<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
------------------------
ACORDIA, INC.
(NAME OF SUBJECT COMPANY)
AICI ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ANTHEM INSURANCE COMPANIES, INC.
(BIDDERS)
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
004929 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PATRICK M. SHERIDAN
AICI ACQUISITION CORP.
ANTHEM INSURANCE COMPANIES, INC.
120 MONUMENT CIRCLE
INDIANAPOLIS, INDIANA 46204
TELEPHONE: (317) 488-6000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPY TO:
JAMES H. GROSS, ESQ.
VORYS, SATER, SEYMOUR AND PEASE
P.O. BOX 1008, 52 EAST GAY STREET
COLUMBUS, OH 43216
TELEPHONE: (614) 464-6400
CALCULATION OF FILING FEE
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<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
</TABLE>
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<TABLE>
<S> <C>
$287,431,560 $57,487
</TABLE>
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* For purposes of calculation of the filing fee only. Assumes the purchase, at
a purchase price of $40.00 per share of Common Stock, of 7,185,789 shares of
Common Stock of the Subject Company, representing all of such Common Stock
outstanding on a fully diluted basis (assuming the exercise of options and
warrants to acquire shares of Common Stock and excluding shares of Common
Stock owned by the Bidders). The above calculation is based on the most
recent publicly available data for the Subject Company.
** The amount of the filing fee, calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th of
1% of the transaction value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(A)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form of Registration No.: N/A Date Filed: N/A
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<PAGE> 2
CUSIP No. 004929 10 5
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS ANTHEM
INSURANCE COMPANIES, INC.
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [
]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION INDIANA
- ---------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,693,056 SHARES OF COMMON
STOCK
- ---------------------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7): 66.8%
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
2
<PAGE> 3
CUSIP No. 004929 10 5
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS AICI
ACQUISITION CORP.
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS WC, AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [
]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
- ---------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,693,056 SHARES OF COMMON
STOCK
- ---------------------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7): 66.8%
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
3
<PAGE> 4
This Schedule 14D-1 Tender Offer Statement (this "Statement") relates to
the offer by AICI Acquisition Corp., a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Anthem Insurance Companies, Inc., an Indiana
mutual insurance company ("Parent"), to purchase all outstanding shares of
Common Stock, par value $1.00 per share (the "Common Stock"), of Acordia, Inc.,
a Delaware corporation (the "Subject Company"), at a price of $40.00 per share
of Common Stock, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase dated June 6, 1997 (the "Offer to Purchase") and in the related Letter
of Transmittal (the "Letter of Transmittal") (which, as amended from time to
time, together constitute the "Offer"). Copies of the Offer to Purchase and the
Letter of Transmittal are annexed hereto as Exhibits (a)(1) and (a)(2),
respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the Subject Company is Acordia, Inc., a Delaware
corporation, with its principal executive offices at 120 Monument Circle,
Indianapolis, Indiana 46204.
(b) The information set forth in the section entitled "INTRODUCTION" of the
Offer to Purchase is incorporated herein by reference.
(c) The information set forth in the section entitled "THE TENDER
OFFER -- Price Range of the Common Stock; Dividends on the Common Stock" of the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a-d, g) This Statement is being filed on behalf of Parent and the
Purchaser for purposes of the Schedule 14D-1. The information set forth in the
sections entitled "INTRODUCTION," "THE TENDER OFFER -- Certain Information
Concerning the Company" and Schedule I of the Offer to Purchase is incorporated
herein by reference.
(e-f) During the last five years, neither Parent nor the Purchaser, nor, to
the best knowledge of Parent and the Purchaser, any of the persons listed in
Schedule I of the Offer to Purchase, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree, or final order enjoining future violation of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a-b) The information set forth in the sections entitled "INTRODUCTION,"
"SPECIAL FACTORS -- Background of the Offer," "SPECIAL FACTORS -- Interests of
Certain Persons; Stockholdings of Certain Officers and Directors; and Related
Transactions," "SPECIAL FACTORS -- Fairness of the Offer," "SPECIAL
FACTORS -- The Merger Agreement" and Schedule I of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a-b) The information set forth in the section entitled "THE TENDER
OFFER -- Source and Amount of Funds" of the Offer to Purchase is incorporated
herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a-e) The information set forth in the sections entitled "INTRODUCTION" and
"SPECIAL FACTORS -- Purpose of the Offer and the Merger; Plans for the Company"
of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
(f-g) The information set forth in sections entitled "SPECIAL
FACTORS -- Purpose of the Offer and the Merger; Plans for the Company" and "THE
TENDER OFFER -- Certain Effects of the Offer" of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a-b) The information set forth in the sections entitled "INTRODUCTION,"
"SPECIAL FACTORS -- Background to the Offer," and "SPECIAL FACTORS -- Interests
of Certain Persons; Stockholdings of Certain Officers and Directors; and Related
Transactions" and Schedules I and II of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the sections entitled "INTRODUCTION," "SPECIAL
FACTORS -- Background to the Offer," "SPECIAL FACTORS -- The Merger Agreement"
and "SPECIAL FACTORS -- Interests of Certain Persons; Stockholdings of Certain
Officers and Directors; and Related Transactions" of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the sections entitled "INTRODUCTION," "SPECIAL
FACTORS -- Analysis of Credit Suisse First Boston as Financial Advisor to
Parent" and "THE TENDER OFFER -- Fees and Expenses" of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in the section entitled "THE TENDER
OFFER -- Certain Information Concerning Parent and the Purchaser" of the Offer
to Purchase is incorporated herein by reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a stockholder of the Company whether to sell, tender or hold
Common Stock being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) Not applicable.
(b-c) The information set forth in the sections entitled "INTRODUCTION" and
"THE TENDER OFFER -- Certain Legal Matters" of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in the section entitled "THE TENDER
OFFER -- Certain Effects of the Offer" of the Offer to Purchase is incorporated
herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated June 6, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
5
<PAGE> 6
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated June 6, 1997.
(a)(8) Text of Press Release, dated June 2, 1997, issued by the Purchaser.
(c)(1) Agreement and Plan of Merger dated as of June 2, 1997, among the
Company, Parent and the Purchaser.
(c)(2) Anthem Acordia Stock Plan, as amended.
(c)(3) Fairness Opinion of Credit Suisse First Boston Corporation dated
June 2, 1997.
(c)(4) Complaint filed in Crandon Capital Partners v. Acordia, Inc., et.
al. (Del. Ch. June 4, 1997).
(c)(5) Complaint filed in Sherry Levinson v. Acordia, Inc., et. al., and
Anthem Insurance Companies, Inc. (Del. Ch. June 4, 1997).
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: June 6, 1997
AICI ACQUISITION CORP.
By: /s/ PATRICK M. SHERIDAN
------------------------------------
Name: Patrick M. Sheridan
Title: Treasurer
ANTHEM INSURANCE COMPANIES, INC.
By: /s/ PATRICK M. SHERIDAN
------------------------------------
Name: Patrick M. Sheridan
Title: Executive Vice President
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
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<S> <C> <C>
(a)(1) Offer to Purchase, dated June 6, 1997. ..................................
(a)(2) Letter of Transmittal. ..................................................
(a)(3) Notice of Guaranteed Delivery. ..........................................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees. ...............................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees. ...........................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9. ....................................................
(a)(7) Form of Summary Advertisement, dated June 6, 1997. ......................
(a)(8) Text of Press Release, dated June 2, 1997, issued by the Purchaser. .....
(c)(1) Agreement and Plan of Merger dated as of June 2, 1997, among the Company,
Parent and the Purchaser. ...............................................
(c)(2) Anthem Acordia Stock Plan, as amended. ..................................
(c)(3) Fairness Opinion of Credit Suisse First Boston Corporation
dated June 2, 1997. .....................................................
(c)(4) Complaint filed in Crandon Capital Partners v. Acordia, Inc., et al.
(Del. Ch. June 4, 1997)..................................................
(c)(5) Complaint filed in Sherry Levinson v. Acordia, Inc., et. al., and Anthem
Insurance Companies, Inc. (Del. Ch. June 4, 1997). ......................
(d) None. ...................................................................
(e) Not applicable. .........................................................
(f) None. ...................................................................
</TABLE>
<PAGE> 1
Offer to Purchase for Cash Exhibit (a)(1)
All Outstanding Shares of Common Stock
of
ACORDIA, INC.
at
$40.00 NET PER SHARE IN CASH
by
AICI ACQUISITION CORP.
a wholly owned subsidiary of
ANTHEM INSURANCE COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED,
AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, AT LEAST A
MAJORITY OF THE THEN ISSUED AND OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE
$1.00 PER SHARE (THE "COMMON STOCK"), OF ACORDIA, INC. (THE "COMPANY"), OTHER
THAN SHARES OF COMMON STOCK BENEFICIALLY OWNED BY AICI ACQUISITION CORP. (THE
"PURCHASER"), ANTHEM INSURANCE COMPANIES, INC. ("PARENT"), PARENT'S OTHER
SUBSIDIARIES AND PARENT'S EXECUTIVE OFFICERS AND DIRECTORS. SEE "INTRODUCTION"
AND "THE TENDER OFFER -- CERTAIN CONDITIONS OF THE OFFER."
THE BOARD OF DIRECTORS OF THE COMPANY, BASED UPON, AMONG OTHER THINGS THE
UNANIMOUS RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE COMPANY'S BOARD OF
DIRECTORS (THE "COMPANY SPECIAL COMMITTEE"), HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE MERGER
AGREEMENT, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS (OTHER THAN THE PARENT AND THE PURCHASER) AND HAS APPROVED THE
OFFER, THE MERGER AND THE MERGER AGREEMENT AND RECOMMENDS (EXCLUDING CERTAIN
INTERESTED DIRECTORS WHO ABSTAINED) THAT SUCH STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES TO THE PURCHASER PURSUANT TO THE OFFER.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Common Stock should either (i) complete and sign the Letter of Transmittal
provided herewith (or a manually signed facsimile thereof) in accordance with
the instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed if required by Instruction 1 to the Letter of Transmittal and
mail or deliver the Letter of Transmittal (or such facsimile) and all other
required documents to the Depositary (as defined herein) together with the
certificates for such Common Stock to the Depositary, or tender such Common
Stock pursuant to the procedure for book-entry transfer set forth in the section
entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock," or (ii)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
having Common Stock registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Common Stock.
If a stockholder desires to tender Common Stock and such stockholder's
certificate for such Common Stock is not immediately available or the procedure
for book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such stockholder's tender may be effected by following the procedure for
guaranteed delivery set forth in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock."
Questions and requests for assistance or for additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be directed to the Dealer Manager or the Information
Agent, at their respective addresses and telephone numbers set forth on the back
cover of this Offer to Purchase.
The Dealer Manager for the Offer is:
[CREDIT SUISSE LOGO]
June 6, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... 1
SPECIAL FACTORS....................................................................... 3
Background of the Offer............................................................. 3
Analysis of Credit Suisse First Boston as Financial Advisor to Parent............... 8
Fairness of the Offer............................................................... 14
The Merger Agreement................................................................ 14
Purpose of the Offer and the Merger; Plans for the Company.......................... 17
Interests of Certain Persons; Stockholdings of Certain Officers and Directors; and
Related Transactions............................................................. 19
Certain Federal Income Tax Consequences............................................. 21
Appraisal Rights.................................................................... 21
THE TENDER OFFER...................................................................... 23
Terms of the Offer.................................................................. 23
Procedures for Tendering Common Stock............................................... 25
Withdrawal Rights................................................................... 28
Acceptance for Payment and Payment.................................................. 29
Price Range of Common Stock; Dividends on the Common Stock.......................... 30
Certain Effects of the Offer........................................................ 30
Certain Information Concerning the Company.......................................... 31
Certain Information Concerning Parent and the Purchaser............................. 32
Source and Amount of Funds.......................................................... 34
Dividends and Distributions......................................................... 34
Certain Conditions of the Offer..................................................... 34
Certain Legal Matters............................................................... 36
Fees and Expenses................................................................... 37
Miscellaneous....................................................................... 39
Schedule I -- Directors and Executive Officers of Parent and the Purchaser
Schedule II -- Parent Purchases of Common Stock
Annex I -- Section 262 of the General Corporation Law of the State of Delaware
</TABLE>
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF ACORDIA, INC.:
INTRODUCTION
AICI Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Anthem Insurance Companies, Inc., an Indiana mutual
insurance company ("Parent"), hereby offers to purchase all outstanding shares
of Common Stock, par value $1.00 per share (the "Common Stock"), of Acordia,
Inc., a Delaware corporation (the "Company"), not already owned by the
Purchaser, Parent or Parent's other subsidiaries at a price of $40.00 per share,
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Common Stock by Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of Credit
Suisse First Boston Corporation ("Credit Suisse First Boston"), as Dealer
Manager (in such capacity, the "Dealer Manager"), First Chicago Trust Company of
New York, as Depositary (the "Depositary"), and D. F. King & Co., Inc., as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See "THE TENDER OFFER -- Fees and Expenses."
The Board of Directors of the Company, based upon, among other things, the
unanimous recommendation of the Company Special Committee, has determined that
the Merger Agreement (as defined below) and the transactions contemplated
thereby, including the Offer and the Merger (as defined below), upon the terms
and subject to the conditions set forth in the Merger Agreement, are fair to,
and in the best interests of, the Company and its stockholders (other than
Parent and the Purchaser) and has approved the Offer, the Merger and the Merger
Agreement and recommends (excluding certain interested directors who abstained)
that such stockholders accept the Offer and tender their Common Stock to the
Purchaser pursuant to the Offer. Reference is made to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to the Company's stockholders herewith. Stockholders are
urged to read the Schedule 14D-9 in its entirety for a description of the
assumptions made, factors considered and procedures followed by the Company
Special Committee and the Company's Board of Directors in making the approvals,
determinations and recommendations set forth above.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 2, 1997 (the "Merger Agreement") among the Company, Parent and the
Purchaser. The Merger Agreement provides, among other things, that promptly
following the purchase of shares of Common Stock pursuant to the Offer and
subject to the terms and conditions of the Merger Agreement, and in accordance
with the relevant provisions of the Delaware General Corporation Law (the
"DGCL"), the Purchaser will be merged with and into the Company (the "Merger").
The Company will continue as the surviving corporation (the "Surviving
Corporation") and as a wholly owned subsidiary of Parent following consummation
of the Merger. If the Purchaser owns at least 90% of the outstanding shares of
Common Stock of the Company, Purchaser will have the ability to consummate the
Merger without a meeting or vote of the stockholders of the Company pursuant to
the "short form" merger provisions of the DGCL. Pursuant to the Merger each then
outstanding share of Common Stock, other than Common Stock owned by the
Purchaser, Parent or Parent's other subsidiaries, shares held in the treasury of
the Company and Common Stock owned by stockholders who perfect their dissenters'
rights under the DGCL, would be converted into the right to receive an amount in
cash equal to the Offer Price without interest. See "SPECIAL FACTORS -- Purpose
of the Offer and the Proposed Merger; Plans for the Company" and "SPECIAL
FACTORS -- Appraisal Rights."
<PAGE> 4
THE OFFER IS CONDITIONED (THE "MINIMUM TENDER CONDITION") UPON, AMONG OTHER
THINGS, THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO
EXPIRATION OF THE OFFER AT LEAST A MAJORITY OF THE THEN ISSUED AND OUTSTANDING
SHARES OF COMMON STOCK, OTHER THAN SHARES OF COMMON STOCK BENEFICIALLY OWNED BY
THE PURCHASER, PARENT, PARENT'S OTHER SUBSIDIARIES AND THE EXECUTIVE OFFICERS
AND DIRECTORS OF PARENT (THE "MINIMUM NUMBER OF SHARES"). SEE "THE TENDER
OFFER -- CERTAIN CONDITIONS OF THE OFFER."
The Company has represented to the Purchaser that as of June 2, 1997, there
were 13,016,378 shares of Common Stock outstanding, 2,218,605 shares of Common
Stock reserved for issuance under the Company's employee stock option and award
plans (with 1,362,467 options outstanding thereunder) (the "Stock Options") and
1,500,000 shares of Common Stock reserved for issuance pursuant to outstanding
warrants to purchase 1,500,000 shares of Common Stock issued to Great American
Insurance Company in connection with the Company's 1993 acquisition of the
outstanding capital stock of American Business Insurance, Inc. from Great
American Insurance Company (the "Great American Warrants"). The Company has
10,000,000 shares of Preferred Stock authorized, but none of such shares have
been issued. As of March 10, 1997, there were approximately 450 holders of
record of the Common Stock.
Based on the foregoing and assuming that all Stock Options and the Great
American Warrants are surrendered for the cash value thereof in accordance with
the terms of the Merger Agreement (see "SPECIAL FACTORS -- Background of the
Offer; Merger Agreement") and that no new shares of Common Stock have been
issued or Stock Options have been granted and exercised after June 2, 1997,
there will be 13,016,378 shares of Common Stock outstanding on the Expiration
Date (as defined below) entitled to 13,016,378 votes. Following the contribution
of shares from Parent to the Purchaser on or prior to the Expiration Date, the
Purchaser will own 8,693,056 shares of Common Stock, representing approximately
66.8% of the outstanding shares of Common Stock on the Expiration Date. See "THE
TENDER OFFER -- Certain Information Concerning Parent and the Purchaser." As set
forth on Schedule I to this Offer to Purchase, the executive officers and
directors of Parent beneficially own, in the aggregate, 188,886 shares of Common
Stock of the Company (excluding shares subject to unexercised Stock Options).
See "SPECIAL FACTORS -- Interests of Certain Persons; Stockholdings of Certain
Officers and Directors; and Related Transactions." Thus, based on the foregoing
assumptions, 2,067,219 shares of Common Stock would be the Minimum Number of
Shares. In the event the Great American Warrants are exercised in full,
2,817,219 shares of Common Stock would be the Minimum Number of Shares.
The Purchaser has been advised by the Company, that to the best of the
Company's knowledge, except as set forth below, each of the Company's executive
officers and directors has indicated his or her respective intentions to tender
all shares of Common Stock owned by him or her pursuant to the Offer. One
director of the Company has indicated that he intends to make donations to
charitable institutions of not more than 500 shares, with the expectation that
such donees will tender such donated shares pursuant to the Offer. See "SPECIAL
FACTORS -- Interests of Certain Persons; Stockholdings of Certain Officers and
Directors; and Related Transactions."
The Offer is subject to certain other conditions. See "THE TENDER
OFFER -- Certain Conditions of the Offer." The Purchaser expressly reserves the
right, in its sole discretion, to waive any one or more of the conditions to the
Offer; provided, that the Purchaser has agreed that it will not waive the
Minimum Tender Condition without the consent of a majority of the current
members of the Company's Special Committee (the "Independent Directors").
If, after giving effect to the purchase of Common Stock in the Offer, the
Purchaser owns 90% or more of the outstanding Common Stock, the Purchaser
intends to effect the Merger as a "short-form" merger under the DGCL, without a
vote of the stockholders of the Company. In order to obtain such 90% ownership,
the Purchaser must purchase at least 3,021,685 shares of Common Stock in the
Offer, assuming all Stock Options and the Great American Warrants are
surrendered in accordance with the provisions of the Merger Agreement for cash
rather than exercised (or 5,597,905 shares of Common Stock, assuming all Stock
Options and the Great American Warrants are exercised). Such 3,021,685 shares of
2
<PAGE> 5
Common Stock represent approximately 69.9% of the 4,323,322 shares of Common
Stock not currently beneficially owned by Parent. If, after giving effect to the
purchase of shares of Common Stock by the Purchaser in the Offer, the Purchaser
owns less than 90% of the outstanding shares of Common Stock, the Merger will
have to be approved by the Company's stockholders. Pursuant to the terms of the
Company's Certificate of Incorporation, the Merger and the Merger Agreement must
be approved and adopted by the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock. By reason of Parent's current ownership
of shares of Common Stock (which will be transferred to the Purchaser on or
prior to the Expiration Date), the Purchaser will have sufficient voting power
to approve the Merger and the Merger Agreement without the vote of any of the
other stockholders of the Company and regardless of the number of shares of
Common Stock purchased by the Purchaser pursuant to the Offer. Parent and the
Purchaser have agreed in the Merger Agreement to vote or cause to be voted all
shares of Common Stock owned by them in favor of approval and adoption of the
Merger Agreement and the Merger.
In the event the Offer is not consummated, Parent and the Purchaser intend
to explore all options which may be available to them at such time, which may
include, without limitation, the acquisition of Common Stock through open market
purchases, privately negotiated transactions, another tender offer or exchange
offer or otherwise upon such terms and at such prices as they shall determine,
which may be more or less than the price to be paid pursuant to the Offer.
Parent and the Purchaser also reserve the right to dispose of Common Stock.
The Company's Board of Directors declared a quarterly cash dividend to
holders of record of Common Stock as of May 27, 1997 of $0.20 per share on May
13, 1997, payable on June 16, 1997. Such holders of record will be entitled to
receive the quarterly cash dividend whether or not they tender their Common
Stock pursuant to the Offer, and no adjustment will be made to the price in the
Offer or to any other terms of the Offer as a result of the payment of any such
quarterly dividend to such stockholders.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
SPECIAL FACTORS
BACKGROUND OF THE OFFER
The Company was organized and initially capitalized by Parent in September
1989. In October 1992, the Company completed its initial public offering.
Following the initial public offering, Parent owned 63.3% of the Company's
outstanding Common Stock (62.5% on a fully diluted basis). Beginning in October
1995, Parent's Board of Directors authorized the purchase of up to two million
shares of the Company's Common Stock. Purchases have been made from time to time
in the open market at prevailing prices or in privately negotiated transactions.
Parent has made no open market purchases of the Company's Common Stock since
June 1996. See Schedule II to this Offer to Purchase. Since October 1995, Parent
has acquired 487,488 additional shares of Common Stock which, in addition to the
acquisition by the Company of shares of its Common Stock in a privately
negotiated purchase, has resulted in Parent's ownership increasing to 66.8%
(54.7% on a fully diluted basis).
According to the Company's publicly available filings, the Company has
grown through the acquisition of insurance brokerage companies and third party
administrators, through the creation of new Acordia companies and the expansion
of existing Acordia companies. From 1992 through the present, a significant
portion of the Company's revenues have been derived from commissions on Parent's
products and revenues and from the provision of various administrative services
to Parent and its affiliates. Commissions and fees to the Company from entities
affiliated with Parent were $291.0 million and $233.1 million in 1996 and 1995,
respectively. See "-- Interests of Certain Persons; Stockholdings of Certain
Officers and Directors; and Related Transactions." Because of the high
percentage of the Company's revenues derived from the sale and servicing of
Parent's life and health products, the Company has stated that it is inevitable
that industry forces affecting Parent will also affect the Company.
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In addition, certain of the Company's and Parent's management has been at
times overlapping. L. Ben Lytle, the President and Chief Executive Officer of
Parent and Chairman of the Board of the Company, served as Chief Executive
Officer of the Company from the time the Company began operations through
November 1996, and as President from March 1993 through November 1994. Patrick
M. Sheridan, Executive Vice President, Chief Financial Officer and a Director of
the Company, served as Executive Vice President and Chief Financial Officer of
the Company from August 1989 through August 1996. See "-- Interests of Certain
Persons; Stockholdings of Certain Officers and Directors; and Related
Transactions."
In 1995 the Company and Parent, as part of their continuing strategic
initiatives, began looking at ways to reduce the administration and marketing
expense portion of the total healthcare premium dollar in light of the intense
competition and changes occurring in the healthcare industry. During 1996,
Parent also redefined its strategic direction to focus on its healthcare
mission, in line with its assessment of the opportunities presented by the
changing dynamics of the healthcare industry, and began divesting itself of
businesses not directly supportive of the healthcare mission. Although Parent
and the Company agreed with respect to the cancellation of the administration
and wholesale distribution functions for Parent's products outside of Indiana,
Kentucky and Ohio, as described in part below, no agreement could be reached
with respect to any modification in the arrangements regarding these functions
in Indiana, Kentucky and Ohio. The business conducted in these states represents
a material portion of the Company's operations. Discussions regarding cost
issues continued into 1997 in the context of the ongoing business relationships
between the Company and Parent and its affiliated insurers under various
administrative and marketing arrangements. Although these discussions addressed
a variety of topics and several possible alternatives, including a going private
transaction, they were not understood by either party to be, and were not
intended as, proposals regarding the acquisition by Parent of the remaining
equity interest of the Company, and these discussions did not result in
negotiations between the Company and Parent regarding any such acquisition.
The timing of Parent's strategic review of its ownership relationship with
the Company has also been affected by a recent, comprehensive codification of
statutory accounting principles for insurers undertaken by the National
Association of Insurance Commissioners ("NAIC"). While the codification has not
yet been completed, Parent anticipates that the resulting changes may become
effective by year end 1998 and would require Parent to revise the methodology
for determining the carrying value of the Company's Common Stock held as an
investment in affiliated common stock. This change under the new principles is
expected to eliminate the entire carrying value of the Company's Common Stock,
regardless of its fair market value or published share prices. As a result of
the expected codification of the new principles by the NAIC, Parent has
determined that, whether or not the Offer or Merger is completed, Parent intends
to revise the carrying value of the Company's Common Stock to zero, effective
with its June 30, 1997 quarterly statement to be filed with the Indiana
Insurance Commissioner. Parent believes that the changes in statutory accounting
principles proposed by the NAIC would diminish the benefit to Parent of having
an investment in a publicly traded affiliate.
In September 1996, Parent retained Credit Suisse First Boston to assist its
management in reviewing alternatives with respect to Parent's interest in the
Company and Parent's healthcare mission. As part of this review, Credit Suisse
First Boston undertook, in consultation with Parent's and the Company's
management, a business and financial analysis of the Company and a review of
various alternatives. In December 1996, Parent amended its engagement with
Credit Suisse First Boston to include the analysis and evaluation of the
business, operations and financial position of the Company's insurance brokerage
operations that are independent of the administrative and marketing services
provided to Parent ("Acordia Brokers") and the exploration of a possible sale of
Acordia Brokers. During this period there were further discussions at the
management level regarding administrative and marketing costs issues as the
Company and Parent developed their respective 1997 business plans. However, no
action was taken by the Board of Directors of either Parent or the Company.
In January 1997, Parent and the Company, as part of the strategic
developments within Parent, decided that the wholesale marketing and
distribution functions for Parent's products outside of Indiana, Kentucky and
Ohio should be performed by Parent. Parent agreed to pay the Company a one-time
cancellation fee of
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$6.0 million, one-half of which was paid in the first quarter 1997 and the
remainder of which will be paid during the second quarter of 1997.
On February 6, 1997, the Company issued a press release announcing its
decision to undertake a strategic review of its business operations, including a
review of the Company's relationship with Parent. The Company also announced
that its Board had been informed by Parent that Parent was undertaking its own
strategic review, including an analysis of its business relationship with and
investment in the Company. The Company further announced that its Board of
Directors had created the Company Special Committee to evaluate any proposals
made by or involving Parent, and authorized it to retain such financial or other
advisers as might be necessary to assist the Company Special Committee in the
evaluation process. John C. Crane was designated as Chairman of the Company
Special Committee. The press release also stated that the Company was projecting
that revenues from the Company's health-related operations would be flat to
slightly down when compared to 1996.
At such time, Parent also informed the Company that no decision had as yet
been made by Parent as to what, if any, changes it believed should be made with
respect to Parent's business relationship with and investment in the Company and
that, as part of the evaluation process, Credit Suisse First Boston had been
asked to explore the possible sale of Acordia Brokers and the possible
reorganization of the Company's health business. In late February 1997, the
Board of Directors of Parent appointed a special committee of outside directors
(the "Parent Special Committee") to review and evaluate any proposals developed
regarding the Company, to make recommendations with respect to any such
proposals to the full Board of Directors of Parent and to oversee any
negotiations between Parent and others with respect to such proposals. Frank B.
Hower, Jr. was designated as Chairman of the Parent Special Committee.
Subsequent to the issuance of the February 6, 1997 press release, Credit
Suisse First Boston began soliciting indications of interest from prospective
purchasers of Acordia Brokers.
The Company Special Committee held its first meeting on February 20, 1997.
At this meeting, the Company Special Committee discussed the retention of
independent advisors and the process by which such advisors would be selected.
On March 11, 1997, the Company Special Committee met to interview five
financial advisor candidates. Following discussion, the Company Special
Committee selected Alex. Brown & Sons Incorporated ("Alex. Brown") as financial
advisor to the Company Special Committee. This selection was followed shortly
thereafter by the selection of Jones, Day, Reavis & Pogue ("Jones Day") to serve
as legal counsel to the Company Special Committee.
The Parent Special Committee held its first meeting on March 27, 1997. The
meeting was attended by representatives of Credit Suisse First Boston and Vorys,
Sater, Seymour and Pease, special counsel to Parent and the Parent Special
Committee ("Vorys Sater"). Credit Suisse First Boston advised the Parent Special
Committee on the process for valuing and analyzing the possible sale of Acordia
Brokers. Vorys Sater advised the Parent Special Committee of its fiduciary
duties under Indiana law and the legal issues to be considered with respect to
any transaction involving the Company and the possible sale of Acordia Brokers.
The next meeting of the Company Special Committee occurred on April 11,
1997. The meeting was attended by representatives of Alex. Brown and Jones Day.
At this meeting, Alex. Brown advised the Company Special Committee on the
process for valuing and analyzing the Company's business operations and on their
progress in due diligence. Jones Day briefed the Company Special Committee on
its fiduciary duties and responsibilities to minority shareholders under
Delaware law. The Company Special Committee was also updated on the status of
Credit Suisse First Boston's evaluation of a possible sale of Acordia Brokers.
Between February 1997 and early May 1997, executives of each of the Company
and Parent had frequent communications regarding day-to-day operations as well
as general discussions regarding Parent's business relationship with and
investment in the Company.
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<PAGE> 8
On May 6, 1997, the Company Special Committee met. The meeting was attended
by representatives of Alex. Brown and Jones Day. At this meeting, Alex. Brown
provided the Company Special Committee with a preliminary assessment of Alex.
Brown's view on the valuation of, and valuation methodology with respect to, the
components of the Company.
On May 7, 1997, Credit Suisse First Boston met with Alex. Brown at Alex.
Brown's offices in Baltimore, Maryland. At this meeting, Credit Suisse First
Boston provided Alex. Brown with its initial views on an appropriate valuation
of, and valuation methodology with respect to, the components of the Company.
On May 9, 1997, the Parent Special Committee met and was updated on the
progress of negotiations with respect to the possible sale of Acordia Brokers
and considered the possible terms of a transaction with the Company. Vorys Sater
again briefed the Parent Special Committee on its fiduciary duties under Indiana
law and the duties owed to minority shareholders under the DGCL. In addition, on
May 9, the Parent Special Committee, through Credit Suisse First Boston,
received proposals with respect to the possible sale of Acordia Brokers.
On May 12, 1997, the Parent Special Committee met by telephone with Credit
Suisse First Boston and Vorys Sater present. Credit Suisse First Boston
described the proposals received for Acordia Brokers. Each proposal provided for
a leveraged buyout of Acordia Brokers and contained financing conditions. The
Parent Special Committee unanimously resolved to proceed to negotiations with
one of the bidders, whose proposal was within the valuation ranges ultimately
established for Acordia Brokers by Credit Suisse First Boston and Alex. Brown.
Credit Suisse First Boston recommended that the Parent Special Committee
authorize Credit Suisse First Boston to discuss a specific share price with
Alex. Brown. Following discussion of the appropriate price, the Parent Special
Committee unanimously resolved to authorize Credit Suisse First Boston to
discuss in general terms a price of $34 per share with Alex. Brown.
On May 13, 1997, the Company Special Committee met, and Mr. Crane advised
the Company Special Committee of Alex. Brown's report on its May 7 meeting with
Credit Suisse First Boston. The Company Special Committee was also updated on
the proposals received for Acordia Brokers. At the Company's Board of Directors
meeting on the same date, the Company Special Committee updated the Board with
respect to its activities to such date.
On May 15, 1997, Credit Suisse First Boston met with Mr. Crane, Alex. Brown
and Jones Day and discussed in general terms a price of $34 per share for all
shares of Common Stock not owned by Parent. A telephonic meeting of the Company
Special Committee was convened later that day with Jones Day and Alex. Brown
present to discuss the price communicated by Credit Suisse First Boston.
Following a lengthy discussion, the Company Special Committee instructed Alex.
Brown to inform Credit Suisse First Boston that the Company Special Committee
had placed a preliminary per share value for the Common Stock in excess of $40
per share.
On May 16, 1997, Credit Suisse First Boston met at its offices in New York,
New York with Alex. Brown. At this meeting, Alex. Brown advised Credit Suisse
First Boston that the Company Special Committee placed a preliminary per share
value for the Common Stock in excess of $40.
On May 19, 1997, the Parent Special Committee met again by telephone. The
Parent Special Committee's financial and legal advisers described the
negotiations with the bidder for Acordia Brokers. Credit Suisse First Boston
also reported to the Parent Special Committee that it had met with Alex. Brown
on May 16 and that Alex. Brown had reported that the Company Special Committee
placed a preliminary per share value for the Common Stock in excess of $40 per
share. The Parent Special Committee then deliberated regarding whether to
consider other alternatives or to increase the price it was willing to
recommend. Following discussion, the Parent Special Committee unanimously
resolved to authorize Credit Suisse First Boston to discuss with Alex. Brown a
per share price of $37.
