<PAGE> 1
As filed with the Securities and Exchange Commission on July 12, 1996
Registration No. 333- 4625
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ACCEL INTERNATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 31-0788334
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
NICHOLAS Z. ALEXANDER, Senior Vice President
475 Metro Place North, Suite 100 475 Metro Place North, Suite 100
Dublin, Ohio 43017 Dublin, Ohio 43107
(614) 764-7000 (614) 764- 7000
(Address of principal executive offices) (Name and address of agent for service)
-----------------------
Copy to:
FRED A. SUMMER, ESQ.
Squire, Sanders & Dempsey
41 South High Street
Columbus, Ohio 43215
(614) 365-2700
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
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, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
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. / /
-----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE> 2
ACCEL INTERNATIONAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number
Form S-2
(Reg. S-K Item,
if applicable) Caption or Location in Prospectus
<S> <C>
1(501) Outside front cover page
2(502) Outside front cover page; Inside front cover page;
Outside back cover page
3(503) SUMMARY; RISK FACTORS
4(504) USE OF PROCEEDS
5(505) THE RIGHTS OFFERING -- Determination of
Subscription Price
6(506) Inapplicable
7(507) Inapplicable
8(508) PLAN OF DISTRIBUTION
9(202) DESCRIPTION OF THE CAPITAL STOCK
10(509) Inapplicable
11(a) INCORPORATION OF CERTAIN INFORMATION BY REFERENCE;
RECENT DEVELOPMENTS
11(b) Inapplicable
11(c) Inapplicable
12 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
13(510) Inapplicable
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION, DATED JULY 12, 1996
PROSPECTUS 6,834,648 SHARES
ACCEL INTERNATIONAL CORPORATION
[LOGO]
COMMON STOCK
---------------
ACCEL International Corporation (the "Company"), a Delaware
corporation, is offering (the "Rights Offering") to holders of record (the
"Rights Holders") of shares of its Common Stock, par value $.10 per share (the
"Common Stock"), non-transferable subscription rights (the "Rights") to
subscribe for and purchase additional shares of the Common Stock for a price of
$2.25 per share (the "Subscription Price"). Such Rights Holders will receive one
Right for every share of Common Stock held by them as of the close of business
on June 18, 1996 (the "Record Date"). Rights Holders may purchase 1.5 shares of
Common Stock (the "Underlying Shares") for each Right held upon payment of the
Subscription Price (the "Basic Subscription Privilege"). No fractional Rights
will be issued and no fractional shares of Common Stock will be issued upon
exercise of the Rights. To the extent that the Basic Subscription Privilege is
not exercised in full, the Company may determine to offer the shares of Common
Stock not subscribed for sale to employees, independent agents and customers
(including automobile dealers) of the Company directly through executive
officers of the Company at a price of $2.25 per share (the "Additional
Offering"). See "Plan of Distribution." The Rights will be evidenced by
non-transferable certificates. Once a Rights Holder has exercised any Rights,
such exercise may not be revoked.
The Rights will expire at 5:00 p.m., Columbus, Ohio time, on August
15, 1996, unless extended (as it may be extended, the "Expiration Date"),
provided that the Expiration Date shall in no event be later than August 28,
1996. Rights Holders who do not exercise their Rights will experience a decrease
in their proportionate interest in the equity ownership and voting power of the
Company. See "Risk Factors--Decrease in Proportionate Equity Ownership if Rights
Not Exercised."
The Common Stock is traded on the Nasdaq National Market under the
symbol "ACLE." On July 11, 1996, the last reported sale price of the Common
Stock was $2.75.
After the Expiration Date, the Rights will no longer be exercisable
and will have no value. Since the Rights are non-transferable, the Rights may
not be sold and there will be no trading market for the Rights.
POTENTIAL PURCHASERS OF THE COMMON STOCK PURSUANT TO AN EXERCISE OF
THE RIGHTS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE __.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================
Price to Underwriting Proceeds to
Public Discount Company (1)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $ 2.25 None $ 2.25
- ---------------------------------------------------------------------------------------
Total(2) $15,377,958 None $15,377,958
=======================================================================================
</TABLE>
(1) Before deducting expenses payable by the Company estimated to be
$96,400.
(2) The Total amount assumes the purchase of all 6,834,648 shares of
Common Stock offered hereby.
---------------
The date of this Prospectus is July -, 1996
<PAGE> 4
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-2 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") with respect to the Rights and the shares of Common Stock offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement and amendments thereof and exhibits thereto.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information are
available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549-1004, as well as the Regional Offices of the Commission at 7 World Trade
Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, 14th Floor, Chicago, Illinois 60661- 2511. Copies of
the Registration Statement and amendments thereof and the exhibits thereto may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
(File No. 0-8162) are incorporated in this Prospectus by reference:
(1) Annual Report on Form 10-K for the year ended December 31, 1995
(a copy of which accompanies this Prospectus).
(2) Quarterly Report on Form 10-Q for the quarter ended March 31,
1996 (a copy of which accompanies this Prospectus).
Any statement contained in a document which is 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 such 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
beneficial owners, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the foregoing
documents, other than the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests should be
directed to ACCEL International Corporation, 475 Metro Place North, Suite 100,
Dublin, Ohio 43017, Attention: Nicholas Z. Alexander, Senior Vice President,
(614) 764-7000.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
information appearing elsewhere in this Prospectus and in the documents
incorporated in this Prospectus by reference.
The Company
The Company is an insurance holding company incorporated in Delaware
in June 1978 as the successor to an Ohio corporation, formerly Acceleration
Corporation, organized in 1969. The Company, through its subsidiaries, is
engaged in the sale and underwriting of credit life and credit accident and
health insurance, extended service contracts and other specialty casualty
products. The credit insurance and extended service contract products are
offered to consumers principally through automobile dealers, financial
institutions and other business entities. For more detailed information
concerning the business of the Company and its financial statements see the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 (the
"10-K") and Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
(the "10-Q"), copies of which accompany this Prospectus and which are
incorporated herein by reference.
The Company's home office is located at 475 Metro Place North, Suite
100, Dublin, Ohio 43017 and its telephone number is (614) 764-7000.
Risk Factors
There are certain risks in connection with the Rights Offering that
should be considered by Rights Holders prior to determining whether to exercise
the Rights and purchase the Common Stock. The following is a summary of certain
of these risks: (i) The Company has experienced net losses since 1992 and may
incur net losses in the future; (ii) the Company's gross premiums derived from
its credit insurance business are substantially dependent upon consumer credit
transactions involving the purchase of automobiles; (iii) A.M. Best Company
downgraded the Company's life insurance subsidiary's rating from A- to C+ and
the property and casualty insurance subsidiary's rating from A to B in 1991
which ratings have remained unchanged since then. The current ratings may have
an adverse affect on the insurance subsidiaries' ability to market their
products; (iv) the Company does not expect to pay dividends in the foreseeable
future and is limited under a note purchase agreement from doing so; (v) Chase
Insurance Holdings Corporation ("CIHC"), a corporation which is beneficially
owned indirectly by David T. Chase, a director of the Company, his wife, his
children and various family trusts (collectively, the "Chase Stockholders"),
beneficially owns, directly or indirectly, approximately 29.7% of the
outstanding shares of Common Stock of the Company and Mr. Chase's wife
beneficially owns an additional 8.4% of the Common Stock of the Company. It is
possible that the Rights Offering will result in CIHC, either alone or together
with the Chase Stockholders and Mrs. Chase, beneficially owning as much as 60.6%
of the Common Stock, assuming that the Chase Stockholders and Mrs. Chase
exercise their Basic Subscription Privilege in full and that the other Rights
Holders do not exercise their Basic Subscription Privilege, and having actual
control over the Company. The Company has been advised that the Chase
Stockholders and Mrs. Chase do intend to exercise their Basic Subscription
Privilege in full. Mr. Chase disclaims beneficial ownership of the shares of
Common Stock owned by his wife; and (vi) there can be no assurance that the
market price of the Common Stock will not decline.
The Rights Offering
Rights......................Each record holder of Common Stock at the close of
business on June 18, 1996 (the "Record Date") is
receiving one non- transferable subscription right
("Right") for each share of Common Stock held of
record on the Record Date. Each
4
<PAGE> 6
Right will entitle the holder thereof ("Rights
Holder") to purchase from the Company 1.5 shares of
Common Stock (the "Underlying Shares") for a price
of $2.25 per share (the "Subscription Price"). An
aggregate of up to 6,834,648 shares of Common Stock
will be sold in the Rights Offering upon exercise of
the Rights. The Rights will be evidenced by
non-transferable certificates (the "Subscription
Rights Certificates").
Basic Subscription
Privilege............... Rights Holders are entitled to purchase, at the
Subscription Price, 1.5 Underlying Shares for each
Right held (the "Basic Subscription Privilege"). No
fractional Rights will be issued and no fractional
shares of common stock will be issued upon exercise
of the Rights. See "The Rights Offering -- Basic
Subscription Privilege."
To the extent that the Basic Subscription Privilege
is not exercised in full, the Company may determine
to offer any or all of the shares of Common Stock
not subscribed for sale to employees, independent
agents and customers (including automobile dealers)
of the Company directly through executive officers
of the Company. See "The Rights Offering -- Basic
Subscription Privilege" and "Plan of Distribution."
Subscription
Price................... $2.25 per Underlying Share, payable in cash. See
"The Rights Offering -- Exercise of Rights" and "The
Rights Offering --Determination of Subscription
Price."
Tender of Subordinated
Notes in Lieu of Cash .. The Company has decided to permit CIHC and its
affiliate (the "Subordinated Noteholders") to tender
$5,619,046 principal amount of the Company's 10.125%
Subordinated Notes due July 2000 (the "Subordinated
Notes") for cancellation as consideration (in lieu
of cash) for the purchase of shares of Common Stock
pursuant to the Rights Offering.
Shares of Common Stock
Outstanding After the
Rights Offering ........ As of the Record Date there were 4,556,432 Shares of
Common Stock outstanding. An aggregate of up to
6,834,648 shares of Common Stock will be sold in the
Rights Offering if all of the Rights are exercised.
If all Rights are exercised, an aggregate of
11,391,080 shares of Common Stock will be
outstanding upon completion of the Rights Offering.
5
<PAGE> 7
Transferability
of Rights............... The Rights, including the Basic Subscription
Privilege , are not transferable.
Expiration Date......... 5:00 p.m., Columbus, Ohio time, August 15, 1996, or
such later date and time to which the Rights
Offering may be extended (the "Expiration Date"),
provided that the expiration date shall in no event
be later than August 28, 1996 . See "The Rights
Offering -- Expiration Date." Rights not exercised
prior to the Expiration Date will expire and become
worthless.
Procedure for
Exercising Rights....... The Basic Subscription Privilege may be exercised by
properly completing and signing the Subscription
Certificate evidencing the Rights (a "Subscription
Certificate") and forwarding such Subscription
Certificate (or following the Guaranteed Delivery
Procedures), with payment of the Subscription Price
for each Underlying Share subscribed for pursuant to
the Basic Subscription Privilege , to the
Subscription Agent on or prior to the Expiration
Date. If Subscription Rights are sent by mail,
Rights Holders are urged to use insured, registered
mail. No interest will be paid on funds delivered in
payment of the Subscription Price. See "The Rights
Offering -- Exercise of Rights."
No Revocation
of Exercise............. Once a Rights Holder has exercised the Basic
Subscription Privilege , such exercise may not be
revoked.
