-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UmHoIL2pdxFx6XDygYR15C96GU3rFxBNfASebVTCLHVEBdFyS1QXgiU1N7aV5sCR SmL1WHtrYhCGomGwkmcwDA== 0000950152-96-002654.txt : 19960529 0000950152-96-002654.hdr.sgml : 19960529 ACCESSION NUMBER: 0000950152-96-002654 CONFORMED SUBMISSION TYPE: S-2 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19960528 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCEL INTERNATIONAL CORP CENTRAL INDEX KEY: 0000001985 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 310788334 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-04625 FILM NUMBER: 96573176 BUSINESS ADDRESS: STREET 1: 475 METRO PLACE N CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147647000 MAIL ADDRESS: STREET 1: 475 METRO PLACE NORTH CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: ACCELERATION CORP DATE OF NAME CHANGE: 19870814 S-2 1 ACCEL INTERNATIONAL INC. 1 As filed with the Securities and Exchange Commission on May 28, 1996 Registration No. 333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM S-2 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ACCEL INTERNATIONAL CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 31-0788334 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) NICHOLAS Z. ALEXANDER, Secretary 475 Metro Place North 475 Metro Place North Dublin, Ohio 43017 Dublin, Ohio 43107 (614) 764-7000 (614) 764-1000 (Address of principal executive offices) (Name and address of agent for service) ----------------------- Copy to: FRED A. SUMMER, ESQ. Squire, Sanders & Dempsey 41 South High Street Columbus, Ohio 43215 (614) 365-2700 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
================================================================================================================================= Proposed Proposed maximum Title of each class of securities to Amount to be maximum offering aggregate offering Amount of be registered registered price per unit(1) price(1) registration fee - --------------------------------------------------------------------------------------------------------------------------------- Common Stock, $.10 Par Value 7,000,000 $2.625 $18,375,000 $6,336.21 - --------------------------------------------------------------------------------------------------------------------------------- Non-Transferable Subscription Rights Evidencing Rights to Purchase Common Stock 7,000,000 (2) (2) (3) ================================================================================================================================= (1) Estimated solely for purpose of calculating the filing fee pursuant to Rule 457(c) under the Securities Act of 1933 (the "Act"), based on the average of the high and low prices per share on the Nasdaq National Market on May 22, 1996. (2) No consideration will be received by the Registrant upon distribution of Rights. (3) No filing fee is required for the registration of Rights pursuant to Rule 457(g) of the Act.
----------------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ 2 ACCEL INTERNATIONAL CORPORATION CROSS-REFERENCE SHEET
Item Number Form S-2 (Reg. S-K Item, if applicable) Caption or Location in Prospectus 1(501) Outside front cover page 2(502) Outside front cover page; Inside front cover page; Outside back cover page 3(503) SUMMARY; RISK FACTORS 4(504) USE OF PROCEEDS 5(505) THE RIGHTS OFFERING -- Determination of Subscription Price 6(506) Inapplicable 7(507) Inapplicable 8(508) PLAN OF DISTRIBUTION 9(202) DESCRIPTION OF THE CAPITAL STOCK 10(509) Inapplicable 11(a) INCORPORATION OF CERTAIN INFORMATION BY REFERENCE; RECENT DEVELOPMENTS 11(b) Inapplicable 11(c) Inapplicable 12 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 13(510) Inapplicable
3 SUBJECT TO COMPLETION, DATED MAY 28, 1996 PROSPECTUS __ SHARES ACCEL INTERNATIONAL CORPORATION [LOGO] COMMON STOCK --------------- ACCEL International Corporation (the "Company"), a Delaware corporation, is offering (the "Rights Offering") to holders of record (the "Rights Holders") of shares of its Common Stock, par value $.10 per share (the "Common Stock"), non-transferable subscription rights (the "Rights") to subscribe for and purchase additional shares of the Common Stock for a price of $__ per share (the "Subscription Price"). Such Rights Holders will receive one Right for every share of Common Stock held by them as of the close of business on __, 1996 (the "Record Date"). Rights Holders may purchase __ share[s] of Common Stock (the "Underlying Shares") for each Right held upon payment of the Subscription Price (the "Basic Subscription Privilege"). Each Right also carries the right to subscribe (the "Oversubscription Privilege") at the Subscription Price for additional shares of Common Stock that are not otherwise purchased pursuant to the exercise of Rights up to an amount equal to one-half of the number of Underlying Shares each Rights Holder is eligible to purchase pursuant to the Basic Subscription Privilege. If an insufficient number of shares of Common Stock is available to satisfy fully all elections to exercise the Oversubscription Privilege, the available shares of Common Stock will be prorated among Rights Holders who exercised their Oversubscription Privilege based on the respective number of Underlying Shares purchased by such Rights Holders pursuant to their Basic Subscription Privilege. See "The Rights Offering--Subscription Privileges--Oversubscription Privilege." [No fractional Rights will be issued and no fractional shares of Common Stock will be issued upon exercise of the Rights.] To the extent that the Oversubscription Privilege is not exercised in full, the Company may determine to offer the shares of Common Stock not subscribed for sale to others, including current directors or stockholders of the Company and their affiliates, employees and independent agents, either directly or through underwriters or agents (the "Additional Offering"). See "Plan of Distribution." The Rights will be evidenced by non-transferable certificates. Once a Rights Holder has exercised any Rights, such exercise may not be revoked. The Rights will expire at 5:00 p.m., Columbus, Ohio time, on __, 1996, unless extended (as it may be extended, the "Expiration Date"), provided that the Expiration Date shall in no event be later than __, 1996. Rights Holders who do not exercise their Rights will experience a decrease in their proportionate interest in the equity ownership and voting power of the Company. See "Risk Factors--Decrease in Proportionate Equity Ownership if Rights Not Exercised." The Common Stock is traded on the Nasdaq National Market under the symbol "ACLE." On May 23, 1996, the last reported sale price of the Common Stock was $2.50. After the Expiration Date, the Rights will no longer be exercisable and will have no value. Since the Rights are non-transferable, the Rights may not be sold and there will be no trading market for the Rights. POTENTIAL PURCHASERS OF THE COMMON STOCK PURSUANT TO AN EXERCISE OF THE RIGHTS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE __. --------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
====================================================================================================== Price to Underwriting Proceeds to Public Discount Company (1) - ------------------------------------------------------------------------------------------------------ Per Share $ None $ - ------------------------------------------------------------------------------------------------------ Total(2) $ None $ ====================================================================================================== (1) Before deducting expenses payable by the Company estimated to be $__ . (2) The Total amount assumes the purchase of all __ shares of Common Stock offered hereby.
--------------- The date of this Prospectus is __ , 1996 4 AVAILABLE INFORMATION The Company has filed a Registration Statement on Form S-2 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with the Securities and Exchange Commission (the "Commission") with respect to the Rights and the shares of Common Stock offered pursuant to this Prospectus. For further information, reference is made to the Registration Statement and amendments thereof and exhibits thereto. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information are available for inspection without charge at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004, as well as the Regional Offices of the Commission at 7 World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661- 2511. Copies of the Registration Statement and amendments thereof and the exhibits thereto may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company (File No. 0-8162) are incorporated in this Prospectus by reference: (1) Annual Report on Form 10-K for the year ended December 31, 1995 (a copy of which accompanies this Prospectus). (2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (a copy of which accompanies this Prospectus). Any statement contained in a document which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including beneficial owners, to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of any and all of the foregoing documents, other than the exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Requests should be directed to ACCEL International Corporation, 475 Metro Place North, Dublin, Ohio 43017, Attention: Nicholas Z. Alexander, Senior Vice President, (614) 764-7000. 2 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the information appearing elsewhere in this Prospectus and in the documents incorporated in this Prospectus by reference. The Company The Company is an insurance holding company incorporated in Delaware in June 1978 as the successor to an Ohio corporation, formerly Acceleration Corporation, organized in 1969. The Company, through its subsidiaries, is engaged in the sale and underwriting of credit life and credit accident and health insurance, extended service contracts and other specialty casualty products. The credit insurance and extended service contract products are offered to consumers principally through automobile dealers, financial institutions and other business entities. For more detailed information concerning the business of the Company and its financial statements see the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (the "10-K") and Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the "10-Q"), copies of which accompany this Prospectus and which are incorporated herein by reference. The Company's home office is located at 475 Metro Place North, Dublin, Ohio 43017 and its telephone number is (614) 764-7000. Risk Factors There are certain risks in connection with the Rights Offering that should be considered by Rights Holders prior to determining whether to exercise the Rights and purchase the Common Stock. The following is a summary of certain of these risks: (i) The Company has experienced net losses since 1992 and may incur net losses in the future; (ii) the Company's gross premiums derived from its credit insurance business are substantially dependent upon consumer credit transactions involving the purchase of automobiles, (iii) the Company does not expect to pay dividends in the foreseeable future and is limited under a note purchase agreement from doing so; (iv) Chase Insurance Holdings Corporation ("CIHC"), a corporation which is beneficially owned by David T. Chase, a director of the Company, his wife, his children and various family trusts (collectively, the "Chase Stockholders"), beneficially owns, directly or indirectly, approximately 30.3% of the outstanding shares of Common Stock of the Company and the Chase Stockholders and certain affiliates of CIHC beneficially own an additional 8.6% of the Common Stock of the Company. It is possible that the Rights Offering will result in CIHC, either alone or together with the Chase Stockholders and such affiliates, beneficially owning over 50% of the Common Stock and having actual control over the Company. Mr. Chase disclaims beneficial ownership of the shares of Common Stock owned by CIHC, its affiliates and the Chase Stockholders other than Mr. Chase; and (v) there can be no assurance that the market price of the Common Stock will not decline. The Rights Offering
Rights.............................................. Each record holder of Common Stock at the close of business on __, 1996 (the "Record Date") is receiving one non- transferable subscription right ("Right") for each share of Common Stock held of record on the Record Date. Each Right will entitle the holder thereof ("Rights Holder") to purchase from the Company __ share[s] of Common Stock (the "Underlying Shares") for a price of $__ per share (the "Subscription Price"). An aggregate of up to __ shares of Common Stock will be sold in the Rights Offering upon exercise of the Rights. The Rights will be evidenced by non- transferable certificates (the "Subscription Rights Certificates").
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Basic Subscription Privilege........................ Rights Holders are entitled to purchase, at the Subscription Price, __ Underlying Share[s] for each Right held (the "Basic Subscription Privilege"). [No fractional Rights will be issued and no fractional shares of common stock will be issued upon exercise of the Rights.] See "The Rights Offering -- Subscription Privileges -- Basic Subscription Privilege." Oversubscription Privilege.......................... Each Rights Holder who exercises in full his or her Basic Subscription Privilege may also subscribe at the Subscription Price for additional Underlying Shares available as a result of unexercised Rights, if any, up to an amount equal to one-half of the total Underlying Shares purchased by such Rights Holder pursuant to the Basic Subscription Privilege (the "Oversubscription Privilege"). If an insufficient number of Underlying Shares is available to satisfy fully the elections to exercise the Oversubscription Privilege, the available Underlying Shares will be prorated among Rights Holders who exercise their Oversubscription Privilege based on the respective number of Underlying Shares purchased by such Rights Holders pursuant to the Basic Subscription Privilege. To the extent that the Oversubscription Privilege is not exercised in full, the Company may determine to offer any or all of the shares of Common Stock not subscribed for sale to others, including current directors or stockholders of the Company or their affiliates, employees and independent agents, either directly or through underwriters or agents. See "The Rights Offering -- Subscription Privileges -- Oversubscription Privilege" and "Plan of Distribution." Subscription Price.................................. $__ per Underlying Share, payable in cash. See "The Rights Offering -- Exercise of Rights" and "The Rights Offering -- Determination of Subscription Price." Shares of Common Stock Outstanding After the Rights Offering........................... As of the Record Date there were 4,456,432 Shares of Common Stock outstanding. An aggregate of up to __ shares of Common Stock will be sold in the Rights Offering if all of the Rights are exercised. If all Rights are exercised, an aggregate of __ shares of Common Stock will be outstanding upon completion of the Rights Offering. Transferability of Rights........................... The Rights, including the Basic Subscription Privilege and the Over Subscription Privilege, are not transferable. Expiration Date..................................... 5:00 p.m., Columbus, Ohio time, __, 1996, or such later date and time to which the Rights Offering may be extended (the "Expiration Date"). See "The Rights Offering -- Expiration Date." Rights not exercised prior to the Expiration Date will expire and become worthless. Procedure for Exercising Rights..................... The Basic Subscription Privilege and Oversubscription Privilege may be exercised by properly completing and signing
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the Subscription Certificate evidencing the Rights (a "Subscription Certificate") and forwarding such Subscription Certificate (or following the Guaranteed Delivery Procedures), with payment of the Subscription Price for each Underlying Share subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege, to the Subscription Agent on or prior to the Expiration Date. Any Rights Holder subscribing for an aggregate of more than [5,000] Underlying Shares pursuant to the Oversubscription Privilege prior to the Expiration Date shall not be required to deliver payment for such number of Underlying Shares in excess of [5,000] until the Expiration Date. The Company, in its sole discretion, may determine to waive payment for such number of Underlying Shares in excess of [5,000] subscribed for pursuant to the Oversubscription Privilege until after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. If Subscription Rights are sent by mail, Rights Holders are urged to use insured, registered mail. No interest will be paid on funds delivered in payment of the Subscription Price. See "The Rights Offering -- Exercise of Rights." No Revocation of Exercise........................... Once a Rights Holder has exercised the Basic Subscription Privilege or the Oversubscription Privilege, such exercise may not be revoked. Persons Holding Common Stock or Wishing to Exercise Rights, Through Others.................. Persons holding shares of Common Stock beneficially, and receiving the Rights issuable with respect thereto, through a broker, dealer, commercial bank, trust company or other nominee, as well as persons holding certificates for Common Stock directly who would prefer to have such institutions effect transactions relating to the Rights on their behalf, should contact the appropriate institution or nominee and request it to effect such transactions for them. See "The Rights Offering -- Exercise of Rights". Issuance of Common Stock............................ Certificates representing shares of Common Stock purchased pursuant to the exercise of the Basic Subscription Privilege will be delivered to subscribers as soon as practicable after the corresponding Rights have been validly exercised and payment therefor has been received by the Company. Certificates of Common Stock purchased pursuant to the Oversubscription Privilege will be delivered to subscribers as soon as practicable after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. See "The Rights Offering -- Subscription Privileges." Use of Proceeds..................................... The Company intends to use the net cash proceeds from the Rights Offering for general corporate purposes, including investments in, and advances to, its insurance company subsidiaries and the redemption of any Subordinated Notes
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which are not tendered in the Rights Offering. Since the Company has decided to permit holders of its outstanding $__ principal amount of 10.125% Subordinated Notes due July 2000 (the "Subordinated Notes") to tender their respective Subordinated Notes for cancellation as consideration (in lieu of cash) for the purchase of shares of Common Stock, the net cash proceeds of the Rights Offering assuming all Subordinated Notes held by stockholders are tendered and all of the Rights are exercised in full are estimated to be $__. CIHC and one of its affiliates collectively hold $5,481,046 principal amount of Subordinated Notes as of March 31, 1996. CIHC has indicated that it and such affiliate intend to tender all of the Subordinated Notes held by them. Subordinated Notes will be accepted by the Company as consideration in an amount equal to the full principal amount of such Subordinated Notes. Subscription Agent.................................. National City Bank, Cleveland, Ohio. The Subscription Agent's telephone number is (800) 622-6757.