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On May 20, 1997, following consideration of an increase in both the volume
and price of the Company's Common Stock, the Company and Parent issued the
following press release:
INDIANAPOLIS -- Acordia, Inc. (NYSE: ACO) and Anthem Insurance
Companies, Inc. announced today that in furtherance of the previously
announced review of their current business and financial relationship, they
are in discussions with regard to a possible reorganization of Acordia's
health business, which could include an acquisition by Anthem of the
publicly owned shares of Acordia not owned by Anthem. Anthem further
announced that it is in discussions with a third party with regard to a
possible sale of Acordia's brokerage business. There can be no assurance
that these discussions will result in any transaction, or if so, as to the
terms or timing of any such transaction.
As of May 1, 1997, Anthem owned approximately 67% of Acordia's
outstanding common stock.
On May 20, 1997, Credit Suisse First Boston also indicated to Alex. Brown
by telephone that the Parent Special Committee was prepared to discuss a per
share price of $37.
On May 21, 1997, Vorys Sater delivered to Dewey Ballantine, counsel to the
Company, and Jones Day, an initial draft of the Merger Agreement for their
review.
On May 22, 1997, the Company Special Committee held a telephonic meeting
with Alex. Brown and Jones Day present. At this meeting, Alex. Brown reported on
its May 16 meeting with Credit Suisse First Boston and subsequent discussions.
After lengthy discussion, the Company Special Committee instructed Alex. Brown
to advise Credit Suisse First Boston that the Company Special Committee believed
that the value of the Common Stock was at least $40 per share.
On May 23, 1997, Alex. Brown contacted Credit Suisse First Boston by
telephone and indicated that the Company Special Committee placed a preliminary
per share value on the Common Stock of at least $40 per share.
On the morning of May 27, 1997, the Parent Special Committee met by
telephone. Credit Suisse First Boston reported that Alex. Brown continued to
communicate that the Company Special Committee believed that the value of the
Company was at least $40 per share. The Parent Special Committee determined that
Mr. Hower should contact Mr. Crane directly. Following telephone discussions
between Mr. Crane and Mr. Hower that afternoon, the Parent Special Committee
reconvened on the evening of May 27 and Mr. Hower reported that, based on his
conversation with Mr. Crane, the Company Special Committee would likely
recommend acceptance of an offer at $40 per share. In addition, the Parent
Special Committee discussed whether the execution of a definitive agreement with
respect to the sale of Acordia Brokers should be a condition to a tender offer.
Following deliberations, the Parent Special Committee determined to recommend an
offer of $40 per share to the Parent's Board of Directors which would not be so
conditioned. Following the meeting, Vorys Sater furnished a revised draft of the
Merger Agreement to Dewey Ballantine and Jones Day.
On May 28, 1997, a telephonic meeting of the Company Special Committee was
held to discuss a per share price of $40 for the Common Stock. At the conclusion
of this meeting, the Company Special Committee determined to continue
discussions with the Parent Special Committee at a price of $40 per share
subject to the negotiation of a mutually acceptable Merger Agreement.
The Board of Directors of Parent met on May 30, 1997, with Credit Suisse
First Boston and Vorys Sater present by telephone. The Parent Special Committee
described the course of the negotiations, and Credit Suisse First Boston
provided information on the financial terms of an offer at a per share price of
$40. Credit Suisse First Boston also orally advised the directors that, as of
such date and based upon and subject to certain matters discussed with them, the
consideration to be paid by Parent in the Offer and the Merger was fair to
Parent from a financial point of view. Vorys Sater outlined the terms and
conditions of the draft Merger Agreement. The Board of Directors of Parent took
no action with respect to the Parent Special Committee's recommendation on May
30.
The Company Special Committee also met on May 30 to discuss a $40 per share
price and to consider its recommendation to the Company's Board of Directors. At
this meeting, Alex. Brown rendered its oral
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opinion, subsequently confirmed in writing, that, as of that date, the proposed
consideration of $40 per share was fair, from a financial point of view, to the
Company's stockholders other than Parent, and Jones Day outlined the terms and
conditions of the draft Merger Agreement and the open issues that remained in
that draft. At the conclusion of this meeting, the Company Special Committee
unanimously determined to recommend to the Company's Board of Directors that the
Board approve a $40 per share price, subject to the finalization of the draft
Merger Agreement.
On May 31, 1997, Parent's Board of Directors reconvened and (excluding
certain interested directors who abstained) approved the Merger, the Merger
Agreement and the Offer. Following this meeting, Mr. Hower telephoned Mr. Crane
to convey the Offer. A telephonic meeting of the Company's Board of Directors
was held later that day. Following receipt of the Company Special Committee's
recommendation and a discussion of the Offer, the Merger and the Merger
Agreement, the Company's Board of Directors (excluding certain interested
directors who abstained) approved the Merger Agreement (including the Offer and
the Merger) and recommended to the Company's stockholders (other than Parent and
the Purchaser) that such stockholders accept the Offer and tender their shares
of Common Stock pursuant to the Offer, and determined that the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders
(other than Parent and the Purchaser).
On June 1, 1997, Jones Day and Vorys Sater finalized negotiations on the
Merger Agreement, and the Merger Agreement was thereafter executed by Parent,
the Purchaser and the Company. On June 2, 1997, the Company issued a press
release announcing such execution.
ANALYSIS OF CREDIT SUISSE FIRST BOSTON AS FINANCIAL ADVISOR TO PARENT
Credit Suisse First Boston has acted as exclusive financial advisor to
Parent in connection with the Offer and the Merger. Credit Suisse First Boston
is an internationally recognized investment banking firm and is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, leveraged buyouts, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.
General. In connection with Credit Suisse First Boston's engagement, Parent
requested that Credit Suisse First Boston evaluate the fairness to Parent from a
financial point of view of the consideration to be paid by Parent in the Offer
and the Merger. At a meeting of Parent's Board of Directors held on May 30,
1997, Credit Suisse First Boston orally advised Parent's Board of Directors
that, as of such date and based upon and subject to certain matters discussed
with the Board, the consideration to be paid by Parent in the Offer and the
Merger was fair to Parent from a financial point of view. Credit Suisse First
Boston's opinion was subsequently confirmed in writing on June 2, 1997 (the
"Credit Suisse First Boston Opinion").
In arriving at its opinion, Credit Suisse First Boston (i) reviewed the
Merger Agreement and certain publicly available business and financial
information relating to Parent and the Company, (ii) reviewed certain other
information, including financial forecasts, provided by Parent and the Company,
(iii) met with the managements of Parent and the Company to discuss the
businesses and prospects of Parent and the Company, (iv) considered certain
financial and stock market data of the Company compared that data with similar
data for other publicly held companies in businesses similar to that of the
Company, (vi) considered the financial terms of certain other business
combinations and other transactions which have recently been effected, and (vii)
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which Credit Suisse
First Boston deemed relevant.
In connection with the Credit Suisse First Boston Opinion, Credit Suisse
First Boston did not assume responsibility for independent verification of any
of the information provided to or otherwise reviewed by Credit Suisse First
Boston and relied upon its being complete and accurate in all material respects.
With respect to the financial forecasts, Credit Suisse First Boston assumed that
they were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of Parent and the Company
as to the future financial performance of Parent and the Company. In addition,
Credit Suisse First Boston was not asked to and did not make an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Parent or the Company, nor was Credit Suisse First Boston
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<PAGE> 11
furnished with any such evaluations or appraisals. Credit Suisse First Boston
notes in the Credit Suisse First Boston Opinion that it understood that Parent
had entered into discussions with a third parties with respect to the sale,
following consummation of the transactions contemplated by the Merger Agreement,
of all of the shares of certain subsidiary corporations and certain other assets
which comprise the independent insurance brokerage and related business of the
Company. The Credit Suisse First Boston Opinion is necessarily based on
information available to it and financial, economic, market and other conditions
as they existed and could be evaluated on the date of the Credit Suisse First
Boston Opinion. Although Credit Suisse First Boston evaluated the fairness of
the consideration to be paid by Parent in the Offer and the Merger from a
financial point of view, the specific consideration payable in the Offer and the
Merger was determined by Parent and the Company through arm's length
negotiation. No other limitations were imposed by Parent on Credit Suisse First
Boston with respect to the investigations made or procedures followed by Credit
Suisse First Boston.
Copies of the Credit Suisse First Boston Opinion have been filed as an
exhibit to the Schedule 14D-1 and may be inspected, copied and obtained in the
manner specified in "THE TENDER OFFER -- Certain Information Concerning the
Company." The Credit Suisse First Boston Opinion is directed only to the
fairness of the consideration to be paid by Parent in the Offer and the Merger
from a financial point of view, does not address any other aspect of the Offer,
the Merger or any related transaction and does not constitute a recommendation
to stockholders of the Company as to whether to tender Shares in the Offer.
Summary of Analyses. In deriving an equity value reference range for the
Company, Credit Suisse First Boston performed, as appropriate, a comparable
companies analysis, a comparable acquisition analysis and a discounted cash flow
analysis for each of the Acordia Brokers segment and the health insurance
business segment of the Company ("Acordia Health") and a leveraged buy-out
analysis for Acordia Brokers.
Credit Suisse First Boston also reviewed certain additional information
including information relating to the daily trading volume and price performance
of the Common Stock and the implications of certain "minority squeeze-out"
transactions.
The following is a summary of the material financial analyses performed by
Credit Suisse First Boston in connection with its presentation to Parent on May
30, 1997, and delivery of the Credit Suisse First Boston Opinion. Such
description does not purport to be a complete description of the analyses
conducted by Credit Suisse First Boston in arriving at its opinion.
Acordia Brokers Comparable Company Analysis. Credit Suisse First Boston
performed a comparable company analysis (the "Brokers Comparable Company
Analysis") in which it compared certain publicly available financial data,
projections of future financial performance (reflecting a composite of equity
research analysts' estimates as reported by First Call Corporation) and market
statistics (calculated based upon closing stock prices as of May 23, 1997) of
selected publicly traded insurance brokers with certain historical and projected
financial information for Acordia Brokers. Such comparable companies included:
Aon Corporation ("Aon"); Arthur J. Gallagher & Co. ("Gallagher"); E.W. Blanch
Holdings, Inc. ("Blanch"); Hilb, Rogal & Hamilton Company ("Hilb, Rogal"); Marsh
& McLennan Companies, Inc. ("Marsh & McLennan"); and Poe & Brown, Inc. ("Poe &
Brown") (the "Brokerage Comparable Companies"). Credit Suisse First Boston
further noted that in terms of total revenues, client base and geographic area
of operations, Gallagher; Hilb, Rogal; and Poe & Brown were most comparable to
Acordia Brokers. Credit Suisse First Boston calculated the Adjusted Market Value
(defined as aggregate equity value plus debt and preferred stock, net of
operating cash and cash equivalents) of the Brokerage Comparable Companies as
multiples of (i) latest twelve months ("LTM") revenues, (ii) LTM earnings before
interest, taxes, depreciation and amortization ("EBITDA") and (iii) LTM earnings
before interest and taxes ("EBIT"). Credit Suisse First Boston also derived
multiples of common stock prices per share relative to actual 1996 and a
composite equity research analysts' estimates of 1997 and 1998 earnings per
share (as reported by First Call Corporation) for the Brokerage Comparable
Companies. This analysis indicated that (i) the Adjusted Market Value to LTM
revenues ranged from 1.0x to 2.6x with a relevant multiple range of 1.0x to 1.2x
for the Brokerage Comparable Companies; (ii) the Adjusted Market Value to LTM
EBITDA multiples ranged from
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5.6x to 14.7x with a relevant multiple range of 5.6x to 7.0x for the Brokerage
Comparable Companies; and (iii) the Adjusted Market Value to LTM EBIT multiples
ranged from 6.4x to 19.2x with a relevant multiple range of 6.4x to 9.0x for the
Brokerage Comparable Companies; (iv) the common stock prices to actual 1996
earnings per share multiples ranged from 12.1x to 22.5x with a relevant multiple
range of 12.1x to 16.9x for the Brokerage Comparable Companies; and (v) the
common stock prices to estimated 1997 earnings per share multiples ranged from
11.6x to 20.6x with a relevant multiple range of 11.6x to 16.3x for the
Brokerage Comparable Companies. Credit Suisse First Boston then applied these
multiples of actual 1996 and estimated 1997 financial performance to the
appropriate benchmarks of Acordia brokers to derive equity and enterprise
reference ranges for Acordia Brokers taking into consideration control premiums
of 25% and 35%. The foregoing analysis resulted in an Enterprise Value
(including debt and earn-out obligations) reference range for Acordia Brokers of
$321 million to $396 million.
Acordia Brokers Comparable Acquisitions Analysis. Using publicly available
information, Credit Suisse First Boston reviewed 55 selected business
combinations which occurred since January 1990 involving companies in the
insurance brokerage industry. In conducting this analysis, Credit Suisse First
Boston noted that merger activity in the insurance brokerage industry had
accelerated in the prior 12 months and that valuations have varied dramatically.
Credit Suisse First Boston placed particular emphasis on recent business
combinations involving companies which (i) are similar in size to Acordia
Brokers or (ii) involved acquisitions of United States based insurance brokerage
businesses, consisting of the following transactions (listed as acquired
company/acquiror): Bain Hogg Robinson, Inc./Acordia, Inc.; Kaye International
L.P./Old Lyme Holding Corp.; H.W. Kaufman Financial Group Inc./AJK Acquisition
Company; Jardine Insurance Brokers -- U.S. Retail Operations/Alexander &
Alexander Services Inc.; The Frizzell Group Ltd. (subsidiary of Marsh &
McLennan)/Liverpool Victoria Friendly Society; Bain Hogg Group plc/Aon;
Alexander & Alexander Services Inc./Aon; JIB Group plc/Lloyd Thompson Group plc;
Lowndes Lambert Group Holdings plc/Fenchurch plc; CECAR/Marsh & McLennan;
Johnson & Higgins, Inc./Marsh & McLennan; and The Minet Group/Aon (the
"Brokerage Acquisition Comparables"). For each of the Brokerage Acquisition
Comparables, Credit Suisse First Boston (i) compared the purchase price of each
such transaction to the publicly available LTM net income of the acquired
company and (ii) compared the Adjusted Value (defined as purchase price plus
acquired company debt and preferred stock, if any, net of operating cash and
cash equivalents) to LTM revenues, EBITDA and EBIT of the acquired company.
Credit Suisse First Boston's analysis indicated that purchase price as a
multiple of LTM net income ranged from 6.0x to 24.3x with a relevant multiple
range of 20.0x to 24.0x. This analysis also indicated that Adjusted Value as a
multiple of: (i) LTM revenues ranged from 0.2x to 2.0x with a relevant multiple
range of 0.9x to 1.2x; (ii) LTM EBITDA ranged from 3.5x to 10.2x with a relevant
multiple range of 6.0x to 8.0x; and (iii) LTM EBIT ranged from 4.2x to 13.2x
with a relevant multiple range of 8.0x to 12.0x. The foregoing analysis resulted
in an Enterprise Value (including debt and earn-out obligations) reference range
for Acordia Brokers of $300 million to $400 million.
Acordia Brokers Discounted Cash Flow Analysis. Credit Suisse First Boston
performed a discounted cash flow analysis of the projected unlevered free cash
flows of Acordia Brokers for the period 1997 through 2006, based upon financial
forecasts for 1997 provided to Credit Suisse First Boston by the management of
the Company and financial forecasts for the period 1998 to 2006 developed by
Credit Suisse First Boston. The base case of this analysis assumed 4.3% revenue
growth and margin improvements to 15.2% in 1997 and held constant thereafter
(the "Base Case"). Credit Suisse First Boston also prepared, as a part of its
sensitivity analysis, a number of cases modifying certain of the assumptions
utilized to prepare the Base Case (the "Sensitivity Cases"). The Sensitivity
Cases included (i) a margin decrease case assuming, among other things, margins
decreasing by 0.8% per year until reaching 11.0% in 2002 and held constant
thereafter (the "Margin Decrease Case") and (ii) a margin increase case
assuming, among other things, increasing margins by 0.8% per year until reaching
19.8% in 2003 and held constant thereafter (the "Margin Increase Case"). Credit
Suisse First Boston utilized the "Base Case," "Margin Decrease Case" and "Margin
Increase Case" scenarios for Acordia Brokers merely as points of reference and
in no way intended to suggest parameters or forecasts as to minimum or maximum
enterprise and equity valuation ranges for Acordia Brokers. Credit Suisse First
Boston developed an Enterprise Value reference range utilizing discount rates of
10% to 14% and terminal value multiples of (i) estimated 2006 EBITDA of
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5.5x to 7.0x; (ii) estimated 2006 net income of 12.0x to 15.0x; and (iii)
estimated 2006 revenues of 0.9x to 1.2x. The foregoing analysis resulted in an
Enterprise Value (including debt and earn-out obligations) reference range of
$325 million to $400 million.
Acordia Brokers Leveraged Buyout Analysis. Credit Suisse First Boston
examined potential returns in four scenarios involving a highly leveraged
acquisition of Acordia Brokers. In this analysis, Credit Suisse First Boston
assumed revenue growth of 4.3% annually, EBITDA margins in 1997 of 15.2%, no
incremental acquisitions and a 10% carried interest for Acordia Brokers'
management. Credit Suisse First Boston analyzed the potential rates of return
available to an equity investor assuming (i) a purchase price of $367 million,
an equity contribution of $35 million and EBITDA margins increasing to 19.0% by
2001; (ii) a purchase price of $392 million, an equity contribution of $60
million and EBITDA margins increasing to 19.0% by 2001; (iii) a purchase price
of $417 million, an equity contribution of $85 million and EBITDA margins
increasing to 19.0% by 2001; and (iv) a purchase price of $367 million, an
equity contribution of $35 million and no EBITDA margin increase beyond 15.2%.
Assuming exit multiples of projected 2001 EBITDA ranging from 6.5x to 8.0x and
that an equity investor in a leveraged buy-out of Acordia Brokers would require
a 25% to 35% rate of return on its equity investment, the foregoing analysis
resulted in an Enterprise Value (including debt and earn-out obligations)
reference range of $365 million to $415 million.
Valuation Reference Range of Acordia Brokers. Based on the above analyses,
Credit Suisse First Boston derived an Enterprise Value (including debt and
earn-out obligations) reference range for Acordia Brokers of $325 million to
$375 million.
Acordia Health Comparable Companies Analysis. Credit Suisse First Boston
performed a comparable company analysis (the "Health Comparable Company
Analysis") in which it compared certain publicly available financial data,
projections of future financial performance reflecting a composite of equity
research analysts' estimates (as reported by First Call Corporation) and market
statistics (calculated based upon closing stock prices as of May 23, 1997) of
selected publicly traded health insurance service companies with certain
historical and projected financial information for Acordia Health. Such
comparable companies included: HealthCare Compare Corp.; Health Plan Services
Corporation ("HPS"); CoreVel Corporation; and Crawford & Company (the "Health
Insurance Service Comparable Companies"). Credit Suisse First Boston further
noted that (i) none of the Health Insurance Service Comparable Companies have a
concentration of business with a single customer analogous to the Company's
relationship with Parent, and (ii) the Health Insurance Service Comparable
Companies generally had high projected growth rates (18.5% to 19.9%) in contrast
to Acordia Health. Credit Suisse First Boston calculated the Adjusted Market
Value of the Health Insurance Service Comparable Companies as multiples of (i)
LTM revenues, (ii) LTM EBITDA and (iii) LTM EBIT. Credit Suisse First Boston
also derived multiples of common stock prices per share relative to actual 1996
earnings per share and a composite equity research analysts' estimates of 1997
and 1998 earnings per share (as reported by First Call Corporation) for the
Health Insurance Service Comparable Companies. This analysis indicated that (i)
the Adjusted Market Value to LTM revenues ranged from 0.9x to 1.2x with a
relevant multiple range of 0.9x to 1.2x for the Health Insurance Service
Comparable Companies; (ii) the Adjusted Market Value to LTM EBITDA multiples
ranged from 6.6x to 10.6x with a relevant multiple range of 7.0x to 9.0x for the
Health Insurance Service Comparable Companies; and (iii) the Adjusted Market
Value to LTM EBIT multiples ranged from 8.0x to 16.6x with a relevant multiple
range of 8.0x to 10.0x for the Health Insurance Service Comparable Companies;
(iv) the common stock prices to actual 1996 earnings per share multiples ranged
from 17.8x to 22.2x with a relevant multiple range of 17.0x to 19.0x for the
Health Insurance Service Comparable Companies; and (v) the common stock prices
to estimated 1997 earnings per share multiples ranged from 13.4x to 17.7x with a
relevant multiple range of 13.5x to 17.0x for the Health Insurance Service
Comparable Companies. Credit Suisse First Boston then applied these multiples of
actual 1996 and estimated 1997 financial performance to the appropriate
benchmarks of Acordia Health to derive an Enterprise Value reference range for
Acordia Health. The foregoing analysis resulted in an Enterprise Value reference
range for Acordia Health of $400 million to $500 million. Credit Suisse First
Boston considered the special relationship between Parent and the Company and
concluded that this special relationship limited the applicability of the
comparable company analysis to the valuation of Acordia Health on a stand-alone
basis and that a control premium for Acordia Health would be inappropriate.
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Acordia Health Comparable Acquisitions Analysis. Using publicly available
information, Credit Suisse First Boston reviewed various selected business
combinations which occurred since January 1991 involving third party
administration and cost-containment companies (the "Health Care Services
Acquisition Comparables"). The Health Care Services Acquisition Comparables
included (listed as acquired company/acquiror): GENEX Services Inc.
("GENEX")/Provident Companies, Inc.; MedView Services, Inc./Value Health, Inc.;
Health Risk Management Inc./HPS; Consolidated Group Inc./HPS; Harrington
Services Corp./HPS; Employee Benefit Plans/First Financial Management Corp.;
Alexsis/Continental Casualty; Electronic Tabulating Service/Equifax; GENEX/First
Financial Management Corp.; Executive Risk Consultants, Inc./Physician
Corporation of America; Community Care Network/Value Health, Inc.; Reviewco/The
Noetics Group/Foundation Health Corp.; FOCUS Healthcare Management/United
Healthcare Corporation; Preferred Health Care Ltd./Value Health, Inc.; Vantage
Computer Systems Inc./Continuum Corp.; Corporate Healthcare Financing/United
American Healthcare Corp.; American Biodyne, Inc./Medco Containment Services;
Health Economics Corp. (unit of Halliburton Company)/Equifax; Alta Health
Strategies, Inc./First Financial Management Corp.; Occupational-Urgent Care
Health Systems, Inc. (OUCH)/Health Care Compare Corp.; and Lincoln
National -- Network Unit/Investor Group. For each of the Health Care Services
Acquisition Comparables, Credit Suisse First Boston (i) compared the purchase
price of each such transaction to publicly available LTM net income of the
acquired company and (ii) compared the Adjusted Value to LTM revenues, EBITDA
and EBIT. This analysis indicated that purchase price as a multiple of LTM net
income ranged from 10.6x to 67.3x with a relevant multiple range of 12.0x to
15.0x and Adjusted Value as a multiple of: (i) LTM revenues ranged from 0.5x to
9.9x with a relevant multiple range of 0.9x to 1.4x; (ii) LTM EBITDA ranged from
4.9x to 34.5x with a relevant multiple range of 6.5x to 8.0x; and (iii) LTM EBIT
ranged from 4.0x to 39.0x with a relevant multiple range of 8.0x to 12.0x. The
foregoing analysis resulted in an Enterprise Value reference range of $450
million to $550 million. Credit Suisse First Boston considered the special
relationship between Parent and the Company and concluded that this special
relationship limited the applicability of the comparable acquisition analysis to
the valuation of Acordia Health on a stand-alone basis.
Acordia Health Discounted Cash Flow Analysis. Credit Suisse First Boston
performed a discounted cash flow analysis of the projected unlevered free cash
flows of Acordia Health for the period 1997 through 2001, based upon the
following: (i) financial forecasts for Acordia Health provided to Credit Suisse
First Boston by Parent assuming that (x) Parent achieves its planned growth in
managed care members and reduces over time its traditional health insurance
customers, (y) Acordia Health continues to serve Parent's customers, but does
not earn any revenue for the managed care which Parent provides and (z) a
reduction of EBITDA margins for Acordia from 20.1% in 1997 to 16.1% in 2001 (the
"Anthem Planned Case"), (ii) financial forecasts for Acordia Health provided to
Credit Suisse First Boston by Parent which assumed no change in the Company's
compensation or Parent's cost and which result in a decline in Parent's
business, substantially due to competitive factors, and a subsequent decline in
the Company's revenues by $57.4 million and a decline in Acordia Health's EBITDA
margin from 20.1% in 1997 to 10.0% in 1998 with a 1% per year increase
thereafter (the "Do Nothing/Margin Drop Case"), (iii) financial forecasts
developed by Credit Suisse First Boston which assumed the Company and Parent
sever their business relationship at the end of 1998 and the Company places 100%
of its business with unaffiliated carriers resulting in a decline in Acordia
Health's EBITDA margin from 20.1% in 1997 to 16.1% in 2001 (the "Independent
Acordia Case"), and (iv) financial forecasts developed by Credit Suisse First
Boston which assumed Parent achieves its planned growth in managed care members
but at a slower rate than currently planned and Acordia Health's EBITDA margin
remained constant at 20.1% (the "Slow Transition Case"). In each of the
foregoing cases Credit Suisse First Boston assumed that non-Parent revenues in
Acordia Health grow at 5% per year. Credit Suisse First Boston utilized the
"Anthem Planned Case," "Do Nothing/Margin Drop Case," "Independent Acordia Case"
and "Slow Transition Case" scenarios for Acordia Health merely as points of
reference and in no way intended to suggest parameters or forecasts as to
minimum or maximum enterprise and equity valuation ranges for Acordia Health.
Credit Suisse First Boston developed an Enterprise Value reference range
utilizing discount rates of 11% to 13% and terminal value multiples of (i)
estimated 2001 EBITDA of 5.5x to 7.0x; (ii) estimated 2001 net income of 16.0x
to 19.0x; and
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(iii) estimated 2001 revenues of 1.1x to 1.4x. The foregoing analysis resulted
in an Enterprise Value reference range of $225 million to $325 million.
Valuation Reference Range of Acordia Health. Based on the above analyses,
Credit Suisse First Boston derived an Enterprise Value reference range for
Acordia Health of $340 million to $440 million.
Combined Reference Range of Acordia Brokers and Acordia Health. Credit
Suisse First Boston combined the Enterprise Value reference range values
determined for Acordia Brokers and Acordia Health, as well as the operating cash
and cash equivalents and total debt of the Company, to determine the overall per
share reference range for the Company. For purposes of calculating the
appropriate per share reference range, Credit Suisse First Boston assumed
exercise of all outstanding options and warrants of the Company, including
proceeds of such exercises in operating cash and equivalents and including
shares issued upon such exercise in total shares and equivalents. The foregoing
analysis resulted in a Company Equity Value reference range per share and
equivalent of $33.45 to $41.63 (the "Company per Share Equity Value Reference
Range").
Additional Information. Credit Suisse First Boston also reviewed the
following: (i) the daily trading volume and per share daily closing market price
of the Company's Common Stock over the period from the Company's initial public
offering (October 21, 1992) to May 23, 1997; (ii) the relative price performance
of the Company's Common Stock against a Brokers Index composed of Aon;
Gallagher; Blanch; Hilb, Rogal; Marsh & McLennan; and Poe & Brown; (iii) the
price and volume distribution of trades of the Company's Common Stock for the
period from October 21, 1992 to May 23, 1997; and (iv) the Company's stockholder
profile.
Going Private Considerations. Credit Suisse First Boston also considered
the implications of a "minority squeeze-out" transaction whereby Parent acquired
as a majority stockholder in the Company all of the remaining Company Common
Stock, which generally requires a premium to the prevailing market price. In
particular, Credit Suisse First Boston analyzed the premium to stock price one
day, one week and one month prior to announcement of various minority
squeeze-out transactions since 1990 and determined that: (i) the mean premiums
to stock price one day, one week and one moth prior to the announcement were
20.0%, 23.1% and 25.9%, respectively; (ii) the median premiums to stock price
one day, one week and one month prior to the announcement were 26.1%, 29.6% and
31.4%, respectively; (iii) the 75th percentile of the range of premiums to stock
price one day, one week and one month prior to the announcement were 36.0%,
42.7% and 47.7%, respectively; and (iv) the 25th percentile of the range of
premiums to stock price one day, one week and one month prior to the
announcement were 10.8%, 12.5% and 8.2%, respectively. Credit Suisse First
Boston analyzed the premium of the Company Equity Value Reference Range to the
market price for Company Common Stock at selected dates and derived: (i) a range
of premiums to the market price for Company Common Stock one day prior to
Parent's February 6, 1997 announcement that it was reviewing its investment in
the Company (the "Announcement") from 20.0% to 49.3%; (ii) a range of premiums
to the market price for the Company Common Stock one week prior to the
Announcement from 19.5% to 48.7%; (iii) a range of premiums to the market price
for Company Common Stock one month prior to the Announcement from 20.0% to
49.3%; and (iv) a range of premiums to the market price for Company Common Stock
as of May 23, 1997 from (6.8)% to 16.0%. Credit Suisse First Boston further
noted that the $40 per share Offer Price represented a premium of 43.5% to the
market price for Company Common Stock one day prior to the Announcement date,
42.9% to the market price for Company Common Stock one week prior to the
Announcement date, 43.5% to the market price for Company Common Stock one month
prior to the Announcement date and 11.5% to the market price as of May 23, 1997.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the process
underlying the Credit Suisse First Boston Opinion. In arriving at its opinion,
Credit Suisse First Boston considered the results of all such analyses taken as
a whole. Furthermore, in arriving at its fairness opinion, Credit Suisse First
Boston considered the special relationship between Parent and the Company.
Credit Suisse First Boston also made qualitative judgments as to the
significance and relevance of each analysis and factor. No company or
transaction used in the above analyses as a comparison is identical to Parent,
the Company, or
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the Offer or the Merger. The analyses were prepared solely for purposes of
Credit Suisse First Boston providing its opinion to Parent as to the fairness
from a financial point of view to Parent of the consideration to be paid by
Parent in the Offer and the Merger, and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses are based upon numerous
factors or events beyond the control of Parent, the Company, their respective
advisors or any other person and are inherently uncertain. Actual future results
may be materially different from those forecast.
FEE AND OTHER INFORMATION
Pursuant to the terms of Credit Suisse First Boston's engagement, for its
services in connection with the Offer and the Merger, Parent has agreed to pay
Credit Suisse First Boston a financial advisory fee of $100,000 (which is
creditable against any transaction fee) and a transaction fee of $2.5 million,
$500,000 of which was payable upon execution of the Merger Agreement and the
balance of which is payable upon acquisition by Parent of greater than 90% of
the outstanding voting securities of the Company. In addition, Parent has agreed
to pay to Credit Suisse First Boston, under certain circumstances, a separate
fee of $2.5 million in connection with any sale of Acordia Brokers. Parent also
has agreed to reimburse Credit Suisse First Boston for its out-of-pocket
expenses, including the reasonable fees and expenses of its counsel, and to
indemnify Credit Suisse First Boston and certain related persons against certain
liabilities, including liabilities under the federal securities laws.
In the ordinary course of business, Credit Suisse First Boston and its
affiliates may actively trade the securities of Parent and the Company for their
own account and for accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. In the past, Credit Suisse First
Boston and its affiliates have provided financial advisory services for Parent
and the Company and have received customary fees for rendering these services.
FAIRNESS OF THE OFFER
The Board of Directors of the Company, based upon, among other things, the
unanimous recommendation by the Company Special Committee, has determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, upon the terms and subject to the conditions set forth in
the Merger Agreement, are fair to, and in the best interests of, the Company and
its stockholders (other than Parent and the Purchaser) and recommends (excluding
certain interested directors who abstained) that such stockholders accept the
Offer and tender their shares of Common Stock to the Purchaser pursuant to the
Offer. Reference is made to the Company's Schedule 14D-9 mailed to stockholders
herewith for a description of the assumptions made, factors considered and
procedures followed by the Company Special Committee.
Parent and the Purchaser believe that the Offer and the Merger are fair to
the stockholders of the Company (other than Parent and the Purchaser) based on
the conclusions, and the bases therefor, unanimously reached by the Company
Special Committee in recommending the Offer and Merger to the Company's Board of
Directors, as set forth in the Company's Schedule 14D-9, and the fact that the
Offer and Merger were unanimously recommended to the Company's Board of
Directors by the Company Special Committee which was advised by experienced and
independent legal counsel and financial advisors and which received a fairness
opinion from Alex. Brown that the consideration to be received by the Company's
stockholders (other than Parent and the Purchaser) in the Offer and Merger is
fair to them from a financial point of view. However, Parent and the Purchaser
have a conflict of interest with respect to the Offer and the Merger. Parent and
the Purchaser did not find it practicable to, and did not, quantify or otherwise
attach relative weight to the specific factors considered by them.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
filed as an exhibit to the Schedule 14D-1 filed by the Purchaser and Parent with
the Commission in connection with the Offer. Such summary is qualified in its
entirety by reference to the Merger Agreement.
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The Offer. Pursuant to the Merger Agreement, the Purchaser is obligated to
commence the Offer no later than five business days following the public
announcement of the Merger Agreement. The obligation of the Purchaser to
commence the Offer and to accept for payment and to pay for any shares of Common
Stock tendered pursuant to the Offer are subject only to the conditions
specified in "THE TENDER OFFER -- Certain Conditions of the Offer."
