SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(A) Of
The Securities Exchange Act Of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant: / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to <section> 240.14a-11(c) or
<section> 240.14a-12
ACCEL INTERNATIONAL CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(l)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously by written preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-1 1(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form Schedule or Registration Statement No.
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3) Filing Party:
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4) Date Filed:
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<PAGE>
ACCEL International Corporation
12603 S.W. Freeway, Suite 315
Stafford, Texas 77477
(281) 565-8010
October __, 1999
1999 ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1999 annual meeting of Stockholders of ACCEL International Corporation
to be held at 10:00 a.m., local time on November 16, 1999, at the offices
of Day, Berry & Howard LLP, CityPlace I, Hartford, Connecticut. A notice
of the meeting, a proxy statement and a proxy card accompany this letter.
At the meeting, you will be asked to consider and vote upon the
following:
- - - proposed amendments to our certificate of incorporation and
bylaws in the forms attached as Appendices A and B to the proxy
statement;
- - - a proposed amendment to our 1996 Stock Incentive Plan in the
form attached as Appendix C; and
- - - the election of our directors to serve until our next annual
meeting.
The proposed amendment and restatement of our certificate of
incorporation, if adopted, would:
- - - increase the number of authorized shares of our common stock from 10
million to 15 million. An increase is needed to permit us to complete
the proposed acquisition of Allegiance Insurance Managers, Ltd.;
- - - eliminate the prohibition against stockholder action without
a meeting;
- - - eliminate the requirement that the holders of 80% or more of
our outstanding shares entitled to elect directors approve some
reorganizations, some amendments to our certificate of
incorporation and amendment to our bylaws; and
- - - reduce the minimum number of directors of the Corporation
from nine to three.
The proposed amendment to our bylaws, if approved, would:
- - - permit the bylaws to be made, repealed, altered, amended or
rescinded by the vote of our stockholders holding a majority of
our outstanding shares entitled to elect directors, rather than
by stockholders holding 80% of the shares as currently required;
and
- - - decrease the stockholder vote necessary to approve an
amendment to our certificate of incorporation that would
contravene any bylaw, from the vote of stockholders holding 80%
or more of our outstanding shares entitled to elect directors, to
the vote of the holders of only a majority of the shares.
The proposed amendments to our certificate of incorporation and bylaws
will require the affirmative vote of the holders of 80% or more of the
outstanding shares.
The proposed amendment to the 1996 Stock Incentive Plan, if approved,
would:
- - - increase the total number of shares of Common Stock with
respect to which awards may be granted from 1,500,000 to
2,000,000.
The proposed amendment to the 1996 Stock Incentive Plan will require
the affirmative vote of a majority of the holders of the shares voting in
person or by proxy at the meeting.
Your Board of Directors recommends that you vote FOR the amendments to
our certificate of incorporation and bylaws, FOR the amendment to our 1996
Stock Incentive Plan, and FOR the election of the nominees for director.
Details of the important information concerning the items of business
scheduled for the meeting appear in the accompanying proxy statement.
Please give this material your careful attention.
Whether or not you plan to attend the meeting, please complete, sign
and date the accompanying proxy card and return it in the enclosed prepaid
envelope. If you attend the meeting, you may vote in person even if you
have previously returned your proxy card. Your prompt cooperation will be
greatly appreciated.
We are gratified by your continued support of our company.
Sincerely yours,
Douglas J. Coats
President, Chief Executive
Officer and Secretary
<PAGE>
ACCEL INTERNATIONAL CORPORATION
12603 S.W. Freeway, Suite 315
Stafford, Texas 77477
Notice Of Annual Meeting Of Stockholders
To Be Held November 16, 1999
We will hold the 1999 annual meeting of stockholders of ACCEL
International Corporation at the offices of Day, Berry & Howard LLP,
CityPlace I, Hartford, Connecticut, on November 16, 1999, at 10:00 am.,
local time, for the following purposes:
1. To approve and adopt an amended and restated certificate of
incorporation and an amendment to the bylaws. The proposed changes to our
certificate of incorporation and bylaws, if approved, would:
- - - increase the number of authorized shares of our common stock
from 10 million to 15 million;
- - - eliminate the prohibition against stockholder action without
a meeting;
- - - eliminate the requirement that the holders of 80% or more of
our outstanding shares entitled to elect directors, approve some
reorganizations, some amendments to our certificate of
incorporation and amendments to our bylaws; and
- - - reduce the minimum number of directors of the Corporation
from nine to three.
2. To approve and adopt an amendment to our 1996 Stock Incentive
Plan. The proposed amendment, if approved, would:
- - - increase the total number of shares of Common Stock with
respect to which awards may be granted from 1,500,000 to
2,000,000;
3. To elect our directors to serve until our next annual meeting;
and
4. To act on such other matters as may be properly brought before
the meeting or any adjournments, postponements or continuations of the
meeting.
We have described all of these matters more fully in the accompanying
proxy statement, which you should read carefully.
Your Board of Directors has fixed the close of business on September
28, 1999, as the record date for the meeting. Only stockholders of record
at the close of business at this time are entitled to notice of and to vote
at the meeting or any adjournments, postponements or continuations of the
meeting. A complete list of stockholders entitled to vote at the meeting
will be available for examination by any stockholder at the place where the
meeting is to be held for at least 10 days before the meeting and also at the
meeting.
All stockholders are invited to attend the meeting. To ensure your
representation at the meeting, however, you are urged to mark, sign and
return the enclosed proxy in the accompanying envelope, whether or not you
expect to attend the meeting. No postage is required if you mail it in the
United States. In the event that you attend the meeting, you may vote in
person even if you have returned a proxy.
Your vote is important.
To vote your shares, please sign, date and complete the enclosed proxy
and mail it promptly in the enclosed return envelope.
By Order of the Board of Directors
Douglas J. Coats
President, Chief Executive
Officer and Secretary
<PAGE>
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT THE MEETING . . . . . . . . . . . . . . . . . i
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
The Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
Record Date; Vote Required. . . . . . . . . . . . . . . . . . . . . . . . ii
Annual Meeting Proposals. . . . . . . . . . . . . . . . . . . . . . . . . ii
Proposed Amendments to Certificate of Incorporation and Bylaws. . . . . . ii
Proposed Amendment to 1996 Stock Incentive Plan . . . . . . . . . . . . . ii
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . ii
THE MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Meeting . . . . . . . . . . . . . . . . . . . . . 1
Matters to be Considered at the Meeting . . . . . . . . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Voting of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 2
Record Date; Stockholders Entitled to Vote; Quorum. . . . . . . . . . . . 2
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 3
PROPOSAL NO. 1 - AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS. . 4
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Increase in Number of Authorized Shares . . . . . . . . . . . . . . . . . 4
Amendment Permitting Action by Written Consent. . . . . . . . . . . . . . 5
Amendment Eliminating Anti-takeover and Supermajority Provisions. . . . . 5
Amendment Reducing Minimum Number of Directors. . . . . . . . . . . . . . 9
PROPOSAL NO. 2 - APPROVAL OF THE ADOPTION OF AN AMENDMENT TO THE 1996
STOCK INCENTIVE PLAN . . . . . . . . . . . . . . . . . . . . . . . . 10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Summary of the Provisions of the Plan . . . . . . . . . . . . . . . . . . 10
Proposed Amendment to the Plan. . . . . . . . . . . . . . . . . . . . . . 14
PROPOSAL NO. 3- ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . 12
Nominees for Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . 14
Meetings and Committees of the Board of Directors . . . . . . . . . . . . 14
FORWARD LOOKING STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS . . . . . . . . . . . . . 17
MARKET PRICE AND DIVIDEND INFORMATION . . . . . . . . . . . . . . . . . . 19
EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Summary Compensation Table. . . . . . . . . . . . . . . . . . . . . . . . 21
Options Granted in Last Fiscal Year . . . . . . . . . . . . . . . . . . . 22
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Beneficial Ownership of Management. . . . . . . . . . . . . . . . . . . . 23
Report of the Compensation Committee. . . . . . . . . . . . . . . . . . . 23
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . 26
RELATIONSHIP WITH INDEPENDENT AUDITORS. . . . . . . . . . . . . . . . . . 26
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . 26
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . . . . . 27
APPENDIX A PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION . . A-1
APPENDIX B PROPOSED AMENDMENT TO THE BYLAWS . . . . . . . . . . . . . . . B-1
APPENDIX C PROPOSED AMENDMENT TO 1996 STOCK INCENTIVE PLAN. . . . . . . . C-1
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q: What do I need to do now?
A: Just sign and mail your proxy card in the enclosed return envelope as
soon as possible, so that your shares may be represented at the
meeting. The meeting will take place on November 16, 1999. Your
Board of Directors recommends that you vote in favor of each proposal
being submitted to you for approval.
Q: Can I change my vote after I have mailed in my signed proxy card?
A: Yes. You can change your vote at any time before we vote your proxy
at the meeting. You can do so in one of three ways. First, you can
send written notice stating that you would like to revoke your proxy
to our Secretary at the address given below. Second, you can complete
a new proxy card and send it to our Secretary at the address given
below. Third, you can attend the meeting and vote in person. You
should send any written notice or new proxy card to:
Douglas J. Coats
President, Chief Executive Officer and Secretary
ACCEL International Corporation
P.O. Box 1949
Stafford, TX 77497-1949
You may request a new proxy card by calling Douglas J. Coats at (281)
565-8010.
Q: Where can I find more information?
A: You may obtain more information from various sources, as set forth in
"Where Can I Find More Information" on page 29.
<PAGE>
SUMMARY
Because this a summary, it does not contain all the information that
may be important to you. Before you decide how to vote on each proposal,
you should carefully read this entire proxy statement and all of its
appendices. For a description of the documents referred to in this statement,
you should review "Where You Can Find More Information" beginning on page 29.
<TABLE>
<CAPTION>
<S> <C>
The Meeting (page 1) Annual Meeting Proposals (pages 3, 9 and 14)
The annual meeting will be held on November 16, Proposed Amendments to Certificate of
1999, at 10:00 a.m., local time at the offices of Incorporation and Bylaws (page 3)
Day, Berry & Howard LLP, CityPlace I, Hartford, At the meeting, you will be asked to approve an
Connecticut. At the meeting, you will be asked amended and restated certificate of incorporation
- - - to approve a proposed amended and restated and a bylaws amendment that will:
certificate of incorporation and an amendment - increase the number of authorized shares of our
to our bylaws; common stock from 10 million to 15 million which
- - - to approve a proposed amendment to our 1996 will allow us to complete the proposed acquisition
Stock Incentive Plan; of Allegiance Insurance Managers, Ltd.;
- - - to elect nine directors; and - eliminate the prohibition against
- - - to act on any other items that may be stockholder action without a meeting;
submitted to a vote at the meeting. - eliminate the requirement that the holders
Record Date; Vote Required (page 1) of 80% or more of our outstanding shares
You can vote at the meeting if you owned shares entitled to elect directors, approve amendments
of our common stock at the close of business on to our bylaws, some reorganizations and some
September 28, 1999. You can cast one vote for amendments to our certificate of incorporation;
each share of common stock that you owned at that and
time. The proposed amendments to our certificate
of incorporation and bylaws must be approved by - reduce our minimum number of directors from nine
the holders of 80% of the outstanding shares of to three.
our common stock. The proposed amendment to the Proposed Amendment to 1996 Stock Incentive Plan
1996 Stock Incentive Plan will require the (page 9)
affirmative vote of a majority of the holders of At the meeting, you will be asked to approve an
the shares voting in person or by proxy at the amendment to our 1996 Stock Incentive Plan that
meeting. The director nominees who receive the will:
most votes of those cast will be elected. You
can vote your shares by attending the meeting and - increase the total number of shares of Common
voting in person or you can mark the enclosed Stock with respect to which awards may be
proxy card with your vote, sign it and mail it in granted from 1,500,000 to 2,000,000.
the enclosed return envelope. You can revoke Election of Directors (page 14)
your proxy as late as the date of the meeting At the meeting, you will be asked to elect the
either by sending in a new proxy or by attending following nine director nominees: Robert
the meeting and voting in person. Betagole, David T. Chase, Douglas J. Coats,
Raymond H. Deck, Richard Desich, Gregory B. Grusse,
Kermit G. Hicks, Stephen M. Qua, and John P.
Redding, each to serve until the 2000 annual meeting
of stockholders.
</TABLE>
<PAGE>
THE MEETING
Date, Time and Place of Meeting
We will hold the meeting on November 16, 1999, at 10:00 a.m., local
time, or at any adjournment or postponement thereof, at the offices of Day,
Berry & Howard LLP, CityPlace I, Hartford, Connecticut, for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders.
Matters to be Considered at the Meeting
At the meeting, we will ask our stockholders to consider and vote upon
the following matters:
- a proposal to amend our certificate of incorporation and
bylaws in order to:
(a) increase the number of authorized shares of our common stock
from 10 million to 15 million;
(b) eliminate the prohibition against stockholder action without
a meeting;
(c) eliminate the requirement that the holders of 80% or more of
our outstanding shares entitled to elect directors, approve
amendments to our bylaws, some reorganizations and some
amendments to our certificate of incorporation;
(d) reduce the minimum number of directors of the Corporation
from nine to three;
- a proposal to amend our 1996 Stock Incentive Plan in order to
increase the total number of shares of Common Stock with respect
to which awards may be granted from 1,500,000 to 2,000,000; and
- the election of directors to serve until our next annual
meeting.
The stockholders will also consider and vote upon such other matters
as may properly be brought before the meeting or any adjournment or
postponement thereof.
Vote Required
The proposal to amend the certificate of incorporation and bylaws will
pass if the holders of 80% or more of our outstanding shares entitled to
elect directors vote in favor.
The proposal to amend the 1996 Stock Incentive Plan will pass upon the
affirmative vote of the holders of a majority of the shares voting in
person or by proxy at the meeting.
A plurality of the votes cast by the stockholders present in person or
by proxy and entitled to vote will elect directors. This means that the
directors receiving the greatest number of votes cast will be elected.
With regard to the election of directors, you may vote in favor of or
withhold your vote from each nominee; and votes that are withheld will be
excluded entirely from the vote and will have no effect. There is no
cumulative voting with respect to the election of directors.
Pursuant to applicable law, broker non-votes and abstentions will not
be counted in favor of any proposal presented at the meeting or the
election of any nominee for director. If you abstain from voting on the
proposal to amend the certificate of incorporation and bylaws, then you
will in effect be voting against it. Broker non-votes will also have the
same effect as a negative vote on the proposal. Abstentions and broker
non-votes will not count against the proposals to amend the 1996 Stock
Incentive Plan and to elect directors.
Voting of Proxies
Shares of our common stock represented by properly executed proxies
received in time for the meeting, unless previously revoked, will be voted
at the meeting as specified by the stockholders on the proxies. If no
specification is made, shares represented by these proxies will be voted as
recommended by your Board of Directors.
If any other matters properly come before the meeting for
consideration, the person or persons named in the form of proxy enclosed
herewith and acting thereunder will have discretion to vote on the matters
in accordance with their best judgment, unless the proxy indicates
otherwise. We have no knowledge of any matters to be presented at the
meeting other than those matters referred to and described in this proxy
statement.