RISK FACTORS The following risk factors, in addition to other information in this Prospectus and in the documents incorporated by reference, should be considered carefully by potential purchasers in evaluating the Company, its business and an investment in shares of the Common Stock offered hereby. Continuing Net Losses The Company has experienced net losses since 1992 and may incur net losses in the future. The Company incurred net losses of $1,460,000, $5,238,000, $5,281,000 and $22,124,000 for the years ended December 31, 1995, 1994, 1993 and 1992, respectively. There can be no assurance that the Company will not experience net losses in the future. Dependence Upon Automobile Purchases The Company sells credit insurance and extended warranty contracts primarily in connection with consumer credit transactions involving automobile purchases. Automobile purchases have been and will continue to be affected, directly and indirectly, by automobile prices, interest rates, the availability of consumer credit and general economic conditions, all of which are beyond the Company's control. Effect of Downgrading of Insurance Ratings Life Insurance The Company's life insurance subsidiary is rated C+ (Fair) by Best Company ("Best"). Best downgraded the life insurance subsidiary's rating from A- to C+ in 1991. The Best rating is based on factors relevant to policyholders and are not directed toward the protection of stockholders. The Best rating is based upon its current opinion of the life insurance subsidiary's lack of consistently profitable operating results in recent years as well as its concern regarding the weak financial results, high debt level and poor liquidity position of the Company. The weaknesses noted by Best are partially offset by the general profitability of the life insurance subsidiary's core credit life insurance operations and the high quality of its investment portfolio. Although the Company has not experienced a material reduction in the level of its sales of credit insurance products through automobile dealers following Best's 6 9 downgrading, the insurance company subsidiary's current rating adversely affects its ability to market those products through financial institutions. Property and Casualty Insurance The Company's property and casualty insurance company subsidiary is rated B (Adequate) by Best. Best downgraded the property and casualty insurance company subsidiary's rating from A to B in 1991. The Best rating reflects its analysis of the property and casualty insurance company subsidiary's continued operating losses and corresponding decline in surplus and ongoing reserve strengthening for the lines of business in runoff. The property and casualty insurance company subsidiary's current rating may have an adverse affect on its ability to market its products through certain quality agents and brokers. Uncertain Profitability of New Programs The property and casualty insurance subsidiary has recently introduced two new insurance programs. See "Recent Developments." Because the property and casualty insurance company subsidiary has had little or no experience in writing coverage for the new insurance programs, there can be no assurance that either of such programs will be profitable. The Company has, however, employed individuals to develop these programs who have extensive experience. Limitations on Payment of Dividends The Company has not paid dividends on the Common Stock since 1991 due to the Company's lack of profitability in recent years and does not expect to pay dividends until the Company has returned to a level of profitability which will sustain the payment of cash dividends. In addition, the Company's outstanding 9.50% Notes due April 1, 2001 (the "Senior Notes"), were issued pursuant to a note purchase agreement which limits the Company's ability to pay dividends to 50% of net income computed on a cumulative basis from January 1, 1996 to and including the date of the dividend payment. Even if the Company does have net income in the future, its principal source of cash flow with which to pay dividends will be dependent upon the ability of its insurance company subsidiaries to pay dividends to the Company. Ohio domiciled insurance companies are subject to laws and regulations which, among other things, limit the amount of dividends and other payments that can be made by such insurance companies without prior regulatory approval. See "Price Range of Common Stock and Dividend Policy" included herein and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Consolidated Financial Statements and notes thereto included in the 10-K which accompanies this Prospectus. Decrease in Proportionate Equity Ownership if Rights Not Exercised Rights Holders who do not exercise their Rights will experience a decrease in their proportionate interest in the equity ownership and voting power of the Company. In addition, CIHC beneficially owns, directly or indirectly, approximately 30.3% of the outstanding shares of Common Stock of the Company and the Chase Stockholders and certain affiliates of CIHC beneficially own an additional 8.6% of the Common Stock of the Company. It is possible that if a sufficient number of Rights Holders do not exercise their rights, the Rights Offering will result in CIHC, either alone or together with the Chase Stockholders and such affiliates, beneficially owning over 50% of the Common Stock and having actual control over the Company. Mr. Chase disclaims beneficial ownership of the shares of Common Stock owned by CIHC, its affiliates and the Chase Stockholders other than Mr. Chase. Potential Conflicts of Interest CIHC is a principal stockholder of the Company which in turn is beneficially owned by Mr. Chase and the other Chase Stockholders. CIHC and one of its affiliates collectively hold $5,481,046 principal amount of 7 10 Subordinated Notes. The Company has decided to permit holders of Subordinated Notes to tender their respective Subordinated Notes for cancellation as consideration (in lieu of cash) for the purchase of the Common Stock and anticipates that CIHC will so tender its Subordinated Notes. Nature of the Rights Offering The Company does not have a commitment for the purchase of shares of Common Stock which may remain unsold at the expiration of the Rights Offering. Accordingly, there can be no assurance as to the number of shares of Common Stock which will be sold by the Company in the Rights Offering or in the Additional Offering. Market Price Risks Associated With the Common Stock There can be no assurance that the market price of the Common Stock will not decline during the period the Rights are outstanding or that, following the issuance of the Rights and the sale of the Underlying Shares upon exercise of the Rights, a subscribing Rights Holder will be able to sell shares purchased in the Rights Offering at a price equal to or greater than the Subscription Price. Once a Rights Holder has exercised the Basic Subscription Privilege or the Oversubscription Privilege, such exercise may not be revoked. See "The Rights Offering -- No Revocation." Moreover, until certificates are delivered, subscribing Rights Holders may not be able to sell the shares of Common Stock that they have purchased in the Rights Offering. USE OF PROCEEDS The Company intends to use the net cash proceeds from the Rights Offering for general corporate purposes, including investments in, and advances to, its insurance company subsidiaries and the redemption of any Subordinated Notes which are not tendered in the Rights Offering. Since the Company has decided to permit holders of its outstanding $6,182,446 principal amount of 10.125% Subordinated Notes due July 2000 to tender their respective Subordinated Notes for cancellation as consideration (in lieu of cash) for the purchase of shares of Common Stock, the net cash proceeds of the Rights Offering, assuming all Subordinated Notes held by stockholders are tendered and all of the Rights are exercised in full, are estimated to be $__. The Subordinated Notes bear interest at 10.125% per annum and are scheduled to mature in July 2000. No principal payments are required to be paid on the Subordinated Notes prior to maturity but the Subordinated Notes may be prepaid at any time without penalty. RECENT DEVELOPMENTS The property and casualty insurance subsidiary has recently introduced two new insurance programs, one for truckers and charter buses and the other for automobile dealers. The truckers and charter bus program is a limited coverage program while the automobile dealers program is a multi-peril package program which provides property, liability and related coverages. During the first quarter of 1996, the trucking and charter bus program produced approximately $5 million of annualized premiums. The Company anticipates that the automobile dealer program will begin production during the second quarter of 1996. On May 16, 1996, the Company publicly announced that it had reached an agreement to settle its $5.16 million judgment against Homeowners Marketing Services, Inc. ("HMS") for $4.4 million in cash. Homeowners Group, Inc. ("HOMG"), the parent of HMS, has entered into a definitive merger agreement with Cross Country Group, Inc. which has agreed to pay the amount of the settlement at the time of the closing of its acquisition of HOMG. HOMG announced that the closing of the acquisition, which is subject to regulatory and stockholder approval, is anticipated in late September. When and if the amount of the settlement is paid, the Company intends to use such amount to increase the capital of the two insurance company subsidiaries to enable them to develop existing and new insurance programs. 8 11 The Company has had an arrangement with a financial institution pursuant to which it ceded credit life and credit accident and health insurance originated by the financial institution to a reinsurance company owned by the financial institution. During the most recent fiscal year, the Company wrote $1,486,000 in net premiums for which it received a ceding commission. The Company has received a notice from the financial institution that effective June 1, 1996, the arrangement will be terminated. Although the Company does have the right to recapture the ceded insurance and retain 100% of the profits and losses thereof during runoff, the Company's premiums written in the future will be reduced unless it is able to replace the insurance originated by the financial institution with new business. PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY The Common Stock is traded on the Nasdaq National Market under the symbol "ACLE." The following table sets forth the high and low sales prices of the Common Stock for each of the periods indicated through __, 1996 as reported by the Nasdaq National Market. The prices have been rounded up to the nearest eighth and do not include retail markups, markdowns or commissions.
High Low ---- --- YEAR ENDED DECEMBER 31, 1994 First Quarter.............................................................. $6.000 $3.750 Second Quarter............................................................. 5.000 3.000 Third Quarter.............................................................. 3.750 2.250 Fourth Quarter............................................................. 3.125 1.750 YEAR ENDED DECEMBER 31, 1995 First Quarter.............................................................. 2.875 1.750 Second Quarter............................................................. 3.125 2.000 Third Quarter.............................................................. 4.875 2.750 Fourth Quarter............................................................. 3.875 2.375 YEAR ENDING DECEMBER 31, 1996 First Quarter.............................................................. 3.375 2.875 Second Quarter (through __)................................................