Although the Purchaser has expressly reserved the right to amend or make
changes in the terms and conditions of the Offer, the Merger Agreement provides
that, without the consent of a majority of the Independent Directors (as defined
in the Merger Agreement) the Purchaser may not waive the Minimum Tender
Condition or make any change in the terms or conditions of the Offer which (A)
changes the form of consideration to be paid, (B) decreases the price per share
of Common Stock payable in the Offer, (C) reduces the maximum number of shares
of Common Stock to be purchased in the Offer, (D) imposes conditions to the
Offer in addition to those set forth in "THE TENDER OFFER -- Certain Conditions
of the Offer," (E) extends the Expiration Date of the Offer (except as required
by law or the applicable rules and regulations of the Commission and except that
the Expiration Date may be extended for up to forty business days in the
aggregate in the event any condition to the Offer is not satisfied), or (F)
amends any term of the Offer in any manner materially adverse to holders of
shares of Common Stock.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time the Purchaser will be merged with and
into the Company in accordance with the DGCL. The Company will continue as the
Surviving Corporation and as a wholly owned subsidiary of the Parent following
consummation of the Merger.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto. The
representations and warranties will not survive the consummation of the Merger
or the termination of the Merger Agreement.
Covenants. The Company's covenants are standard and include, among other
things, operating in the ordinary course. In addition, the Company has agreed to
convene a meeting of the Company's stockholders to vote upon the Merger, unless
a vote of stockholders is not required by the DGCL. If such a meeting is
required for consummation of the Merger, the Company will prepare and file with
the Commission a proxy statement or information statement for such a meeting to
vote upon the Merger.
Stock Options; Great American Warrants. As soon as practicable, upon the
written request of the Purchaser, the Company and the Purchaser have agreed to
take such actions as are reasonably required to provide that at the earlier of
the purchase of shares of Common Stock pursuant to the Offer and the effective
time of the Merger, each holder of a then outstanding Stock Option, whether or
not exercisable, or a then outstanding Great American Warrant will receive from
the Company the difference between the Offer Price and the exercise price of
such Stock Option or Great American Warrant, as the case may be, net in either
case of any applicable tax withholding.
Other Offers. From the date of the Merger Agreement until the termination
thereof, the Company has agreed that it and its subsidiaries will not, and the
Company shall use reasonable efforts to cause the officers, directors, employees
or other agents of the Company and its subsidiaries not to, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal (as defined below) or (ii) subject to the fiduciary duties
of the Board of Directors under applicable law as advised by counsel to the
Company, engage in negotiations with, or disclose any nonpublic information
relating to the Company or any subsidiary or afford access to the properties,
books or records of the Company or any subsidiary to, any person or entity that
may be considering making, or has made, an Acquisition Proposal; provided,
however, that nothing contained in the Merger Agreement shall prevent the
Company, the Company's directors or the Company Special Committee from
furnishing nonpublic information to, or affording access to the properties,
books or records of the Company or any subsidiary to, or entering into
discussions or agreements with, any person or entity in connection with an
unsolicited Acquisition Proposal by such person or entity or recommending an
unsolicited Acquisition Proposal to the stockholders of the Company, if and only
to the extent that (1) the Company's directors or the Company Special Committee,
as the case may be, determine in good faith after consultation with outside
legal counsel that such action is necessary to comply with their
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fiduciary duties to the stockholders of the Company under applicable law and (2)
prior to furnishing any such nonpublic information to, or entering into
discussions or negotiations with, such person or entity, the Company's directors
or the Company Special Committee, as the case may be, receive from such person
or entity an executed confidentiality agreement with customary terms. The
Company has agreed to promptly notify Parent after receipt of any Acquisition
Proposal or any indication that any person or entity is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any subsidiary or for access to the properties, books or records of
the Company or any subsidiary by any person or entity that may be considering
making, or has made, an Acquisition Proposal and will keep Parent fully informed
of the status and details of any such Acquisition Proposal, indication or
request. For purposes hereof, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
subsidiary, other than the transactions contemplated by the Merger Agreement.
Directors' and Officers' Indemnification and Insurance. The Certificate of
Incorporation of the Surviving Corporation will contain provisions no less
favorable to the Company's directors and officers with respect to
indemnification than such provisions in the Company's Certificate of
Incorporation, and such provisions will not be amended, repealed or otherwise
modified for six years after the consummation of the Merger in a manner that
would materially adversely affect the rights of the Company's existing directors
and officers with respect to actions or events at or prior to the effective time
of the Merger. In addition, the Company and, following the Merger, the Surviving
Corporation have agreed to indemnify the existing directors and officers of the
Company in connection with any action or omission to act in their capacity as
directors and officers of the Company for a period of six years after the later
of the consummation of the Merger and the date of the Merger Agreement. Parent
has agreed to maintain directors' and officers' liability insurance policies
containing substantially comparable terms and conditions to the Company's
existing policies to cover the acts and omissions of the Company's current
directors and officers occurring on or prior to the consummation of the Merger
for a period of six years after the consummation of the Merger (or for such
lesser period as can be purchased for a premium not exceeding 200% of the last
intercompany allocation made by Parent to the Company with respect to directors'
and officers' insurance).
Conditions to Obligations of Each Party to Effect the Merger. Conditions
to the obligations of each party to effect the Merger include, (i) the approval
and adoption of the Merger Agreement and the transactions contemplated thereby
by the Company's stockholders to the extent required by, and in accordance with,
the DGCL and the Company's Certificate of Incorporation and Bylaws; (ii) the
Purchaser's or its permitted assignee's purchase of all shares of Common Stock
validly tendered and not withdrawn pursuant to the Offer; (iii) the taking of
all actions and making of all filings with, and the approval of, any
governmental body, agency, official or authority required to permit the
consummation of the Merger; and (iv) the absence of the issuance of any order
and of the existence of any statute, rule or regulation restraining or
prohibiting the consummation of the Merger or the effective operation of the
business of the Company and its subsidiaries after the consummation of the
Merger.
Additional Condition to Obligations of Parent and the Purchaser. The
obligation of Parent and the Purchaser to effect the Merger is also subject to
the condition that the Company shall have in all material respects performed all
of its obligations under the Merger Agreement.
Termination. The Merger Agreement may be terminated at any time prior to
the consummation of the Merger, whether prior to or after approval by the
Company's stockholders:
(i) by mutual written consent of the Company and Parent, if such
termination is also approved by a majority of the Independent Directors;
(ii) by either the Company or Parent, if the consummation of the
Merger shall not have occurred on or before October 31, 1997; provided,
however, that the right to terminate the Merger Agreement pursuant to this
clause (ii) shall not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the primary cause of, or
resulted in, the failure of the consummation of the Merger to occur on or
before such date;
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(iii) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Parent
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable;
(iv) by Parent, if the Purchaser shall have (a) terminated the Offer
without having accepted any shares of Common Stock for payment thereunder
by reason of the failure to satisfy any condition under "THE TENDER
OFFER -- Certain Conditions of the Offer" or (b) failed to pay for shares
of Common Stock pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Shares shall have
been caused by or resulted directly from the failure of Parent or the
Purchaser to perform in any material respect any material covenant or
agreement of either of them contained in the Merger Agreement or the
material breach by Parent or the Purchaser of any material representation
or warranty of either of them contained in the Merger Agreement;
(v) by the Company, upon approval of the Board of Directors of the
Company and a majority of the Independent Directors, if the Purchaser shall
have (a) failed to commence the Offer within five business days following
the date of the initial public announcement of the Offer, (b) terminated
the Offer without having accepted any shares of Common Stock for payment
thereunder by reason of the failure to satisfy any condition set forth
under "THE TENDER OFFER -- Certain Conditions of the Offer" or (iii) failed
to pay for shares of Common Stock pursuant to the Offer within 90 days
following the commencement of the Offer, unless such failure to pay for
shares of Common Stock shall have been caused by or resulted directly from
the failure of the Company to perform in any material respect any material
covenant or agreement of it contained in the Merger Agreement or the
material breach by the Company of any material representation or warranty
of it contained in the Merger Agreement; or
(vi) by the Company, upon approval of the Board of Directors of the
Company and a majority of the Independent Directors, if any representation
or warranty of Parent and the Purchaser in the Merger Agreement shall not
be true and correct in any material respect, as if such representation or
warranty was made as of such time on or after the date of the Merger
Agreement; or Parent or the Purchaser shall have failed to perform in any
material respect any obligation or to comply in any material respect with
any agreement or covenant of Parent or the Purchaser to be performed or
complied with by it under the Merger Agreement.
Expenses. All costs and expenses incurred in connection with the Merger
Agreement are to be paid by the party incurring them.
PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY
Purpose and Structure. The purpose of the Offer and the Merger is to
enable Parent to acquire, in one or more transactions, the entire equity
interest in the Company. The Offer is intended to increase the likelihood that
the Merger will be completed promptly. If the Purchaser acquires, pursuant to
the Offer or otherwise, at least 90% of the outstanding shares of Common Stock
of the Company, the Purchaser will have the ability to consummate the Merger
without a meeting of the stockholders of the Company pursuant to the "short
form" merger provisions of the DGCL. Pursuant to the Merger, each then
outstanding share of Common Stock (other than Common Stock owned by the
Purchaser, Parent or any of Parent's other subsidiaries, shares held in the
Company's treasury and Common Stock owned by stockholders who perfect their
dissenters' rights under the DGCL) would be converted into the right to receive
an amount in cash equal to the price per share of Common Stock paid by the
Purchaser pursuant to the Offer. See "-- Appraisal Rights." If the Merger is not
consummated as a "short-form" merger, under the DGCL and the Company's Restated
Certificate of Incorporation, the Merger would require the affirmative vote of
the holders of a majority of the then outstanding shares of Common Stock.
If, following consummation of the Offer, the Purchaser owns less than 90%
of the outstanding shares of Common Stock, the Purchaser and Parent reserve the
right to purchase from time to time additional shares, if market conditions
permit and subject to the availability of funds and other investment
opportunities. Such purchases may be made through the open market, privately
negotiated purchases, another tender
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offer, an exchange offer or otherwise, subject, in each case, to market
conditions, at prices which may be greater or less than those of the Offer.
There can be no assurance that the Purchaser will acquire such additional shares
in such circumstances or over what period of time such additional shares, if
any, might be acquired. Any acquisition of shares by Purchaser would have to be
made in accordance with applicable legal requirements, including those of
Regulation 13D-G and Rules 10b-18 and 13e-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
Plans for the Company. In February 1997, Parent and the Company each
announced that it was undertaking a strategic review of the relationship with
the other, and each of Parent and the Company stated that each was looking at
ways to reduce the administrative and marketing expense portion of the total
health care premium dollar in light of the intense competition and changes
occurring in the health care industry. In addition, Parent has been refining its
strategic decision to focus on its health care mission, in line with its
assessment of the opportunities presented by the changing dynamics of the
industry, and to divest its interest in other lines of business. Parent
subsequently determined that the property and casualty brokerage business might
not be consistent with Parent's long-term mission and that, in light of the
brokerage industry consolidation, there was an opportunity to capitalize on the
value of Acordia Brokers. Parent is presently negotiating with a prospective
purchaser with respect to the possible sale of Acordia Brokers. There can be no
assurance that a sale will be consummated, and neither the Offer nor the Merger
is contingent upon the possible sale of Acordia Brokers.
If the Merger is consummated and Acordia Brokers is sold, the Company's
primary business would be providing various health care administrative and
marketing services to Parent and its affiliates, and a substantial portion of
the Company's current management and personnel, as well as facilities, would be
transferred to the buyer of Acordia Brokers. In the event that the current
negotiations regarding Acordia Brokers do not result in a transaction involving
Acordia Brokers, Parent may seek another buyer or may retain the brokerage
business for an indefinite period.
Parent is currently reviewing, and will continue to review, various
possible business strategies with respect to the restructuring of Acordia's
health business, including the further consolidation of various claims, customer
services and other functions currently being performed by the Company for Parent
and its affiliates with and into one or more of Parent and its affiliates.
Parent currently believes that significant economic and operational efficiencies
might be achieved by consolidating various health-related functions of the
Company with those of Parent and its affiliates. It is anticipated that such
further restructuring will occur regardless of whether Acordia Brokers is sold,
assuming that the Purchaser acquires the remaining equity interest in the
Company. The restructuring may, in addition to changes in the Company's
business, include, among other things, changes in the Company's corporate
structure, capitalization and dividend policy, operations, facilities, employee
benefit plans and management and personnel. If the Offer and the Merger are not
consummated, Parent will continue to review various other possible business
strategies with respect to its business relationship with the Company, including
modifications to or the termination of one or more of the current contractual
relationships between the Company and Parent and its affiliates.
Purchaser currently intends, to the extent possible, to seek to have the
Company's Common Stock delisted from the New York Stock Exchange, Inc. (the
"NYSE") and to terminate the registration of the Common Stock under the Exchange
Act following consummation of the Offer or the Merger. Delisting of the Common
Stock may occur, in any event, at the instigation of the NYSE following
consummation of the Offer due to the reduced number of shares of Common Stock or
holders thereof then outstanding. The failure to be so listed could result in
the termination of the registration of the Common Stock under the Exchange Act.
If the Common Stock ceases to be registered under the Exchange Act, the Company,
among other things, would no longer be required to comply with the Exchange
Act's proxy or reporting rules. See "THE TENDER OFFER -- Certain Effects of the
Offer."
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INTERESTS OF CERTAIN PERSONS; STOCKHOLDINGS OF CERTAIN OFFICERS AND DIRECTORS;
AND RELATED TRANSACTIONS
Directors and Officers. As described above under "-- Background of the
Offer," three of the Company's directors, including the Chairman of the Board,
are officers or employees of Parent: Dwane R. Houser, Parent's Chairman of the
Board; L. Ben Lytle, Parent's President and Chief Executive Officer and the
Company's Chairman of the Board; and Patrick M. Sheridan, Parent's Executive
Vice President and Chief Financial Officer. A fourth director, Michael L. Smith,
is Chief Operating and Chief Financial Officer of American Health Network, a
subsidiary of Parent. The executive officers and directors of Parent
beneficially own, in the aggregate, 188,886 shares of Common Stock of the
Company (excluding shares subject to unexercised Stock Options). Messrs. Houser,
Lytle, and Sheridan beneficially own 8,449 shares, 105,000 shares and 60,000
shares, respectively, of such shares (excluding shares subject to unexercised
Stock Options). Schedule I to this Offer to Purchase sets forth the amount and
nature of such beneficial ownership for each executive officer and director of
Parent and the Purchaser.
The non-employee directors of the Company are entitled to certain fees,
stock options and/or stock awards pursuant to plans and arrangements which are
described in the Company's Proxy Statement, dated April 11, 1997. Messrs.
Houser, Lytle, Sheridan and Smith are considered employee directors for purposes
of such plans and arrangements and therefore are not entitled to, and do not
receive, any such fees, stock options or stock awards.
Stockholdings of Certain Officers and Directors. As noted above, Parent
currently owns 8,693,056 shares of Common Stock, representing approximately
66.8% of the outstanding shares of Common Stock, which shares Parent anticipates
will be contributed to the Purchaser prior to the consummation of the Offer. See
"INTRODUCTION" and " -- Background of the Offer." As of the date hereof, to the
knowledge of Purchaser, no executive officer or director of Parent or the
Purchaser beneficially owns, or has the right to acquire, directly or
indirectly, any shares of Common Stock, except as set forth on Schedule I to
this Offer to Purchase. Executive officers and directors of Parent listed in
Schedule I to this Offer to Purchase, who beneficially own, in the aggregate,
188,886 shares of Common Stock (excluding shares subject to unexercised Stock
Options), have indicated to the Purchaser that they currently intend to tender
their shares pursuant to the Offer. None of the Purchaser, Parent or, to the
knowledge of the Purchaser, any of the executive officers or directors of Parent
or the Purchaser, has engaged in any transaction in the Common Stock in the past
60 days.
Related Transactions.
(A) Marketing and Agency Agreements with Parent. The Company, through
one or more of its subsidiaries, markets insurance products underwritten by
Parent or its affiliates and/or perform administrative services in
connection with those insurance products. In connection therewith, each
such Company subsidiary has entered into a marketing and agency agreement
and/or administrative services agreement with Parent or an affiliate
insurer.
The marketing and agency agreement provides that such Company
subsidiary is appointed as an agent of Parent (or its affiliated insurer)
to solicit new applications and renewal applications for insurance coverage
marketed by it and underwritten by Parent or such affiliated insurer. The
administrative services agreement provides that the Company's subsidiary
company shall perform one or more of the following administrative services
with regard to insurance contracts underwritten by Parent or an affiliated
insurer: premium billing and collection, adjustment and settlement of
claims, customer service correspondence and general clerical and
administrative functions. In some cases, the administrative service
agreement also provides for the administration of Parent's or its
affiliated insurers' health maintenance organizations and other managed
case businesses. Parent or the affiliated insurer may, at its discretion,
grant underwriting authority to the Company's subsidiary in accordance with
the insurer's underwriting guidelines and the terms of the administrative
services agreement. As compensation for these services, Parent or the
affiliated insurer pays the Company's subsidiary a fee primarily based on a
percentage of the earned premium. Additionally, Parent and its affiliated
insurers
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permit the Company's subsidiary to charge insureds a monthly administrative
fee pursuant to the administrative services agreement. Parent and its
affiliated insurers paid an aggregate of approximately $175.6 million,
$233.1 million and $291.0 million to the Company pursuant to these
agreements for the years ended December 31, 1995 and 1996, respectively. In
accordance with insurance holding Company statutes applicable to Parent and
its affiliated insurers, the amounts paid pursuant to such agreements
cannot exceed a reasonable charge.
In January 1997, Parent and the Company, as part of strategic
developments within Parent, decided that the wholesale marketing and
distribution functions for Parent's products outside of Indiana, Kentucky
and Ohio should be performed by Parent. Parent agreed to pay the Company a
one-time cancellation fee of $6.0 million, one-half of which was paid
during the first quarter of 1997, and the remainder of which will be paid
during the second quarter of 1997. See "-- Background of the Offer."
In February 1997, the Company and Parent announced the planned
consolidation of their claims processing sites in Indiana, Kentucky and
Ohio into one central site located in Indiana. The consolidation of the
Indiana sites is virtually complete.
(B) Management Agreement. In June 1992, the Company entered into a
management agreement with Parent pursuant to which Parent has agreed to
provide to the Company the services of certain senior management employees.
Effective December 31, 1996, the Company terminated the management
agreement. Prior to the termination of the management agreement, the
Company reimbursed Parent for all allocated expenses incurred by Parent in
connection with the furnishing of the services rendered pursuant to the
management agreement. The Company paid fees for management services plus
allocated expenses to the Company in the amounts of approximately $574,000
and $180,000 for the years ended December 31, 1995 and 1996, respectively.
(C) Inter-Company Services Agreement. The Company is a party to The
Anthem Inter-Company Services Agreement (the "Services Agreement") among
Parent and its subsidiaries pursuant to which the parties thereto are
entitled to provide and receive certain administrative and systems services
including financial and payroll, legal, auditing, investment, information
services, data processing, actuarial, marketing and human resources.
Pursuant to the Agreement, the Company reimburses Parent or its affiliate
rendering such services for the actual costs and expenses which Parent or
such affiliate incurs in providing such services or on a reasonable charge
basis. In consideration of services under the Services Agreement, the
Company paid to Parent fees aggregating approximately $52.0 million and
$95.2 million for the years ended December 31, 1995 and 1996, respectively.
(D) Tax Sharing and Indemnification Agreements. Effective January 1,
1989 (or such later date as a subsidiary first became included in Parent's
consolidated tax return), the Company and its subsidiaries were included in
Parent's state and federal consolidated income tax returns and were parties
to a federal and a state income tax sharing agreement with Parent. The tax
sharing agreements provided for the allocation of tax liability among
Parent and its affiliates. Effective October 29, 1992, the Company and its
subsidiaries were not eligible to be included in Parent's federal and most
state income tax returns for periods following the October 1992 date since
Parent retained less than 80% of the voting power and the total value of
the stock of the Company. The Company and Parent file together with respect
to a few consolidated combined state tax returns. Pursuant to the tax
sharing agreements, the Company paid Parent $91,819 in 1995 for taxable
year 1994 and no amounts were paid by either party in 1996 for taxable year
1995. The Company and Parent have entered into a tax indemnification
agreement, pursuant to which Parent has agreed to indemnify the Company
with respect to any federal or state income taxes related to periods prior
to the October 1992 date when the Company was a member of Parent's
consolidated group for federal income tax purposes and reflected on the
Company's consolidated balance sheet dated December 31, 1991 or accrued in
the ordinary course of business consistent with past practices from
December 31, 1991 until the October 1992 date.
(E) Lease. In June 1992, the Company entered into a sublease
agreement with Parent pursuant to which the Company subleases certain
office space and related equipment located at 120 Monument
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Circle, Indianapolis, Indiana. For the years ended December 31, 1995 and
1996, the Company made rental payments to Parent in the amount of $690,000
and $698,000, respectively.
(F) Registration Rights Agreement. In connection with the initial
public offering of the Company's Common Stock, the Company and Parent
entered into a Registration Rights Agreement pursuant to which the Company
granted to Parent certain rights with respect to registration under the
Securities Act of 1933, as amended, of Common Stock currently held or
thereafter acquired by Parent.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
federal income tax purposes, a tendering stockholder will recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer or the Merger and the aggregate tax basis in the Common
Stock tendered by the stockholder and purchased pursuant to the Offer or
converted in the Merger, as the case may be. Gain or loss will be calculated
separately for each block (i.e., Common Stock acquired at the same time in a
single transaction) of Common Stock tendered and purchased pursuant to the Offer
or converted in the Merger, as the case may be. If shares of Common Stock are
held by a stockholder as capital assets, gain or loss recognized by the
stockholder will be capital gain or loss, which will be long-term capital gain
or loss if the stockholder's holding period for the Common Stock exceeds one
year.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Common Stock may be subject to 31% backup withholding unless the
stockholder provides its taxpayer identification number ("TIN") and certifies
that such number is correct or properly certifies that it is awaiting a TIN, or
unless an exemption applies. A stockholder that does not furnish its TIN may be
subject to a penalty imposed by the Internal Revenue Service ("IRS"). See "THE
TENDER OFFER -- Procedures For Tendering Common Stock -- Backup Withholding."
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an appropriate income tax return.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO COMMON STOCK RECEIVED PURSUANT TO THE EXERCISE
OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WITH RESPECT TO
HOLDERS OF COMMON STOCK WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE,
SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND
FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF COMMON STOCK IN LIGHT
OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS)
OF THE OFFER AND THE PROPOSED MERGER.
APPRAISAL RIGHTS
UNDER THE DGCL, HOLDERS OF SHARES OF COMMON STOCK NOT PURCHASED BY
PURCHASER ARE NOT ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE OFFER.
However, if following consummation of the Offer, Purchaser consummates the
Merger, holders of shares of Common Stock not purchased by Purchaser in the
Offer will be entitled to seek appraisal rights under the DGCL in connection
with the Merger as follows.
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The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL ("Section 262") which is attached hereto as
Annex I and is incorporated herein by this reference. All references in Section
262 and in this summary to a "stockholder" or "holders" are to the record holder
of the shares of Common Stock as to which appraisal rights are asserted.
Under the DGCL, holders of shares of Common Stock ("Appraisal Shares") who
follow the procedures set forth in Section 262, and who have neither voted in
favor of the Merger nor consented thereto in writing, will be entitled to have
their Appraisal Shares appraised by the Delaware Chancery Court and to receive
payment in cash of the "fair value" of such Appraisal Shares, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest, if any, as determined by such court.
Under Section 262, if the Merger must be submitted to the stockholders of
the Company because Purchaser does not own 90% of the outstanding shares of
Common Stock or otherwise, the Company must, not less than 20 days prior to the
meeting held for the purpose of obtaining stockholder approval of the Merger,
notify each of the Company's stockholders entitled to appraisal rights that such
rights are available, and must include in such notice a copy of Section 262. If
no stockholder vote is required or if stockholder approval is obtained by
written consent in lieu of a meeting, the Company, either before the effective
date of the Merger or within ten days thereafter, must notify each of the
stockholders entitled to appraisal rights of the effective date of the Merger
and that appraisal rights are available, and must include in such notice a copy
of Section 262.
A holder of Appraisal Shares wishing to exercise such holder's appraisal
rights will be required to deliver to Purchaser within 20 days after the date of
mailing of the notice described in the preceding paragraph a written demand for
appraisal of such holder's Appraisal Shares. A holder of Appraisal Shares
wishing to exercise such holder's appraisal rights must be the record holder of
such Appraisal Shares on the date the written demand for appraisal (as described
below) is made and must continue to hold such Appraisal Shares of record through
the effective date of the Merger. Accordingly, a holder of Appraisal Shares who
is the record holder of Appraisal Shares on the date the written demand for
appraisal is made (if such demand is made prior to the effectiveness of the
Merger), but who thereafter transfers such Appraisal Shares prior to the
consummation of the Merger, will lose any right to appraisal in respect of such
Appraisal Shares.
Within 120 days after the effective date of the Merger, but not thereafter,
Purchaser or any stockholder who has complied with the statutory requirements
summarized above and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Chancery Court demanding a determination of the fair
value of the Appraisal Shares. Purchaser is under no obligation to file a
petition with respect to the appraisal of the fair value of the Appraisal Shares
and does not intend to do so. Accordingly, it will be the obligation of the
stockholders seeking appraisal rights to initiate all necessary action to
perfect any appraisal rights within the time prescribed in Section 262.
Within 120 days after the effective date of the Merger, any stockholder who
has complied with the statutory requirements summarized above will be entitled,
upon written request, to receive from Purchaser a statement setting forth the
aggregate number of Appraisal Shares with respect to which demands for appraisal
have been received and the aggregate number of holders of such Appraisal Shares.
Such statements must be mailed within ten days after a written request therefor
has been received by Purchaser or within ten days after expiration of the period
for delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the "fair value" of their Appraisal
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value.
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In determining the "fair value" of the Appraisal Shares, a court could
consider factors other than, or in addition to, the market value of the Common
Stock, including, among other things, asset values and earning capacity of the
Company. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among
other things, that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceeding.
Therefore, the value so determined in any appraisal proceeding could be
different from the Merger Consideration (as defined in the Merger Agreement).
Several decisions by the Delaware courts, which may or may not apply to the
Merger, have held that a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be "entirely fair" to such other stockholders. In determining whether a merger
is fair to minority shareholders, Delaware courts have considered, among other
things, the type and amount of the consideration to be received by the
stockholders and whether there was fair dealing among the parties. The Delaware
Supreme Court stated in Weinberger that, although the remedy ordinarily
available in a merger that is found not to be "fair" to minority stockholders is
the right to appraisal described above, such appraisal remedy may not be
adequate "in certain cases, particularly where fraud, misrepresentation,
self-dealing, deliberate waste of corporate assets, or gross and palpable
overreaching are involved," and that in such cases the Delaware Chancery Court
would be free to fashion any form of appropriate relief.
The costs of the proceeding may be determined by the Delaware Chancery
Court and taxed upon the parties as the Delaware Chancery Court deems equitable
in the circumstances. Upon application of a stockholder, the Delaware Chancery
Court may also order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts, to
be charged pro rata against the value of all of the Appraisal Shares entitled to
appraisal.
Any holder of Appraisal Shares who has duly demanded an appraisal in
compliance with Section 262 will not, from and after the effective date of the
Merger, be entitled to vote the Appraisal Shares subject to such demand for any
purpose or to receive payment of dividends or other distributions on those
Appraisal Shares (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the
Merger).
If any stockholder who properly demands appraisal of his or her Appraisal
Shares under Section 262 fails to perfect, or effectively withdraws or loses,
his or her right to appraisal, as provided in the DGCL, the Appraisal Shares of
such stockholder will be converted into the right to receive the consideration
receivable with respect to such Appraisal Shares pursuant to the Merger. A
stockholder will fail to perfect, or effectively lose or withdraw, his or her
right to appraisal if, among other things, no petition for appraisal is filed
within 120 days after the consummation of the Merger, or if the stockholder
delivers to Purchaser a written withdrawal of his or her demand for appraisal.
Any such attempt to withdraw an appraisal demand more than 60 days after the
consummation of the Merger will require the written approval of Purchaser.
THE TENDER OFFER
TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all shares of
Common Stock validly tendered prior to the Expiration Date and not withdrawn in
accordance with the procedures set forth in "-- Withdrawal Rights" on or prior
to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New
York City time, on Thursday, July 3, 1997, unless and until the Purchaser,
subject to the terms of the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, will expire. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED COMMON STOCK, WHETHER OR NOT THE PURCHASER EXERCISES
ITS RIGHT TO EXTEND THE OFFER.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM TENDER CONDITION AND THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH
UNDER "-- CERTAIN CONDITIONS OF THE OFFER."
If by the Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the applicable rules and regulations of the Commission
and the terms of the Merger Agreement, to (a) terminate the Offer and not accept
for payment or pay for any Common Stock and return all tendered Common Stock to
tendering stockholders, (b) waive all the unsatisfied conditions and accept for
payment and pay for all Common Stock validly tendered prior to the Expiration
Date and not theretofore withdrawn, (c) extend the Offer and, subject to the
right of stockholders to withdraw Common Stock until the Expiration Date, retain
the Common Stock that have been tendered during the period or periods for which
the Offer is extended or (d) amend the Offer.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights set forth under "-- Certain Conditions of the
Offer." There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date, or the first opening of the NYSE on the
next business day after the previously scheduled Expiration Date, in accordance
with the public announcement requirements of Rule 14d-4(c) under the Exchange
Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change), and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Common Stock) is delayed in its purchase of
or payment for Common Stock or it is unable to pay for Common Stock pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Common Stock on behalf of
the Purchaser, and such Common Stock may not be withdrawn except to the extent
tendering stockholders are entitled to withdrawal rights as described under
"-- Withdrawal Rights." However, the ability of the Purchaser to delay the
payment for Common Stock that the Purchaser has accepted for payment is limited
by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities tendered by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will, or Parent will cause the Purchaser to, extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or otherwise. The minimum
period during which the Offer must remain open following material changes in the
terms of the Offer or information concerning the Offer, other than a change in
price or a change in the percentage of securities sought, will depend upon the
facts and circumstances then existing, including the relative materiality of the
changed terms or information. In the Commission's view, an offer should
generally remain open for a minimum of five business days from the date a
material change is first published, sent or given to stockholders. With respect
to a change in price or, subject to certain limitations, a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders and
investor response. Accordingly, if prior to the Expiration Date, in accordance
with the terms of the Merger Agreement, the Purchaser decreases the number of
shares of Common Stock being sought, or increases or decreases the Offer Price,
and if the Offer is scheduled to expire at any time earlier than the period
ending on the tenth business day from the date that notice of such increase or
decrease is first published, sent or
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given to holders of shares of Common Stock, the Offer will be extended at least
until the expiration of such 10 business day period.
The Company is providing to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Common Stock. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Common Stock
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Common Stock.
PROCEDURES FOR TENDERING COMMON STOCK
Valid Tender. For a stockholder validly to tender Common Stock pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined herein), and any other required documents, must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
prior to the Expiration Date and either certificates for tendered Common Stock
must be received by the Depositary at such address or such Common Stock must be
delivered pursuant to the procedures for book-entry transfer set forth below
(and a Book-Entry Confirmation (as defined below) received by the Depositary),
in each case prior to the Expiration Date, or (b) the tendering stockholder must
comply with the guaranteed delivery procedures set forth below.
Participants in the Acordia 401(k) Long Term Savings Investment Plan, the
ABI 401(k) and Profit Sharing Plan and The Associated Group 401(k) Long Term
Savings Investment Plan (the "401(k) Plans") desiring to tender shares of Common
Stock held on their behalf should so instruct the 401(k) Plans Trustee by
completing the form which will be provided to participants for that purpose.
401(k) Plans participants cannot tender Common Stock allocated to their 401(k)
Plans accounts by executing the Letter of Transmittal.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Common Stock at The Depository Trust Company and
the Philadelphia Depository Trust Company (the "Book-Entry Transfer Facilities")
for purposes of the Offer within two business days after the date of this Offer
to Purchase. Any financial institution that is a participant in any of the
Book-Entry Transfer Facilities' systems may make book-entry delivery of Common
Stock by causing a Book-Entry Transfer Facility to transfer such Common Stock
into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Common
Stock may be effected through book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and all other required documents, or an Agent's Message (as defined
below), must, in any case, be transmitted to, and received by, the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below.
The confirmation of a book-entry transfer of Common Stock into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Stock that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
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<PAGE> 28
THE METHOD OF DELIVERY OF COMMON STOCK, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. COMMON
STOCK, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (a) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes hereof, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the Common Stock) of Common Stock tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) such Common Stock is tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Common Stock are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Common
Stock not tendered or not accepted for payment are to be returned to a person
other than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed in blank or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
holders appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. See Instructions 1 and 5 to the
Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Common Stock
pursuant to the Offer and such stockholder's certificates for Common Stock are
not immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such stockholder's tender may
be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, on or prior to the Expiration Date;
and
(iii) the certificates, representing all tendered shares of Common
Stock, in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Common Stock), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the NYSE
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution and a
representation that the stockholder owns the Common Stock tendered within the
meaning of, and that the tender of the Common Stock effected thereby complies
with, Rule 14e-4 under the Exchange Act, each in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Common Stock
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Common Stock, (b) a Letter of Transmittal (or
26
<PAGE> 29
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Common Stock or Book-Entry Confirmations with respect
to Common Stock are actually received by the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE COMMON STOCK TO BE PAID BY
THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Purchaser and each of them as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Common Stock tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Common Stock or other securities or rights issued or issuable in
respect of such Common Stock on or after June 6, 1997 (the "Applicable Date").