Revocability of Proxies
If you give a proxy, you have the power to revoke it at any time
before it is voted by a later appointment received by our Secretary or by
giving notice of revocation to our Secretary in writing or in open meeting.
Record Date; Stockholders Entitled to Vote; Quorum
Only stockholders of record at the close of business on September 28,
1999 will be entitled to receive notice of and to vote at the meeting. As
of the record date, 8,554,966 shares of common stock were issued and
outstanding. Each share of common stock is entitled to one vote on each
matter on which the holders of common stock are entitled to vote. A
majority of the outstanding shares of common stock entitled to vote must be
represented in person or by proxy at the meeting in order for a quorum to
be present.
Solicitation of Proxies
Your Board of Directors is soliciting proxies, the form of which is
enclosed, for the meeting. The cost of this solicitation will be borne by
us. We have hired Corporate Investor Communications, Inc. to solicit
proxies for us at a fee of $4,500 plus expenses. Our officers, directors,
regular employees or individuals from the firm hired by us may communicate
with stockholders personally or by mail, telephone, telegram or otherwise
for the purpose of soliciting proxies. We and our authorized agents will
request brokers and other custodians, nominees and fiduciaries to forward
proxy soliciting material to the beneficial owners of shares held of record
by these persons and will reimburse their reasonable out-of-pocket expenses
in forwarding the material. This proxy statement is being mailed on or
about October __, 1999.
<PAGE>
PROPOSAL NO. 1- AMENDMENTS TO CERTIFICATE
OF INCORPORATION AND BYLAWS
General
The Board of Directors has approved and recommends that you approve
and adopt the amended and restated certificate of incorporation of ACCEL
attached as Appendix A to this proxy statement and the amendment to ACCEL's
bylaws attached as Appendix B to this proxy statement. The changes to the
certificate of incorporation and bylaws will:
- increase the number of authorized shares of common stock by
5 million shares;
- eliminate the prohibition against stockholder action
without a meeting;
- eliminate some anti-takeover and supermajority vote
provisions; and
- reduce the minimum number of directors of the
Corporation from nine to three.
We have discussed these changes in further detail below. Copies of
our certificate of incorporation and bylaws as now in effect and marked as
proposed to be amended are also included in Appendices A and B. The
affirmative vote of the holders of 80% or more of the outstanding shares of
ACCEL is required to approve the proposed amended and restated certificate of
incorporation and amendment to the bylaws. If stockholders approve the
proposal, we intend to file an amendment to our certificate of incorporation
shortly after the meeting. The amendment to the certificate of incorporation
will be effective immediately when the Secretary of State of Delaware accepts
the filing. The amendment to the bylaws will be effective when the stockholders
approve it.
Increase in Number of Authorized Shares
The proposed amended and restated certificate of incorporation will
increase the number of authorized shares of common stock of ACCEL from 10
million to 15 million. The additional shares of common stock to be
authorized will have rights identical to the currently outstanding shares
of common stock of ACCEL.
The Board of Directors believes the proposed increase in the number of
authorized shares of common stock is necessary to provide ACCEL with the
flexibility to act in the future with respect to financing programs,
acquisitions, mergers, stock splits and other corporate purposes without
the delay and expense associated with obtaining stockholder approval each
time an opportunity requiring the issuance of shares may arise. After the
proposed amended and restated certificate of incorporation becomes effective,
the Board of Directors will be free to issue the additional authorized shares
of common stock without further action on the part of stockholders.
Stockholders will not have any preemptive rights to purchase the additional
shares.
ACCEL has reached an agreement in principle to acquire 100% of the stock
of Allegiance Insurance Managers, Ltd. for 1,526,076 shares of ACCEL's common
stock. Allegiance operates as an underwriting manager, managing general
agency and claims administrator for various programs, companies and clients.
Gerald H. Pastor, President and Chief Executive Officer of Allegiance, has been
elected President and Chief Executive Officer of ACCEL's subsidiary,
Acceleration National Insurance Company, and will continue as President and
Chief Executive Officer of Allegiance. Upon completion of the proposed
acquisition, the Board of Directors will elect Mr. Pastor President and Chief
Executive Officer of ACCEL and will elect him and two other persons associated
with Allegiance to the Board of Directors of ACCEL. After the proposed
acquisition of Allegiance, the primary focus of Acceleration National Insurance
Company will be in the non-standard automobile insurance business.
Under the proposed terms, ACCEL will issue up to an additional 2,180,110
shares of common stock to the shareholders of Allegiance if the combined
business meets certain performance criteria over the six years after the
purchase. If the business does not achieve certain cumulative earnings by
December 31, 2002, the former Allegiance shareholders will return 763,038
shares to ACCEL.
Consummation of the purchase of the stock of Allegiance cannot occur
unless the stockholders of ACCEL approve the proposed increase in its authorized
shares. Closing of the purchase is also subject to negotiation and execution
of a definitive stock purchase agreement, clearance by the Ohio Department of
Insurance and satisfaction of customary closing conditions. Accordingly, we
can give no assurance that we will complete the proposed acquisition.
The availability of authorized but unissued shares of common stock
might be deemed to have the effect of preventing or discouraging an attempt
by another person to obtain control of ACCEL, because the additional shares
could be issued by the Board of Directors, which could dilute the stock
ownership of that person. We have no plans for issuances for that purpose
and this proposal is not being proposed in response to a known effort to acquire
control of ACCEL.
The authorization of additional shares of common stock pursuant to
this proposal will itself have no dilutive effect upon the proportionate
voting power of the present stockholders of ACCEL. However, to the extent
that ACCEL subsequently issues shares to persons other than the present
stockholders, such as to the shareholders of Allegiance, the issuance could
have a substantial dilutive effect on present stockholders.
Amendment Permitting Action by Written Consent
Under the applicable provisions of the Delaware General Corporation
Law, in the absence of a prohibition against stockholder action without a
meeting, stockholders may take any action which may be taken at a meeting
of stockholders without a meeting, without prior notice and without a vote,
if:
- the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or
take the action at a meeting at which all shares entitled to vote
thereon were present and voted, sign consents in writing, setting
forth the action; and
- deliver the consents to the corporation.
Consequently, the amendment will make it easier to gain stockholder
approval at any time approval is required without the delay and expense
associated with calling a special meeting of our stockholders. David T.
Chase and related persons currently have the power to vote a majority of the
outstanding shares. The amendment will give them the power, acting
together, to take stockholder action without a meeting. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" on page 19.
Amendment Eliminating Anti-takeover and Supermajority Provisions
GENERAL DESCRIPTION. The proposed amended and restated certificate of
incorporation will result in the deletion, in their entirety, of Articles
Sixth, Tenth, Twelfth and Thirteenth of our existing certificate of
incorporation and the deletion of the second sentence of Article Fourteenth
of our certificate of incorporation. The proposed amendment to the bylaws
will amend Article IX.
As noted above, the proposed amendment will eliminate Article Twelfth
of the existing certificate of incorporation in its entirety. Article
Twelfth requires that some transactions with a Related Corporation (as
defined in Article Twelfth) and the dissolution of ACCEL be approved by
resolution of the Board of Directors prior to the Related Corporation
acquiring the beneficial ownership of more than 5% of the outstanding
common stock of ACCEL. If this approval is not received, then
the transaction must be approved by the holders of at least 80% of the
outstanding shares of ACCEL entitled to elect directors, even if the
approval of holders of only a simply majority of outstanding shares or of
the shares voted or represented at the meeting might otherwise be legally
required.
It is important to understand that many of the terms defined in
Article Twelfth differ from similar concepts established under the Delaware
General Corporation Law. Article Twelfth defines a "Related Corporation"
as any other corporation or its affiliate if the other corporation and its
affiliates singly or in the aggregate are directly or indirectly the
beneficial owners of more than 5% of the outstanding shares of common stock
of the Corporation. The transactions covered by Article Twelfth include:
- the merger of ACCEL with any Related Corporation;
- the sale, lease or exchange of all or substantially all of
ACCEL's assets or business to or with a Related Corporation; and
- the issuance or delivery by ACCEL of any stock or other
securities in exchange or payment for any properties or assets of
any Related Corporation or securities issued by any Related
Corporation or in a merger of any affiliate of ACCEL with or into
any Related Corporation.
The proposed amendment will also eliminate provisions in our existing
certificate of incorporation that require approval by holders of 80% of the
outstanding shares of ACCEL to amend, repeal or adopt:
- any provision of our bylaws;
- an amendment to our certificate of incorporation that would
contravene any bylaw; and
- the following Articles of our certificate of incorporation:
- Article Thirteenth (governing some amendments to the
certificate of incorporation requiring an 80% supermajority
vote);
- Article Sixth (dealing with alteration of the bylaws by
the stockholders);
- Article Seventh (dealing with the number and selection
of directors);
- Article Tenth (dealing with the prohibition against
stockholder action without a meeting); and
- Article Twelfth (which is described above).
The proposed amendment will also amend Article IX of our bylaws, which
currently provides that the bylaws may be made, repealed, altered, amended
or rescinded by the Board of Directors or by the holders of not less than
80% of the outstanding shares of ACCEL entitled to elect directors.
Article IX also provides that an 80% supermajority vote is required for any
amendment to our certificate of incorporation that would contravene any
bylaw in existence on the record date of the applicable stockholder
meeting. The proposed amendment will change all of the foregoing 80%
supermajority vote requirements to the vote of the holders of a majority of
the outstanding shares of ACCEL.
If stockholders eliminate the supermajority vote requirements, then
the holders of a majority of the outstanding shares of common stock could
change our certificate of incorporation, including changes to the size of
the Board of Directors beyond what is currently permitted by Article
Seventh of the certificate of incorporation. Also, the affirmative vote of
a majority of either the outstanding shares of common stock or the members
of the Board of Directors could change the bylaws.
HISTORICAL BACKGROUND. Article Twelfth and the supermajority
provisions are intended to make it more difficult for a takeover to occur
without the approval of the Board of Directors. Our stockholders adopted
Article Twelfth and the supermajority voting provisions of the certificate
of incorporation and the bylaws that this proposal would eliminate at a
time when unsolicited attempts to take control of or acquire companies were
common.
REASONS FOR THE PROPOSAL. The Board of Directors believes that the
provisions of Article Twelfth and the supermajority voting provisions
contained in our certificate of incorporation and bylaws are no longer
meaningful, but have become unnecessary and potentially cumbersome. The
Board of Directors believes that elimination of Article Twelfth and the
supermajority provisions would provide greater flexibility in connection
with the management of ACCEL and transactions of the type subject to
Article Twelfth and the 80% supermajority voting provisions, and that this
flexibility would be beneficial to ACCEL and its stockholders.
The Board of Directors believes that Article Twelfth is unnecessary
because we are subject to other safeguards that assure the fairness of
transactions involving interested directors or stockholders. For example,
Section 144 of the Delaware General Corporation Law requires that
transactions with related parties either be:
- approved by a majority of the disinterested directors, as
determined pursuant to the Delaware General Corporation Law;
- approved by the holders of a majority of the common stock
entitled to vote thereon; or
- fair to ACCEL as of the time the Board of Directors or the
holders of the common stock approved the transactions.
In addition, it is our policy that any transaction with related
parties be on terms no less favorable to us than could be obtained in an
arms-length transaction with unrelated parties. In approving any related
party transaction, decisions by members of the Board of Directors are
subject to the fiduciary duty requirements of the Delaware General
Corporation Law and related case law.
Under the Delaware General Corporation Law, approval of mergers,
consolidations and similar extraordinary transactions that may be subject
to Article Twelfth generally would require the vote of the holders of a
majority of the outstanding shares of capital stock of ACCEL. Other
transactions currently covered by Article Twelfth may not require any
stockholder vote under the Delaware General Corporation Law. In addition,
Section 203 of the Delaware General Corporation Law, which became effective
in 1987, restricts the ability of stockholders who beneficially own 15% or
more of the outstanding shares of a corporation and have not held the
shares for at least three years from engaging in some business combination
transactions involving the corporation.
The Board of Directors believes that the supermajority voting
provisions are no longer meaningful or necessary due to our current
ownership structure, and may actually hinder our ability to raise capital
or enter into business combinations the Board of Directors believes are in
our best interest. Furthermore, the Board of Directors believes that the
types of transactions subject to Article Twelfth and the 80% supermajority
voting provisions should not be blocked by holders of a small minority of
20% of the common stock outstanding.
EFFECTS OF ADOPTION OF THE PROPOSAL. The elimination of Article
Twelfth would permit us and any Related Corporation to engage in
transactions of the type restricted by Article Twelfth with:
- approval of the holders of a majority of our outstanding
common stock, pursuant to Sections 251 and 252 of the Delaware
General Corporation Law; or
- in the case of some transactions with some Related
Corporations, with the approval of a majority of the
disinterested directors as determined in accordance with Section
144 of the Delaware General Corporation Law.
Elimination of Article Twelfth would have the effect of rendering less
difficult the accomplishment of business combinations, changes in control
of ACCEL, unsolicited tender offers or mergers, and the assumption of
control by the holder of a large block of shares.
The elimination of the 80% supermajority voting provisions would make
it easier for holders of a majority of the stock and current management to
effect changes to our certificate of incorporation and bylaws which they
favor, but would make it more difficult for them to preclude changes they
opposed or to retain control if a hostile takeover was attempted.
It is unlikely that a hostile takeover attempt, certificate of
incorporation or bylaw amendment or other stockholder initiative would be
successful unless supported by the Chase family. Members of the Chase
family, if they vote together as a block, presently are able to vote more
than 50% of the common stock outstanding. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS" on page 19. The elimination of Article
Twelfth and the supermajority voting provisions would make it easier for
the Chase family to obtain approval of a reorganization transaction with a
Related Corporation, certificate of incorporation or bylaw amendment or
other extraordinary item that they support, and also would make it more
difficult for anyone else to block or veto a reorganization transaction
with a Related Corporation, certificate of incorporation or bylaw amendment
or other extraordinary item that such person opposes.
Amendment Reducing Minimum Number of Directors
The proposed amended and restated certificate of incorporation will
reduce the minimum number of directors to three. The certificate of
incorporation presently requires at least nine directors.
The Board of Directors believes that at times fewer than nine
directors may be appropriate for ACCEL. Also reducing the minimum will
avoid potential problems if nine qualified people are not willing to serve
as directors. Delaware law only requires that ACCEL have three directors.
Although the Board of Directors has no plans to reduce the present number
of directors, it believes that it is desirable to have the flexibility to
have a smaller Board if that becomes necessary or desirable in the future.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND THE BYLAWS AMENDMENT.
<PAGE>
PROPOSAL NO. 2 - APPROVAL OF THE ADOPTION OF AN AMENDMENT TO THE
1996 STOCK INCENTIVE PLAN
General
The Board of Directors has approved an amendment (the "Plan
Amendment") to the Company's 1996 Stock Incentive Plan (the "Plan") to
increase the maximum number of shares of common stock, $.10 par value, of
the Company ("Common Stock") with respect to which awards may be granted
under the Plan. Currently, the maximum number of shares of Common Stock
with respect to which awards may be granted under the Plan is 1,500,000.
The Plan Amendment increases the maximum number of shares under the Plan to
2,000,000. In order for the Plan amendment to become effective,
stockholders must approve it at the 1999 annual meeting.