Persons Holding Common
Stock or Wishing
to Exercise Rights,
Through Others.......... Persons holding shares of Common Stock beneficially,
and receiving the Rights issuable with respect
thereto, through a broker, dealer, commercial bank,
trust company or other nominee, as well as persons
holding certificates for Common Stock directly who
would prefer to have such institutions effect
transactions relating to the Rights on their behalf,
should contact the appropriate institution or
nominee and request it to effect such transactions
for them. See "The Rights Offering -- Exercise of
Rights".
Issuance of
Common Stock............ Certificates representing shares of Common Stock
purchased pursuant to the exercise of the Basic
Subscription Privilege
6
<PAGE> 8
will be delivered to subscribers as soon as
practicable after the corresponding Rights have been
validly exercised and payment therefor has been
received by the Company. See "The Rights Offering --
Basic Subscription Privilege."
Use of Proceeds......... The Company intends to use the net cash proceeds
from the Rights Offering for general corporate
purposes, including investments in, and advances to,
its insurance company subsidiaries and the
redemption of any Subordinated Notes which are not
tendered in the Rights Offering. The Subordinated
Noteholders have indicated that they intend to
tender $5,619,046 principal amount or 88.7% of the
$6,337,446 principal amount of Subordinated Notes
outstanding as of June 30, 1996, for cancellation as
consideration (in lieu of cash) for the purchase of
shares of Common Stock. The Subordinated Notes will
be accepted by the Company as consideration in an
amount equal to the full principal amount of such
Subordinated Notes plus accrued interest from July
1, 1996 through the date of exercise of the Basic
Subscription Privilege by the Subordinated
Noteholders. Accordingly, the net cash proceeds of
the Rights Offering assuming all of the Rights are
exercised in full are estimated to be approximately
$9,600,000.
Subscription Agent...... National City Bank, Cleveland, Ohio. The
Subscription Agent's telephone number is (800)
622-6757.
RISK FACTORS
Prospective investors should consider carefully the following risk
factors, together with other information contained or incorporated by reference
in this Prospectus, in evaluating an investment in the Common Stock offered
hereby. This Prospectus contains or incorporates by reference certain
forward-looking statements reflecting management's current views with respect to
future events and financial performance. These forward- looking statements are
subject to certain risks and uncertainties, all of which are difficult to
predict and many of which are beyond the control of the Company, that could
cause actual results to differ materially from those in the forward-looking
statements, including but not limited to, the following risk factors.
Continuing Net Losses
7
<PAGE> 9
The Company has experienced net losses since 1992 and may incur net
losses in the future. The Company incurred net losses of $1,460,000, $5,238,000,
$5,281,000 and $22,124,000 or an aggregate of $34,103,000 for the years ended
December 31, 1995, 1994, 1993 and 1992, respectively. There can be no assurance
that the Company will not experience net losses in the future.
Decrease in Gross Premiums Written
Since 1991 gross premiums written have decreased from $130,239,000 to
$55,443,000 principally as a result of the Company's decision to discontinue all
lines of business except for credit insurance and extended service contracts.
See Item 1 of the 10-K for a general discussion of the discontinued lines of
business and Table II on page 15 of the 10-K which sets forth the changes in
gross premiums written for the past three fiscal years for both continuing lines
of business and discontinued lines of business.
Interest Rate Risk
The Company, like all other life and health and property and casualty
insurers, is subject to various risks which are discussed in Note A of the Notes
to Consolidated Financial Statements included in the 10-K. In particular, the
Company is subject to interest rate risk which is the risk that interest rates
will change and cause a decrease in the value of an insurer's investments. The
Company mitigates this risk by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would have to
borrow funds or sell assets prior to maturity and potentially recognize a gain
or loss. At March 31, 1996, the estimated duration of the Company's fixed income
investment portfolio was 2.84 years while the estimated liability duration was
approximately 3.5 years. Currently, an interest rate change of 1% would impact
the market value of the fixed maturity portfolio and stockholders' equity by a
decline of approximately $1.8 million if interest rates rose and an increase of
approximately $1.8 million if interest rates declined.
Dependence Upon Automobile Purchases
The Company sells credit insurance and extended warranty contracts
primarily in connection with consumer credit transactions involving automobile
purchases. Automobile purchases have been and will continue to be affected,
directly and indirectly, by automobile prices, interest rates, the availability
of consumer credit and general economic conditions, all of which are beyond the
Company's control.
Effect of Downgrading of Insurance Ratings
Life Insurance
The Company's life insurance subsidiary is rated C+ (Fair) by A.M. Best
Company ("Best"). Best downgraded the life insurance subsidiary's rating from A-
to C+ in 1991 and the rating has remained unchanged since then. The Best rating
is based on factors relevant to policyholders and is not directed toward the
protection of stockholders. The Best rating is based upon its current opinion of
the life insurance subsidiary's lack of consistently profitable operating
results in recent years as well as its concern regarding the weak financial
results, high debt level and poor liquidity position of the Company. The
weaknesses noted by Best are partially offset by the general profitability of
the life insurance subsidiary's core credit life insurance operations and the
high quality of its investment portfolio. Although the Company has not
experienced a material reduction in the level of its sales of credit insurance
products through automobile dealers following Best's downgrading, the insurance
company subsidiary's current rating adversely affects its ability to market
those products through financial institutions.
Property and Casualty Insurance
8
<PAGE> 10
The Company's property and casualty insurance company subsidiary is
rated B (Adequate) by Best. Best downgraded the property and casualty insurance
company subsidiary's rating from A to B in 1991 and the rating has remained
unchanged since then. The Best rating reflects its analysis of the property and
casualty insurance company subsidiary's continued operating losses and
corresponding decline in surplus and ongoing reserve strengthening for the lines
of business in runoff. The property and casualty insurance company subsidiary's
current rating may have an adverse affect on its ability to market its products
through certain quality agents and brokers.
Uncertain Profitability of New Programs; Dependence Upon Agent
The property and casualty insurance subsidiary has recently introduced
two new insurance programs. See "Recent Developments." Because the property and
casualty insurance company subsidiary has had little or no experience in writing
coverage for the new insurance programs, there can be no assurance that either
of such programs will be profitable. The Company has, however, employed
individuals to develop these programs who have extensive experience. The
Company's new commercial auto program (truck and bus) is being marketed through
an independent agent, Transportation Insurance Specialists, Inc. ("TIS") which
does have limited authority to bind the Company. If the commercial auto program
(truck and bus) becomes material, the loss of TIS as an independent agent could
have a material adverse impact on the Company's financial position or operating
results.
Limitations on Payment of Dividends
The Company has not paid dividends on the Common Stock since 1991 due
to the Company's lack of profitability in recent years and does not expect to
pay dividends until the Company has returned to a level of profitability which
will sustain the payment of cash dividends. In addition, the Company's
outstanding 9.50% Notes due April 1, 2001 (the "Senior Notes"), were issued
pursuant to a note purchase agreement which limits the Company's ability to pay
dividends to 50% of net income computed on a cumulative basis from January 1,
1996 to and including the date of the dividend payment. Even if the Company does
have net income in the future, its principal source of cash flow with which to
pay dividends will be dependent upon the ability of its insurance company
subsidiaries to pay dividends to the Company. Ohio domiciled insurance companies
are subject to laws and regulations which, among other things, limit the amount
of dividends and other payments that can be made by such insurance companies
without prior regulatory approval. See "Price Range of Common Stock and Dividend
Policy" included herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Consolidated Financial Statements and
notes thereto included in the 10-K which accompanies this Prospectus.
Claims Asserted by Liquidation Bureau under Certificates of Suretyship
On October 7, 1994, the Liquidation Bureau of the New York State
Insurance Department (the "Liquidation Bureau") took control of Galaxy Insurance
Company ("Galaxy"), which prior to the commencement of liquidation proceedings
had been an indirect wholly-owned subsidiary of the Company, pursuant to an
order of liquidation of the New York Supreme Court. Prior to the liquidation of
Galaxy, Acceleration National Insurance Company ("ANIC"), the property and
casualty insurance company subsidiary of the Company, had issued certain
certificates of suretyship ("Certificates") with respect to certain Galaxy
insurance policies, each of which provided that ANIC would assume the
responsibilities of Galaxy under the specified policy if Galaxy became insolvent
or financially unable to meet its obligations on the underlying policy, but only
if certain conditions were met. In particular, the Certificates provided that
ANIC's assumption of liability was contingent upon the insured's executing and
delivering all agreements, assignments or evidence of subrogation satisfactory
to ANIC respecting payments made or liabilities assumed.
In May 1996, the Liquidation Bureau, acting on behalf of the New York
Property/Casualty Insurance Security Funds (the "Guaranty Fund"), during a
meeting with Company representatives informally advised the Company that on
behalf of the Guaranty Fund it intended to seek indemnification or reimbursement
from ANIC for
9
<PAGE> 11
claims paid by the Guaranty Fund to Galaxy insureds on policies which may have
been covered by the Certificates. The Liquidation Bureau has not yet completed
its response to the Company's request for accounting data and other information
with respect to the Liquidation Bureau's analysis of the Guaranty Fund's right
to indemnification and, accordingly, the Company cannot quantify the magnitude
of the potential claim for indemnification or reimbursement. The Company has
taken the position that the Guaranty Fund has no right to seek indemnification
unless Galaxy insureds who hold properly issued Certificates have executed
assignments and evidence of subrogation. Even if any Galaxy insured properly
made such a claim directly against ANIC, the Company has been advised by counsel
that if ANIC paid any such claim, it would have the right, under assignment and
subrogation agreements with its insureds, to assert all rights that the insureds
could have asserted to recover the loss amounts from any other source, including
the Guaranty Fund.
The Company intends to fully investigate each claim which the
Liquidation Bureau, acting on behalf of the Guaranty Fund, formally asserts is
entitled to the benefits of a Certificate to determine whether such Certificate
was properly endorsed by ANIC and issued with proper authority and if so,
whether proper agreements, assignments and evidence of subrogation have been
executed. The Company intends to vigorously deny liability for any claims for
indemnification or reimbursement made by the Liquidation Bureau, on behalf of
the Guaranty Fund, with respect to the Certificates. Although the Company is not
in a position to estimate the magnitude of the potential claims for
indemnification or reimbursement, it does not believe that the ultimate
resolution of such claims will have a material adverse affect on the financial
condition or results of operations of the Company.
Decrease in Proportionate Equity Ownership if Rights Not Exercised
Rights Holders who do not exercise their Rights will experience a
decrease in their proportionate interest in the equity ownership and voting
power of the Company. In addition, the Chase Stockholders beneficially own,
directly or indirectly, approximately 29.7% of the outstanding shares of Common
Stock of the Company and Mr. Chases's wife beneficially owns an additional 8.4%
of the Common Stock of the Company. It is possible that the Rights Offering will
result in CIHC, either alone or together with the Chase Stockholders and Mrs.
Chase, beneficially owning as much as 60.6% of the Common Stock, assuming that
the Chase Stockholders and Mrs. Chase exercise their Basic Subscription
Privilege in full and that the other Rights Holders do not exercise their Basic
Subscription Privilege, and having actual control over the Company.
