will participants receive cash dividends on fractional shares credited to
their accounts?
Yes. Dividends on fractional share interests will be either reinvested in
Class A Common Stock or sent directly to the participant, depending upon the
participant's selected investment option.
CERTIFICATES FOR SHARES
21. Are stock certificates issued for shares of Class A Common Stock purchased
under the Plan?
Unless a participant requests, certificates for shares of Class A Common
Stock purchased under the Plan will not be issued. The number of shares credited
to a participant's account will be shown on the participant's statement of
account. However, except as indicated below, a participant may receive
certificates for full shares accumulated in his or her account under the Plan at
any time by writing or calling EquiServe, or through the Internet account access
facility. If certificates for fewer than all of the shares credited to a
participant's account are issued, any remaining full shares and fractional
shares will remain credited to the participant's account, and the participant
will remain enrolled in the Plan unless and until the participant discontinues
his or her participation.
An instruction to issue a certificate for all shares credited to a
participant's account will result in the issuance of a certificate for all full
shares and a check for any fractional share valued at the then-current market
price, less any brokerage commission, any transaction fee and any other costs of
sale to the participant.
A participant's rights under the Plan and shares credited to the account of
a participant under the Plan may not be pledged. A participant who wishes to
pledge his or her shares must request that certificates for such shares be
issued in his or her name.
Certificates for fractional shares will not be issued under any
circumstances. Any fractional interest withdrawn from the Plan will be sold by
EquiServe at the then-current market price less any brokerage commission, any
transaction fee and any other costs of sale. In no case will certificates
representing a fractional interest be issued.
22. In whose name are accounts maintained and certificates registered when
issued?
Accounts will be maintained in the names in which the certificates of
stockholders were registered at the time the stockholders became participants in
the Plan. Likewise, certificates for full shares will be registered in the same
name when issued.
Upon written request, certificates will be registered and issued in names
other than the account name, subject to compliance with any applicable laws and
the payment by the participant of any applicable taxes, provided that the
request meets the usual requirements of EquiServe for the recognition of a
transfer of stock certificates.
CHANGING REINVESTMENT OPTIONS AND DISCONTINUING REINVESTMENTS
23. When and how may a participant withdraw shares held under the Plan?
A participant may change his or her investment options at any time by
contacting EquiServe in writing, by telephone or through the Internet.
24. How does a participant discontinue reinvesting dividends?
A participant may discontinue reinvestment of dividends at any time in
writing, by telephone or through the Internet. However, EquiServe must receive
the participant's request before the dividend record date for the change to be
effective for that dividend.
-11-
Even if a participant discontinues reinvestment, the shares of Class A
Common Stock or Class B Common Stock will continue to be credited in book-entry
form in his or her account at EquiServe unless a certificate is requested. A
participant may request a certificate for all or part of his or her shares of
Class A Common Stock or Class B Common Stock. If a certificate is requested for
all shares of Class A Common Stock or Class B Common Stock, a certificate will
be received for all whole shares of Class A Common Stock or Class B Common Stock
in a participant's account, together with a check representing the then-current
market value of the sale of any fractional share.
FEDERAL INCOME TAX CONSEQUENCES
25. What are the federal income tax consequences of participation in the Plan?
In the case of reinvested dividends, when EquiServe acquires shares of
Class A Common Stock for a participant's account directly from us, the
participant must include in gross income a dividend equal to the number of
shares of Class A Common Stock purchased with the participant's reinvested
dividends multiplied by the fair market value of shares of Class A Common Stock
on the relevant payment date. In this event, the participant's tax basis in
shares of Class A Common Stock credited to his or her account will be equal to
the amount that the participant included in gross income.
Alternatively, when EquiServe purchases shares for a participant's account
on the open market with reinvested dividends, a participant must include in
gross income a dividend equal to the actual purchase price to EquiServe of the
shares of Class A Common Stock plus that portion of any brokerage commissions
paid by the Company that are attributable to the purchase of the participant's
shares of Class A Common Stock. In this event, the participant's tax basis in
shares of Class A Common Stock credited to his or her account will be equal to
their purchase price plus allocable brokerage commissions.
Your tax basis in shares of Class A Common Stock purchased with voluntary
cash payments will be equal to the price paid, increased by any brokerage
commission (which will be paid by us) allocated to such purchases and treated as
dividend income.
You will not realize any taxable income when you receive certificates for
whole shares credited to your account upon a request for such certificates.
However, if you receive, upon request, a cash payment for the sale of whole
and/or fractional shares credited to your account, you will realize gain or loss
measured by the difference between the amount of the cash received and your
basis in such shares or fractional shares. Such gain or loss will be capital in
character if such shares or fractional shares are a capital asset in your hands.
For further information as to the tax consequences of participation in the Plan,
you should consult with your own tax advisors.
The tax consequences under state and local tax laws and for participants
who do not reside in the United States will vary from jurisdiction to
jurisdiction. Each participant is advised to consult his or her own tax advisor
to determine the tax consequences of a particular transaction in his or her
account.
THE TAX INFORMATION IN THIS ANSWER TO QUESTION 25 IS PROVIDED SOLELY AS A
GUIDE TO YOU AND MAY BE SUBJECT TO CHANGE BY FUTURE LEGISLATION. YOU ARE ADVISED
TO CONSULT YOUR OWN TAX ADVISOR AS TO THE FEDERAL AND STATE INCOME TAX EFFECTS
OF PARTICIPATION IN THE PLAN.
OTHER INFORMATION
26. What happens when a participant sells or transfers all of the shares of
Class A Common Stock and Class B Common Stock registered in the
participant's name?
If a participant disposes of all of the shares of Class A Common Stock and
Class B Common Stock registered in his or her name, EquiServe will continue to
reinvest the dividends on the shares of Class A Common Stock and Class B Common
Stock held in the participant's account in the Plan until EquiServe is otherwise
notified.
-12-
27. What happens if the Company issues a stock dividend or declares a stock
split?
Any shares of Class A Common Stock or Class B Common Stock issued as a
stock dividend or pursuant to a stock split with respect to shares of Class A
Common Stock or Class B Common Stock held in a participant's account will be
credited to the participant's account. Stock dividends or split shares
distributed on shares registered in a participant's name and held in certificate
form may be mailed directly to the participant.
28. How will shares credited to a participant's account under the Plan be voted
at meetings of stockholders?
If a participant has shares credited to an account under the Plan on a
record date for a meeting of stockholders, the participant will be sent proxy
material with respect to that meeting. Each participant will have the sole right
to vote any whole shares (but not fractional shares) that are credited to such
participant's account under the Plan on the record date for a vote. A
participant may vote in person at meetings or by submitting a proxy to direct
one or more individuals to vote on the participant's behalf. Participants under
the Plan who are registered holders of Class A Common Stock and Class B Common
Stock will receive a separate proxy for Class A Common Stock, which is entitled
to one-tenth of a vote per share, and Class B Common Stock, which is entitled to
one vote per share, which will include any whole shares credited to such
participant's account. Shares of Class A Common Stock or Class B Common Stock
for which no proxy is received will not be voted.
29. May the Plan be suspended, modified or discontinued?
We may suspend, modify or discontinue the Plan at any time, in whole, in
part or in respect of participants in one or more jurisdictions, without the
approval of participants. Notice of such suspension, modification or
discontinuation will be sent to all affected participants, who will in all
events have the right to withdraw from participation. Upon any discontinuation
of the Plan, each affected participant has the option to receive a certificate
for all of the whole shares of Class A Common Stock and Class B Common Stock
credited to the participant's account and a check for the cash value of any
fractional shares credited to the participant's account. Fractional shares will
be valued at the then-current market value, less any brokerage commissions, any
transaction fee and any other costs of sale. Otherwise the participant can
choose to have his or her shares of Class A Common Stock or Class B Common Stock
remain in book-entry form.
If we discontinue the Plan for the purpose of establishing another dividend
reinvestment plan, participants will be automatically enrolled in the other plan
and shares credited to each participant's Plan account will be credited
automatically to such other plan, unless notice to the contrary is received by
EquiServe.
We also reserve the right to discontinue any participant's participation in
the Plan at any time for any reason upon written notice to the participant at
the address appearing on EquiServe's records.
30. How is the Plan to be interpreted?
Any question of interpretation arising under the Plan will be determined by
us, and any such determination will be final.
31. Who bears the risk of market price fluctuations in the shares credited to a
participant's account under the Plan?