The Plan
The purpose of the Plan is to advance the long-term interests of the
Company by (i) motivating executive officers, other personnel and
independent agents of the Company by means of long-term incentive
compensation; (ii) furthering the identity of interests of participants
with those of the stockholders of the Company, through the ownership and
performance of the Common Stock; and (iii) permitting the Company to
attract and retain directors and executive personnel upon whose judgment
the successful conduct of the business of the Company largely depends.
Summary of the Provisions of the Plan
Overview. The Plan permits the granting of (1) options to purchase shares
of Common Stock which are either (a) non-statutory stock options ("Non-statutory
Stock Options") not intended to qualify for special tax treatment under the
Internal Revenue Code of 1986, as amended (the "Code"), or (b) options which are
intended to qualify as incentive stock options under the Code ("Incentive Stock
Options"), (2) stock appreciation rights in conjunction with stock options, (3)
restricted stock awards, (4) phantom stock awards and (5) performance shares.
All employees of the Company and its subsidiaries who hold a position with
responsibility in an executive, managerial, administrative or professional
capacity or independent agents who market and sell insurance written by a
subsidiary of the Company, and whose performance, as determined by the Committee
(as defined below under the caption "Administration") in the exercise of the
Committee's sole and absolute discretion, can have an effect on the growth,
profitability and success of the Company, are eligible to be participants in the
Plan. In addition, the Plan provides for the grant of stock options to
Directors of the Company who are not employees of the Company or any of its
subsidiaries (the "Outside Directors"). The Plan is not subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended,
and is not qualified under Section 401(a) of the Code.
Common Stock Available. The total number of shares of Common Stock
currently available under the Plan is 1,500,000 shares. The proposed Plan
Amendment increases the maximum number of shares under the Plan to
2,000,000 shares. Of this maximum number, up to 500,000 shares may be issued
pursuant to the exercise of Outside Directors' stock options. Notwithstanding
the foregoing, at no time shall the number of shares of Common Stock deemed
available for grant in any fiscal year exceed 10% of the total number of issued
and outstanding shares of Common Stock. The number of shares of Common Stock
available for grant to any individual participant in any calendar year shall not
exceed 250,000. The number of shares of Common Stock which remain available for
grant pursuant to the Plan and Common Stock subject to outstanding awards will
be appropriately and proportionately adjusted to reflect changes in the
Company's capitalization, including stock splits, stock dividends, mergers,
reorganizations, consolidations and recapitalizations. The purchase price per
share under outstanding options will also be appropriately adjusted to reflect
capitalization changes.
Administration. The Plan may be administered by the Board of Directors or
such other committee designated by the Board to administer the Plan under
Section 3 of the Plan (the "Committee"). The Committee shall be composed of at
least three directors and shall serve at the pleasure of the Board of Directors.
Each member of the Committee must be a director who is a "disinterested person"
under Rule 16b-3 under the Exchange Act and an "outside director" under Section
162(m) of the Code and the regulations thereunder. The Committee has the
authority to select the employees and/or independent agents to be participants,
to determine the type and number of awards to be granted, and to establish rules
and regulations for the administration of the Plan.
Stock Options. For stock options granted to employees or independent
agents under the Plan, the option price per share will be not less than 100% of
the fair market value of Common Stock on the date of the grant. Payment of the
option price upon exercise of an option may be made in cash, Common Stock, or a
combination thereof, as set forth in the option agreement. The term of each
option will be fixed by the Committee, except that Incentive Stock Options
will not be exercisable after 10 years from the grant date. The grant and terms
of Incentive Stock Options will be limited to the extent required by the Code.
Independent agents shall not be eligible to receive grants of Incentive Stock
Options. In the absence of any provision in an option to the contrary (i)
options will become exercisable as to 25% of the shares of Common Stock subject
to the option upon the completion of the first full year of employment or
retention and as to 25% of such shares upon the completion of each full year
thereafter prior to termination of the participant's relationship with the
Company, and (ii) options will lapse upon the earlier of (w) 180 days after the
termination of the participant's relationship with the Company if the
termination is due to due to death or disability or if the participant
dies within 90 days of such termination, (x) 90 after termination of the
participant's relationship with the Company for any other reason other than
death, disability or gross misconduct or neglect, (y) upon termination of the
participant's relationship with the Company if the termination is the result of
the participant's gross misconduct or neglect as determined by the Committee,
and (z) 10 years after the option was granted. Each stock option will be
evidenced by an option agreement conforming to the provisions of the Plan, in
such form as is approved by the Committee from time to time. The option
agreement will set forth the number of shares of Common Stock that are subject
to the option, the type of option granted, the option price to be paid upon
exercise, the manner in which the option is to be exercised, the
option period, and such other terms as may be approved by the Committee.
Stock Appreciation Rights. Stock appreciation rights may be granted
pursuant to the Plan either separately or in conjunction with other awards.
Stock appreciation rights related to stock options may be granted when the
option is granted, and with respect to non-statutory options, also may be
granted at any time before exercise or expiration of the option. Upon exercise
of a stock appreciation right, the holder will receive payment from the Company
in an amount equal to the excess of the then fair market value of the Common
Stock covered by the stock appreciation right over the option or grant price of
the stock appreciation right. The Committee may impose such conditions or
restrictions on the exercise of any stock appreciation right it deems
appropriate.
Restricted Stock Awards. Restricted stock awards may be granted pursuant
to the Plan. Shares of Common Stock covered by restricted stock awards may not
be sold or otherwise transferred by the recipient until termination of the
restrictions applicable to the awards, which restrictions will be established by
the Committee and need not be the same for all such awards. Restricted stock
awards shall be subject to such terms, conditions, restrictions, or limitations
as the Committee deems appropriate. During the period in which any shares of
Common Stock are subject to restrictions, the Committee may, in its discretion,
grant to recipients all or any of the rights of stockholders with respect to
such Common Stock.
Phantom Stock Awards. Awards of phantom stock may be granted under the
Plan either separately or in conjunction with other awards. Phantom stock
awards entitle the recipient to receive the market value or appreciation
in value of a stated number of shares of Common Stock on a settlement date
determined by the Committee. The Committee has complete authority to determined
the terms, conditions, restrictions and limitations of such awards.
Performance Shares. Performance shares may be granted under the Plan.
Performance shares are convertible into Common Stock or cash, or a combination
thereof, upon the obtainment of predetermined performance targets during an
established performance period. The Committee shall establish the performance
targets, the performance period and the other terms, conditions, restrictions or
limitations on any award of performance shares.
Outside Director Stock Options. The Plan provides for the grant to Outside
Directors of options to purchase Common Stock ("Outside Director Stock
Options"). See "Compensation of Directors". Each Outside Director who is
elected or appointed to serve as a Director of the Company after the effective
date of the Plan and who is not a Director on the effective date of the Plan,
shall, upon his initial appointment or election, automatically be granted an
option to purchase 10,000 shares of Common Stock. At each year's annual meeting
of the stockholders of the Company there shall be granted automatically to each
Outside Director (other than any Outside Director who first became a Director at
any time during the period following the immediately preceding annual meeting of
stockholders), the option to purchase 10,000 shares of Common Stock. All
Outside Director Stock Options will be Non-statutory Stock Options with a
10-year term , and the purchase price per share will be 100% of the fair market
value of Common Stock on the date of grant. Payment of the Option price may be
made in cash, Common Stock, or a combination thereof, as set forth in the option
agreement. In the absence of any provision in an option to the contrary,
options will become exercisable as to 50% of the shares of Common Stock subject
to the option upon the completion of each full year thereafter prior to
termination. Outside Director Stock Options not otherwise exercisable at the
time of the termination of the Director's status as a Director may be exercised
for 180 days following the date of such termination, as long as such period is
within the original 10-year option term. Outside Director Options not otherwise
exercisable at the time of the death or voluntary retirement of a Director may
be exercised for a period of 180 days subject to the original term of the
option.
Tax Effects. For federal income tax purposes, under existing statutes,
regulations and authorities, an optionee does not realize taxable income at the
time of the grant of an Incentive Stock Option, a Non-statutory Stock Option,
phantom stock award or a stock appreciation right. Upon the exercise of a
Non-statutory Stock Option, the Company is entitled to a compensation expense
deduction in the amount by which the fair market value of the subject Common
Stock exceeds the option price and the optionee realizes ordinary income in
such amount. Upon the exercise of a stock appreciation right, the Company is
entitled to a deduction and the optionee realizes ordinary income in the amount
of the cash or fair market value of the Common Stock received. On the
subsequent sale of Common Stock received upon the exercise of a Non-statutory
Stock Option, the difference between the fair market value of the Common Stock
on the date of receipt and the amount realized on the sale will be treated as
capital gain or loss, which will be short or long term depending on the period
for which the Common Stock is held prior to the sale. An optionee will have no
taxable income upon the exercise of an Incentive Stock Option (except that the
alternative minimum tax may apply) and generally does not realize taxable income
until the sale of the Common Stock received upon exercise of the option. If a
sale does not take place until at least two years after grant and one year after
exercise of the option, any gain or loss realized will be treated as long term
capital gain or loss. Under such circumstances, the Company will not be
entitled to a deduction in connection with the grant or the exercise of the
option. If a disposition occurs prior to two years after grant or one year
after exercise, then the difference between the option price and the fair market
value of the Common Stock on the date of exercise (or in certain cases, the
amount realized on sale, if less than the market value on the date of exercise)
is taxable as ordinary income to the optionee and is deductible by the Company
for federal income tax purposes.
With respect to awards of phantom stock, a participant will realize
ordinary income equal to the fair market value of the Common Stock or
appreciation in value of the Common Stock, as applicable, on the settlement date
and the Company will be entitled to a deduction in the same amount. With
respect to restricted stock awards, a participant generally will realize
ordinary income equal to the fair market value of the Common Stock received as
of the first day that such shares of Common Stock become transferable or are not
subject to substantial risk of forfeiture, whichever occurs earlier. The
Company will be entitled to a deduction at that time in the same amount.
Assignment of Interest. Except as expressly provided in the Plan with
respect to transfers by will or the laws of descent and distribution, no option,
phantom stock awards, stock appreciation right or restricted stock award may be
assigned or transferred by any participant.
Limitations on Resale of Securities. Participants who are officers or
directors of the Company, including those who may be deemed "affiliates" of the
Company, as such term is defined under the Securities Act, have certain
limitations on their ability to resell Common Stock acquired pursuant to the
Plan. Any sale of Common Stock by an employee or Outside Director also must be
made in compliance with the Company's policies on trading in securities of the
Company.
Amendment or Termination of the Plan. No awards may be granted under the
Plan after June 11, 2006. The Plan gives the Committee the power to suspend,
reinstate and terminate the Plan or any portion thereof at any time. In
addition, the Committee may amend the Plan, except that, without any required
stockholder approval, no such amendment may (1) materially increase the benefits
to participants in the Plan, (2) materially increase the total number of shares
of Common Stock that could be issued or (3) materially modify the requirements
as to eligibility for participation in the Plan. The provisions of the Plan
relating to the eligibility for, and the amount, price and timing of, awards to
Outside Directors may not be amended, nor shall the operation of such provisions
be suspended or reinstated, more than once every six months.
Proposed Amendment to the Plan
The Board of Directors has approved, subject to the approval of the
stockholders, an amendment to the Plan which would increase the total number of
shares of Common Stock with respect to which awards may be granted from
1,500,000 to 2,000,000. The Board believes that the Plan is an important way to
attract, retain and motivate key employees, and that it is appropriate to
increase the number of shares available for awards under the Plan. Approval of
the proposed Plan Amendment will ensure that enough shares are available under
the Plan to encourage stock ownership by executive officers and key employees
and to help the Company attract and retain individuals who will contribute to
the Company's success.
Also, approval of the Plan Amendment will make it certain that the
Company will be able to provide 500,000 options for grant to employees of
Allegiance Insurance Managers, Ltd. in connection with the proposed
acquisition discussed previously under Proposal No. 1 on page 4. The
agreement in principle with Allegiance contemplates that the Company will grant
that number of options to those employees, of which 250,000 will be designated
for Mr. Pastor.
No other changes to the Plan are proposed. The text of the proposed
amendment to the Plan is included in this Proxy Statement as Appendix C.
Approval of the proposed amendment to the Plan requires the
affirmative vote of the holders of a majority of the shares voting in
person or by proxy at the Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN.
<PAGE>
PROPOSAL NO. 3- ELECTION OF DIRECTORS
Nominees for Directors
In accordance with our bylaws, the Board of Directors has fixed the
number of directors at nine. Directors are elected annually to serve until
the next annual meeting of stockholders, and until their successors are
elected and qualified. The election of directors is decided by a plurality
of the votes cast by the shares entitled to vote in the election. In the
absence of instructions to the contrary, the persons named in the proxy
intend to vote the proxies for the election as directors of the persons
nominated below. Although the Board of Directors has no reason to believe
that any of the nominees set forth below will not serve, in the event that
vacancies occur, the proxies will be voted for the election of the
nominees, if any, the Board of Directors or a duly authorized committee of
it may designate.
<TABLE>
<CAPTION>
NOMINEES
TERM EXPIRES 2000
Number of Shares of
Common Stock Owned
Beneficially, Directly
or Indirectly, on
Names, Position with Principal Occupation for September 30, 1999,
ACCEL and Age (as Past Five Years/Other Director (Except as Otherwise Percent
of September 30, 1999 Directorships Since Noted) (1) of Class
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert Betagole President of Mike Albert 1970 117,491 (5) 1.4%
Director, 70 Leasing, Inc., Cincinnati, OH.
David T. Chase President and Director of 1985 4,343,148 (6) 50.8%
Director, 70 D. T. Chase Enterprises, Inc.
(2) Hartford, CT.
Douglas J. Coats President and Chief Executive 1995 143,660 1.7%
President, Chief Officer of ACCEL since October
Executive Officer, 1, 1998. Prior thereto, he
Secretary and was Executive Vice President
Director, 66 of ACCEL since May 23, 1995.
Prior thereto, he was Executive
Vice President of Ranger
Insurance Company, Houston, TX
since August, 1987.
Raymond H. Deck Chairman of the Board of 1990 343,287 4.0%
Director, 77 ACCEL since October, 1998.
(2)(3)(4) President of Chase
Insurance Enterprises, Inc.,
Hartford, CT.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOMINEES
TERM EXPIRES 2000
Number of Shares of
Common Stock Owned
Beneficially, Directly
or Indirectly, on
Names, Position with Principal Occupation for September 30, 1999,
ACCEL and Age (as Past Five Years/Other Director (Except as Otherwise Percent
of September 30, 1999 Directorships Since Noted) (1) of Class
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard Desich President of Mid-Ohio 1997 35,350 *
Director, 63 Securities Corp., Elyria, OH
Kermit G. Hicks President of Hicks 1981 65,314 (7) *
Director, 63 Chevrolet, Inc.,
(2) (3) (4) Greencastle, PA. Also,
Chairman of the Board of
Tower Bancorp Inc., and
its wholly owned
subsidiary First National
Bank of Greencastle.
Gregory B. Grusse Appointed a member of the 1999 0 *
Director, 37 Board of Directors on
September 30, 1999.