Prior to 1992 the Company had historically paid stock or cash dividends. On June 2, 1992, the Board of Directors of the Company decided to suspend payment of cash dividends on the Common Stock until the Company returned to a level of profitability which will sustain the payment of cash dividends. Moreover, the note agreement pursuant to which the Company's $16,500,000 principal amount of Senior Notes were issued restricts the payment of dividends on the Common Stock to an amount equal to 50% of net income computed on a cumulative basis from January 1, 1996 to and including the date of the dividend payment. Accordingly, there is presently no amount available for paying dividends after giving effect to this restriction. Even if the Company does have net income in the future, its principal source of cash flow with which to pay dividends will be dependent upon the ability of its insurance company subsidiaries to pay dividends to the Company. Ohio domiciled insurance companies are subject to laws and regulations which, among other things, limit the amount of dividends and other payments than can be made by such insurance companies without prior regulatory approval. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Consolidated Financial Statements and notes thereto included in the 10-K which accompanies this Prospectus. THE RIGHTS OFFERING The Rights 9 12 The Company is hereby issuing Rights to each holder of Common Stock as of the close of business on __, 1996 (the "Record Date") at no charge to such holders. The Company will issue one Right for each share of Common Stock held on the Record Date. Each Right will entitle the holder thereof (the "Rights Holder") to subscribe for __ share[s] of Common Stock. The Rights will be evidenced by non-transferable Subscription Rights Certificates which are being distributed to each Rights Holder contemporaneously with the delivery of this Prospectus. The issuance by the Company of shares of Common Stock pursuant to the Rights Offering is not conditioned upon the subscription of any minimum number of shares of Common Stock by the Rights Holders. The opportunity to exercise the Oversubscription Privilege is available to all Rights Holders on the same terms. [No fractional Rights will be issued and no fractional shares of Common Stock will be issued upon exercise of the Rights.] See "The Rights Offering -- Subscription Privileges -- Oversubscription Privilege." BEFORE EXERCISING ANY RIGHTS, POTENTIAL INVESTORS ARE URGED TO READ CAREFULLY THE INFORMATION SET FORTH UNDER "RISK FACTORS." Expiration Date The Rights will expire at 5:00 p.m., Columbus, Ohio time, on __, 1996, subject to extension at the discretion of the Company (as it may be extended, the "Expiration Date"), provided that the Expiration Date shall in no event be later than __, 1996. After the Expiration Date, unexercised Rights will be null and void. The Company will not be obligated to honor any purported exercise of Rights received by the Subscription Agent after 5:00 p.m., Columbus, Ohio time, on the Expiration Date, regardless of when the documents relating to such exercise were sent, except pursuant to the Guaranteed Delivery Procedures described below. The Company may extend the Expiration Date by giving oral or written notice to the Subscription Agent on or before the Expiration Date, followed by a press release no later than 9:00 a.m., Columbus, Ohio time on the next business day after the previously scheduled Expiration Date. Subscription Privileges Basic Subscription Privilege. Each Right will entitle the Rights Holder to receive, upon payment of the Subscription Price, __ share[s] of Common Stock (the "Basic Subscription Privilege"). Each Rights Holder is entitled to subscribe for all, or any portion, of such Right Holder's Rights [subject to the elimination of fractional shares]. Certificates representing Underlying Shares purchased pursuant to the Basic Subscription Privilege will be delivered to subscribers as soon as practicable after the corresponding Rights have been validly exercised and full payment for shares has been received and cleared. Oversubscription Privilege. Subject to the allocation described below, each Right also carries the right to subscribe at the Subscription Price for additional shares of Common Stock (the "Oversubscription Privilege") up to an amount equal to one-half of the Underlying Shares purchased by each Rights Holder pursuant to the Basic Subscription Privilege. All beneficial owners of Rights who exercise the Basic Subscription Privilege in full will be entitled to exercise the Oversubscription Privilege. Underlying Shares will be available for purchase pursuant to the Oversubscription Privilege only to the extent that any Underlying Shares are not subscribed for through the Basic Subscription Privilege. If the Underlying Shares not subscribed for through the Basic Subscription Privilege (the "Excess Shares") are not sufficient to satisfy all subscriptions pursuant to the Oversubscription Privilege, the Excess Shares will be allocated pro rata (subject to the elimination of fractional shares) among those Rights Holders exercising the Oversubscription Privilege, in proportion, not to the number of shares requested pursuant to the Oversubscription Privilege, but to the number of shares each beneficial owner of Rights exercising the Oversubscription Privilege has purchased pursuant to the Basic Subscription Privilege; provided, however, that if such pro rata allocation results in any Rights Holder being allocated a greater number of Excess Shares than such Rights Holder subscribed for pursuant to the exercise of such Rights Holder's Oversubscription Privilege, then such Rights Holder will be allocated only such number of Excess Shares 10 13 as such Rights Holder subscribed for and the remaining Excess Shares will be allocated among all other Rights Holders exercising the Oversubscription Privilege. Certificates representing shares of Common Stock purchased pursuant to the Oversubscription Privilege will be delivered to subscribers as soon as practicable after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. Banks, brokers and other nominee holders of Rights who exercise the Basic Subscription Privilege and the Oversubscription Privilege on behalf of beneficial owners of Rights will be required to certify to the Subscription Agent and the Company, in connection with the exercise of the Oversubscription Privilege, as to the aggregate number of Rights that have been exercised and the number of Underlying Shares that are being subscribed for pursuant to the Oversubscription Privilege by each beneficial owner of Rights on whose behalf such nominee holder is acting. Exercise of Rights Rights may be exercised by delivering to National City Bank (the "Subscription Agent"), at or prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date, the properly completed and executed Subscription Certificate evidencing such Rights with any signatures required to be guaranteed so guaranteed, together with payment in full of the Subscription Price for each Underlying Share subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege. Any Rights Holder subscribing for an aggregate of more than [5,000] Underlying Shares pursuant to the Oversubscription Privilege prior to the Expiration Date shall not be required to deliver payment for such number of Underlying Shares in excess of [5,000] until the Expiration Date. The Company, at its sole discretion, may determine to waive payment for such excess number of Underlying Shares until after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. All payments must be by (i) check or bank draft (cashier's check) drawn upon a U.S. bank or postal or express money order payable to National City Bank, as Subscription Agent, or (ii) by wire transfer of same-day funds to an account designated by the Subscription Agent, in which case please contact the Subscription Agent at (800) 622-6757 for information concerning such account. Payments will be deemed to have been received by the Subscription Agent only upon (i) clearance of any uncertified check, (ii) collection by the Subscription Agent of any certified check or bank draft upon a U.S. bank or of any postal or express money order or (iii) receipt of good funds in the account designated by the Subscription Agent. If paying by uncertified personal check, please note that the funds paid thereby may take up to ten business days to clear. Accordingly, Rights Holders who wish to pay the Subscription Price by means of uncertified personal check are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment is received and clears by such date and are urged to consider payment by means of certified or cashier's check, money order or wire transfer of funds. The address to which the Subscription Certificates and payment of the Subscription Price should be delivered is: By Mail: National City Bank, Subscription Agent Corporate Trust Operations P.O. Box 94720 Cleveland, Ohio 44101-4720 By Hand or Overnight Courier: National City Bank, Subscription Agent Corporate Trust Operations 3rd Floor -- North Annex 4100 West 150th Street Cleveland, Ohio 44135-1385 11 14 If a Rights Holder wishes to exercise Rights, but time will not permit such Rights Holder to cause the Subscription Certificate or Subscription Certificates evidencing such Rights to reach the Subscription Agent on or prior to the Expiration Date, such Rights may nevertheless be exercised if all of the following conditions (the "Guaranteed Delivery Procedures") are met: (i) such holder has caused payment in full of the Subscription Price for each Underlying Share being subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege to be received (in the manner set forth above) by the Subscription Agent on or prior to the Expiration Date; (ii) the Subscription Agent receives, on or prior to the Expiration Date, a guarantee notice ("Notice of Guaranteed Delivery"), substantially in the form provided with the instructions (the "Instructions") distributed with the Subscription Certificates, from a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. ("NASD"), or from a commercial bank or trust company having an office or correspondent in the United States or from a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15 of the Exchange Act (each, an "Eligible Institution"), stating the name of the exercising Rights Holder, the number of Rights represented by the Subscription Certificate or Subscription Certificates held by such exercising Rights Holder, the number of Underlying Shares being subscribed for pursuant to the Basic Subscription Privilege and the number of Underlying Shares, if any, being subscribed for pursuant to the Oversubscription Privilege, and guaranteeing the delivery to the Subscription Agent of any Subscription Certificate evidencing such Rights within five business days following the Expiration Date; and (iii) the properly completed Subscription Certificate evidencing the Rights being exercised, with any signatures required to be guaranteed so guaranteed, is received by the Subscription Agent within five business days following the Expiration Date. The Notice of Guaranteed Delivery may be delivered to the Subscription Agent in the same manner as Subscription Certificates at the address set forth above, or may be transmitted to the Subscription Agent by facsimile transmission (telecopy no. (216) 476-8367 ). Additional copies of the form of Notice of Guaranteed Delivery are available upon request from the Subscription Agent. Funds received in payment of the Subscription Price for Excess Shares subscribed for pursuant to the Oversubscription Privilege will be held in a segregated account pending issuance of such Excess Shares. If a Rights Holder exercising the Oversubscription Privilege is allocated less than all of the shares of Common Stock which such Rights Holder subscribed for pursuant to the Oversubscription Privilege, the excess funds paid by such Rights Holder in respect of the Subscription Price for shares not issued shall be returned by mail without interest or deduction as soon as practicable after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. Unless a Subscription Certificate (i) provides that the shares of Common Stock to be issued pursuant to the exercise of Rights represented thereby are to be issued in the name of the Rights Holder and/or are to be delivered to the Rights Holder or (ii) is submitted for the account of an Eligible Institution, signatures on such Subscription Certificate must be guaranteed by an Eligible Institution or other eligible guarantor institution which is a member of or a participant in a medallion guarantee program acceptable to the Subscription Agent. Rights Holders who hold shares of Common Stock for the account of others, such as brokers, trustees or depositories for securities, should notify the respective beneficial owners of such shares as soon as possible to ascertain such beneficial owners' intentions and to obtain instructions with respect to the Rights. If the beneficial owner so instructs, the nominee holder should complete Subscription Certificates and submit them to the Subscription Agent with the proper payment. In addition, beneficial owners of Common Stock or Rights held through such a nominee holder should contact the nominee holder and request the nominee holder to act in accordance with such beneficial owner's instructions. If a beneficial owner wishes to obtain a separate Subscription Right Certificate, such 12 15 beneficial owner should contact the nominee holder as soon as possible and request that a separate Subscription Right Certificate be issued. A nominee holder may request any Subscription Right Certificate held by it to be split into such smaller denominations as it wishes, provided that the Subscription Right Certificate is received by the Subscription Agent, properly endorsed, no later than the Expiration Date. The instructions accompanying the Subscription Certificates should be read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE COMPANY. THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF THE RIGHTS HOLDERS, BUT IF SENT BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., COLUMBUS, OHIO TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE UP TO TEN BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS. All questions concerning the timeliness, validity, form and eligibility of any exercise of Rights will be determined by the Company, whose determinations will be final and binding. The Company in its sole discretion may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as it may determine, or reject the purported exercise of any Right. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as the Company determines in its sole discretion. Neither the Company nor the Subscription Agent will be under any duty to give notification of any defect or irregularity in connection with the submission of Subscription Certificates or incur any liability for failure to give such notification. Any questions or requests for assistance concerning the method of exercising Rights or requests for additional copies of this Prospectus, the Form 10-K, the Form 10-Q, the Instructions or the Notice of Guaranteed Delivery should be directed to the Subscription Agent, at its address set forth under "Exercise of Rights", above (telephone: (800) 622-6757). No Revocation ONCE A RIGHTS HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE AND/OR THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED. Non-Transferability of Rights The Rights are not transferable and will not be traded on any securities exchange or quoted on any inter-dealer quotation system. Rights may only be exercised or permitted to expire. Rights Holders who determine not to exercise their Rights may not transfer their rights and, at the Expiration Date, Rights which have not been exercised will expire and be null and void and have no value, provided that Rights may be transferred by operation of law in the case of death, dissolution, liquidation or bankruptcy of the Rights Holder, or pursuant to an order of an appropriate court. A Rights Holder may, however, elect to have the Underlying Shares registered in the name of, and/or delivered to, a person other than the Rights Holder provided that the signature on the related Subscription Certificate is guaranteed by an Eligible Institution or other eligible guarantor institution as more fully described under "-- Exercise of Rights", above, and in the accompanying Subscription Certificate and Instructions. Tender of Subordinated Notes in Lieu of Cash 13 16 The Company has decided to permit holders of Subordinated Notes to tender their respective Subordinated Notes to the Company for cancellation as consideration (in lieu of cash) for the purchase of shares of Common Stock. Upon receipt of such Subordinated Notes, the Company will direct the Subscription Agent to accept such Subordinated Notes as consideration for the issuance of the related Underlying Shares. See "Use of Proceeds." Determination of Subscription Price The Subscription Price was determined by the Company. In making this determination, the material factors considered by the Company were the amount of proceeds that the Company desires to raise, the average market price of the Common Stock, the pro rata nature of the offering and pricing policies customary for transactions of this type. The Subscription Price should not be considered an indication of the actual value of the Company or the Common Stock. Foreign and Certain Other Stockholders Subscription Certificates will not be mailed to Rights Holders whose addresses are outside the United States or who have an APO or FPO address, but will be held by the Subscription Agent for their account. To exercise such Rights, such a Rights Holder must notify the Subscription Agent, and must establish to the satisfaction of the Subscription Agent and the Company that such exercise is permitted under applicable law. If the procedures set forth in the preceding sentence are not followed prior to the Expiration Date, the Rights will expire. Other Matters The Rights Offering is not being made in any state or other jurisdiction in which it is unlawful to do so, nor is the Company selling or accepting any offers to purchase any shares of Common Stock from Rights Holders who are residents of any such state or other jurisdiction. The Company may delay the commencement of the Rights Offering in certain states or other jurisdictions, or change the terms of the Rights Offering, in order to comply with the securities law requirements of such states or other jurisdictions. It is not anticipated that there will be any changes in the terms of the Rights Offering. If any such change is made that is material and has an adverse effect on any Rights Holder that has previously exercised Rights, such Rights Holder will be provided the opportunity to revoke such exercise. The Company, if it so determines in its sole discretion, may decline to make modifications to the terms of the Rights Offering requested by certain states or other jurisdictions, in which event Rights Holders resident in those states or jurisdictions will not be eligible to participate in the Rights Offering. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following summary describes certain United States federal income tax considerations applicable to U.S. Rights Holders who hold Common Stock as a capital asset and who receive Rights in respect of such Common Stock in the initial issuance of the Rights (the "Issuance"). This summary is based upon laws, regulations, rulings and decisions currently in effect. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular investor or to certain types of investors subject to special treatment under the federal income tax laws (for example, banks, dealers in securities, life insurance companies, tax exempt organizations and foreign taxpayers), nor does it discuss any aspect of state, local or foreign tax laws. Issuance of Rights Holders of Common Stock will not recognize taxable income in connection with the receipt of Rights. Basis and Holding Period of the Rights 14 17 Except as provided in the following sentence, the basis of the Rights received by a stockholder as a distribution with respect to such stockholder's Common Stock will be zero. If either (i) the fair market value of the Rights on the date of Issuance is 15% or more of the fair market value (on the date of Issuance) of the Common Stock with respect to which they are received or (ii) the stockholder elects, in his or her federal income tax return for the taxable year in which the Rights are received, to allocate part of the basis of such Common Stock to the Rights, then upon exercise of the Rights, the stockholder's basis in such Common Stock will be allocated between the Common Stock and the Rights in proportion to the fair market values of each on the date of Issuance. The holding period of a stockholder with respect to the Rights received as a distribution on such stockholder's Common Stock will include the stockholder's holding period for the Common Stock with respect to which the Rights were issued. Lapse of the Rights Rights Holders who allow the Rights received by them in the Issuance to lapse will not recognize any gain or loss, and no adjustment will be made to the basis of the Common Stock, if any, owned by such Rights Holders. Exercise of the Rights; Basis and Holding Period of Common Stock Rights Holders will not recognize any gain or loss upon the exercise of such Rights. The basis of the Common Stock acquired through exercise of the Rights will be equal to the sum of the Subscription Price therefor and the Rights Holder's basis in such Rights (if any) as described above. The holding period for the Common Stock acquired through exercise of the Rights will begin on the date the Rights are exercised. THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. ACCORDINGLY, EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE RIGHTS OFFERING ON HIS OR HER OWN PARTICULAR TAX SITUATION, INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX LAWS. DESCRIPTION OF THE CAPITAL STOCK Common Stock The Company has 10,000,000 authorized shares of Common Stock, of which 4,456,432 shares were issued and outstanding as of March 31, 1996. At the Annual Meeting of Stockholders to be held June 11, 1996, the stockholders will be asked to adopt an amendment to the Company's Restated Certificate of Incorporation (the "Certificate of Incorporation") which will increase the authorized shares of Common Stock from 10,000,000 to 15,000,000. The holders of the Common Stock are entitled to one vote per share on all matters requiring stockholder action. The Certificate of Incorporation does not permit cumulative voting for the election of directors. The holders of Common Stock have no preemptive or other subscription rights and there are no redemption, sinking fund or conversion privileges applicable thereto. The holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor. Upon liquidation, dissolution or winding up of the Company, holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities. All outstanding shares of Common Stock are fully paid and nonassessable and the shares of Common Stock to be issued in the Rights Offering will, upon delivery and payment therefor in accordance with the terms of the Rights Offering, be fully paid and nonassessable. The Certificate of Incorporation contains a provision which requires the affirmative vote of not less than 80 percent of the outstanding shares of the Company entitled to elect directors for the approval of certain business combinations and other transactions with a corporation or any affiliate thereof which acquires more than five percent 15 18 of the beneficial ownership of the outstanding shares of Common Stock of the Company unless such business combination or other transaction was approved by resolution of the Board of Directors of the Company prior to the acquisition by such corporation or affiliate thereof of the beneficial ownership of more than five percent of the outstanding Common Stock. This provision could have the effect of delaying, deferring or preventing a change in control of the Company. The registrar and transfer agent for the Company's Common Stock is National City Bank. Preferred Stock The Company has 1,000,000 authorized shares of Preferred Stock, par value $1.00 per share, none of which were issued and outstanding as of March 31, 1996. The Certificate of Incorporation provides that the Board of Directors is authorized to fix the voting rights, redemption rights, conversion rights, sinking fund provisions, designations, preferences and the relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions of the Preferred Stock. The Company has no present intention to issue any shares of Preferred Stock. LEGAL MATTERS The validity of the issuance of Common Shares in the Rights Offering will be passed upon by counsel for the Company, Squire, Sanders & Dempsey, Columbus, Ohio. EXPERTS The Company's consolidated financial statements and schedules as of December 31, 1995 and 1994, and for each of the years in the two-year period ended December 31, 1995, included in the Form 10-K, a copy of which accompanies this Prospectus and which is incorporated by reference in this Prospectus, have been incorporated herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, with respect to the Company's consolidated financial statements and schedules as of December 31, 1995 and 1994, and for each of the years in the two-year period ended December 31, 1995 and in reliance on the report of Ernst & Young LLP, independent certified public accountants, with respect to the Company's consolidated financial statements and schedules for the year ended December 31, 1993 and are incorporated herein in reliance upon the authority of said firms as experts in accounting and auditing. The report of KPMG Peat Marwick LLP dated March 15, 1996 contains an explanatory paragraph that states that as discussed in Note D to the consolidated financial statements, on March 30, 1994, the Company and its principal lender agreed to waive compliance with certain loan agreement covenants through January 1, 1995. On February 7, 1995, the Company and the lender again renegotiated the credit agreement and certain of the covenants. The amended agreement stated that the loan was payable in full on June 30, 1997. On December 29, 1995, the Company issued senior notes with a different lender and retired the aforementioned credit agreement. The most recent loan agreement requires that during the period the loan is outstanding, the Company maintain consolidated tangible net worth, as defined. At December 31, 1995, required tangible net worth was $15,000,000 and the Company's consolidated tangible net worth, as defined, was $19,738,000. 16 19 ================================================================================ NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THIS PROSPECTUS RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. -------------------- TABLE OF CONTENTS
PAGE ---- Available Information........................................................................................... 2 Incorporation of Certain Documents by Reference................................................................. 2 Prospectus Summary.............................................................................................. 3 Risk Factors.................................................................................................... 6 Use of Proceeds................................................................................................. 8 Recent Developments............................................................................................. 8 Price Range of Common Stock and Dividend Policy................................................................. 9 The Rights Offering............................................................................................. 9 Certain Federal Income Tax Consequences......................................................................... 14 Description of the Capital Stock................................................................................ 15 Legal Matters................................................................................................... 16 Experts......................................................................................................... 16
ACCEL INTERNATIONAL CORPORATION __ SHARES OF COMMON STOCK -------------------- PROSPECTUS -------------------- __, 1996 ================================================================================ 17 20 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table presents an itemized estimate of all expenses in connection with the issuance and distribution of the Common Shares, other than underwriting discounts and commissions.
Nature of Expense Amount ----------------- ------ SEC Registration Fee ................................................................ $6,336.21 Printing and Engraving Costs ........................................................ _________* Counsel Fees and Expenses ........................................................... _________* Accounting Fees and Expenses ........................................................ _________* Blue Sky Expenses and Counsel Fees .................................................. _________* Subscription Agent Fees and Expenses ................................................ _________* Miscellaneous ....................................................................... _________* TOTAL ............................................................................... $__________* *To be filed by amendment.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Section 145 of the Delaware General Corporation Law (the "DGCL") and the Registrant's Bylaws provide for the indemnification of directors and officers against certain liabilities. Officers and directors of the Registrant and its subsidiaries are indemnified generally against expenses actually and reasonably incurred in connection with proceedings, whether civil or criminal, if such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe was unlawful. The Registrant is empowered by Section 102(b)(7) of the DGCL to include a provision in its Restated Certificate of Incorporation that limits a director's liability to the Registrant or its stockholders for monetary damages for breaches of his or her fiduciary duty as a director. Article Fifteenth of the Registrant's Restated Certificate of Incorporation provides that no director or former director of the Registrant shall be personally liable to the Registrant or its stockholders for breach of fiduciary duty as a director except for (i) any breach of the director's duty of loyalty, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) approving the payment of a dividend, stock repurchase or redemption which is unlawful under the DGCL, or (iv) any transaction from which the director derived an improper personal benefit. The Registrant maintains insurance policies under which directors and officers are insured, within the limits and subject to the limitations of the policies, against expenses in connection with the defense of actions, suits or proceedings and certain liabilities that might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been directors or officers of the Registrant. ITEM 16. EXHIBITS. The following Exhibits are filed as part of this Registration Statement:
EXHIBITS DESCRIPTION -------- ----------- 5.1 Opinion of Squire, Sanders & Dempsey (including consents) 23.1 Consent of KPMG Peat Marwick LLP
21
23.2 Consent of Ernst & Young LLP 23.3 Consent of Squire, Sanders & Dempsey (see Exhibit 5.1) 24.1 Power of Attorney (included elsewhere in the signature page to this Registration Statement) 99.1 Form of Subscription Certificate 99.2 Form of Instructions for Subscription Certificates 99.3 Form of Notice of Guaranteed Delivery 99.4 Form of Subscription Agency Agreement 99.5 Form of Nominee Holder Oversubscription Exercise Form 99.6 Form of Nominee Holder Certification
ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement: Provided, however that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (c) The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer and the terms of any subsequent reoffering thereof. If any public offering is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or II-2 22 otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 23 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all requirements for filing on Form S-2 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on May 24, 1996. ACCEL INTERNATIONAL CORPORATION By: /s/ Thomas H. Friedberg ------------------------------------- Thomas H. Friedberg Chairman of the Board, President and Chief Executive Officer POWER OF ATTORNEY We, the undersigned officers and directors of ACCEL INTERNATIONAL CORPORATION, hereby severally constitute and appoint Thomas H. Friedberg, Nicholas Z. Alexander and Kurt L. Mueller, and each of them, our lawful attorneys-in-fact and agents, for us and in our stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and all documents relating thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing necessary or advisable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities indicated and on 24, 1996.