Potential Conflicts of Interest
CIHC , which is beneficially owned by Mr. Chase and the other Chase
Stockholders, is a principal stockholder of the Company and is one of the
Subordinated Noteholders. The Subordinated Noteholders collectively hold
$5,619,046 principal amount or 88.7% of the $6,337,446 principal amount of
Subordinated Notes outstanding as of June 30, 1996. The Company has decided to
permit the Subordinated Noteholders to tender their respective Subordinated
Notes for cancellation as consideration (in lieu of cash) for the purchase of
the Common Stock and the Subordinated Noteholders have indicated that they
intend to tender all of the Subordinated Notes held by them. In addition, the
Chase Stockholders have indicated that they intend to purchase the balance of
Underlying Shares available to them after giving effect to the tender of the
Subordinated Notes. Assuming that the $5,619,046 principal amount of
Subordinated Notes held by the Subordinated Noteholders are tendered and the
balance of the Underlying Shares are purchased for cash, an aggregate of
2,600,188 shares of Common Stock will be purchased by the Chase Stockholders. If
no other Rights are exercised, the Chase Stockholders would beneficially own
60.6% of the outstanding shares of Common Stock.
10
<PAGE> 12
The Board of Directors has felt for some time that the Company must
improve its debt-to-equity ratio and reduce its interest expense, thereby
addressing concerns of both its insurance regulators and rating agencies. By
improving the debt-to-equity ratio and reducing its interest expense, the Board
of Directors believes that the Best ratings of the Company's insurance
subsidiaries may be upgraded thereby creating new market opportunities. Since
the elimination of the debt represented by the Subordinated Notes would
significantly improve the Company's debt-to-equity ratio and reduce its interest
expense, the Board of Directors concluded that it was in the best interest of
the Company and its stockholders to agree to accept the tender of Subordinated
Notes in lieu of cash.
Nature of the Rights Offering
The Company does not have a commitment for the purchase of shares of
Common Stock which may remain unsold at the expiration of the Rights Offering.
Accordingly, there can be no assurance as to the number of shares of Common
Stock which will be sold by the Company in the Rights Offering or in the
Additional Offering.
Market Price Risks Associated With the Common Stock
There can be no assurance that the market price of the Common Stock
will not decline during the period the Rights are outstanding or that, following
the issuance of the Rights and the sale of the Underlying Shares upon exercise
of the Rights, a subscribing Rights Holder will be able to sell shares purchased
in the Rights Offering at a price equal to or greater than the Subscription
Price. Once a Rights Holder has exercised the Basic Subscription Privilege ,
such exercise may not be revoked. See "The Rights Offering -- No Revocation."
Moreover, until certificates are delivered, subscribing Rights Holders may not
be able to sell the shares of Common Stock that they have purchased in the
Rights Offering.
USE OF PROCEEDS
The Company intends to use the net cash proceeds from the Rights
Offering for general corporate purposes, including investments in, and advances
to, its insurance company subsidiaries and the redemption of any Subordinated
Notes which are not tendered in the Rights Offering. The Subordinated
Noteholders have indicated that they intend to tender $5,619,046 principal
amount or 88.7% of the $6,337,446 principal amount of Subordinated Notes
outstanding as of June 30, 1996, for cancellation as consideration (in lieu of
cash) for the purchase of shares of Common Stock. The Subordinated Notes will be
accepted by the Company as consideration in an amount equal to the full
principal amount of such Subordinated Notes plus accrued interest from July 1,
1996 through the date of exercise of the Basic Subscription Privilege by the
Subordinated Noteholders. Accordingly, the net cash proceeds of the Rights
Offering assuming all of the Rights are exercised in full are estimated to be
approximately $9,600,000. The Subordinated Notes bear interest at 10.125% per
annum and are scheduled to mature in July 2000. No principal payments are
required to be paid on the Subordinated Notes prior to maturity but the
Subordinated Notes may be prepaid at any time without penalty.
RECENT DEVELOPMENTS
The property and casualty insurance subsidiary has recently introduced
two new insurance programs, one is the commercial auto program (truck and bus)
and the other is for automobile dealers. The commercial auto program (truck and
bus) is a limited coverage program while the automobile dealers program is a
multi-peril package program which provides property, liability and related
coverages. During the first two quarters of 1996, the commercial auto program
(truck and bus) produced approximately $9.1 million of annualized premiums.
11
<PAGE> 13
During the second quarter of 1996, the automobile dealer program produced
approximately $1.0 million of annualized premiums.
On May 16, 1996, the Company publicly announced that it had reached an
agreement to settle its $5.16 million judgment against Homeowners Marketing
Services, Inc. ("HMS") for $4.4 million in cash. Homeowners Group, Inc.
("HOMG"), the parent of HMS, has entered into a definitive merger agreement with
Cross Country Group, Inc. which has agreed to pay the amount of the settlement
at the time of the closing of its acquisition of HOMG. HOMG announced that the
closing of the acquisition, which is subject to regulatory and stockholder
approval, is anticipated in late September. When and if the amount of the
settlement is paid, the Company intends to use such amount to increase the
capital of the two insurance company subsidiaries to enable them to develop
existing and new insurance programs. No part of the settlement will be
recognized as income until received by the Company.
The Company has had an arrangement with a financial institution
pursuant to which it ceded credit life and credit accident and health insurance
originated by the financial institution to a reinsurance company owned by the
financial institution. During the most recent fiscal year, the Company wrote
$1,486,000 in net premiums for which it received a ceding commission. The
financial institution terminated the arrangement effective June 1, 1996.
Although the Company does have the right to recapture the ceded insurance and
retain 100% of the profits and losses thereof during runoff, the Company's
premiums written in the future will be reduced unless it is able to replace the
insurance originated by the financial institution with new business.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the Nasdaq National Market under the
symbol "ACLE." The following table sets forth the high and low sales prices of
the Common Stock for each of the periods indicated through July 11, 1996 as
reported by the Nasdaq National Market. The prices have been rounded up to the
nearest eighth and do not include retail markups, markdowns or commissions.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994
First Quarter........................................ $6.000 $3.750
Second Quarter....................................... 5.000 3.000
Third Quarter........................................ 3.750 2.250
Fourth Quarter....................................... 3.125 1.750
YEAR ENDED DECEMBER 31, 1995
First Quarter........................................ 2.875 1.750
Second Quarter....................................... 3.125 2.000
Third Quarter........................................ 4.875 2.750
Fourth Quarter....................................... 3.875 2.375
YEAR ENDING DECEMBER 31, 1996
First Quarter........................................ 3.375 2.875
Second Quarter....................................... 3.750 2.500
Third Quarter (through July 11, 1996)................ 3.250 2.500
</TABLE>
12
<PAGE> 14
Prior to 1992 the Company had historically paid stock or cash
dividends. On June 2, 1992, the Board of Directors of the Company decided to
suspend payment of cash dividends on the Common Stock until the Company returned
to a level of profitability which will sustain the payment of cash dividends.
Moreover, the note agreement pursuant to which the Company's $16,500,000
principal amount of Senior Notes were issued restricts the payment of dividends
on the Common Stock to an amount equal to 50% of net income computed on a
cumulative basis from January 1, 1996 to and including the date of the dividend
payment. Accordingly, there is presently no amount available for paying
dividends after giving effect to this restriction. Even if the Company does have
net income in the future, its principal source of cash flow with which to pay
dividends will be dependent upon the ability of its insurance company
subsidiaries to pay dividends to the Company. Ohio domiciled insurance companies
are subject to laws and regulations which, among other things, limit the amount
of dividends and other payments than can be made by such insurance companies
without prior regulatory approval. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Consolidated Financial
Statements and notes thereto included in the 10-K which accompanies this
Prospectus.
THE RIGHTS OFFERING
The Rights
The Company is hereby issuing Rights to each holder of Common Stock as
of the close of business on June 18, 1996 (the "Record Date") at no charge to
such holders. The Company will issue one Right for each share of Common Stock
held on the Record Date. Each Right will entitle the holder thereof (the "Rights
Holder") to subscribe for 1.5 shares of Common Stock. The Rights will be
evidenced by non-transferable Subscription Rights Certificates which are being
distributed to each Rights Holder contemporaneously with the delivery of this
Prospectus. The issuance by the Company of shares of Common Stock pursuant to
the Rights Offering is not conditioned upon the subscription of any minimum
number of shares of Common Stock by the Rights Holders. No fractional Rights
will be issued and no fractional shares of Common Stock will be issued upon
exercise of the Rights. See "The Rights Offering -- Basic Subscription
Privilege."
BEFORE EXERCISING ANY RIGHTS, POTENTIAL INVESTORS ARE URGED TO READ CAREFULLY
THE INFORMATION SET FORTH UNDER "RISK FACTORS."
Expiration Date
The Rights will expire at 5:00 p.m., Columbus, Ohio time, on August 15,
1996, subject to extension at the discretion of the Company (as it may be
extended, the "Expiration Date"), provided that the Expiration Date shall in no
event be later than August 28, 1996. After the Expiration Date, unexercised
Rights will be null and void. The Company will not be obligated to honor any
purported exercise of Rights received by the Subscription Agent after 5:00 p.m.,
Columbus, Ohio time, on the Expiration Date, regardless of when the documents
relating to such exercise were sent, except pursuant to the Guaranteed Delivery
Procedures described below. The Company may extend the Expiration Date by giving
oral or written notice to the Subscription Agent on or before the Expiration
Date, followed by a press release no later than 9:00 a.m., Columbus, Ohio time
on the next business day after the previously scheduled Expiration Date.
Basic Subscription Privilege
Each Right will entitle the Rights Holder to receive, upon payment of
the Subscription Price, 1.5 shares of Common Stock (the "Basic Subscription
Privilege"). Each Rights Holder is entitled to subscribe for all, or any
portion, of such Right Holder's Rights subject to the elimination of fractional
shares. Certificates representing Underlying Shares purchased pursuant to the
Basic Subscription Privilege
13
<PAGE> 15
will be delivered to subscribers as soon as practicable after the corresponding
Rights have been validly exercised and full payment for shares has been received
and cleared.
Exercise of Rights
Rights may be exercised by delivering to National City Bank (the
"Subscription Agent"), at or prior to 5:00 p.m., Columbus, Ohio time, on the
Expiration Date, the properly completed and executed Subscription Certificate
evidencing such Rights with any signatures required to be guaranteed so
guaranteed, together with payment in full of the Subscription Price for each
Underlying Share subscribed for pursuant to the Basic Subscription Privilege .
All payments must be by (i) check or bank draft (cashier's check) drawn upon a
U.S. bank or postal or express money order payable to National City Bank, as
Subscription Agent, or (ii) by wire transfer of same-day funds to an account
designated by the Subscription Agent, in which case please contact the
Subscription Agent at (800) 622-6757 for information concerning such account.
Payments will be deemed to have been received by the Subscription Agent only
upon (i) clearance of any uncertified check, (ii) collection by the Subscription
Agent of any certified check or bank draft upon a U.S. bank or of any postal or
express money order or (iii) receipt of good funds in the account designated by
the Subscription Agent. If paying by uncertified personal check, please note
that the funds paid thereby may take up to ten business days to clear.
Accordingly, Rights Holders who wish to pay the Subscription Price by means of
uncertified personal check are urged to make payment sufficiently in advance of
the
14
<PAGE> 16
Expiration Date to ensure that such payment is received and clears by such date
and are urged to consider payment by means of certified or cashier's check,
money order or wire transfer of funds.