A participant's investment in shares credited to his or her account under
the Plan will be no different from investment in directly held shares of Class A
Common Stock or Class B Common Stock. The participant will bear the risk of loss
and realize the benefits of any gain from market price changes with respect to
all such shares credited to the participant's account under the Plan.
32. What is the liability of the Company and EquiServe under the Plan?
Neither the Company nor EquiServe, as Plan administrator, will be liable
for any act done in good faith or for any good faith omission to act in
connection with the Plan, including, without limitation, any claim of liability
arising out of failure to discontinue reinvestment of dividends for a
participant's account upon such participant's death prior to receipt of notice
in writing of such death, or with respect to the prices at which shares of
-13-
Class A Common Stock are purchased or shares of Class A Common Stock or Class B
Common Stock are sold for the participant's account and the times when such
purchases and sales are made, or with respect to any loss or fluctuation in the
market value after the purchase or sale of such shares.
Participants should recognize that neither the Company nor EquiServe can
assure participants of a profit or protect them against a loss on the shares of
Class A Common Stock purchased by them under the Plan.
USE OF PROCEEDS
The proceeds received by us from sales of Class A Common Stock pursuant to
the Plan will be used for general corporate purposes, including investment in
and advances to our subsidiaries.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 2000
and 1999, and the related consolidated statements of income and comprehensive
income, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 2000, and related financial statement
schedules, incorporated by reference in this Prospectus, have been audited and
reported on by KPMG LLP, independent certified public accountants. Such
consolidated financial statements have been incorporated by reference in this
Prospectus upon the authority of said firm as experts in accounting and
auditing.
LEGAL OPINION
The validity of the issuance of the shares of Class A Common Stock offered
under the Plan will be passed upon for us by Duane, Morris & Heckscher LLP,
Philadelphia, Pennsylvania. As of April 20, 2001, persons who are partners of or
of counsel to Duane, Morris & Heckscher LLP beneficially owned 19,666 shares of
the Company's outstanding Class A Common Stock, and 18,722 shares of the
Company's outstanding Class B Common Stock, of which 8,889 shares represent
shares purchasable under currently exercisable stock options. In addition,
Frederick W. Dreher, a partner of Duane, Morris & Heckscher LLP, is a director
of the Mutual Company, which is the holder of approximately 62.2% of each of the
Company's Class A Common Stock and Class B Common Stock.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission or SEC. You may read and
copy any reports, statements or other information filed by us at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our filings with the SEC are also available to the
public from commercial document retrieval services and at the world wide web
site maintained by the SEC at "http://www.sec.gov."
We have filed with the SEC in Washington, D.C. a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the securities covered by this Prospectus. As permitted by the rules and
regulations of the SEC, this Prospectus does not contain all of the information
set forth in the Registration Statement. For further information with respect to
the Company and the securities offered hereby, reference is made to the
Registration Statement, including the exhibits filed or incorporated as a part
thereof. Statements contained herein concerning the provisions of documents
filed with, or incorporated by reference in, the Registration Statement as
exhibits are necessarily summaries of such documents and each such statement is
qualified in its entirety by reference to the copy of the applicable documents
filed with the SEC. Copies of the Registration Statement and the exhibits
thereto are on file at the offices of the SEC and may be obtained upon payment
of the prescribed fee or may be examined without charge at the public reference
facilities of the SEC described above or at the worldwide web site maintained
by the SEC described above.
-14-
- ------------------------------------ -----------------------------------
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION NOT CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR 1,000,000 SHARES
MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY [LOGO]
THE COMPANY. NEITHER DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY DONEGAL GROUP INC.
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN DIVIDEND REINVESTMENT AND
OFFER TO SELL, OR A SOLICITATION OF STOCK PURCHASE PLAN
AN OFFER TO BUY, ANY OF THE
SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH
OFFERING IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT
CONTAIN ALL OF THE INFORMATION SET
FORTH IN THE REGISTRATION
STATEMENT, CERTAIN PORTIONS OF
WHICH HAVE BEEN OMITTED PURSUANT TO
THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION, CLASS A COMMON STOCK
AND TO WHICH PORTIONS REFERENCE IS
HEREBY MADE FOR FURTHER INFORMATION
WITH RESPECT TO THE COMPANY AND THE
SECURITIES OFFERED HEREBY. THE
REGISTRATION STATEMENT MAY BE
INSPECTED WITHOUT CHARGE BY ANYONE
AT THE OFFICE OF THE COMMISSION,
450 FIFTH STREET, N.W., WASHINGTON,
D.C. 20549, AND COPIES OF ALL OR
ANY PART OF IT MAY BE OBTAINED FROM
THE COMMISSION AT ITS PRINCIPAL
OFFICE, 450 FIFTH STREET, N.W.,
WASHINGTON, D.C. 20549, UPON THE
PAYMENT OF FEES PRESCRIBED BY IT.
TABLE OF CONTENTS
Page PROSPECTUS
----
Incorporation of Certain Documents
by Reference....................... 2
The Company........................... 3
The Plan.............................. 3
Description of the Plan............... 4 APRIL 30, 2001
Use of Proceeds....................... 14
Experts............................... 14
Legal Opinion......................... 14
Where You Can Find More Information... 14
- ------------------------------------ -----------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses relating to the registration of the shares of Class A Common
Stock being offered hereby will be borne by the Company. Such expenses are
estimated as follows:
Item Amount
- ---- ------
Registration Fee................................................... $ 2,707.00
Legal Fees and Expenses............................................ 8,000.00*
Accounting Fees and Expenses....................................... 1,500.00*
Printing and Duplicating........................................... 5,500.00*
Miscellaneous Expenses............................................. 600.00
----------
Total............................................ $18,307.00
==========
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that such person's conduct was unlawful.
In the case of an action or suit by or in the right of the corporation to
procure a judgment in its favor, Section 145 empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by reason of the fact that such
person is or was acting in any of the capacities set forth above against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection
II-1
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, except that indemnification is
not permitted in respect of any claim, issue or matter as to which such person
is adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court deems proper.
Section 145 further provides that a Delaware corporation is required to
indemnify a director, officer, employee or agent against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with any action, suit or proceeding or in defense of any claim, issue or matter
therein as to which such person has been successful on the merits or otherwise;
that indemnification provided for by Section 145 shall not be deemed exclusive
of any other rights to which the indemnified party may be entitled; that
indemnification provided for by Section 145 shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; and empowers the corporation to
purchase and maintain insurance on behalf of a director or officer against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of such person's status as such whether or not the
corporation would have the power to indemnify such person against such liability
under Section 145. A Delaware corporation may provide indemnification only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct. Such determination is to be
made (i) by a majority vote of the directors who were not parties to such
action, suit or proceeding, or (ii) by a committee of such directors designated
by the majority vote of such directors, or (iii) if there are no such directors,
or if such directors so direct, by independent legal counsel in a written
opinion, or (iv) by the stockholders.
Article 5 of the Company's By-laws provides for indemnification of
directors and officers of the Company to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as presently or hereafter in
effect. The By-laws of the Mutual Company also provide that the Mutual Company
shall indemnify to the full extent authorized by law any director or officer of
the Mutual Company who is made, or threatened to be made, a party to any action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was serving as a director, officer, employee or
agent of the Company, or is or was serving as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise at the request of the Mutual Company.
The Company provides liability insurance for directors and officers for
certain losses arising from claims or charges made against them while acting in
their capacities as directors or officers of the Company up to an aggregate of
$5,000,000 inclusive of defense costs, expenses and charges.
Additionally, as permitted by the General Corporation Law of the State of
Delaware, Article 6 of the Company's Certificate of Incorporation provides that
no director of the
II-2
Company shall incur personal liability to the Company or its stockholders for
monetary damages for breach of such person's fiduciary duty as a director;
provided, however, that the provision does not eliminate or limit the liability
of a director for (i) any breach of the director's duty of loyalty to the
Company or its stockholders; (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) the unlawful
payment of dividends or unlawful purchase or redemption of stock under Section
174 of the General Corporation Law of the State of Delaware; or (iv) any
transaction from which the director derived an improper personal benefit.
ITEM 16. EXHIBITS.
The Exhibits filed herewith are set forth on the Index to Exhibits filed as
a part of this registration statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-3
(d) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Marietta, Pennsylvania on April 30, 2001.
DONEGAL GROUP INC.