All such powers of attorney and proxies will be irrevocable and considered
coupled with an interest in the tendered Common Stock. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts such Common
Stock for payment pursuant to the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by such stockholder with
respect to such Common Stock and other securities or rights will, without
further action, be revoked and no subsequent powers of attorney, proxies,
consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Common Stock and other
securities or rights in respect of any annual, special, adjourned or postponed
meeting of the Company's stockholders, actions by written consent in lieu of any
such meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Common Stock to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Common Stock, the Purchaser must be able to exercise full voting,
consent and other rights with respect to such Common Stock and other securities
or rights, including voting at any meeting of stockholders (whether annual or
special or whether or not adjourned) or acting by written consent without a
meeting in respect of such Common Stock.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Common Stock will be determined by the Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders determined by it not to
be in proper form or the acceptance for payment of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any condition of the Offer or any defect or
irregularity in the tender of any Common Stock of any particular stockholder
whether or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Common Stock will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or waived.
None of the Purchaser, Parent, any of their affiliates or assigns, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Common Stock in the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct Taxpayer Identification Number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN or
fails to provide the certifications described above, the IRS may impose a
penalty on such stockholder and the payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31% of the amount of such
payment. All stockholders surrendering Common Stock pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9 included
as part
27
<PAGE> 30
of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists and
is proved in a manner satisfactory to the Purchaser and the Depositary). Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign stockholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
Other Requirements. A tender of shares of Common Stock pursuant to any one
of the procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer, as well as the tendering
stockholder's representation and warranty that (i) such stockholder has the full
power and authority to tender, sell, assign and transfer the tendered shares of
Common Stock (and any and all other shares or other securities issued or
issuable in respect of such Common Stock on or after June 2, 1997) and (ii) when
the same are accepted for payment by the Purchaser, the Purchaser will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances and not subject to any adverse claims. Purchaser's
acceptance for payment of shares of Common Stock tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
WITHDRAWAL RIGHTS
Except as otherwise provided in this section, tenders of Common Stock
pursuant to the Offer are irrevocable. Common Stock tendered pursuant to the
Offer may be withdrawn pursuant to the procedures set forth below at any time
prior to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after August
4, 1997. If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Common Stock or is unable to purchase Common Stock validly tendered
pursuant to the Offer for any reason, then without prejudice to the Purchaser's
rights under the Offer, the Depositary may nevertheless, on behalf of the
Purchaser, subject to Rule 14e-1(c) under the Exchange Act, retain tendered
Common Stock and such Common Stock may not be withdrawn except to the extent
that tendering stockholders are entitled to withdrawal rights as described in
this section. Any such delay will be accompanied by an extension of the Offer to
the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Common Stock to be
withdrawn, the number of shares of Common Stock to be withdrawn and the name of
the registered holder of the Common Stock to be withdrawn, if different from the
name of the person who tendered the Common Stock. If certificates for Common
Stock to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Common Stock has been tendered by an Eligible Institution, the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Common Stock has been delivered pursuant to the procedure for
book-entry transfer as set forth under "-- Procedures for Tendering Common
Stock," any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Common Stock and otherwise comply with such Book-Entry Transfer
Facility's procedures.
Withdrawals of tenders of Common Stock may not be rescinded, and any Common
Stock properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Common Stock may be retendered by
again following one of the procedures described under "-- Procedures for
Tendering Common Stock" at any time on or prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, any of their affiliates or assigns, the Depositary,
the Information
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<PAGE> 31
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Common
Stock validly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the terms set forth under "-- Withdrawal Rights"
promptly after the Expiration Date. All questions as to the satisfaction of such
terms and conditions will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. See
"-- Withdrawal Rights" and "-- Certain Conditions of the Offer." The Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for Common Stock in order to comply in whole or in part
with any applicable law. See "-- Certain Legal Matters." Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Common Stock accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (a)
certificates for (or a timely Book-Entry Confirmation with respect to) such
Common Stock, (b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and (c) any other documents
required by the Letter of Transmittal. The consideration per share of Common
Stock paid to any stockholder pursuant to the Offer will be the highest
consideration paid to any other stockholder of the same class pursuant to the
Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Common Stock validly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Common Stock pursuant to the Offer. Upon the terms and subject to the conditions
of the Offer, payment for Common Stock accepted for payment pursuant to the
Offer will be made by deposit of the Offer Price therefor with the Depositary,
which will act as agent for validly tendering stockholders for the purpose of
receiving payment from the Purchaser and transmitting payment to tendering
stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE OF
THE COMMON STOCK TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Upon the deposit of funds with the
Depositary for the purpose of making payments to tendering stockholders, the
Purchaser's obligation to make such payment shall be satisfied and tendering
stockholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Common Stock
pursuant to the Offer. The Purchaser will pay any stock transfer taxes with
respect to the transfer and sale to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal, as
well as any charges and expenses of the Depositary and the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Common Stock or is unable to accept for payment or pay for Common Stock pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Common Stock, and such Common Stock may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described under "-- Withdrawal Rights."
If any tendered shares of Common Stock are not purchased pursuant to the
Offer for any reason, certificates for any such unpurchased Common Stock will be
returned, without expense to the tendering stockholder (or, in the case of
Common Stock delivered by book-entry transfer of such Common Stock into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth under "-- Procedures for Tendering Common Stock," such Common Stock
will be credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration, termination or
withdrawal of the Offer.
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<PAGE> 32
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Common Stock tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Common Stock validly
tendered and accepted for payment pursuant to the Offer.
PRICE RANGE OF COMMON STOCK; DIVIDENDS ON THE COMMON STOCK
The Common Stock currently is listed and traded on the NYSE under the
symbol ACO. The following table sets forth the high and low closing prices per
share of Common Stock together with the per share dividends paid by the Company
for the periods indicated as reported in publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
1995:
First quarter.................................................. $34 1/2 $31 3/8 $ .18
Second quarter................................................. 33 1/8 30 .18
Third quarter.................................................. 32 1/8 26 .18
Fourth quarter................................................. 29 7/8 23 1/2 .18
1996:
First quarter.................................................. 31 3/4 27 3/4 .20
Second quarter................................................. 33 3/4 30 7/8 .20
Third quarter.................................................. 33 5/8 30 1/8 .20
Fourth quarter................................................. 30 3/4 28 .20
1997:
First quarter.................................................. 33 27 1/2 .20
Second quarter through June 5, 1997............................ 39 1/2 31 1/2 .20
</TABLE>
On February 5, 1997, the last full trading day before Parent announced its
consideration of a change in its strategic plan with respect to, and
relationship with and investment in, the Company, the last reported sale price
of the Common Stock on the NYSE was $27 7/8. On May 30, 1997, the last full
trading day before the first public announcement of the Offer, the last reported
sales price of the Common Stock on the NYSE was $35 1/2. STOCKHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK.
CERTAIN EFFECTS OF THE OFFER
Market for the Shares. The purchase of Common Stock pursuant to the Offer
will reduce the number of holders of Common Stock and the number of shares of
Common Stock that might otherwise trade publicly and could adversely affect the
liquidity and market value of the remaining Common Stock held by the public.
Stock Exchange Listing. Depending on the number of shares of Common Stock
purchased in the Offer, the Common Stock may no longer meet the requirements of
the NYSE for continued listing. According to the NYSE's published guidelines,
the NYSE would consider delisting the Common Stock if, among other things, (i)
the number of record holders of at least 100 shares should fall below 1,200,
(ii) the number of publicly held shares of Common Stock (exclusive of holdings
of officers, directors, members of their immediate families and other
concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should fall
below 600,000 or (iii) the aggregate market value of publicly held Common Stock
(exclusive of NYSE Excluded Holdings) should fall below $5,000,000. According to
the Company's Annual Report on Form 10-K for the year ended December 31, 1996
(the "Company 10K"), as of March 10, 1997, there were 450 holders of record of
Common Stock and, as of March 1, 1997, there were 13,005,106 shares of Common
Stock outstanding.
If the NYSE were to delist the Common Stock, it is possible that the Common
Stock would trade on another securities exchange or in the over-the-counter
market and that price quotations for the Common Stock would be reported by such
exchange, the Nasdaq Stock Market or other sources. The extent of the public
market for the Common Stock and availability of such quotations would depend,
however, upon such factors as the number of holders, the aggregate market value
of the publicly held Common Stock at such
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<PAGE> 33
time, the interest in maintaining a market in the Common Stock on the part of
securities firms, the possible termination of registration of the Common Stock
under the Exchange Act and other factors. The Purchaser cannot predict whether
the reduction in the number of Common Stock that might otherwise trade publicly
would have an adverse or beneficial effect on the market price for or
marketability of the Common Stock or whether it would cause future market prices
to be greater or less than the price per share to be paid pursuant to the Offer.
Exchange Act Registration. The Common Stock is currently registered under
the Exchange Act. Registration of the Common Stock under the Exchange Act may be
terminated upon application of the Company to the Commission if the Common Stock
is neither listed on a national securities exchange or quoted on Nasdaq nor held
by 300 or more holders of record. Termination of registration of the Common
Stock under the Exchange Act would substantially reduce the information required
to be furnished by the Company to its stockholders and to the Commission and
would make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b) of
the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings and
the related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Common
Stock under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Common Stock is not terminated prior to the Merger,
then the Common Stock will be delisted from all stock exchanges and the
registration of the Common Stock will be terminated following the consummation
of the Merger.
Margin Regulations. The shares of Common Stock are currently "margin
securities" under the regulations of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of the Common
Stock. Depending upon factors similar to those described above regarding listing
and market quotations, it is possible that, following the Offer, the Common
Stock would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer be
used as collateral for loans made by brokers for the purpose of buying, carrying
or trading in securities.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 120
Monument Circle, Indianapolis, Indiana 46204 and its telephone number is (317)
488-6666.
The Company is a holding company for a nationwide network of operating
business units engaged in providing insurance broking, risk management
consulting, managed health care integration and administration, workers
compensation administration, underwriting management and employee benefits
consulting services to government, not-for-profit and private sector employers,
groups, trusts and associations, and individual consumers. The Company offers to
its customers, as broker or agent, a range of products tailored to the specific
needs of their particular business which may include health related products
(including indemnity insurance, employee benefit programs, and third-party
administration), managed care programs, property and casualty insurance, life
and disability insurance, and other select financial services. The Company
derived approximately 44% of its revenues for the year ended December 31, 1996
from the sale and administration of life and health insurance products
underwritten by Parent and or its affiliated insurers.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company 10-K and the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 (the "Company 10-Q"). More comprehensive
financial information is included in the Company 10-K and such Company 10-Q and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety
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<PAGE> 34
by reference to such information. The Company 10-K and the Company 10-Q and such
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "-- Available Information."
ACORDIA, INC.
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT SHARES, PER SHARE AMOUNTS AND RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED DECEMBER
MARCH 31, 31,
------------------- -------------------
1997 1996 1996 1995
------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................................... $ 165.8 $ 164.7 $ 661.0 $ 555.1
Operating income................................. 22.1 22.3 87.3 175.4
Net income....................................... 6.7 7.3 29.9 23.6
Earnings per share............................... 0.50 0.51 2.09 1.64
Earnings per share, fully diluted................ 0.49 0.50 2.09 1.64
Cash dividends per share......................... 0.20 0.20 0.80 0.72
Ratio of earnings to fixed charges............... 1.5x 2.8x 1.4x 2.0x
Weighted average shares outstanding.............. 13,395 14,361 14,324 14,379
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets..................................... $ 734.5 $ 721.7 $ 745.6 $ 736.5
Long-term debt................................... 136.7 138.7 136.2 131.6
Other long-term liabilities...................... 58.1 36.4 49.2 34.2
Stockholders' equity............................. 206.2 216.9 202.4 212.1
Book value per share............................. $ 15.86 $ 15.50 $ 15.58 $ 15.19
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, NY 10048
and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661.
Copies of such information should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, DC 20549. The Commission also maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains reports
and other information regarding registrants that file electronically with the
Commission. Such material should also be available for inspection at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
Company Information. The information concerning the Company contained in
this Offer to Purchase has been taken from or based upon publicly available
documents on file with the Commission and other publicly available information.
Although Parent and the Purchaser do not have any knowledge that any such
information is untrue, neither the Purchaser nor Parent takes any responsibility
for the accuracy or completeness of such information or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information.
CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
Parent is an Indiana domiciled mutual insurance company and is one of the
nation's largest health insurance and managed care companies. As an independent
licensee of the Blue Cross Blue Shield
32
<PAGE> 35
Association, Parent offers Blue Cross Blue Shield ("BCBS") branded insurance
products in Indiana and, through its subsidiaries, in Ohio and Kentucky. As of
December 31, 1996, the Company provided health care coverage or services to
approximately four million people throughout these states, and its share of the
health insurance and managed care market ranged from 20-30% of the total
population in this tri-state region. Parent is licensed to do business in 30
states and, including subsidiary operations, conducts business in all fifty
states. As of December 31, 1996, Parent had total assets of $5.0 billion and
policyholders' surplus of $1.3 billion.
The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Parent which to date has not conducted any business other
than in connection with the Offer and the Merger. The principal executive
offices of Parent and the Purchaser are located at 120 Monument Circle,
Indianapolis, Indiana 46204. Of the 8,693,056 shares of Common Stock owned
beneficially by Parent, 8,693,056 shares of Common Stock are currently held of
record by Parent and no shares of Common Stock are currently held of record by
the Purchaser. Prior to the closing of the Offer, all of the shares of Common
Stock held of record by Parent will be contributed to Purchaser.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent is set forth in Schedule I hereto
and incorporated herein by reference.
During the last five years, none of the Purchaser, Parent or, to the
Purchaser's or Parent's knowledge, any person named in Schedule I hereto, has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation of such laws.
Set forth below is a summary of certain selected consolidated financial
information with respect to Parent and its subsidiaries for the three months
ended March 31, 1997 and March 31, 1996, and for the years ended December 31,
1996 and 1995.
Parent is not subject to the informational reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the Commission relating to its business, financial condition or other matters.
Parent files certain financial and other information with the Departments of
Insurance for the 30 states in which it is licensed to transact insurance
business. In addition, the Indiana Department of Insurance conducts regular
financial examinations of Parent and, from time to time, state insurance
regulatory authorities in any of the 30 jurisdictions may make inquiries
regarding Parent's compliance with regulations regarding the conduct of its
insurance business. Parent is also subject to the insurance holding company act
of each state in which it is licensed. These laws contain requirements and
restrictions regarding transactions between an insurance company and its
affiliates. Reports that are required to be filed under such holding company
acts include information concerning capital structure, ownership, management,
general financial condition and certain intercompany transactions. Although
state laws vary somewhat, reports and other information submitted by, or
otherwise concerning, Parent are generally available from the Departments of
Insurance where Parent does business.
Parent's selected consolidated financial data included herein have been
prepared in accordance with generally accepted accounting principles.
33
<PAGE> 36
ANTHEM INSURANCE COMPANIES, INC.
SELECTED FINANCIAL INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ---------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues..................................... $1,599.0 $1,598.0 $6,269.6 $6,037.5
Income (loss) before income taxes and
minority interest.......................... 13.5 39.5 119.1 (121.3)
Minority interest in consolidated
subsidiaries............................... (1.7) (2.8) (12.1) (8.8)
Net income (loss)............................ 4.8 20.1 64.2 (98.0)
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets................................. $4,880.8 $5,344.9 $4,968.0 $5,345.7
Policy liabilities........................... 1,780.3 1,950.2 1,804.8 1,953.7
Total policyholders' surplus................. 1,316.2 1,281.4 1,347.4 1,314.9
</TABLE>
SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon obtaining any arrangements for the
financing of the Offer. Purchaser estimates that the total amount of funds
required by the Purchaser to purchase all of the Common Stock pursuant to the
Offer, to pay the surrender value of all outstanding Stock Options and all
outstanding Great American Warrants and to pay fees and expenses related to the
Offer and the Merger will be approximately $216 million. The Purchaser plans to
obtain all funds needed for the Offer and the Merger through a capital
contribution from Parent.
Parent plans to obtain funds for such capital contribution from available
cash on hand, assuming the closing of the sale of the assets of Anthem Casualty
Insurance Group, Inc., one of Parent's subsidiaries, which is scheduled to close
on June 30, 1997, or, if such closing does not occur, from the liquidation of
outstanding short-term investment securities.
DIVIDENDS AND DISTRIBUTIONS
The Company's Board of Directors declared a quarterly cash dividend to
holders of record of Common Stock on May 27, 1997, of $0.20 per share on May 13,
1997, payable on June 16, 1997. Such holders of record will be entitled to
receive the quarterly cash dividend whether or not they tender their Common
Stock pursuant to the Offer, and no adjustment will be made to the price in the
Offer or to any other terms of the Offer as a result of the payment of any such
quarterly dividend to such stockholders.
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, to pay for any Common Stock not theretofore
accepted for payment or paid for (and the Purchaser may postpone the acceptance
for payment or, subject to the restriction set forth above, payment for any
tendered Common Stock pursuant to the Offer), and may amend or terminate the
Offer, to the extent provided in the Merger Agreement, unless the Minimum Tender
Condition shall have been satisfied or waived in accordance with the terms of
the Merger Agreement. Furthermore, notwithstanding any other term or provision
of the Offer, the Purchaser will not be required to accept for payment or, in
its good faith discretion, subject as aforesaid, to pay for any Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer if, at any time on or after the date of the Merger Agreement (June 2,
1997), and before the acceptance of such
34
<PAGE> 37
Common Stock for payment or, subject to any applicable rules and regulations of
the Commission, the payment therefor, any of the following conditions exist:
(a) an order shall have been entered in any action or proceeding
before any federal or state court or governmental agency or other
regulatory body or a permanent injunction by any federal or state court of
competent jurisdiction in the United States shall have been issued and
remain in effect (i) making illegal the purchase of, or payment for, any
shares of Common Stock by the Purchaser, Parent or any of Parent's other
subsidiaries; (ii) otherwise preventing the consummation of the Offer or
the Merger; or (iii) imposing limitations on the ability of the Purchaser,
Parent or any of Parent's other subsidiaries to exercise effectively full
rights of ownership of any shares of Common Stock, including, without
limitation, the right to vote any shares of Common Stock acquired by the
Purchaser pursuant to the Offer on all matters properly presented to the
Company's stockholders, which would effect a material diminution in the
value of the shares acquired by the Purchaser;
(b) there shall have been any federal or state statute, rule or
regulation enacted, enforced, promulgated, amended or made applicable to
the Company, the Purchaser, Parent or any other affiliate of Parent or the
Company on or after the date of the Offer by any governmental, regulatory
or administrative authority or agency, domestic, foreign or supranational
(each, a "Governmental Entity") that could reasonably be expected to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iii) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) any
extraordinary or material adverse change in the financial markets or major
stock exchange indices in the United States from that existing at the close
of business on the date of the Merger Agreement, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iv) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or Governmental Entity on,
or other event that, in the reasonable judgment of the Purchaser, is
reasonably likely to materially adversely affect the extension of credit by
banks or other lending institutions, (v) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (vi) in the case of any of the
foregoing situations described in clauses (i) through (v) of this paragraph
(c) existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(d) any approval, permit, authorization, favorable review or consent
of any Governmental Entity, including, but not limited to, the Indiana
Insurance Commissioner, shall not have been obtained;
(e) the Purchaser shall have reached an agreement or understanding
with the Company, including with a majority of the Independent Directors,
providing for termination of the Offer;
(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement, or any of the representations and warranties of the Company set
forth in the Merger Agreement shall not be true in any material respect
when made or at any time prior to consummation of the Offer as if made at
and as of such time;
(g) the Merger Agreement shall have been terminated in accordance with
its terms; or
(h) the Board of Directors of the Company shall have withdrawn, or
materially modified or amended in a manner materially adverse to Parent or
the Purchaser, its approval or recommendation of the Offer or the Merger;
which, in the reasonable judgment of the Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by the
Purchaser, Parent or any of Parent's other subsidiaries) giving rise to any such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payment.
35
<PAGE> 38
CERTAIN LEGAL MATTERS
General. In connection with the Offer and the Merger, Parent must obtain
approval from the Indiana Insurance Commissioner for the creation of the
Purchaser, the contribution of the shares of Common Stock owned by Parent to the
Purchaser and the contribution of cash to the Purchaser to fund the Offer, the
Merger and the other transactions contemplated by the Merger Agreement. Parent
received the requisite approval to form the Purchaser on June 2, 1997 and
expects to receive the other requisite approvals from the Indiana Insurance
Commissioner prior to the expiration of the Offer, and such approvals are a
condition to the Offer.
Except as otherwise disclosed herein, based on a review of publicly
available information filed by the Company with the Commission, neither the
Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Common
Stock by the Purchaser pursuant to the Offer or the Merger or (ii) any approval
or other action, by any Governmental Entity, that would be required for the
acquisition or ownership of Common Stock by the Purchaser as contemplated
herein. Should any such approval or other action be required, the Purchaser
currently contemplates that such approval or action would be sought. While the
Purchaser does not currently intend to delay the acceptance for payment of
Common Stock tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or action, if needed,
would be obtained or would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, the
Purchaser or Parent or that certain parts of the businesses of the Company, the
Purchaser or Parent might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchaser's
obligation under the Offer to accept for payment and pay for Common Stock is
subject to certain conditions. See "-- Certain Conditions of the Offer."
Going Private Transaction. The Offer may be deemed to constitute a "Going
Private" transaction under Rule 13e-3 under the Exchange Act. Therefore,
Purchaser has filed with the Commission a Transaction Statement on Schedule
13E-3, together with exhibits, in addition to filing with the Commission a
Tender Offer Statement on Schedule 14D-1. Pursuant to Rule 13e-3, this Offer to
Purchase contains information relating to, among other matters, the fairness of
the Offer to the Company's stockholders.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice and the
FTC and certain waiting period requirements have been satisfied. Because Parent
already owns more than 50% of the outstanding voting securities of the Company,
Parent does not believe that it is required to make any filings pursuant to the
HSR Act or that the Offer and the Proposed Merger are subject to the HSR Act.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws governing corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were
inapplicable only under certain conditions. Subsequently, a number of Federal
courts ruled that various state takeover statutes were unconstitutional insofar
as they apply to corporations incorporated outside the state of enactment.
Except as described herein, Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer, and nothing in this Offer to Purchase nor any action
taken in
36
<PAGE> 39
connection herewith is intended as a waiver of that right. In the event that any
state takeover statute is found applicable to the Offer, the Purchaser might be
unable to accept for payment or pay for shares of Common Stock tendered pursuant
to the Offer or be delayed in continuing or consummating the Offer. In such
case, the Purchaser may not be obligated to accept for payment or pay for shares
of Common Stock tendered. See "-- Certain Conditions of the Offer."
Delaware Statute. Section 203 of the DGCL, in general, prohibits a
Delaware corporation, such as the Company, from engaging in a business
combination with the holder of 15% or more of its outstanding shares (an
"interested stockholder") for a period of three years from the time such
interested stockholder became the holder of 15% or more of such shares unless
such stockholder owned shares in excess of the 15% limitation as of December 23,
1987, such stockholder acquired more than 15% of the stock with the prior
approval of the board of the corporation or certain other conditions are
satisfied. Parent initially acquired the shares of Common Stock it beneficially
owned with the prior approval of the Company's Board of Directors, and more than
three years have elapsed since Parent acquired more than 15% of the Common Stock
and became an "interested stockholder." Accordingly, Purchaser does not believe
that Section 203 of the DGCL is applicable to the Offer or will be applicable to
the Merger. See "SPECIAL FACTORS -- Background of the Offer."
Certain Litigation. On June 4, 1997, an individual and purported class
action was commenced in the Court of Chancery of the State of Delaware, New
Castle County, purportedly on behalf of stockholders of the Company. The
defendants are the Company and its following officers and directors: L. Ben
Lytle, Frank C. Witthun, Patrick M. Sheridan, John C. Alpin, Birch E. Bayh, John
C. Crane, Mitchell E. Daniels, Jr., Catherine E. Dolan, Ernie E. Green, Dwane R.
Houser, Thomas C. Roberts, William W. Rosenblatt, James B. Stradtner, and
Michael L. Smith. The complaint alleges that in connection with the decision to
enter into the definitive Merger Agreement with Parent the individual defendants
"suffer from conflicts of interest either because they are affiliated with
Parent or maintain close business and personal relationships with the members of
the Company's senior management," and that the defendants "have violated
fiduciary and other common law duties owed to the plaintiff and the other
members of the class in that they have not and are not exercising independent
judgment, and have acted and are acting to the detriment of the Class." The
complaint seeks damages in an unspecified amount, and preliminary and permanent
injunctive relief enjoining defendants from proceeding with or consummating the
transaction with Parent or rescission in the event the transaction is
consummated. The Company intends to, and understands that the other defendants
intend to, vigorously defend this lawsuit, including the request for a
preliminary injunction. The foregoing description of the complaint is qualified
in its entirety by reference to such complaint filed as exhibit (c)(4) to the
Schedule 14D-1 and incorporated by reference.
On June 4, 1997, another individual and purported class action was
commenced in the Court of Chancery of the State of Delaware, New Castle County,
purportedly on behalf of stockholders of the Company. The defendants are the
Company, Parent, L. Ben Lytle, Patrick M. Sheridan, Dwane R. Houser, and Frank
C. Whitthun. The complaint alleges that in connection with the proposed merger
transaction with Parent, the defendants, among other things, have violated
fiduciary duties, failed to exercise independent business judgment, and acted to
the detriment of the Company's public stockholders for their own personal
benefit. The complaint seeks damages in an unspecified amount, preliminary and
permanent injunctive relief enjoining Parent from acquiring the outstanding
shares of the Company not already owned by it, and an order directing defendants
to carry out their fiduciary duties to plaintiff and the purported class. The
Company intends to, and understands that the other defendants intend to
vigorously defend this lawsuit, including the request for preliminary
injunction. The foregoing description of the complaint is qualified in its
entirety by reference to such complaint filed as exhibit (c)(5) to the Schedule
14D-1 and incorporated by reference.
FEES AND EXPENSES
Credit Suisse First Boston is acting as Dealer Manager in connection with
the Offer and serving as financial advisor to Parent in connection with its
proposed acquisition of the Common Stock. Parent has agreed to pay Credit Suisse
First Boston an advisory fee of $100,000 (creditable against the transaction
37
<PAGE> 40
fee) and a transaction fee of $2.5 million in connection with the effort to
acquire all of the outstanding Common Stock of the Company, $500,000 of which
was payable upon the execution of the Merger Agreement, and the balance of which
is payable upon the closing of the Offer if at such time Parent beneficially
owns more than 90% of the outstanding shares of Common Stock of the Company or
upon the closing of the Merger. Parent has also agreed to reimburse Credit
Suisse First Boston for all out-of-pocket expenses, including the fees and
expenses of its legal counsel and will indemnify Credit Suisse First Boston
against certain liabilities and expenses in connection herewith, including,
without limitation, certain liabilities under federal securities laws. In
addition, Parent has agreed to pay Credit Suisse First Boston a separate fee of
$2.5 million in connection with the sale of Acordia Brokers, which fee shall be
payable upon the sale of all or a substantial amount of the assets or capital
stock of Acordia Brokers.
Credit Suisse First Boston may from time to time in the future render
various investment banking services to Parent and its affiliates, for which it
is expected it would be paid customary fees. In the ordinary course of business,
Credit Suisse First Boston and its affiliates may actively trade the securities
of Parent and the Company for their own account and for the account of customers
and accordingly may, at any time, hold long or short positions in such
securities. Credit Suisse First Boston has from time to time rendered various
investment banking services to the Company.
D. F. King & Co., Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Common Stock by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners of Common Stock. The Purchaser will
pay the Information Agent reasonable and customary compensation for all such
services in addition to reimbursing the Information Agent for reasonable
out-of-pocket expenses in connection therewith. The Purchaser has agreed to
indemnify the Information Agent against certain liabilities and expenses in
connection with the Offer, including, without limitation, certain liabilities
under the federal securities laws.
First Chicago Trust Company of New York has been retained as the
Depositary. The Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, will reimburse the
Depositary for its reasonable out-of-pocket expenses in connection therewith and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including, without limitation, certain liabilities under
the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Common Stock pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies and other nominees will, upon request, be reimbursed by Parent
or the Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
The Merger Agreement provides that all costs and expenses incurred in
connection with the Merger Agreement will be paid by the party incurring the
expense. Estimated costs and fees to be incurred by Parent in connection with
the Offer and the Merger are as follows:
<TABLE>
<S> <C>
Investment banking fees................................................. $2,500,000
Legal fees.............................................................. 350,000
S.E.C. filing fees...................................................... 57,487
Printing costs.......................................................... 50,000
Solicitation costs...................................................... 20,000
Miscellaneous........................................................... 22,513
--------
Total......................................................... 3,000,000
========
</TABLE>
The Company has advised Parent that the estimated fees and expenses to be
incurred by the Company in connection with the Offer and the Merger will be
approximately $1,000,000.
38
<PAGE> 41
MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Common Stock in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Common Stock in such jurisdiction. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser by
the Dealer Manager or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission a Transaction
Statement on Schedule 13E-3 pursuant to Rule 13e-3 under the Exchange Act,
together with Exhibits, and a Tender Offer Statement on Schedule 14D-1 pursuant
to Rule 14D-3 under the Exchange Act, together with Exhibits, each of which
furnishes certain additional information with respect to the Offer, and may file
amendments thereto. Such Schedule 13E-3 and Schedule 14D-1, and any amendments
thereto, including Exhibits, may be inspected and copies may be obtained in the
manner set forth under "-- Certain Information Concerning the Company" (except
that such material will not be available at the regional offices of the
Commission).
AICI ACQUISITION CORP.
June 6, 1997
39
<PAGE> 42
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
1. Directors and Executive Officers of Parent. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years, as well as the amount and nature of the beneficial
ownership of the Company's Common Stock, of each director and executive officer
of Parent. The principal address of Parent and the current business address for
each individual listed below is 120 Monument Circle, Indianapolis, Indiana. Each
of the individuals listed below is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; STOCK OWNERSHIP
MATERIAL POSITIONS HELD DURING THE PAST FIVE OF THE COMPANY'S
NAME YEARS COMMON STOCK
- ------------------------------ --------------------------------------------- ----------------
<S> <C> <C>
Dwane R. Houser............... Chairman of the Board of Parent. Mr. Houser 8,449(1)
has been Chairman of Board of Parent since
October 1995 and a director of the Company
since September 1995. Prior to his
affiliation with Parent, he was Chairman of
the Board and Chief Executive Officer of
Community Mutual Insurance Company, a
health insurance company which merged with
Parent in October 1995 ("CMIC").
L. Ben Lytle.................. Chief Executive Officer, President and 136,500(2)
Director of Parent. Mr. Lytle has been
President, Chief Executive Officer and a
director of Parent since March 1989 and
Chairman of the Board of the Company since
it began operations. He served as the
Company's Chief Executive Officer from the
time it began operations until November
1996. From February 1994 to October 1995,
he served as Chairman of the Board of
Parent.
Stephen T. Bow................ Director of Parent. Mr. Bow has been a 2,050
director of Parent since 1993. From 1994
until his retirement in December 1996, Mr.
Bow was Chairman and Chief Executive
Officer of Anthem Life Insurance Companies,
and from July 1993 through June 1994 was
President and Chief Executive Officer of
Southeastern Group, Inc., the successor to
Southeastern Mutual Insurance Company,
d/b/a BC/BS of Kentucky (which merged into
Parent in 1993), for whom he served as
President and Chief Executive Officer since
1989.
Vincent A. Chiarucci.......... Director of Parent. Mr. Chiarucci has been a --
director of Parent since October 1995. From
June 1987 until his retirement in January
1995, Mr. Chiarucci was President of Figgie
International, Inc.
Kenneth K. Harper............. Director of Parent. Mr. Harper has been a 205
director of Parent since 1993. Mr. Harper has
been President of The Harper Realty Group,
L.L.C. since 1986.
John R. Hodowal............... Director of Parent. Mr. Hodowal has been a --
director of Parent since 1991. Mr. Hodowal
has been Chairman and Chief Executive
Officer of IPALCO Enterprises, Inc. since
1989.
Frank B. Hower, Jr. .......... Director of Parent. Mr. Hower has been a 1,000
director of Parent since 1993. From 1980
until his retirement in 1990, Mr. Hower was
Chairman and Chief Executive Officer of
Liberty National Bancorp, Inc.
</TABLE>
S-I-1
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; STOCK OWNERSHIP
MATERIAL POSITIONS HELD DURING THE PAST FIVE OF THE COMPANY'S
NAME YEARS COMMON STOCK
- ------------------------------ --------------------------------------------- ----------------
<S> <C> <C>
William G. Mays............... Director of Parent. Mr. Mays has been a 1,000
director of Parent since 1993. Mr. Mays has
been the President of Mays Chemical Co.,
Inc. since 1980.
James W. McDowell, Jr. ....... Director of Parent. Mr. McDowell has been a --
director of Parent since 1993. He has been
President of McDowell & Associates since
1992 and was Chief Executive Officer of
Dairyman, Inc. from 1980 to 1992.
James A. Perkins.............. Director of Parent. Mr. Perkins has been a 450
director of Parent since 1989. From 1964
until his retirement in May 1995, he was
International Representative of United Auto
Workers, Region 3.
George A. Schaeffer, Jr. ..... Director of Parent. Mr. Schaefer has been a --
director of Parent since October 1995. He has
served as President and Chief Executive
Officer of Fifth Third Bancorp/Fifth Third
Bank since 1990.
Andrew W. Skrobola............ Director of Parent. Mr. Skrobola has been a --
director of Parent since October 1995. He has
served as Senior Vice President of Finance
of Thomas Steel Strip Corp. since 1975.