Vice President,
David T. Chase
Enterprises, Inc.,
Hartford, CT
Stephen M. Qua President of Qua Buick, Inc. 1970 23,958 *
Director, 66 Cleveland, OH
(2) (3) (4)
John P. Redding Senior Vice President, 1997 1,000 *
Director, 40 David T. Chase
Enterprises, Inc.,
Hartford, CT
All Directors as a group (9 persons) 5,073,208 (8) 58.1%
* Less than 1% of outstanding common stock.
- - -----------------
(1) On September 30, 1999, there were 8,554,966 shares of ACCEL's common stock issued and outstanding. Except as
noted, includes shares owned by spouse, minor children or some other family members, or held as custodian or trustee
for the benefit of spouse or children, or owned by corporations of which the person is an officer or principal
stockholder, over which shares the directors have sole or shared voting or investment power. With respect to the
directors, includes an aggregate of 274,500 shares which are subject to immediately exercisable options. Of the
274,500 shares subject to options, the following directors have options to purchase the number of shares indicated
after their names: Mr. Betagole, 7,500; Mr. Chase, 7,500; Mr. Coats, 135,000; Mr. Deck, 107,500; Mr. Desich, 1,000;
Mr. Hicks, 7,500; Mr. Qua, 7,500; and Mr. Redding, 1,000.
(2) Member of Executive Committee (Mr. Deck, Chairman)
(3) Member of Audit Committee (Mr. Qua, Chairman)
(4) Member of Compensation Committee (Mr. Deck, Chairman)
(5) Includes 16,371 shares as to which Mr. Betagole disclaims beneficial ownership.
(6) See footnotes (2) and (5) at pages 19 and 20 herein.
(7) Includes 9,696 shares as to which Mr. Hicks claims beneficial ownership on an indirect basis.
(8) This amount includes 20,537 shares owned by all officers in their Acceleration Retirement Savings and Stock
Ownership Plan accounts as of December 31, 1998.
</TABLE>
Compensation of Directors
During 1998, we continued to pay our non-employee directors at the reduced
compensation levels initiated in 1993. Accordingly our non-employee directors
received an annual retainer of $5,000 plus a fee of $500 per meeting for
attending any regular or special meetings of the Board of Directors. The
members of each committee of the Board of Directors, other than officers of
ACCEL, received a fee of $500 for each meeting attended. Chairmen of committees
received a fee of $750 for each meeting attended.
The 1996 Stock Incentive Plan of ACCEL International Corporation provides
for options to be granted every year to our non-employee directors for a
predetermined number of shares of common stock. This plan, as amended by the
stockholders in 1998, provides that newly appointed or elected non-employee
directors are granted options for 10,000 shares in the year they are appointed
or elected, and thereafter will receive annual automatic grants of options to
purchase 10,000 shares. The exercise price is equal to the fair market value of
a share of stock on the date the option is granted. Options become exercisable
as to 50% of the shares subject to the option on completion of each full year
prior to termination of the director's status as director after the date the
option was granted. The options lapse on the earliest of the date 10 years
after the option was granted, or the date 180 days after the termination of the
director's status as director. The options shall fully vest and become
completely exercisable upon the death or voluntary retirement of a director.
Meetings and Committees of the Board of Directors
Your Board of Directors met four times during 1998. No director attended
fewer than 75% of the total number of meetings of directors and of any
committees on which he served. The Board of Directors has established an
Executive Committee, an Audit Committee and a Compensation Committee. It does
not have a Nominating Committee.
The Executive Committee, which exercises the powers of the Board of
Directors between regular meetings of the Board, did not meet during 1998. The
membership of the Executive Committee consists of Messrs. Coats, Chase, Deck,
Hicks and Qua. The Audit Committee met one time during 1998 to review the
results of the audit of our 1997 financial statements by our independent
auditors, review the scope of the 1998 audit, consider relevant matters
pertaining to internal controls and accounting procedures, perform other
customary functions of Audit Committees, and to make a recommendation to the
Board of Directors on the engagement of independent auditors for fiscal
year 1998. The membership of the Audit Committee consists of Messrs. Qua, Deck
and Hicks.
The Compensation Committee met four times during 1998 for the purpose of
reviewing employee compensation and benefit arrangements. The membership of the
Compensation Committee consists of Messrs. Deck, Hicks and Qua. The Report of
the Compensation Committee is contained below under "EXECUTIVE COMPENSATION."
<PAGE>
FORWARD LOOKING STATEMENTS
Matters discussed throughout this proxy statement include some statements
that may be "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements in this proxy
statement, other than statements of historical facts, that address activities,
events or developments that we expect, believe or anticipate will or may occur
in the future are forward-looking statements. Although we believe the
expectations expressed in these forward-looking statements are based on
reasonable assumptions within the bounds of our knowledge of our business, these
statements are not guaranteed of future performance and actual results or
developments may differ materially from those in the forward-looking statements.
Forward-looking statements involve risks and uncertainties including, but not
limited to, general economic trends, continued acceptance of our products in the
marketplace, competitive factors, insurance regulations, adverse changes in
interest rates, unforeseen losses with respect to loss and settlement expense
reserves for unreported and reported claims, catastrophic events, and other
risks detailed from time to time in our periodic reports filed with the
Commission. We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
<PAGE>
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
We have provided in the following table some information as of September 30, 1999
(except as otherwise noted) with respect to stockholders known to us to be the beneficial
owners of more than 5% of any class of our voting securities.
Name and Address Amount of Beneficial Percent
Title of Class of Beneficial Owner Ownership (1) of Class
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock David T. Chase 4,343,148 Shares (2) 50.8%
D. T. Chase Enterprises, Inc.
One Commercial Plaza
Hartford CT 06103
Arnold L. Chase 1,167,824 Shares (3) 13.7%
D. T. Chase Enterprises, Inc.
One Commercial Plaza
Hartford CT 06103
The Darland Trust 1,167,824 Shares (4) 13.7%
P.O. Box 472
St. Peter's House, Le Bordage
St. Peter Port
Guernsey GYI6AX
Channel Islands
Rhoda L. Chase 2,000,000 Shares (5) 23.4%
c/o Chase Enterprises, Inc.
One Commercial Plaza
Hartford CT 06103
Spitzer Profit Sharing and 750,250 Shares (6) 8.7%
Savings Plan
150 E. Bridge Street
Elyria OH 44035
Dimensional Fund Advisors Inc. 427,724 Shares (7) 5.0%
1299 Ocean Avenue
Santa Monica CA 90401
- - --------------------
(1) Except as otherwise noted, we have no reason to believe that any beneficial owner
listed above does not have sole voting and investment power with respect to these
shares.
(2) Includes 7,500 shares of common stock subject to immediately exercisable options.
According to a Schedule 13D filed with the Securities and Commission, David T.
Chase has, to the extent temporarily transferred to him, sole power to vote and
dispose of 880,000 shares of common stock loaned to him by his wife, Rhoda L. Chase,
and shares the power to dispose or to direct the disposition of:
- 1,120,000 shares beneficially owned by Rhoda L. Chase;
- 1,167,824 shares beneficially owned by his son, Arnold L. Chase, and
- 1,167,824 shares beneficially owned by The Darland Trust, a trust whose
beneficiaries are his daughter, Cheryl A. Chase, and her children.
(3) According to a Schedule 13D filed with the Securities and Commission, Arnold L. Chase
shares the power to dispose or to direct the disposition of the 1,167,824 shares owned
by him with David T. Chase and has the sole power to vote or direct the vote of these
shares. These shares are also included in the above table in David T. Chase's shares.
(4) According to a Schedule 13D filed with the Securities and Commission, The Darland Trust
shares the power to dispose or to direct the disposition of the 1,167,824 shares owned by
it with David T. Chase and has the sole power to vote or direct the vote of these shares.
These shares are also included in the above table in David T. Chase's shares.
(5) According to a Schedule 13D filed with the Securities and Commission, Rhoda L. Chase has
the sole power to vote or to direct the vote of all these shares, except to the extent
that she may be deemed to have temporarily transferred the sole power to vote or to
direct the vote of the 880,000 shares loaned to David T. Chase. Rhoda L. Chase shares
with David T. Case the power to dispose or to direct the disposition of 1,120,000 of the
shares of common stock owned by her. Rhoda L. Chase has the sole power to dispose or to
direct the disposition of the 880,000 shares loaned by her to her husband, except to the
extent that she may be deemed to have temporarily transferred such power to David T. Chase.
The shares of common stock owned by Rhoda L. Chase are also included in the above table in
David T. Chase's shares.
(6) Spitzer Profit Sharing and Savings Plan under agreement dated December 31, 1973, is an
employee Benefit Plan, Pension Fund subject to the provisions of the Employee Retirement
Income Security Act of 1974.
(7) Dimensional Fund Advisors Inc., an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is deemed to have beneficial ownership of 427,724 shares
of our common stock as of December 31, 1998. All of these securities are owned by advisory
clients of Dimensional, no one of which, to the knowledge of Dimensional, owns more than 5%
of the class of securities. Dimensional disclaims beneficial ownership of all these
securities.
</TABLE>
<PAGE>
MARKET PRICE AND DIVIDEND INFORMATION
Our common stock is traded over-the-counter as one of
The Nasdaq Stock Market National Market Issues, under the
NASDAQ symbol ACLE.
The following table sets forth the quarterly range of
over-the-counter prices for our common stock during the
quarters indicated. These prices have been adjusted for
common stock dividends, if any, and do not include retail
mark-up, mark-down, or commissions and do not always
necessarily represent actual transactions.
<TABLE>
<CAPTION>
1997 High Low
- - -------------------------------------------------------
<S> <C> <C>
1st Quarter $3.250 $2.813
2nd Quarter 3.125 2.875
3rd Quarter 4.125 3.500
4th Quarter 3.813 4.375
1998
- - -------------------------------------------------------
1st Quarter 3.500 3.063
2nd Quarter 3.500 2.875
3rd Quarter 3.375 2.188
4th Quarter 3.375 2.125
1999
- - -------------------------------------------------------
1st Quarter 3.000 2.500
2nd Quarter 2.625 1.8125
3rd Quarter 1.875 1.0625
</TABLE>
The approximate number of holders of record of our common stock as of
September 15, 1999 was 552.
Since June 1992, your Board of Directors has suspended payment of cash
dividends on our common stock until we return to a level of profitability
which will sustain dividend payments.
<PAGE>
EXECUTIVE COMPENSATION
Executive Officers
We have listed in the following table the name, age and principal position
of each of our executive officers.
<TABLE>
<CAPTION>
Name Age Principal Position
- - ---------------------------------------------------------------------------------------
<S> <C> <C>
Douglas J. Coats 66 President, Chief Executive Officer and Secretary
Walter J. Kozuch 46 Vice President
Robert A. Estlund 44 Vice President, Controller and
Treasurer
</TABLE>
Mr. Coats joined us on May 23, 1995, when he was appointed Executive Vice
President and a member of your Board of Directors. Prior thereto, he was
Executive Vice President of Ranger Insurance Company, Houston, Texas for more
than five years.
Mr. Kozuch joined us on August 1, 1999, when he was appointed Vice
President.
Mr. Estlund joined us in March of 1997 and was elected Vice President and
Controller. On July 1, 1999 Mr. Estlund was also appointed to the office of
Treasurer.
<PAGE>
Summary Compensation Table
We have summarized in the following table some information concerning the
compensation awarded or paid to, or earned by, our current Chief Executive
Officer and each of our other most highly compensated executive officers whose
total annual salary and bonus for the fiscal year ended December 31, 1998,
exceeded $100,000 (the "named executives") during each of the last three
fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Security All Other
Annual Compensation Underlying Compensation
Name, Age, and Principal Salary Bonus Options/ ($)(1)
Location Year ($) ($) SAR's (#)
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas H. Friedberg, 60 (2) 1998 250,688 -- 60,000 3,037
Chairman of the Board, President 1997 275,000 -- 60,000 14,300
and Chief Executive Officer 1996 140,000 -- 110,000 2,183
Douglas J. Coats, 66 (2) 1998 162,728 -- 30,000 6,318
President and Chief Executive 1997 137,500 -- 30,000 12,980
Officer 1996 71,250 -- 55,000 2,611
Nicholas Z. Alexander, 63 (3) 1998 129,200 -- 10,000 4,740
Senior Vice President, 1997 119,600 -- 10,000 11,514
Secretary and
General Counsel 1996 115,000 -- 10,000 8,628
Bryce E. Farmer, 48 (4) 1998 112,333 -- 10,000 1,012
Senior Vice President 1997 109,200 -- 10,000 3,151
Administration 1996 97,125 -- 10,000 318
William E. Merritt, Jr., 64 1998 110,867 -- 10,000 4,083
(5)
Senior Vice President 1997 107,362 -- 10,000 10,243
Claims 1996 60,480 -- -- 3,067
(1) Represents approximate amounts contributed on behalf of each named executive to the Acceleration Retirement
Savings and Stock Ownership Plan.
(2) Mr. Friedberg retired as Chairman of the Board, President and Chief Executive Officer of ACCEL on
September 30, 1998. Mr. Coats was appointed President and Chief Executive Officer of ACCEL, and named
Chairman of the Board of Acceleration National Insurance Company on October 1, 1998.
(3) Mr. Alexander left employment with ACCEL on June 30, 1999.
(4) Mr. Farmer commenced employment with ACCEL on February 5, 1996.
(5) Mr. Merritt commenced employment with ACCEL on June 7, 1996, and due to illness, went on long term disability
on January 1, 1999.
</TABLE>
<PAGE>
Options Granted in Last Fiscal Year
We have provided in the following table information concerning individual
grants of options to purchase our common stock made to the named executives in
1998:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
INDIVIDUAL GRANTS IN 1998 Value
Number of Percent of at Assumed Annual Rates
Securities Total of Stock Price
Underlying Options Appreciation
Options/ Granted to Exercise or for Option Term
SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($ Sh) (1) Date 5% ($) 10% ($)
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Friedberg 60,000 35.6% $3.218 9/30/99 12.597 25.473
Douglas J. Coats 30,000 17.8% $3.218 6/16/03 26.678 58.952
Nicholas Z. Alexander 10,000 5.9% $3.218 6/16/08 20.243 51.299
Bryce E. Farmer 10,000 5.9% $3.218 6/16/08 20.243 51.299
William E. Merritt, Jr. 10,000 5.9% $3.218 6/16/08 20.243 51.299
</TABLE>
- - ----------------------
(1) Market price of our common stock on date of grant.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
We have provided in the following table some information regarding
individual exercises of stock options during 1998 by each of the named
executives:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Value
Realized Number of Securities
Shares (Mkt. Price Underlying Unexercised Value of Unexercised
Acquired at Exercise Options at In-The-Money Options at
on Less Fiscal Year End Fiscal Year End (1)
Exercise Exercise --------------------------
Name (#) Price) Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Friedberg --- --- 175,000 60,000 $48,750 N/A
Douglas J. Coats --- --- 135,000 30,000 $61,875 N/A
Nicholas Z. Alexander --- --- 37,628 42,627 $17,236 $10,360
Bryce E. Farmer --- --- 7,500 22,500 $2,188 $2,813
William E. Merritt, Jr. --- --- 7,500 22,500 $2,188 $2,813
</TABLE>
- - ---------------------
(1) Represent the amount by which the market price of our common stock on
December 31, 1998 ($2.875) exceeded the exercise prices of unexercised
options on that date.