By:/s/ DONALD H. NIKOLAUS
-----------------------------
Donald H. Nikolaus, President
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Donald H. Nikolaus and Ralph G. Spontak, and each
or either of them, as such person's true and lawful attorneys-in-fact and
agents, with full power of substitution, for such person, and in such person's
name, place and stead, in any and all capacities to sign any or all amendments
or post-effective amendments to this registration statement, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ DONALD H. NIKOLAUS President, Chief Executive Officer April 30, 2001
- --------------------------------- and a Director
Donald H. Nikolaus (principal executive officer)
/s/ RALPH G. SPONTAK Senior Vice President, Chief Financial April 30, 2001
- --------------------------------- Officer and Secretary
Ralph G. Spontak (principal financial and
accounting officer)
/s/ C. EDWIN IRELAND Director April 30, 2001
- ---------------------------------
C. Edwin Ireland
II-5
Signature Title Date
--------- ----- ----
/s/ PATRICIA A. GILMARTIN Director April 30, 2001
- ---------------------------------
Patricia A. Gilmartin
/s/ PHILIP H. GLATFELTER, II Director April 30, 2001
- ---------------------------------
Philip H. Glatfelter, II
Director April , 2001
- ---------------------------------
R. Richard Sherbahn
Director April , 2001
- ---------------------------------
Thomas J. Finley, Jr.
/s/ ROBERT S. BOLINGER Director April 30, 2001
- ---------------------------------
Robert S. Bolinger
Director April , 2001
- ---------------------------------
John J. Lyons
II-6
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits Reference
- ------ ----------------------- ---------
3.1 Certificate of Incorporation of Registrant, as Filed herewith
amended
3.2 Amended and Restated By-laws of Registrant *
5 Opinion of Duane, Morris & Heckscher LLP as Filed herewith
to legality of securities to be registered hereby
23.1 Consent of KPMG LLP Filed herewith
23.2 Consent of Duane, Morris & Heckscher LLP Filed herewith
(Included in its Opinion)
24 Powers of Attorney Filed herewith
(Included on Signature Page)
99.1 Donegal Group Inc. Enrollment Authorization Filed herewith
Form for Holders of Class A Common Stock
99.2 Donegal Group Inc. Enrollment Authorization Filed herewith
Form for Holders of Class B Common Stock
* Such Exhibit is hereby incorporated by reference to the same exhibit in
Registrant's Form 10-Q Report for the quarter ended September 30, 1998.
II-7
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
DONEGAL GROUP INC.
1. The name of the Corporation is Donegal Group Inc.
2. The address of its registered office is 1220 Market Street Building,
Wilmington, County of New Castle, Delaware 19801. The name of its
registered agent at such address is Wilmington Corporate Services, Inc.
3. The nature of the business to be conducted or promoted is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
4. a) The aggregate number of shares which the Corporation shall have
authority to issue is: Ten Million (10,000,000) shares of Common Stock
of the par value of One Dollar ($1.00) per share (the "Common Stock")
and One Million (1,000,000) shares of Series Preferred Stock of the
par value of One Dollar ($1.00) per share (the "Preferred Stock").
(b) The Preferred Stock may be issued from time to time by the Board of
Directors as herein provided in one or more series. The designations,
relative rights, preferences and limitations of the Preferred Stock,
and particularly of the shares of each series thereof, may, to the
extent permitted by law, be similar to or may differ from those of any
other series. The Board of Directors of the Corporation is hereby
expressly granted authority, subject to the provisions of this Article
Four, to issue from time to time Preferred Stock in one or more series
and to fix from time to time before issuance thereof, by filing a
certificate pursuant to the General Corporation Law, the number of
shares in each such series and all designations, relative rights
(including the right, to the extent permitted by law, to convert into
shares of any class or into shares of any series of any class),
preferences and limitations of the shares in each such series,
including, but without limiting the generality of the foregoing, the
following:
(i) The number of shares to constitute such series (which number may
at any time, or from time to time, be increased or decreased by
the Board of Directors, notwithstanding that shares of the series
may be outstanding at the time of such increase or decrease,
unless the Board of Directors shall have otherwise provided in
creating such series) and the distinctive designation thereof;
(ii) The dividend rate on the shares of such series, whether or not
dividends on the shares of such series shall be cumulative and
the date or dates, if any, from which dividends thereon shall be
cumulative;
(iii) Whether or not the shares of such series shall be redeemable,
and, if redeemable, the date or dates upon or after which they
shall be redeemable and the amount or amounts per share (which
shall be, in the case of each share, not less than its preference
upon involuntary liquidation, plus an amount equal to all
dividends thereon accrued and unpaid, whether or not earned or
declared) payable thereon in the case of the redemption thereof,
which amount may vary at different redemption dates or otherwise
as permitted by law;
(iv) The right, if any, of holders of shares of such series to convert
the same into, or exchange the same for, Common Stock or other
stock as permitted by law, and the terms and conditions of such
conversion or exchange, as well as provisions for adjustment of
the conversion rate in such events as the Board of Directors
shall determine;
(v) The amount per share payable on the shares of such series upon
the voluntary and involuntary liquidation, dissolution or winding
up of the Corporation;
(vi) Whether the holders of shares of such series shall have voting
power, full or limited, in addition to the voting powers provided
by law, and, in case additional voting powers are accorded, to
fix the extent thereof; and
(vii) Generally to fix the other rights and privileges and any
qualifications, limitations or restrictions of such rights and
-2-
privileges of such series, provided, however, that no such
rights, privileges, qualifications, limitations or restrictions
shall be in conflict with the Certificate of Incorporation of the
Corporation or with the resolution or resolutions adopted by the
Board of Directors providing for the issue of any series of which
there are shares then outstanding.
(c) All shares of Preferred Stock of the same series shall be identical in
all respects, except that shares of any one series issued at different
times may differ as to the dates, if any, from which dividends thereon
may accumulate. All shares of Preferred Stock of all series shall be
of equal rank and shall be identical in all respects, except that to
the extent not otherwise limited in this Article Four any series may
differ from any other series with respect to any one or more of the
designations, relative rights, preferences and limitations described
or referred to in subparagraphs (b) (i) to (vii) inclusive of this
Article Four.
(d) Dividends on the outstanding Preferred Stock of each series shall be
declared and paid or set apart for payment before any dividends shall
be declared and paid or set apart for payment on the Common Stock with
respect to the same quarterly dividend period. Dividends on any shares
of Preferred Stock shall be cumulative only if and to the extent set
forth in a certificate filed pursuant to law. After dividends on all
shares of Preferred Stock (including cumulative dividends if and to
the extent any such shares shall be entitled thereto) shall have been
declared and paid or set apart for payment with respect to any
quarterly dividend period, then and not otherwise as long as any
shares of Preferred Stock shall remain outstanding, dividends may be
declared and paid or set apart for payment with respect to the same
quarterly dividend period on the Common Stock out of the assets or
funds of the Corporation legally available therefor.
(e) All shares of Preferred Stock of all series shall be of equal rank,
preference and priority as to dividends irrespective of whether or not
the rates of dividends to which the particular series of Preferred
Stock shall be entitled shall be the same
-3-
and when the stated dividends are not paid in full, the shares of all
series of Preferred Stock shall share ratably in the payment thereof
in accordance with the sums which would be payable on such shares if
all dividends were paid in full, provided, however, that any two or
more series of Preferred Stock may differ from each other as to the
existence and extent of the right to cumulative dividends, as
aforesaid.
(f) Except as otherwise specifically provided in the certificate filed
pursuant to law with respect to any series of Preferred Stock or as
otherwise provided by law, the Preferred Stock shall not have any
right to vote for the election of directors or for any other purpose
and the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes. Each holder of
Common Stock shall be entitled to one vote for each share thereof
held. In all instances in which voting rights are granted to Preferred
Stock or any series thereof, such Preferred Stock or series shall vote
with the Common Stock as a single class, except with respect to any
vote for the approval of any merger, consolidation, liquidation or
dissolution of the Corporation and except as otherwise provided in the
certificate filed pursuant to law with respect to any series of
Preferred Stock or as otherwise provided by law.