The address to which the Subscription Certificates and payment of the
Subscription Price should be delivered is:
By Mail:
National City Bank, Subscription Agent
Corporate Trust Operations
P.O. Box 94720
Cleveland, Ohio 44101-4720
By Hand or Overnight Courier:
National City Bank, Subscription Agent
Corporate Trust Operations
3rd Floor -- North Annex
4100 West 150th Street
Cleveland, Ohio 44135-1385
If a Rights Holder wishes to exercise Rights, but time will not permit
such Rights Holder to cause the Subscription Certificate or Subscription
Certificates evidencing such Rights to reach the Subscription Agent on or prior
to the Expiration Date, such Rights may nevertheless be exercised if all of the
following conditions (the "Guaranteed Delivery Procedures") are met:
(i) such holder has caused payment in full of the Subscription
Price for each Underlying Share being subscribed for pursuant to the Basic
Subscription Privilege to be received (in the manner set forth above) by the
Subscription Agent on or prior to the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the
Expiration Date, a guarantee notice ("Notice of Guaranteed Delivery"),
substantially in the form provided with the instructions (the "Instructions")
distributed with the Subscription Certificates, from a member firm of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc. ("NASD"), or from a commercial bank or trust company
having an office or correspondent in the United States or from a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program, pursuant to Rule 17Ad-15 of the
Exchange Act (each, an "Eligible Institution"), stating the name of the
exercising Rights Holder, the number of Rights represented by the Subscription
Certificate or Subscription Certificates held by such exercising Rights Holder,
the number of Underlying Shares being subscribed for pursuant to the Basic
Subscription Privilege and guaranteeing the delivery to the Subscription Agent
of any Subscription Certificate evidencing such Rights within five business days
following the Expiration Date; and
(iii) the properly completed Subscription Certificate
evidencing the Rights being exercised, with any signatures required to be
guaranteed so guaranteed, is received by the Subscription Agent within five
business days following the Expiration Date. The Notice of Guaranteed Delivery
may be delivered to the Subscription Agent in the same manner as Subscription
Certificates at the address set forth above, or may be transmitted to the
Subscription Agent by facsimile transmission (telecopy no. (216) 476-8367 ).
Additional copies of the form of Notice of Guaranteed Delivery are available
upon request from the Subscription Agent.
15
<PAGE> 17
Unless a Subscription Certificate (i) provides that the shares of
Common Stock to be issued pursuant to the exercise of Rights represented thereby
are to be issued in the name of the Rights Holder and/or are to be delivered to
the Rights Holder or (ii) is submitted for the account of an Eligible
Institution, signatures on such Subscription Certificate must be guaranteed by
an Eligible Institution or other eligible guarantor institution which is a
member of or a participant in a medallion guarantee program acceptable to the
Subscription Agent.
Rights Holders who hold shares of Common Stock for the account of
others, such as brokers, trustees or depositories for securities, should notify
the respective beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights. If the beneficial owner so instructs, the nominee holder should
complete Subscription Certificates and submit them to the Subscription Agent
with the proper payment. In addition, beneficial owners of Common Stock or
Rights held through such a nominee holder should contact the nominee holder and
request the nominee holder to act in accordance with such beneficial owner's
instructions. If a beneficial owner wishes to obtain a separate Subscription
Right Certificate, such beneficial owner should contact the nominee holder as
soon as possible and request that a separate Subscription Right Certificate be
issued. A nominee holder may request any Subscription Right Certificate held by
it to be split into such smaller denominations as it wishes, provided that the
Subscription Right Certificate is received by the Subscription Agent, properly
endorsed, no later than the Expiration Date.
The instructions accompanying the Subscription Certificates should be
read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO
THE COMPANY.
THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE RIGHTS HOLDERS, BUT IF SENT BY MAIL, IT IS RECOMMENDED THAT SUCH
CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00
P.M., COLUMBUS, OHIO TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL
CHECKS MAY TAKE UP TO TEN BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY,
OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR
WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility
of any exercise of Rights will be determined by the Company, whose
determinations will be final and binding. The Company in its sole discretion may
waive any defect or irregularity, or permit a defect or irregularity to be
corrected within such time as it may determine, or reject the purported exercise
of any Right. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Company determines in its sole discretion. Neither the Company nor the
Subscription Agent will be under any duty to give notification of any defect or
irregularity in connection with the submission of Subscription Certificates or
incur any liability for failure to give such notification.
Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus, the Form
10-K, the Form 10-Q, the Instructions or the Notice of Guaranteed
16
<PAGE> 18
Delivery should be directed to the Subscription Agent, at its address set forth
under "Exercise of Rights", above (telephone: (800) 622-6757).
No Revocation
ONCE A RIGHTS HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE ,
SUCH EXERCISE MAY NOT BE REVOKED.
Non-Transferability of Rights
The Rights are not transferable and will not be traded on any
securities exchange or quoted on any inter-dealer quotation system. Rights may
only be exercised or permitted to expire. Rights Holders who determine not to
exercise their Rights may not transfer their rights and, at the Expiration Date,
Rights which have not been exercised will expire and be null and void and have
no value, provided that Rights may be transferred by operation of law in the
case of death, dissolution, liquidation or bankruptcy of the Rights Holder, or
pursuant to an order of an appropriate court. A Rights Holder may, however,
elect to have the Underlying Shares registered in the name of, and/or delivered
to, a person other than the Rights Holder provided that the signature on the
related Subscription Certificate is guaranteed by an Eligible Institution or
other eligible guarantor institution as more fully described under "-- Exercise
of Rights", above, and in the accompanying Subscription Certificate and
Instructions.
Tender of Subordinated Notes in Lieu of Cash
The Company has decided to permit holders of Subordinated Notes to
tender their respective Subordinated Notes to the Company for cancellation as
consideration (in lieu of cash) for the purchase of shares of Common Stock. Upon
receipt of such Subordinated Notes, the Company will direct the Subscription
Agent to accept such Subordinated Notes as consideration for the issuance of the
related Underlying Shares. See "Use of Proceeds."
Determination of Subscription Price
The Subscription Price was determined by the Company. In making this
determination, the material factors considered by the Company were the amount of
proceeds that the Company desires to raise, the average market price of the
Common Stock, the pro rata nature of the offering and pricing policies customary
for transactions of this type. The Subscription Price should not be considered
an indication of the actual value of the Company or the Common Stock.
Foreign and Certain Other Stockholders
Subscription Certificates will not be mailed to Rights Holders whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise such
Rights, such a Rights Holder must notify the Subscription Agent, and must
establish to the satisfaction of the Subscription Agent and the Company that
such exercise is permitted under applicable law. If the procedures set forth in
the preceding sentence are not followed prior to the Expiration Date, the Rights
will expire.
Other Matters
The Rights Offering is not being made in any state or other
jurisdiction in which it is unlawful to do so, nor is the Company selling or
accepting any offers to purchase any shares of Common Stock from Rights Holders
who are residents of any such state or other jurisdiction. The Company may delay
the commencement of the Rights Offering in certain states or other
jurisdictions, or change the terms of the Rights Offering, in order to comply
with the securities law requirements of such states or other jurisdictions. It
is not anticipated that there will be any changes in the terms of the Rights
Offering. If any such change is made that is material and has an adverse effect
17
<PAGE> 19
on any Rights Holder that has previously exercised Rights, such Rights Holder
will be provided the opportunity to revoke such exercise. The Company, if it so
determines in its sole discretion, may decline to make modifications to the
terms of the Rights Offering requested by certain states or other jurisdictions,
in which event Rights Holders resident in those states or jurisdictions will not
be eligible to participate in the Rights Offering.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal
income tax considerations applicable to U.S. Rights Holders who hold Common
Stock as a capital asset and who receive Rights in respect of such Common Stock
in the initial issuance of the Rights (the "Issuance"). This summary is based
upon laws, regulations, rulings and decisions currently in effect. This summary
does not discuss all aspects of federal income taxation that may be relevant to
a particular investor or to certain types of investors subject to special
treatment under the federal income tax laws (for example, banks, dealers in
securities, life insurance companies, tax exempt organizations and foreign
taxpayers), nor does it discuss any aspect of state, local or foreign tax laws.
Issuance of Rights
Holders of Common Stock will not recognize taxable income in connection
with the receipt of Rights.
Basis and Holding Period of the Rights
Except as provided in the following sentence, the basis of the Rights
received by a stockholder as a distribution with respect to such stockholder's
Common Stock will be zero. If either (i) the fair market value of the Rights on
the date of Issuance is 15% or more of the fair market value (on the date of
Issuance) of the Common Stock with respect to which they are received or (ii)
the stockholder elects, in his or her federal income tax return for the taxable
year in which the Rights are received, to allocate part of the basis of such
Common Stock to the Rights, then upon exercise of the Rights, the stockholder's
basis in such Common Stock will be allocated between the Common Stock and the
Rights in proportion to the fair market values of each on the date of Issuance.
The holding period of a stockholder with respect to the Rights received as a
distribution on such stockholder's Common Stock will include the stockholder's
holding period for the Common Stock with respect to which the Rights were
issued.
Lapse of the Rights
Rights Holders who allow the Rights received by them in the Issuance to
lapse will not recognize any gain or loss, and no adjustment will be made to the
basis of the Common Stock, if any, owned by such Rights Holders.
Exercise of the Rights; Basis and Holding Period of Common Stock
Rights Holders will not recognize any gain or loss upon the exercise of
such Rights. The basis of the Common Stock acquired through exercise of the
Rights will be equal to the sum of the Subscription Price therefor and the
Rights Holder's basis in such Rights (if any) as described above. The holding
period for the Common Stock acquired through exercise of the Rights will begin
on the date the Rights are exercised.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE RIGHTS OFFERING ON HIS OR
HER OWN PARTICULAR TAX SITUATION, INCLUDING THE APPLICATION AND EFFECT OF STATE
AND LOCAL INCOME AND OTHER TAX LAWS.
18
<PAGE> 20
DESCRIPTION OF THE CAPITAL STOCK
Common Stock
The Company had 10,000,000 authorized shares of Common Stock, of which
4,456,432 shares were issued and outstanding as of March 31, 1996. At the Annual
Meeting of Stockholders held on June 11, 1996, the stockholders adopted an
amendment to the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") which increased the authorized shares of Common
Stock from 10,000,000 to 15,000,000. The holders of the Common Stock are
entitled to one vote per share on all matters requiring stockholder action. The
Certificate of Incorporation does not permit cumulative voting for the election
of directors. The holders of Common Stock have no preemptive or other
subscription rights and there are no redemption, sinking fund or conversion
privileges applicable thereto. The holders of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefor. Upon liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities. All outstanding shares of Common Stock
are fully paid and nonassessable and the shares of Common Stock to be issued in
the Rights Offering will, upon delivery and payment therefor in accordance with
the terms of the Rights Offering, be fully paid and nonassessable.
The Certificate of Incorporation contains a provision which requires
the affirmative vote of not less than 80 percent of the outstanding shares of
the Company entitled to elect directors for the approval of certain business
combinations and other transactions with a corporation or any affiliate thereof
which acquires more than five percent of the beneficial ownership of the
outstanding shares of Common Stock of the Company unless such business
combination or other transaction was approved by resolution of the Board of
Directors of the Company prior to the acquisition by such corporation or
affiliate thereof of the beneficial ownership of more than five percent of the
outstanding Common Stock. This provision could have the effect of delaying,
deferring or preventing a change in control of the Company.
The registrar and transfer agent for the Company's Common Stock is
National City Bank.
Preferred Stock
The Company has 1,000,000 authorized shares of Preferred Stock, par
value $1.00 per share, none of which were issued and outstanding as of March 31,
1996. The Certificate of Incorporation provides that the Board of Directors is
authorized to fix the voting rights, redemption rights, conversion rights,
sinking fund provisions, designations, preferences and the relative,
participating, optional or other rights, if any, and the qualifications,
limitations or restrictions of the Preferred Stock. The Company has no present
intention to issue any shares of Preferred Stock.
PLAN OF DISTRIBUTION
The Rights and Common Stock offered pursuant to the Rights Offering are
being offered by the Company directly to its stockholders. Certain executive
officers of the Company may solicit responses from Rights Holders to the Rights
Offering, but such executive officers will not receive any commissions or
compensation for such services other than their normal employment compensation.