Beneficial Ownership of Management
We have provided in the following table some information regarding the
named executive's beneficial ownership of our common stock as of
September 30, 1999:
<TABLE>
<CAPTION>
Shares of Common Stock of
Company Beneficially Owned
---------------------------------------
Title of Class Name of Officer Number (1) Percent of Class
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Douglas J. Coats 143,660 1.67%
Common Stock Walter J. Kozuch 10,000 *
Common Stock Robert A. Estlund 0 0%
</TABLE>
- - -------------------
(1) The amounts shown represent the total shares owned outright by the named
individuals together with shares which are issuable upon the exercise of
all stock options which are currently exercisable. Specifically, the
following individuals have the right to acquire the shares indicated after
their names, upon the exercise of the stock option: Mr. Coats, 135,000;
and Mr. Kozuch 10,000.
* Less than 1% of outstanding common stock.
Report of the Compensation Committee
Our compensation package for our executive officers consists of base salary,
participation in a profit sharing plan for senior officers, and periodic stock
option grants or awards. The committee fixed and determined the base salary for
Mr. Friedberg, former Chairman of the Board, President and Chief Executive
Officer, after a performance review was conducted. As of June 1, 1996, the
committee had formulated a compensation arrangement for Mr. Friedberg to include
base salary and authorize a stock option to be granted. A similar compensation
arrangement was approved for Mr. Coats, our current President and Chief
Executive Officer, on the recommendation of Mr. Friedberg. Our Chief Executive
Officer determines and recommends to the committee base salary levels for all
other executive officers. The committee also determines the amount of
profit sharing compensation and stock option grants or awards, if any.
Based on Mr. Friedberg's experience and performance, the committee
established a total aggregate annual compensation level for Mr. Friedberg of
$350,000, subject to an annual review, with an allocation of the $350,000
between cash compensation and stock options to be determined annually by the
committee. Until his retirement, Mr. Friedberg was paid at the rate of $300,000
and was granted 60,000 options at $3.218. The stock options granted for this
purpose were valued by calculating the difference between the book value and
market value per share as of the date of grant. The annual review took into
account ACCEL's performance, comparative industry data and various subjective
considerations of individual performance as well as corporate goals.
Mr. Friedberg retired from the Company effective September 30, 1998 and Mr.
Coats took over the responsibilities of President and CEO. His salary was
increased from an annual rate of $150,000 to $200,000 based on his increased
responsibilities. Mr. Deck, an outside director, became Chairman of the Board.
A special meeting of the Compensation Committee with Mr. Qua acting as Chairman
established Mr. Deck's compensation as executive Chairman at $100,000 annually
and granted him 100,000 options at $2.25, the current market price of the stock.
In previous years, profit sharing plans had been adopted for all employees
of ACCEL and for senior officers. The overall objectives for establishing
ACCEL's incentive compensation programs were to enhance total compensation
without adding fixed expense, modify the corporate reward systems and give
managers the discretion to reward contributors, better focus management's
attention on the achievement of objectives and drive accountability to all
levels of ACCEL, and foster teamwork. For 1998, no profit sharing goal was set
for employees and senior officers. Accordingly, no profit sharing compensation
was paid to any employees or senior officers in 1998.
Raymond H. Deck, Chairman; Kermit G. Hicks, Member; Stephen M. Qua, Member
Performance Graph
The following graph compares the cumulative total shareholder return on our
common stock from January 1, 1993, until December 31,1998, with the cumulative
total return of (a) the Russell 2000 Index and (b) the NASDAQ Insurance Index.
The graph assumes the investment of $100 in our common stock, the Russell 2000
Index and the NASDAQ Insurance Index.
<PAGE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ACCEL INTERNATIONAL CORPORATION, THE RUSSELL 2000 INDEX AND
THE NASDAQ INSURANCE INDEX
[NOTE: Graphical line chart representing the figures listed in the table below
is omitted from the EDGAR ASCII submission.]
*$100 INVESTED ON 12/31/93 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ACCEL $100 $47 $73 $73 $97 $77
Russell 2000 Index $100 $98 $126 $147 $180 $179
NASDAQ Insurance Index $100 $94 $134 $152 $224 $199
</TABLE>
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors, and
persons who own more than 10% of the common stock, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10% stockholders are required by Securities and
Exchange Commission regulations to furnish us with copies of all Section 16(a)
forms they file.
Based solely on our review of the copies of the forms received by us or
written representations from some reporting persons that no Forms 5 were
required of them, we believe that during the fiscal year ended December 31,
1998, all filing requirements applicable to our officers, directors and greater
than 10% stockholders were complied with.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has served as our independent auditor for each of the
years in the three-year period ended December 31, 1998. In recent years, it has
been the practice of the Board of Directors to annually review and select
independent auditors of ACCEL. The Board of Directors intends to continue this
practice and to make the selection of the independent auditors later in the
year. The selection of the independent auditors has not therefore been made for
the current fiscal year. Representatives of KPMG Peat Marwick LLP will be
present at the meeting, will have an opportunity to make a statement, if
desired, and will be available to respond to appropriate questions, if any, of
our stockholders.
STOCKHOLDER PROPOSALS
Stockholders wishing to submit proposals to our 2000 proxy statement may do
so prior to June 15, 2000 by letter addressed to us in care of our corporate
secretary.
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Exchange Act. The amendment
to 14a-4 (c)(1) governs our use of discretionary proxy voting authority with
respect to a stockholder proposal which the stockholder has not sought to
include in our proxy statement. The new amendment provides that if a proponent
of a proposal fails to notify us at least 45 days prior to the month and day of
mailing of the prior year's proxy statement, then the management proxies will be
allowed to use their discretionary voting authority when the proposal is raised
at that meeting, without any discussion of the matter in the proxy statement.
With respect to our 2000 meeting of stockholders, if we are not provided
notice of a stockholder proposal which the stockholder has not previously sought
to include in our proxy statement by _________, 2000, the management proxies
will be allowed to use their discretionary authority as outlined above.
OTHER MATTERS
As of the date of this proxy statement, we do not expect any matters other
than these described in this proxy statement will be brought before the meeting.
If any other business properly comes before the meeting, or any adjournment of
the meeting, the proxy holders will vote in regard to the other business
according to their discretion insofar as the proxies are not limited to the
contrary.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. This proxy statement
is our proxy statement for the meeting.
You may read and copy any reports, statements or other information we file
at the Securities and Exchange Commission's Public Reference Rooms at the
following locations:
<TABLE>
<CAPTION>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, DC 20549 New York, NY 10048 Suite 400
Chicago, IL 60661-2511
</TABLE>
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. Our
Securities and Exchange Commission filings are also available to the public from
commercial document retrieval services and at the web site maintained by the
Securities and Exchange Commission at http://www.sec.gov.
In addition, our filings can be inspected at the offices of NASDAQ, 9801
Washingtonian, Gaithersburg, Maryland 20878, (202) 496-2500.
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this proxy statement, which means that we can
disclose important information to you by referring you to other information we
have filed with the Securities and Exchange Commission. The information
incorporated by reference is deemed to be part of this proxy statement, except
for any information superseded by information in this proxy statement.
This proxy statement incorporates by reference the documents set forth
below that ACCEL has previously filed with the Securities and Exchange
Commission. These documents contain important information about us.
<TABLE>
<CAPTION>
SEC Filings (file No. 0-8162) Period or Date Filed
- - ---------------------------------------------------------------------------
<S> <C>
Annual Report on form 10-K Year ended: - December 31, 1998
Quarterly Report on Form 10-Q Quarter ended: - June 30, 1999
</TABLE>
We are also incorporating by reference additional documents that we file
with the Securities and Exchange Commission between the date of this proxy
statement and the date of the annual meeting. These documents include periodic
reports, such as annual reports on Form 10-K, quarterly reports on Form l0-Q and
current reports on Form 8-K, as well as proxy statements.
You can request a free copy of all or any of these documents, other than
the exhibits to these documents unless those exhibits are specifically
incorporated by reference into these documents, by writing to or calling:
Douglas J. Coats
President, Chief Executive Officer and Secretary
ACCEL International Corporation
P.O. Box 1949
Stafford, TX 77497-1949
(281) 565-8010
If you would like to request these documents from us, please do so by
November 1, 1999 to receive them before the meeting.
You should rely on the information contained or incorporated by reference
in this proxy statement to decide how to vote on the matters to be considered at
the annual meeting. We have not authorized anyone to provide you with
information that is different from or in addition to what is contained in this
proxy statement. Therefore, if anyone does give you information of this sort,
you should not rely on it. The information contained in this proxy statement
speaks only as of its date unless the information specifically indicates that
another date applies.
By Order of the Board of Directors
Douglas J. Coats
President, Chief Executive Officer
and Secretary
October [__], 1999
<PAGE>
APPENDIX A
PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ACCEL INTERNATIONAL CORPORATION
Incorporated Pursuant to an Original Certificate of
Incorporation filed with the Secretary of State on June 6, 1978
ACCEL INTERNATIONAL CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby certify
as follows:
A. The Corporation was originally incorporated under the name
Acceleration Corporation and filed its original Certificate of Incorporation
with the Secretary of State of the State of Delaware on June 6, 1978.
B. The Corporation duly filed a Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware on June 9, 1989 and a
Certificate of Amendment of Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware on June 13, 1996.
C. The Board of Directors of the Corporation at a meeting held on
September 29, 1999, duly adopted resolutions setting forth the Amended and
Restated Certificate of Incorporation herein contained (the {"}Amended and
Restated Certificate of Incorporation"), declaring its advisability and
directing that such Amended and Restated Certificate of Incorporation be
submitted to the holders of the Corporation's issued and outstanding capital
stock, for approval in accordance with the provisions of Sections 242 and 245
of the General Corporation Law of the State of Delaware and the Corporation's
Certificate of Incorporation, as currently in effect. The Amended and Restated
Certificate of Incorporation was duly adopted by vote of the holders of not less
than eighty percent (80%) of the outstanding shares of Common Stock of the
Corporation at the annual meeting of stockholders held on November 16, 1999, all
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware and the Corporation's Certificate of
Incorporation, as currently in effect.
D. The text of the Amended and Restated Certificate of Incorporation
shall read in its entirety as follows:
FIRST: The name of the Corporation is:
ACCEL INTERNATIONAL CORPORATION
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street in the City of Wilmington, County of
New Castle, and the name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The Corporation shall be authorized to issue two classes of
shares of stock to be designated, respectively, "Preferred Stock" and "Common
Stock"; the total number of shares which the Corporation shall have authority to
issue is sixteen million (16,000,000); the total number of shares of Preferred
Stock shall be one million (1,000,000) and each such share shall have a par
value of one dollar ($1.00); and the total number of shares of Common Stock
shall be fifteen million (15,000,000) and each such share shall have a par value
of ten cents ($.l0).
Shares of Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to fix the voting rights,
redemption rights, conversion rights, sinking fund provisions, designations,
powers, preferences and the relative, participating, optional or other rights,
if any, and the qualifications, limitations or restrictions thereof, of any
wholly unissued series of Preferred Stock; and to fix the number of shares
constituting such series, and to increase or decrease the number of shares of
any such series (but not below the number of shares thereof then outstanding).
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind the bylaws of the Corporation.
SIXTH: The number of Directors of the Corporation shall be fixed in the
manner provided in the bylaws, but such number shall not be less than three nor
more than 24.
SEVENTH: During any period when the holders of any Preferred Stock or any
one or more series thereof, voting as a class, shall be entitled to elect a
specified number of directors, by reason of dividend arrearages or other
provisions giving them the right to do so, then and during such time as such
right continues (1) the then otherwise authorized number of directors shall be
increased by such specified number of directors, and the holders of such
Preferred Stock or such series thereof, voting as a class, shall be entitled to
elect the additional directors so provided for, pursuant to the provisions of
such Preferred Stock or series; (2) each such additional director shall serve
for such term, and have such voting powers, as shall be stated in the provisions
pertaining to such Preferred Stock or series; and (3) whenever the holders of
any such Preferred Stock or series thereof are divested of such rights to elect
a specified number of directors, voting as a class, pursuant to the provisions
of such Preferred Stock or series, the terms of office of all directors elected
by the holders of such Preferred Stock or series, voting as a class pursuant to
such provisions, or elected to fill any vacancies resulting from the death,
resignation or removal of directors so elected by the holders of such Preferred
Stock or series, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
EIGHTH: Elections of directors at an annual or special meeting of
stockholders need not be by written ballot unless the bylaws of the Corporation
shall so provide.
NINTH: Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the Board of Directors, or by a
majority of the members of the Board of Directors, or by a committee of the
Board of Directors which has been duly designated by the Board of Directors and
whose powers and authority, as provided in a resolution of the Board of
Directors or in the bylaws of the Corporation, include the power to call such
meetings, but such special meetings may not be called by any other person or
persons; provided, however, that if and to the extent that any special meeting
of stockholders may be called by any other person or persons specified in
any provision of this Amended and Restated Certificate of Incorporation
or any amendment thereto or any certificate filed under Section 151(g) of the
Delaware General Corporation Law (or its successor statute as in effect from
time to time hereafter), then such special meeting may also be called by the
person or persons, in the manner, at the times and for the purposes so
specified.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
ELEVENTH: No director or former director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law, which deals with the paying of a dividend or the approving of a
stock repurchase or redemption which is illegal under Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
IN WITNESS WHEREOF, ACCEL International Corporation has caused this
Amended and Restated Certificate of Incorporation to be signed by Douglas J.
Coats, President and Chief Executive Officer, as of the _____ day of _________,
1999.
ACCEL INTERNATIONAL CORPORATION
By:
-----------------------------
Douglas J. Coats
President
<PAGE>
Note - We have provided below a copy of ACCEL's existing Certificate of
Incorporation that we have marked to show the changes that will be effected
if the stockholders of ACCEL approve Proposal 1. Added language appears in
bold type and is surrounded by [ ]. Deleted language is encompassed by { }.
[AMENDED AND] RESTATED CERTIFICATE OF INCORPORATION
OF
ACCEL INTERNATIONAL CORPORATION
[Incorporated Pursuant to an Original Certificate of
Incorporation] {ACCEL International Corporation was originally incorporated
under the name Acceleration Corporation and its original certificate of
incorporation was} filed with the Secretary of State {of Delaware on
June 6, 1978. This restated certificate was duly adopted June 8, 1989,
by the board of directors of ACCEL International Corporation without a
vote of stockholders in accordance with the provisions of Section
245 of the General Corporation Law} on June 6, 1978
[ACCEL INTERNATIONAL CORPORATION, a corporation duly organized and existing
under the laws] of the State of Delaware {. This certificate only restates and
integrates and does not further amend the provisions of the corporation's
certificate of incorporation as heretofore amended or supplemented, and there is
no discrepancy between those provisions and the provisions of this restated
certificate. The adopted Restated} [(the "Corporation"), does hereby certify as
follows:
A. The Corporation was originally incorporated under the name
Acceleration Corporation and filed its original] Certificate of Incorporation
{is}[with the Secretary of State of the State of Delaware on June 6, 1978.
B. The Corporation duly filed a Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware on June 9, 1989 and a
Certificate of Amendment of Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware on June 13, 1996.