(g) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, each series of
Preferred Stock shall have preference and priority over the Common
Stock for payment of the amount to which each outstanding series of
Preferred Stock shall be entitled in accordance with the provisions
thereof and each holder of Preferred Stock shall be entitled to be
paid in full such amount, or have a sum sufficient for the payment in
full set aside, before any payments shall be made to the holders of
the Common Stock. If, upon liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation or the proceeds
thereof, distributable among the holders of the shares of all series
of Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributed
-4-
among such holders ratably in accordance with the respective amounts
which would be payable if all amounts payable thereon were paid in
full. After the holders of the Preferred Stock of each series shall
have been paid in full the amounts to which they respectively shall be
entitled, or a sum sufficient for the payment in full set aside, the
remaining net assets of the Corporation shall be distributed pro rata
to the holders of the Common Stock in accordance with their respective
rights and interests, to the exclusion of the holders of Preferred
Stock. A consolidation or merger of the Corporation with or into
another corporation or corporations, or a sale, whether for cash,
shares of stock, securities or properties, of all or substantially all
of the assets of the Corporation, shall not be deemed or construed to
be a liquidation, dissolution or winding up of the Corporation within
the meaning of this Article Four.
(h) In the event that Preferred Stock of any series shall be made
redeemable as provided in subparagraph (b)(iii) of this Article Four,
the Corporation, at the option of the Board of Directors, may redeem
at any time or times, and from time to time, all or any part of any
one or more series of Preferred Stock outstanding by paying for each
share the then applicable redemption price fixed by the Board of
Directors as provided herein, plus an amount equal to accrued and
unpaid dividends to the date fixed for redemption, upon such notice
and terms as may be specifically provided in the certificate filed
pursuant to law with respect to such series of Preferred Stock.
5. The Corporation shall have the power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
-5-
connection with such action, suit or proceeding if he acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, upon a plea of nolo contendere or
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
6. The directors of the Corporation shall incur no personal liability to the
Corporation or its stockholders for monetary damages for any breach of the
fiduciary duty as a director; provided, however, that the directors of the
Corporation shall continue to be subject to liability (i) for any breach of
their duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the directors derived an improper benefit.
7. The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors, the number of members of which
shall be set forth in the By-laws of the Corporation. The Directors need
not be elected by ballot unless required by the By-laws of the Corporation.
8. In the furtherance and not in limitation of the objects, purposes and
powers conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized to make, amend and repeal the By-laws, to
fix the amount to be reserved as working capital, and to authorize and
cause to be executed mortgages and liens without limit as to the amount,
upon the property and franchise of this Corporation.
9. The Corporation is to have perpetual existence.
10. Meetings of the stockholders may be held within or without the State of
Delaware, as the By-laws may provide. The books of the
-6-
Corporation may be kept, subject to any provisions contained in the
statutes, outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the By-laws of
the Corporation. Elections of directors need not be by written ballot
unless the By-laws of the Corporation shall so provide.
11. The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
12. The name and address of the Incorporator is John L. Olsen, Esquire, c/o
Duane, Morris & Heckscher, 1220 Market Street Building, P.O. Box 195,
Wilmington, Delaware 19899.
13. The powers of Incorporator shall terminate upon the election of directors.
I, THE UNDERSIGNED, being the Incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, and do hereby certify that this is my act and
deed and the facts herein stated are true; and accordingly, have hereunto set my
hand and seal this 26th day of August, 1986.
/s/ John L. Olsen (SEAL)
-----------------------------------
John L. Olsen, Incorporator
-7-
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DONEGAL GROUP INC.
UNDER SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
Donegal Group Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY THAT:
FIRST: The Board of Directors of Donegal Group Inc. (the "Corporation"), at
a meeting of the Board of Directors held on March 16, 1998 pursuant to notice
duly given, duly adopted the following resolution setting forth a proposed
amendment of the Certificate of Incorporation of the Corporation, declaring such
amendment to be advisable and calling for a meeting of the stockholders of said
Corporation for consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that Article 4(a) of the Certificate of Incorporation of
Donegal Group Inc. is hereby amended and restated to provide in full
as follows:
"4. (a) The aggregate number of shares which the Corporation
shall have authority to issue is: Fifteen Million shares of
Common Stock of the par value of One Dollar ($1.00) per share
(the "Common Stock") and One Million shares of Series Preferred
Stock of the par value of One Dollar ($1.00) per share (the
"Preferred Stock")."
SECOND: Thereafter, pursuant to a resolution of the Board of Directors,
at the annual meeting of the stockholders of the Corporation held on April
16,1998, the holders of a majority of the outstanding shares entitled to vote
thereon voted in favor of the approval and adoption of the amendment.
THIRD: Such amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Donald H. Nikolaus, its President and Chief Executive
Officer, and Ralph G. Spontak, its Senior Vice President, Chief Financial
Officer and Secretary, this 20th day of April, 1998.
(SEAL) DONEGAL GROUP INC.
By: /s/ Donald H. Nikolaus
----------------------
Donald H. Nikolaus,
President and Chief
ATTEST: Executive Officer
By: /s/ Ralph G. Spontak
--------------------------------
Ralph G. Spontak,
Senior Vice President, Chief
Financial Officer and Secretary
-2-
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DONEGAL GROUP INC.
UNDER SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
Donegal Group Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY THAT:
FIRST: The Board of Directors of Donegal Group Inc. (the "Corporation"), at
a meeting of the Board of Directors held on March 18, 1999 pursuant to notice
duly given, duly adopted the following resolutions setting forth a proposed
amendment of the Certificate of Incorporation of the Corporation, declaring such
amendment to be advisable and calling for a meeting of the stockholders of said
Corporation for consideration thereof. The resolutions setting forth the
proposed amendment are as follows:
WHEREAS, the Board of Directors declares it advisable to amend Article 4 of
the Corporation's Certificate of Incorporation to (i) increase the number of
authorized shares of capital stock from 16,000,000 shares, consisting of
1,000,000 shares of Series Preferred Stock and 15,000,000 shares of Common
Stock, to 37,000,000 shares, consisting of 2,000,000 shares of Series Preferred
Stock, 20,000,000 shares of Common Stock and 15,000,000 shares of Class A Common
Stock and (ii) restate in its entirety Article 4 of the Corporation's
Certificate of Incorporation as so amended; it is
RESOLVED, that Article 4 of the Certificate of Incorporation of
Donegal Group Inc. is hereby amended and restated to provide in full as set
forth on Exhibit A hereto; and
FURTHER RESOLVED, that the amendment to and restatement of Article 4
of the Certificate of Incorporation shall be submitted to the stockholders
of the Corporation for approval in accordance with the applicable
provisions of the Delaware General Corporation Law.
SECOND: Thereafter, pursuant to a resolution of the Board of Directors, at
the annual meeting of the stockholders of the Corporation held on April 15,
1999, the holders of a majority of the outstanding shares entitled to vote
thereon voted in favor of the approval and adoption of the amendment.
THIRD: Such amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Donald H. Nikolaus, its President and Chief Executive
Officer, and Ralph G. Spontak, its Senior Vice President, Chief Financial
Officer and Secretary, this 15th day of April, 1999.
(SEAL) DONEGAL GROUP INC.
By: /s/ Donald H. Nikolaus
-----------------------
Donald H. Nikolaus,
President and Chief
ATTEST: Executive Officer
By: /s/ Ralph G. Spontak
-------------------------------
Ralph G. Spontak,
Senior Vice President, Chief
Financial Officer and Secretary
-2-
EXHIBIT A
4. The aggregate number of shares of stock which the Corporation shall have
authority to issue is 37,000,000 shares, consisting of (i) 20,000,000 shares of
Common Stock (the "Common Stock"), par value $1.00 per share, (ii) 15,000,000
shares of Class A Common Stock (the "Class A Common Stock"), par value $.01 per
share, and (iii) 2,000,000 shares of Series Preferred Stock (the "Preferred
Stock"), par value $.01 per share.
(a) The Class A Common Stock may be issued from time to time by the Board
of Directors as herein provided in one or more series. The designations,
relative rights (including voting rights), preferences, limitations and
restrictions of the Class A Common Stock, and particularly of the shares of each
series thereof, may, to the extent permitted by law, be similar to or may differ
from those of any other series. The Board of Directors of the Corporation is
hereby expressly granted authority, subject to the provisions of this Article 4,
to issue from time to time Class A Common Stock in one or more series and to fix
from time to time before issuance thereof, by filing a certificate of
designations pursuant to the General Corporation Law of the State of Delaware
(the "GCL"), the number of shares in each such series and all designations,
relative rights (including the right, to the extent permitted by law, to convert
into shares of any class or into shares of any series of any class),
preferences, qualifications, limitations and restrictions of the shares in each
such series. Notwithstanding anything to the contrary set forth above, the
powers, preferences and rights, and the qualifications, limitations and
restrictions, of the Common Stock and the Class A Common Stock shall be subject
to the following:
(i) Except as otherwise required by law or as otherwise provided in
this Certificate of Incorporation or in a certificate of designations filed
pursuant to the GCL with respect to any series of Class A Common Stock,
each share of Common Stock and each share of Class A Common Stock shall be
of equal rank and shall have identical powers, preferences, qualifications,
limitations, restrictions and other rights, including rights in
liquidation. All shares of Class A Common Stock of the same series shall be
identical in all respects.