Upon completion of the Rights Offering, any shares of Common Stock that
are not purchased by Rights Holders may be offered by the Company for sale to
employees, independent agents and customers (including automobile dealers) of
the Company at $2.25 per share (the "Additional Offering") for a period
commencing on the Expiration Date and ending not later than September 30, 1996.
The Company will sell such shares of Common Stock directly to any purchaser
19
<PAGE> 21
or purchasers through its executive officers. No soliciting fee or other
compensation will be paid in connection with the Additional Offering.
LEGAL MATTERS
The validity of the issuance of Common Shares in the Rights Offering will
be passed upon by counsel for the Company, Squire, Sanders & Dempsey, Columbus,
Ohio.
EXPERTS
The Company's consolidated financial statements and schedules as of
December 31, 1995 and 1994, and for each of the years in the two-year period
ended December 31, 1995, included in the Form 10-K, a copy of which accompanies
this Prospectus and which is incorporated by reference in this Prospectus, have
been incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, and in reliance on the report of Ernst
& Young LLP, independent certified public accountants, with respect to the
Company's consolidated financial statements and schedules for the year ended
December 31, 1993 and are incorporated herein in reliance upon the authority of
said firms as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP dated March 15, 1996 contains an
explanatory paragraph that states that as discussed in Note D to the
consolidated financial statements, on March 30, 1994, the Company and its
principal lender agreed to waive compliance with certain loan agreement
covenants through January 1, 1995. On February 7, 1995, the Company and the
lender again renegotiated the credit agreement and certain of the covenants. The
amended agreement stated that the loan was payable in full on June 30, 1997. On
December 29, 1995, the Company issued senior notes with a different lender and
retired the aforementioned credit agreement. The most recent loan agreement
requires that during the period the loan is outstanding, the Company maintain
consolidated tangible net worth, as defined. At December 31, 1995, required
tangible net worth was $15,000,000 and the Company's consolidated tangible net
worth, as defined, was $19,738,000.
20
<PAGE> 22
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THIS PROSPECTUS RELATES OR
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................... 2
Incorporation of Certain Documents by Reference......................... 2
Prospectus Summary...................................................... 3
Risk Factors............................................................ 6
Use of Proceeds......................................................... 9
Recent Developments..................................................... 10
Price Range of Common Stock and Dividend Policy......................... 11
The Rights Offering..................................................... 11
Federal Income Tax Consequences........................................ 15
Description of the Capital Stock........................................ 16
Plan of Distribution.................................................... 17
Legal Matters........................................................... 17
Experts................................................................. 17
</TABLE>
================================================================================
ACCEL INTERNATIONAL CORPORATION
6,834,648 SHARES OF
COMMON STOCK
--------------------
PROSPECTUS
--------------------
JULY -, 1996
================================================================================
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table presents an itemized estimate of all expenses in
connection with the issuance and distribution of the Common Shares, other than
underwriting discounts and commissions.
<TABLE>
Nature of Expense Amount
----------------- ------
<S> <C>
SEC Registration Fee ................................................. $ 6,336
Printing and Engraving Costs ........................................ 11,000*
Counsel Fees and Expenses ............................................ 38,000*
Accounting Fees and Expenses ......................................... 25,000*
Blue Sky Expenses and Counsel Fees ................................... 2,000*
Subscription Agent Fees and Expenses ................................ 7,500*
Miscellaneous ....................................................... 6,564*
TOTAL ................................................................ $96,400*
</TABLE>
* Estimated.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law (the "DGCL") and the
Registrant's Bylaws provide for the indemnification of directors and officers
against certain liabilities. Officers and directors of the Registrant and its
subsidiaries are indemnified generally against expenses actually and reasonably
incurred in connection with proceedings, whether civil or criminal, if such
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Registrant, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe was
unlawful. The Registrant is empowered by Section 102(b)(7) of the DGCL to
include a provision in its Restated Certificate of Incorporation that limits a
director's liability to the Registrant or its stockholders for monetary damages
for breaches of his or her fiduciary duty as a director. Article Fifteenth of
the Registrant's Restated Certificate of Incorporation provides that no director
or former director of the Registrant shall be personally liable to the
Registrant or its stockholders for breach of fiduciary duty as a director except
for (i) any breach of the director's duty of loyalty, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) approving the payment of a dividend, stock repurchase or redemption
which is unlawful under the DGCL, or (iv) any transaction from which the
director derived an improper personal benefit. The Registrant maintains
insurance policies under which directors and officers are insured, within the
limits and subject to the limitations of the policies, against expenses in
connection with the defense of actions, suits or proceedings and certain
liabilities that might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been
directors or officers of the Registrant.
ITEM 16. EXHIBITS. The following Exhibits are filed as part of this
Registration Statement:
EXHIBITS DESCRIPTION
-------- -----------
II-1
<PAGE> 24
5.1 Opinion of Squire, Sanders & Dempsey (including consents)*
23.1 Consent of KPMG Peat Marwick LLP*
23.2 Consent of Ernst & Young LLP*
23.3 Consent of Squire, Sanders & Dempsey (see Exhibit 5.1)*
24.1 Power of Attorney (included elsewhere in the signature
page to this Registration Statement)*
99.1 Form of Subscription Certificate
99.2 Form of Instructions for Subscription Certificates
99.3 Form of Notice of Guaranteed Delivery
99.4 Form of Subscription Agency Agreement
99.5
Form of Nominee Holder Certification
- --------------------
*Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act 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;
(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)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed 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.
(2) 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set
forth the results of the subscription offer and the terms of any
subsequent reoffering thereof. If any public offering is to be made on
terms differing from those set forth on the
II-2
<PAGE> 25
cover page of the prospectus, a post-effective amendment will be filed
to set forth the terms of such offering.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-2 and has duly caused this Amendment no. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Columbus, State of Ohio, on July 12,
1996.
ACCEL INTERNATIONAL CORPORATION
By:*
------------------------------------
Thomas H. Friedberg
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Amendment No.
1 to the Registration Statement has been signed by the following persons in the
capacities indicated and on July 12, 1996.
Signature Title
--------- -----
* Chairman of the Board, President
- -------------------------------------- and Chief Executive Officer
Thomas H. Friedberg (principal executive officer) and
Director
* Vice President and Controller
- -------------------------------------- (principal financial officer and
Kurt L. Mueller controller)
* Director
- --------------------------------------
Robert Betagole
* Director
- --------------------------------------
David T. Chase
II-4
<PAGE> 27
Signature Title
--------- -----
* Director
- --------------------------------------
Douglas J. Coats
* Director
- --------------------------------------
Raymond H. Deck
* Director
- --------------------------------------
Robert E. Fowler III
* Director
- --------------------------------------
Kermit G. Hicks
* Director
- --------------------------------------
Stephen M. Qua
* Director
- --------------------------------------
Milton J. Taylor, Sr.
* Director
- --------------------------------------
Paul R. Whitters
*By: /s/ Nicholas Z. Alexander
----------------------------------
Nicholas Z. Alexander
Attorney-in-Fact
II-5
<PAGE> 28
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
5.1. Opinion of Squire, Sanders & Dempsey (including consents)*
23.1 Consent of KPMG Peat Marwick LLP*
23.2 Consent of Ernst & Young LLP*
23.3 Consent of Squire, Sanders & Dempsey (see Exhibit 5.1)*
24.1 Power of Attorney (included elsewhere in the signature page this
Registration Statement)*
99.1 Form of Subscription Certificate
99.2 Form of Instructions for Subscription Certificates
99.3 Form of Notice of Guaranteed Delivery
99.4 Form of Subscription Agency Agreement
99.5 Form of Nominee Holder Certification
- ----------------
*Previously filed.
<PAGE> 1
Exhibit 99.1
ACCEL International Corporation SUBSCRIPTION CERTIFICATE NO.
CUSIP NO.
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S
PROSPECTUS DATED JULY ___, 1996 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN
BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE
SUBSCRIPTION AGENT. THIS CERTIFICATE OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY 5:00 P.M., COLUMBUS,
OHIO TIME, ON __________________, 1996, UNLESS EXTENDED (AS IT MAY BE EXTENDED,
THE "EXPIRATION DATE"), PROVIDED THAT THE EXPIRATION DATE SHALL IN NO EVENT BE
LATER THAN AUGUST 28, 1996.
The Rights represented by this subscription certificate may be exercised by duly
completing Form 1. Rights holders are advised to review the Prospectus and
instructions, copies of which are available from the Subscription Agent, before
exercising their Rights. IMPORTANT: Complete FORM 1 and, if applicable, special
delivery instructions in FORM 2, and special issuance instructions in FORM 3,
and SIGN on reverse side.
SUBSCRIPTION PRICE $2.25 ______ NON-TRANSFERABLE RIGHTS TO
PER SHARE PURCHASE COMMON STOCK OF ACCEL
International Corporation
Name and Address of Registered Holder: _________________________________________
The registered owner whose name is inscribed hereon is entitled to subscribe for
shares of Common Stock upon the terms and subject to the conditions set forth in
the Prospectus and instructions relating thereto.
By _______________________________ By ____________________________
Thomas H. Friedberg Nicholas Z. Alexander
Chairman of the Board, Senior Vice President and
President and Chief Secretary
Executive Officer
THIS SUBSCRIPTION CERTIFICATE IS NOT TRANSFERABLE AND MAY NOT BE COMBINED OR
DIVIDED EXCEPT BY THE COMPANY IN THE EVENT A HOLDER SHALL CHOOSE TO EXERCISE
LESS THAN ALL OF THE RIGHTS EVIDENCED HEREBY.
<PAGE> 2
RIGHTS HOLDERS SHOULD BE AWARE THAT IF THEY CHOOSE TO EXERCISE LESS THAN ALL OF
THE RIGHTS EVIDENCED HEREBY, THEY MAY NOT RECEIVE A NEW SUBSCRIPTION CERTIFICATE
IN SUFFICIENT TIME TO EXERCISE THE REMAINING RIGHTS EVIDENCED THEREBY.
FORM 1--EXERCISE AND SUBSCRIPTION: The undersigned hereby irrevocably exercises
one or more Rights to subscribe for shares of Common Stock, as indicated below,
on the terms and subject to the conditions specified in the Prospectus, receipt
of which is hereby acknowledged.
(a) Number of shares subscribed for pursuant to the Basic Subscription
Privilege (1 Right needed to subscribe for each 1.5 shares): __________
(b) Total Subscription Price (total number of shares subscribed
for--pursuant to the Basic Subscription Privilege--times the
Subscription Price of $2.25): $______________(1)
(1) If the amount enclosed or transmitted is not sufficient to pay the
Subscription Price for all shares that are stated to be subscribed for, or if
the number of shares being subscribed for is not specified, the number of shares
subscribed for will be assumed to be the maximum number that could be subscribed
for upon payment of such amount. If the number of shares to be subscribed for is
not specified and the amount enclosed or transmitted exceeds the Subscription
Price for all shares represented by this Subscription Certificate (the
"Subscription Excess"), such Subscription Excess shall be returned to the
subscriber.
METHOD OF PAYMENT (CHECK ONE):
[ ] CHECK, BANK DRAFT OR MONEY ORDER PAYABLE TO "NATIONAL CITY
BANK"
[ ] WIRE TRANSFER DIRECTED TO ABA NO. 041000124 (MARKED: "ACCEL
International Corporation SUBSCRIPTION").