Signature Title --------- ----- /s/ Thomas H. Friedberg Chairman of the Board, President and - ------------------------- Chief Executive Officer (principal executive officer) and Thomas H. Friedberg Director /s/ Kurt L. Mueller Vice President and Controller - ------------------------ (principal financial officer and controller) Kurt L. Mueller /s/ Robert Betagole Director - ------------------------ Robert Betagole /s/ David T. Chase Director - ------------------------ David T. Chase
II-4 24 Signature Title --------- ----- /s/ Douglas J. Coats Director - --------------------------------- Douglas J. Coats /s/ Raymond H. Deck Director - --------------------------------- Raymond H. Deck /s/ Robert E. Fowler Director - --------------------------------- Robert E. Fowler III Director - --------------------------------- Kermit G. Hicks Director - --------------------------------- Stephen M. Qua /s/ Milton J. Taylor Director - --------------------------------- Milton J. Taylor, Sr. /s/ Paul R. Whitters Director - --------------------------------- Paul R. Whitters II-5 25 EXHIBIT INDEX
Exhibit Number Description - ------ ----------- 5.1. Opinion of Squire, Sanders & Dempsey (including consents) 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of Ernst & Young LLP 23.3 Consent of Squire, Sanders & Dempsey (see Exhibit 5.1) 24.1 Power of Attorney (included elsewhere in the signature page this Registration Statement) 99.1 Form of Subscription Certificate 99.2 Form of Instructions for Subscription Certificates 99.3 Form of Notice of Guaranteed Delivery 99.4 Form of Subscription Agency Agreement 99.5 Form of Nominee Holder Oversubscription Exercise Form 99.6 Form of Nominee Holder Certification
EX-5 2 EXHIBIT 5 1 Exhibit 5.1 May 28, 1996 (614) 365-2743 ACCEL International Corporation 475 Metro Place North Dublin, Ohio 43017 Re: Common Stock, $.10 Par Value Gentlemen: We have acted as counsel to ACCEL Internantional Corporation (the "Company") in connection with the Registration Statement on Form S-2 to be filed by the Company with the Securities and Exchange Commission ("SEC") on May 28, 1996 (the "Registration Statement"). The Registration Statement relates to (i) the distribution to holders of record the Common Stock, $.10 par value, of Company (the "Common Stock") of one non-tranferable subscription right (the "Rights") for each share of Common Stock held on such record date, and (ii) the shares of Common Stock to be issued upon exercise of the Rights (the "Underlying Shares"). At the Company's Annual Stockholders' Meeting to be held on June 11, 1996, the stockholders will be asked to approve a proposal to amend the Company's Certificate of Incorporation to increase the total number of authorized shares of Common Stock from 10,000,000 to 15,000,000 (the "Amendment"). For purposes of this opinion, we are assuming that the Underlying Shares will not be issued before the Amendment has been approved by the stockholders of the Company and the appropriate certificate setting forth the Amendment has been duly filed with the Secretary of State of the State of Delaware. In connection with the transactions described herein, we have examined such corporate records and other documents and certificates of public officials as we have deemed necessary in order for us to render the opinion set forth below. Based on the foregoing, we are of the opinion that: 2 ACCEL International Corporation May 28, 1996 Page 2 1. The Rights have been duly authorized and when validly issued in accordance with such authorization, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally. 2. The Underlying Shares issuable upon exercise of the Rights, when issued, delivered and paid for as contemplated in the Registration Statement, will be validly issued, fully paid and nonassessable. We are admitted to the bar of the State of Ohio. In rendering the opinion set forth above, we have not passed on and do not purport to pass upon the application of any laws of any jurisdiction other than the federal securities laws, the corporate law of the State of Delaware and the laws of the State of Ohio. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the Registration Statement. Very truly yours, SQUIRE, SANDERS & DEMPSEY EX-23.1 3 EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS' The Board of Directors ACCEL International Corporation: We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the Registration Statement (Form S-2) and related prospectus. Our report dated March 15, 1996 contains an explanatory paragraph that as discussed in Note D to the consolidated financial statements, on March 30, 1994, the Company and its principal lender agreed to waive compliance with certain loan agreement covenants through January 1, 1995. On February 7, 1995 the Company and the lender again renegotiated the credit agreement and certain of the covenants. The amended agreement stated that the loan was payable in full on June 30, 1997. On December 29, 1995, the Company issued senior notes with a different lender and retired the aforementioned credit agreement. The most recent loan agreement requires that during the period the loan is outstanding, the Company maintain consolidated tangible net worth, as defined. At December 31, 1995, required tangible net worth was $15,000,000 and the Company's consolidated tangible net worth, as defined, was $19,738,000. KPMG Peat Marwick LLP Columbus, Ohio May 24, 1996 EX-23.2 4 EXHIBIT 23.2 1 Exhibit 23.2 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-2) and related Prospectus of ACCEL International Corporation for the registration of 7,000,000 non-transferable subscription rights and to the incorporation by reference therein of our report dated March 30, 1994, with respect to the cosolidated financial statements and schedules of ACCEL International Corporation for the year ended December 31, 1993 included in its Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP Columbus, Ohio May 21, 1996 EX-99.1 5 EXHIBIT 99.1 1 Exhibit 99.1 ACCEL International Corporation SUBSCRIPTION CERTIFICATE NO. CUSIP NO. THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S PROSPECTUS DATED MAY ___, 1996 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE SUBSCRIPTION AGENT. THIS CERTIFICATE OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY 5:00 P.M., COLUMBUS, OHIO TIME, ON __________________, 1996, UNLESS EXTENDED (AS IT MAY BE EXTENDED, THE "EXPIRATION DATE"), PROVIDED THAT THE EXPIRATION DATE SHALL IN NO EVENT BE LATER THAN _________________, 1996. The Rights represented by this subscription certificate may be exercised by duly completing Form 1. Rights holders are advised to review the Prospectus and instructions, copies of which are available from the Subscription Agent, before exercising their Rights. IMPORTANT: Complete FORM 1 and, if applicable, special delivery instructions in FORM 2, and special issuance instructions in FORM 3, and SIGN on reverse side. SUBSCRIPTION PRICE $_______ ______ NON-TRANSFERABLE RIGHTS TO PER SHARE PURCHASE COMMON STOCK OF ACCEL International Corporation Name and Address of Registered Holder: _________________________________________ The registered owner whose name is inscribed hereon is entitled to subscribe for shares of Common Stock upon the terms and subject to the conditions set forth in the Prospectus and instructions relating thereto. By _________________________________ By ___________________________________ Thomas H. Friedberg Nicholas Z. Alexander Chairman of the Board, Senior Vice President and President and Chief Secretary Executive Officer THIS SUBSCRIPTION CERTIFICATE IS NOT TRANSFERABLE AND MAY NOT BE COMBINED OR DIVIDED EXCEPT BY THE COMPANY IN THE EVENT A HOLDER SHALL CHOOSE TO EXERCISE LESS THAN ALL OF THE RIGHTS EVIDENCED HEREBY. 2 RIGHTS HOLDERS SHOULD BE AWARE THAT IF THEY CHOOSE TO EXERCISE LESS THAN ALL OF THE RIGHTS EVIDENCED HEREBY, THEY MAY NOT RECEIVE A NEW SUBSCRIPTION CERTIFICATE IN SUFFICIENT TIME TO EXERCISE THE REMAINING RIGHTS EVIDENCED THEREBY. FORM 1--EXERCISE AND SUBSCRIPTION: The undersigned hereby irrevocably exercises one or more Rights to subscribe for shares of Common Stock, as indicated below, on the terms and subject to the conditions specified in the Prospectus, receipt of which is hereby acknowledged. (a) Number of shares subscribed for pursuant to the Basic Subscription Privilege (_____ Right[s] needed to subscribe for each full share): __________ (b) Number of shares subscribed for pursuant to the Oversubscription Privilege: __________ (c) Total Subscription Price (total number of shares subscribed for--pursuant to both the Basic Subscription Privilege and the Oversubscription Privilege--times the Subscription Price of $_____): $______________(1) (1) If the amount enclosed or transmitted is not sufficient to pay the Subscription Price for all shares that are stated to be subscribed for, or if the number of shares being subscribed for is not specified, the number of shares subscribed for will be assumed to be the maximum number that could be subscribed for upon payment of such amount. If the number of shares to be subscribed for pursuant to the Oversubscription Privilege is not specified and the amount enclosed or transmitted exceeds the Subscription Price for all shares represented by this Subscription Certificate (the "Subscription Excess"), the person subscribing pursuant hereto shall be deemed to have exercised the Oversubscription Privilege to purchase, to the extent available, that number of whole shares of Common Stock equal to the quotient obtained by dividing the Subscription Excess by $_________. Any amount remaining after such division shall be returned to the subscriber. METHOD OF PAYMENT (CHECK ONE): / / CHECK, BANK DRAFT OR MONEY ORDER PAYABLE TO "NATIONAL CITY BANK" / / WIRE TRANSFER DIRECTED TO ABA NO. 041000124 (MARKED: "ACCEL International Corporation SUBSCRIPTION"). (d) If the number of Rights being exercised pursuant to the Basic Subscription Privilege is less than all of the Rights represented by the Subscription Certificate, deliver to me a new Subscription Certificate evidencing the remaining Rights to which I am entitled. 3 / / CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY DELIVERED TO THE SUBSCRIPTION AGENT PRIOR TO THE DATE HEREOF AND COMPLETE THE FOLLOWING. Name(s) of Registered Owner(s):______________________________ Window Ticket number (if any):_______________________________ Date of Execution of Notice of Guaranteed Delivery:____________________________ Name of Institution which Guaranteed Delivery:_________________________________ FORM 2--SPECIAL DELIVERY INSTRUCTIONS: Name and address for mailing any stock certificates and/or cash payment if other than shown on the reverse hereof: Name:__________________________________________________________________________ Address:_______________________________________________________________________ _______________________________________________________________________________ (Including Zip Code) FORM 3--SPECIAL ISSUANCE INSTRUCTIONS: Name and address of person(s) to whom shares of Common Stock are to be issued if other than registered holder(s) whose name(s) appear(s) on this Subscription Certificate: Name___________________________________________________________________________ Address________________________________________________________________________ _______________________________________________________________________________ (Including Zip Code) Taxpayer Identification or Social Security Number:____________________________________ IMPORTANT RIGHTS HOLDER SIGN HERE AND, IF RIGHTS ARE BEING EXERCISED, COMPLETE SUBSTITUTE FORM W-9 ________________________________________ (Signature(s) of Holder(s)) Dated:_______________________________, 1996 (Must be signed by the registered holder(s) exactly as name(s) appear(s) on this Subscription Certificate. If signature is by trustee(s), executor(s), administrator(s), guardian(s), 4 attorney(s)-in-fact, agent(s), officer(s) of a corporation or another acting in a fiduciary or representative capacity, please provide the following information. See Instructions.) Name(s):________________________________________________ (Please Print) Capacity: _________________________________________ Address: _________________________________________ ________________________________________________________ (Including Zip Code) Area Code and Telephone Number: _______________________________________ (Home) _______________________________________ (Business) Tax Identification or Social Security No:___________________________________ (Complete Substitute Form W-9) GUARANTY OF SIGNATURE(S) Note: See Section 3(c) of Instructions (Affix Medallion Guarantee, Below) EX-99.2 6 EXHIBIT 99.2 1 Exhibit 99.2 INSTRUCTIONS AS TO USE OF ACCEL INTERNATIONAL CORPORATION SUBSCRIPTION CERTIFICATES CONSULT THE INFORMATION AGENT, YOUR BANK OR BROKER AS TO ANY QUESTIONS The following instructions relate to a rights offering (the "Rights Offering") by ACCEL International Corporation (the "Company"), a Delaware corporation, to the holders of record of its Common Stock, par value $0.10 per share (the "Common Stock"), as described in the Company's Prospectus dated ______________, 1996 (the "Prospectus"). Holders of record of Common Stock at the close of business on ________________, 1996 (the "Record Date") are receiving one non-transferable subscription right (the "Rights") for every one share of Common Stock held by them on the Record Date. An aggregate of 4,456,432 Rights exercisable to purchase an aggregate of ______________ shares of Common Stock (the "Underlying Shares") are being distributed in connection with the Rights Offering. Each Right is exercisable, upon payment of $___________ in cash (the "Subscription Price"), to purchase [______] share[s] of Common Stock (the "Basic Subscription Privilege"). In addition, subject to the allocation described below, each Right also carries the right to subscribe at the Subscription Price for additional shares of Common Stock available as a result of unexercised Rights, if any (the "Oversubscription Privilege") up to the amount offered by the Prospectus. Any Rights holder subscribing for an aggregate of more than [5,000] Underlying Shares pursuant to the Oversubscription Privilege prior to 5:00 p.m., Columbus, Ohio time, on ________________, 1996, unless extended (as it may be extended, the "Expiration Date"), provided that the Expiration Date shall in no event be later than _______________, 1996, shall not be required to deliver payment for such number of Underlying Shares in excess of [5,000] until the Expiration Date. The Company, in its sole discretion, may determine to waive payment for such excess number of Underlying Shares until after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. Underlying Shares will be available for purchase pursuant to the Oversubscription Privilege only to the extent that all the Underlying Shares are not subscribed for through the exercise of the Basic Subscription Privilege by the Expiration Date. If the Underlying Shares so available (the "Excess Shares") are not sufficient to satisfy all subscriptions pursuant to the Oversubscription Privilege, the available Excess Shares will be allocated pro rata (subject to the elimination of fractional shares) among the holders of Rights who exercise the Oversubscription Privilege, in proportion, not to the number of shares requested pursuant to the Oversubscription Privilege, but to the number of shares each beneficial holder has purchased pursuant to the Basic Subscription Privilege; provided, however, that if such pro rata allocation results in any holder being allocated a greater number of Excess Shares than such holder subscribed for pursuant to the exercise of such holder's Oversubscription Privilege, then such holder will be allocated only such number of Excess Shares as such holder subscribed for and the remaining Excess Shares 1 2 will be allocated among all other holders exercising the Oversubscription Privilege. See "The Rights Offering-Subscription Privileges" in the Prospectus. The Rights will expire at 5:00 p.m., Columbus, Ohio time, on the Expiration Date. The Rights are not transferable and will not be traded on any securities exchange or quoted on any inter-dealer quotation system. See "The Rights Offering --Non-Transferability of Rights" in the Prospectus. The number of Rights to which you are entitled is printed on the face of your subscription certificate. You should indicate your wishes with regard to the exercise of your Rights by completing the appropriate form or forms on your subscription certificate and returning the certificate to the Subscription Agent in the envelope provided. YOUR SUBSCRIPTION CERTIFICATES MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, OR GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION CERTIFICATES MUST BE COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION PRICE, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, ON OR BEFORE 5:00 P.M., COLUMBUS, OHIO TIME, ON THE EXPIRATION DATE. ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE AND/OR THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED EXCEPT UNDER LIMITED CIRCUMSTANCES AS DESCRIBED IN THE PROSPECTUS. 1. Subscription Privilege. To exercise Rights, complete Form 1 and send your properly completed and executed subscription certificate, together with payments in full of the Subscription Price for each Underlying Share subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege, to the Subscription Agent. Any Rights holder subscribing for an aggregate of more than [5,000] Underlying Shares pursuant to the Oversubscription Privilege prior to the Expiration Date shall not be required to deliver payment for such number of Underlying Shares in excess of [5,000] until the Expiration Date. The Company, in its sole discretion, may determine to waive payment for such excess number of Underlying Shares until after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. All payments must be made in U.S. dollars (a) by check or bank draft drawn upon a U.S. bank or postal or express money order payable to National City Bank, as Subscription Agent, or (b) if by wire transfer, please contact the National City Bank for further instructions. Payments will be deemed to have been received by the Subscription Agent only upon (i) the clearance of any uncertified check, (ii) the receipt by the Subscription Agent of any certified check or bank draft drawn upon a U.S. bank or any postal express money order or (iii) the receipt of good funds in the Subscription Agent's account. If paying by uncertified personal check, please note that the funds paid thereby may take up to ten business days to clear. Accordingly, holders of Rights who wish to pay the Subscription Price by means of uncertified personal check are urged to make payment sufficiently in advance of the 2 3 Expiration Date to ensure that such payment is received and clears by such date and are urged to consider payment by means of certified or cashiers check, money order or wire transfer of funds. You may cause a written guaranty substantially in the form available from the Subscription Agent (the "Notice of Guaranteed Delivery") from a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or from a commercial bank or trust company having an office or correspondent in the United States or from a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934 (each of the foregoing being an "Eligible Institution"), to be received by the Subscription Agent at or prior to the Expiration Date together with payment in full of the applicable Subscription Price. Such Notice of Guaranteed Delivery must state your name, the number of Rights represented by your subscription certificate, the number of Rights being exercised pursuant to the Basic Subscription Privilege and the number of Underlying Shares, if any, being subscribed for pursuant to the Oversubscription Privilege, and will guarantee the delivery to the Subscription Agent of your properly completed and executed subscription certificate within five business days following the date of the Notice of Guaranteed Delivery. If this procedure is followed, your subscription certificate must be received by the Subscription Agent within five business days of the Notice of Guaranteed Delivery. Additional copies of the Notice of Guaranteed Delivery may be obtained upon request from the Subscription Agent at the address, or by calling the telephone number, indicated below. Banks, brokers and other nominee holders of Rights who exercise the Basic Subscription Privilege and the Oversubscription Privilege on behalf of beneficial owners of Rights will be required to certify to the Subscription Agent and the Company (by delivery to the Subscription Agent of a Nominee Holder Certification substantially in the form available from the Subscription Agent), the aggregate number of Rights that have been exercised, and the number of Underlying Shares that are being subscribed for pursuant to the Oversubscription Privilege, by each beneficial owner of Rights (including such nominee itself) on whose behalf such nominee holder is acting. In the event a Nominee Holder Certification is not delivered in respect of a Subscription Certificate, the Subscription Agent shall for all purposes (including for purposes of any allocation in connection with the Oversubscription Privilege) be entitled to assume that such certificate is exercised on behalf of a single beneficial owner. If more Excess Shares are subscribed for pursuant to the Oversubscription Privilege than are available for sale, Excess Shares will be allocated, as described above, among beneficial owners exercising the Oversubscription Privilege in proportion to such owners' exercise of Rights pursuant to the Basic Subscription Privilege. The address and telecopier numbers of the Subscription Agent are as follows: 3 4 If by Mail: If by Hand: National City Bank, Subscription Agent National City Bank, Subscription Agent Corporate Trust Operations Corporate Trust Operations P.O. Box 94720 3rd Floor - North Annex Cleveland, Ohio 44101-4720 4100 West 150th Street Cleveland, Ohio 44135-1385 Telecopier: (216) 476-8367 If you exercise less than all of the Rights evidenced by your subscription certificate by so indicating in Form 1 of your subscription certificate, the Subscription Agent will issue to you a new non-transferable subscription certificate evidencing the unexercised Rights. However, if you choose to have a new subscription certificate sent to you, you may not receive any such new subscription certificate in sufficient time to permit exercise of the Rights evidenced thereby. If you have not indicated the number of Rights being exercised, or if the amount you have forwarded is not sufficient (subject to the second sentence of Section 1 above) to purchase the number of shares subscribed for, you will be deemed to have exercised the Basic Subscription Privilege with respect to the maximum number of whole Rights which may be exercised for the Subscription Price payment delivered by you, and to the extent that the Subscription Price payment delivered by you exceeds the product of the Subscription Price multiplied by the number of Rights evidenced by the subscription certificates delivered by you (such excess being the "Subscription Excess"), you will be deemed to have exercised your Oversubscription Privilege to purchase, to the extent available, that number of whole shares of Common Stock equal to the quotient obtained by dividing the Subscription Excess by the Subscription Price. 2. Issuance and Delivery of Stock Certificates, Etc. The following issuances, deliveries and payments will be made to the name and the address shown on the face of your subscription certificate unless you provide special instructions to the contrary in Form 2 and/or Form 3. (a) BASIC SUBSCRIPTION PRIVILEGE. As soon as practicable after the valid exercise of Rights, the Subscription Agent will issue and mail to each exercising Rights Holder certificates representing shares of Common Stock purchased pursuant to the Basic Subscription Privilege. (b) OVERSUBSCRIPTION PRIVILEGE. As soon as practicable after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected, the Subscription Agent will issue and mail to each Rights Holder who validly exercises the Oversubscription Privilege the number of shares allocated to such Rights Holder pursuant to the Oversubscription Privilege. See "The Rights Offering-Subscription Privileges-Oversubscription Privilege" in the Prospectus. 4 5 (c) CASH PAYMENTS. As soon as practicable after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected, the Subscription Agent will mail to each Rights Holder who exercises the Oversubscription Privilege any excess funds received in payment of the Subscription Price for Excess Shares that are subscribed for by such Rights holder but not allocated to such Rights Holder pursuant to the Oversubscription Privilege. 3. Execution. (a) EXECUTION BY REGISTERED HOLDER. The signature on the subscription certificate must correspond with the name of the registered holder exactly as it appears on the face of the subscription certificate without any alteration or change whatsoever. Persons who sign the subscription certificate in a representative or other fiduciary capacity must indicate their capacity when signing and, unless waived by the Subscription Agent in its sole and absolute discretion, must present to the Subscription Agent satisfactory evidence of their authority to so act. (b) EXECUTION BY PERSON OTHER THAN REGISTERED HOLDER. If the subscription certificate is executed by a person other than the holder named on the face of the subscription certificate, proper evidence of authority of the person executing the subscription certificate must accompany the same unless, for good cause, the Subscription Agent dispenses with proof of authority. (c) SIGNATURE GUARANTIES. Your signature must be guaranteed by an Eligible Institution if you wish to specify special issuance, payment or delivery instructions pursuant to Form 2 and/or Form 3. 4. Method of Delivery. The method of delivery of subscription certificates and payment of the Subscription Price to the Subscription Agent will be at the election and risk of the Rights Holder, but, if sent by mail, it is recommended that they be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the Subscription Agent and the clearance of any checks sent in payment of the Exercise Price prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date. 5. Special Provisions Relating to the Delivery of Rights Through Depository Facility Participants. In the case of holders of Rights that are held of record through The Depository Trust Company and Philadelphia Depository Trust Company or any other depository (each a "Depository"), exercises of the Basic Subscription Privilege (but not the Oversubscription Privilege) may be effected by instructing the Depository to transfer Rights (such Rights "Depository Rights") from the Depository's account of such holder to the Depository account of the Subscription Agent, together with payment of the Subscription Price for each Underlying Share subscribed for pursuant to the Basic Subscription Privilege. The Oversubscription Privilege in respect of 5 6 Depository Rights may not be exercised through the Depository. The holder of a Depository Right may exercise the Oversubscription Privilege in respect of such Depository Right by properly executing and delivering to the Subscription Agent at or prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date, a Nominee Holder Oversubscription Exercise Form, in the form available from the Subscription Agent, or a Notice of Guaranteed Delivery, together with payment of the appropriate Subscription Price for the number of Underlying Shares for which the Oversubscription Privilege is to be exercised. Any Rights holder subscribing for an aggregate of more than [5,000] Underlying Shares pursuant to the Oversubscription Privilege prior to the Expiration Date shall not be required to deliver payment for such number of Underlying Shares in excess of [5,000] until the Expiration Date. The Company, in its sole discretion, may determine to waive payment for such excess number of Underlying Shares until after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. If a Notice of Guaranteed Delivery relates to Rights with respect to which exercise of the Basic Subscription Privilege will be made through a Depository and such Notice of Guaranteed Delivery also relates to the exercise of the Oversubscription Privilege, a Nominee Holder Oversubscription Exercise Form must also be received by the Subscription Agent in respect of such exercise of the Oversubscription Privilege within five business days of the Notice of Guaranteed Delivery. 6. Substitute Form W-9. Each Rights holder who elects to exercise Rights should provide the Subscription Agent with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, substantially in the form provided with these instructions. A copy of Substitute Form W-9 may be obtained upon request from the Subscription Agent at the address indicated above. Failure to provide the information on the form may subject such holder to a $50.00 penalty and to 31% federal income tax withholding with respect to dividends that may be paid by the Company on shares of Common Stock purchased upon the exercise of Rights. 6 EX-99.3 7 EXHIBIT 99.3 1 Exhibit 99.3 NOTICE OF GUARANTEED DELIVERY for SUBSCRIPTION CERTIFICATES issued by ACCEL INTERNATIONAL CORPORATION This form, or one substantially equivalent hereto, must be used to exercise Rights pursuant to the Basic Subscription Privilege and the Oversubscription Privilege pursuant to the Rights Offering described in the Prospectus dated ________________, 1996 (the "Prospectus") of ACCEL International Corporation (the "Company"), a Delaware corporation, if a holder of Rights cannot deliver the subscription certificate(s) evidencing the Rights (the "Subscription Certificate(s)"), to the Subscription Agent listed below (the "Subscription Agent") at or prior to 5:00 p.m., Columbus, Ohio time, on _______________, 1996, unless extended (as it may be extended, the "Expiration Date"), provided that the Expiration Date shall in no event be later than _______________, 1996. Such form must be delivered by hand or sent by facsimile transmission or mail to the Subscription Agent, and must be received by the Subscription Agent on or prior to the Expiration Date. See "The Rights Offering--Exercise of Rights" in the Prospectus. Payment of the Subscription Price of $_________ per share for each share of the Company's Common Stock, par value $0.10 per share (the "Common Stock"), subscribed for upon exercise of such Rights must be received by the Subscription Agent in the manner specified in the Prospectus at or prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date even if the Subscription Certificate evidencing such Rights is being delivered pursuant to the procedure for guaranteed delivery thereof. The Subscription Agent is: National City Bank If by Mail: Facsimile Transmission: If by Hand or Overnight Courier: National City Bank, (216) 476-8367 National City Bank, Subscription Agent Subscription Agent Corporate Trust Operations Corporate Trust Operations P. O. Box 94720 3rd Floor -- North Annex Cleveland, Ohio 44101-4720 4100 West 150th Street Cleveland, Ohio 44135-1385 1 2 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. Ladies and Gentlemen: The undersigned hereby represents that (i) he or she is the holder of Subscription Certificate(s) representing ___________________ Rights, and (ii) that such Subscription Certificate(s) cannot be delivered to the Subscription Agent at or before 5:00 p.m., Columbus, Ohio time, on the Expiration Date. Upon the terms and subject to the condition set forth in the Prospectus, receipt of which is hereby acknowledged, the undersigned hereby elects to exercise (i) the Basic Subscription Privilege to subscribe for [______] share[s] of Common Stock per Right with respect to each of _________________ Rights represented by such Subscription Certificate and (ii) the Oversubscription Privilege relating to each such Right, to the extent that Excess Shares (as defined in the Prospectus) are available therefor, for an aggregate of up to ___________________ Excess Shares. The undersigned understands that payment of the Subscription Price of $_______ per share for each share of Common Stock subscribed for pursuant to the Basic Subscription Privilege and Oversubscription Privilege must be received by the Subscription Agent at or before 5:00 p.m., Columbus, Ohio time, on the Expiration Date and represents that such payment, in the aggregate amount of $________________, either (check appropriate box): / / is delivered herewith or / / was delivered separately; in the manner set forth below (check appropriate box and complete information relating thereto): / / - wire transfer of funds - name of transferor institution: - date of transfer: - confirmation number (if available): / / money order - name of maker: - date and number of check, draft or money order number: - bank on which check is drawn or issuer of money order: / / uncertified check (Payment by uncertified check will not be deemed to have been received by the Subscription Agent until such check has cleared. Holders paying by such means are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment clears by such date.) / / certified check or / / bank draft (cashier's check) 2 3 Signature(s)_______________________ Address________________________________ Name(s)____________________________ Area Code and Tel No.(s)_______________ Please Type or Print Subscription Certificate No.