(ii) Each holder of Common Stock shall be entitled to one vote for
each share of Common Stock held. Except as otherwise specifically provided
in the certificate of designations filed pursuant to the GCL with respect
to any series of Class A Common Stock or as otherwise provided by law, the
Class A Common Stock shall not have any right to vote for the election of
directors or for any other purpose and the Common Stock and, to the extent
A-1
provided in a certificate of designations filed pursuant to the GCL with
respect to any series of Preferred Stock, the Preferred Stock shall have
the exclusive right to vote for the election of directors and for all other
purposes. In all instances in which voting rights are granted to the Class
A Common Stock or any series thereof, the Class A Common Stock or series
thereof shall vote with the Common Stock and, to the extent provided in a
certificate of designations filed pursuant to the GCL with respect to any
series of Preferred Stock, the Preferred Stock as a single class, except as
otherwise provided in the certificate of designations filed pursuant to the
GCL with respect to any series of Class A Common Stock or as otherwise
provided by law.
(iii) Each share of Common Stock and each share of Class A Common
Stock shall be equal in respect of rights to dividends and distributions,
except that (A) a dividend or distribution in cash or property on a share
of Class A Common Stock may be greater than a dividend or distribution in
cash or property on a share of Common Stock and (B) dividends or other
distributions payable on the Common Stock and the Class A Common Stock in
shares of capital stock shall be made to all holders of Common Stock and
Class A Common Stock and may be made (1) in shares of Common Stock to the
holders of Common Stock and in shares of Class A Common Stock to the
holders of Class A Common Stock, (2) in shares of Class A Common Stock to
the holders of Common Stock and to the holders of Class A Common Stock or
(3) in any other authorized class or series of capital stock to the holders
of Common Stock and to the holders of Class A Common Stock.
(iv) Except to the extent provided in paragraph (a)(iii) of this
Article 4, the Corporation shall not split, divide or combine the shares of
the Common Stock or the Class A Common Stock unless, at the same time, the
Corporation splits, divides or combines, as the case may be, the shares of
both the Common Stock and the Class A Common Stock in the same proportion
and manner.
(v) The number of authorized shares of Common Stock and the number of
authorized shares of Class A Common Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative
vote of the holders of a majority of the voting power of the stock of the
Corporation entitled to vote irrespective of any other voting requirements
set forth in Section 242(b)(2) of the GCL, but subject in all events to
compliance with the requirements of this Article 4.
(b) The Preferred Stock may be issued from time to time by the Board of
Directors of the Corporation as herein provided in one or more series. The
designations, relative rights (including
A-2
voting rights), preferences, limitations and restrictions of the Preferred
Stock, and particularly of the shares of each series thereof, may, to the extent
permitted by law, be similar to or may differ from those of any other series.
The Board of Directors of the Corporation is hereby expressly granted authority,
subject to the provisions of this Article 4, to issue from time to time
Preferred Stock in one or more series and to fix from time to time before
issuance thereof, by filing a certificate of designations pursuant to the GCL,
the number of shares in each such series and all designations, relative rights
(including the right, to the extent permitted by law, to convert into shares of
any class or into shares of any series of any class), preferences, limitations
and restrictions of the shares in each such series. Notwithstanding anything to
the contrary set forth above, the powers, preferences and rights, and the
qualifications, limitations and restrictions, of the Preferred Stock shall be
subject to the following:
(i) The number of authorized shares of the Preferred Stock may be
increased or decreased (but not below the number of shares then
outstanding) by the affirmative vote of the holders of a majority of the
voting power of the stock of the Corporation entitled to vote irrespective
of any other voting requirements set forth in Section 242(b)(2) of the GCL,
but subject in all events to compliance with the requirements of this
Article 4.
(ii) All shares of Preferred Stock of the same series shall be
identical in all respects, except that shares of any one series issued at
different times may differ as to the dates, if any, from which dividends
thereon, if any, may accumulate. All shares of Preferred Stock of all
series shall be of equal rank and shall be identical in all respects,
except that, to the extent not otherwise limited in this Article 4, any
series may differ from any other series with respect to any one or more of
the designations, relative rights, preferences, limitations and
restrictions set forth in a certificate of designations filed under the GCL
with respect to any series.
(iii) Except as otherwise specifically provided in the certificate of
designations filed pursuant to the GCL with respect to any series of
Preferred Stock or as otherwise provided by law, the Preferred Stock shall
not have any right to vote for the election of directors or for any other
purpose and the Common Stock and, to the extent provided in a certificate
of designations filed pursuant to the GCL with respect to any series of
Class A Common Stock, the Class A Common Stock shall have the exclusive
right to vote for the election of directors and for all other purposes. In
all instances in which voting rights are granted to the Preferred Stock or
any series thereof, such Preferred Stock or series thereof shall vote with
the Common Stock and, to the extent provided in a certificate of
designations filed pursuant to the GCL with respect to any series of Class
A Common Stock, the Class A Common Stock as a single class,
A-3
except as otherwise provided in the certificate of designations filed
pursuant to the GCL with respect to any series of Preferred Stock or as
otherwise provided by law.
(c) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, each series of Preferred Stock
shall have preference and priority over the Common Stock and the Class A Common
Stock for payment of the amount to which each outstanding series of Preferred
Stock shall be entitled in accordance with the provisions thereof and each
holder of Preferred Stock shall be entitled to be paid in full such amount, or
have a sum sufficient for the payment in full set aside, before any payments
shall be made to the holders of the Common Stock and the Class A Common Stock.
After the holders of the Preferred Stock of each series shall have been paid in
full the amounts to which they respectively shall be entitled, or a sum
sufficient for the payment in full set aside, the remaining net assets of the
Corporation shall be distributed pro rata to the holders of the Common Stock and
the Class A Common Stock in accordance with their respective rights and
interests, to the exclusion of the holders of Preferred Stock. A consolidation
or merger of the Corporation with or into another corporation or corporations,
or a sale, whether for cash, shares of stock, securities or properties, of all
or substantially all of the assets of the Corporation, shall not be deemed or
construed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Article 4.
A-4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DONEGAL GROUP INC.
UNDER SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
Donegal Group Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY THAT:
FIRST: The Board of Directors of Donegal Group Inc. (the "Corporation"), at
a meeting of the Board of Directors held on April 6, 2001 pursuant to notice
duly given, duly adopted the following resolutions setting forth a proposed
amendment of the Certificate of Incorporation of the Corporation, declaring such
amendment to be advisable and calling for a meeting of the stockholders of said
Corporation for consideration thereof. The resolutions setting forth the
proposed amendment are as follows:
WHEREAS, the Board of Directors declares it advisable to amend Article
4 of the Corporation's Certificate of Incorporation to (i) authorize
30,000,000 shares of a new class of common stock with one-tenth of a vote
per share designated as Class A Common Stock; (ii) reclassify the
Corporation's existing Common Stock as Class B Common Stock, effect a
one-for-three reverse split of the Class B Common Stock effective as of the
close of business on April 19, 2001, reduce the number of authorized shares
thereof from 20,000,000 shares to 10,000,000 shares and reduce the par
value thereof from $1.00 per share to $.01 per share, and (iii) eliminate
the Corporation's existing authorization to issue 15,000,000 shares of
Class A Common Stock; it is
RESOLVED, that Article 4 of the Certificate of Incorporation of
Donegal Group Inc. is hereby amended to provide in full as set forth on
Exhibit A hereto; and
FURTHER RESOLVED, that the amendment to Article 4 of the Certificate
of Incorporation shall be submitted to the stockholders of the Corporation
for approval in accordance with the applicable provisions of the Delaware
General Corporation Law.
SECOND: Thereafter, pursuant to a resolution of the Board of Directors, at
the annual meeting of the stockholders of the Corporation held on April 19,
2001, the holders of a majority of the outstanding shares entitled to vote
thereon voted in favor of the approval and adoption of the amendment.