Charles C. Smith, Jr.,
M.D. ....................... Director of Parent. Dr. Smith has been a --
director of Parent since 1993. Dr. Smith has
been a physician since 1962.
Dennis J. Sullivan, Jr. ...... Director of Parent. Mr. Sullivan has been a --
director of Parent since October 1995. Since
1993, Mr. Sullivan has been Executive
Counselor of Dan Pinger Public Relations.
From 1987 until 1993, he was Executive Vice
President and Chief Financial Officer of
Cincinnati Bell, Inc.
Sr. Francis M. Thrailkill..... Director of Parent. Sister Thrailkill has --
been a director of Parent since October 1995.
She has served as President of College of
Mount St. Joseph since 1987.
Fred C. Tucker III............ Director of Parent. Mr. Tucker has been a 2,930
director of Parent since 1989. He has been
President of F. C. Tucker Company, Inc.
since 1977.
Thomas C. Walker.............. Director of Parent. Mr. Walker has been a 1,000
director of Parent since 1979. From 1980
until his retirement in 1990, Mr. Walker
was Executive Vice President and Chief
Financial Officer of Indiana Bell Telephone
Company, Inc.
Patrick M. Sheridan........... Executive Vice President and Chief Financial 78,000(2)
Officer of Parent. Mr. Sheridan has served as
Executive Vice President and Chief
Financial Officer of Parent since 1987, and
he was Treasurer of Parent from 1987 to
1991. From 1989 until August 1996, he
served as Executive Vice President and
Chief Financial Officer of the Company. Mr.
Sheridan has been a director of the Company
since 1989.
David R. Frick................ Executive Vice President and Chief 5,278(1)
Administrative Officer of Parent. Mr. Frick
has served as Executive Vice President and
Chief Administrative Officer of Parent
since 1995. Prior to joining the Parent, he
was an attorney with Baker & Daniels and
was Managing Partner of the firm from 1987
to 1992.
</TABLE>
S-I-2
<PAGE> 44
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; STOCK OWNERSHIP
MATERIAL POSITIONS HELD DURING THE PAST FIVE OF THE COMPANY'S
NAME YEARS COMMON STOCK
- ------------------------------ --------------------------------------------- ----------------
<S> <C> <C>
Bain J. Farris................ Executive Vice President of Integrated Health 1,524
Care Delivery of Parent. Mr. Farris has
served as Executive Vice President since
January 1995. From 1986 through 1994, he
was President and Chief Executive Officer
of St. Vincent Hospital and Health Center.
</TABLE>
- ---------------
(1) Amount includes restricted stock as to which the executive has the right to
vote and receive dividends but does not have the right to dispose of such
stock until the expiration of various restriction periods as follows: Mr.
Houser -- 5,076 restricted shares and Mr. Frick -- 3,045.5 restricted
shares. During such restriction periods, the restricted stock is subject to
forfeiture upon termination of the executive's employment with Parent or one
of its subsidiaries.
(2) Amount includes 31,500 exercisable options held by Mr. Lytle; and 18,000
exercisable options held by Mr. Sheridan.
2. Directors and Executive Officers of the Purchaser. The executive
officers of the Purchaser are Dwane R. Houser, Chairman; L. Ben Lytle,
President; Patrick M. Sheridan, Treasurer; and David R. Frick, Secretary. The
directors of the Purchaser are Messrs. Houser, Lytle, Sheridan and Frick. The
current business address, citizenship and present occupation or employment and
material occupations, positions, offices or employments for the past five years,
as well as the amount and nature of the beneficial ownership of the Company's
Common Stock, of each such officer and director of the Purchaser are as set
forth above.
S-I-3
<PAGE> 45
SCHEDULE II
PURCHASES OF COMMON STOCK BY PARENT
Set forth below are the amount of shares of Common Stock purchased by
Parent since January 1, 1995, the range of prices paid for such shares and the
average purchase price for each quarterly period of the Company during such
period:
<TABLE>
<CAPTION>
FISCAL QUARTER NUMBER OF SHARES PRICE RANGE AVERAGE PRICE
- ----------------------------------------------- ---------------- ----------- ----------------
<S> <C> <C> <C>
4th Quarter 1995............................... 58,400 $27 1/2-29 1/8 $28.36125
1st Quarter 1996............................... 418,600 $27 3/4-31 39.375
2nd Quarter 1996............................... 4,500 $31 7/8-32 1/2 32.1875
3rd Quarter 1996............................... -- -- --
4th Quarter 1996............................... -- -- --
1st Quarter 1997............................... 5,988(1) N/A(1) N/A(1)
</TABLE>
- ---------------
(1) The transactions reported consist of Parent's acceptance of restricted
shares of Common Stock in satisfaction of tax withholding obligations of
participants in the Anthem Acordia Stock Plan upon the lapse of restrictions
upon such shares, at the request of the participants, pursuant to the plan.
S-II-1
<PAGE> 46
ANNEX I
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Section 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to Section
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
A-I-1
<PAGE> 47
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to Section
228 or Section 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the
A-I-2
<PAGE> 48
effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound,
A-I-3
<PAGE> 49
as the Court may direct. Payment shall be so made to each such stockholder, in
the case of holders of uncertificated stock forthwith, and the case of holders
of shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
A-I-4
<PAGE> 50
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for shares of
Common Stock and any other required documents should be sent or delivered by
each Stockholder or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street
Jersey City, New Jersey 07303 Vietnam Veterans Memorial Plaza New York, New York 10005
New York, New York 10041
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only): Notice of Guaranteed Delivery:
(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>
Any questions and request for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and addresses
below. You may also contact your local broker, dealer, commercial bank or trust
company for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Toll Free (800) 207-2872
The Dealer Manager for the Offer is:
[CREDIT SUISSE LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (888) 624-6123
June 6, 1997
<PAGE> 1
LETTER OF TRANSMITTAL Exhibit (a)(2)
To Tender Shares of Common Stock
of
Acordia, Inc.
Pursuant to the Offer to Purchase dated June 6, 1997
by
AICI Acquisition Corporation
a wholly owned subsidiary of
Anthem Insurance Companies, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street
Jersey City, New Jersey 07303 Vietnam Veterans Memorial Plaza New York, New York 10005
New York, New York 10041
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only): Notice of Guaranteed Delivery:
(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED
BELOW.
PARTICIPANTS IN THE COMPANY'S 401(k) LONG TERM SAVINGS INVESTMENT PLAN, THE ABI
401(k) AND PROFIT SHARING PLAN AND THE ASSOCIATED GROUP 401(k) LONG TERM SAVINGS
INVESTMENT PLAN (THE "PLANS") DESIRING TO TENDER COMMON STOCK (AS DEFINED BELOW)
SHOULD SO INSTRUCT THE TRUSTEE FOR THE PLANS BY COMPLETING THE FORM WHICH WILL
BE PROVIDED TO PARTICIPANTS FOR THAT PURPOSE. PARTICIPANTS CANNOT TENDER SHARES
ALLOCATED TO THEIR ACCOUNTS BY EXECUTING THIS LETTER OF TRANSMITTAL.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Common Stock (as defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined below) is utilized, if
delivery of Common Stock is to be made by book-entry transfer to an account
maintained by the Depositary at The Depository Trust Company ("DTC") or the
Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to
the book-entry transfer procedure described in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock" of the Offer to Purchase (as
defined below).
Stockholders whose certificates for Common Stock are not immediately
available or who cannot deliver either the certificates for, or a Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to, their Common
Stock and all other documents required hereby to the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase) must tender their
Common Stock in accordance with the guaranteed delivery procedures set forth in
the section entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock"
of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
[ ] CHECK HERE IF TENDERED COMMON STOCK IS BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING. (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER COMMON STOCK BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-----------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
<TABLE>
<CAPTION>
PHILADELPHIA
THE DEPOSITORY DEPOSITORY
TRUST COMPANY TRUST COMPANY
-------------- -------------
<S> <C> <C>
(CHECK ONE) [ ] [ ]
</TABLE>
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED COMMON STOCK IS BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
-----------------------------------------------------------------------------
Window Ticket No. (if any)
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------------------------------------------------
Name of Institution which Guaranteed Delivery
--------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK TENDERED
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) COMMON STOCK TENDERED
APPEAR(S) ON STOCK CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
CERTIFICATE EVIDENCED BY NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
=================================================
=================================================
TOTAL SHARES
------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry stockholders.
(2) Unless otherwise indicated, it will be assumed that all shares of Common Stock being delivered to the Depositary
are being tendered hereby. See Instruction 4.
------------------------------------------------------------------------------------------------------------------
</TABLE>
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Common Stock tendered hereby. The certificates and number of shares of Common
Stock that the undersigned wishes to tender should be indicated in the
appropriate boxes.
<PAGE> 3
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to AICI Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Anthem Insurance
Companies, Inc. ("Parent"), the above-described shares of Common Stock, par
value $1.00 per share (the "Common Stock") of Acordia, Inc., a Delaware
corporation (the "Company"), pursuant to Purchaser's offer to purchase all
outstanding Common Stock, at a price of $40.00 per share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated June 6, 1997 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, as each may be amended or supplemented from time to time, together
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to
Parent or one or more direct or indirect wholly owned subsidiaries of Parent,
the right to purchase all or any portion of the Common Stock tendered pursuant
to the Offer.
Subject to, and effective upon, acceptance for payment of the Common Stock
tendered herewith, in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all the Common Stock that is being tendered hereby and
all dividends (other than regular quarterly cash dividends having a customary
and usual record and payment date prior to the Purchaser purchasing and becoming
a record holder of such Common Stock) and distributions (including, without
limitation, distributions of additional Common Stock) (collectively,
"Distributions"), and irrevocably appoints First Chicago Trust Company of New
York (the "Depositary") the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Common Stock and all Distributions, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to the full extent of the undersigned's rights
with respect to such Common Stock (and Distributions) to (i) deliver
certificates evidencing such Common Stock and all Distributions, or transfer
ownership of such Common Stock and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to, or upon the order of,
the Purchaser, (ii) present such Common Stock and all Distributions for transfer
on the books of the Company and (iii) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Common Stock and all
Distributions, all in accordance with the terms of the Offer.
<PAGE> 4
By executing this Letter of Transmittal, the undersigned irrevocably
appoints the Purchaser and its officers, and each of them, and any other
designees of the Purchaser, as the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to the Common Stock tendered hereby and
accepted for payment by the Purchaser (and any and all Distributions). All such
powers of attorney and proxies shall be considered irrevocable and coupled with
an interest in the tendered Common Stock (and Distributions). This appointment
will be effective if, when, and only to the extent that, the Purchaser accepts
such Common Stock for payment pursuant to the Offer. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Common Stock (and such other Common Stock and
securities issued in Distributions) will, without further action, be revoked,
and no subsequent powers of attorney, proxies, consents or revocations may be
given or executed by the undersigned (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
named above will, with respect to the Common Stock and other securities for
which the appointment is effective, be empowered to exercise all voting and
other rights of the undersigned as they in their sole discretion may deem proper
at any annual or special meeting of the stockholders of the Company or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise, and the Purchaser reserves the right to require that, in
order for Common Stock or other securities to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Common Stock,
the Purchaser must be able to exercise full voting, consent or other rights with
respect to such Common Stock and all Distributions, including voting at any
meeting of stockholders of the Company (whether annual or special or whether or
not adjourned) or action by written consent without a meeting in respect of such
Common Stock.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Common Stock
tendered hereby and all Distributions, and that when such Common Stock is
accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances, and that none of
such Common Stock and Distributions will be subject to any adverse claim. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Common Stock tendered hereby
and all Distributions. In addition, the undersigned shall remit and transfer
promptly to the Depositary for the account of the Purchaser all Distributions in
respect of the Common Stock tendered hereby, accompanied by appropriate
documentation of transfer, and, pending such remittance and transfer or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Common Stock tendered hereby or deduct from such purchase
price, the amount or value of such Distribution as determined by the Purchaser
in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Common Stock pursuant to any
one of the procedures described in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock" of the Offer to Purchase and in
the instructions hereto will constitute the undersigned's acceptance of the
terms and conditions of the Offer. The Purchaser's acceptance of such Common
Stock for payment will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer,
including, without limitation, the undersigned's representation and warranty
that the undersigned owns the Common Stock being tendered. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Common Stock
tendered hereby. Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the Offer, the price to be paid to the
undersigned will be the amended price notwithstanding the fact that a different
price is stated in this Letter of Transmittal.
<PAGE> 5
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Common Stock
purchased, and return all certificates evidencing Common Stock not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Common Stock Tendered." Similarly, unless otherwise indicated in
the box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Common Stock purchased and all certificates evidencing
Common Stock not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Common Stock Tendered." In the event that the boxes
entitled "Special Payment Instructions" and "Special Delivery Instructions" are
both completed, please issue the check for the purchase price of all Common
Stock purchased and return all certificates evidencing Common Stock not
purchased or not tendered (and any accompanying documents, as appropriate) in
the name(s) of, and mail such check and certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Please credit any
Common Stock tendered herewith by book-entry transfer that are not purchased by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
Special Payment Instructions, to transfer any Common Stock from the name of the
registered holder(s) thereof if the Purchaser does not purchase any of the
Common Stock tendered hereby.
<PAGE> 6
- ------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Common
Stock purchased or certificates evidencing Common Stock not tendered or
not purchased are to be issued in the name of someone other than the
undersigned.
Issue [ ] Check [ ] Certificate(s) to:
Name
-----------------------------------------------------
(PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Common
Stock purchased or certificates evidencing Common Stock not tendered or
not purchased are to be mailed to someone other than the undersigned, or
to the undersigned at an address other than that shown under "Description
of Common Stock Tendered."
Mail [ ] Check [ ] Certificate(s) to:
Name:
-----------------------------------------------------
(PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------------
<PAGE> 7
IMPORTANT
STOCKHOLDERS SIGN HERE:
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
- ------------------------1997
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for the Common Stock on a security position listing or by a
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instructions 1 and 5.)
Name(s):
================================================================================
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
================================================================================
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
- ----------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- ----------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
================================================================================
(PLEASE PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
================================================================================
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------------
Dated:
- ------------------------, 1997
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Common Stock (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Common Stock)
tendered hereby and such holder(s) has (have) completed neither the box entitled
"Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Common Stock is tendered for
the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND STOCK CERTIFICATES. This Letter
of Transmittal is to be completed by the holder of the Common Stock either if
certificates are to be forwarded herewith or, unless an Agent's Message (as
defined below) is utilized, if Common Stock is to be delivered by book-entry
transfer pursuant to the procedure set forth in the section entitled "THE TENDER
OFFER -- Procedures for Tendering Common Stock" of the Offer to Purchase.
Certificates evidencing all physically tendered Common Stock, or a confirmation
of a book-entry transfer into an account maintained by the Depositary at a
Book-Entry Transfer Facility of all Common Stock delivered by book-entry
transfer as well as a properly completed and duly executed Letter of
Transmittal, together with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other documents required by
this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in the Offer
to Purchase). If certificates for tendered Common Stock are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery.
Stockholders whose certificates for tendered Common Stock are not
immediately available, who cannot deliver their certificates for tendered Common
Stock and all other required documents to the Depositary prior to the Expiration
Date or who cannot complete the procedure for delivery by book-entry transfer on
a timely basis may tender such Common Stock pursuant to the guaranteed delivery
procedure described in the section entitled "THE TENDER OFFER -- Procedures for
Tendering Common Stock" of the Offer to Purchase. Pursuant to such procedure:
(i) such tender must be made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date; and (iii) the certificates
evidencing all physically delivered Common Stock in proper form for transfer by
delivery, or a confirmation of a book-entry transfer into an account maintained
by the Depositary at a Book-Entry Transfer Facility of all Common Stock
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery, as provided in the section
entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock" of the
Offer to Purchase. A "trading day" is any day on which the New York Stock
Exchange is open for business. The Notice of Guaranteed Delivery may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution and a representation that the stockholder owns the Common
Stock tendered within the meaning of, and that the tender of the Common Stock
effected thereby complies with, Rule 14e-4 under the Securities Exchange Act of
1934, as amended, each in the form set forth in such Notice of Guaranteed
Delivery.
<PAGE> 9
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Stock that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF COMMON STOCK, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. COMMON STOCK
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional shares of Common Stock will be purchased. By execution of this Letter
of Transmittal (or a facsimile hereof), all tendering stockholders waive any
right to receive any notice of the acceptance of their Common Stock for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Common Stock Tendered" is inadequate, the certificate numbers and/or the number
of shares of Common Stock should be listed on a separate schedule and attached
hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If less than all the Common Stock evidenced by any certificate
delivered to the Depositary herewith is to be tendered hereby, fill in the
number of shares of Common Stock which is to be tendered in the box entitled
"Number of Shares Tendered," as appropriate. In any such case, new
certificate(s) evidencing the remainder of the Common Stock that was evidenced
by the certificate(s) delivered to the Depositary herewith will be sent to the
person(s) signing this Letter of Transmittal, unless otherwise provided in the
box entitled "Special Delivery Instructions" on the reverse hereof, as soon as
practicable after the expiration of the Offer. All Common Stock evidenced by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Stock tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) evidencing such Common Stock without
alteration, enlargement or any other change whatsoever.
If any of the shares of Common Stock tendered hereby are owned of record by
two or more persons, all such persons must sign this Letter of Transmittal.
If any of the shares of Common Stock tendered hereby are registered in the
names of different holders, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
such Common Stock.
If this Letter of Transmittal is signed by the registered holder(s) of the
Common Stock tendered hereby, no endorsements of certificates or separate stock
powers are required, unless payment is to be made to, or certificates evidencing
Common Stock not tendered or not purchased are to be issued in the name of, a
person other than the registered holder(s), in which case, the certificate(s)
evidencing the Common Stock tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s). Signatures on such
certificate(s) and stock powers must be guaranteed by an Eligible Institution.
<PAGE> 10
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Stock tendered hereby, the certificate(s)
evidencing the Common Stock tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s). Signatures on such
certificate(s) and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of such person's authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Common Stock to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or if certificate(s)
evidencing Common Stock not tendered or not purchased are to be issued in the
name of, a person other than the registered holder(s), the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price unless evidence satisfactory to the Purchaser
of the payment of such taxes, or exemption therefrom, is submitted. EXCEPT AS
PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS
TO BE AFFIXED TO THE CERTIFICATES EVIDENCING THE COMMON STOCK TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, or certificate(s) evidencing Common Stock not tendered or not
purchased are to be returned to, a person other than the person(s) signing this
Letter of Transmittal or if such check or any such certificate is to be sent to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Common Stock Tendered" herein, the
appropriate boxes on this Letter of Transmittal must be completed. Persons
tendering Common Stock by book-entry transfer may request that shares of Common
Stock not purchased be credited to such account at any of the Book-Entry
Transfer Facilities as such stockholder may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
shares of Common Stock not purchased will be returned by crediting the account
at the Book-Entry Transfer Facilities designated above.
8. WAIVER OF CONDITIONS. Subject to the terms and conditions set forth in
the Agreement and Plan of Merger dated as of June 2, 1997 among the Company,
Parent and the Purchaser, the conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
<PAGE> 11
10. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Common Stock purchased from such stockholder. If the tendering stockholder has
not been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification
Number. If "Applied For" is written in Part I and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price to such stockholder until a TIN is provided to the
Depositary.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Common Stock has been lost, destroyed or stolen, the stockholder
should promptly notify the First Chicago Trust Company of New York by calling
(800) 446-2617 between 8:30 a.m. and 7:00 p.m. New York City time. An affidavit
of loss will be sent to the stockholder, which should then be completed and
returned with the Letter of Transmittal to the Depositary. The stockholder will
then be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE OF THE OFFER AND EITHER CERTIFICATES FOR
TENDERED COMMON STOCK MUST BE RECEIVED BY THE DEPOSITARY OR COMMON STOCK MUST BE
DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR
TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Common Stock
is accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Common
Stock purchased pursuant to the Offer may be subject to backup withholding of
31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, signed under penalties of
perjury, attesting to such individual's exempt status. Such forms can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
<PAGE> 12
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
pursuant to the Offer, the stockholder is required to notify the Depositary of
such stockholder's correct TIN by completing the form below certifying (a) that
the TIN provided on Substitute Form W-9 is correct (or that such stockholder is
awaiting a TIN), and (b) that (i) such stockholder has not been notified by the
Internal Revenue Service that such stockholder is subject to backup withholding
as a result of a failure to report all interest or dividends or (ii) the
Internal Revenue Service has notified such stockholder that such stockholder is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Common
Stock tendered hereby. If the Common Stock is in more than one name or is not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report. If the tendering stockholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, the stockholder should write "Applied For" in the space
provided for the TIN in Part I, and sign and date the Substitute Form W-9 and
the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE> 13
ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING:
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
- ----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification ------------------------------
FORM W-9 Number -- For all accounts, enter taxpayer Social Security Number(s)
DEPARTMENT OF THE TREASURY identification number in the box at right. OR
INTERNAL REVENUE SERVICE (For most individuals, this is your social ------------------------------
security number. If you do not have a Employer Identification Number
number, see Obtaining a Number in the (If awaiting TIN write
enclosed guidelines.) Certify by signing and "Applied For")
dating below. Note: If the account is in
more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup Withholding, see the enclosed
IDENTIFICATION NUMBER Guidelines and complete as instructed therein.
("TIN") CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of failure to report all
interest or dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
PART III -- Awaiting TIN [ ]
PART IV -- Exempt TIN [ ]
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item
(2). (Also see instructions in the enclosed Guidelines.)
- ------------------------------------------------------------------------------------------------------
</TABLE>
Signature Date __________ 1997
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
III OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
==============================================================
Signature Date
-------------------------------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
<PAGE> 14
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Toll Free (800) 207-2872
The Dealer Manager for the Offer is:
[CREDIT SUISSE LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (888) 624-6123
June 6, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY Exhibit (a)(3)
for
Tender of Shares of Common Stock
of
Acordia, Inc.
to
AICI Acquisition Corp.
a wholly owned subsidiary of
Anthem Insurance Companies, Inc.
(Not to be Used for Signature Guarantees)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
evidencing common stock, par value $1.00 per share (the "Common Stock"), of
Acordia, Inc., a Delaware corporation (the "Company"), are not immediately
available, (ii) time will not permit all required documents to reach First
Chicago Trust Company of New York, as Depositary (the "Depositary"), prior to
the Expiration Date (as defined in "THE TENDER OFFER -- Terms of the Offer" of
the Offer to Purchase (as defined below)) or (iii) the procedure for book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution (as defined in the Offer to Purchase) and a representation
that the stockholder owns the Common Stock, and that the tender of the Common
Stock effected thereby complies with Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, each in the form set forth in this Notice of Guaranteed
Delivery. See the section entitled "THE TENDER OFFER -- Procedures for Tendering
Common Stock" of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Suite 4680
P.O. Box 2569 Company 14 Wall Street
Jersey City, New Jersey 07303 55 Water Street, DTC TAD New York, New York 10005
Vietnam Veterans Memorial Plaza
New York, New York 10041
By Facsimile Transmission To Confirm Receipt of
(For Eligible Institutions Only): Notice of Guaranteed Delivery:
(201) 222-4720 (201) 222-4707
or
(201) 222-4721
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to AICI Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Anthem Insurance
Companies, Inc., an Indiana mutual insurance company ("Parent"), upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated June 6,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), receipt of each of
which is hereby acknowledged, the number of shares of Common Stock specified
below pursuant to the guaranteed delivery procedures described in the section
entitled "THE TENDER OFFER -- Procedures for Tendering Common Stock" of the
Offer to Purchase.
Number of Shares of Common Stock:
- ------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Check ONE box if Common Stock will be tendered by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT
Address(es):
- --------------------------------------------------------------------------------
ZIP CODE
Daytime Area Code and Telephone No.:
- ----------------------------------------------------------------------
Signature(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: ________ , 1997
2
<PAGE> 3
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
hereby (a) represents that the above named person(s) "own(s)" the Common Stock
tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended ("Rule 14e-4"), (b) represents that the tender of Common
Stock effected hereby complies with Rule 14e-4, and (c) guarantees delivery to
the Depositary, at one of its addresses set forth above, of certificates
evidencing the Common Stock tendered hereby in proper form for transfer, or
confirmation of book-entry transfer of such Common Stock into the account
maintained by the Depositary at The Depository Trust Company or the Philadelphia
Depository Trust Company, in each case with delivery of a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) with any required
signature guarantees, or an Agent's Message (as defined in the section entitled
"THE TENDER OFFER -- Procedures for Tendering Common Stock" of the Offer to
Purchase), and any other documents required by the Letter of Transmittal, within
three New York Stock Exchange, Inc. trading days after the date of execution of
this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
certificates for Common Stock to the Depositary within the time period shown
herein. Failure to do so could result in financial loss to such Eligible
Institution. All terms used herein have the meanings set forth in the Offer to
Purchase.
(PLEASE PRINT)
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(ZIP CODE)
AUTHORIZED SIGNATURE:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Daytime Area Code and Tel. No.:
- -----------------------------------------------------------------------------
Dated:
- ------------ , 1997
NOTE: DO NOT SEND CERTIFICATES FOR COMMON STOCK WITH THIS NOTICE OF
GUARANTEED DELIVERY. COMMON STOCK CERTIFICATES SHOULD BE SENT WITH
YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
[CREDIT SUISSE LOGO]
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue Telephone 212 325 2000
New York, NY 10010-3629
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ACORDIA, INC.
AT
$40.00 NET PER SHARE
BY
AICI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ANTHEM INSURANCE COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
June 6, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by AICI Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Anthem Insurance Companies,
Inc., an Indiana mutual insurance company ("Parent"), to act as Dealer Manager
in connection with the Purchaser's offer to purchase all of the outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of
Acordia, Inc., a Delaware corporation (the "Company"), at a purchase price of
$40.00 per share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 6, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer").
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. Offer to Purchase, dated June 6, 1997.
2. The Letter of Transmittal to tender Common Stock is for your use
and for the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Common Stock.
3. A letter to stockholders of the Company from Messrs. Frank C.
Witthun, President and Chief Executive Officer of the Company, and John C.
Crane, Chairman of the Special Committee of the Board of Directors of the
Company, together with a Solicitation/Recommendation Statement on Schedule
14D-9 filed with the Securities and Exchange Commission by the Company and
mailed to stockholders of the Company.
4. The Notice of Guaranteed Delivery for tender of Common Stock to be
used to accept the Offer if neither of the two procedures for tendering
Common Stock set forth in the Offer to Purchase can be completed on a
timely basis.
<PAGE> 2
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Common Stock registered in your name or in the name
of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Common Stock in your name or in the name of your
nominee.
If, after giving effect to the purchase of shares of Common Stock in the
Offer, the Purchaser owns 90% or more of the outstanding shares of Common Stock,
the Purchaser intends to effect the Merger (as defined in the Offer to Purchase)
as a "short-form" merger under the Delaware General Corporation Law, without a
vote of the stockholders of the Company. In order to obtain such 90% ownership,
the Purchaser must purchase at least 3,021,685 shares of Common Stock in the
Offer, assuming all Stock Options and the Great American Warrants (each as
defined in the Offer to Purchase) are surrendered in accordance with the
provisions of the Merger Agreement for cash rather than exercised (or 5,597,905
shares of Common Stock, assuming all Stock Options and the Great American
Warrants are exercised). Such 3,021,685 shares of Common Stock represent
approximately 69.9% of the 4,323,322 shares of Common Stock not currently
beneficially owned by Parent. If, after giving effect to the purchase of shares
of Common Stock by the Purchaser in the Offer, the Purchaser owns less than 90%
of the outstanding shares of Common Stock, the Merger will have to be approved
by the Company's stockholders. Pursuant to the terms of the Company's
Certificate of Incorporation, the Merger and the Merger Agreement (as defined in
the Offer to Purchase) must be approved and adopted by the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock. By reason
of Parent's current ownership of shares of Common Stock (which will be
transferred to the Purchaser on or prior to the Expiration Date), the Purchaser
will have sufficient voting power to approve the Merger and the Merger Agreement
without the vote of any of the other stockholders of the Company and regardless
of the number of shares of Common Stock purchased by the Purchaser pursuant to
the Offer. Parent and the Purchaser have agreed in the Merger Agreement to vote
or cause to be voted all shares of Common Stock owned by them in favor of
approval and adoption of the Merger Agreement and the Merger.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS
THE OFFER IS EXTENDED.
Please note the following:
1. The offer price is $40.00 per share of Common Stock, net to the
seller in cash.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer, at
least a majority of the outstanding shares of Common Stock other than
shares owned by the Purchaser, Parent, Parent's other subsidiaries and
Parent's executive officers and directors. See "INTRODUCTION," "THE TENDER
OFFER -- Terms of the Offer" and "THE TENDER OFFER -- Certain Conditions of
the Offer" in the Offer to Purchase.
3. The Offer is being made for all outstanding shares of Common Stock.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager, the Depositary or the Information
Agent (as defined in the Offer to Purchase) or, except as set forth in
Instruction 6 to the Letter of Transmittal, transfer taxes on the sale of
Common Stock pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required unless an exemption is
provided or unless the required taxpayer identification information is
provided. See Instruction 10 of, and "IMPORTANT TAX INFORMATION" in, the
Letter of Transmittal.
2
<PAGE> 3
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, July 3, 1997, unless extended. See "THE TENDER
OFFER -- Terms of the Offer" in the Offer to Purchase.
6. Following the unanimous approval by the Special Committee of the
Company's Board of Directors and its recommendation to the Board of
Directors, the Board of Directors of the Company (excluding certain
interested directors who abstained) approved the Offer, the Merger
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated by the Merger Agreement, determined that each of the Offer,
the Merger Agreement and the Merger (as defined in the Offer to Purchase)
is fair to and in the best interests of the stockholders of the Company and
recommended that such stockholders accept the Offer and tender their Common
Stock pursuant to the Offer.
7. In all cases, payment for shares of Common Stock purchased pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for, or a Book-Entry Confirmation (as defined under "THE
TENDER OFFER -- Procedures for Tendering Common Stock -- Book-Entry
Transfer" in the Offer to Purchase) with respect to, such Common Stock and
a Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed with all required signature guarantees and all
other documents required by the Letter of Transmittal. See "THE TENDER
OFFER -- Procedures for Tendering Common Stock" in the Offer to Purchase.
For Common Stock to be validly tendered pursuant to the Offer, either (a) a
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with all required signature guarantees, or in the
case of a book entry transfer, an Agent's Message (as defined in "THE TENDER
OFFER -- Procedures for Tendering Common Stock -- Book-Entry Transfer"), and all
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase prior to the
Expiration Date and either (i) certificates representing tendered Common Stock
must be received by the Depositary at any such address prior to the Expiration
Date or (ii) such Common Stock must be delivered pursuant to the procedures for
book-entry transfer set forth in the Offer to Purchase and a Book-Entry
Confirmation must be received by the Depositary prior to the Expiration Date or
(b) the tendering stockholder must comply with the guaranteed delivery
procedures set forth in the Offer to Purchase. No alternative, conditional or
contingent tenders will be accepted. If a stockholder desires to tender Common
Stock pursuant to the Offer and such stockholder's certificates for such shares
of Common Stock are not immediately available or the procedures for book-entry
transfer set forth in the Offer to Purchase cannot be completed on a timely
basis or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, such Common Stock may nevertheless be tendered
according to the guaranteed delivery procedures under "THE TENDER
OFFER -- Procedures for Tendering Common Stock -- Guaranteed Delivery" in the
Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other persons for soliciting tenders of Common Stock pursuant to the Offer
(other than the Dealer Manager, the Depositary and the Information Agent as
described in the Offer to Purchase). The Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding the enclosed materials to your clients. The Purchaser will pay or
cause to be paid any transfer taxes payable on the sale of Common Stock to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation, the Dealer Manager for the Offer, by
mail at Eleven Madison Avenue, New York, New York 10010-3629, or by telephone at
(888) 624-6123, or First Chicago Trust Company of New York, the Depositary for
the Offer, by mail at Suite 4660, P.O. Box 2569, Jersey City, New Jersey
07303-2569, or D.F. King & Co., Inc., the Information Agent for the Offer, by
mail at 77 Water Street, New York, New York 10005, or by telephone at (800)
207-2872.
3
<PAGE> 4
Requests for additional copies of the enclosed tender offer materials may
be directed to the Information Agent at the above address and telephone number.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
4
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ACORDIA, INC.
AT
$40.00 NET PER SHARE
BY
AICI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ANTHEM INSURANCE COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
June 6, 1997
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated June 6, 1997
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by AICI Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Anthem Insurance Companies,
Inc. ("Parent"), to purchase all outstanding shares of common stock, par value
$1.00 per share (the "Common Stock"), of Acordia, Inc., a Delaware corporation
(the "Company"), at a price of $40.00 per share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
the Letter of Transmittal.
Stockholders who desire to tender Common Stock pursuant to the Offer and
whose certificates for such Common Stock (the "Certificates") are not
immediately available or the procedures for book-entry transfer set forth in the
Offer to Purchase cannot be completed on a timely basis or time will not permit
all required documents to reach First Chicago Trust Company of New York, (the
"Depositary") prior to the Expiration Date (as defined in the Offer to Purchase)
may nevertheless tender their Common Stock according to the guaranteed delivery
procedures set forth under "THE TENDER OFFER -- Procedures for Tendering Common
Stock -- Guaranteed Delivery."
We are (or our nominee is) the holder of record of the Common Stock held by
us for your account. A TENDER OF SUCH COMMON STOCK CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
COMMON STOCK HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Common Stock held by us for your
account, pursuant to the terms and conditions set forth in the Offer to
Purchase.