(c) If the number of Rights being exercised pursuant to the Basic
Subscription Privilege is less than all of the Rights represented by the
Subscription Certificate, deliver to me a new Subscription Certificate
evidencing the remaining Rights to which I am entitled.
[ ] CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE SUBSCRIPTION AGENT PRIOR TO THE
DATE HEREOF AND COMPLETE THE FOLLOWING.
Name(s) of Registered Owner(s): ____________________
Window Ticket number (if any): ____________________
Date of Execution of Notice of Guaranteed Delivery: ____________________
Name of Institution which Guaranteed Delivery: ____________________
<PAGE> 3
FORM 2--SPECIAL DELIVERY INSTRUCTIONS: Name and address for mailing any stock
certificates and/or cash payment if other than shown on the reverse hereof:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
FORM 3--SPECIAL ISSUANCE INSTRUCTIONS: Name and address of person(s) to whom
shares of Common Stock are to be issued if other than registered holder(s) whose
name(s) appear(s) on this Subscription Certificate:
Name ___________________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Taxpayer Identification or
Social Security Number: ____________________
IMPORTANT
RIGHTS HOLDER SIGN HERE
AND, IF RIGHTS ARE BEING EXERCISED,
COMPLETE SUBSTITUTE FORM W-9
______________________________
(Signature(s) of Holder(s))
Dated:________________________, 1996
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on this
Subscription Certificate. If signature is by trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a
corporation or another acting in a fiduciary or representative capacity, please
provide the following information. See Instructions.)
Name(s): _______________________________
(Please Print)
Capacity: ______________________________
Address: _______________________________
________________________________________
(Including Zip Code)
<PAGE> 4
Area Code and
Telephone Number: ___________________________
(Home)
___________________________
(Business)
Tax Identification
or Social Security No: ______________________
(Complete Substitute Form W-9)
GUARANTY OF SIGNATURE(S)
Note: See Section 3(c) of Instructions
(Affix Medallion Guaranty, Below)
<PAGE> 1
Exhibit 99.2
INSTRUCTIONS AS TO USE OF ACCEL INTERNATIONAL CORPORATION
SUBSCRIPTION CERTIFICATES
CONSULT THE INFORMATION AGENT, YOUR BANK
OR BROKER AS TO ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights Offering")
by ACCEL International Corporation (the "Company"), a Delaware corporation, to
the holders of record of its Common Stock, par value $0.10 per share (the
"Common Stock"), as described in the Company's Prospectus dated ______________,
1996 (the "Prospectus"). Holders of record of Common Stock at the close of
business on June 18, 1996 (the "Record Date") are receiving one non-transferable
subscription right (the "Rights") for every one share of Common Stock held by
them on the Record Date. An aggregate of 4,556,432 Rights exercisable to
purchase an aggregate of up to 6,834,648 shares of Common Stock (the "Underlying
Shares") are being distributed in connection with the Rights Offering. Each
Right entitles the holder thereof ("Rights Holder") to purchase 1.5 shares of
Common Stock (the "Underlying Shares") for a price of $2.25 (the "Subscription
Price") per share (the "Basic Subscription Privilege").
To the extent that Basic Subscription Privilege is not exercised in full, the
Company may determine to offer any or all of the shares of Common Stock not
subscribed for sale to employees, independent agents, and customers (including
automobile dealers) of the Company directly through executive officers of the
Company. See "The Rights Offering-Basic Subscription Privilege" and "Plan of
Distribution" in the Prospectus.
The Rights will expire at 5:00 p.m., Columbus, Ohio time, on the Expiration
Date. The Rights are not transferable and will not be traded on any securities
exchange or quoted on any inter-dealer quotation system. See "The Rights
Offering --Non-Transferability of Rights" in the Prospectus.
The number of Rights to which you are entitled is printed on the face of your
subscription certificate. You should indicate your wishes with regard to the
exercise of your Rights by completing the appropriate form or forms on your
subscription certificate and returning the certificate to the Subscription Agent
in the envelope provided.
YOUR SUBSCRIPTION CERTIFICATES MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, OR
GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION CERTIFICATES
MUST BE COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION PRICE, INCLUDING FINAL
CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, ON OR
BEFORE 5:00 P.M., COLUMBUS, OHIO TIME, ON THE EXPIRATION DATE. ONCE A HOLDER OF
RIGHTS HAS
1
<PAGE> 2
EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED
EXCEPT UNDER LIMITED CIRCUMSTANCES AS DESCRIBED IN THE PROSPECTUS.
1. Basic Subscription Privilege.
To exercise Rights, complete Form 1 and send your properly completed and
executed subscription certificate, together with payments in full of the
Subscription Price for each Underlying Share subscribed for pursuant to the
Basic Subscription Privilege, to the Subscription Agent. All payments must be
made in U.S. dollars (a) by check or bank draft drawn upon a U.S. bank or postal
or express money order payable to National City Bank, as Subscription Agent, or
(b) if by wire transfer, please contact the National City Bank for further
instructions. Payments will be deemed to have been received by the Subscription
Agent only upon (i) the clearance of any uncertified check, (ii) the receipt by
the Subscription Agent of any certified check or bank draft drawn upon a U.S.
bank or any postal express money order or (iii) the receipt of good funds in the
Subscription Agent's account. If paying by uncertified personal check, please
note that the funds paid thereby may take up to ten business days to clear.
Accordingly, holders of Rights who wish to pay the Subscription Price by means
of uncertified personal check are urged to make payment sufficiently in advance
of the Expiration Date to ensure that such payment is received and clears by
such date and are urged to consider payment by means of certified or cashiers
check, money order or wire transfer of funds. You may cause a written guaranty
substantially in the form available from the Subscription Agent (the "Notice of
Guaranteed Delivery") from a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc., or
from a commercial bank or trust company having an office or correspondent in the
United States or from a bank, stockbroker, savings and loan association or
credit union with membership in an approved signature guarantee medallion
program, pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act
of 1934 (each of the foregoing being an "Eligible Institution"), to be received
by the Subscription Agent at or prior to the Expiration Date together with
payment in full of the applicable Subscription Price. Such Notice of Guaranteed
Delivery must state your name, the number of Rights represented by your
subscription certificate and the number of Rights being exercised pursuant to
the Basic Subscription Privilege, and will guarantee the delivery to the
Subscription Agent of your properly completed and executed subscription
certificate within five business days following the date of the Notice of
Guaranteed Delivery. If this procedure is followed, your subscription
certificate must be received by the Subscription Agent within five business days
of the Notice of Guaranteed Delivery. Additional copies of the Notice of
Guaranteed Delivery may be obtained upon request from the Subscription Agent at
the address, or by calling the telephone number, indicated below.
Banks, brokers and other nominee holders of Rights who exercise the Basic
Subscription Privilege on behalf of beneficial owners of Rights will be required
to certify to the Subscription Agent and the Company (by delivery to the
Subscription Agent of a Nominee Holder Certification substantially in the form
available from the Subscription Agent), the aggregate number of Rights that have
been exercised by each beneficial owner of Rights (including such
2
<PAGE> 3
nominee itself) on whose behalf such nominee holder is acting. In the event a
Nominee Holder Certification is not delivered in respect of a Subscription
Certificate, the Subscription Agent shall for all purposes be entitled to assume
that such certificate is exercised on behalf of a single beneficial owner.
The address and telecopier numbers of the Subscription Agent are as follows:
If by Mail: If by Hand:
National City Bank, National City Bank,
Subscription Agent Subscription Agent
Corporate Trust Operations Corporate Trust Operations
P.O. Box 94720 3rd Floor - North Annex
Cleveland, Ohio 44101-4720 4100 West 150th Street
Cleveland, Ohio 44135-1385
Telecopier: (216) 476-8367
If you exercise less than all of the Rights evidenced by your subscription
certificate by so indicating in Form 1 of your subscription certificate, the
Subscription Agent will issue to you a new non-transferable subscription
certificate evidencing the unexercised Rights. However, if you choose to have a
new subscription certificate sent to you, you may not receive any such new
subscription certificate in sufficient time to permit exercise of the Rights
evidenced thereby. If you have not indicated the number of Rights being
exercised, or if the amount you have forwarded is not sufficient to purchase
the number of shares subscribed for, you will be deemed to have exercised the
Basic Subscription Privilege with respect to the maximum number of whole Rights
which may be exercised for the Subscription Price payment delivered by you, and
to the extent that if the Subscription Price payment delivered by you exceeds
the product of the Subscription Price multiplied by the number of Rights
evidenced by the subscription certificates delivered by you (such excess being
the "Subscription Excess"), such Subscription Excess will be returned to you.
2. Issuance and Delivery of Stock Certificates, Etc.
The following issuances, deliveries and payments will be made to the name and
the address shown on the face of your subscription certificate unless you
provide special instructions to the contrary in Form 2 and/or Form 3.
(a) Basic Subscription Privilege. As soon as practicable after the valid
exercise of Rights, the Subscription Agent will issue and mail to each
exercising Rights Holder certificates representing shares of Common Stock
purchased pursuant to the Basic Subscription Privilege.
3
<PAGE> 4
(b) Cash Payments. As soon as practicable after the Expiration Date the
Subscription Agent will mail to each Rights Holder any excess funds received
from such Right Holder in payment of the Subscription Price.
3. Execution.
(a) Execution by Registered Holder. The signature on the subscription
certificate must correspond with the name of the registered holder exactly as it
appears on the face of the subscription certificate without any alteration or
change whatsoever. Persons who sign the subscription certificate in a
representative or other fiduciary capacity must indicate their capacity when
signing and, unless waived by the Subscription Agent in its sole and absolute
discretion, must present to the Subscription Agent satisfactory evidence of
their authority to so act.
(b) Execution by Person Other than Registered Holder. If the subscription
certificate is executed by a person other than the holder named on the face of
the subscription certificate, proper evidence of authority of the person
executing the subscription certificate must accompany the same unless, for good
cause, the Subscription Agent dispenses with proof of authority.
(c) Signature Guaranties. Your signature must be guaranteed by an Eligible
Institution if you wish to specify special issuance, payment or delivery
instructions pursuant to Form 2 and/or Form 3.
4. Method of Delivery.
The method of delivery of subscription certificates and payment of the
Subscription Price to the Subscription Agent will be at the election and risk of
the Rights Holder, but, if sent by mail, it is recommended that they be sent by
registered mail, properly insured, with return receipt requested, and that a
sufficient number of days be allowed to ensure delivery to the Subscription
Agent and the clearance of any checks sent in payment of the Exercise Price
prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date.
5. Special Provisions Relating to the Delivery of Rights Through Depository
Facility Participants.
In the case of holders of Rights that are held of record through The Depository
Trust Company and Philadelphia Depository Trust Company or any other depository
(each a "Depository"), exercises of the Basic Subscription Privilege may be
effected by instructing the Depository to transfer Rights (such Rights
"Depository Rights") from the Depository's account of such holder to the
Depository account of the Subscription Agent, together with payment of the
Subscription Price for each Underlying Share subscribed for pursuant to the
Basic Subscription Privilege.
4
<PAGE> 5
6. Substitute Form W-9.
Each Rights holder who elects to exercise Rights should provide the Subscription
Agent with a correct Taxpayer Identification Number ("TIN") on Substitute Form
W-9, substantially in the form provided with these instructions. A copy of
Substitute Form W-9 may be obtained upon request from the Subscription Agent at
the address indicated above. Failure to provide the information on the form may
subject such holder to a $50.00 penalty and to 31% federal income tax
withholding with respect to dividends that may be paid by the Company on shares
of Common Stock purchased upon the exercise of Rights.