THIRD: The amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: The amendment shall be effective at 5:00 p.m. on April 19, 2001.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Donald H. Nikolaus, its President and Chief Executive
Officer, and Ralph G. Spontak, its Senior Vice President, Chief Financial
Officer and Secretary, this 19th day of April, 2001.
(SEAL) DONEGAL GROUP INC.
By: /s/ Donald H. Nikolaus
-------------------------------------
Donald H. Nikolaus,
ATTEST: President and Chief Executive Officer
By: /s/ Ralph G. Spontak
--------------------------------
Ralph G. Spontak,
Senior Vice President, Chief
Financial Officer and Secretary
-2-
EXHIBIT A
4. The aggregate number of shares of stock which the Corporation shall have
authority to issue is 42,000,000 shares, consisting of (i) 30,000,000 shares of
Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
(ii) 10,000,000 shares of Class B Common Stock, par value $.01 per share (the
"Class B Common Stock"), and (iii) 2,000,000 shares of Series Preferred Stock,
par value $.01 per share (the "Preferred Stock"). At the time the Certificate of
Amendment of the Corporation's Certificate of Incorporation becomes effective
(the "Effective Time") pursuant to the General Corporation Law of the State of
Delaware (the "DGCL"), and without any further action on the part of the
Corporation or its stockholders, the Corporation's Common Stock, par value $1.00
per share, authorized and issued immediately prior to the Effective Time (the
"Old Common Stock") shall be reclassified, converted and combined into shares of
Class B Common Stock at the rate of one share of Class B Common Stock for each
three shares of Old Common Stock (the "Reverse Split"); provided, however, that
the Corporation shall not issue certificates for any fractional shares of Class
B Common Stock but, in lieu of such fractional interest, each holder of Old
Common Stock who would otherwise be entitled to receive a certificate for a
fraction of a share of Class B Common Stock in the Reverse Split will receive
cash in an amount equal to the average of the closing sale prices of a share of
Old Common Stock for the ten trading days ending on the date on which the
Effective Time occurs (adjusted if necessary to reflect the per share price of
the Old Common Stock without giving effect to the Reverse Split) multiplied by
the number of shares of Old Common Stock held by such holder that would
otherwise be exchanged for such fractional interest. At the Effective Time, the
certificates representing shares of the Old Common Stock shall be deemed
cancelled and shall not be recognized as outstanding on the books of the
Corporation for any purpose.
(a) The powers, preferences and rights and the qualifications, limitations
and restrictions of the Class A Common Stock and the Class B Common Stock,
respectively, shall be as follows:
(i) Except as otherwise required by law or as otherwise provided in
this Article 4, each share of Class A Common Stock and each share of Class
B Common Stock shall be of equal rank and shall have identical powers,
preferences, qualifications, limitations, restrictions and other rights.
(ii) Except as otherwise required by law or as otherwise provided in
the Corporation's Certificate of Incorporation, with respect to all matters
upon which the stockholders of the Corporation are entitled to vote, each
holder of Class A Common
A-1
Stock shall be entitled to one-tenth of one vote for each share of Class A
Common Stock held and each holder of Class B Common Stock shall be entitled
to one vote for each share of Class B Common Stock held. Except as
otherwise required by the DGCL or the Corporation's Certificate of
Incorporation, the holders of Class A Common Stock and the holders of Class
B Common Stock shall vote together as a single class on all matters to be
voted upon by the stockholders of the Corporation.
(iii) Each share of Class A Common Stock outstanding at the time of
the declaration of any dividend or other distribution payable in cash upon
the shares of Class B Common Stock shall be entitled to a dividend or
distribution payable at the same time and to stockholders of record on the
same date in an amount at least 10% greater than any dividend declared upon
each share of Class B Common Stock. Each share of Class A Common Stock and
Class B Common Stock shall be equal in respect to dividends or other
distributions payable in shares of capital stock provided that such
dividends or distributions may be made (1) in shares of Class A Common
Stock to the holders of Class A Common Stock and in shares of Class B
Common Stock to the holders of Class B Common Stock, (2) in shares of Class
A Common Stock to the holders of Class A Common Stock and to the holders of
Class B Common Stock or (3) in any other authorized class or series of
capital stock to the holders of Class A Common Stock and to the holders of
Class B Common Stock.
(iv) Except as otherwise specifically provided under clause (a)(iii)
above, the Corporation shall not split, divide or combine the shares of
Class A Common Stock or Class B Common Stock unless, at the same time, the
Corporation splits, divides or combines, as the case may be, the shares of
both the Class A Common Stock and the Class B Common Stock in the same
proportion and manner.
(v) In the event of a merger or consolidation of the Corporation with
or into another entity (whether or not the Corporation is the surviving
entity), the holders of Class A Common Stock and the holders of Class B
Common Stock shall be entitled to receive the same per share consideration
in such merger or consolidation, except that, if the consideration paid to
the stockholders of the Corporation shall consist in whole or in part of
shares of another entity, the shares of such other entity issued to the
holders of the Class B Common Stock may have greater voting rights than the
shares of the other entity issued to the holders of the Class A Common
Stock.
(b) The Preferred Stock may be issued from time to time by the Board of
Directors of the Corporation as herein provided in one or more series. The
designations, relative rights
A-2
(including voting rights), preferences, limitations and restrictions of the
Preferred Stock, and particularly of the shares of each series thereof, may, to
the extent permitted by law, be similar to or may differ from those of any other
series. The Board of Directors of the Corporation is hereby expressly granted
authority, subject to the provisions of this Article 4, to issue from time to
time Preferred Stock in one or more series and to fix from time to time before
issuance thereof, by filing a certificate of designations pursuant to the DGCL,
the number of shares in each such series and all designations, relative rights
(including the right, to the extent permitted by law, to convert into shares of
any class of capital stock or into shares of any series of any class of capital
stock), preferences, limitations and restrictions of the shares in each such
series. Notwithstanding anything to the contrary set forth above, the powers,
preferences and rights, and the qualifications, limitations and restrictions, of
the Preferred Stock shall be subject to the following:
(i) Except as otherwise specifically provided in the certificate of
designations filed under the DGCL with respect to any series of Preferred
Stock, the number of authorized shares of any series of Preferred Stock may
be increased or decreased (but not below the number of shares then
outstanding) by the affirmative vote of the holders of a majority of the
voting power of the stock of the Corporation entitled to vote irrespective
of any other voting requirements set forth in Section 242(b)(2) of the
DGCL, but subject in all events to compliance with the requirements of this
Article 4.
(ii) All shares of Preferred Stock of the same series shall be
identical in all respects, except that shares of any one series issued at
different times may differ as to the dates, if any, from which dividends
thereon, if any, may accumulate. All shares of Preferred Stock of all
series shall be of equal rank and shall be identical in all respects,
except that, to the extent not otherwise limited in this Article 4, any
series may differ from any other series with respect to any one or more of
the designations, relative rights, preferences, limitations and
restrictions set forth in a certificate of designations filed under the
DGCL with respect to any series.
(iii) Except as otherwise specifically provided in the certificate of
designations filed pursuant to the DGCL with respect to any series of
Preferred Stock or as otherwise provided by law, the Preferred Stock shall
not have any right to vote for the election of directors or for any other
purpose and the Class A Common Stock and the Class B Common Stock shall
have the exclusive right to vote for the election of directors and for all
other purposes. In all instances in which voting rights are granted to the
Preferred Stock or any series thereof, such Preferred Stock or series
thereof shall vote with the Class A Common Stock and the Class B Common
Stock as a single class, except as
A-3
otherwise provided in the certificate of designations filed pursuant to the
DGCL with respect to any series of Preferred Stock or as otherwise provided
by law.
(iv) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, each series of Preferred
Stock shall have preference and priority over the Class A Common Stock and
the Class B Common Stock for payment of the amount to which each
outstanding series of Preferred Stock shall be entitled in accordance with
the provisions thereof and each holder of Preferred Stock shall be entitled
to be paid in full such amount, or have a sum sufficient for the payment
thereof in full set aside, before any payments shall be made to the holders
of the Class A Common Stock and the Class B Common Stock. After the holders
of the Preferred Stock of each series shall have been paid in full the
amounts to which they respectively shall be entitled, or a sum sufficient
for the payment thereof in full set aside, the remaining net assets of the
Corporation shall be distributed pro rata to the holders of the Class A
Common Stock and the Class B Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of
Preferred Stock. A consolidation or merger of the Corporation with or into
another entity, or a sale, whether for cash, shares of stock, securities or
properties, of all or substantially all of the assets of the Corporation,
shall not be deemed or construed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Article 4.