C. The Board of Directors of the Corporation at a meeting held on
September 29, 1999, duly adopted resolutions setting forth the Amended and
Restated Certificate of Incorporation herein contained (the "Amended and
Restated Certificate of Incorporation"), declaring its advisability and
directing that such Amended and Restated Certificate of Incorporation be
submitted to the holders of the Corporation's issued and outstanding capital
stock, for approval in accordance with the provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware and the Corporation's
Certificate of Incorporation, as currently in effect. The Amended and Restated
Certificate of Incorporation was duly adopted by vote of the holders of not less
than eighty percent (80%) of the outstanding shares of Common Stock of the
Corporation at the annual meeting of stockholders held on November 16, 1999, all
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware and the Corporation's Certificate of
Incorporation, as currently in effect.
D. The text of the Amended and Restated Certificate of Incorporation
shall read in its entirety] as follows:
FIRST: The name of the Corporation is:
ACCEL INTERNATIONAL CORPORATION
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle, and the name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The Corporation shall be authorized to issue two classes of
shares of stock to be designated, respectively, "Preferred Stock" and "Common
Stock"; the total number of shares which the Corporation shall have authority to
issue is {eleven}[sixteen] million {11,000,000} [(16,000,000)]; the total number
of shares of Preferred Stock shall be one million (1,000,000) and each such
share shall have a par value of one dollar ($1.00); and the total number of
shares of Common Stock shall be {ten} [fifteen] million {(10,000,000}
[(15,000,000)] and each such share shall have a par value of ten cents ($.10).
Shares of Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to fix the voting rights,
redemption rights, conversion rights, sinking fund provisions, designations,
powers, preferences and the relative, participating, optional or other rights,
if any, and the qualifications, limitations or restrictions thereof, of any
wholly unissued series of Preferred Stock; and to fix the number of shares
constituting such series, and to increase or decrease the number of shares of
any such series (but not below the number of shares thereof then outstanding).
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind the bylaws of the Corporation.
SIXTH{: The bylaw shall not be made, repealed, altered, amended, or
rescinded by the stockholders of the Corporation except by the vote of the
holders of not less than 80 percent of the outstanding shares of the Corporation
entitled to elect directors. Any amendment to the Certificate of Incorporation
which shall contravene any bylaw in existence on the record date of the
stockholder meeting at which such amendment is to be voted upon by the
stockholders shall require the vote of the holders of not less than 80 percent
of the outstanding shares of the Corporation entitled to elect
directors. SEVENTH}: The number of Directors of the Corporation shall be fixed
in the manner provided in the bylaws, but such number shall not be less than
[three] {nine} nor more than 24.
{EIGHTH} [SEVENTH]: During any period when the holders of any Preferred
Stock or any one or more series thereof, voting as a class, shall be entitled to
elect a specified number of directors, by reason of dividend arrearages or other
provisions giving them the right to do so, then and during such time as such
right continues (1) the then otherwise authorized number of directors shall be
increased by such specified number of directors, and the holders of such
Preferred Stock or such series thereof, voting as a class, shall be entitled to
elect the additional directors so provided for, pursuant to the provisions of
such Preferred Stock or series; (2) each such additional director shall serve
for such term, and have such voting powers, as shall be stated in the provisions
pertaining to such Preferred Stock or series; and (3) whenever the holders of
any such Preferred Stock or series thereof are divested of such rights to elect
a specified number of directors, voting as a class, pursuant to the provisions
of such Preferred Stock or series, the terms of office of all directors elected
by the holders of such Preferred Stock or series, voting as a class pursuant to
such provisions, or elected to fill any vacancies resulting from the death,
resignation or removal of directors so elected by the holders of such Preferred
Stock or series, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
(NINTH} [EIGHTH]: Elections of directors at an annual or special meeting
of stockholders need not be by written ballot unless the bylaws of the
Corporation shall so provide.
{TENTH: No action shall be taken by the stockholders except at an annual or
special meeting of stockholders. ELEVENTH) [NINTH]: Special meetings of the
stockholders of the Corporation for any purpose or purposes may be called at any
time by the Board of Directors, or by a majority of the members of the Board of
Directors, or by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors or in the bylaws of the Corporation,
include the power to call such meetings, but such special meetings may not be
called by any other person or persons; provided, however, that if and to the
extent that any special meeting of stockholders may be called by any other
person or persons specified in any provision of [this Amended and Restated]
Certificate of Incorporation or any amendment thereto or any certificate filed
under Section 151(g) of the Delaware General Corporation Law (or its successor
statute as in effect from time to time hereafter), then such special meeting may
also be called by the person or persons, in the manner, at the times and for the
purposes so specified.
{TWELFTH: The affirmative vote of the holders of not less than 80 percent
of the outstanding shares of the Corporation entitled to elect directors shall
be required for the approval of any proposal that (1) the Corporation merge or
consolidate with any other corporation or any affiliate of such other
corporation if such other corporation and its affiliates singly or in the
aggregate are directly or indirectly the beneficial owners of more than five
percent of the outstanding shares of Common Stock of the Corporation (such other
corporation and any affiliate thereof being herein referred to as a "Related
Corporation") or (2) the Corporation sell, lease or exchange all or
substantially all of its assets or business to or with such Related Corporation,
or (3) the Corporation issue or deliver any stock or other securities of its
issue in exchange or payment for any properties or assets of any such Related
Corporation or securities issued by any such Related corporation or in a merger
of any affiliate of the Corporation with or into any such Related Corporation,
or (4) the Corporation dissolve, and to effect such transaction the approval of
stockholders of the Corporation is required by law or by any agreement between
the Corporation and any national or regional securities exchange; provided,
however, that the foregoing shall not apply to any such merger, consolidation,
sale, lease, or exchange, or issuance or delivery of assets, stock or other
securities which was approved by resolution of the Board of Directors of the
Corporation prior to the acquisition of the beneficial ownership of more than
five percent of the outstanding Common Stock by the Related Corporation, nor
shall it apply to and such transaction solely between the Corporation and
another corporation 50 percent or more of the voting power of which is owned by
the Corporation provided that the Certificate of Incorporation of the surviving
corporation contains provisions substantially similar to those provided in
Articles SIXTH, TENTH, TWELFTH, THIRTEENTH. For the purposes hereof, an
"affiliate" is any person (including a corporation, partnership, association,
trust, business entity, estate or individual) who directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified; "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise; and in computing the percentage of
outstanding Common Stock beneficially owned by any person, the shares
outstanding and the shares owned shall be determined as of the record date fixed
to determine the stockholders entitled to "vote or express consent with respect
to such proposal. The stockholder "vote, if any, required for mergers,
consolidations, sales, leases, or exchanges of assets or issuances of stock or
other securities not expressly provided for in this Article, shall be such as
may be required by applicable law.}
{THIRTEENTH: The provisions set forth in this Article THIRTEENTH and in
Articles SIXTH (dealing with the alteration of Bylaws by stockholders), SEVENTH
(dealing with the number and selection of directors), TENTH (dealing "with the
prohibition against stockholder action " without meetings) and TWELFTH (dealing
with the 80 percent "vote of stockholders required for certain reorganizations)
may not be repealed or amended in any respect unless such repeal or amendment is
approved by the affirmative "vote of the holders of not less than 80 percent of
the outstanding shares of the Corporation entitled to elect directors.
FOURTEENTH:}
[TENTH:] The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this [Amended and Restated] Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
{Notwithstanding the foregoing, the provisions set forth in Articles SIXTH,
SEVENTH, TENTH, TWELFTH, and THIRTEENTH may not be repealed or amended in any
respect unless such repeal or amendment is approved as specified in Article
THIRTEENTH of this Certificate of Incorporation. FIFTEENTH,} [ELEVENTH:] No
director or former director of {this} [the] Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law, which deals with the paying {'of'} [of] a dividend or the
approving of a stock repurchase or redemption which is illegal under Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
IN WITNESS WHEREOF, ACCEL International Corporation has caused this
[Amended and] Restated Certificate of Incorporation to be signed by {Brian L.
Howell, Chairman of the Board of Directors} [Douglas J. Coats, President and
Chief Executive Officer,] {and Nicholas Z. Alexander, Vice President, Secretary
and General Counsel, this} [as of the] ____ [day] of __________, 1999].
ACCEL INTERNATIONAL [
] CORPORATION
{Attest:
By: By:
------------------------------ ------------------------------------
Nicholas Z. Alexander {Brian L. Howell} [Douglas J. Coats].
Vice President, Secretary {Chairman of the Board} [President]
and Chief Executive Officer
and General Counsel of Directors}
<PAGE>
APPENDIX B
PROPOSED AMENDMENT TO THE BYLAWS
ARTICLE IX
AMENDMENTS
Except for ARTICLE VIII, the bylaws may be made, repealed, altered,
amended or rescinded by the act of the Board of Directors. The Bylaws shall
not be made, repealed, altered, amended, or rescinded by the stockholders of the
Corporation except by the vote of the holders of not less than a majority of the
outstanding shares of the Corporation entitled to elect directors. Any
amendment to the Certificate of Incorporation which shall contravene any bylaw
in existence on the record date of the stockholder meeting at which such
amendment is to be voted upon by the stockholders shall require the vote of the
holders of not less than a majority of the outstanding shares of the Corporation
entitled to elect directors.
Note - We have provided below a copy of Article IX of ACCEL's existing
Bylaws that we have marked to show the changes that will be effected if the
stockholders of ACCEL approve Proposal 1.
ARTICLE IX
AMENDMENTS
Except for ARTICLE VIII, the bylaws may be made, repealed, altered,
amended or rescinded by the act of the Board of Directors. The Bylaws shall not
be made, repealed, altered, amended, or rescinded by the stockholders of the
Corporation except by the vote of the holders of not less than {80 percent} [a
majority] of the outstanding shares of the Corporation entitled to elect
directors. Any amendment to the Certificate of Incorporation which shall
contravene any bylaw in existence on the record date of the stockholder meeting
at which such amendment is to be voted upon by the stockholders shall require
the vote of the holders of not less than {80percent} [a majority] of the
outstanding shares of the Corporation entitled to elect directors.
<PAGE>
APPENDIX C
PROPOSED AMENDMENT TO 1996 STOCK INCENTIVE PLAN
Section 5. Shares Available
(a) Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. Subject to the adjustments
provided for in Sections 17 and 18 hereof, the maximum number of shares of
Common Stock available for grant of Awards under the Plan is 2,000,000 shares.
Of this total number, up to 5000,000 shares may be issued pursuant to the
exercise of Directors' Stock Options. Notwithstanding the foregoing, at
no time shall the number of shares of Common Stock deemed to be available for
grant in any fiscal year exceed ten percent of the total number of issued and
outstanding shares of Common Stock of the Company. The number of shares of
Common Stock available for grant to any individual Participant in any calendar
year shall not exceed 250,000 shares.
<PAGE>
ACCEL INTERNATIONAL CORPORATION
PROXY
Annual Meeting of Stockholders
OCTOBER [__], 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas J. Coats and Raymond H. Deck, or
either of them acting singly, as Proxies, with power of substitution, for and in
the name of the undersigned to vote, as designated below, all the shares of
common stock of ACCEL International Corporation, a Delaware corporation (the
"Company"), held of record by the undersigned as of September 28, 1999 at the
annual meeting of Stockholders to be held on November 16, 1999 or any
adjournment thereof.
1. AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS.
Proposal to approve and adopt the amended and restated certificate
of incorporation and amendment to the bylaws attached as Appendices
A and B to the accompanying Proxy Statement.
FOR /_/ AGAINST /_/ ABSTAIN /_/
2. AMENDMENT TO 1996 STOCK INCENTIVE PLAN.
Proposal to approve the amendment to the 1996 Stock Incentive Plan
attached as Appendix C to the accompanying Proxy Statement.
FOR /_/ AGAINST /_/ ABSTAIN /_/
3. ELECTION OF DIRECTORS.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
/_/ /_/
Robert Betagole, David T. Chase, Douglas J. Coats, Raymond H. Deck, Richard
Desich, Kermit G. Hicks, Gregory B. Grusse, Stephen M. Qua and John P. Redding.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
4. OTHER BUSINESS. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the meeting or any
adjournment thereof.
(PLEASE SEE REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 and 3.
<PAGE>
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement, each dated October [__], 1999. Please sign
exactly as name appears hereon. When shares are held by joint tenants, both
should sign.
<TABLE>
<CAPTION>
<S> <C>
Date: _________, 1999 ____________________________________
(Signature)
____________________________________
(Signature)
(When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by
President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.)
</TABLE>
Please mark, sign, date and return this proxy promptly using the enclosed
envelope.
<PAGE>
EXHIBIT A
ACCEL INTERNATIONAL CORPORATION
1996 STOCK INCENTIVE PLAN
Proposal 2
<PAGE>
ACCEL INTERNATIONAL CORPORATION
1996 Stock Incentive Plan
Section 1. Purpose
The purpose of this Plan is to advance the long-term interests of ACCEL
International Corporation by (i) motivating executive and other personnel
and independent agents by means of long-tem incentive compensation, (ii)
furthering the identity of interests of participants with those of the
stockholders of the Company through the ownership and performance of the
Common Stock of the Company and (iii) permitting the Company to attract and
retain directors, executive personnel and independent agents upon whose
judgment the successful conduct of the business of the Company largely
depends. Toward this objective, the Committee may grant stock options,
stock appreciation rights, restricted stock awards, phantom stock and/or
performance shares to Key Employees of the company, and shall grant stock
options to non-employee directors of the Company, on the terms and subject
to the conditions set forth in the Plan.
Notwithstanding any provision in the Stock Option Agreements entered into
by ACCEL and Participant to the contrary, all Options granted to
Participant shall vest and become immediately exercisable as to 100% of the
Shares subject to Options upon the first to occur of (i) six months
following the sale of all of the capital stock or all substantially all of
the assets of Acceleration National Insurance Company ("ANIC"), and (ii)
the effective date of the involuntary termination of the Participant's
relationship with ANIC as a result of such sale. Options vesting pursuant
hereto shall expire twelve months after vesting (i.e., in (i) twelve months
after six months after the effective date of involuntary termination).
Section 2. Definitions
2.1 "Administrative Policies" means the administrative policies and procedures
adopted and amended from time to time by the Committee to administer the Plan.
2.2 "Applicable Market" means the Nasdaq National Market or, if the common
Stock is no longer traded in the Nasdaq National Market, then the principal
securities exchange, if any, on which the Common Stock is traded as determined
by the committee, or if the Common Stock is no longer traded in the Nasdaq
National Market or on any national securities exchange, then such other market
price reporting system pursuant to which the Common Stock is traded or quoted
as designated by the Committee.
2.3 "Award" means any form of stock option, stock appreciation right, restricted
stock award, phantom stock or performance share granted under the Plan, whether
singly, in combination, or in tandem, granted, made or awarded to a Participant
by the Committee pursuant to such terms, conditions, restrictions and
limitations, if any, as the Committee may establish by the Award Agreement or
otherwise.
2.4 "Award Agreement" means a written agreement with respect to an Award between
the Company and a Participant establishing the terms, conditions, restrictions
and limitations applicable to an Award. To the extent an Award Agreement is
inconsistent with the terms of the Plan, the Plan shall govern the rights of
the Participant thereunder.
2.5 "Board of Directors" or "Board" means the directors of the Company, as a
group, serving as such from time to time.
2.6 "Code" means the Internal Revenue Cod of 1986, as amended from time to time.