(s) (if available)____________________________ GUARANTY OF DELIVERY (Not to be used for Subscription Certificate signature guaranty) The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States or a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guaranty medallion program, guarantees that the undersigned will deliver to the Subscription Agent the certificates representing the Rights being exercised hereby, with any required signature guaranties and any other required documents, all within five business days after the date hereof. ________________________________ Dated:____________________________, 1996 (Name of Firm) ________________________________ _________________________________________ (Address) (Authorized Signature) ________________________________ _________________________________________ (Area Code and Telephone Number) (Printed Name of Authorized Signer) The institution which completes this form must communicate the guaranty to the Subscription Agent and must deliver the Subscription Certificate(s) to the Subscription Agent within the time period shown herein. Failure to do so could result in a financial loss to such institution. 3 EX-99.4 8 EXHIBIT 99.4 1 Exhibit 99.4 SUBSCRIPTION AGENCY AGREEMENT This Subscription Agency Agreement (the "Agreement") is made as of May ___, 1996 between ACCEL International Corporation (the "Company") and National City Bank, as subscription agent (the "Agent"). All terms not defined herein shall have the meaning given in the prospectus (the "Prospectus") included in the Registration Statement on Form S-2 (File No. ________) filed by the Company with the Securities and Exchange Commission on ________, 1996, as amended by any amendment filed with respect thereto (the "Registration Statement"). WHEREAS, the Company proposes to make a subscription offer by issuing certificates or other evidences of non-transferable subscription rights, in the form designated by the Company (the "Subscription Certificates") to holders of record of shares (each a "Stockholder") of its Common Stock, par value $.10 per share (the "Common Stock"), as of a record date specified by the Company (the "Record Date"), pursuant to which each stockholder will receive non-transferable subscription rights (the "Rights") to subscribe for shares of Common Stock, as described in and upon such terms as are set forth in the Prospectus included as a part of the Registration Statement; a final copy of the Prospectus has been or, upon availability will promptly be, delivered to the Agent; and WHEREAS, the Company wishes the Agent to perform certain acts on behalf of the Company, and the Agent is willing to so act, in connection with the distribution of the Subscription Certificates and the issuance and exercise of the Rights to subscribe for Common Stock as therein set forth, all upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements set forth herein, the parties agree as follows: 1. Appointment. ----------- The Company hereby appoints the Agent to act as subscription agent for the Company in connection with the distribution of Subscription Certificates and the issuance and exercise of the Rights in accordance with the terms set forth in this Agreement and the Prospectus and the Agent hereby accepts such appointment. 2. Form and Execution of Subscription Certificates. ------------------------------------------------ (a) Each Subscription Certificate shall be irrevocable and non-transferable. The Agent shall maintain a register of Subscription Certificates and the holders of record thereof (each of whom shall be deemed a "Stockholder" hereunder for purposes of determining the rights of holders of Subscription Certificates). Each Subscription Certificate shall, subject to the provisions thereof, entitle the Stockholder in whose name it is recorded to the following: 2 (1) The right to purchase from the Company until the Expiration Date, at the Subscription Price, a number of shares of Common Stock equal to [______] share[s] of Common Stock for each Right evidenced thereby (the "Basic Subscription Privilege"); and (2) The right to subscribe for additional shares of Common Stock, subject to the availability of such shares and to the allotment of such shares as may be available among Stockholders who exercise the Oversubscription Privilege on the basis specified in the Prospectus; provided, however, that such Stockholder has exercised the Basic Subscription Privilege in respect of all Rights which he or she holds (the "Oversubscription Privilege"). 3. Rights and Issuance of Subscription Certificates. ------------------------------------------------ (a) Each Subscription Certificate shall evidence the Rights of the Stockholder therein named to purchase shares of Common Stock upon the terms and conditions therein and herein set forth. (b) Upon the written authorization of the Company, signed by any of its duly authorized officers, as to the Record Date, the Agent shall, from a list of the Stockholders of Common Stock as of the Record Date to be prepared by the Agent in its capacity as transfer agent of the Company (the "Transfer Agent"), prepare and record Subscription Certificates in the names of the Stockholders, setting forth the number of Rights to subscribe for shares of the Common Stock calculated on the basis of one Right for each one share of Common Stock recorded on the books in the name of each such Stockholder as of the Record Date. (c) Each Subscription Certificate shall be dated as of the Record Date and shall be executed manually or by facsimile signature of a duly authorized officer of the Agent. Upon the written advice, signed as aforesaid, as to the effective date of the Registration Statement, the Agent shall promptly countersign and deliver the Subscription Certificates, together with a copy of the Prospectus, instructions as to the use of the Subscription Certificates and any other document as the Company deems necessary or appropriate, to all Stockholders with record addresses in the United States (including its territories and possessions and the District of Columbia). No Subscription Certificate shall be valid for any purpose unless so executed. Delivery to Stockholders with record address inside the United States shall be by first class mail (without registration or insurance). (d) The Rights evidenced by Subscription Certificates issued to Foreign Stockholders will be held by the Agent for such Foreign Stockholders' accounts until instructions are received to exercise the Rights. To exercise such rights, such a Foreign Stockholder must notify the Agent and must establish to the satisfaction of the Agent that such exercise is permitted under applicable law. If such a holder does not follow the procedures set forth in the preceding sentence prior to the Expiration Date, such Rights represented thereby will expire. - 2 - 3 4. Exercise. -------- (a) Stockholders may acquire shares of Common Stock pursuant to the Basic Subscription Privilege, and, if available, pursuant to the Oversubscription Privilege by delivery to the Agent as specified in the Prospectus of (i) the Subscription Certificate with respect thereto, duly executed by such Stockholder in accordance with and as provided by the terms and conditions of the Subscription Certificate, together with (ii) the purchase price of $_______ for each share of Common Stock subscribed for by exercise of such Rights (the "Subscription Price"), in U.S. dollars by wire transfer or by money order or check drawn on a bank in the United States, in each case payable to the order of the Agent. In the case of holders of Rights that are held of record through a Depository (as defined below), exercises of the Basic Subscription Privilege (but not the Oversubscription Privilege) may be effected by instructing the Depository to transfer Rights (such Rights "Depository Rights") from the Depository's account of such holder to the Depository account of the Agent, together with payment of the Subscription Price for each Underlying Share subscribed for pursuant to the Basic Subscription Privilege. The Oversubscription Privilege in respect of Depository Rights may not be exercised through the Depository. The holder of Depository Rights may exercise the Oversubscription Privilege in respect of such Depository Rights by properly executing and delivering to the Agent at or prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date, a Nominee Holder Oversubscription Exercise Form or a Notice of Guaranteed Delivery, together with payment of the appropriate Subscription Price for the number of Underlying Shares for which the Oversubscription Privilege is to be exercised. Any Rights holder subscribing for an aggregate of more than [5,000] shares pursuant to the Oversubscription Privilege prior to the Expiration Date shall not be required to deliver payment for such number of underlying shares in excess of [5,000] until the Expiration Date. The Company, in its sole discretion, may determine to waive payment for such excess number of Underlying Shares until after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. Payments will be deemed to have been received by the Agent only upon (i) clearance of any uncertified check (for purposes hereof, an uncertified check will be deemed to clear upon presentation to, and payment at, the drawee bank), (ii) receipt by the Agent of any certified check or money order or (iii) receipt of good funds by wire transfer to the Agent's account. Nominees (as defined below) who, on behalf of beneficial owners, exercise the Basic Subscription Privilege and who wish to exercise the Oversubscription Privilege, must properly execute and deliver to the Agent at or prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date a Nominee Holder Oversubscription Exercise Form and a Nominee Holder Certification. (b) Rights may be exercised at any time after the date of issuance of the Subscription Certificates with respect thereto but no later than 5:00 p.m., Columbus, Ohio time, on the Expiration Date. For the purpose of determining the time of the - 3 - 4 exercise of any Rights, delivery of any material to the Agent shall be deemed to occur when such materials are received at the Corporate Trust Operations of the Agent specified in the Prospectus. Once a Stockholder has exercised the Basic Subscription Privilege or the Oversubscription Privilege, such exercise may not be revoked except as provided in the Prospectus. (c) Notwithstanding the provisions of Section 4(a) and 4(b) regarding delivery of an executed Subscription Certificate to the Agent prior to 5:00 P.M. Columbus, Ohio time on the Expiration Date, if prior to such time the Agent receives a Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise from a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or from a commercial bank or trust company having an office or correspondent in the United States (each, an "Eligible Institution") guaranteeing delivery of a properly completed and executed Subscription Certificate, then such exercise of the Basic Subscription Privilege and Oversubscription Privilege shall be regarded as timely, subject, however, to receipt of (i) the duly executed Subscription Certificate by the Agent within five business days following the Expiration Date (the "Protect Period") and (ii) payment in full of the subscription price (subject to the right of the Company to waive advance payment in respect of the Oversubscription Privilege as described above) prior to 5:00 p.m., Columbus, Ohio time, on the Expiration Date. (d) As soon as practicable after the valid exercise of Rights (for purposes hereof an exercise will not be treated as valid until such time as the Agent receives good funds) the Agent shall send to each exercising Stockholder (an "Exercising Stockholder") or, if shares of Common Stock on the Record Date are held by Depository Trust Company and Philadelphia Depository Trust Company (each a "Depository") or any other depository or nominee (together with the Depositories, "Nominees"), to such Nominee the share certificates representing the shares of Common Stock acquired pursuant to the Basic Subscription Privilege. As soon as practicable after the Expiration Date and after all pro rations and adjustments contemplated by the terms of the Rights Offering have been effected, the Agent shall send to each Exercising Stockholder or Nominee who exercises an Oversubscription Privilege certificates representing the shares of Common Stock acquired pursuant to the Oversubscription Privilege, along with a letter explaining the allocation of shares of Common Stock pursuant to the Oversubscription Privilege. Any excess payment to be refunded by the Company to an Exercising Stockholder who is not allocated the full amount of shares of Common Stock subscribed for pursuant to the Oversubscription Privilege, shall be mailed by the Agent to him or her without interest or deduction as soon as practicable after the Expiration Date and after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. (e) If an exercising Rights Holder has not indicated the number of Rights being exercised, or if the Subscription Price payment forwarded by such holder to the Agent is not sufficient (subject to the fifth sentence of Section 4(a) above) to - 4 - 5 purchase the number of shares subscribed for, the Rights holder will be deemed to have exercised the Basic Subscription Privilege with respect to the maximum number of whole Rights which may be exercised for the Subscription Price delivered to the Agent and, to the extent that the Subscription Price payment delivered by such holder exceeds the Subscription Price multiplied by the number of Rights exercised (such excess being the "Subscription Excess"), the holder will be deemed to have exercised its Oversubscription Privilege to purchase, to the extent available, a number of whole Underlying Shares equal to the quotient obtained by dividing the Subscription Excess by the Subscription Price. (f) Pursuant to the terms of the Rights Offering, the Company may permit holders of Subordinated Notes to tender their respective Subordinated Notes to the Company for cancellation as consideration (in lieu of cash) for the purchase of Underlying Shares. Upon receipt of such Subordinated Notes, the Company shall instruct the Subscription Agent to accept such Subordinated Notes as consideration, in an amount equal to the outstanding principal balance of such Subordinated Notes, for the issuance of the related Underlying Shares and the Subscription Agent shall be protected in relying upon such instruction. 5. Non-Transferability of Rights. ----------------------------- The Rights are not transferable. Stockholders who determine not to exercise their Rights may not transfer their Rights and, at the Expiration Date, Rights which have not been exercised will expire and be null and void and have no value, provided that Rights may be transferred by operation of law in the case of death, dissolution, liquidation or bankruptcy of the Rights holder, or pursuant to an order of an appropriate court. A Stockholder may subdivide a Subscription Certificate into multiple Subscription Certificates having in the aggregate the same number of Rights, provided that all such new Subscription Certificates shall be registered in the same name as the old Subscription Certificate. 6. Validity of Subscriptions. ------------------------- Irregular subscriptions not otherwise covered by specific instructions herein shall be submitted to an appropriate officer of the Company and handled in accordance with his or her instructions. Such instructions will be documented by the Agent indicating the instructing officer and the date thereof. 7. Oversubscription. ---------------- If, after allocation of shares of Common Stock to Exercising Stockholders, there remain Underlying Shares not subscribed for through the Basic Subscription Privilege (the "Excess Shares"), then the Agent shall allocate such Excess Shares to Stockholders who have exercised all the Rights initially issued to them and who have exercised the right to subscribe for additional shares of Common Stock (the "Oversubscription Privilege") to acquire more than the number of shares for which the Rights issued to them are exercisable. If the number of shares for which the Oversubscription Privilege has been exercised is greater than the Excess Shares, the Agent - 5 - 6 shall allocate pro rata the Excess Shares among the Stockholders exercising the Oversubscription Privilege based on the number of shares each Stockholder exercising the Oversubscription Privilege has purchased pursuant to the Basic Subscription Privilege; provided, however, that if such pro rata allocation results in any Stockholder being allocated a greater number of Excess Shares than such Stockholder subscribed for pursuant to the exercise of such Stockholder's Oversubscription Privilege, then such Stockholder will be allocated only such number of Excess Shares as such Stockholder subscribed for and the remaining Excess Shares will be allocated among all other Stockholders exercising the Oversubscription Privilege. The percentage of Excess Shares each oversubscribing Stockholder may acquire will be rounded up or down to result in delivery of whole shares of Common Stock. The Agent shall advise the Company immediately upon the completion of the allocation set forth above as to the total number of shares subscribed and distributable. 