A-4
EXHIBIT 5
---------
[DUANE MORRIS LETTERHEAD]
April 30, 2001
The Board of Directors of
Donegal Group Inc.
1195 River Road
Marietta, PA 17547
Ladies and Gentlemen:
We have acted as counsel to Donegal Group Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a registration
statement on Form S-3 (the "Registration Statement") relating to the offer and
sale by the Company of up to 1,000,000 shares (the "Shares") of Class A Common
Stock, $.01 par value, of the Company, pursuant to the Company's Dividend
Reinvestment and Stock Purchase Plan (the "Plan").
As counsel to the Company, we have supervised all corporate proceedings in
connection with the preparation and filing of the Registration Statement. We
have also examined the Company's Certificate of Incorporation and By-laws, as
amended to date, the corporate minutes and other proceedings and the records
relating to the authorization, sale and issuance of the Shares, and such other
documents and matters of law as we have deemed necessary or appropriate in order
to render this opinion.
Based on the foregoing, it is our opinion that each of the Shares, when
issued in accordance with the terms and conditions of the Plan, will be duly
authorized, legally and validly issued and outstanding, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Opinion" in the prospectus contained in the Registration Statement.
Sincerely,
/s/ Duane Morris & Heckscher LLP
EXHIBIT 23.1
------------
Independent Auditors' Consent
-----------------------------
The Board of Directors
Donegal Group Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus contained in
the Registration Statement.
/s/ KPMG LLP
KPMG LLP
Philadelphia, Pennsylvania
April 30, 2001
EXHIBIT 99.1
------------
ENROLLMENT AUTHORIZATION FORM
PLEASE ENROLL MY ACCOUNT AS FOLLOWS:
- ------------------------------------
Place an "X" in ONE box only, using a dark ink pen or a #2 pencil ([ ]). If
you do not check any box, then FULL DIVIDEND REINVESTMENT will be assumed.
FULL DIVIDEND REINVESTMENT [ ]
Reinvest all dividends for this account
PARTIAL DIVIDEND REINVESTMENT [ ]
Send any dividends in cash on _________________* whole shares and reinvest any
remaining dividends.
VOLUNTARY CASH PAYMENTS ONLY (NO DIVIDEND REINVESTMENT) [ ]
All dividends will be paid in cash.
*Cannot be greater than the total number of certificated and/or book-entry
shares that may hereafter be registered in your name.
Under each of the options above, participants may make voluntary cash payments
at any time.
AUTOMATIC DEDUCTIONS
To authorize deductions complete BOTH SIDES of the next form below.
Signature(s) of Registered Owner(s):
-------------------------------------------
(PLEASE DETACH, BUT DO NOT FOLD OR STAPLE)
[Grid Omitted]
1. Bank Routing Number
------------------------
2. Bank Account Number
------------------------
3. Account Type Checking [ ] Savings [ ]
4. Withdrawal Amount .00
-----------------
5. Cycle 1st [ ] 2nd [ ]
WITHDRAWAL AMOUNT MUST BE IN WHOLE DOLLARS ONLY, DO NOT INDICATE CENTS
---------------------
SEE REVERSE SIDE FOR IMPORTANT INFORMATION
- ------------------------------------------
6. I (We) agree to the terms of the Automatic Deduction Authorization on the
reverse side
- ------------------------------------------------------
Signature Date
AUTHORIZATION FORM FOR AUTOMATIC DEDUCTIONS
(PLEASE DETACH, BUT DO NOT FOLD OR STAPLE)
VOLUNTARY CASH PAYMENT FORM
To purchase additional shares, please make your check or money order payable in
United States dollars to "Investment Plan Services." (PLEASE NOTE YOUR ACCOUNT
NUMBER AND COMPANY CODE ON YOUR PAYMENT.) DO NOT SEND CASH.
Amount Enclosed $
---------------------------
MAIL YOUR PAYMENT TOGETHER WITH THIS FORM IN THE POSTAGE PRE-PAID ENVELOPE
PROVIDED OR TO THE ADDRESS SHOWN ON THE REVERSE SIDE OF THIS FORM.
( )
- -------------------------
Daytime telephone number
[Reverse Side]
AUTOMATIC DEDUCTION AUTHORIZATION
---------------------------------
I (We) hereby authorize First Chicago Trust Company of New York to make
deductions of funds from the checking or savings account in the amount stated on
the reverse of this form. These funds will be used to purchase shares to be held
for my (our) account.
7. BANK/FINANCIAL INSTITUTION INFORMATION
--------------------------------------
NAME
---------------------------------------------------------------------------
ADDRESS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CITY STATE ZIP
----------------------------- -------------------- --------------
VOLUNTARY CASH PAYMENT INFORMATION
Voluntary cash payments should be mailed to First Chicago Trust Company of New
York, Investment Plans, P.O. Box 13531, Newark, NJ 07188-0001.
For information, participants may write to First Chicago Trust Company of New
York, Investment Plans, P.O. Box 2598, Jersey City, NJ 07303-2598.
If you prefer, you may call First Chicago Trust Company of New York at the
telephone number listed in the enclosed plan description.
ENROLLMENT AUTHORIZATION FORM
PLEASE ENROLL MY ACCOUNT AS FOLLOWS:
- ------------------------------------
Place an "X" in ONE box only, using a dark ink pen or a #2 pencil ([ ]).
If you do not check any box, then FULL DIVIDEND REINVESTMENT will be assumed.
Participation in the plan is subject to the terms as outlined in the plan
description.
For information, participants may write to Investment Plan Services, P.O. Box
2598, Jersey City, NJ 07303-2598.
If you prefer, you may call the plan administrator at the telephone number
listed in the enclosed plan description.
Voluntary cash payments should be mailed to Investment Plan Services, P.O. Box
13531, Newark, NJ 07188-0001.
USE THIS ILLUSTRATION AS A GUIDE TO HELP YOU COMPLETE THE AUTHORIZATION FORM FOR
AUTOMATIC DEDUCTIONS BELOW
[GRAPHIC ILLUSTRATION OMITTED]
AUTHORIZATION FORM FOR AUTOMATIC DEDUCTIONS
INSTRUCTIONS - PLEASE COMPLETE ALL 7 STEPS
Complete and return this form ONLY if you wish to authorize automatic deductions
to purchase additional shares. DEDUCTIONS CAN ONLY BE MADE FROM ACCOUNTS AT U.S.
BANKS AND FINANCIAL INSTITUTIONS. There are 7 steps to complete on BOTH SIDES of
this authorization form. Each one is important in setting this up for you.
Please be sure to complete all 7 steps, using a dark ink pen or a #2 pencil.
Let's start with the 6 items on the reverse side.
1. - BANK ROUTING NUMBER: Locate your bank's 9 digit routing number in the
lower left portion of your check or deposit slip as illustrated above.
Write that number in the 9 boxes across the top of the grid and then shade
in the corresponding box beneath each number.
2. - BANK ACCOUNT NUMBER: Locate you bank account number and shade in the grid
as you did in Step 1. Note that there may be more spaces than you need so
be sure to start from the left side as the machine that reads this form
will start reading the grid from the left side. Please do not put dashes or
leave blank spaces between your numbers.
3. - ACCOUNT TYPE: Are we debiting your checking or savings account? Check
one. If deductions are to be made from a MONEY MARKET ACCOUNT, please
contact your bank/financial institution to confirm if your account is a
checking or a savings account.
4. - WITHDRAWAL AMOUNT: Enter the amount to debit from your bank account in
the boxes across the top of the grid. Now, shade in the grid as you did
before. Express the withdrawal amount in WHOLE DOLLARS ONLY, NO CENTS.
(Refer to the enclosed plan description for the minimum amount.)
5. - CYCLE: Refer to the enclosed plan description for the frequency of
automatic deductions. If the plan permits deductions ONLY ONCE A MONTH,
PLEASE SHADE IN THE GRID UNDER "1ST CYCLE." If the plan permits deductions
TWICE PER MONTH, YOU MUST INDICATE YOUR CHOICE OF DEDUCTION DATES, either
the earlier date (1st cycle) or the later date (2nd cycle), or both.
6. - SIGNATURE(S): Also, be sure to read the Automatic Deduction Authorization
(below, at left) that authorizes us to perform this service for you.