Please note the following:
1. The offer price is $40.00 per share, net to the seller in cash.
2. The Offer is conditioned upon, among other things, there being
validly tendered, and not withdrawn prior to the expiration of the Offer,
at least a majority of the outstanding shares of Common Stock other than
shares owned by the Purchaser, Parent, Parent's other subsidiaries and
Parent's
<PAGE> 2
executive officers and directors. See "INTRODUCTION," "THE TENDER
OFFER -- Certain Conditions of the Offer" and "-- Terms of the Offer" in
the Offer to Purchase.
3. The Offer is being made for all outstanding Common Stock.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager (as defined in the Offer to Purchase),
the Depositary or the Information Agent (as defined in the Offer to
Purchase) or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the sale of Common Stock pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of, and
"IMPORTANT TAX INFORMATION" in, the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, July 3, 1997, unless extended. See "THE TENDER
OFFER -- Terms of the Offer" in the Offer to Purchase.
6. Following the unanimous approval by the Special Committee of the
Company's Board of Directors and its recommendation to the Board of
Directors, the Board of Directors of the Company (excluding certain
interested directors who abstained) has approved the Offer, the Merger
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated by the Merger Agreement, determined that each of the Offer,
the Merger Agreement and the Merger (as defined in the Offer to Purchase)
is fair to and in the best interests of the holders of Common Stock and
recommended that such stockholders accept the Offer and tender their Common
Stock pursuant to the Offer.
7. In all cases, payment for Common Stock purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of
certificates for, or a Book-Entry Confirmation (as defined in the Offer to
Purchase) with respect to, such shares of Common Stock and a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed, with all required signature guarantees and all other
documents required by the Letter of Transmittal. See "THE TENDER OFFER
-- Procedures for Tendering Common Stock" in the Offer to Purchase.
If you wish to have us tender any or all of your Common Stock held by us
for your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth herein. An envelope to return
your instructions to us is enclosed. If you authorize the tender of your Common
Stock, all such Common Stock will be tendered unless otherwise specified in the
instruction form. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL AND IS BEING MADE TO ALL HOLDERS OF COMMON STOCK.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Common Stock residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction.
In those jurisdictions where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
made on behalf of the Purchaser by Credit Suisse First Boston Corporation or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ACORDIA, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated June 6, 1997 (the "Offer to Purchase"), and the related Letter
of Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer") in connection with the offer by AICI
Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned
subsidiary of Anthem Insurance Companies, Inc., an Indiana mutual insurance
company, to purchase all outstanding shares of common stock, $1.00 par value per
share (the "Common Stock"), of Acordia, Inc., a Delaware corporation, at a
purchase price of $40.00 per share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase.
This will instruct you to tender to Purchaser the number of shares of
Common Stock indicated below (or if no number is indicated below, all Common
Stock) which are held by you for the account of the undersigned, upon the terms
and subject to the conditions set forth in the Offer to Purchase.
Number of shares of Common Stock to be tendered:
- -------------------------------------------------
Date:
- ------------------------------------------------------------------------------,
1997
- ------------------------------------------------------------------------------
SIGN HERE
Signature(s):
- ------------------------------------------------------------------------------
Print or Type Name(s):
- ------------------------------------------------------------------------------
Print or Type Address:
- ------------------------------------------------------------------------------
Area Code and Telephone Number(s):
- ------------------------------------------------------------------
Taxpayer Identification or Social Security Number(s):
- --------------------------------------------------
<PAGE> 1
EXHIBIT (A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner
account) of the account or,
if combined funds,
any one of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account or,
if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor,
or committee for a designated or incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual
is not a legal or valid trust owner(1)
under State law
- --------------------------------------------------------
<CAPTION>
- --------------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------
<C> <S> <C>
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The Legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless the
legal entity
itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- --------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonments.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated June 6, 1997 and the related Letter of
Transmittal, and any amendments or supplements thereto, and is being made to all
holders of Shares. The Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In those jurisdictions where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser (as defined below) by
Credit Suisse First Boston Corporation ("Credit Suisse First Boston") or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON STOCK
OF
ACORDIA, INC.
AT
$40.00 NET PER SHARE
BY
AICI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ANTHEM INSURANCE COMPANIES,INC.
AICI Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Anthem Insurance Companies, Inc., an Indiana mutual
insurance company (the "Parent"), is offering to purchase all outstanding shares
of common stock, par value $1.00 per share (the "Shares"), of Acordia, Inc., a
Delaware corporation (the "Company"), at a price of $40.00 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated June 6, 1997
(the "Offer to Purchase"), and in the related Letter of Transmittal (which
together with the Offer to Purchase and any amendments or supplements thereto
constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JULY 3, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of June 2, 1997 (the "Merger Agreement"), among the Company, the Parent
and the Purchaser. The Merger Agreement provides, among other things, for the
commencement of the Offer by the Purchaser, and further provides that, following
the purchase of Shares pursuant to the Offer and promptly after the satisfaction
or waiver of certain conditions, the Purchaser will be merged with and into the
Company (the "Merger"), with the Company as the surviving corporation in the
Merger. At the effective time of the Merger, each outstanding Share (except for
Shares held in the treasury of the Company or owned by the Purchaser, the Parent
or any of the Parent's other subsidiaries and Shares held by stockholders who
properly exercise their appraisal rights under the Delaware General Corporation
Law) will be converted into the right to receive $40.00 per Share (or any higher
price per Share paid for Shares pursuant to the Offer), without interest.
THE BOARD OF DIRECTORS OF THE COMPANY, BASED UPON, AMONG OTHER THINGS, THE
UNANIMOUS RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE COMPANY'S BOARD OF
DIRECTORS, HAS DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, UPON THE TERMS AND
SUBJECT TO THE CONDITIONS SET FORTH IN THE MERGER AGREEMENT ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS (OTHER THAN THE PARENT
AND THE PURCHASER) AND HAS APPROVED THE OFFER, THE MERGER AND THE MERGER
AGREEMENT AND RECOMMENDS (EXCLUDING CERTAIN INTERESTED DIRECTORS WHO ABSTAINED)
THAT THE STOCKHOLDERS OF THE COMPANY (OTHER THAN THE PARENT AND THE PURCHASER)
ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED, AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
BELOW), AT LEAST A MAJORITY OF THE THEN ISSUED AND OUTSTANDING SHARES, OTHER
THAN SHARES BENEFICIALLY OWNED BY THE PURCHASER, THE PARENT, THE PARENT'S OTHER
SUBSIDIARIES AND THE PARENT'S EXECUTIVE OFFICERS AND DIRECTORS. THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THE OFFER TO PURCHASE.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to First
Chicago Trust Company of New York, as the Depositary (the "Depositary"), of the
Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all
cases, upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for the tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to validly tendering stockholders. In all cases, payment
for Shares purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a confirmation
of a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or The Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in the
Offer to Purchase and the Letter of Transmittal) and (ii) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
all other documents required by the Letter of Transmittal. Under no
circumstances will interest on the purchase price for Shares be paid by the
Purchaser by reason of any delay in making such payment or otherwise.
The term "Expiration Date" shall mean 12:00 Midnight, New York City Time,
on Thursday, July 3, 1997, unless and until the Purchaser, in accordance with
the terms of the Offer and the Merger Agreement, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire. Subject to the terms of the Merger Agreement, the
Purchaser expressly reserves the right, in its sole discretion, at any time or
from time to time, to extend the period of time during which the Offer is open
by giving oral or written notice of such extension to the Depositary and by
making a public announcement of such extension. There can be no assurance that
the Purchaser will exercise its right to extend the Offer. The Purchaser also
expressly reserves the right, subject to applicable laws (including applicable
regulations of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, as amended), and to the terms of the Merger
Agreement, at any time or from time to time, (i) to delay acceptance for payment
of or payment for any Shares, regardless of whether Shares were theretofore
accepted for payment, or to terminate the Offer and not accept for payment or
pay for any Shares not theretofore accepted for payment or paid for, upon the
occurrence of any of the conditions specified under "THE TENDER OFFER--Certain
Conditions of the Offer" in the Offer to Purchase, by giving oral or written
notice of such delay in payment or termination to the Depositary, and (ii) to
amend the Offer in any respect, by giving oral or written notice to the
Depositary. Any extension, delay in payment, termination or amendment will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued not later than 9:00 A.M.,
New York City Time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which the Purchaser may choose
to make any public announcement, the Purchaser will have no obligation to
publish, advertise or otherwise communicate any such announcement other than by
issuing a press release to the Dow Jones News Service (or a similar news
service) or as otherwise may be required by law. During any such extension, all
Shares previously tendered and not properly withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except as
otherwise provided below. Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after Monday, August 4, 1997. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth under
"THE TENDER OFFER--Procedures for Tendering Shares" in the Offer to Purchase,
any notice of withdrawal must also specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding. No withdrawal of Shares shall be deemed
to have been properly made until all defects and irregularities have been cured
or waived. None of the Purchaser, the Parent, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failing to give such notification.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company is providing to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees appear on the Company's
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and other tender offer documents may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
Questions or requests for assistance may be directed to the Dealer Manager or
the Information Agent at their respective addresses and telephone numbers as set
forth below. The Purchaser will not pay any fees or commissions to any broker or
dealer or to any other person (other than the Dealer Manager and the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Toll Free (800) 207-2872
The Dealer Manager for the Offer is:
[CREDIT SUISSE LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (888) 624-6123
June 6, 1997
<PAGE> 1
EXHIBIT (a)(8)
PRESS RELEASE
EXHIBIT
DOW JONES News/Retrieval(R)
- -------------------------------------------------------------------------------
DOW JONES NEWS SERVICE
06/02 Acordia, Anthem Merger-2: To Begin Tender Offer By June 6
INDIANAPOLIS (Dow Jones)--Acordia Inc. (ACO) and Anthem Inc. reached a
merger agreement under which Anthem will acquire all outstanding common shares
of Acordia for $40 each.
Anthem and a wholly owned unit will commence a tender offer for the 33.2%
of Acordia stock it doesn't already own no later than June 6. The offer is
conditioned upon, among other things, a majority of the shares not currently
held by Anthem, its units, officers or directors being tendered and not
withdrawn.
All Acordia shares remaining at the completion of the tender will be
acquired in a cash merger of Acordia and an Anthem unit at the tender offer
price of $40 per share.
Anthem also said Monday that its previously announced discussions with a
third party regarding a possible sale of Acordia's brokerage business are
continuing. The tender offer and the proposed merger are not conditioned upon
the sale of Acordia's brokerage business, the company said.
Acordia's stock closed at $35 in New York Stock Exchange trading Friday,
and opened at $39, up $4, in Monday trading.
Anthem is a mutually owned insurer and health insurance provider. Acordia
is an insurance brokerage company.
(END) DOW JONES NEWS 06-02-97
10:04 AM
Source: Dow Jones News Service, June 2, 1997
- -------------------------------------------------------------------------------
COPYRIGHT (C) 1997 DOW JONES & COMPANY, INC. ALL RIGHTS RESERVED. PAGE 1
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
dated as of
June 2, 1997
among
ACORDIA, INC.
ANTHEM INSURANCE COMPANIES, INC.
and
AICI ACQUISITION CORP.
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.......................................... 1
1.02 Company Action..................................... 2
ARTICLE II
THE MERGER
SECTION 2.01 The Merger......................................... 3
2.02 Conversion of Shares............................... 4
2.03 Surrender and Payment.............................. 4
2.04 Dissenting Shares.................................. 5
2.05 Stock Options and Purchase Rights.................. 5
2.06 Stock Purchase Warrants............................ 6
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 Certificate of Incorporation....................... 6
3.02 Bylaws............................................. 6
3.03 Directors and Officers............................. 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 4.01 Corporate Existence and Power...................... 7
4.02 Corporate Authorization............................ 7
4.03 Governmental Authorization......................... 7
4.04 Non-Contravention.................................. 7
4.05 Capitalization..................................... 8
4.06 Subsidiaries....................................... 8
4.07 SEC Filings........................................ 9
</TABLE>
- --------
* The Table of Contents is not part of this Agreement.
i
<PAGE> 3
<TABLE>
<S> <C> <C>
4.08 Financial Statements............................... 9
4.09 Finders' Fees...................................... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
SECTION 5.01 Corporate Existence and Power...................... 10
5.02 Corporate Authorization............................ 10
5.03 Governmental Authorization......................... 10
5.04 Non-Contravention.................................. 10
5.05 Finders' Fees...................................... 10
5.06 Financing.......................................... 11
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01 Conduct of the Company............................. 11
6.02 Stockholders' Meeting; Proxy Material.............. 11
6.03 Disclosure Documents............................... 12
6.04 Access to Information.............................. 12
6.05 Other Offers....................................... 13
ARTICLE VII
COVENANTS OF PARENT AND PURCHASER
SECTION 7.01 Confidentiality.................................... 13
7.02 Obligations of Purchaser........................... 14
7.03 Voting of Shares................................... 14
7.04 Disclosure Documents............................... 14
ARTICLE VIII
COVENANTS OF PARENT, PURCHASER
AND THE COMPANY
SECTION 8.01 Reasonable Efforts................................. 15
8.02 Certain Filings.................................... 15
8.03 Public Announcements............................... 15
8.04 Further Assurances................................. 15
8.05 Notices of Certain Events.......................... 15
8.06 Directors' and Officers' Indemnification and Insurance 16
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
8.07 Form of Merger..................................... 17
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party........ 17
9.02 Condition to the Obligations of Parent and Purchaser
18
ARTICLE X
TERMINATION
SECTION 10.01 Termination........................................ 18
10.02 Effect of Termination.............................. 20
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices............................................ 20
11.02 Survival of Representations and Warranties......... 21
11.03 Amendments; No Waivers............................. 21
11.04 Expenses........................................... 22
11.05 Successors and Assigns............................. 22
11.06 Governing Law...................................... 22
11.07 Counterparts; Effectiveness........................ 22
</TABLE>
Annex I - Conditions to the Offer
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 2, 1997 among Acordia,
Inc., a Delaware corporation (the "Company"), Anthem Insurance Companies, Inc.,
an Indiana mutual insurance company ("Parent"), and AICI Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser").
The parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.01. The Offer. (a) Provided that none of the events set
forth in Annex I hereto shall have occurred or be existing, Purchaser shall, as
promptly as practicable after the date hereof, but in no event later than five
business days following the public announcement of the terms of this Agreement,
commence an offer (the "Offer") to purchase any and all of the outstanding
shares of common stock, $1.00 par value (the "Shares"), of the Company at a
price of $40.00 per Share, net to the seller in cash. The Offer shall be subject
to the condition that at least a majority of the then issued and outstanding
Shares, other than Shares owned by Purchaser, Parent, Parent's other
subsidiaries and Parent's executive officers and directors, shall have been
validly tendered in accordance with the terms of the Offer prior to the
expiration date of the Offer and not withdrawn (the "Minimum Tender Condition")
and to the other conditions set forth in Annex I hereto. Purchaser expressly
reserves the right to waive the Minimum Tender Condition or any of the other
conditions to the Offer, to increase the price per Share payable in the Offer
and to make any other change in the terms or conditions of the Offer; provided
that (i) Parent shall not waive the Minimum Tender Condition without the consent
of a majority of the Independent Directors (as defined below) and (ii) without
the consent of a majority of the Independent Directors, the Purchaser shall not
make any change in the terms or conditions of the Offer which (A) changes the
form of consideration to be paid or (B) decreases the price per Share payable in
the Offer or (C) reduces the maximum number of Shares to be purchased in the
Offer or (D) imposes conditions to the Offer in addition to those set forth in
Annex I hereto or (E) extends the expiration date of the Offer (except as
required by law or the applicable rules and regulations of the SEC and except
that the expiration date of the Offer may be extended for up to forty (40)
business days in the aggregate in the event any condition to the Offer is not
satisfied) or (F) amends any term of the Offer in any manner materially adverse
to holders of Shares.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and the Purchaser shall file with the SEC (as defined in Section 4.07)
with respect to the Offer, a Tender Offer Statement on Schedule 14D-l and a
Transaction Statement on Schedule 13E-3 which will contain the offer to
purchase, the information required by Rule 13e-3 under the Exchange Act (as
defined in Section 4.03), the form of the related letter of transmittal and an
<PAGE> 6
amendment to Parent's Schedule 13D (together with any supplements or amendments
thereto, collectively the "Offer Documents"). Parent, the Purchaser and the
Company each agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have been found to be
or become false or misleading in any material respect. Parent and the Purchaser
agree to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. The
Company, the Special Committee (as defined herein) and their respective counsel,
shall be given an opportunity to review and comment on the Schedule 14D-l and
the Schedule 13E-3 prior to the filing thereof with the SEC. Parent and the
Purchaser shall provide the Company, the Special Committee and their respective
counsel, a copy of any written comments or telephonic notification of any verbal
comments Parent or the Purchaser may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt thereof and shall
provide the Company, the Special Committee and their respective counsel with a
copy of any written responses thereto and telephonic notification of any verbal
responses thereto of Parent or the Purchaser or their counsel.
SECTION 1.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors (with Messrs. Lytle, Sheridan,
Houser and Smith abstaining), at a meeting duly called and held and acting on
the unanimous recommendation of a special committee of the Board of Directors of
the Company comprised entirely of non-management independent directors (the
"Special Committee"), has (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (as defined
in Section 2.01), are fair to and in the best interest of the Company's
stockholders, excluding with respect to such determination the Purchaser, Parent
and Parent's other subsidiaries; (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger; and (iii)
resolved to recommend acceptance of the Offer and approval and adoption of this
Agreement and the Merger by its stockholders; provided, that such recommendation
may be withdrawn, modified or amended to the extent the Board of Directors of
the Company deems it necessary to do so in the exercise of its fiduciary
obligations to the Company's stockholders after being so advised by counsel. The
Company further represents that the Special Committee's investment banker has
delivered to the Company's Board of Directors its written opinion that the
consideration to be paid in the Offer and the Merger is fair to the holders of
Shares, excluding the Purchaser, Parent and Parent's other subsidiaries, from a
financial point of view. The Company will promptly furnish Parent and Purchaser
with a list of its stockholders, mailing labels and any available listing or
computer file containing the names and addresses of all record holders of Shares
and lists of securities positions of Shares held in stock depositories, in each
case true and correct in all material respects as of the most recent practicable
date, and will provide to Parent and Purchaser such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent and
Purchaser may reasonably request, from time to time in connection with the
Offer.
(b) As soon as practicable on the day that the Offer is commenced
the Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of
the Company's Special
2
<PAGE> 7
Committee and Board of Directors referred to above. The Company, Parent and
Purchaser each agree promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that it shall have been found to be
or become false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, other than the
Purchaser, Parent and Parent's other subsidiaries, in each case as and to the
extent required by applicable federal securities laws. Parent and Purchaser and
their counsel shall be given an opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.
(c) Until the Effective Time, the parties hereto agree to take all
action reasonably necessary to ensure that the Company's directors shall include
at least two directors who currently members of the Special Committee (the
"Independent Directors"); provided, however, that, if the number of Independent
Directors shall be reduced below two for any reason, the parties hereto agree to
take all action reasonably necessary to enable the remaining Independent
Director to designate a person who is not an officer, director, designee,
employee or affiliate of Parent or the Purchaser to fill such vacancy and such
person shall be deemed to be an Independent Director for purposes of this
Agreement or, if no Independent Directors then remain, the parties hereto agree
to take all action reasonably necessary to ensure that two persons are
designated to fill such vacancies who shall not be officers, directors,
designees, employees or affiliates of Parent or the Purchaser, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. (a) At the Effective Time, the Purchaser
shall be merged (the "Merger") with and into the Company in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law"), whereupon the
separate existence of Purchaser shall cease, and the Company shall be the
surviving corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Purchaser will file a certificate of merger with the Secretary of State of the
State of Delaware and make all other filings or recordings required by Delaware
Law in connection with the Merger. The Merger shall become effective at such
time as the certificate of merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as is specified in the certificate
of merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities and duties of the Company and
Purchaser, all as provided under Delaware Law.
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SECTION 2.02. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned
by Purchaser, Parent or any of Parent's other subsidiaries
immediately prior to the Effective Time shall be cancelled, and no
payment shall be made with respect thereto;
(b) each issued and outstanding share of common stock of
Purchaser outstanding immediately prior to the Effective Time shall
be converted into and become that number of shares of common stock
of the Surviving Corporation that equals the number of shares of
common stock of the Company issued and outstanding immediately prior
to the Effective Time divided by the number of shares of common
stock of Purchaser issued and outstanding immediately prior to the
Effective Time; and
(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.02(a) or as
provided in Section 2.04 with respect to Dissenting Shares (as
defined herein), be converted into the right to receive $40.00 in
cash, without interest (the "Merger Consideration").
SECTION 2.03. Surrender and Payment. (a) Prior to the Effective
Time, Parent shall appoint an agent who shall be reasonably acceptable to the
Special Committee (the "Exchange Agent") for the purpose of exchanging
certificates representing Shares for the Merger Consideration. Parent will make
available to the Exchange Agent the entire Merger Consideration to be paid in
respect of the Shares. Promptly after the Effective Time, Parent will send, or
will cause the Exchange Agent to send, to each holder of Shares at the Effective
Time a letter of transmittal for use in such exchange (which shall specify that
the delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such Shares. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes
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required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable. For purposes of this Agreement,
"Person" means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity or organization, including
a government or political subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be cancelled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article II.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Parent, upon
demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by holders
of Shares two years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become property
of any governmental entity) shall, to the extent permitted by applicable law,
become the property of Parent free and clear of any claims or interest of any
Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) to pay for Dissenting Shares (as
defined below) for which appraisal rights have been perfected shall be returned
to Parent, upon demand.
SECTION 2.04. Dissenting Shares. Notwithstanding Section 2.02,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with Delaware Law
("Dissenting Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If after the Effective Time such holder fails to
perfect or withdraws or loses his right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration. The Surviving Corporation shall give Parent
prompt notice of any demands received by the Company for appraisal of Shares,
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Surviving Corporation shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
SECTION 2.05. Stock Options and Purchase Rights. As soon as
practicable following the date of this Agreement, upon the written request of
the Purchaser, the Company (or, if appropriate, any committee administering any
stock option or compensation plan or arrangement) and the Purchaser shall take
such actions as are reasonably required (including, if necessary, the provision
of funds by the Purchaser to the Company) to provide that at the earlier
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of the purchase of Shares pursuant to the Offer and the Effective Time, each
holder of a then outstanding stock option and/or right to purchase Shares
granted under any stock option or compensation plan or arrangement of the
Company, whether or not then exercisable, shall, upon surrender thereof to the
Company or its designee, receive from the Company the difference between the
Merger Consideration and the exercise price per Share for the Shares covered by
such option or right, net of any applicable tax withholding. The holders of such
stock options or rights shall be entitled to enforce this Section 2.05 against
the Company, the Surviving Corporation and the Purchaser.
SECTION 2.06. Stock Purchase Warrants. As soon as practicable
following the date of this Agreement, upon the written request of the Purchaser,
the Company and the Purchaser shall take such actions as are reasonably required
(including, if necessary, the provision of funds by the Purchaser to the
Company) to provide that at the earlier of the purchase of Shares pursuant to
the Offer and the Effective Time, the holder of each outstanding warrant to
purchase Shares granted under that certain Warrant Subscription Agreement by and
between the Company and First Chicago Trust Company dated as of October 1, 1993
(each, a "Warrant" and, collectively, the "Warrants") shall, upon surrender
thereof to the Company or its designee, receive from the Company the difference
between the Merger Consideration and the exercise price per Share for the Shares
covered by such Warrant, net of any applicable tax withholding. The holders of
such Warrants shall be entitled to enforce this Section 2.06 against the
Company, the Surviving Company and the Purchaser.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation. Subject to Section 8.06
hereof, the certificate of incorporation of the Company in effect at the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 3.02. Bylaws. Subject to Section 8.06 hereof, the bylaws of
Purchaser in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 3.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Purchaser at the Effective Time shall
be the directors of the Surviving Corporation, and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have or
be reasonably likely to have a Material Adverse Effect. For purposes of this
Agreement, "Material Adverse Effect" means an effect that is materially adverse
to the condition (financial or otherwise), business, assets or results of
operations of the Company and the Subsidiaries (as defined in Section 4.06)
taken as a whole. The Company has heretofore made available to Parent and
Purchaser true and complete copies of the Company's certificate of incorporation
and bylaws as currently in effect.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
agreement of the Company.
SECTION 4.03. Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
Merger by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (i) the filing of a
certificate of merger in accordance with Delaware Law and (ii) compliance with
any applicable requirements of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder (the "Exchange Act").
SECTION 4.04. Non-Contravention. Except as set forth on Schedule
4.04 and without giving effect to any change in the form of the Merger as
permitted by Section 8.07, the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the certificate of incorporation or bylaws of the Company, (ii) assuming
compliance with the matters referred to in Section 4.03, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (iii) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under
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any provision of any agreement, contract or other instrument binding upon the
Company or any Subsidiary or any license, franchise, permit or other similar
authorization held by the Company or any Subsidiary, or (iv) result in the
creation or imposition of any Lien on any asset of the Company or any
Subsidiary, except, in the case of clauses (ii), (iii) and (iv), for such
exceptions which would not, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect. For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
SECTION 4.05. Capitalization. The authorized capital stock of the
Company consists of ten million (10,000,000) shares of Preferred Stock, with no
par value, and one hundred million (100,000,000) shares of Common Stock, par
value $1.00 per share. As of May 1, 1997, there were outstanding (a) no shares
of Preferred Stock and 13,005,106 shares of Common Stock, (b) stock options and
rights to purchase an aggregate of 1,396,086 Shares (of which options and rights
to purchase an aggregate of 857,825 Shares were exercisable) and (c) Warrants to
purchase an aggregate of 1,500,000 Shares. All outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth in this Section and except for
changes since May 1, 1997, resulting from the exercise of stock options, rights
or Warrants outstanding on such date, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, and (iii) no options or other rights to
acquire from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses (i),
(ii) and (iii) being referred to collectively as the "Company Securities").
There are no outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Company Securities.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "Subsidiary" means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company. All Subsidiaries and their respective jurisdictions of
incorporation are identified in Exhibit 21 to the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1996 (the "Company 10-K").
(b) All of the outstanding capital stock of, or other ownership
interests in, each Subsidiary, is, unless otherwise required by applicable law,
owned by the Company, directly or indirectly, free and clear of any Lien and
free of any other limitation or restriction (including any
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restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities of
the Company or any Subsidiary convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary, and (ii) options or other rights to acquire from the Company or any
Subsidiary, and no other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items in clauses (i)
and (ii) being referred to collectively as the "Subsidiary Securities"). There
are no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.07. SEC Filings. (a) The Company has made available to
Parent (i) the annual reports on Form 10-K for its fiscal years ended December
31, 1996, 1995 and 1994, (ii) its quarterly report on Form l0-Q for its fiscal
quarter ended March 31, 1997, (iii) its proxy or information statements relating
to meetings of, or actions taken without a meeting by, the stockholders of the
Company held since December 31, 1994 and (iv) all of its other reports,
statements, schedules and registration statements filed with the Securities and
Exchange Commission (the "SEC") since December 31, 1996.
(b) As of its filing date, each such report, statement or schedule
filed pursuant to the Exchange Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(c) Since December 31, 1996, the Company has not filed any
registration statements pursuant to the Securities Act of 1933.
SECTION 4.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in its annual report on Form 10-K and the quarterly report
on Form 10-Q referred to in Section 4.07 fairly present, in all material
respects, in conformity with generally accepted accounting principles applied on
a consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended (subject to normal year-end
adjustments and the absence of notes thereto in the case of any unaudited
interim financial statements).
SECTION 4.09. Finders' Fees. Except for Alex Brown & Company, a copy
of whose engagement agreement has been provided to Parent and Purchaser, there
is no investment banker, broker, finder or other intermediary which has been
retained by, or is authorized to act on behalf of, the Company or any Subsidiary
or the Special Committee, or any other committee of the Board of Directors of
the Company or any Subsidiary, and which might be entitled to any fee or
commission from Purchaser, Parent or any of Parent's other subsidiaries upon
consummation of the transactions contemplated by this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to
the Company that:
SECTION 5.01. Corporate Existence and Power. Parent is a mutual
insurance company duly organized under the laws of the State of Indiana,
Purchaser is a corporation duly organized under the laws of the State of
Delaware, and each of them is validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Since the date of its incorporation,
Purchaser has not engaged in any activities other than in connection with or as
contemplated by this Agreement.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Purchaser of this Agreement and the consummation by
Parent and Purchaser of the transactions contemplated hereby are within the
corporate powers of Parent and Purchaser and have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
agreement of Parent and Purchaser.
SECTION 5.03. Governmental Authorization. The execution, delivery
and performance by Parent and Purchaser of this Agreement and the consummation
by Parent and Purchaser of the transactions contemplated by this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority other than (i) the filing of a certificate of
merger in accordance with Delaware Law, (ii) compliance with any applicable
requirements of the Exchange Act and (iii) the filing of a Form D with, and the
approval thereof by, the Indiana Insurance Commissioner.
SECTION 5.04. Non-Contravention. The execution, delivery and
performance by Parent and Purchaser of this Agreement and the consummation by
Parent and Purchaser of the transactions contemplated hereby do not and will not
(i) contravene or conflict with the articles or certificate of incorporation or
bylaws of Parent and Purchaser, (ii) assuming compliance with the matters
referred to in Section 5.03, contravene or conflict with any provision of law,
regulation, judgment, order or decree binding upon Parent and Purchaser, or
(iii) constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Parent or Purchaser
or to a loss of any benefit to which Parent or Purchaser is entitled under any
agreement, contract or other instrument binding upon Parent or Purchaser.
SECTION 5.05. Finders' Fees. Except for Credit Suisse First Boston
Corporation, whose fees will be paid by Parent, there is no investment banker,
broker, finder or other intermediary who might be entitled to any fee or
commission from the Company or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
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SECTION 5.06. Financing. Parent has or will have available, prior to
the expiration of the Offer, and will provide to Purchaser on a timely basis,
sufficient funds to enable Purchaser to consummate the Offer, the Merger and the
other transactions contemplated hereby and to pay all related fees and expenses.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.01. Conduct of the Company. From the date hereof until the
Effective Time, except as set forth on Schedule 6.01 attached hereto, the
Company and the Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their reasonable efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time:
(a) the Company will not adopt or propose any
change in its certificate of incorporation or bylaws;
(b) the Company will not, and will not permit any Subsidiary
to, (i) take or agree or commit to take any action that would make
any representation and warranty of the Company hereunder inaccurate
in any respect at or as of any time prior to the Effective Time or
(ii) omit or agree or commit to omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in
any respect at any such time; and
(c) the Company will not, and will not permit any Subsidiary
to, (i) take or agree or commit to take any action that would cause
any of the conditions to the Offer set forth in Annex I hereto not
to be satisfied or (ii) omit or agree or commit to omit to take any
action necessary to cause any of the conditions to the Offer set
forth in Annex I hereto to be satisfied.
SECTION 6.02. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger and the
transactions contemplated by the Purchase Agreement, unless a vote of
stockholders of the Company is not required by Delaware Law. The Directors of
the Company shall, subject to their fiduciary duties as advised by counsel,
recommend approval and adoption by the Company's stockholders of this Agreement
and the Merger and the
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transactions contemplated by the Purchase Agreement. In
connection with such meeting, the Company (i) will promptly prepare and file
with the SEC, will use its reasonable efforts to have cleared by the SEC and
will thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (ii) will use
its reasonable efforts to obtain the necessary approvals by its stockholders of
this Agreement, and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
SECTION 6.03. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
such stockholders vote on adoption of this Agreement and at the Effective Time,
the Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy Statement
and at the time of any distribution thereof, such Company Disclosure Document
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
obligations of the Company contained in this Section 6.03(b) will not apply to
statements or omissions included in the Company Disclosure Documents based upon
information furnished to the Company in writing by Parent or Purchaser
specifically for use therein.
(c) The information with respect to the Company or any Subsidiary
that the Company furnishes to Parent or Purchaser in writing specifically for
use in the Offer Documents will not, at the time of the filing thereof, at the
time of any distribution thereof and at the time of the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 6.04. Access to Information. From the date hereof until the
Effective Time, the Company will give Parent and Purchaser, their counsel,
financial advisors, auditors and other authorized representatives full access
during normal business hours and without disrupting the orderly conduct of
business by the Company and its Subsidiaries to the offices, properties, books
and records of the Company and the Subsidiaries, will furnish to Parent and
Purchaser, their counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent and Purchaser in their
investigation of the business of the Company and the Subsidiaries; provided that
no
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investigation pursuant to this Section shall affect any representation or
warranty given by the Company to Parent and Purchaser hereunder.