8. Delivery of Certificates. ------------------------ The Agent will deliver (i) certificates representing those shares of Common Stock purchased pursuant to exercise of the Basic Subscription Privilege as soon as practicable after the corresponding Rights have been validly exercised and full payment for such shares has been received and cleared and (ii) certificates representing those shares purchased pursuant to the exercise of the Oversubscription Privilege as soon as practicable after the Expiration Date and after all prorations and adjustments contemplated by the Rights Offering have been effected, but in no event shall share certificates be delivered after the time period set forth in Section 4(d) hereof. 9. Holding Proceeds of Rights Offering in Escrow. --------------------------------------------- (a) All proceeds received by the Agent from Stockholders in respect of the exercise of Rights shall be held by the Agent, on behalf of the Company, in a segregated, interest-bearing escrow account (the "Escrow Account"). As soon as practicable after the receipt of any proceeds in respect of the exercise of the Basic Subscription Privilege, the Agent shall deliver all such proceeds to the Company, together with any interest thereon. (b) The Agent shall deliver all proceeds received in respect of the exercise of the Oversubscription Privilege (including interest earned thereon) to the Company as promptly as practicable, but in no event later than 10 business days after all prorations and adjustments contemplated by the terms of the Rights Offering have been effected. Pending delivery to the Company as provided herein or disbursement in the manner described in Section 4(d) above, funds held in the Escrow Account shall be invested by the Agent at the direction of the Company. 10. Reports. ------- Daily, during the period commencing with the mailing of the Subscription Certificates and ending on the Expiration Date (and in the case of guaranteed deliveries pursuant to Section 4(c), the period ending five business days after the Expiration Date) the Agent will report by - 6 - 7 telephone or telecopier (by 12:00 Noon, Columbus, Ohio time), confirmed by letter, to an officer of the Company, data regarding Rights exercised, the total number of shares of Common Stock subscribed for, and payments received therefor, bringing forward the figures from the previous day's report in each case so as to show the cumulative totals and any such other information as may be reasonably requested by the Company. 11. Loss or Mutilation; Cancellation. -------------------------------- (a) If any Subscription Certificate is lost, stolen, mutilated or destroyed, the Agent may, on such terms which will indemnify and protect the Company and the Agent as the Agent and the Company shall agree (which shall, in the case of a mutilated Subscription Certificate include the surrender and cancellation thereof), issue a new Subscription Certificate of like denomination in substitution for the Subscription Certificate so lost, stolen, mutilated or destroyed. (b) All Subscription Certificates surrendered for the purpose of exercise or, subject to Section 5, exchange, substitution or transfer shall be canceled by the Agent, and no Subscription Certificates shall be issued in lieu thereof except as expressly permitted by provisions of this Agreement. The Company shall deliver to the Agent for cancellation and retirement, and the Agent shall so cancel and return, any other Subscription Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Agent shall deliver all canceled Subscription Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Subscription Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 12. Compensation for Services. ------------------------- The Company agrees to pay to the Agent certain fees, as set forth in the schedule hereto, for services performed hereunder, which services include any other services not described herein but customarily performed by the Subscription/Escrow Agent in a rights offering. The Company further agrees that it will reimburse the Agent for its reasonable out-of-pocket expenses incurred in the performance of its duties as such. 13. Instructions and Indemnification. -------------------------------- The Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions: (a) The Agent shall be entitled to rely upon any instructions or directions furnished to it by an appropriate officer of the Company, whether in conformity with the provisions of this Agreement or constituting a modification hereof or a supplement hereto. Without limiting the generality of the foregoing or any other provision of this Agreement, the Agent, in connection with its duties hereunder, shall not be under any duty or obligation to inquire into the validity or invalidity or authority or lack thereof of any instruction or direction from an appropriate - 7 - 8 officer of the Company which conforms to the applicable requirements of this Agreement and which the Agent reasonably believes to be genuine and shall not be liable for any delays, errors or loss of data occurring by reason of circumstances beyond the Agent's control, including, without limitation, acts of civil or military authority, national emergencies, labor difficulties, fire, flood, catastrophe, acts of God, insurrection, war, riots or failure of the mails, transportation, communication or power supply. (b) The Company will indemnify the Agent for, and hold it harmless against, any liability and expense which may arise out of or in connection with the services described in this Agreement or the instructions or directions furnished to the Agent relating to this Agreement by an appropriate officer of the Company; provided, however, that such agreement does not extend to, and the Agent shall not be indemnified or held harmless with respect to any liability or expense which shall arise out of, or be incurred or suffered as a result of, the Agent's gross negligence, bad faith, wilful misconduct or breach of this Agreement. The Company shall not indemnify the Agent with respect to any claim or action settled without its consent, which consent shall not be unreasonably withheld. (c) The Agent will promptly notify the Company of any claim with respect to which it may seek indemnity hereunder. The Company shall be entitled to participate at its own expense in the defense of any suit brought to enforce any such claim, and if the Company so elects, the Company shall assume the defense of any such suit. In the event that the Company assumes such defense, the Company shall not thereafter be liable for the fees and expenses of any additional counsel that the Agent retains, so long as the Company shall retain counsel reasonably satisfactory to the Agent, to defend such suit 14. Changes in Subscription Certificate. ----------------------------------- The Agent may, without the consent or concurrence of the Stockholders in whose names Subscription Certificates are registered, by supplemental agreement or otherwise, concur with the Company in making any changes or corrections in a Subscription Certificate that it shall have been advised by counsel (who may be counsel for the Company) is appropriate to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error therein or herein contained, and which shall not be inconsistent with the provision of the Subscription Certificate except insofar as any such change may confer additional rights upon the Stockholders. 15. Assignment, Delegation. ---------------------- (a) Neither this Agreement nor any rights or obligations hereunder may be assigned or delegated by either party without the written consent of the other party. (b) This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. Nothing in this Agreement is - 8 - 9 intended or shall be construed to confer upon any other person any right, remedy or claim or to impose upon any other person any duty, liability or obligation. 16. Governing Law. ------------- The validity, interpretation and performance of this Agreement shall be governed by the law of the State of Ohio. 17. Severability. ------------ The parties hereto agree that if any of the provisions contained in this Agreement shall be determined invalid, unlawful or unenforceable to any extent, such provisions shall be deemed modified to the extent necessary to render such provisions enforceable. The parties hereto further agree that this Agreement shall be deemed severable, and the invalidity, unlawfulness or enforceability of any term or provision thereof shall not affect the validity, legality or enforceability of this Agreement or of any other term or provision hereof. 18. Counterparts. ------------ This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. 19. Captions. -------- The captions and descriptive headings herein are for the convenience of the parties only. They do not in any way modify, amplify, alter or give full notice of the provisions hereof. 20. Facsimile Signatures. -------------------- Any facsimile signature of any party hereto shall constitute a legal, valid and binding execution hereof by such party. 21. Further Actions. --------------- Each party agrees to perform such further acts and execute such further documents as are necessary to effect the purposes of this Agreement. 22. Additional Provisions. --------------------- Except as specifically modified by this Agreement, the Agent's rights and responsibilities set forth in the Agreement for Stock Transfer Services between the Company and the Agent are hereby ratified and confirmed and continue in effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. - 9 - 10 NATIONAL CITY BANK By:__________________________________ Name:________________________________ Title:_______________________________ ACCEL INTERNATIONAL CORPORATION By:__________________________________ Name:________________________________ Title:_______________________________ - 10 - 11 SCHEDULE OF FEES FOR SUBSCRIPTION/ESCROW AGENT SERVICES between ACCEL International Corporation and NATIONAL CITY BANK [to be provided by National City Bank] - 11 - EX-99.5 9 EXHIBIT 99.5 1 Exhibit 99.5 ACCEL INTERNATIONAL CORPORATION RIGHTS OFFERING NOMINEE HOLDER OVERSUBSCRIPTION EXERCISE FORM PLEASE COMPLETE ALL APPLICABLE INFORMATION By Mail: By Hand or Overnight Courier: National City Bank, Subscription Agent National City Bank, Subscription Agent Corporate Trust Operations Corporate Trust Operations P.O. Box 94720 3rd Floor -- North Annex Cleveland, Ohio 44101-4720 4100 West 150th Street Cleveland, Ohio 44135-1385 THIS FORM IS TO BE USED ONLY BY NOMINEE HOLDERS TO EXERCISE THE OVERSUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO WHICH THE BASIC SUBSCRIPTION PRIVILEGE WAS EXERCISED TO THE FULLEST EXTENT POSSIBLE AND DELIVERED THROUGH THE FACILITIES OF A COMMON DEPOSITORY. ALL OTHER EXERCISES OF OVERSUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF SUBSCRIPTION CERTIFICATES. THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN ACCEL INTERNATIONAL CORPORATION'S ("THE COMPANY'S") PROSPECTUS DATED _______________, 1996 (THE PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE SUBSCRIPTION AGENT, NATIONAL CITY BANK AT (800) 622-6757. THIS FORM OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY 5:00 P.M., COLUMBUS, OHIO TIME, ON _________________, 1996, UNLESS EXTENDED (AS IT MAY BE EXTENDED, THE EXPIRATION DATE"), PROVIDED THAT THE EXPIRATION DATE SHALL IN NO EVENT BE LATER THAN ________________, 1996. 2 1. The undersigned hereby certifies to the Company and the Subscription Agent that it is a participant in _________________________________ (the Depository") Name of Depository and that it has either (i) exercised the Basic Subscription Privilege in respect of Rights and delivered such exercised Rights to the Subscription Agent by means of transfer to the Depository Account of the Company or (ii) delivered to the Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of the Basic Subscription Privilege and will deliver the Rights called for in such Notice of Guaranteed Delivery to the Subscription Agent by means of transfer to such Depository Account of the Company. 2. The undersigned hereby exercises the Oversubscription Privilege to purchase, to the extent available, ___________ shares of Common Stock and certifies to the Company and the Subscription Agent by execution of a Nominee Holder Certification that such Oversubscription Privilege is being exercised for the account or accounts of persons (which may include the undersigned) on whose behalf all Basic Subscription Rights have been exercised to the fullest extent possible. 3. The undersigned understands that payment of the Subscription Price of $______ per share for each share of Common Stock subscribed for pursuant to the Oversubscription Privilege must be received by the Subscription Agent at or before 5:00 p.m., Columbus, Ohio time, on the Expiration Date and represents that such payment, in the aggregate amount of $______________, either (check appropriate box): / / has been or is being delivered to the Subscription Agent pursuant to the Notice of Guaranteed Delivery referred to above or / / is being delivered to the Subscription Agent herewith or / / has been delivered separately to the Subscription Agent and, in the case of funds not delivered pursuant to a Notice of Guaranteed Delivery, is or was delivered in the manner set forth below (check appropriate box and complete information relating thereto): / / wire transfer of funds - -- name of transferor institution____________________________________________ - -- date of transfer__________________________________________________________ - 2 - 3 - -- confirmation number (if available)________________________________________ / / uncertified check / / certified check / / bank draft (cashier's check) Basic Subscription Confirmation Number:_____________ Depository Participant Number:______________________ Name of Depository Participant:_____________________ By:_________________________________________________ Name:______________________________________ Title:_____________________________________ Dated: _________________, 1996 PARTICIPANTS EXERCISING THE OVERSUBSCRIPTION PRIVILEGE PURSUANT HERETO MUST SEPARATELY SUBMIT A NOMINEE HOLDER CERTIFICATION TO THE SUBSCRIPTION AGENT. SUCH NOMINEE HOLDER CERTIFICATIONS ARE AVAILABLE FROM THE SUBSCRIPTION AGENT. - 3 - EX-99.6 10 EXHIBIT 99.6 1 Exhibit 99.6 ACCEL INTERNATIONAL CORPORATION RIGHTS OFFERING NOMINEE HOLDER CERTIFICATION The undersigned, a bank, broker or other nominee holder of Rights ( Rights") to purchase shares of Common Stock, par value $.10 per share ( Common Stock"), of ACCEL International Corporation (the Company") pursuant to the rights offering (the "Rights Offering") described and provided for in the Company's prospectus dated ____, 1996, (the Prospectus"), hereby certifies to the Company and to National City Bank, as Subscription Agent for such Rights Offering, that (1) the undersigned has exercised, on behalf of beneficial owners thereof, (which may include the undersigned), the number of Rights specified below pursuant to the Basic Subscription Privilege (as defined in the Prospectus) on behalf of beneficial owners of Rights who have subscribed for the purchase of additional shares of Common Stock pursuant to the Oversubscription Privilege (as defined in the Prospectus); (2) the undersigned has listed below each such exercised Basic Subscription and the corresponding Oversubscription Privilege (without identifying any such beneficial owner) and (3) each such beneficial owner's Basic Subscription has been exercised to the fullest extent possible: Number of Rights Number of Shares Exercised Pursuant to Subscribed for Pursuant Basic Subscription to Oversubscription Rights Certificate Privilege Privilege Number ----------------------------------------------------------------------------- 1. ______________________ _______________________ _________________________ 2. ______________________ _______________________ _________________________ 3. ______________________ _______________________ _________________________ 4. ______________________ _______________________ _________________________ 5. ______________________ _______________________ _________________________ 6. ______________________ _______________________ _________________________ 7. ______________________ _______________________ _________________________ 8. ______________________ _______________________ _________________________ 9. ______________________ _______________________ _________________________ 10. ______________________ _______________________ _________________________ ___________________________ Name of Nominee Holder Depository Participant Number (if applicable) ___________________________ Address ________________________________________ Basic Subscription Confirmation Number(s) By:________________________ Name:______________________ Title:_____________________ ________________________________________ Telephone Number:__________ -----END PRIVACY-ENHANCED MESSAGE-----