7. - BANK/FINANCIAL INSTITUTION INFORMATION: Now, fill in the bank name and
address (below, at right) and you're all done.
AUTOMATIC DEDUCTION AUTHORIZATION
---------------------------------
I (We) hereby authorize the plan administrator to make deductions of funds from
the checking or savings account in the amount stated on the reverse of this
form. These funds will be used to purchase shares to be held for my (our)
account.
7. BANK/FINANCIAL INSTITUTION INFORMATION
--------------------------------------
NAME
----------------------------------------------------------------------------
ADDRESS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CITY STATE ZIP
------------------------------------------ --------------------- ---------
VOLUNTARY CASH PAYMENT INFORMATION
Voluntary cash payments should be mailed to Investment Plan Services, P.O. Box
13531, Newark, NJ 07188-0001.
For information, participants may write to Investment Plan Services, P.O. Box
2598, Jersey City, NJ 07303-2598.
If you prefer, you may call the plan administrator at the telephone number
listed in the enclosed plan description.
EXHIBIT 99.2
------------
ENROLLMENT AUTHORIZATION FORM
PLEASE ENROLL MY ACCOUNT AS FOLLOWS:
- ------------------------------------
Place an "X" in ONE box only, using a dark ink pen or a #2 pencil ([ ]). If
you do not check any box, then FULL DIVIDEND REINVESTMENT will be assumed.
FULL DIVIDEND REINVESTMENT [ ]
Reinvest all dividends for this account
VOLUNTARY CASH PAYMENTS ONLY (NO DIVIDEND REINVESTMENT) [ ]
All dividends will be paid in cash.
Under each of the options above, participants may make voluntary cash payments
at any time.
AUTOMATIC DEDUCTIONS
To authorize deductions complete BOTH SIDES of the next form below.
Signature(s) of Registered Owner(s):
--------------------------------------------
(PLEASE DETACH, BUT DO NOT FOLD OR STAPLE)
[Grid Omitted]
1. Bank Routing Number
------------------------
2. Bank Account Number
------------------------
3. Account Type Checking [ ] Savings [ ]
4. Withdrawal Amount .00
-----------------
5. Cycle 1st [ ] 2nd [ ]
WITHDRAWAL AMOUNT MUST BE IN WHOLE DOLLARS ONLY, DO NOT INDICATE CENTS
---------------------
SEE REVERSE SIDE FOR IMPORTANT INFORMATION
- ------------------------------------------
6. I (We) agree to the terms of the Automatic Deduction Authorization on the
reverse side
- -------------------------------------------------------
Signature Date
AUTHORIZATION FORM FOR AUTOMATIC DEDUCTIONS
(PLEASE DETACH, BUT DO NOT FOLD OR STAPLE)
VOLUNTARY CASH PAYMENT FORM
To purchase additional shares, please make your check or money order payable in
United States dollars to "Investment Plan Services." (PLEASE NOTE YOUR ACCOUNT
NUMBER AND COMPANY CODE ON YOUR PAYMENT.) DO NOT SEND CASH.
Amount Enclosed $
---------------------------
MAIL YOUR PAYMENT TOGETHER WITH THIS FORM IN THE POSTAGE PRE-PAID ENVELOPE
PROVIDED OR TO THE ADDRESS SHOWN ON THE REVERSE SIDE OF THIS FORM.
( )
- -------------------------
Daytime telephone number
[Reverse Side]
AUTOMATIC DEDUCTION AUTHORIZATION
---------------------------------
I (We) hereby authorize First Chicago Trust Company of New York to make
deductions of funds from the checking or savings account in the amount stated on
the reverse of this form. These funds will be used to purchase shares to be held
for my (our) account.
7. BANK/FINANCIAL INSTITUTION INFORMATION
--------------------------------------
NAME
----------------------------------------------------------------------------
ADDRESS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CITY STATE ZIP
------------------------------------- ---------------- -------------
VOLUNTARY CASH PAYMENT INFORMATION
Voluntary cash payments should be mailed to First Chicago Trust Company of New
York, Investment Plans, P.O. Box 13531, Newark, NJ 07188-0001.
For information, participants may write to First Chicago Trust Company of New
York, Investment Plans, P.O. Box 2598, Jersey City, NJ 07303-2598.
If you prefer, you may call First Chicago Trust Company of New York at the
telephone number listed in the enclosed plan description.
ENROLLMENT AUTHORIZATION FORM
PLEASE ENROLL MY ACCOUNT AS FOLLOWS:
- ------------------------------------
Place an "X" in ONE box only, using a dark ink pen or a #2 pencil ([ ]).
If you do not check any box, then FULL DIVIDEND REINVESTMENT will be assumed.
Participation in the plan is subject to the terms as outlined in the plan
description.
For information, participants may write to Investment Plan Services, P.O. Box
2598, Jersey City, NJ 07303-2598.
If you prefer, you may call the plan administrator at the telephone number
listed in the enclosed plan description.
Voluntary cash payments should be mailed to Investment Plan Services, P.O. Box
13531, Newark, NJ 07188-0001.
USE THIS ILLUSTRATION AS A GUIDE TO HELP YOU COMPLETE THE AUTHORIZATION FORM FOR
AUTOMATIC DEDUCTIONS BELOW
[GRAPHIC ILLUSTRATION OMITTED]
AUTHORIZATION FORM FOR AUTOMATIC DEDUCTIONS
INSTRUCTIONS - PLEASE COMPLETE ALL 7 STEPS
Complete and return this form ONLY if you wish to authorize automatic deductions
to purchase additional shares. DEDUCTIONS CAN ONLY BE MADE FROM ACCOUNTS AT U.S.
BANKS AND FINANCIAL INSTITUTIONS. There are 7 steps to complete on BOTH SIDES of
this authorization form. Each one is important in setting this up for you.
Please be sure to complete all 7 steps, using a dark ink pen or a #2 pencil.
Let's start with the 6 items on the reverse side.
1. - BANK ROUTING NUMBER: Locate your bank's 9 digit routing number in the
lower left portion of your check or deposit slip as illustrated above.
Write that number in the 9 boxes across the top of the grid and then shade
in the corresponding box beneath each number.
2. - BANK ACCOUNT NUMBER: Locate you bank account number and shade in the grid
as you did in Step 1. Note that there may be more spaces than you need so
be sure to start from the left side as the machine that reads this form
will start reading the grid from the left side. Please do not put dashes or
leave blank spaces between your numbers.
3. - ACCOUNT TYPE: Are we debiting your checking or savings account? Check
one. If deductions are to be made from a MONEY MARKET ACCOUNT, please
contact your bank/financial institution to confirm if your account is a
checking or a savings account.
4. - WITHDRAWAL AMOUNT: Enter the amount to debit from your bank account in
the boxes across the top of the grid. Now, shade in the grid as you did
before. Express the withdrawal amount in WHOLE DOLLARS ONLY, NO CENTS.
(Refer to the enclosed plan description for the minimum amount.)
5. - CYCLE: Refer to the enclosed plan description for the frequency of
automatic deductions. If the plan permits deductions ONLY ONCE A MONTH,
PLEASE SHADE IN THE GRID UNDER "1ST CYCLE." If the plan permits deductions
TWICE PER MONTH, YOU MUST INDICATE YOUR CHOICE OF DEDUCTION DATES, either
the earlier date (1st cycle) or the later date (2nd cycle), or both.
6. - SIGNATURE(S): Also, be sure to read the Automatic Deduction Authorization
(below, at left) that authorizes us to perform this service for you.
7. - BANK/FINANCIAL INSTITUTION INFORMATION: Now, fill in the bank name and
address (below, at right) and you're all done.
AUTOMATIC DEDUCTION AUTHORIZATION
---------------------------------
I (We) hereby authorize the plan administrator to make deductions of funds from
the checking or savings account in the amount stated on the reverse of this
form. These funds will be used to purchase shares to be held for my (our)
account.
7. BANK/FINANCIAL INSTITUTION INFORMATION
--------------------------------------
NAME
----------------------------------------------------------------------------
ADDRESS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CITY STATE ZIP
----------------------------------------- --------------- ------------
VOLUNTARY CASH PAYMENT INFORMATION
Voluntary cash payments should be mailed to Investment Plan Services, P.O. Box
13531, Newark, NJ 07188-0001.
For information, participants may write to Investment Plan Services, P.O. Box
2598, Jersey City, NJ 07303-2598.
If you prefer, you may call the plan administrator at the telephone number
listed in the enclosed plan description.