2.7 "Committee" means the Board of Directors or any committee designated by the
Board of Directors to administer the Plan under Section 3 hereof. If at any
time the Board of Directors shall administer the Plan, then the functions of
the Committee specified in the Plan shall be exercised by the Board of
Directors.
2.8 "Common Stock" means the Common Stock, $.10 par value, of the Company.
2.9 "Company" means ACCEL International Corporation, a Delaware corporation.
2.10 "Derivative Security" means any of the "derivative securities" as defined
in Rule 16a-1 under the Exchange Act as such rule may be amended or superseded
from time to time.
2.11 "Director" means a member of the Board of Directors.
2.12 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.13 "Key Employee" means an employee of the Company or a Subsidiary who holds a
position of responsibility in an executive, managerial, administrative or
professional capacity or an independent agent who markets and sells insurance
written by a Subsidiary and whose performance, as determined by the Committee
in the exercise of its sole and absolute discretion, can have an effect on the
growth, profitability and success of the Company. For the purpose of any
provision of this Plan relating to incentive stock options, the term "Key
Employee" shall be limited to mean any employee who is eligible to receive the
grant of an incentive stock option pursuant to the provisions of Section 422 of
the Code as amended or superseded from time to time and shall exclude any
independent agent unless at the time of the Award is granted, such independent
agent is eligible to receive the grant of an incentive stock option.
2.14"Participant" means any individual to whom an Award has been granted by the
Committee under this Plan.
2.15 "Plan" means this ACCEL International Corporation, 1996 Stock Incentive
Plan, as the same may be amended from time to time.
2.16 "Qualified Domestic Relations Order" means a qualified domestic relations
order as defined by the Code or the rules thereunder if so defined therein,
and, if not, as defined by Title I of the Employment Retirement Income Security
Act of 1974 ("ERISA"), or rules thereunder.
2.17 "Section 16 Officer" means any Participant who is an "officer" of the
Company within the meaning of Rule 16a-1 under the Exchange Act as may be
amended or superseded from time to time.
2.18 "Subsidiary" means a corporation or other business entity in which the
Company directly or indirectly has an ownership interest of fifty-one percent
or more.
2.19 "Termination" means the termination of the Participant's relationship with
the Company including termination of the Participant's employment, status as a
Director or appointment as an independent agent. A Participant who is absent
from employment or other relationship with the Company for a reason or purpose
and for a period of time approved by the Committee, in its sole discretion,
shall not for the period of such absence be deemed, solely because of such
absence, to have suffered a Termination, unless and until the Committee
otherwise determines.
2.20 "Applicable Laws" means the requirements relating to the administration of
any Awards under corporate laws, federal and state securities laws, the Code
and any stock exchange or quotation system on which the Common Stock is listed
or quoted.
Section 3. Administration
The Plan shall be administered by the Committee which Committee shall be
constituted to comply with Applicable Laws.
Members of the Committee shall serve at the pleasure of the Board of
Directors, and may resign by written notice filed with the Chairman of the
Board, President or Secretary of the Company. A vacancy in the membership
of the Committee shall be filled by the appointment of a successor member
by the Board of Directors. Until such vacancy is filled, the remaining
members shall constitute a quorum and the action at any meeting of a
majority of the entire Committee, or an action unanimously approved in
writing by all Committee members, shall constitute action of the Committee.
Subject to the express provisions of this Plan, the Committee shall have
exclusive and final authority to: (i) construe and interpret the Plan and
any Award Agreement entered into hereunder; (ii) establish, amend and
rescind Administrative Policies for the administration of the Plan; and
(iii) determine the "fair market value" of the Common Stock of the Company
(based on the Applicable Market, if any, for the Common Stock). The
Committee shall have such additional authority as the Board of Directors
may from time to time determine to be necessary or desirable. Employees,
agents and independent contractors of the Company or the Committee may be
assigned, or employed or retained to perform, administrative, clerical and
other duties of the Committee, subject to the supervision and control of
the Committee; provided, however, that only the Committee may grant or
award an Award under the Plan and make decisions concerning the timing,
pricing and amount of any Award, except for stock options automatically
granted to Directors who are not employees of the Company under Section 13
hereof.
For so long as Directors and/or Section 16 Officers are or may be
Participants in the Plan, the Committee shall not knowingly take any
action, or decline to take any action, which shall cause the Plan not to
meet the requirements contained in Rule 16b3 under the Exchange Act, as
such rule is amended or superseded from time to time, which permit the
granting or making of Awards under the Plan to be exempt from Section 16(b)
of the Exchange Act as amended or superseded from time to time.
Section 4. Eligibility
Except as otherwise provided herein, any Key Employee is eligible to become
a Participant in the Plan. Directors of the Company, other than Directors
who are employees of the Company, shall be eligible only to receive stock
options pursuant to Section 13 hereof.
Section 5. Shares Available
(a) Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. Subject to the adjustments
provided for in Sections 17 and 18 hereof, the maximum number of shares of
Common Stock available for grant of Awards under the Plan is 1,500,000 shares.
Of this total number, up to 500,000 shares may be issued pursuant to the
exercise of Directors' Stock Options. Notwithstanding the foregoing, at no
time shall the number of shares of Common Stock deemed to be available for
grant in any fiscal year exceed ten percent of the total number of issued and
outstanding shares of Common Stock of the Company. The number of shares of
Common Stock available for grant to any individual Participant in any calendar
year shall not exceed 250,000 shares.
(b) For purposes of calculating the number of shares of Common Stock deemed to
be granted hereunder during any fiscal year, each Award, whether denominated in
stock options, stock appreciation rights, restricted stock, performance shares
or phantom stock, shall be deemed to be a grant of a number of shares of Common
Stock equal to the number of shares represented by the stock options, shares of
restricted stock, performance shares, shares of phantom stock or stock
appreciation rights set forth in the Award; provided however
(i) in the case of any Award as to which the exercise of one right
nullifies the exercisability of another (including, by way of
illustration the grant of a stock option with Tandem SARs (as
hereinafter defined)), the number of shares deemed to have been
granted shall be the maximum number of shares (and/or cash
equivalents) that could have been acquired upon the maximum
exercise or settlement of the Award; and
(ii) in the case of Performance Share Awards (as hereinafter defined)
providing for payments in excess of 100% of the number of shares set
forth in the Award Agreement, the number of shares granted shall be
deemed to be the maximum number of shares (and/or the cash equivalent
thereof) issuable under the Award at the highest level of
performance.
(c) Shares of Common Stock covered by lapsed, canceled, surrendered or
terminated Awards shall be shares available for regrant under the Plan;
provided, however, that the portion of any Award that has been settled by the
payment of cash or the issuance of shares of Common Stock, or a combination
thereof, shall not be available for re-grant under the Plan, irrespective of
the value of the settlement or the method of its payment. The settlement of an
Award shall not be deemed to be the grant of an Award hereunder.
Section 6. Term
The Plan shall become effective as of June 11, 1996, subject to approval of
the Plan by the holders of a majority of the shares of Common Stock. No
Awards shall be exercisable or payable before approval of the Plan has been
obtained from the Company's stockholders and no Awards may be granted after
June 11, 2006.
Section 7. Participation
The Committee shall select, from time to time, Participants from those Key
Employees who, in the opinion of the Committee, can further the Plan's
purpose and the Committee shall determine the type or types of Awards, if
any, to be made to the Participant. Any selection by the Committee of an
employee or independent agent of the Company or a Subsidiary to be a
Participant in the Plan shall irrevocably constitute the Committee's
concurrent and conclusive determination that such employee or independent
agent is a Key Employee. In addition, all non-employee Directors shall
participate in the Plan solely in the manner specified in Section 13
hereof. The terms, conditions and restrictions of each Award shall be set
forth in an Award Agreement, and no Participant shall have any rights to or
interest in an Award unless and until such Participant has exercised and
delivered an Award Agreement with respect to such Award.
Section 8. Stock Options
(a) GRANTS. Awards may be granted in the form of stock options. Stock
options may be incentive stock options within the meaning of Section 422 of the
Code or nonqualified stock options (i.e., stock options which are not incentive
stock options), or a combination of both, or any particular type of tax
advantage option authorized by the Code from time to time.
(b) TERMS AND CONDITIONS OF OPTIONS. An option shall be exercisable in whole
or in such installments and at such times as may be determined by the
Committee; provided, however, that no stock option shall be exercisable more
than ten years after the date of grant thereof. In the absence of any
provision in an option to the contrary (i) the option will become exercisable
upon as to 25% of the shares of Common Stock subject to the option upon
completion of the first full year of employment or retention of the Participant
after the date thereof and as to 25% of such shares upon the completion of each
full year thereafter prior to Termination, and (ii) the option will lapse upon
the earliest of (A) 180 days after Termination of the Participant's
relationship with the Company if the Termination is due to death or disability
or if the Participant dies within 90 days of the Termination, (B) 90 days after
Termination if the Termination is for any reason other than death, disability
or gross misconduct or neglect, (C) upon Termination if the Termination is the
result of the Participant's gross misconduct or neglect as determined by the
Committee, or (D) ten years after the option was granted. The option exercise
price shall be established by the Committee, but such price shall not be less
than the per share fair market value of the Common Stock, as determined by the
Committee, on the date of the stock option's grant subject to adjustment as
provided in Sections 17 or 18 hereof
(c) RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS. Stock options issued in
the form of incentive stock options shall, in addition to being subject to all
applicable terms, conditions, restrictions and/or limitations established by
the Committee, comply with Section 422 of the Code. Incentive stock options
shall be granted only to those Key Employees who are employees of the Company
and its "subsidiaries" within the meaning of Section 424 of the Code, shall not
be granted to any independent agents unless permitted by Section 422 of the
Code or any successor provision and shall be granted within ten years after the
date the Plan was adopted by the Board of Directors. The aggregate fair market
value (determined as of the date the option is granted) of shares with respect
to which incentive stock options are exercisable for the first time by an
individual during any calendar year (under this Plan or any other plan of the
Company or any Subsidiary which provides for the granting of incentive stock
options) may not exceed $100,000 or such other number as may be applicable
under the Code from time to time. Any incentive stock option that is granted
to any employee who is, at the time the option is granted, deemed for purposes
of Section 422 of the Code, or any successor provision, to own shares of the
Company possessing more than ten percent (10%) of the total combined voting
power of all classes of shares of the Company or of a parent or subsidiary of
the Company shall have an option exercise price that is at least 110 percent
(110%) of the fair market value of the shares at the date of grant and shall
not be exercisable after the expiration of 5 years from the date it is granted.
(d) ADDITIONAL TERMS AND CONDITIONS. The Committee may, in any manner not
inconsistent with the Plan, by way of the Award Agreement or otherwise,
establish such other terms, conditions, restrictions and/ or limitations, if
any, on any stock option Award and the exercise thereof.
(e) PAYMENT. Upon exercise, a Participant may pay the option exercise price
of a stock option (i) in cash, (ii) in shares of Common Stock, or (iii) a
combination thereof, or (iv) in the sole discretion of the Committee, through a
cashless exercise procedure involving a broker; provided, however, that such
method and time for payment shall be permitted by and be in compliance with
applicable law, or (v) such other consideration as the Committee may deem
appropriate. The Committee shall establish appropriate methods for accepting
Common Stock and may impose such conditions as it deems appropriate on the use
of such Common Stock to exercise a stock option.
Section 9. Stock Appreciation Rights
(a) GRANTS. Awards may be granted in the form of stock appreciation rights
("SARs"). SARs shall entitle the recipient to receive a payment equal to the
appreciation in market value of a stated number of shares of Common Stock from
the price stated in the Award Agreement to the market value of the Common Stock
on the date of exercise or surrender. A SAR may be granted in tandem with all
or a portion of a related stock option under the Plan ("Tandem SARs"). Tandem
SARs shall permit the optionee to surrender a stock option or portion thereof
and to receive the payment to which he is entitled under the SAR Award
Agreement with respect to the shares of Common Stock subject to the surrendered
stock option or portion thereof. A Tandem SAR may be granted either at the
time of the grant of the related stock option or at any time thereafter during
the term of the stock option.
(b) TERMS AND CONDITIONS OF TANDEM SARS. A Tandem SAR shall be exercisable to
the extent, and only to the extent, that the related stock option is
exercisable. The appreciation in value of a Tandem SAR shall be the
appreciation in fair market value from an amount not less than the option
exercise price of the related stock option or portion thereof being surrendered
to the market value of the Common Stock on the date of exercise. Upon exercise
of a Tandem SAR as to some or all of the shares covered by an Award, the
related stock option shall be canceled automatically to the extent of the
number of SARS exercised, and such shares shall not thereafter be eligible for
grant under Section 5 hereof.
(c) DEEMED EXERCISE. The Committee may provide that an SAR shall be deemed to
be exercised at the close of business on the scheduled expiration date of such
SAR, if at such time the SAR by its terms is otherwise exercisable and, if so
exercised, would result in a payment to the Participant.
(d) ADDITIONAL TERMS AND CONDITIONS. The Committee may, in any manner not
inconsistent with the Plan, by way of the Award Agreement or otherwise,
determine such other terms, conditions, restrictions and/or limitations, if
any, on any SAR Award.
Section 10. Restricted Stock Awards
(a) GRANTS. Awards may be granted in the form of Restricted Stock Awards.
Restricted Stock Awards consist of shares of Common Stock bearing restrictions
on their transfer or otherwise as authorized by Section 10(b), below, and may
be awarded to a Key Employee with or without payment of consideration by the
Key Employee.
(b) AWARD RESTRICTIONS. Restricted Stock Awards shall be subject to such
terms, conditions, restrictions, or limitations as the Committee deems
appropriate including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment or
individual performance or the financial performance of the Company. The
Committee may modify, or accelerate the termination of, the restrictions
applicable to a Restricted Stock Award under such circumstances as it deems
appropriate.
(c) RIGHTS OF STOCKHOLDERS. During the period in which any shares of Common
Stock are subject to the restrictions imposed under this Section 10, the
Committee may, in its discretion, grant to the Participant to whom such
restricted shares have been awarded, all or any of the rights of a stockholder
with respect to such shares, including, by way of illustration but not by way
of limitation, the right to vote such shares and to receive dividends.
(d) EVIDENCE OF AWARD. Any Restricted Stock Award granted under the Plan may
be evidenced in such manner as the Committee deems appropriate, including,
without limitation, book entry registration or issuance of a stock certificate
or certificates.
(e) ADDITIONAL TERMS AND CONDITIONS. The Committee may, in any manner not
inconsistent with the Plan, by way of Award Agreement or otherwise, determine
such other terms, conditions, restrictions or limitations, if any, on any Award
of Restricted Stock.
Section 11. Phantom Stock
(a) GRANTS. Awards may be granted in the form of Phantom Stock Awards.
Phantom Stock Awards shall entitle the Participant to receive the market value
or the appreciation in value of a stated number of shares of Common Stock on a
settlement date determined by the Committee.
(b) TERMS AND CONDITIONS. The Committee may, in any manner not inconsistent
with the Plan, by way of Award Agreement or otherwise, determine such terms,
conditions, restrictions or limitations, if any, on any Award of Phantom Stock.
Section 12. Performance Shares
(a) GRANTS. Awards may be granted in the form of performance shares.