5
<PAGE> 1
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
for
SUBSCRIPTION CERTIFICATES
issued by
ACCEL INTERNATIONAL CORPORATION
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Basic Subscription Privilege pursuant to the Rights
Offering described in the Prospectus dated ________________, 1996 (the
"Prospectus") of ACCEL International Corporation (the "Company"), a Delaware
corporation, if a holder of Rights cannot deliver the subscription
certificate(s) evidencing the Rights (the "Subscription Certificate(s)"), to the
Subscription Agent listed below (the "Subscription Agent") at or prior to 5:00
p.m., Columbus, Ohio time, on _______________, 1996, unless extended (as it may
be extended, the "Expiration Date"), provided that the Expiration Date shall in
no event be later than August 28, 1996. Such form must be delivered by hand or
sent by facsimile transmission or mail to the Subscription Agent, and must be
received by the Subscription Agent on or prior to the Expiration Date. See "The
Rights Offering--Exercise of Rights" in the Prospectus. Payment of the
Subscription Price of $2.25 per share for each share of the Company's Common
Stock, par value $0.10 per share (the "Common Stock"), subscribed for upon
exercise of such Rights must be received by the Subscription Agent in the manner
specified in the Prospectus at or prior to 5:00 p.m., Columbus, Ohio time, on
the Expiration Date even if the Subscription Certificate evidencing such Rights
is being delivered pursuant to the procedure for guaranteed delivery thereof.
The Subscription Agent is:
National City Bank
<TABLE>
<S> <C> <C>
If by Mail: Facsimile Transmission: If by Hand or Overnight Courier:
National City Bank, (216) 476-8367 National City Bank,
Subscription Agent Subscription Agent
Corporate Trust Operations Corporate Trust Operations
P. O. Box 94720 3rd Floor -- North Annex
Cleveland, Ohio 44101-4720 4100 West 150th Street
Cleveland, Ohio 44135-1385
</TABLE>
1
<PAGE> 2
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby represents that (i) he or she is the holder of
Subscription Certificate(s) representing ___________________ Rights, and (ii)
that such Subscription Certificate(s) cannot be delivered to the Subscription
Agent at or before 5:00 p.m., Columbus, Ohio time, on the Expiration Date. Upon
the terms and subject to the condition set forth in the Prospectus, receipt of
which is hereby acknowledged, the undersigned hereby elects to exercise the
Basic Subscription Privilege to subscribe for 1.5 shares of Common Stock per
Right with respect to each of _________________ Rights represented by such
Subscription Certificate. The undersigned understands that payment of the
Subscription Price of $2.25 per share for each share of Common Stock subscribed
for pursuant to the Basic Subscription Privilege must be received by the
Subscription Agent at or before 5:00 p.m., Columbus, Ohio time, on the
Expiration Date and represents that such payment, in the aggregate amount of
$________________, either (check appropriate box):
[ ] is delivered herewith or [ ] was delivered separately;
in the manner set forth below (check appropriate box and complete information
relating thereto):
[ ] wire transfer of funds
- name of transferor institution: ________________________________
- date of transfer: ______________________________________________
- confirmation number (if available): ____________________________
[ ] money order
- name of maker: _________________________________________________
- date and number of check, draft or money order number: _________
- bank on which check is drawn or issuer of money order: _________
[ ] uncertified check (Payment by uncertified check will not be
deemed to have been received by the Subscription Agent until such
check has cleared. Holders paying by such means are urged to make
payment sufficiently in advance of the Expiration Date to ensure
that such payment clears by such date.)
[ ] certified check or [ ] bank draft (cashier's check)
Signature(s) ______________________ Address _________________________________
Name(s) ___________________________ Area Code and Tel No.(s) ________________
2
<PAGE> 3
Please Type or Print
Subscription Certificate No.(s) (if available) _________________________________
GUARANTY OF DELIVERY
(Not to be used for Subscription Certificate signature guaranty)
The undersigned, a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States or a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guaranty medallion program, guarantees that the undersigned
will deliver to the Subscription Agent the certificates representing the Rights
being exercised hereby, with any required signature guaranties and any other
required documents, all within five business days after the date hereof.
_______________________________________ Dated: __________________________, 1996
(Name of Firm)
_______________________________________ _______________________________________
(Address) (Authorized Signature)
_______________________________________ _______________________________________
(Area Code and Telephone Number) (Printed Name of Authorized Signer)
The institution which completes this form must communicate the guaranty to the
Subscription Agent and must deliver the Subscription Certificate(s) to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
3
<PAGE> 1
Exhibit 99.4
SUBSCRIPTION AGENCY AGREEMENT
This Subscription Agency Agreement (the "Agreement") is made as of July ___,
1996 between ACCEL International Corporation (the "Company") and National City
Bank, as subscription agent (the "Agent"). All terms not defined herein shall
have the meaning given in the prospectus (the "Prospectus") included in the
Registration Statement on Form S-2 (File No. 333-04625) filed by the Company
with the Securities and Exchange Commission on May 28, 1996, as amended by any
amendment filed with respect thereto (the "Registration Statement").
WHEREAS, the Company proposes to make a subscription offer by issuing
certificates or other evidences of non-transferable subscription rights, in the
form designated by the Company (the "Subscription Certificates") to holders of
record of shares (each a "Stockholder") of its Common Stock, par value $.10 per
share (the "Common Stock"), as of a record date specified by the Company (the
"Record Date"), pursuant to which each stockholder will receive non-transferable
subscription rights (the "Rights") to subscribe for shares of Common Stock, as
described in and upon such terms as are set forth in the Prospectus included as
a part of the Registration Statement; a final copy of the Prospectus has been
or, upon availability will promptly be, delivered to the Agent; and
WHEREAS, the Company wishes the Agent to perform certain acts on behalf of the
Company, and the Agent is willing to so act, in connection with the distribution
of the Subscription Certificates and the issuance and exercise of the Rights to
subscribe for Common Stock as therein set forth, all upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements
set forth herein, the parties agree as follows:
1. Appointment.
The Company hereby appoints the Agent to act as subscription agent for
the Company in connection with the distribution of Subscription Certificates and
the issuance and exercise of the Rights in accordance with the terms set forth
in this Agreement and the Prospectus and the Agent hereby accepts such
appointment.
2. Form and Execution of Subscription Certificates.
Each Subscription Certificate shall be irrevocable and
non-transferable. The Agent shall maintain a register of Subscription
Certificates and the holders of record thereof (each of whom shall be deemed a
"Stockholder" hereunder for purposes of determining the rights of holders of
Subscription Certificates). Each Subscription Certificate shall, subject to the
provisions thereof, entitle the Stockholder in whose name it is recorded to the
right to purchase from the Company until the Expiration Date, at the
Subscription Price, a number of shares of Common Stock equal to 1.5 shares of
Common Stock for each Right evidenced thereby (the "Basic Subscription
Privilege").
<PAGE> 2
3. Rights and Issuance of Subscription Certificates.
(a) Each Subscription Certificate shall evidence the Rights of the
Stockholder therein named to purchase shares of Common Stock
upon the terms and conditions therein and herein set forth.
(b) Upon the written authorization of the Company, signed by any
of its duly authorized officers, as to the Record Date, the
Agent shall, from a list of the Stockholders of Common Stock
as of the Record Date to be prepared by the Agent in its
capacity as transfer agent of the Company (the "Transfer
Agent"), prepare and record Subscription Certificates in the
names of the Stockholders, setting forth the number of Rights
to subscribe for shares of the Common Stock calculated on the
basis of one Right for each one share of Common Stock recorded
on the books in the name of each such Stockholder as of the
Record Date.
(c) Each Subscription Certificate shall be dated as of the Record
Date and shall be executed manually or by facsimile signature
of a duly authorized officer of the Agent. Upon the written
advice, signed as aforesaid, as to the effective date of the
Registration Statement, the Agent shall promptly countersign
and deliver the Subscription Certificates, together with a
copy of the Prospectus, instructions as to the use of the
Subscription Certificates and any other document as the
Company deems necessary or appropriate, to all Stockholders
with record addresses in the United States (including its
territories and possessions and the District of Columbia). No
Subscription Certificate shall be valid for any purpose unless
so executed. Delivery to Stockholders with record address
inside the United States shall be by first class mail (without
registration or insurance).
(d) The Rights evidenced by Subscription Certificates issued to
Foreign Stockholders will be held by the Agent for such
Foreign Stockholders' accounts until instructions are received
to exercise the Rights. To exercise such rights, such a
Foreign Stockholder must notify the Agent and must establish
to the satisfaction of the Agent that such exercise is
permitted under applicable law. If such a holder does not
follow the procedures set forth in the preceding sentence
prior to the Expiration Date, such Rights represented thereby
will expire.
4. Exercise.
(a) Stockholders may acquire shares of Common Stock pursuant to
the Basic Subscription Privilege by delivery to the Agent as
specified in the Prospectus of (i) the Subscription
Certificate with respect thereto, duly executed by such
Stockholder in accordance with and as provided by the terms
and conditions of the Subscription Certificate, together with
(ii) the purchase price of $2.25 for each share of Common
Stock subscribed for by exercise of such Rights (the
"Subscription Price"), in U.S. dollars by wire transfer or by
money order or check drawn on a bank in the United States, in
each case payable to the order of
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<PAGE> 3
the Agent. In the case of holders of Rights that are held of
record through a Depository (as defined below), exercises of
the Basic Subscription Privilege may be effected by
instructing the Depository to transfer Rights (such Rights
"Depository Rights") from the Depository's account of such
holder to the Depository account of the Agent, together with
payment of the Subscription Price for each Underlying Share
subscribed for pursuant to the Basic Subscription Privilege.
Payments will be deemed to have been received by the Agent
only upon (i) clearance of any uncertified check (for purposes
hereof, an uncertified check will be deemed to clear upon
presentation to, and payment at, the drawee bank), (ii)
receipt by the Agent of any certified check or money order or
(iii) receipt of good funds by wire transfer to the Agent's
account.
(b) Rights may be exercised at any time after the date of issuance
of the Subscription Certificates with respect thereto but no
later than 5:00 p.m., Columbus, Ohio time, on the Expiration
Date. For the purpose of determining the time of the exercise
of any Rights, delivery of any material to the Agent shall be
deemed to occur when such materials are received at the
Corporate Trust Operations of the Agent specified in the
Prospectus. Once a Stockholder has exercised the Basic
Subscription Privilege such exercise may not be revoked except
as provided in the Prospectus.
(c) Notwithstanding the provisions of Section 4(a) and 4(b)
regarding delivery of an executed Subscription Certificate to
the Agent prior to 5:00 P.M. Columbus, Ohio time on the
Expiration Date, if prior to such time the Agent receives a
Notice of Guaranteed Delivery by facsimile (telecopy) or
otherwise from a member firm of a registered national
securities exchange or a member of the National Association of
Securities Dealers, Inc., or from a commercial bank or trust
company having an office or correspondent in the United States
(each, an "Eligible Institution") guaranteeing delivery of a
properly completed and executed Subscription Certificate, then
such exercise of the Basic Subscription Privilege shall be
regarded as timely, subject, however, to receipt of (i) the
duly executed Subscription Certificate by the Agent within
five business days following the Expiration Date (the "Protect
Period") and (ii) payment in full of the subscription price
(subject to the right of the Company to waive advance payment
in respect of the Oversubscription Privilege as described
above) prior to 5:00 p.m., Columbus, Ohio time, on the
Expiration Date.