SECTION 6.05. Other Offers. From the date hereof until the
termination hereof, the Company and its Subsidiaries will not, and the Company
shall use reasonable efforts to cause the officers, directors, employees or
other agents of the Company and the Subsidiaries not to, directly or indirectly,
(i) take any action to solicit, initiate or encourage any Acquisition Proposal
or (ii) subject to the fiduciary duties of the Board of Directors under
applicable law as advised by counsel to the Company, engage in negotiations
with, or disclose any nonpublic information relating to the Company or any
Subsidiary or afford access to the properties, books or records of the Company
or any Subsidiary to, any Person that may be considering making, or has made, an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company, the Company's directors or the Special
Committee from furnishing nonpublic information to, or affording access to the
properties, books or records of the Company or any Subsidiary to, or entering
into discussions or an agreement with, any Person in connection with an
unsolicited Acquisition Proposal by such Person or recommending an unsolicited
Acquisition Proposal to the stockholders of the Company, if and only to the
extent that (1) the Company's directors or the Special Committee, as the case
may be, determine in good faith after consultation with outside legal counsel
that such action is necessary to comply with their fiduciary duties to the
stockholders of the Company under applicable law and (2) prior to furnishing any
such nonpublic information to, or entering into discussions or negotiations
with, such Person, the Company's directors or the Special Committee, as the case
may be, receive from such Person an executed confidentiality agreement with
customary terms. The Company will promptly notify Parent after receipt of any
Acquisition Proposal or any indication that any Person is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any Subsidiary or for access to the properties, books or records of
the Company or any Subsidiary by any Person that may be considering making, or
has made, an Acquisition Proposal and will keep Parent fully informed of the
status and details of any such Acquisition Proposal, indication or request. For
purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any Subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this Agreement.
ARTICLE VII
COVENANTS OF PARENT AND PURCHASER
Parent and Purchaser agree that:
SECTION 7.01. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement, Parent and Purchaser will hold, and will use
their reasonable efforts to cause their respective officers, directors,
employees, accountants, lenders, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law (in which case only such portion of the
relevant documents or information as is required to be disclosed following
reasonable efforts to
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obtain confidential treatment thereof), all confidential documents and
information concerning the Company and the Subsidiaries furnished to Parent or
Purchaser in connection with the transactions contemplated by this Agreement,
including, without limitation, the stockholder lists furnished by the Company
pursuant to Section 1.02, except to the extent that such information can be
shown to have been (i) previously known on a nonconfidential basis by Parent or
Purchaser, (ii) in the public domain through no fault of Parent or Purchaser or
(iii) later lawfully acquired by Parent or Purchaser from sources other than the
Company; provided that Parent or Purchaser may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, lenders,
advisors and agents solely in connection with the transactions contemplated by
this Agreement so long as such Persons are informed by Parent or Purchaser of
the confidential nature of such information and are directed by Parent or
Purchaser to treat such information confidentially. The obligation of Parent and
Purchaser to hold any such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If this Agreement
is terminated, Parent and Purchaser will, and will use reasonable efforts to
cause their officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the Company, upon request, all
documents and other materials, and all copies thereof, obtained by Parent or
Purchaser or on their behalf from the Company in connection with this Agreement
that are subject to such confidence.
SECTION 7.02. Obligations of Purchaser. Parent will take all action
necessary to cause Purchaser to perform its obligations under this Agreement and
to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 7.03. Voting of Shares. Each of Parent and Purchaser agrees
to vote all Shares beneficially owned by it in favor of adoption of this
Agreement at the Company Stockholder Meeting.
SECTION 7.04. Disclosure Documents. (a) The information with respect
to Parent and its subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the Effective Time, and
(ii) in the case of any Company Disclosure Document other than the Company Proxy
Statement, at the time of the filing thereof, at the time of any distribution
thereof and at the time of the consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this Section 7.04(b) will not apply to
statements or omissions in the
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<PAGE> 19
Offer Documents based upon information furnished to Parent or Purchaser in
writing by the Company specifically for use therein.
ARTICLE VIII
COVENANTS OF PARENT, PURCHASER
AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party will use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 8.02. Certain Filings. The Company, Parent and Purchaser
shall cooperate with one another (a) in connection with the preparation of the
Company Disclosure Documents and the Offer Documents, and (b) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency or official, or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (c) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 8.03. Public Announcements. Parent, Purchaser and the
Company will consult with each other before issuing any press release or making
any public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any such
press release or make any such public statement prior to such consultation.
SECTION 8.04. Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
SECTION 8.05. Notices of Certain Events. Each of the Company
and Parent shall promptly notify the other of:
15
<PAGE> 20
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting Parent, Purchaser,
the Company or any Subsidiary which relate to the consummation of
the transactions contemplated by this Agreement.
SECTION 8.06. Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in Article Ten of the Certificate of Incorporation of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
materially adversely the rights thereunder of individuals who at the Effective
Time were directors or officers of the Company, with respect to any act or
omission in their capacity as an officer or director of the Company occurring on
or prior to the Effective Time, unless such modification shall be required by
law.
(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless each present and former director and officer of the Company
(collectively, the "Indemnified Parties") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or directly pertaining to any action or omission in their
capacity as an officer or director of the Company occurring on or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, for a period of six years after the later of the Effective Time and the
date hereof, in each case to the fullest extent permitted under applicable law
(and shall pay any expenses in advance of the final disposition of such action
or proceeding to each Indemnified Party to the fullest extent permitted under
applicable law, upon receipt from the Indemnified Party to whom expenses are
advanced of an undertaking to repay such advances required under applicable
law). In the event of any such claim, action, suit, proceeding or investigation,
(i) the Company or the Surviving Corporation, as the case may be, shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties
promptly after statements therefor are received and (ii) the Company and the
Surviving Corporation shall cooperate in the defense of any such matter. In the
event that any claim for indemnification is asserted or made within such
six-
16
<PAGE> 21
year period, all rights to indemnification in respect of such claim shall
continue until the final disposition of such claim.
(c) Parent shall maintain in effect for the benefit of the
Indemnified Parties for six years after the Effective Time (or for such lesser
period as can be purchased for a premium not exceeding 200% of the last
intercompany allocation from Parent to the Company with respect to directors'
and officers' insurance) the current directors' and officers' liability
insurance policies maintained by the Company to cover acts and omissions of the
Indemnified Parties occurring prior to the Effective Time; provided, that Parent
may substitute therefor policies of substantially the same coverage containing
substantially comparable terms and conditions with respect to matters occurring
prior to the Effective Time.
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 8.06; provided, that nothing
contained herein shall be deemed to impose any additional liability on the
acquiror of assets of the Company pursuant to a transaction of the kind
described in Schedule 6.01 attached hereto.
(e) The Indemnified Parties are each intended third-party
beneficiaries of the provisions of this Section 8.06, and may enforce this
Section 8.06 against the Company, the Surviving Corporation or Parent, as the
case may be, as fully and effectively as if each were a party to this Agreement.
SECTION 8.07. Form of Merger. Upon the request of Parent, the
parties hereto agree to use reasonable efforts to change the form of the Merger
from a reverse merger, pursuant to which Purchaser will be merged with and into
the Company, with the Company being the Surviving Corporation, to a forward
merger, pursuant to which the Company will be merged with and into Purchaser,
with the Purchaser being the Surviving Corporation.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the transactions contemplated hereby
shall have been approved and adopted by the stockholders of the
Company to the extent required by, and in accordance with,
17
<PAGE> 22
Delaware Law and the Certificate of Incorporation and Bylaws of the
Company;
(b) Purchaser or its permitted assignee shall have purchased
all Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that this condition shall not be applicable to
the obligations of Parent or Purchaser if, in breach of this
Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer;
(c) all actions by or in respect of or filings with any
governmental body, agency, official, or authority required to permit
the consummation of the Merger shall have been obtained or made; and
(d) no court, arbitrator or governmental body, agency or
official shall have issued any order, and there shall not be any
statute, rule or regulation, restraining or prohibiting the
consummation of the Merger or the effective operation of the
business of the Company and the Subsidiaries after the Effective
Time,
SECTION 9.02. Conditions to the Obligations of Parent and Purchaser.
The obligations of Parent and Purchaser to consummate the Merger are subject to
the satisfaction of the following further condition: the Company shall have
performed in all material respects all of its obligations hereunder required to
be performed by it at or prior to the Effective Time.
ARTICLE X
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company
and Parent, if such termination is also approved by a
majority of the Independent Directors;
(b) by either the Company or Parent, if the Effective Time
shall not have occurred on or before October 31, 1997; provided,
however, that the right to terminate this Agreement under this
Section 10.01(b) shall not be available to any party whose
18
<PAGE> 23
failure to fulfill any obligation under this Agreement has been the
primary cause of, or resulted in, the failure of the Effective Time
to occur on or before such date;
(c) by either the Company or Parent, if there shall be any law
or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is
entered and such judgment, injunction, order or decree shall become
final and nonappealable;
(d) by Parent, if Purchaser shall have (i) terminated the
Offer without having accepted any Shares for payment thereunder by
reason of the failure to satisfy any condition set forth in Annex I
hereto or (ii) failed to pay for Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure
to pay for Shares shall have been caused by or resulted directly
from the failure of Parent or Purchaser to perform in any material
respect any material covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or
Purchaser of any material representation or warranty of either of
them contained in this Agreement;
(e) by the Company, upon approval of the Board of Directors of
the Company and a majority of the Independent Directors, if
Purchaser shall have (i) failed to commence the Offer within five
business days following the date of the initial public announcement
of the offer, (ii) terminated the Offer without having accepted any
Shares for payment thereunder by reason of the failure to satisfy
any condition set forth in Annex I hereto or (iii) failed to pay for
Shares pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Shares
shall have been caused by or resulted directly from the failure of
the Company to perform in any material respect any material covenant
or agreement of it contained in this Agreement or the material
breach by the Company of any material representation or warranty of
it contained in this Agreement; or
(f) by the Company, upon approval of the Board of Directors of
the Company and a majority of the Independent Directors, if any
representation or warranty of Parent and Purchaser in this Agreement
shall not be true and correct in any material respect, as if such
representation or warranty was made as of such time on or after the
date of this Agreement; or Parent or Purchaser shall have failed to
perform in any material respect any obligation or
19
<PAGE> 24
to comply in any material respect with any agreement or covenant of
Parent or Purchaser to be performed or complied with by it under
this Agreement.
SECTION 10.02. Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that (a) the
agreements contained in Sections 7.01, 11.01, 11.04 and 11.06 shall survive the
termination hereof and (b) nothing herein shall relieve any party from liability
for any breach hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by delivery in
person, by telecopy or by registered or certified mail (postage prepaid, return
receipt requested), to the respective parties and the Special Committee at the
following addresses (or at such other address as shall be specified in a notice
given in accordance with this Section 11.01):
if to Parent or Purchaser, to:
Anthem Insurance Companies, Inc.
120 Monument Circle
Indianapolis, Indiana 46204
Attn: Patrick M. Sheridan
Telecopy: (317) 488-6466
with a copy to:
James H. Gross
Vorys, Sater, Seymour and Pease
52 East Gay Street
Box 1008
Columbus, Ohio 43216-1008
Telecopy: (614) 464-6350
20
<PAGE> 25
if to the Company, to:
Acordia, Inc.
120 Monument Circle
Indianapolis, Indiana 46204
Attn: Frank C. Witthun
Telecopy: (317) 488-6542
with a copy to: William W. Rosenblatt
Jonathan L. Freedman
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
if to the Special Committee, to:
John C. Crane
c/o Acordia, Inc.
120 Monument Circle
Indianapolis, Indiana 46204
Telecopy: (317) 488-6542
with a copy to: William P. Ritchie
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601-1692
Telecopy: (312) 782-8585
SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement pursuant to Section 10.01,
except that (a) the agreements and obligations set forth in Sections 7.01,
11.01, 11.04 and 11.06 shall survive any termination hereof and (b) the
agreements and obligations set forth in Articles II and XI and Section 8.05
shall survive the Effective Time in accordance with their respective terms.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended prior to the Effective Time if, and only if, such
amendment is in writing and signed by the Company, Parent and Purchaser;
provided, that after the approval and adoption of this Agreement by the
stockholders of the Company, no such amendment shall be made which would reduce
the amount or change the type of consideration in which each Share shall be
converted upon consummation of the Merger, would impose conditions to the Merger
other than those set forth in Sections 9.01 and 9.02 hereof or would otherwise
amend or change
21
<PAGE> 26
the terms and conditions of the Merger in a manner materially adverse to the
holders of the Shares (other than the Purchaser, Parent and Parent's other
subsidiaries); provided, further, that any amendment shall be approved by a
majority of the Independent Directors.
(b) At any time prior to the Effective Time, any party hereto may
(i) extend the time for the performance of any obligation or other act of any
other party hereto, (ii) waive any inaccuracy in any representation or warranty
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party to be bound thereby and, in the case of any extension or waiver by which
the Company is to be bound, only if approved by a majority of the Independent
Directors.
(c) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 11.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Purchaser
may transfer or assign, in whole or from time to time in part, to one or more of
its subsidiaries, the right to purchase Shares pursuant to the Offer, but any
such transfer or assignment will not relieve Purchaser of its obligations under
the Offer or prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
SECTION 11.06. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of the State of Delaware.
SECTION 11.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
[Signature page follows.]
22
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ACORDIA, INC.
By:/s/ Frank C. Witthun
-----------------------------------
Name: Frank C. Witthun
Title: President and Chief Executive
Officer
ANTHEM INSURANCE COMPANIES, INC.
By: /s/ L. Ben Lytle
------------------------------------
Name: L. Ben Lytle
Title: President and Chief Executive
Officer
AICI ACQUISITION CORP.
By: /s/ L. Ben Lytle
------------------------------------
Name: L. Ben Lytle
Title: President
23
<PAGE> 28
ANNEX I
Notwithstanding any other term or provision of the Offer, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, to pay for any Shares tendered
pursuant to the Offer and, in its good faith discretion, may amend or terminate
the Offer, to the extent provided in this Agreement, unless the Minimum Tender
Condition shall have been satisfied or waived in accordance with the terms
hereof. Furthermore, notwithstanding any other term or provision of the Offer,
the Purchaser will not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and, in its good faith discretion, may terminate or amend the Offer, to the
extent provided in this Agreement, if, at any time on or after the date of this
Agreement, and before the acceptance of such Shares for payment or, subject to
any applicable rules and regulations of the SEC, the payment therefor, any of
the following conditions exists:
(a) an order shall have been entered in any action or proceeding
before any federal or state court or governmental agency or other regulatory
body or a permanent injunction by any federal or state court of competent
jurisdiction in the United States shall have been issued and remain in effect
(i) making illegal the purchase of, or payment for, any Shares by Purchaser,
Parent or any of Parent's other subsidiaries; (ii) otherwise preventing the
consummation of the Offer or the Merger; or (iii) imposing limitations on the
ability of Purchaser, Parent or any of Parent's other subsidiaries to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to the
Offer on all matters properly presented to the Company's stockholders, which
would effect a material diminution in the value of the Shares acquired by
Purchaser;
(b) there shall have been any federal or state statute, rule or
regulation enacted, enforced, promulgated, amended or made applicable to the
Company, Purchaser, Parent or any other affiliate of Parent or the Company on or
after the date of the Offer by any governmental, regulatory or administrative
authority or agency, domestic, foreign or supranational (each, a "Governmental
Entity") that could reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in clauses (i) through (iii) of paragraph
(a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States; (ii) any extraordinary
or material adverse change in the financial markets or major stock exchange
indices in the United States from that existing at the close of business on the
date of this Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
limitation (whether or not mandatory) by any government, domestic, foreign or
supranational, or Governmental Entity on, or other event that, in the reasonable
judgment of the Purchaser, is reasonably likely to materially adversely affect,
the extension of credit by banks or other lending institutions, (v) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or (vi) in the case
of any of the foregoing situations
<PAGE> 29
described in clauses (i) through (v) of this paragraph (d) existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof;
(d) any approval, permit, authorization, favorable review or consent
of any Governmental Entity, including, but not limited to, the Indiana Insurance
Commissioner, shall not have been obtained;
(e) the Purchaser shall have reached an agreement or understanding
with the Company, including with a majority of the Independent Directors,
providing for termination of the Offer;
(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Agreement, or any
of the representations and warranties of the Company set forth in the Agreement
shall not be true in any material respect when made or at any time prior to
consummation of the Offer as if made at and as of such time; or
(g) this Agreement shall have been terminated in accordance
with its terms; or
(h) the Board of Directors of the Company shall have withdrawn, or
materially modified or amended in a manner materially adverse to Parent or
Purchaser, its approval or recommendation of the Offer or the Merger;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Purchaser, Parent or
any of Parent's other subsidiaries) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.
2
<PAGE> 1
EXHIBIT (C)(3)
ANTHEM ACORDIA STOCK PLAN
ARTICLE I
PURPOSE
The purpose of the Anthem Acordia Stock Plan (the "Plan") of Anthem
Insurance Companies, Inc. (the "Company") is to align the interests of key
executives of the Company or a Subsidiary of the Company to the interests of the
Company by awarding key executives restricted stock of Acordia, Inc., in which
the Company is a shareholder. The Plan is intended as a means to attract and
retain selected key executives of the Company and to recognize and reward the
efforts of selected key executives of the Company.
ARTICLE II
DEFINITIONS AND RULES OF CONSTRUCTION
Section 2.1. Definitions. The following words and phrases, when
capitalized, have the following meanings:
(a) "Award" means an award or grant of Restricted Stock by the
Committee to a Participant in the Plan pursuant to the provisions of
Article V of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Beneficiary" means the person or persons, including a trustee,
designated in writing by the Participant pursuant to practices of, or rules
prescribed by, the Committee, as the recipient of a benefit payable under
the Plan following the Participant's death. To be effective, a Beneficiary
designation must be filed with the Committee on a form prescribed by the
Committee. If a proper designation is not on record with the Committee the
Beneficiary shall be the Participant's estate.
(d) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time or any successor thereto, together with the rules, regulations
and interpretations promulgated thereunder.
(e) "Committee" means the Committee established pursuant to Article X.
(f) "Common Stock" means the common stock of Acordia, Inc. having a
par value of $1.00 per share.
(g) "Company" means Anthem Insurance Companies, Inc., an Indiana
mutual insurance company, and its Subsidiaries.
(h) "Disability" has the same meaning as set forth in The Anthem
401(k) Long Term Savings Investment Plan, as amended from time to time.
(i) "ERISA" means the Employee Retirement Income Security Act of 1974,
as in effect from time to time or any successor thereto, together with the
rules, regulations and interpretations promulgated thereunder.
(j) "Participant" means a key management or other highly compensated
employee who is selected by the Committee to participate in the Plan. A
person who is an "insider" subject to Section 16 of the Securities Exchange
Act of 1934 with respect to Acordia, Inc. is not eligible to be a
Participant during such time as he or she is an insider.
(k) "Plan" means the Anthem Acordia Stock Plan herein set forth, as
amended from time to time.
(l) "Restricted Period" means the period of time, designated by the
Committee, during which Awards are subject to the restrictions established
in accordance with Article V of the Plan.
(m) "Restricted Stock" means shares of Common Stock awarded pursuant
to the provisions of Article V of the Plan.
<PAGE> 2
(n) "Retirement" means termination of a Participant's employment, for
any reason other than death, on or after the date he attains age 55.
(o) "Share Reserve" means the share reserve established pursuant to
Article IV of the Plan.
(p) "Subsidiary" means a subsidiary of the Company.
Section 2.2. Rules of Construction. The following rules of construction
shall govern in interpreting the Plan:
(a) The provisions of this Plan shall be construed and governed in all
respects under and by the internal laws of the State of Indiana, to the
extent not preempted by federal law.
(b) Words used in the masculine gender shall be construed to include
the feminine gender, where appropriate.
(c) Words used in the singular shall be construed to include the
plural, where appropriate, and vice versa.
(d) The headings and subheadings in the Plan are inserted for
convenience of reference only and are not to be considered in the
construction of any provision of the Plan.
(e) If any provision of the Plan shall be held to be illegal or
invalid for any reason, that provision shall be deemed to be null and void,
but the invalidation of that provision shall not otherwise impair or affect
the Plan.
(f) The Plan shall be construed and interpreted as an unfunded plan
for purposes of the Code and as an unfunded plan maintained primarily for
the purpose of providing deferred compensation for a select group of
management or highly compensated employees within the meaning of ERISA
section 201(2). The Plan is not a pension plan.
ARTICLE III
PARTICIPATION
Subject to the provisions of the Plan, the Committee shall at any time, and
from time to time, in its sole discretion, select the Participants to be
eligible to be granted Awards under the Plan, upon recommendation of the CEO of
the Company or the Subsidiary at which the Participant is employed, as
applicable. No individual shall at any time have the right to be selected as a
Participant or to continue to be a Participant in a subsequent period.
ARTICLE IV
SHARE RESERVE
Subject to adjustment as permitted under this Article IV or required under
Article VII, the aggregate number of shares of Common Stock that may be
distributed to Participants under the Plan may not exceed 150,000 shares (the
"Share Reserve"). Such shares shall be shares of Common Stock held by the
Company. If any Awards are forfeited or terminate, settled in cash in lieu of
stock or exchanged for other Awards, the shares of Common Stock which were
theretofore subject to such Awards shall again be available for Awards under the
Plan to the extent of such forfeiture, termination, settlement or exchange. No
fractional shares of Common Stock shall be issued under the Plan.
ARTICLE V
AWARDS
Section 5.1. Awards. Subject to the provisions of the Plan, the Committee
shall determine, in its sole discretion, the amount of the Awards to be made and
set forth the terms, conditions and limitations
2
<PAGE> 3
applicable to each Award, including but not limited to the requirement that the
Participant execute an employment contract prior to the grant. Awards shall be
in the form of Restricted Stock. No Participant, having been granted an Award,
shall have the right to be granted an additional Award in the future though the
Committee is not prohibited from making an additional grant to a Participant. At
the Committee's sole discretion, a Participant may be given an election to
surrender an Award in exchange for the grant of a new Award.
Section 5.2. Restricted Period. At the time an Award is made, the
Committee shall establish the Restricted Period applicable to the Award. During
the Restricted Period, the Restricted Stock awarded will be subject to
forfeiture in accordance with Section 5.5 hereof. During the Restricted Period,
such Restricted Stock may not be sold, assigned, transferred, pledged,
hypothecated or encumbered, or otherwise disposed of, or be subject to
execution, attachment or similar process. Each Award may have a different
Restricted Period. At the time the Award is made, the Committee may, in its sole
discretion, prescribe conditions for the lapse of restrictions with respect to
portions of an Award during the Restricted Period and for the lapse or
termination of restrictions upon the satisfaction of other conditions in
addition to or other than the expiration of the Restricted Period with respect
to all or any portion of the Award.
Section 5.3. Rights of Holders of Restricted Stock. Subject to the
restrictions described in Section 5.2, the Participant shall have all rights of
a shareholder, including the right to currently receive dividends paid on such
Restricted Stock and the right to vote such Restricted Stock.
Section 5.4. Delivery of Restricted Stock. Restricted Stock awarded to a
Participant under the Plan may be held under the Participant's name in a book
entry account maintained by the Company or, if not so held, stock certificates
for Restricted Stock awarded may be registered in the name of the Participant
and issued and deposited, together with a stock power endorsed in blank, with
the Company or an agent appointed by the Company and shall bear an appropriate
legend restricting the transferability thereof. A Participant shall be entitled
to delivery of stock certificates only upon the lapse of the restrictions with
respect to that portion of an Award in accordance with the provisions of this
Article and Article VI and the satisfaction of any other conditions prescribed
by the Committee.
Section 5.5. Forfeitures. Except to the extent that the restrictions shall
have lapsed with respect to all or a portion of an Award, a Participant's right
to all or a portion of an Award subject to restrictions shall be forfeited if
and when such Participant ceases to be an employee of the Company or any of its
Subsidiaries within the Restricted Period for any reason or when any prescribed
condition for the lapse or termination of restrictions is not satisfied within
the applicable time period. All stock forfeited shall become the property of the
Company and all of the rights of such Participant to such Award and as a
stockholder shall terminate without further action or obligation on the part of
the Company. Dividends declared with respect to forfeited shares but not paid at
the time of forfeiture will be forfeited. The Committee may, in its sole
discretion, shorten or terminate the Restricted Period or waive any conditions
for the lapse or termination of restrictions with respect to all or any portion
of an Award.
Section 5.6. Section 83(b) Election. A Participant who files an election
with the Internal Revenue Service to include the fair market value of any
Restricted Stock in gross income while it is still subject to Restrictions shall
promptly furnish the Company with a copy of such election together with the
amount of any federal, state, local or other taxes required to be withheld to
enable the Company to claim an income tax deduction with respect to such
election.
ARTICLE VI
SPECIAL VESTING RULES
The Committee may amend the restrictions or other conditions in any Award;
provided, however, that no such amendment shall reduce interests in the Plan as
to which restrictions had lapsed prior to the date of such amendment without the
consent of the Participant holding such interest.
3
<PAGE> 4
ARTICLE VII
ADJUSTMENT PROVISIONS
In the event that the Common Stock should as a result of a stock split or
stock dividend or combination of shares or other change or exchange for other
securities by reclassification or otherwise, be increased or decreased or
changed into, or exchanged for, a different number or kind of shares or other
securities of Acordia, Inc. or any other corporation, or in the event of a
spin-off, spin-out or other distribution of assets to shareholders or the
assumption or conversion of outstanding grants pursuant to an acquisition, the
number and kind of shares then subject to Awards granted under the Plan and the
number of shares then remaining in the Share Reserve, shall be appropriately
adjusted by the Committee to reflect such action.
ARTICLE VIII
AMENDMENT OR DISCONTINUANCE OF THE PLAN
The Plan may be amended, suspended or terminated by the Board in whole or
in part at any time, with prospective or retroactive effect, provided that no
amendment, suspension or termination of the Plan shall adversely affect, except
with the consent of the holder, any rights or obligations with respect to Awards
theretofore granted.
ARTICLE IX
LISTING AND QUALIFICATION OF SHARES
The Company, in its discretion, may postpone the issuance or delivery of
shares of Common Stock pursuant to any Award until completion of such stock
exchange listing, or other qualification of such shares under any state or
federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations including, but not limited
to a written representation that such shares are to be acquired for investment
and not for resale or with a view to distribution thereof, and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of the shares in compliance with applicable laws, rules and
regulations. The Committee may cause a legend or legends to be placed on such
certificates to make appropriate reference to such representation and to
restrict transfer in the absence of compliance with applicable federal or state
securities laws.
ARTICLE X
ADMINISTRATION
Section 10.1. Administrator. The Compensation Committee, or such other
Committee as shall be designated by the Board, shall be the administrator of the
Plan. The Committee shall hold membership at the pleasure of the Board and shall
consist of the number of members that is specified from time to time by the
Board.
Section 10.2. Powers and Duties of the Committee. Subject to the specific
limitations stated in this Plan, the Committee shall have the power to interpret
the Plan and, subject to its provisions, prescribe, amend, waive and rescind
rules and regulations, to determine the terms of Awards and to make all other
determinations necessary or desirable for the Plan's administration. All
decisions of the Committee shall be by vote of a majority of its members. All
action taken by the Committee in the administration and interpretation of the
Plan shall be final and binding on all concerned. Without limiting the
generality of the foregoing, the Committee shall have the following powers,
duties, and responsibilities:
(a) to carry out the general administration of the Plan;
(b) to cause to be prepared all forms necessary or appropriate for the
administration of the Plan;
(c) to keep appropriate books and records;
4
<PAGE> 5
(d) to determine amounts to be disbursed to Participants and others
under the provisions of the Plan;
(e) to determine, consistent with the provisions of this instrument,
all questions of eligibility, rights, and status of Participants and others
under the Plan;
(f) to exercise all other powers and duties specifically conferred
upon the Committee elsewhere in this instrument; and
(g) to interpret, in its full discretion, the terms of the Plan and
the benefits payable pursuant to it and to resolve, in its full discretion,
all disputed questions of Plan interpretation and benefit eligibility; and
(h) to delegate all or a part of its powers, duties or
responsibilities to other persons or entities, in its discretion.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Relationship. Notwithstanding any other provision of this
Plan, this Plan and action taken pursuant to it shall not be deemed or construed
to establish a trust or fiduciary relationship of any kind between or among the
Company, Participants, or any other persons. The Plan is intended to be unfunded
for purposes of the Code and ERISA. The right of Participants to an award is
strictly a contractual right to payment, and this Plan does not grant nor shall
it be deemed to grant Participants or any other person any interest in or right
to any of the funds, property, or assets of the Company other than as an
unsecured general creditor of the Company.
Section 11.2. Other Benefits and Plans. Nothing in this Plan shall be
deemed to prevent Participants from receiving, in addition to the restricted
stock provided for under this Plan, any funds that may be distributable to them
at any time under any other present or future retirement or incentive plan of
the Company.
Section 11.3. Anticipation of Benefits. Neither Participants nor
Beneficiaries shall have the power, except by will or the law of descent and
distribution, to transfer, assign, anticipate, pledge, alienate, or otherwise
encumber in advance any of the payments that may become due under this Plan, and
any attempt to do so shall be void. Any payments that may become due under this
Plan shall not be subject to attachment, garnishment, or execution or be
transferrable by operation of law in the event of bankruptcy or insolvency of a
Participant.
Section 11.4. Obligations to the Company. If a Participant becomes
entitled to a distribution of Restricted Stock under the Plan, and if at that
time the Participant has outstanding any debt, obligation, or other liability
representing an amount owing to the Company, then the Committee may determine in
its sole discretion to offset the amount owing to the Company against the
distribution.
Section 11.5. Employment Not Guaranteed. Nothing contained in this Plan
nor any action taken under the Plan shall be construed as a contract of
employment or as giving any Employee any right to be retained in employment with
the Company.
Section 11.6. Waiver of Breach. The Company's waiver of any Plan provision
shall not operate or be construed as a waiver of any subsequent breach by the
Participant.
Section 11.7. Benefit. This Plan shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
Section 11.8. Tax Withholding. All Awards pursuant to the Plan shall be,
at the appropriate time, subject to withholding required by applicable Federal,
state and local laws, and, if applicable, FICA and HI tax, and the Committee may
make such arrangements for the payment of any withholding taxes on Awards as it
deems satisfactory, including, (i) deducting the amount required to be withheld
from salary or any other
5
<PAGE> 6
amount then or thereafter payable to a Participant, beneficiary or legal
representative, (ii) requiring a Participant, Beneficiary or legal
representative to pay to the Company the amount required to be withheld as a
condition of releasing the shares related thereto, or (iii) providing the
Participant with the option to have shares withheld to satisfy taxes.
Section 11.9. Notices. Any notice or filing required or permitted to be
given to the Committee or Company under the Plan shall be sufficient if it is in
writing and hand delivered, or sent by registered or certified mail, to the
Company at the principal office of the Company. Such notice shall be deemed
given as of the date of delivery or, if delivery is made by mail, as of the date
shown on the postmark on the receipt for registration or certification. Notices
to the Participant shall be delivered personally or mailed to the Participant at
his address appearing in the records of the Company. The address of any party
may be changed at any time by written notice to the other party given in
accordance with this provision.
ARTICLE XII
EFFECTIVE DATES
EXECUTED on behalf of Anthem, Inc., as of the day of ,
19 .
ANTHEM, INC.
By:
--------------------------------------
Chief Executive Officer
Date:
6
<PAGE> 7
FIRST AMENDMENT TO THE
ASSOCIATED ACORDIA STOCK PLAN
(AS ADOPTED EFFECTIVE AUGUST 17, 1995)
Pursuant to rights reserved under Article VIII of the Associated Acordia
Stock Plan (the "Plan") but, except as expressly provided herein otherwise,
conditioned upon the successful consummation of a tender offer by Anthem
Insurance Companies, Inc. (the "Company") for the common stock of Acordia, Inc.
on or before December 31, 1997 (the "Tender Offer"), the Plan is hereby amended
as follows:
1. Effective as of June 1, 1997, the Plan is amended by renaming it
the Anthem Acordia Stock Plan.
2. Effective as of the date the Company accepts for payment the common
stock of Acordia, Inc. tendered in the Tender Offer (the "Effective Date"),
a new Article XIII is added to the Plan to provide, in its entirety, as
follows:
ARTICLE XIII
CONVERSION OF RESTRICTED STOCK
Section 13. Scope Limitations. The provisions set forth in this Article
shall supersede any other provision in the Plan to the extent inconsistent with
the provisions in this Article; provided, however, that with respect to any
Award outstanding on the Effective Date, the provisions set forth in this
Article shall only be given effect if the Purchaser holding such Award consents.
Section 13.2. Conversion of Restriction Stock. As part of the Tender
Offer, the Company may elect either of the following two options:
(a) The first option would be for the Company to tender under the
terms of the Tender Offer the shares of Common Stock held as part of a
Restricted Stock Award and receive a cash amount determined in accordance
with the Tender Offer for each share of Common Stock so tendered.
(b) The second option would be to convert each Restricted Stock Award
outstanding as of the date on which the Tender Offer is completed into a
cash Award in an amount determined by multiplying the number of shares of
Common Stock included as part of the restricted Stock Award by an amount
equal to the price offered by the Company as part of the Tender Offer.
The cash equivalent realized upon the conversion of each Restricted Stock Award
shall hereinafter be referred to as a Restricted Cash Award. The Company shall
maintain a separate bookkeeping account for each Restricted Cash Award which
will have an initial balance equal to the cash equivalent realized under
whichever of the options described above is elected by the Company. The amounts
held as part of a Restricted Cash Award shall be deemed unfunded in accordance
with Section 13.6. The amount credited to each Restricted Cash Award Account
shall be credited with interest in the manner described in Section 13.3.
Section 13.3. Crediting of Interest. Beginning on the Effective Date, each
Restricted Cash Award Account shall be credited with interest at the Declared
Rate (as such term is defined below). For purposes of the Plan, the "Declared
Rate" means the average of the monthly average rates of 10-year United States
Treasury Notes for the twelve months ending on the September 30 of the preceding
calendar year plus 150 basis points; provided, however, that if the Anthem
Pension Committee changes the method of determining or increases or decreases
the interest rate which is credited under the Anthem Deferred Compensation Plan,
then the Declared Rate herein shall also change with regard to the crediting of
interest to the Participants' Restricted Cash Award Accounts, but the interest
rates shall not be decreased for periods prior to such action. Unless the Anthem
Pension Committee prospectively changes the manner of crediting interest in the
Anthem Deferred Compensation Plan, interest will be credited quarterly through
the last date of the calendar quarter immediately preceding the distribution
date of the Restricted Cash Award Account.