"Performance Shares" means interests the entitlement to which is based upon the
attainment of pre-determined Performance Targets as hereinafter defined during
a Performance Period as hereinafter defined. At the end of the Performance
Period, Performance Shares shall be converted into Common Stock (or Common
Stock and cash, as determined by the Award Agreement) and distributed to
Participants based upon such entitlement.
(b) PERFORMANCE CRITERIA. The Committee may grant an Award of Performance
Shares to Participants as of the first day of each Performance Period. As used
herein, the term "Performance Period" means the period during which a
Performance Target is measured and the term "Performance Target" means the
predetermined goals established by the Committee. A Performance Target will be
established at the beginning of each Performance Period. If at the end of the
Performance Period, the Performance Target is fully met, the Performance Shares
will be converted 100% into shares of Common Stock (or the cash equivalent
thereof; as determined by the Award Agreement) and issued to the Participant.
Award payments in excess of 100% shall be permitted based upon an attainment in
excess of 100% of the Performance Target. If the Performance Target has not
been fully met, Performance Shares will be converted and delivered only to the
extent, if any, provided at the time of the grant of such Award for conversion
based upon partial attainment of the Performance Target and the balance of the
Performance Shares will be forfeited to the Company and available for
reissuance pursuant to Section 5 hereof
(c) ADDITIONAL TERMS AND CONDITIONS. The Committee may, in any manner not
inconsistent with the terms of this Plan, by way of the Award Agreement or
otherwise, determine the manner of payment of Awards of Performance Shares and
other terms, conditions, restrictions or limitations, if any, on any Award of
Performance Shares.
Section 13. Directors' Stock Options
(a) GRANTS. Awards may be granted to non-employee Directors only in the form
of stock options satisfying the requirements of this Section 13. Each person
who is elected or appointed to serve as a Director of the Company after the
effective date of the First Amendment to the Plan, upon his initial appointment
or election as a Director, automatically be granted an option for 10,000 shares
of Common Stock. At each year's annual meeting of the stockholders of the
Company commencing on the effective date of the First Amendment to the Plan,
there shall be granted automatically to each non-employee Director (other than
any non-employee Director who first became a Director at any time during the
period following the immediately preceding annual meeting of the stockholders
of the Company), the option to purchase 10,000 shares of Common Stock. All
stock options granted under this Section 13 shall be nonqualified stock
options.
(b) OPTION EXERCISE PRICE. The option exercise price of all stock options
granted under this Section 13 shall be the per share fair market value of the
outstanding shares of the Common Stock on the date such options are
automatically granted. Payment of the option exercise price may be made in
cash or in shares of Common Stock or a combination of cash and Common Stock to
the extent provided in the Award Agreement.
(c) ADMINISTRATION. Subject to the express provisions of this Section 13,
the Committee shall have conclusive authority to construe and interpret any
Stock Option Award granted under this Section 13 and to adopt Administrative
Policies with respect thereto; provided, however, that no action shall be taken
which would prevent the options granted under this Section 13 or any Award
granted under the Plan from meeting the requirements for exemption from Section
16(b) of the Exchange Act, or subsequent comparable statute, as set forth in
Rule 16b-3 of the Exchange Act or any subsequent comparable rule:
(d) OPTION AGREEMENT. The options granted hereunder shall be evidenced by an
option agreement, dated as of the date of the grant, which agreement shall be
in such form, consistent with the terms and requirements of this Section 13, as
shall be approved by the Committee from time to time and executed on behalf of
the Company by the President. The Option Agreement shall require the optionee
to refrain from selling or otherwise disposing of shares so acquired for at
least six months following the date of the grant of such option.
(e) OPTION PERIOD. In the absence of any provision in an option to the
contrary (i) the option will become exercisable as to 50% of the shares of
Common Stock subject to the option upon completion of the first full year after
the date thereof and as to 50% of such shares upon the completion of each full
year thereafter prior to Termination, and (ii) the option will lapse upon the
earliest of (A) 180 days after Termination of the Director's status as a
Director, or (B) ten years after the option was granted.
(f) TRANSFERABILITY. Except as otherwise provided in this Section 13(f), no
option granted under this Section 13 shall be transferable by the non-employee
Director except will or the laws of descent and distribution, or pursuant to a
Qualified Domestic Relations Order, and during the Director's lifetime options
may be exercised only by him or his guardian or legal representative or his
transferee under such Qualified Domestic Relations Order. The Committee shall
authorize all stock options granted pursuant to this Section 13 to be granted
to a Director on terms which permit transfer by such Director to (i) the
spouse, children or grandchildren of the Director and any other persons related
to the Director as may be approved by the Committee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members, (iii) a partnership or partnerships in which such Immediate
Family Members are the only partners, or (iv) a limited liability company or
limited liability companies in which such Immediate Family Members are the only
members. The Committee may, in its discretion, permit transfers of such stock
options to any other persons or entities as may be approved by the Committee
Notwithstanding the transfer, the Director shall Continue to be subject to the
provisions of Section 19 regarding the withholding of applicable income and
employment taxes required by Applicable Laws.
(g) LIMITATIONS ON EXERCISE. To the extent that an option is not otherwise
exercisable at the date of the Director's death or voluntary retirement as a
Director, it shall become fully exercisable upon such death or voluntary
retirement provided, however, that except as otherwise determined by the
Committee, Director Stock Options shall not become exercisable under this
Sentence prior to the expiration of six months from the date of grant. Upon
such death or voluntary retirement, such options shall be exercisable for a
period of 180 days, subject to the original term of the option.
Section 14. Payment of Awards
Except as otherwise provided herein Award Agreements may provide that, at
the discretion of the Committee, payment of Awards may be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of
property as the Committee shall determine. The terms of Award Agreements
may provide for payment of Awards in the form of a lump sum or
installments, as determined by the Committee. In connection with
transactions involving the exercise and cancellation of an Award (under
this Section 14 or Section 25, or otherwise) held by or through a Director
or a Section 16 Officer (whether or not the transaction also involves the
related surrender and cancellation of a stock option) and the receipt of
cash in complete or partial settlement of the Award, or the cash settlement
of an equity security to satisfy the tax withholding consequences of a
Derivative Security, the Committee may require that such transaction be
consummated in compliance with Rule 16b-3(e) under the Exchange Act, as
such rule may be amended or superseded from time to time, unless the holder
of such Award waives such compliance in a writing executed by such holder
and delivered to the Committee and the Committee consents to such waiver.
Section 15. Dividends and Dividend Equivalents
If an Award is granted in the form of a Restricted Stock Award or Phantom
Stock Award, the Committee may choose, at the time of the grant of the
Award, to include as part of such Award an entitlement to receive dividends
or dividend equivalents, subject to such terms, conditions, restrictions or
limitations, if any, as the Committee may establish. Dividends and
dividend equivalents shall be paid in such form and manner and at such time
as the Committee shall determine. All dividends or dividend equivalents
which are not paid currently may, at the Committee's discretion, accrue
interest or be reinvested into additional shares of Common Stock.
Section 16. Assignment and Transfer; Holding Period
The rights and interests of a Participant under the Plan, and in any
Derivative Security issued or granted under the Plan, may not be assigned,
sold, encumbered or transferred except, in the event of the death of a
Participant, by will or the laws of descent and distribution, or except
pursuant to a Qualified Domestic Relations Order.
Except as otherwise provided in the first paragraph of this Section 16 (but
such exception shall not apply if its application would cause the grant or
award of the subject equity security or Derivative Security not to be
exempt from section 16(b) of the Exchange Act), an equity security of the
Company granted or awarded to a Director or Section 16 Officer as an Award
under the Plan shall not be assigned, sold, encumbered, transferred or
otherwise disposed of prior to the expiration of six months from the date
of grant, and neither a Derivative Security granted or awarded to a
Director or Section 16 Officer as an Award under the Plan, nor the
underlying equity security with respect to such Derivative Security, shall
be assigned, sold, encumbered, transferred or otherwise disposed of prior
to the expiration of six months from the date of acquisition of the
Derivative Security to the date of disposition of the Derivative Security
(other than upon exercise or conversion) or such underlying equity
security, unless, in either case, the holder of such equity security or
Derivative Security requests waiver of such restrictions in a writing
delivered to the Committee and the Committee consents to such waiver.
Section 17. Adjustments Upon Changes in Capitalization
In the event of any change in the outstanding shares of Common Stock by
reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure or shares of the Company, the maximum
aggregate number and class of shares as to which Awards may be or are
required to be granted under the Plan and the shares issuable pursuant to
and the exercise or purchase price payable under then outstanding Awards,
shall be appropriately adjusted by the Committee whose determination shall
be final. Any such adjustments may be provided for in Award Agreements.
Section 18. Extraordinary Distributions and Pro Rata Repurchases
In the event the Company shall at any time when an Award is outstanding
make an Extraordinary Distribution (as hereinafter defined) in respect of
Common Stock or effect a Pro Rata Repurchase of Common Stock (as
hereinafter defined), the Committee may consider the economic impact of the
Extraordinary Distribution or Pro Rata Repurchase on Participants and make
such adjustments as it deems equitable under the circumstances. The
determination of the Committee shall, subject to revision by the Board of
Directors, be final and binding upon all Participants.
(a) As used herein, the term "Extraordinary Distribution" means any
dividend or other distribution by the Company of:
(i) cash, where the aggregate amount of such cash dividend or
distribution together with the amount of all cash dividends and
distributions made during the twelve months preceding the date of
payment of such dividend or other distributed, when combined with
the aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such
Pro Rata Repurchases which is in excess of the fair market value (as
determined by the Committee) of the Common Stock repurchased
during such twelve month period), exceeds ten percent (10%) of the
aggregate fair market value (as determined by the Committee) of all
shares of Common Stock outstanding on the record date for determining
the shareholders entitled to receive such Extraordinary Distribution;
or
(ii) any shares of capital stock of the Company (other than shares of
Common Stock), other securities of the Company (including evidences
of indebtedness of the Company), or any other investments, assets or
property of the Company (including shares of any Subsidiary of the
Company), or any combination thereof.
(b) As used herein "Pro Rata Repurchase" means any purchase of shares of
Common Stock by the Company or any Subsidiary thereof, pursuant to any tender
offer or exchange offer subject to section 13(e) of the Exchange Act or any
successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares of the Company or any Subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase.
Section 19. Withholding Taxes
The Company or the applicable Subsidiary shall be entitled to deduct from
any payment under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment tax required by law to be
withheld with respect to such payment or may require the Participant to pay
to it such tax prior to and as a condition of the making of such payment.
In accordance with any applicable Administrative Policies it establishes,
the Committee may allow a Participant to pay the amount of taxes required
by law to be withheld from an Award by withholding from any payment of
Common Stock due as a result of such Award, or by permitting the
Participant to deliver to the Company shares of Common Stock having a fair
market value, as determined by the Committee, equal to the amount of such
required withholding taxes.
Section 20. Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue or deliver certificates of Common
Stock evidencing Restricted Stock Awards or any other Award payable in
Common Stock prior to (a) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion,
determine to be necessary or advisable, (b) the admission of such shares to
trading on the Applicable Market and (c) the completion of any registration
or other qualification of said shares under any state or Federal law or
ruling of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable. The Company shall have
the right to require that any certificate for Common Stock issued pursuant
to the Plan or an Award bear any restrictive legend required by law and/or
to evidence restrictions on the transfer of the shares under applicable
law, the Award Agreement or the Plan.
Section 21. No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of; or continue to be retained by, the Company or any
Subsidiary. The Company or, in the case of employment with, or retention
by, a Subsidiary, the Subsidiary, reserves the right to terminate the
employment or retention of any Key Employee at any time, subject to the
terms of any agreement with such Key Employee. The adoption of this Plan
shall not be deemed to give any Key Employee or any other individual any
right to be selected as a Participant, to be granted any Awards hereunder
or, if granted an Award, to receive any additional Awards at any subsequent
time.
Section 22. Rights as Stockholder
No Participant shall have any rights as a stockholder as a result of
participation in the Plan until the date of issuance of and only as the
holder of a stock certificate in his name except, in the case of Restricted
Stock Awards, to the extent such rights are granted to the Participant
under Section 10(c) hereof. To the extent any person acquires a right to
receive payments from the Company under this Plan, such rights shall be no
greater than the rights of an unsecured creditor of the Company.
Section 23. Responsibility and Indemnification
No member of the Board of Directors or the Committee shall be liable to the
Company, any Participant or any third party for any action or determination
made in good faith with respect to the Plan and Awards thereunder, or for
any matter as to which the Company's certificate of incorporation or
bylaws, or any valid contract between the Company and such member, limits
or negates the liability of Directors. Such members shall be entitled to
indemnification and reimbursement in the manner provided in the Company's
certificate of incorporation and bylaws, in any valid contract between the
Company and such member, and under any directors' and officers' liability
insurance coverage which may be in effect from time to time.
Section 24. Substitution, Extension, Renewal and Regrant of Awards
Awards may be granted under the Plan from time to time in substitution for
stock options and other rights or awards held by employees of organizations
who become or are about to become Key Employees of the Company or a
Subsidiary as the result of a merger or consolidation of the employing
organization with the Company or a Subsidiary, or the acquisition by the
Company or a Subsidiary of the assets of the employing organization, or the
acquisition by the Company or a Subsidiary of equity interests in the
employing organization as the result of which it becomes a Subsidiary. The
Committee may extend or renew outstanding Awards granted under the Plan on
terms not inconsistent with the Plan.
The Committee may accept the surrender or cancellation of outstanding
Awards (to the extent not theretofore exercised, paid or settled) and grant
or award new Awards in substitution therefor, which new Awards may be
different types of Awards than the Awards so surrendered and/or canceled.
Section 25. Amendment
The Committee may suspend, reinstate and terminate the Plan or any portion
thereof at any time. In addition, the Committee may, from time to time,
amend the Plan in any manner, but may not without stockholder approval
adopt any amendment (i) which would (a) materially increase the benefits
accruing to Participants under the Plan, (b) materially increase the number
of shares of Common Stock which may be issued under the Plan (except as
specified in Section 17 or 18), or (c) materially modify the requirements
as to eligibility for participation in the Plan, or (ii) that requires
stockholder approval in order for the Plan to comply with Section 162(m) of
the Code. Notwithstanding the foregoing, the provisions of Section 13
relating to the eligibility for, and the amount, price and timing of'
Awards to Directors thereunder shall not be amended, nor shall the
operation of Section 13 be suspended or reinstated, more than once every
six months other than to conform with changes in the Code, ERISA, or the
rules thereunder.
Section 26. Corporate Changes; Use of Funds
The grant of an Award pursuant to the Plan shall not affect the right or
power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its stock, securities, capital or business
structure, or to merge, consolidate, dissolve, or liquidate, or to sell,
lease or transfer all or any part of its business or assets. The funds
received by the Company upon any exercise or settlement of an Award may be
used by the Company for any corporate purpose or purposes.
Section 27. Governing Law
The Plan shall be governed by and construed in accordance with the laws of
the State of Delaware, except as preempted by applicable Federal law.
Section 28. Interpretation
The Plan is designed and intended to comply with Rule 16b-3 promulgated
under the Exchange Act and, to the extent applicable, with Section 162(m)
of the Code and all provisions hereof shall be construed in a manner to so
comply.