(d) As soon as practicable after the valid exercise of Rights (for
purposes hereof an exercise will not be treated as valid until
such time as the Agent receives good funds) the Agent shall
send to each exercising Stockholder (an "Exercising
Stockholder") or, if shares of Common Stock on the Record Date
are held by Depository Trust Company and Philadelphia
Depository Trust Company (each a "Depository") or any other
depository or nominee (together with the Depositories,
"Nominees"), to such Nominee the share certificates
representing the shares of Common Stock acquired pursuant to
the Basic Subscription Privilege. Any excess payment to be
refunded by the Company to an Exercising Stockholder shall be
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<PAGE> 4
mailed by the Agent to him or her without interest or
deduction as soon as practicable after the Expiration Date.
(e) If an exercising Rights Holder has not indicated the number of
Rights being exercised, or if the Subscription Price payment
forwarded by such holder to the Agent is not sufficient to
purchase the number of shares subscribed for, the Rights
holder will be deemed to have exercised the Basic Subscription
Privilege with respect to the maximum number of whole Rights
which may be exercised for the Subscription Price delivered to
the Agent and, to the extent that the Subscription Price
payment delivered by such holder exceeds the Subscription
Price multiplied by the number of Rights exercised (such
excess being the "Subscription Excess"), such Subscription
Excess will be returned to the holder.
(f) Pursuant to the terms of the Rights Offering, the Company may
permit holders of Subordinated Notes to tender their
respective Subordinated Notes to the Company for cancellation
as consideration (in lieu of cash) for the purchase of
Underlying Shares. Upon receipt of such Subordinated Notes,
the Company shall instruct the Subscription Agent to accept
such Subordinated Notes as consideration, in an amount equal
to the outstanding principal balance of such Subordinated
Notes and accrued interest thereon, for the issuance of the
related Underlying Shares and the Subscription Agent shall be
protected in relying upon such instruction.
5. Non-Transferability of Rights.
The Rights are not transferable. Stockholders who determine not to
exercise their Rights may not transfer their Rights and, at the Expiration Date,
Rights which have not been exercised will expire and be null and void and have
no value, provided that Rights may be transferred by operation of law in the
case of death, dissolution, liquidation or bankruptcy of the Rights holder, or
pursuant to an order of an appropriate court. A Stockholder may subdivide a
Subscription Certificate into multiple Subscription Certificates having in the
aggregate the same number of Rights, provided that all such new Subscription
Certificates shall be registered in the same name as the old Subscription
Certificate.
6. Validity of Subscriptions.
Irregular subscriptions not otherwise covered by specific instructions
herein shall be submitted to an appropriate officer of the Company and handled
in accordance with his or her instructions. Such instructions will be documented
by the Agent indicating the instructing officer and the date thereof.
7. Additional Offering.
Upon completion of Rights Offering, any shares of Common Stock that are
not purchased by Right Holders may be offered by the Company for sale to
employees, independent agents, and customers (including automobile dealers) of
the Company at $2.25 per share (the
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<PAGE> 5
"Additional Offering") for a period commencing on the Expiration Date and ending
not later than ______________, 1996. The Company will sell such shares of Common
Stock directly to any purchaser or purchasers through its executive officers.
The Agent shall advise the Company immediately upon the completion of the Rights
Offering as to the total number of shares subscribed and distributable.
8. Delivery of Certificates.
The Agent will deliver certificates representing those shares of Common
Stock purchased pursuant to exercise of the Basic Subscription Privilege as soon
as practicable after the corresponding Rights have been validly exercised and
full payment for such shares has been received and cleared.
9. Holding Proceeds of Rights Offering in Escrow.
All proceeds received by the Agent from Stockholders in respect of the
exercise of Rights shall be held by the Agent, on behalf of the Company, in a
segregated, interest-bearing escrow account (the "Escrow Account"). As soon as
practicable after the receipt of any proceeds in respect of the exercise of the
Basic Subscription Privilege, the Agent shall deliver all such proceeds to the
Company, together with any interest thereon. Pending delivery to the Company as
provided herein or disbursement in the manner described in Section 4(d) above,
funds held in the Escrow Account shall be invested by the Agent at the direction
of the Company.
10. Reports.
Daily, during the period commencing with the mailing of the
Subscription Certificates and ending on the Expiration Date (and in the case of
guaranteed deliveries pursuant to Section 4(c), the period ending five business
days after the Expiration Date) the Agent will report by telephone or telecopier
(by 12:00 Noon, Columbus, Ohio time), confirmed by letter, to an officer of the
Company, data regarding Rights exercised, the total number of shares of Common
Stock subscribed for, and payments received therefor, bringing forward the
figures from the previous day's report in each case so as to show the cumulative
totals and any such other information as may be reasonably requested by the
Company.
11. Loss or Mutilation; Cancellation.
(a) If any Subscription Certificate is lost, stolen, mutilated or
destroyed, the Agent may, on such terms which will indemnify
and protect the Company and the Agent as the Agent and the
Company shall agree (which shall, in the case of a mutilated
Subscription Certificate include the surrender and
cancellation thereof), issue a new Subscription Certificate of
like denomination in substitution for the Subscription
Certificate so lost, stolen, mutilated or destroyed.
(b) All Subscription Certificates surrendered for the purpose of
exercise or, subject to Section 5, exchange, substitution or
transfer shall be canceled by the Agent, and no Subscription
Certificates shall be issued in lieu thereof except as
expressly
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<PAGE> 6
permitted by provisions of this Agreement. The Company shall
deliver to the Agent for cancellation and retirement, and the
Agent shall so cancel and return, any other Subscription
Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Agent shall deliver all
canceled Subscription Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled
Subscription Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
12. Compensation for Services.
The Company agrees to pay to the Agent certain fees, as set forth in
the schedule hereto, for services performed hereunder, which services include
any other services not described herein but customarily performed by the
Subscription/Escrow Agent in a Rights Offering. The Company further agrees that
it will reimburse the Agent for its reasonable out-of-pocket expenses incurred
in the performance of its duties as such.
13. Instructions and Indemnification.
The Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions:
(a) The Agent shall be entitled to rely upon any instructions or
directions furnished to it by an appropriate officer of the
Company, whether in conformity with the provisions of this
Agreement or constituting a modification hereof or a
supplement hereto. Without limiting the generality of the
foregoing or any other provision of this Agreement, the Agent,
in connection with its duties hereunder, shall not be under
any duty or obligation to inquire into the validity or
invalidity or authority or lack thereof of any instruction or
direction from an appropriate officer of the Company which
conforms to the applicable requirements of this Agreement and
which the Agent reasonably believes to be genuine and shall
not be liable for any delays, errors or loss of data occurring
by reason of circumstances beyond the Agent's control,
including, without limitation, acts of civil or military
authority, national emergencies, labor difficulties, fire,
flood, catastrophe, acts of God, insurrection, war, riots or
failure of the mails, transportation, communication or power
supply.
(b) The Company will indemnify the Agent for, and hold it harmless
against, any liability and expense which may arise out of or
in connection with the services described in this Agreement or
the instructions or directions furnished to the Agent relating
to this Agreement by an appropriate officer of the Company;
provided, however, that such agreement does not extend to, and
the Agent shall not be indemnified or held harmless with
respect to any liability or expense which shall arise out of,
or be incurred or suffered as a result of, the Agent's gross
negligence, bad faith, wilful misconduct or breach of this
Agreement. The Company shall not indemnify the Agent with
respect to any claim or action settled without its consent,
which consent shall not be unreasonably withheld.
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<PAGE> 7
(c) The Agent will promptly notify the Company of any claim with
respect to which it may seek indemnity hereunder. The Company
shall be entitled to participate at its own expense in the
defense of any suit brought to enforce any such claim, and if
the Company so elects, the Company shall assume the defense of
any such suit. In the event that the Company assumes such
defense, the Company shall not thereafter be liable for the
fees and expenses of any additional counsel that the Agent
retains, so long as the Company shall retain counsel
reasonably satisfactory to the Agent, to defend such suit
14. Changes in Subscription Certificate.
The Agent may, without the consent or concurrence of the Stockholders
in whose names Subscription Certificates are registered, by supplemental
agreement or otherwise, concur with the Company in making any changes or
corrections in a Subscription Certificate that it shall have been advised by
counsel (who may be counsel for the Company) is appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or clerical
omission or mistake or manifest error therein or herein contained, and which
shall not be inconsistent with the provision of the Subscription Certificate
except insofar as any such change may confer additional rights upon the
Stockholders.
15. Assignment, Delegation.
(a) Neither this Agreement nor any rights or obligations hereunder
may be assigned or delegated by either party without the
written consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or
claim or to impose upon any other person any duty, liability
or obligation.
16. Governing Law.
The validity, interpretation and performance of this Agreement shall be
governed by the law of the State of Ohio.
17. Severability.
The parties hereto agree that if any of the provisions contained in
this Agreement shall be determined invalid, unlawful or unenforceable to any
extent, such provisions shall be deemed modified to the extent necessary to
render such provisions enforceable. The parties hereto further agree that this
Agreement shall be deemed severable, and the invalidity, unlawfulness or
enforceability of any term or provision thereof shall not affect the validity,
legality or enforceability of this Agreement or of any other term or provision
hereof.
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<PAGE> 8
18. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
19. Captions.
The captions and descriptive headings herein are for the convenience of
the parties only. They do not in any way modify, amplify, alter or give full
notice of the provisions hereof.
20. Facsimile Signatures.
Any facsimile signature of any party hereto shall constitute a legal,
valid and binding execution hereof by such party.
21. Further Actions.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effect the purposes of this Agreement.
22. Additional Provisions.
Except as specifically modified by this Agreement, the Agent's rights
and responsibilities set forth in the Agreement for Stock Transfer Services
between the Company and the Agent are hereby ratified and confirmed and continue
in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
NATIONAL CITY BANK
By: __________________________
Name: ________________________
Title: _______________________
ACCEL INTERNATIONAL CORPORATION
By: __________________________
Name: ________________________
Title: _______________________
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<PAGE> 9
SCHEDULE OF FEES
FOR SUBSCRIPTION/ESCROW AGENT SERVICES
between
ACCEL International Corporation
and
NATIONAL CITY BANK
[to be provided by National City Bank]
- 9 -
<PAGE> 1
Exhibit 99.5
ACCEL INTERNATIONAL CORPORATION
RIGHTS OFFERING
NOMINEE HOLDER CERTIFICATION
The undersigned, a bank, broker or other nominee holder of Rights (the "Rights")
to purchase shares of Common Stock, par value $.10 per share (the "Common
Stock"), of ACCEL International Corporation (the "Company") pursuant to the
rights offering (the "Rights Offering") described and provided for in the
Company's prospectus dated ______, 1996 (the "Prospectus"), hereby certifies to
the Company and to National City Bank, as Subscription Agent for such Rights
Offering, that the undersigned has subscribed for pursuant to the Basic
Subscription Privilege (as defined in the Prospectus), on behalf of beneficial
owners thereof (which may include the undersigned), the number of shares
specified below:
Number of Shares
Subscribed for
Pursuant to Basic Rights Certificate
Subscription Privilege Number
__________________________________________________
1. ______________________ ___________________
2. ______________________ ___________________
3. ______________________ ___________________
4. ______________________ ___________________
5. ______________________ ___________________
6. ______________________ ___________________
7. ______________________ ___________________
8. ______________________ ___________________
9. ______________________ ___________________
10. ______________________ ___________________
_______________________________
Name of Nominee Holder
Depository Participant Number (if applicable) _______________________________
Address
_________________________________________
Basic Subscription Confirmation Number(s) By: ___________________________
Name: _________________________
_________________________________________ Title: ________________________
Telephone Number: _____________