1
<PAGE> 8
Section 13.4. Lifting of Restrictions. The conversion of the Restricted
Stock Awards to Restricted Cash Award shall have no effect on the Restricted
Period. The Restricted Period shall be lifted on the Restricted Cash Awards
consistent and in accordance with Article V.
Section 13.5. Distributions. Upon the conclusion of the Restricted Period,
the balances held in the Restricted Cash Award Accounts shall be distributed to
the applicable Participants as soon as practicable, but after effecting required
federal and state withholding.
Section 13.6. Unfunded Accounts. Notwithstanding any of the provisions of
the Plan to the contrary, the establishment of the Restricted Cash Award
Accounts shall not be deemed or construed to establish a trust or a fiduciary
relationship of any kind between or among the Company, the Participants or any
other person. The Restricted Cash Award Accounts are intended to be unfunded for
purposes of the Code and ERISA. The right of Participants or other persons to
payment of the amounts under the Plan are strictly a contractual right to
payment, and the Plan does not grant nor shall deem to grant Participants or any
other person any interest and or right to any of the funds, properties or assets
of the Company other than as an unsecured general creditor of the Company.
Neither Participants nor Beneficiaries shall have the power, except by will or
law of descent or distribution, to transfer, assign, anticipate, pledge,
alienate or otherwise encumber in advance any of the payments that may become
due from the Restricted Cash Award Accounts, and any attempt to use so shall be
void. Any payments that may be made under the Plan from the Restricted Cash
Award Accounts shall not be subject to attachment, garnishment, or execution or
be transferable by operation of law in the event of bankruptcy or insolvency of
a Participant.
IN WITNESS WHEREOF, this First Amendment to the Associated Acordia Stock
Plan has been executed this day of , 1997, to be effective as of
June 1, 1997.
ANTHEM INSURANCE COMPANIES, INC.
By:
------------------------------------
L. Ben Lytle,
Chief Executive Officer
2
<PAGE> 1
[CREDIT SUISSE LOGO]
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue Telephone 212 325 2000
New York, NY 10010-3629
June 2, 1997
Board of Directors
Anthem Insurance Companies, Inc.
120 Monument Circle
Indianapolis, IN 46204
Dear Sirs and Madam:
You have asked us to advise you with respect to the fairness to Anthem
Insurance Companies, Inc. (the "Acquiror") from a financial point of view of the
consideration to be paid by the Acquiror pursuant to the terms of the Agreement
and Plan of Merger, dated as of June 2, 1997 (the "Acquisition Agreement"),
among Acordia, Inc. ("Acordia"), the Acquiror and AICI Acquisition Corp. (the
"Sub"). The Acquisition Agreement provides, among other things, for (i) the
commencement of a tender offer (the "Tender Offer") for all of the outstanding
shares of common stock, par value $1.00 per share, of Acordia (the "Acordia
Common Stock") for $40.00 net to the seller in cash, and (ii) the merger (the
"Merger") of the Sub with and into Acordia pursuant to which Acordia will become
a wholly owned subsidiary of the Acquiror and each outstanding share of Acordia
Common Stock, other than shares held in treasury by Acordia or owned by the
Acquiror or any subsidiary of the Acquiror or as to which dissenters' rights
have been perfected, will be converted into the right to receive $40.00 in cash.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Acquiror and Acordia, as well
as the Acquisition Agreement. We have also reviewed certain other information,
including financial forecasts, provided to us by Acordia and the Acquiror, and
have met with Acordia's and the Acquiror's managements to discuss the business
and prospects of the Acquiror and Acordia.
We have also considered certain financial and stock market data of Acordia,
and we have compared that data with similar data for other publicly held
companies in businesses similar to those of the Acquiror and Acordia and we have
considered the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of
Acordia's and the Acquiror's respective managements as to the future financial
performance of the Acquiror and Acordia. In addition, we have not made an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of the Acquiror and Acordia, nor have we been furnished with any such
evaluations or appraisals. We understand that the Acquiror has entered into
discussions with a third party with respect to the sale, following consummation
of the transactions contemplated by the Acquisition Agreement, of all of the
shares of certain subsidiary corporations and certain other assets which
comprise the independent insurance brokerage and related business of Acordia.
Our opinion is necessarily based upon financial, economic, market and other
conditions as they exist and can be evaluated on the date hereof.
We have acted as financial advisor to the Acquiror in connection with the
Tender Offer and the Merger and will receive a fee for our services, a
significant portion of which is contingent upon the acquisition of greater than
90% of the Acordia Common Stock.
In the past, Credit Suisse First Boston Corporation and its affiliates have
provided financial advisory and underwriting services to the Acquiror and
Acordia and received fees for rendering these services.
<PAGE> 2
In the ordinary course of our business, we and our affiliates may actively
trade the securities of the Acquiror and Acordia for our and their own accounts
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of the Acquiror in connection with its consideration of the Tender
Offer and the Merger and is not to be quoted or referred to, in whole or in
part, in any registration statement, prospectus or proxy statement, or in any
other document used in connection with the offering or sale of securities, nor
shall this letter be used for any other purposes, without our prior written
consent.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be paid by the Acquiror in the Tender Offer
and the Merger is fair to the Acquiror from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE> 1
EXHIBIT (c)(4)
SUMMONS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CRANDON CAPITAL PARTNERS,
Plaintiff
vs.
L. BEN LYTLE, FRANK C. WITTHUN,
PATRICK M. SHERIDAN, JOHN C. ALPIN,
BIRCH E. BAYH, JOHN C. CRANE,
MITCHELL E. DANIELS, JR., CATHERINE CIVIL ACTION NO. 15719-NC
E. DOLAN, ERNIE GREEN, DUANE R.
HOUSER, THOMAS C. ROBERTS, WILLIAM SUMMONS
W. ROSENBLATT, JAMES B. STRADTNER,
MICHAEL L. SMITH, and ACORDIA INC.,
Defendants
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named defendants so that, within 20 days after service
hereof upon defendants, exclusive of the day of service, defendants shall serve
upon Kevin Gross, Esq., plaintiff's attorney whose address is P.O. Box 1070
Wilmington, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof and of the complaint.
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above an
answer to the complaint, judgment by default will be rendered against you for
the relief demanded in the complaint.
Dated June 4, 1997 /s/ Dianne M. Kempski
----------------------------
Register in Chancery
<PAGE> 2
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CRANDON CAPITAL PARTNERS, |
Plaintiff | CIVIL ACTION NO. 15719-NC
|
VS. | SUMMONS PURSUANT
| TO 10 DEL.C. Sec. 3114
L. BEN LYTLE, FRANK C. WITTHUN, PATRICK M. |
SHERIDAN, JOHN C. ALPIN, BIRCH E. BAYH, JOHN |
C. CRANE, MITCHELL E. DANIELS, JR., CATHERINE |
E. DOLAN, ERNIE GREEN, DWANE R. HOUSER, |
THOMAS C. ROBERTS, WILLIAM W. ROSENBLATT, |
JAMES B. STRADTNER, MICHAEL L. SMITH, and |
ACORDIA, INC., |
Defendants |
|
|
|
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named individual defendants by service pursuant to 10
Del.C. Sec. 3114 upon Acordia Inc., a Delaware corporation, by serving its
registered agent The Corporation Trust Company, which is designated for service
of process in Delaware, so that within the time required by law, such defendants
shall serve upon Kevin Gross, Esq., plaintiff's attorney whose address is P.O.
Box 1070 Wilmington, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by 10 Del.C. Sec.
3114*, to serve on plaintiff's attorney named above an answer to the complaint,
judgment by default may be rendered against you for the relief demanded in the
complaint.
Dated June 4, 1997 /s/ Dianne M. Kempski
----------------------- --------------------------------------
Register in Chancery
*The text of 10 Del.C. Sec. 3114 is set out on the reverse of this Summons
<PAGE> 3
CIVIL ACTION NO. 15719-NC
CRANDON CAPITAL PARTNERS,
Plaintiff
vs.
L. BEN LYTLE, ET AL,
Defendant
SUMMONS
1. L. Ben Lytle
2. Frank C. Witthun
3. Patrick M. Sheridan
4. John C. Alpin
5. Birch E. Bayh
6. John C. Crane
7. Mitchell E. Daniels, Jr.
8. Catherine E. Dolan
9. Ernie Green
10. Dwane R. Houser
11. Thomas C. Roberts
12. William W. Rosenblatt
13. James B. Stradtner
14. Michael L. Smith
by serving the registered
agent for: Acordia Inc.
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
pursuant to 10 Del.C. section 3114
SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER
<PAGE> 4
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ----------------------------------------X
CRANDON CAPITAL PARTNERS, )
a Florida Partnership, )
Individually )
And On Behalf of All Others )
Similarly Situated, ) C.A. No. 15719-NC
)
Plaintiff, )
)
- against - )
) CLASS ACTION COMPLAINT
L. BEN LYTLE, FRANK C. WITTHUN, )
PATRICK M. SHERIDAN, JOHN C. )
ALPIN, BIRCH E. BAYH, JOHN C. )
CRANE, MITCHELL E. DANIELS, JR., )
CATHERINE E. DOLAN, ERNIE GREEN, )
DWANE E. HOUSER, THOMAS C. )
ROBERTS, WILLIAM W. ROSENBLATT, )
JAMES B. STRADTNER, MICHAEL L. )
SMITH, and ACORDIA INC., )
)
Defendants. )
- ----------------------------------------X
Plaintiff, by its attorneys, alleges upon personal knowledge as to its
own acts and upon information and belief as to all other matters, as follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a class action
on behalf of all persons, other than defendants, who own the securities of
Acordia Inc. ("Acordia" or the "Company") and who are similarly situated (the
"Class"), for injunctive and other relief. Plaintiff seeks the injunctive
relief herein, inter alia, to enjoin the implementation of a proposed
transaction whereby Anthem Insurance Cos. ("Anthem"), which presently owns
<PAGE> 5
approximately 67% of Acordia's outstanding common stock, would buy all of the
outstanding common stock which it does not already own. Alternatively, in the
event that the proposed transaction is implemented, plaintiff seeks to recover
damages caused by the breach of fiduciary duties owed by the defendants.
2. The members of the board of directors who are also directors of
Anthem suffer from irreconcilable conflicts of interest between their fiduciary
duty to maximize value for Acordia's public shareholders and their selfish
interest to pay the lowest possible price. Because of the close personal and
business relationship between these members and other directors of Acordia, it
cannot be expected that any of Acordia's directors will be able to carry out
their fiduciary duties faithfully and impartially to ensure Acordia's public
shareholders are treated fairly and receive maximum value for their investment
in the Company.
3. The individual defendants are obligated to take all necessary
steps to ensure that Acordia's public shareholders will receive the maximum
value realizable for their shares, including implementation of a bidding
mechanism to foster a fair auction of the Company to the highest bidder or the
exploration of strategic alternatives which will return maximum value to
plaintiff and the class. Because of their conflicting interests, the individual
defendants will not fulfill their obligations since an auction or the
exploration of strategic alternatives would force Anthem to pay more for the
Company than they would otherwise be willing to pay.
2
<PAGE> 6
Parties
4. Plaintiff is and, at all relevant times, has been the owner of
shares of Acordia common stock.
5. Acordia is a holding company with subsidiaries that provide
insurance brokering, risk management consulting, managed health care
integration and administration, workers' compensation administration, and
underwriting. Acordia maintains its principal executive offices at 120 Monument
Circle, Indianapolis, Indiana 46204. Acordia has approximately 13,005,106
shares of common stock outstanding and hundreds of stockholders of record.
Anthem still owns 67% of the Company's stock. Acordia stock trades on the New
York Stock Exchange.
6. Anthem is a corporation duly organized and existing under the laws
of the State of Indiana. Anthem is a mutual insurance company and provider of
health insurance and managed health care services in Indiana, Kentucky, and
Ohio. Anthem maintains its principal executive offices at 120 Monument Circle,
Indianapolis, Indiana 46204.
7. Defendant L. Ben Lytle ("Lytle"), at all times material hereto, has
been Chairman of the Board and a director of Acordia. He served as the
Company's Chief Executive Officer until November 1996 and as President from
March 1993 to November 1994. He has served as President, Chief Executive
Officer, and a director of Anthem since March 1989. From February 1994 until
October 1995 he served as Chairman of the Board of Anthem. Lytle owns
approximately 1% of the outstanding shares of the Company. Lytle,
3
<PAGE> 7
among other things, serves a member of the Advisory Board of CID Equity
Partners, L.P. ("CID"), a director of IPALCO Enterprises, Inc. ("IPALCO") and
its subsidiary, Indianapolis Power & Light Company ("Indianapolis"), and Bank
One, N.A.
8. Defendant Frank C. Witthun ("Witthun"), at all times material
hereto, has been President, Chief Executive Officer, and a director of Acordia.
9. Defendant Patrick M. Sheridan ("Sheridan"), at all times material
hereto, has been a director of Acordia. From 1989 to August 1996 he served as
Executive Vice President and Chief Financial Officer of the Company. From 1987
until 1991 he served as the Treasurer of Anthem, and has served as Chief
Financial Officer and Executive Vice President of Anthem since 1987.
10. Defendant John C. Aplin ("Aplin"), at all times material hereto,
has been a director of Acordia. Aplin, among other things, is currently a
general partner of CID.
11. Defendant Birch E. Bayh ("Bayh"), at all times material hereto,
has been a director of Acordia.
12. Defendant John C. Crane ("Crane"), at all times material hereto,
has been a director of Acordia.
13. Defendant Mitchell E. Daniels, Jr. ("Daniels"), at all times
material hereto, has been a director of Acordia. Daniels is also a director of
IPALCO and Indianapolis.
14. Defendant Catherine E. Dolan ("Dolan"), at all times material
hereto, has been a director of Acordia.
4
<PAGE> 8
15. Defendant Ernie Green ("Green"), at all times material hereto, has
been a director of Acordia.
16. Defendant Dwane R. Houser ("Houser") has been a director of the
Company since September 1995. Houser has also been Chairman of the Board of
Anthem since October 1995.
17. Defendant Thomas C. Roberts ("Roberts"), at all times material
hereto, has been a director of Acordia.
18. Defendant William W. Rosenblatt ("Rosenblatt"), at all times
material hereto, has been a director of Acordia.
19. Defendant James B. Stradtner ("Stradtner"), at all times material
hereto, has been a director of Acordia.
20. Defendant Michael L. Smith ("Smith"), at all times material
hereto, has been a director of Acordia. Smith has been the Chief Operating and
Chief Financial Officer of American Health Network, an Anthem subsidiary, since
April 1996.
21. The defendants named in paragraphs 7 through 20 are hereinafter
referred to as the "Individual Defendants."
22. Because of their positions as officers/directors, defendants owe
fiduciary duties of loyalty and due care to plaintiff and the other members of
the Class.
CLASS ACTION ALLEGATIONS
23. Plaintiff brings this case in its own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants,
5
<PAGE> 9
or any of the Company's principal stockholders, who will be threatened with
injury arising from defendants' actions as is described more fully below.
24. This action is properly maintainable as a class action.
25. The Class is so numerous that joinder of all members is
impracticable. The Company has approximately 3.7 million shares of common
stock. There are hundreds of record and beneficial stockholders.
26. There are questions of law and fact common to the Class including,
inter alia, whether:
a. defendants have breached and will continue to breach their
fiduciary and other common law duties owned by them to plaintiff and the
members of the Class; and
b. plaintiff and the other members of the Class would be
irreparably damaged by the wrongs complained of herein.
27. Plaintiff is committed to prosecuting the action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Plaintiff is an adequate
representative of the Class.
28. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for
6
<PAGE> 10
defendants, or adjudications with respect to individual members of the Class
which would as a practical matter be dispositive of the interests of the other
members not parties to the adjudications or substantially impair or impede
their ability to protect their interests.
29. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
30. By the acts, transactions, and courses of conduct alleged herein,
defendants, in breach of their fiduciary duties, have not dealt fairly with the
plaintiff and the Class.
31. On May 21, 1997, The New York Times reported that the Company was
in discussions with Anthem about a reorganization of its health business,
including Anthem's acquisition of the 33% of Acordia it does not already own.
Anthem also announced that it was in discussions with a third party about a
sale of Acordia's brokerage business.
32. Previously, on February 7, 1997, The Wall Street Journal reported
that the Board of Directors had approved a "strategic review" of Acordia's
relationship with Anthem.
33. On June 2, 1997, Acordia and Anthem announced that they had agreed
to enter into a definitive merger agreement, whereby Anthem will acquire,
through a two step tender offer, all the outstanding shares of Acordia common
stock for $40 per share.
7
<PAGE> 11
The tender offer is subject to several conditions, including the tender and
nonwithdrawal of at least a majority of the then-outstanding Acordia shares not
owned by Anthem or its subsidiaries.
34. As set forth above, the directors of Acordia suffer from
conflicts of interest either because they are affiliated with Anthem or
maintain close business and personal relationships with the members of
Acordia's senior management. In these circumstances, the Individual Defendants
are not in a position to protect the interests of Acordia's public
shareholders, particularly in determining whether or not Acordia should be sold
at this time. A sale of the Company at this time could well deny Class members
their right to share proportionately in the true value of Acordia's valuable
assets, profitable business, and future growth in profits and earnings, while
usurping the same for the benefit for Anthem.
35. Additionally, defendants have not seriously considered other
potential purchasers of Acordia or its stock although the Anthem offer put the
Company into play in February 1997.
36. Defendants have violated fiduciary and other common law duties
owed to the plaintiff and the other members of the Class in that they have not
and are not exercising independent business judgment, and have acted and are
acting to the detriment of the Class.
37. As a result of defendants' action, plaintiff and the Class have
been and will be damaged by the breaches of fiduciary
8
<PAGE> 12
duty and, therefore, plaintiff and the Class will not receive the fair value
of Acordia's assets and businesses.
38. Unless enjoined by this Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the Class, and will succeed
in their plan to exclude plaintiff and the Class from the fair proportionate
share of Acordia's valuable assets and businesses, all to the irreparable harm
of the Class.
39. Plaintiff and the Class have no adequate remedy of law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
a. declaring that this lawsuit is properly maintainable as a
class action and certifying plaintiff as representative of the Class;
b. declaring that the defendants and each of them have
committed a gross abuse of trust and have breached their fiduciary duties to
plaintiff and the other members of the Class;
c. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction;
d. in the event the transaction is consummated, rescinding it
and setting it aside;
e. awarding compensatory damages against defendants, jointly
and severally, in an amount to be determined at
9
<PAGE> 13
trial, together with prejudgment interest at the maximum rate allowable by law;
f. awarding plaintiff and the Class their costs and disbursements and
reasonable allowances for plaintiff's counsel and experts' fees and expenses;
and
g. granting such other and further relief as may be just and proper.
Dated: June 2, 1997
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
By: /s/ Harmon M. Monhait
--------------------------------
Suite 214 Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
10
<PAGE> 1
EXHIBIT (c)(5)
SUMMONS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
SHERRY LEVINSON, CIVIL ACTION NO. 15718-NC
Plaintiff
SUMMONS
VS.
ACORDIA, INC., BEN L. LYTLE,
PATRICK M. SHERIDAN, DWANE R.
HOUSER, FRANK C. WITTHUN, and
ANTHEM INSURANCE COMPANIES, INC.,
Defendants
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named defendants so that, within 20 days after
service hereof upon defendants, exclusive of the day of service, defendants
shall serve upon Norman M. Monhait, Esq., plaintiff's attorney whose address is
P.O. Box 1070, Wilmington, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof and of the complaint.
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above
an answer to the complaint, judgment by default will be rendered against you
for the relief demanded in the complaint.
Dated June 4, 1997 /s/ Duanne M. Kempski
----------------- -------------------------
Register in Chancery
<PAGE> 2
CIVIL ACTION NO. 15718-NC
SHERRY LEVINSON,
Plaintiff
VS.
ACORDIA, INC., ET AL,
Defendant
SUMMONS
Please effectuate service upon:
Acordia, Inc.
by serving its registered agent:
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER
Norman M. Monhait, Esq.
Attorney for Plaintiff
<PAGE> 3
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
SHERRY LEVINSON, | CIVIL ACTION NO. 15718-NC
Plaintiff |
| SUMMONS PURSUANT
| TO 10 DEL C. Sec. 3114
VS. |
|
ACORDIA, INC., BEN L. LYTLE, PATRICK M. |
SHERIDAN, DWANE R. HOUSER, FRANK C. WITTHUN, |
and ANTHEM INSURANCE COMPANIES, INC., |
Defendants |
|
|
|
|
|
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named individual defendants by service pursuant to
10 Del C. Sec. 3114 upon Acordia, Inc., a Delaware corporation, by serving its
registered agent The Corporation Trust Company, which is designated for service
of process in Delaware, so that within the time required by law, such
defendants shall serve upon Norman M. Monhait, Esq., plaintiff's attorney whose
address is P.O. Box 1070 Wilmington, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by 10 Del.C.
Sec. 3114*, to serve on plaintiff's attorney named above an answer to the
complaint, judgment by default may be rendered against you for the relief
demanded in the complaint.
Dated June 4, 1997 /s/ Dianne M. Kempski
------------------------ ------------------------------
Register in Chancery
*The text of 10 Del C. Sec. 3114 is set out on the reverse of this Summons
<PAGE> 4
CIVIL ACTION NO. 15718-NC
SHERRY LEVINSON,
Plaintiff
VS.
ACORDIA, INC., ET AL,
Defendant
SUMMONS
1. Ben L. Lytle
2. Patrick M. Sheridan
3. Dwane R. Houser
4. Frank C. Witthun
by serving the registered
agent for: Acordia, Inc.:
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
pursuant to 10 Del.C. Section 3114
------
SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER
<PAGE> 5
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
SHERRY LEVINSON, on behalf of herself and
all others similarly situated,
C.A. No. 15718NC
Plaintiff.
-against- CLASS ACTION
COMPLAINT
ACORDIA, INC., BEN L. LYTLE, PATRICK
M. SHERIDAN, DWANE R. HOUSER,
FRANK C. WITTHUN and ANTHEM
INSURANCE COMPANIES, INC.
Defendants.
Plaintiff, by her attorneys, alleges upon information and belief,
except as to paragraph 1 which plaintiff alleges upon knowledge, as follows:
1. Plaintiff Sherry Levinson is and was, at all times relevant to this
action, a stockholder of defendant Acordia Inc. ("Acordia" or the "Company")
2. Defendant Acordia is a corporation duly organized and existing
under the laws of the state of Delaware, with its principal offices located at
120 Monument Circle, Indianapolis, Indiana. There are currently approximately
over 13 million shares of Acordia common stock outstanding held by more than
450 stockholders. Acordia is a holding company with subsidiaries which provide
insurance brokerage, risk management consulting, managed health care
integration and administration, workers' compensation
<PAGE> 6
administration, underwriting management and employee benefits consulting
services to government, not-for-profit and private sector employers, groups,
trusts and associations, as well as to individual consumers.
3. Defendant Anthem Insurance Companies Inc. ("Anthem") is a
corporation duly organized and existing under the laws of the State of Indiana
with its principal office located at 120 Monument Circle, Indianapolis,
Indiana, the same address as Acordia. Anthem is a mutually owned insurer and
health insurance provider. Anthem currently owns approximately 67% of Acordia's
outstanding stock.
4. Defendant Ben L. Lytle ("Lytle"), at all times relevant hereto, held
the positions of Chairman of the Board of Acordia and President and Chief
Executive Officer of Anthem.
5. Defendant Patrick M. Sheridan ("Sheridan"), at all relevant times
hereto has been a director of the Company. From 1989 until August 1996, he
served as Executive Vice President and Chief Financial Officer of the Company.
He served as the Treasurer of Anthem from 1987 to 1991, and has served as Chief
Financial Officer and Executive Vice President of Anthem since 1987.
6. Defendant Dwane R. Houser ("Houser") at all relevant times hereto,
has been a director of the Company since September 1995. He has served as
Chairman of the Board of Anthem since October 1995.
7. Defendant Frank C. Witthun ("Witthun"), at all times relevant
hereto, held the positions of President and Chief Executive Officer of Acordia.
<PAGE> 7
8. Defendants Lytle, Sheridan, Houser and Witthun are and were, at all
times relevant hereto, members of the boards of directors of Acordia. they are
sometimes referred to herein as the "Individual Defendants".
9. The Individual Defendants and Anthem as officers, directors and/or
controlling stockholders of Acordia, have a fiduciary relationship and
responsibility to plaintiff and other common public stockholders of Acordia and
owe to plaintiff and the other class members the highest obligations of good
faith, loyalty, fair dealing, due care and candor.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action pursuant to Rule 23 of the Rules of
the Court of Chancery on behalf of herself and all other stockholders of the
Company (except defendant and any person, firm, trust, corporation, or other
entity related to or affiliated with any defendant), who are or will be
adversely affected by the conduct of the defendants as more fully described
herein (the "Class").
11. This action is properly maintainable as a class action for the
following reasons:
(a) The Class is so numerous that joinder of all members is
impracticable. As of March 1, 1997, Acordia had approximately 13 million shares
of common stock outstanding held by more than 450 stockholders;
<PAGE> 8
(b) The members of the Class are scattered throughout the United
States and are so numerous as to make it impracticable to bring them all before
this Court;
(c) There are questions of law and fact which are common to the
Class including, inter alia, the following:
i. whether defendants are breaching their fiduciary duties
owed by them to plaintiff and members of the class and/or have aided and
abetted in such breach, by virtue of their participation and/or acquiescence
and by their other conduct complained of herein;
ii. whether defendants are breaching their fiduciary
obligations to plaintiff and members of the class by failing and refusing to
attempt in good faith to maximize stockholder value;
iii. whether defendants have wrongfully failed and refused
to seek a purchaser of Acordia and/or any and all of its various assets or
divisions at the best price obtainable; and
iv. whether plaintiff and the other members of the Class
will be irreparably damaged by defendants' wrongful conduct alleged herein and
if so, what is the proper remedy and/or measure of damages.
(d) The claims of plaintiff are typical of the claims of the Class
in that all members of the Class will be damaged by defendants' actions.
4
<PAGE> 9
(e) Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature.
Plaintiff is an adequate representative of the Class.
(f) The prosecution of separate actions by individual
members of the Class would create a risk of inconsistent or varying
adjudications with respect to individual members of the Class.
(g) Defendants have acted or refused to act on grounds
generally applicable to the Class, thereby making appropriate injunctive relief
and/or corresponding declaratory relief with respect to the Class as a whole.
CLAIM FOR RELIEF
12. On May 20, 1997, Dow Jones Newswire reported that Acordia and
Anthem were discussing a possible reorganization of Acordia's health business.
Acordia announced that the reorganization may include Anthem's acquisition of
the publicly owned shares of Acordia it does not already own.
13. On or about June 2, 1997, Acordia and Anthem, announced that,
as a result of their previously announced strategic reviews, the two companies
had entered into a definitive merger agreement. The merger agreement provides
that, subject to the satisfaction of various conditions. Anthem will acquire
all of the outstanding common stock of Acordia at a price per share of $40.00.
The agreement was approved
5
<PAGE> 10
unanimously by a special committee of Acordia's outside directors. Anthem
currently owns 66.8% of Acordia's outstanding common stock.
14. As part of the proposed transactions, Anthem and a wholly owned
subsidiary will make a tender offer, which is expected to commence no later than
June 6, 1997, for all of the outstanding shares of Acordia's common stock not
already owned by Anthem at a price per share of $40.00. The tender offer is
subject to several conditions, including the tender and nonwithdrawal of at
least a majority of the then issued and outstanding Acordia shares owned by
persons other than Anthem, its subsidiaries or any of its officers and
directors. Under the terms of the merger agreement, after completion of the
tender offer, all then remaining shares of Acordia common stock not owned by
Anthem will be subsequently acquired in a cash merger of Acordia and an Anthem
subsidiary at the tender offer price of $40.00 per share.
15. As set forth above, Anthem already owns 67% of the outstanding
common stock of Acordia. The loyalties of the Individual Defendants, especially
Lytle, Sheridan and Houser who are directors and/or officers of Anthem are, at
best, divided in the instant transaction. The Individual Defendants are beholden
to Anthem, the majority owner of Acordia, and can not be expected to act in the
best interest of Acordia's minority stockholders.
16. The purpose of the proposed transaction is to enable Anthem to
acquire the remaining shares of Acordia it does not already own and to acquire
Acordia's valuable assets for Anthem's own benefit at the expense of Acordia's
public stockholders.
6
<PAGE> 11
17. The proposed acquisition comes at a time when Acordia has
performed well and Anthem expects it will continue to perform well because it
is already poised to do so. Anthem and the Individual Defendants have timed
this transaction to capture Acordia's positive performance and use it to their
own ends, without paying an adequate or fair price for Acordia's remaining
shares.
18. Defendant Anthem and the Individual Defendants in particular,
are in a position of control and power over the Acordia minority stockholders
and have access to internal financial information about Acordia, its true
value, expected increase in true value and the benefits to Anthem of 100%
ownership of Acordia to which plaintiff and the Class members are not privy.
Defendants are using their positions of power and control to benefit Anthem in
this transaction, to the detriment of the Acordia common stockholders.
19. The Individual Defendants have clear and material conflicts of
interest and are acting to better the interests of Anthem at the expense of
Acordia's public stockholders.
20. Defendants have breached their fiduciary and other common law
duties owed to plaintiff and other members of the Class in that they have not
and are not exercising independent business judgment and have acted and are
acting to the detriment of the Class in order to benefit themselves. Any
contemplated transaction is not the product of arm's length negotiations and is
not based upon any independent evaluation of the current value of Acordia's
common stock, assets or business.
7
<PAGE> 12
21. Defendants have failed and refused to take those steps necessary to
ensure that the Company's stockholders will receive maximum value of their
shares of Acordia stock. Defendants have thus far failed to announce any active
auction or open bidding procedures best calculated to maximize shareholder value
in selling the Company. As a result, defendants are acting to put their own
interests ahead of the public stockholders, all at the expense and to the
detriment of the Company's public stockholders.
22. By the acts, transactions and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme in breach of
their fiduciary duties and obligations, are attempting unfairly to deprive
plaintiff and the other members of the Class of their investment in Acordia, all
to the detriment of the Company and its stockholders. Defendants have been
engaged in a wrongful effort to further their own personal interests.
23. By virtue of the acts and conduct alleged herein, defendants, who
control the actions of the Company, have carried out a preconceived plan and
scheme to place their own personal interests ahead of the interests of Acordia's
public stockholders. Defendants have violated their fiduciary duties owed to
plaintiff and the Class in that they have not and are not exercising independent
business judgment and have acted and are acting to the detriment of the
Acordia's public stockholders for their own personal benefit.
8
<PAGE> 13
24. Defendants have breached their fiduciary duties by reason of
the acts and transactions complained of herein, including their apparent
decision to effect a transaction without making an effort to obtain the best
offer possible and by affirmatively attempting to prevent a better offer.
25. As a result of the actions of defendants, plaintiff and the
other members of the Class have been and will be damaged in that they have not
and will not receive their fair proportion of the value of Acordia's assets and
businesses and/or have been and will be prevented from obtaining a fair and
adequate price for their shares of Acordia's common stock.
26. Plaintiff seeks preliminary and permanent injunctive relief and
declaratory relief preventing defendants from inequitably and unlawfully
depriving plaintiff and the Class of their right to realize a full and fair
value for their stock at a substantial premium over the market price, and to
compel defendants to carry out their fiduciary duties to maximize shareholder
value in selling Acordia.
27. Unless enjoined by the Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the other members of the
Class, and will consummate the sale of Acordia at an inadequate and unfair
price, or upon inequitable terms, all to the irreparable harm of plaintiff and
the other members of the Class.
28. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
9
<PAGE> 14
A. Declaring this to be a proper class action and certifying plaintiff
as representative of the Class:
B. Preliminarily and permanently enjoining Anthem from acquiring the
outstanding shares of Acordia not already owned by Anthem:
C. Ordering defendants to carry out their fiduciary duties to
plaintiff and the other members of the Class by announcing their intention to:
(1) cooperate fully with any person or entity, having a bona
fide interest in proposing any transaction which would maximize shareholder
value, including, but not limited to, a buyout or takeover of the Company;
(2) undertake an appropriate evaluation of Acordia's worth as
a merger/acquisition candidate;
(3) take all appropriate steps to enhance Acordia's value and
attractiveness as a merger/acquisition candidate;
(4) take all appropriate steps to effectively expose Acordia to
the marketplace in an effort to create as active auction of Acordia;
(5) act independently so that the interests of Acordia's
public stockholders will be protected; and
(6) adequately ensure that no conflicts of interest exist
between the Individual Defendants' own interest and their fiduciary obligation
to maximize stockholder value or, if such conflicts exist, to ensure that all
conflicts are resolved in the best interest of Acordia's public stockholders;
10
<PAGE> 15
D. Ordering the Individual Defendants, jointly and severally to
account to plaintiff and the Class for all damages suffered and to be suffered
by them as a result of the acts and transactions alleged herein;
E. Awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiff's attorneys' and experts' fees;
and
F. Granting such other further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
BY: /s/ Norman M. Monhait
-------------------------------------
919 North Market Street
Mellon Bank Center, Suite 1401
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
ABBEY, GARDY & SQUITIERI, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700
FARUQI & FARUQI, L.L.P.
415 Madison Avenue
New York, New York 10017
(212) 986-1074
